ATHENS, Greece, March 31, 2015 /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, 2014.

Fourth Quarter 2014 Highlights & Recent Developments


    --  Took delivery of two eco-design Ultramax newbuildings, the M/V Gentle
        Seas and the M/V Peaceful Seas.
    --  Net revenue, net of voyage expenses, of $11.6 million in the fourth
        quarter of 2014.
    --  Reduced average daily adjusted total vessel operating expenses by 8.2%
        year-over-year.
    --  Adjusted EBITDA of $0.4 million in the fourth quarter of 2014.
    --  Adjusted net loss of $7.1 million, or $0.29 per common share, in the
        fourth quarter of 2014.

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, 2013       December 31, 2014        December 31, 2013         December 31, 2014
                    -----------------       -----------------        -----------------         -----------------

    Average number
     of vessels                        13.0                     15.5                      12.9                       14.4
    --------------                     ----                     ----                      ----                       ----

    Time charter
     equivalent
     rate (TCE) (1)                  11,804                    8,187                    10,729                      7,795
    ---------------                  ------                    -----                    ------                      -----

    Net Revenue,
     net of voyage
     expenses                        13,929                   11,642                    49,588                     40,019
    --------------                   ------                   ------                    ------                     ------

    EBITDA (1)                          556                  (2,778)                    7,873                   (23,243)
    ---------                           ---                   ------                     -----                    -------

    Adjusted EBITDA
     (1)                             4,698                      387                    19,657                      2,277
    ---------------                   -----                      ---                    ------                      -----

    Net Loss                        (5,960)                (10,222)                 (16,953)                  (51,796)
    --------                         ------                  -------                   -------                    -------

    Adjusted Net
     Loss (1)                       (1,335)                 (7,057)                  (4,686)                  (24,765)
    ------------                     ------                   ------                    ------                    -------

    Loss per common
     share basic
     and diluted                     (0.34)                  (0.41)                   (1.31)                    (2.18)
    ---------------                   -----                    -----                     -----                      -----

    Adjusted Loss
     per common
     share basic
     and diluted
     (1)                            (0.08)                  (0.29)                   (0.36)                    (1.04)
    -------------                     -----                    -----                     -----                      -----



             (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 /(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, Chief Executive Officer and Interim Chief Financial Officer of Paragon Shipping, stated, "During the fourth quarter of 2014 charter rates remained at historically low levels, a trend that has continued in 2015. Despite this challenging market, for the fourth quarter of 2014, we reported net revenues, net of voyage expenses of $11.6 million, which translates into an average daily time charter equivalent, or TCE, rate of $8,187, about 25% higher than the average daily TCE rate of $6,570 we reported for the third quarter of 2014, with a utilization rate of 99.8%. For the fourth quarter of 2014, we reported an adjusted EBITDA of $0.4 million and an adjusted net loss of $7.1 million, or 29 cents per common share."

Mr. Bodouroglou continued, "In 2014, we continued to execute on our fleet growth strategy by increasing our fleet size to 16 vessels in four size classes. Our further fleet growth is secured with our newbuilding program of five eco-design Ultramax and Kamsarmax drybulk vessels with expected deliveries in 2015. The Company has currently secured debt financing of up to $78.0 million, in the aggregate, for four of its five newbuilding drybulk carriers. While expanding our fleet size, our aim is to maintain a cost-effective structure. For the full year 2014, our average adjusted total vessel operating expenses was $7,244 per vessel per day, which represents an 8.2% year-over-year reduction, as a result of the Company's cost control efficiency and the economies of scale of having a larger fleet."

Mr. Bodouroglou concluded, "In order to withstand the current challenging conditions, our main focus is on improving the Company's cash liquidity and cash flow breakeven levels. To do so, we are currently exploring several alternatives to effectively manage our working capital requirements and other commitments. We are currently in advanced negotiations with several of our lenders to improve our repayment profile and proactively cure any potential covenant breaches in the event that the market continues to be weak throughout the year. We remain committed to take all the necessary steps to emerge stronger from this downturn."

Fourth Quarter 2014 Financial Results
Gross charter revenue for the fourth quarter of 2014 was $16.4 million, compared to $16.5 million for the fourth quarter of 2013. The Company reported a net loss of $10.2 million, or $0.41 per basic and diluted share, for the fourth quarter of 2014, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 24,223,745 and reflecting the impact of the non-cash items discussed below. For the fourth quarter of 2013, the Company reported a net loss of $6.0 million, or $0.34 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 17,162,948.

Excluding all non-cash items described below, the adjusted net loss for the fourth quarter of 2014 was $7.1 million, or $0.29 per basic and diluted share, compared to adjusted net loss of $1.3 million, or $0.08 per basic and diluted share, for the fourth quarter of 2013.

EBITDA for the fourth quarter of 2014 was negative $2.8 million, compared to positive $0.6 million for the fourth quarter of 2013. EBITDA for the fourth quarter of 2014 was calculated by adding the net loss of $10.2 million to net interest expense, including interest expense from interest rate swaps, and depreciation that in the aggregate amounted to $7.4 million. Adjusted EBITDA, excluding all non-cash items described below, was $0.4 million for the fourth quarter of 2014, compared to $4.7 million for the fourth quarter of 2013.

The Company operated an average of 15.5 vessels during the fourth quarter of 2014, earning an average TCE rate of $8,187 per day, compared to an average of 13.0 vessels during the fourth quarter of 2013, earning an average TCE rate of $11,804 per day.

Adjusted total vessel operating expenses, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation, were $11.1 million for the fourth quarter of 2014, compared to $9.9 million for the fourth quarter of 2013. On a daily basis, adjusted total vessel operating expenses for the fourth quarter of 2014 were approximately $7,790 per vessel per day, or 6.2% lower than the adjusted total vessel operating expenses of $8,301 per vessel per day for the fourth quarter of 2013.

As of December 31, 2014, the Company owned approximately 11.0% of the outstanding common stock of Box Ships Inc. (NYSE: TEU) ("Box Ships"), a former wholly-owned subsidiary of the Company which 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 2014, the Company recorded a loss of $0.1 million, compared to $0.3 million income for the fourth quarter of 2013.

As of December 31, 2014, 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 $3.0 million.

Fourth Quarter 2014 Non-cash and One-off Items
The Company's results for the three months ended December 31, 2014 included the following non-cash items:


    --  Loss from marketable securities of $37,127, or less than $0.01 per basic
        and diluted share.
    --  Loss on investment in affiliate of $3.0 million, or $0.12 per basic and
        diluted share.
    --  An unrealized gain on interest rate swaps of $0.1 million, or $0.01 per
        basic and diluted share.
    --  Non-cash expenses of $0.3 million, or $0.01 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 $3.2 million, which represents a $0.12 decrease in earnings per basic and diluted share, for the three months ended December 31, 2014.

Year ended December 31, 2014 Financial Results
Gross charter revenue for the year ended December 31, 2014 was $58.1 million, compared to $59.5 million for the year ended December 31, 2013. The Company reported a net loss of $51.8 million, or $2.18 per basic and diluted share, for the year ended December 31, 2014, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 23,326,062 and reflecting the impact of the non-cash items discussed below. For the year ended December 31, 2013, the Company reported a net loss of $17.0 million, or $1.31 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 12,639,128.

Excluding all non-cash items described below, the adjusted net loss for the year ended December 31, 2014 was $24.8 million, or $1.04 per basic and diluted share, compared to adjusted net loss of $4.7 million, or $0.36 per basic and diluted share, for the year ended December 31, 2013.

EBITDA for the year ended December 31, 2014 was negative $23.2 million, compared to positive $7.9 million for the year ended December 31, 2013. EBITDA for the year ended December 31, 2014 was calculated by adding the net loss of $51.8 million to net interest expense, including interest expense from interest rate swaps, and depreciation that in the aggregate amounted to $28.6 million. Adjusted EBITDA, excluding all non-cash items described below, was $2.3 million for the year ended December 31, 2014, compared to $19.7 million for the year ended December 31, 2013.

The Company operated an average of 14.4 vessels during the year ended December 31, 2014, earning an average TCE rate of $7,795 per day, compared to an average of 12.9 vessels during the year ended December 31, 2013, earning an average TCE rate of $10,729 per day.

Adjusted total vessel operating expenses, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation, were $38.0 million for the year ended December 31, 2014, compared to $37.2 million for the year ended December 31, 2013. On a daily basis, adjusted total vessel operating expenses for the year ended December 31, 2014 were approximately $7,244 per vessel per day, or 8.2% lower than the adjusted total vessel operating expenses of $7,895 per vessel per day for the year ended December 31, 2013, as a result of the Company's cost control efficiency and the economies of scale of having a larger fleet.

The impairment loss of $15.7 million for the year ended December 31, 2014, relates to the write down to fair value of the contract price of the 4,800 TEU containership newbuilding, as a result of the increased probability of selling the respective vessel as of March 31, 2014.

The gain from the sale of assets of $0.4 million for the year ended December 31, 2014, relates to the gain on the sale of the 4,800 TEU containership newbuilding that was concluded in May 2014.

For the year ended December 31, 2014, the Company recorded income of $0.5 million, compared to $1.7 million income for the year ended December 31, 2013.

In the year ended December 31, 2014, the Company recorded a non-cash loss of $0.2 million relating to the dilution effect from the Company's non-participation in the public offering by Box Ships of 5,500,000 of Box Ships' common shares, which was completed on April 15, 2014. In addition, as of March 31, 2014, June 30, 2014 and December 31, 2014, 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 an aggregate non-cash loss of $8.6 million. 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.

Year ended December 31, 2014 Non-cash and One-off Items
The Company's results for the year ended December 31, 2014 included the following non-cash items:


    --  Impairment loss of $15.7 million, or $0.66 per basic and diluted share.
    --  Gain from sale of assets of $0.4 million, or $0.02 per basic and diluted
        share.
    --  Loss from marketable securities of $25,529, or less than $0.01 per basic
        and diluted share.
    --  Loss on investment in affiliate of $8.8 million, or $0.37 per basic and
        diluted share.
    --  An unrealized gain on interest rate swaps of $0.5 million, or $0.02 per
        basic and diluted share.
    --  Non-cash expenses of $1.9 million, or $0.08 per basic and diluted share,
        relating to share based compensation to the management company amounting
        to $0.9 million and to the amortization of the compensation cost
        recognized for non-vested share awards issued to executive officers,
        directors and employees amounting to $1.0 million.
    --  Write off of financing expenses of $1.5 million, or $0.06 per basic and
        diluted share.

In the aggregate, these non-cash items decreased the Company's earnings by $27.0 million, which represents a $1.14 decrease in earnings per basic and diluted share, for the year ended December 31, 2014.

Cash Flows
For the year ended December 31, 2014, the Company's net cash used in operating activities was $6.2 million, compared to net cash generated from operating activities of $4.6 million for the year ended December 31, 2013. For the year ended December 31, 2014, net cash used in investing activities was $104.5 million and net cash from financing activities was $86.5 million. 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.

Newbuilding Program Update
In October 2014, the Company took delivery of its first two Ultramax drybulk carriers, the M/V Gentle Seas and the M/V Peaceful Seas (Hull numbers DY152 and DY153), from Yangzhou Dayang Shipbuilding Co. Ltd. in China. These vessels have a cargo carrying capacity of approximately 63,350 dwt each. In October 2014, an aggregate amount of $35.7 million was paid to the shipyard representing the final installment for these two vessels, which was mainly financed from the loan facility with HSH Nordbank AG, following a total drawdown of $34.4 million. Both vessels have already been deployed under short-term time charters.

Currently, the Company's outstanding newbuilding program consists of two Ultramax drybulk carriers (Hull numbers DY4050 and DY4052) and three Kamsarmax drybulk carriers (Hull numbers YZJ1144, YZJ1145 and YZJ1142) with expected deliveries in 2015. This five-vessel newbuilding program has an aggregate cost of $148.2 million, of which $101.7 million is currently outstanding. With the $160.0 million syndicated secured loan facility led by Nordea Bank Finland Plc, the Company has currently secured debt financing of up to $78.0 million in the aggregate for all of its outstanding Ultramax and two of its Kamsarmax newbuilding drybulk carriers. For the remaining Kamsarmax newbuilding drybulk carrier that is expected to be delivered in the fourth quarter of 2015, the Company is currently in discussions to secure debt financing based on similar terms.

Financing Update
As of December 31, 2014, the Company was in compliance with the financial and security cover ratio covenants contained in its debt agreements, with the exception of the security cover ratio covenant contained in its loan agreement with Commerzbank AG. The Company has entered into a preliminary agreement with Commerzbank AG to amend certain terms of the loan, including, but not limited to, changes in the repayment profile and the waiver of the security cover ratio covenant through 2015, which is subject to formal approvals by the Company and the lender.

The Company is currently in negotiations with several of its other lenders to improve its repayment profile and proactively cure any potential breaches in the event that the current market conditions persist or worsen. Within this context, the Company has agreed to certain arrangements with another two lenders, in addition to the preliminary agreement with Commerzbank AG discussed above. Although management believes that the lenders will continue to support the Company, there can be no assurance that the outcome of these negotiations will be successful.

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, 2014 results on April 1, 2015, at 9:00 am Eastern Time.

Participants should dial into the call ten minutes before the scheduled time using the following numbers 1-888-348-8931 (USA) or +1-412-902-4248 (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 10061729.

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 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 sixteen drybulk vessels with a total carrying capacity of 980,380 dwt. In addition, Paragon Shipping's current newbuilding program consists of two Ultramax drybulk carriers and three Kamsarmax drybulk carriers that are scheduled to be delivered in 2015. The Company's common shares and senior notes trade on NASDAQ under the symbols "PRGN" and "PRGNL," respectively. For more information, visit: www.paragonship.com. The information contained on 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.
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 31, 2015.



    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
    -------------                                ---     -------

    Ultramax
    --------

    Gentle Seas                    Ultramax              63,350            2014
    -----------                    --------              ------            ----

    Peaceful Seas                  Ultramax              63,331            2014
    -------------                  --------              ------            ----

    Total Ultramax                                 2     126,681
    --------------                               ---     -------

    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                                   16     980,380
    -----------                                  ---     -------




    Drybulk Newbuildings that we have agreed to acquire

    Hull
     no.                                       Type / No. of Vessels     Dwt         Expected Delivery
    ----                                       ---------------------     ---         -----------------

    Ultramax
    --------

    Hull
     no.
     DY4050                                          Ultramax                63,500        Q3 2015
    -------                                          --------                ------        -------

    Hull
     no.
     DY4052                                          Ultramax                63,500        Q3 2015
    -------                                          --------                ------        -------

    Total
     Ultramax                                                          2     127,000
    ---------                                                        ---     -------

    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                                                             5     372,400
    ------                                                           ---     -------




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


                                                   Quarter Ended           Quarter Ended            Year Ended               Year Ended
                                                                                                  December 31, 2013        December 31, 2014
                                                 December 31, 2013       December 31, 2014
                                                 -----------------       -----------------

    FLEET DATA
    ----------

    Average number of
     vessels (1)                                                    13.0                     15.5                     12.9                      14.4
    -----------------                                               ----                     ----                     ----                      ----

    Calendar days for
     fleet (2)                                                     1,196                    1,425                    4,717                     5,241
    -----------------                                              -----                    -----                    -----                     -----

    Available days for
     fleet (3)                                                     1,196                    1,425                    4,652                     5,180
    ------------------                                             -----                    -----                    -----                     -----

    Operating days for
     fleet (4)                                                     1,180                    1,422                    4,622                     5,134
    ------------------                                             -----                    -----                    -----                     -----

    Fleet utilization
     (5)                                                          98.7%                   99.8%                   99.4%                    99.1%
    -----------------                                               ----                     ----                     ----                      ----

    AVERAGE DAILY RESULTS
    ---------------------

    Time charter
     equivalent (6)                                               11,804                    8,187                   10,729                     7,795
    ---------------                                               ------                    -----                   ------                     -----

    Vessel operating
     expenses (7)                                                  4,185                    4,427                    4,401                     4,325
    ----------------                                               -----                    -----                    -----                     -----

    Dry-docking
     expenses (8)                                                      -                       -                     360                       418
    -------------                                                    ---                     ---                     ---                       ---

    Management fees -
     related party
     adjusted (9)                                                  1,049                      969                    1,023                     1,028
    -----------------                                              -----                      ---                    -----                     -----

    General and
     administrative
     expenses adjusted
     (10)                                                         3,067                    2,394                    2,111                     1,473
    ------------------                                             -----                    -----                    -----                     -----

    Total vessel
     operating expenses
     adjusted (11)                                                 8,301                    7,790                    7,895                     7,244
    -------------------                                            -----                    -----                    -----                     -----



    (1)                 Average number of vessels is the
                        number of vessels that constituted
                        our 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.

    (3)                 Available days for the fleet are the
                        total calendar days for the relevant
                        period less any off-hire days
                        associated with scheduled dry-
                        dockings or special or intermediate
                        surveys.

    (4)                 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
                        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.

    (5)                 Fleet utilization is the percentage
                        of time that our vessels were able
                        to generate revenues and is
                        determined by dividing operating
                        days by fleet available days for the
                        relevant period.

    (6)                 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 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.

    (7)                 Daily vessel operating expenses,
                        which includes crew costs,
                        provisions, 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.

    (9)                 Daily management fees -related party
                        adjusted are calculated by dividing
                        management fees -related party,
                        excluding share based compensation
                        to the management company, by fleet
                        calendar days for the relevant time
                        period.

    (10)                Daily general and administrative
                        expenses adjusted are calculated by
                        dividing general and administrative
                        expenses, excluding non-cash
                        expenses relating to the
                        amortization of the share based
                        compensation cost for non-vested
                        share awards, by fleet calendar days
                        for the relevant time period.

    (11)                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 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, 2013                December 31, 2014        December 31, 2013         December 31, 2014
                                                -----------------                -----------------        -----------------         -----------------

    Charter Revenue                                              16,509                            16,432                    59,531                     58,138
    ---------------                                              ------                            ------                    ------                     ------

    Commissions                                                   (938)                            (966)                  (3,274)                   (3,374)
    -----------                                                    ----                              ----                    ------                     ------

    Voyage Expenses,
     net                                                        (1,642)                          (3,824)                  (6,669)                  (14,745)
    ----------------                                             ------                            ------                    ------                    -------

    Net Revenue, net
     of voyage
     expenses                                                    13,929                            11,642                    49,588                     40,019
    ----------------                                             ------                            ------                    ------                     ------

    Total operating
     days                                                         1,180                             1,422                     4,622                      5,134
    ---------------                                               -----                             -----                     -----                      -----

    Time Charter
     Equivalent                                                  11,804                             8,187                    10,729                      7,795
    ------------                                                 ------                             -----                    ------                      -----


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


                                                    Year Ended              Year Ended

                                                 December 31, 2013       December 31, 2014
                                                 -----------------       -----------------

    Cash and
     Cash
     Equivalents,
     beginning
     of period                                                    17,677                   31,302
    -------------                                                 ------                   ------

    Cash generated from / (used in):
    --------------------------------

    Operating
     Activities                                                    4,564                  (6,182)
    -----------                                                    -----                   ------

    Investing
     Activities                                                  (6,442)               (104,546)
    -----------                                                   ------                 --------

    Financing
     Activities                                                   15,503                   86,457
    -----------                                                   ------                   ------

    Net
     increase
     /
     (decrease)
     in Cash
     and Cash
     Equivalents                                                  13,625                 (24,271)
    ------------                                                  ------                  -------

    Cash and
     Cash
     Equivalents,
     end of
     period                                                       31,302                    7,031
    -------------                                                 ------                    -----





    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 Ended          Year Ended December 31,      Year Ended December 31,
                                                                                                                                   2013                          2014
                                                  December 31, 2013                December 31, 2014
                                                  -----------------                -----------------

    Net Loss                                                      (5,960)                         (10,222)                    (16,953)                     (51,796)
    --------                                                       ------                           -------                      -------                       -------

    Plus Net interest
     expense, including
     interest expense
     from interest rate
     swaps                                                          2,213                             2,533                        7,839                        10,196
    -------------------                                             -----                             -----                        -----                        ------

    Plus Depreciation                                               4,303                             4,911                       16,987                        18,357
    -----------------                                               -----                             -----                       ------                        ------

    EBITDA                                                            556                           (2,778)                       7,873                      (23,243)
    ------                                                            ---                            ------                        -----                       -------

    Adjusted EBITDA Reconciliation
    ------------------------------

    Net Loss                                                      (5,960)                         (10,222)                    (16,953)                     (51,796)
    --------                                                       ------                           -------                      -------                       -------

    Write off of
     capitalized
     expenses from
     contract
     cancellation                                                     233                                 -                         233                             -
    --------------                                                    ---                               ---                         ---                           ---

    Impairment loss                                                     -                                -                           -                       15,695
    ---------------                                                   ---                              ---                         ---                       ------

    Gain from sale of
     assets                                                             -                                -                           -                        (403)
    -----------------                                                 ---                              ---                         ---                         ----

    Loss from marketable
     securities                                                       959                                37                        1,911                            26
    --------------------                                              ---                               ---                        -----                           ---

    Loss on investment
     in affiliate                                                   2,852                             2,985                        8,620                         8,840
    ------------------                                              -----                             -----                        -----                         -----

    Unrealized gain on
     interest rate swaps                                            (175)                            (116)                       (835)                        (504)
    --------------------                                             ----                              ----                         ----                          ----

    Non-cash expenses
     from the
     amortization of
     share based
     compensation cost
     recognized and
     share based
     compensation to the
     management company                                               273                               259                        1,855                         1,866
    --------------------                                              ---                               ---                        -----                         -----

    Write off of
     financing expenses                                               483                                 -                         483                         1,511
    -------------------                                               ---                               ---                         ---                         -----

    Adjusted Net Loss                                             (1,335)                          (7,057)                     (4,686)                     (24,765)
    -----------------                                              ------                            ------                       ------                       -------

    Plus Net interest
     expense, net of
     write off of
     financing expenses,
     including interest
     expense from swaps                                             1,730                             2,533                        7,356                         8,685
    --------------------                                            -----                             -----                        -----                         -----

    Plus Depreciation                                               4,303                             4,911                       16,987                        18,357
    -----------------                                               -----                             -----                       ------                        ------

    Adjusted EBITDA                                                 4,698                               387                       19,657                         2,277
    ---------------                                                 -----                               ---                       ------                         -----



    (1)              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 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)


              U.S. GAAP Financial
                  Information                           Quarter Ended                       Quarter Ended                Year Ended                  Year Ended

                                                      December 31, 2013                   December 31, 2014          December 31, 2013           December 31, 2014
    ---                                               -----------------                   -----------------          -----------------           -----------------

    Net Loss                                                            (5,960)                            (10,222)                   (16,953)                    (51,796)
    --------                                                             ------                              -------                     -------                      -------

    Net Loss attributable
     to non-vested share
     awards                                                               (123)                               (175)                      (352)                       (832)
    ---------------------                                                  ----                                 ----                        ----                         ----

    Net Loss available to
     common shareholders                                                (5,837)                            (10,047)                   (16,601)                    (50,964)
    ---------------------                                                ------                              -------                     -------                      -------

    Weighted average number
     of common shares basic
     and diluted                                                     17,162,948                           24,223,745                  12,639,128                   23,326,062
    -----------------------                                          ----------                           ----------                  ----------                   ----------

    Loss per common share
     basic and diluted                                                   (0.34)                              (0.41)                     (1.31)                      (2.18)
    ---------------------                                                 -----                                -----                       -----                        -----

    Reconciliation of Net Income /(Loss) to Adjusted Net
     Income /(Loss)
    ----------------------------------------------------

    Net Loss                                                            (5,960)                            (10,222)                   (16,953)                    (51,796)
    --------                                                             ------                              -------                     -------                      -------

    Write off of
     capitalized expenses
     from contract
     cancellation                                                           233                                    -                        233                            -
    ---------------------                                                   ---                                  ---                        ---                          ---

    Impairment loss                                                           -                                   -                          -                      15,695
    ---------------                                                         ---                                 ---                        ---                      ------

    Gain from sale of
     assets                                                                   -                                   -                          -                       (403)
    -----------------                                                       ---                                 ---                        ---                        ----

    Loss from marketable
     securities                                                             959                                   37                       1,911                           26
    --------------------                                                    ---                                  ---                       -----                          ---

    Loss on investment in
     affiliate                                                            2,852                                2,985                       8,620                        8,840
    ---------------------                                                 -----                                -----                       -----                        -----

    Unrealized gain on
     interest rate swaps                                                  (175)                               (116)                      (835)                       (504)
    --------------------                                                   ----                                 ----                        ----                         ----

    Non-cash expenses from
     the amortization of
     share based
     compensation cost
     recognized and share
     based compensation to
     the management company                                                 273                                  259                       1,855                        1,866
    -----------------------                                                 ---                                  ---                       -----                        -----

    Write off of financing
     expenses                                                               483                                    -                        483                        1,511
    ----------------------                                                  ---                                  ---                        ---                        -----

    Adjusted Net Loss (1)                                               (1,335)                             (7,057)                    (4,686)                    (24,765)
    --------------------                                                 ------                               ------                      ------                      -------

    Adjusted Net Loss
     attributable to non-
     vested share awards                                                   (27)                               (121)                       (98)                       (398)
    ---------------------                                                   ---                                 ----                         ---                         ----

    Adjusted Net Loss
     available to common
     shareholders                                                       (1,308)                             (6,936)                    (4,588)                    (24,367)
    --------------------                                                 ------                               ------                      ------                      -------

    Weighted average number
     of common shares basic
     and diluted                                                     17,162,948                           24,223,745                  12,639,128                   23,326,062
    -----------------------                                          ----------                           ----------                  ----------                   ----------

    Adjusted Loss per
     common share basic and
     diluted (1)                                                         (0.08)                              (0.29)                     (0.36)                      (1.04)
    -----------------------                                               -----                                -----                       -----                        -----



    (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 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, 2013 and December 31, 2014

    (Expressed in thousands of United States Dollars)
    ------------------------------------------------

                                                      December 31, 2013 December 31, 2014

    Assets


    Cash and restricted cash
     (current and non-current)                                   41,312             20,920

    Vessels, net                                                306,136            369,033

    Advances for vessels under
     construction                                                45,209             49,972

    Other fixed assets, net                                         596                923

    Investment in affiliate                                      11,309              2,956

    Other assets                                                 14,984             17,162


    Total Assets                                                419,546            460,966
    ------------                                                -------            -------


    Liabilities and Shareholders'
     Equity


    Total debt                                                  180,115            230,779

    Total other liabilities                                       6,780              7,786

    Total shareholders' equity                                  232,651            222,401


    Total Liabilities and
     Shareholders' Equity                                       419,546            460,966
    ---------------------                                       -------            -------


    Paragon Shipping Inc.

    Unaudited Condensed Consolidated Statements of Comprehensive Loss

    For the three months ended December 31, 2013 and 2014

    (Expressed in thousands of United States Dollars - except for shares and share data)
    -----------------------------------------------------------------------------------


                                                                    Three Months Ended        Three Months Ended

                                                                    December 31, 2013         December 31, 2014

    Revenue

    Charter revenue                                                                    16,509                     16,432

    Commissions                                                                         (938)                     (966)

    Net Revenue                                                                        15,571                     15,466
    -----------                                                                        ------                     ------

    Expenses / (Income)

    Voyage expenses, net                                                                1,642                      3,824

    Vessels operating expenses                                                          5,005                      6,309

    Management fees - related party                                                     1,254                      1,380

    Depreciation                                                                        4,303                      4,911

    General and administrative expenses                                                 3,940                      3,671

    Bad debt provisions                                                                  (69)                       131

    Loss from contract cancellation                                                       569                          -

    Loss from marketable securities, net                                                  959                         37

    Other income                                                                        (638)                         -

    Operating Loss                                                                    (1,394)                   (4,797)
    --------------                                                                     ------                     ------

    Other Income / (Expenses)

    Interest and finance costs                                                        (2,022)                   (2,301)

    Loss on derivatives, net                                                             (41)                     (120)

    Interest income                                                                        24                          4

    Equity in net income /(loss) of
     affiliate                                                                            342                       (84)

    Loss on investment in affiliate                                                   (2,852)                   (2,985)

    Foreign currency (loss) / gain                                                       (17)                        61

    Total Other Expenses, net                                                         (4,566)                   (5,425)
    -------------------------                                                          ------                     ------

    Net Loss                                                                          (5,960)                  (10,222)


    Other Comprehensive Income / (Loss)

    Unrealized loss on cash flow hedges                                                  (61)                         -

    Transfer of realized loss on cash
     flow hedges to "Interest and finance
     costs"                                                                                79                          -

    Equity in other comprehensive loss of
     affiliate                                                                              -                       (1)

    Unrealized loss on change in fair
     value of marketable securities                                                     (959)                     (119)

    Transfer of loss on change in fair
     value of marketable securities to                                                    959                         37
    "Loss from marketable securities,
     net"
    ---------------------------------

    Total Other Comprehensive Income /
     (Loss)                                                                                18                       (83)


    Comprehensive Loss                                                                (5,942)                  (10,305)


    Loss per Class A common share, basic
     and diluted                                                                      ($0.34)                   ($0.41)

    Weighted average number of Class A
     common shares, basic and diluted                                              17,162,948                 24,223,745


    Paragon Shipping Inc.

    Unaudited Condensed Consolidated Statements of Comprehensive Loss

    For the years ended December 31, 2013 and 2014

    (Expressed in thousands of United States Dollars - except for shares and share data)
    -----------------------------------------------------------------------------------


                                                                        Year Ended                Year Ended

                                                                    December 31, 2013         December 31, 2014

    Revenue

    Charter revenue                                                                    59,531                     58,138

    Commissions                                                                       (3,274)                   (3,374)

    Net Revenue                                                                        56,257                     54,764
    -----------                                                                        ------                     ------

    Expenses / (Income)

    Voyage expenses, net                                                                6,669                     14,745

    Vessels operating expenses                                                         20,759                     22,666

    Dry-docking expenses                                                                1,698                      2,193

    Management fees - related party                                                     5,874                      6,266

    Depreciation                                                                       16,987                     18,357

    General and administrative expenses                                                10,764                      8,708

    Impairment loss                                                                         -                    15,695

    Bad debt provisions                                                                     -                       131

    Gain from sale of assets                                                                -                     (403)

    Gain from vessel early redelivery                                                 (2,268)                         -

    Loss from contract cancellation                                                       569                          -

    (Gain) /loss from marketable
     securities, net                                                                  (1,202)                        26

    Other (income) / expenses                                                           (638)                       211

    Operating Loss                                                                    (2,955)                  (33,831)
    --------------                                                                     ------                    -------

    Other Income / (Expenses)

    Interest and finance costs                                                        (7,440)                   (9,324)

    Loss on derivatives, net                                                             (95)                     (388)

    Interest income                                                                       531                         21

    Equity in net income of affiliate                                                   1,652                        471

    Loss on investment in affiliate                                                   (8,620)                   (8,840)

    Foreign currency (loss) / gain                                                       (26)                        95

    Total Other Expenses, net                                                        (13,998)                  (17,965)
    -------------------------                                                         -------                    -------

    Net Loss                                                                         (16,953)                  (51,796)


    Other Comprehensive Income / (Loss)

    Unrealized gain on cash flow hedges                                                   131                        131

    Transfer of realized loss on cash
     flow hedges to "Interest and finance
     costs"                                                                               312                         99

    Equity in other comprehensive income
     of affiliate                                                                          77                         16

    Unrealized loss on change in fair
     value of marketable securities                                                   (2,064)                     (163)

    Transfer of loss on change in fair
     value of marketable securities to                                                  1,911                         26
    "(Gain) /loss from marketable
     securities, net"
    -----------------------------

    Total Other Comprehensive Income                                                      367                        109


    Comprehensive Loss                                                               (16,586)                  (51,687)


    Loss per Class A common share, basic
     and diluted                                                                      ($1.31)                   ($2.18)

    Weighted average number of Class A
     common shares, basic and diluted                                              12,639,128                 23,326,062

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SOURCE Paragon Shipping Inc.