ATHENS, Greece, Sept. 1, 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 second quarter and six months ended June 30, 2015.

Second Quarter 2015 Highlights & Recent Developments


    --  Net revenue, net of voyage expenses, of $7.9 million in the second
        quarter of 2015.
    --  Reduced average daily adjusted total vessel operating expenses by 11.1%
        year-over-year.
    --  Adjusted EBITDA of negative $0.6 million in the second quarter of 2015.
    --  Adjusted net loss of $8.1 million, or $0.32 per common share, in the
        second quarter of 2015.
    --  Sale of four vessels of the operating fleet to support the Company's
        liquidity and ensure its sustainability through 2016.

Financial Highlights
(Expressed in thousands of United States Dollars, except for vessel data, TCE and share data)



                  Quarter Ended         Quarter Ended            Six Months                Six Months
                  June 30, 2014         June 30, 2015               Ended                    Ended
                                                                June 30, 2014            June 30, 2015
                                                                -------------            -------------

    Average
     number of
     vessels                       14.0                    16.0                     14.0                      16.0
    ----------                     ----                    ----                     ----                      ----

    Time charter
     equivalent
     rate (TCE)
     (1)                         7,870                   5,494                    8,208                     5,148
    ------------                  -----                   -----                    -----                     -----

    Net Revenue,
     net of
     voyage
     expenses                     9,743                   7,857                   19,994                    14,688
    ------------                  -----                   -----                   ------                    ------

    EBITDA (1)                  (2,158)               (65,465)                (21,210)                 (67,086)
    ---------                    ------                 -------                  -------                   -------

    Adjusted
     EBITDA (1)                     882                   (625)                   1,215                   (2,070)
    -----------                     ---                    ----                    -----                    ------

    Net Loss                    (9,652)               (72,906)                (35,537)                 (81,838)
    --------                     ------                 -------                  -------                   -------

    Adjusted Net
     Loss (1)                   (5,584)                (8,066)                (11,601)                 (16,822)
    ------------                 ------                  ------                  -------                   -------

    Loss per
     common share
     basic and
     diluted                     (0.39)                 (2.93)                  (1.56)                   (3.29)
    -------------                 -----                   -----                    -----                     -----

    Adjusted Loss
     per common
     share basic
     and diluted
     (1)                        (0.23)                 (0.32)                  (0.51)                   (0.68)
    -------------                 -----                   -----                    -----                     -----



              (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: "Although the market has recently started to show signs of a mild recovery, during the second quarter of 2015, charter rates continued to fluctuate close to historically low levels. For the quarter, this translated into an adjusted net loss of $8.1 million, or $0.32 per share. In 2015 year to date, our focus remained on maintaining our efficiency in our operating and cost control performance. As a result, for the six months ended June 30, 2015, we reported a fleet utilization of 99.1% and an average daily adjusted total vessel operating expenses of $5,746, or 11.1% lower year-over-year."

Mr. Bodouroglou continued, "Considering the adverse market conditions, a special committee, formed by the Company's independent directors, decided that it was in the Company's and its shareholders best interest to sell four vessels, namely the M/V Dream Seas, the M/V Gentle Seas, the M/V Peaceful Seas and the M/V Friendly Seas, so as to improve its liquidity. Following such sale that was concluded in July 2015, there has been an immediate cash inflow into the Company of more than $6.0 million representing the net proceeds from the sale after the extinguishment of all existing indebtedness of these four vessels. Also, going forward, it is estimated that there should be additional cash flow savings from this sale given the debt service requirements of these vessels. In addition, in the second quarter of 2015, we sold our share in Box Ships Inc. and in Korea Line Corporation. The total proceeds from the sale of these shares amounted to $3.9 million in the aggregate."

Mr. Bodouroglou concluded, "We remain confident that the market will recover from the prolonged downturn that it is currently facing. Nonetheless, we have taken great strides to ensure the Company's sustainability even if current conditions persist throughout 2016."

Second Quarter 2015 Financial Results
Gross charter revenue for the second quarter of 2015 was $9.9 million, compared to $14.7 million for the second quarter of 2014. The Company reported a net loss of $72.9 million, or $2.93 per basic and diluted share, for the second quarter of 2015, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 24,460,642 and reflecting the impact of the non-cash items discussed below. For the second quarter of 2014, the Company reported a net loss of $9.7 million, or $0.39 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 24,281,164.

Excluding all non-cash items described below, the adjusted net loss for the second quarter of 2015 was $8.1 million, or $0.32 per basic and diluted share, compared to adjusted net loss of $5.6 million, or $0.23 per basic and diluted share, for the second quarter of 2014.

Adjusted EBITDA, excluding all non-cash items described below, was negative $0.6 million for the second quarter of 2015, compared to positive $0.9 million for the second quarter of 2014.

The Company operated an average of 16.0 vessels during the second quarter of 2015, earning an average TCE rate of $5,494 per day, compared to an average of 14.0 vessels during the second quarter of 2014, earning an average TCE rate of $7,870 per day.

Adjusted total vessel operating expenses, which included vessel operating expenses, management fees and general and administrative expenses, and excluded share-based compensation, were $8.4 million for the second quarter of 2015, compared to $8.1 million for the second quarter of 2014. On a daily basis, adjusted total vessel operating expenses for the second quarter of 2015 were approximately $5,781 per vessel per day, or 9.5% lower than the adjusted total vessel operating expenses of $6,388 per vessel per day for the second quarter of 2014. The reduction in the average daily adjusted total vessel operating expenses is the result of the Company's cost control efficiency and the economies of scale of having a larger fleet, as well as of a favorable impact of the Euro / U.S. dollar exchange rate fluctuations.

The loss related to assets held for sale of $47.6 million for the three months ended June 30, 2015, mainly relates to the write down to fair value of the M/V Dream Seas, the M/V Gentle Seas, the M/V Peaceful Seas and the M/V Friendly Seas, following their classification as assets held for sale as of June 30, 2015.

Based on the Company's cash flow projections, it is probable that cash on hand and cash provided by operating activities will not be sufficient to cover the capital expenditures relating to the Company's newbuilding contracts that become due in the twelve-month period ending June 30, 2016. Thus, as of June 30, 2015, the Company assessed as probable the potential sale of the five newbuilding contracts. As a result of this increased probability, the Company recorded an impairment loss of $16.8 million for the three months ended June 30, 2015, which relates to the write down to fair value of the contract price of the five newbuilding drybulk carriers.

In the second quarter of 2015, the Company proceeded with the sale of the total 3,437,500 shares of Box Ships Inc. (NYSE:TEU) ("Box Ships") at an average sale price of $0.8542 per share, which resulted in a loss on investment in affiliates of $0.2 million for the three months ended June 30, 2015. The proceeds from the sale of such shares amounted to $2.9 million.

Furthermore, in the second quarter of 2015, the Company proceeded with the sale of the total 44,550 shares of Korea Line Corporation ("KLC") at an average sale price of $21.68 per share. The total cash received from the sale of these shares amounted to $1.0 million, net of commissions. A loss from marketable securities, net, of $0.1 million was recorded for the three months ended June 30, 2015.

Second Quarter 2015 Non-cash and One-off Items
The Company's results for the three months ended June 30, 2015 included the following non-cash items:


    --  Loss related to assets held for sale of $47.6 million, or $1.91 per
        basic and diluted share.
    --  Impairment loss of $16.8 million, or $0.67 per basic and diluted share.
    --  Loss from marketable securities of $0.1 million or $0.01 per basic and
        diluted share.
    --  Loss on investment in affiliate of $0.2 million or $0.01 per basic and
        diluted share.
    --  Unrealized gain on interest rate swaps of $0.1 million, or less than
        $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 $64.8 million, which represents a $2.61 decrease in earnings per basic and diluted share, for the three months ended June 30, 2015.

Six Months ended June 30, 2015 Financial Results
Gross charter revenue for the six months ended June 30, 2015 was $20.6 million, compared to $28.9 million for the six months ended June 30, 2014. The Company reported a net loss of $81.8 million, or $3.29 per basic and diluted share, for the six months ended June 30, 2015, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 24,460,642 and reflecting the impact of the non-cash items discussed below. For the six months ended June 30, 2014, the Company reported a net loss of $35.5 million, or $1.56 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 22,414,824.

Excluding all non-cash items described below, the adjusted net loss for the six months ended June 30, 2015 was $16.8 million, or $0.68 per basic and diluted share, compared to adjusted net loss of $11.6 million, or $0.51 per basic and diluted share, for the six months ended June 30, 2014.

Adjusted EBITDA, excluding all non-cash items described below, was negative $2.1 million for the six months ended June 30, 2015, compared to positive $1.2 million for the six months ended June 30, 2014.

The Company operated an average of 16.0 vessels during the six months ended June 30, 2015, earning an average TCE rate of $5,148 per day, compared to an average of 14.0 vessels during the six months ended June 30, 2014, earning an average TCE rate of $8,208 per day.

Adjusted total vessel operating expenses, which included vessel operating expenses, management fees and general and administrative expenses, and excluded share-based compensation, were $16.6 million for the six months ended June 30, 2015, compared to $16.3 million for the six months ended June 30, 2014. On a daily basis, adjusted total vessel operating expenses for the six months ended June 30, 2015 were approximately $5,746 per vessel per day, or 11.1% lower than the adjusted total vessel operating expenses of $6,463 per vessel per day for the six months ended June 30, 2014. The reduction in the average daily adjusted total vessel operating expenses is the result of the Company's cost control efficiency and the economies of scale of having a larger fleet, as well as of a favorable impact of the Euro / U.S. dollar exchange rate fluctuations.

The loss related to assets held for sale of $47.6 million for the six months ended June 30, 2015, mainly relates to the write down to fair value of the M/V Dream Seas, the M/V Gentle Seas, the M/V Peaceful Seas and the M/V Friendly Seas, following their classification as assets held for sale as of June 30, 2015.

Based on the Company's cash flow projections, it is probable that cash on hand and cash provided by operating activities will not be sufficient to cover the capital expenditures relating to the Company's newbuilding contracts that become due in the twelve-month period ending June 30, 2016. Thus, as of June 30, 2015, the Company assessed as probable the potential sale of the five newbuilding contracts. As a result of this increased probability, the Company recorded an impairment loss of $16.8 million for the six months ended June 30, 2015, which relates to the write down to fair value of the contract price of the five newbuilding drybulk carriers.

In the second quarter of 2015, the Company proceeded with the sale of the total 3,437,500 shares of Box Ships Inc. (NYSE:TEU) ("Box Ships") at an average sale price of $0.8542 per share, which resulted in a loss on investment in affiliates of $0.2 million for the six months ended June 30, 2015. The proceeds from the sale of such shares amounted to $2.9 million.

Furthermore, in the second quarter of 2015, the Company proceeded with the sale of the total 44,550 shares of Korea Line Corporation ("KLC") at an average sale price of $21.68 per share. The total cash received from the sale of these shares amounted to $1.0 million, net of commissions. A loss from marketable securities, net, of $0.1 million was recorded for the six months ended June 30, 2015.

Six Months ended June 30, 2015 Non-cash and One-off Items
The Company's results for the six months ended June 30, 2015 included the following non-cash items:


    --  Loss related to assets held for sale of $47.6 million, or $1.91 per
        basic and diluted share.
    --  Impairment loss of $16.8 million, or $0.67 per basic and diluted share.
    --  Loss from marketable securities of $0.1 million or $0.01 per basic and
        diluted share.
    --  Loss on investment in affiliate of $0.2 million or $0.01 per basic and
        diluted share.
    --  Unrealized gain on interest rate swaps of $0.2 million, or less than
        $0.01 per basic and diluted share.
    --  Non-cash expenses of $0.5 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 $65.0 million, which represents a $2.61 decrease in earnings per basic and diluted share, for the six months ended June 30, 2015.

Cash Flows
For the six months ended June 30, 2015, the Company's net cash used in operating activities was $2.7 million, compared to $0.3 million for the six months ended June 30, 2014. For the six months ended June 30, 2015, net cash from investing activities was $11.4 million and net cash used in financing activities was $11.5 million. For the six months ended June 30, 2014, net cash used in investing activities was $63.9 million and net cash from financing activities was $55.2 million.

Fleet Developments
On June 25, 2015, a special committee consisting of the Company's five independent directors ("Special Committee") was assigned to investigate the potential block sale of four vessels of the Company's operating fleet, the M/V Dream Seas, the M/V Gentle Seas, the M/V Peaceful Seas and the M/V Friendly Seas, for the purpose of improving the Company's liquidity. The Special Committee determined it to be in the best interest of the Company and its shareholders to sell the vessel-owning subsidiaries of these vessels to an entity controlled by Mr. Michael Bodouroglou, the Company's Chairman, President, Chief Executive Officer and Interim Chief Financial Officer. In July 2015, the Special Committee and Mr. Bodouroglou agreed to an aggregate sale price of $63.2 million for the sale of all of the issued and registered shares of the respective vessel-owning subsidiaries. The Special Committee determined that the purchase price represented fair market value for the assets to be sold, based on vessel valuations received from independent shipbrokers. The sale and transfer of the respective vessel-owning subsidiaries were concluded on July 27, 2015.

Financing Update
On July 31, 2015, the Company entered into a loan supplemental agreement and agreed, subject to certain conditions included therein, to amended terms with the syndicate led by Nordea Bank Finland Plc, including the deferral of one and a portion of two of its scheduled quarterly installments due in the third quarter of 2015 through the first quarter of 2016. The deferred amounts will be settled along with the balloon installment. The Company also agreed to cancel the available borrowing capacity of up to $78.0 million with respect to the undrawn portion of the facility for the partial financing of its outstanding newbuilding contracts. In addition, effective from April 1, 2015 until March 31, 2016, the syndicate agreed to either waive the application or amend the definition of the financial and security cover ratio covenants contained in the respective facility.

On July 27, 2015, following the sale of all of the issued and registered shares of the vessel-owning subsidiaries of the M/V Dream Seas, M/V Gentle Seas, M/V Peaceful Seas and M/V Friendly Seas to an entity controlled by Mr. Michael Bodouroglou as discussed above, the Company proceeded with the extinguishment of the then outstanding indebtedness with HSBC Bank Plc and HSH Nordbank AG, amounting to $56.4 million in the aggregate.

Newbuilding Contracts Update
Currently, the Company's outstanding newbuilding contracts consist of two Ultramax drybulk carriers, with expected deliveries between the third and fourth quarter of 2015, and three Kamsarmax drybulk carriers with expected deliveries in the first quarter of 2016. The aggregate cost of the newbuilding contracts is $148.2 million, of which $101.7 million is currently outstanding.

Based on the Company's cash flow projections, cash on hand and cash provided by operating activities will not be sufficient to cover the capital expenditures relating to the Company's newbuilding contracts that become due in the twelve-month period ending June 30, 2016. Thus, as of June 30, 2015, the Company assessed as probable the potential sale of the five newbuilding contracts. As a result of this increased probability, an impairment loss of $16.8 million was recorded in the second quarter of 2015.

Conference Call and Webcast details
The Company's management team will host a conference call to discuss its results for the second quarter and six months ended June 30, 2015 on September 2, 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 10070880.

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 DresnerAllenCaron 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 twelve drybulk vessels with a total carrying capacity of 719,769 dwt. In addition, Paragon Shipping's current newbuilding contracts consist of two Ultramax and three Kamsarmax drybulk carriers that are scheduled to be delivered from the third quarter of 2015 through the first quarter of 2016. 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

DresnerAllenCaron
Rudy Barrio (Investors)
r.barrio@allencaron.com
(212) 691-8087

- 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 September 1, 2015.



     Operating
     Drybulk
     Fleet

    Name                                       Type / No. of Vessels     Dwt             Year Built
    ----                                       ---------------------     ---             ----------

    Panamax
    -------

     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                                                           7     517,140
     -------                                                         ---     -------

    Supramax
    --------

     Sapphire
     Seas                                            Supramax                53,702                    2005
     --------                                        --------                ------                    ----

     Total
     Supramax                                                          1      53,702
     --------                                                        ---      ------

    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                                                            12     719,769
     -----                                                           ---     -------



    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        Q4 2015
     ------                                          --------                ------        -------

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

    Kamsarmax
    ---------

     Hull
     no.
     YZJ1144                                         Kamsarmax               81,800        Q1 2016
     -------                                         ---------               ------        -------

     Hull
     no.
     YZJ1145                                         Kamsarmax               81,800        Q1 2016
     -------                                         ---------               ------        -------

     Hull
     no.
     YZJ1142                                         Kamsarmax               81,800        Q1 2016
     -------                                         ---------               ------        -------

     Total
     Kamsarmax                                                         3     245,400
     ---------                                                       ---     -------

     Grand
     Total                                                             5     372,400
     -----                                                           ---     -------





    Summary Fleet Data

    (Expressed in United States Dollars where applicable)


                                                        Quarter Ended        Quarter Ended        Six Months Ended         Six Months Ended
                                                        June 30, 2014        June 30, 2015         June 30, 2014            June 30, 2015
                                                        -------------        -------------         -------------            -------------

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

    Average number of
     vessels (1)                                                        14.0                 16.0                     14.0                      16.0
    -----------------                                                   ----                 ----                     ----                      ----

    Calendar days for
     fleet (2)                                                         1,274                1,456                    2,528                     2,896
    -----------------                                                  -----                -----                    -----                     -----

    Available days for
     fleet (3)                                                         1,256                1,450                    2,467                     2,878
    ------------------                                                 -----                -----                    -----                     -----

    Operating days for
     fleet (4)                                                         1,238                1,430                    2,436                     2,853
    ------------------                                                 -----                -----                    -----                     -----

    Fleet utilization (5)                                              98.6%               98.6%                   98.7%                    99.1%
    --------------------                                                ----                 ----                     ----                      ----

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

    Time charter
     equivalent (6)                                                    7,870                5,494                    8,208                     5,148
    ---------------                                                    -----                -----                    -----                     -----

    Vessel operating
     expenses (7)                                                      4,211                4,064                    4,236                     4,015
    ----------------                                                   -----                -----                    -----                     -----

    Management fees -
     related party
     adjusted (8)                                                      1,060                  867                    1,058                       880
    -----------------                                                  -----                  ---                    -----                       ---

    General and
     administrative
     expenses adjusted
     (9)                                                              1,117                  850                    1,169                       851
    ------------------                                                 -----                  ---                    -----                       ---

    Total vessel
     operating expenses
     adjusted (10)                                                     6,388                5,781                    6,463                     5,746
    -------------------                                                -----                -----                    -----                     -----



                (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 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.

                (9)    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.

               (10)    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,
                        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           Six Months              Six Months
                                                                                                                   Ended                   Ended
                                                         June 30, 2014                 June 30, 2015          June 30, 2014           June 30, 2015
                                                         -------------                 -------------          -------------           -------------

    Charter Revenue                                                         14,666                      9,945                  28,903                   20,630
    ---------------                                                         ------                      -----                  ------                   ------

    Commissions                                                              (842)                     (599)                (1,650)                 (1,250)
    -----------                                                               ----                       ----                  ------                   ------

    Voyage Expenses, net                                                   (4,081)                   (1,489)                (7,259)                 (4,692)
    --------------------                                                    ------                     ------                  ------                   ------

    Net Revenue, net of
     voyage expenses                                                         9,743                      7,857                  19,994                   14,688
    -------------------                                                      -----                      -----                  ------                   ------

    Total operating days                                                     1,238                      1,430                   2,436                    2,853
    --------------------                                                     -----                      -----                   -----                    -----

    Time Charter
     Equivalent                                                              7,870                      5,494                   8,208                    5,148
    ------------                                                             -----                      -----                   -----                    -----


    Condensed Cash Flow Information (Unaudited)

    (Expressed in thousands of United States Dollars)


                                                  Six Months Ended          Six Months Ended

                                                   June 30, 2014             June 30, 2015
                                                   -------------             -------------

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

     Operating
     Activities                                                       (341)                  (2,670)
     ----------                                                        ----                    ------

     Investing
     Activities                                                    (63,927)                   11,382
     ----------                                                     -------                    ------

     Financing
     Activities                                                      55,169                  (11,526)
     ----------                                                      ------                   -------




    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              Six Months                  Six Months
                                                         June 30, 2014                  June 30, 2015                 Ended                      Ended
                                                                                                                June 30, 2014              June 30, 2015
                                                                                                           ---    -------------              -------------

    Net Loss                                                               (9,652)                    (72,906)                  (35,537)                   (81,838)
    --------                                                                ------                      -------                    -------                     -------

    Plus Net interest
     expense, including
     interest expense from
     interest rate swaps                                                     3,009                        2,457                      5,415                       4,841
    ----------------------                                                   -----                        -----                      -----                       -----

    Plus Depreciation                                                        4,485                        4,984                      8,912                       9,911
    -----------------                                                        -----                        -----                      -----                       -----

    EBITDA                                                                 (2,158)                    (65,465)                  (21,210)                   (67,086)
    ------                                                                  ------                      -------                    -------                     -------

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

    Net Loss                                                               (9,652)                    (72,906)                  (35,537)                   (81,838)
    --------                                                                ------                      -------                    -------                     -------

    Loss related to assets
     held for sale                                                               -                      47,640                          -                     47,640
    ----------------------                                                     ---                      ------                        ---                     ------

    Impairment loss                                                              -                      16,754                     15,695                      16,754
    ---------------                                                            ---                      ------                     ------                      ------

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

    (Gain) /loss from
     marketable securities                                                    (12)                         134                       (12)                        134
    ----------------------                                                     ---                          ---                        ---                         ---

    Loss on investment in
     affiliate                                                               3,101                          207                      5,855                         207
    ---------------------                                                    -----                          ---                      -----                         ---

    Unrealized loss /
     (gain) on interest
     rate swaps                                                                108                        (150)                      (69)                      (210)
    -------------------                                                        ---                         ----                        ---                        ----

    Non-cash expenses
     from the amortization
     of share based
     compensation cost
     recognized and share
     based compensation to
     the management
     company                                                                   246                          255                      1,359                         491
    ----------------------                                                     ---                          ---                      -----                         ---

    Write off of financing
     expenses                                                                1,028                            -                     1,511                           -
    ----------------------                                                   -----                          ---                     -----                         ---

    Adjusted Net Loss                                                      (5,584)                     (8,066)                  (11,601)                   (16,822)
    -----------------                                                       ------                       ------                    -------                     -------

    Plus Net interest
     expense, net of write
     off of financing
     expenses, including
     interest expense from
     swaps                                                                   1,981                        2,457                      3,904                       4,841
    ----------------------                                                   -----                        -----                      -----                       -----

    Plus Depreciation                                                        4,485                        4,984                      8,912                       9,911
    -----------------                                                        -----                        -----                      -----                       -----

    Adjusted EBITDA                                                            882                        (625)                     1,215                     (2,070)
    ---------------                                                            ---                         ----                      -----                      ------



              (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               Six Months                  Six Months
                                                         June 30, 2014                          June 30, 2015                  Ended                      Ended
                                                                                                                         June 30, 2014              June 30, 2015
    ---                                                                                                             ---    -------------              -------------

    Net Loss                                                               (9,652)                             (72,906)                  (35,537)                   (81,838)
    --------                                                                ------                               -------                    -------                     -------

    Net Loss attributable
     to non-vested share
     awards                                                                  (133)                              (1,313)                     (571)                    (1,363)
    ---------------------                                                     ----                                ------                       ----                      ------

    Net Loss available to
     common shareholders                                                   (9,519)                             (71,593)                  (34,966)                   (80,475)
    ---------------------                                                   ------                               -------                    -------                     -------

    Weighted average
     number of common
     shares basic and
     diluted                                                            24,281,164                            24,460,642                 22,414,824                  24,460,642
    -----------------                                                   ----------                            ----------                 ----------                  ----------

    Loss per common share
     basic and diluted                                                      (0.39)                               (2.93)                    (1.56)                     (3.29)
    ---------------------                                                    -----                                 -----                      -----                       -----

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

    Net Loss                                                               (9,652)                             (72,906)                  (35,537)                   (81,838)
    --------                                                                ------                               -------                    -------                     -------

    Loss related to assets
     held for sale                                                               -                               47,640                          -                     47,640
    ----------------------                                                     ---                               ------                        ---                     ------

    Impairment loss                                                              -                               16,754                     15,695                      16,754
    ---------------                                                            ---                               ------                     ------                      ------

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

    (Gain) /loss from
     marketable securities                                                    (12)                                  134                       (12)                        134
    ----------------------                                                     ---                                   ---                        ---                         ---

    Loss on investment in
     affiliate                                                               3,101                                   207                      5,855                         207
    ---------------------                                                    -----                                   ---                      -----                         ---

    Unrealized loss /
     (gain) on interest
     rate swaps                                                                108                                 (150)                      (69)                      (210)
    -------------------                                                        ---                                  ----                        ---                        ----

    Non-cash expenses
     from the amortization
     of share based
     compensation cost
     recognized and share
     based compensation to
     the management
     company                                                                   246                                   255                      1,359                         491
    ----------------------                                                     ---                                   ---                      -----                         ---

    Write off of financing
     expenses                                                                1,028                                     -                     1,511                           -
    ----------------------                                                   -----                                   ---                     -----                         ---

    Adjusted Net Loss (1)                                                  (5,584)                              (8,066)                  (11,601)                   (16,822)
    --------------------                                                    ------                                ------                    -------                     -------

    Adjusted Net Loss
     attributable to non-
     vested share awards                                                      (77)                                (145)                     (186)                      (280)
    ---------------------                                                      ---                                  ----                       ----                        ----

    Adjusted Net Loss
     available to common
     shareholders                                                          (5,507)                              (7,921)                  (11,415)                   (16,542)
    --------------------                                                    ------                                ------                    -------                     -------

    Weighted average
     number of common
     shares basic and
     diluted                                                            24,281,164                            24,460,642                 22,414,824                  24,460,642
    -----------------                                                   ----------                            ----------                 ----------                  ----------

    Adjusted Loss per
     common share basic
     and diluted (1)                                                        (0.23)                               (0.32)                    (0.51)                     (0.68)
    -------------------                                                      -----                                 -----                      -----                       -----



              (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, 2014 and June 30, 2015

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


                                                      December 31, 2014       June 30, 2015

    Assets


    Cash and restricted
     cash (current and
     non-current)                                                      20,920                8,227

    Assets held for sale                                                    -              62,568

    Vessels, net                                                      369,033              249,395

    Advances for vessels
     under construction                                                49,972               35,299

    Other fixed assets,
     net                                                                  923                  795

    Investment in
     affiliate                                                          2,956                    -

    Other assets                                                       12,800                9,026


    Total Assets                                                      456,604              365,310
    ------------                                                      -------              -------


    Liabilities and
     Shareholders'
     Equity


    Liabilities
     associated with
     assets held for
     sale                                                                   -              58,998

    Long-term debt, net
     of deferred
     financing costs
     (including current
     portion)                                                         226,418              156,787

    Other liabilities                                                   7,786                8,321

    Total shareholders'
     equity                                                           222,400              141,204


    Total Liabilities
     and Shareholders'
     Equity                                                           456,604              365,310
    ------------------                                                -------              -------



    Paragon Shipping Inc.

    Unaudited Condensed Consolidated Statements of Comprehensive Loss

    For the three months ended June 30, 2014 and 2015

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


                                                                   Three Months Ended         Three Months Ended

                                                                     June 30, 2014              June 30, 2015

    Revenue

    Charter revenue                                                                    14,666                       9,945

    Commissions                                                                         (842)                      (599)

    Net Revenue                                                                        13,824                       9,346
    -----------                                                                        ------                       -----

    Expenses / (Income)

    Voyage expenses, net                                                                4,081                       1,489

    Vessels operating expenses                                                          5,365                       5,918

    Dry-docking expenses                                                                  716                          68

    Management fees - related party                                                     1,350                       1,263

    Depreciation                                                                        4,485                       4,984

    General and administrative expenses                                                 1,669                       1,492

    Loss related to assets held for
     sale                                                                                   -                     47,640

    Impairment loss                                                                         -                     16,754

    Bad debt provisions                                                                    15                        (11)

    Gain from sale of assets                                                            (403)                          -

    (Gain) /loss from marketable
     securities, net                                                                     (12)                        134

    Operating Loss                                                                    (3,442)                   (70,385)
    --------------                                                                     ------                     -------

    Other Income / (Expenses)

    Interest and finance costs                                                        (2,812)                    (2,265)

    Loss on derivatives, net                                                            (310)                       (43)

    Interest income                                                                         5                           1

    Equity in net income /(loss) of
     affiliate                                                                             18                         (1)

    Loss on investment in affiliate                                                   (3,101)                      (207)

    Foreign currency loss                                                                (10)                        (6)

    Total Other Expenses, net                                                         (6,210)                    (2,521)
    -------------------------                                                          ------                      ------

    Net Loss                                                                          (9,652)                   (72,906)


    Other Comprehensive Income / (Loss)

    Unrealized gain on cash flow hedges                                                   144                           -

    Transfer of realized loss on cash
     flow hedges to "Interest and
     finance costs"                                                                        22                           -

    Equity in other comprehensive
     (loss) /income of affiliate                                                         (10)                          6

    Transfer of equity in other
     comprehensive loss of affiliate to                                                     -                         14
    "Loss on investment in affiliate"

    Unrealized gain on change in fair
     value of marketable securities                                                       183                          47

    Transfer of (gain) /loss on change
     in fair value of marketable
     securities to                                                                       (12)                        134
    "(Gain) /loss from marketable
     securities, net"
    -----------------------------

    Total Other Comprehensive Income                                                      327                         201


    Comprehensive Loss                                                                (9,325)                   (72,705)


    Loss per Class A common share,
     basic and diluted                                                                ($0.39)                    ($2.93)

    Weighted average number of Class A
     common shares, basic and diluted                                              24,281,164                  24,460,642



    Paragon Shipping Inc.

    Unaudited Condensed Consolidated Statements of Comprehensive Loss

    For the six months ended June 30, 2014 and 2015

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


                                                                    Six Months Ended          Six Months Ended

                                                                     June 30, 2014             June 30, 2015

    Revenue

    Charter revenue                                                                    28,903                     20,630

    Commissions                                                                       (1,650)                   (1,250)

    Net Revenue                                                                        27,253                     19,380
    -----------                                                                        ------                     ------

    Expenses / (Income)

    Voyage expenses, net                                                                7,259                      4,692

    Vessels operating expenses                                                         10,710                     11,628

    Dry-docking expenses                                                                2,193                        351

    Management fees - related party                                                     3,554                      2,549

    Depreciation                                                                        8,912                      9,911

    General and administrative expenses                                                 3,434                      2,956

    Loss related to assets held for
     sale                                                                                   -                    47,640

    Impairment loss                                                                    15,695                     16,754

    Bad debt provisions                                                                    15                         16

    Gain from sale of assets                                                            (403)                         -

    (Gain) /loss from marketable
     securities, net                                                                     (12)                       134

    Other income                                                                         (40)                         -

    Operating Loss                                                                   (24,064)                  (77,251)
    --------------                                                                    -------                    -------

    Other Income / (Expenses)

    Interest and finance costs                                                        (5,022)                   (4,435)

    Loss on derivatives, net                                                            (336)                     (199)

    Interest income                                                                        12                          3

    Equity in net (loss) /income of
     affiliate                                                                          (258)                       173

    Loss on investment in affiliate                                                   (5,855)                     (207)

    Foreign currency (loss) / gain                                                       (14)                        78

    Total Other Expenses, net                                                        (11,473)                   (4,587)
    -------------------------                                                         -------                     ------

    Net Loss                                                                         (35,537)                  (81,838)


    Other Comprehensive Income / (Loss)

    Unrealized gain on cash flow hedges                                                   131                          -

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

    Equity in other comprehensive loss
     of affiliate                                                                         (5)                         -

    Transfer of equity in other
     comprehensive loss of affiliate to                                                     -                        14
    "Loss on investment in affiliate"

    Unrealized (loss) /gain on change
     in fair value of marketable
     securities                                                                          (69)                         3

    Transfer of (gain) /loss on change
     in fair value of marketable
     securities to                                                                       (12)                       134
    "(Gain) /loss from marketable
     securities, net"
    -----------------------------

    Total Other Comprehensive Income                                                      144                        151


    Comprehensive Loss                                                               (35,393)                  (81,687)


    Loss per Class A common share,
     basic and diluted                                                                ($1.56)                   ($3.29)

    Weighted average number of Class A
     common shares, basic and diluted                                              22,414,824                 24,460,642

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SOURCE Paragon Shipping Inc.