March 23, 2016 - 8:46 AM EDT
Print Email Article Font Down Font Up
PANGAEA LOGISTICS SOLUTIONS LTD. - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with our consolidated financial statements and footnotes thereto contained in this report.

Forward Looking Statements

All statements other than statements of historical fact included in this Form
10-K including, without limitation, statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward looking statements. When used in this Form
10-K, words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or our management, identify forward
looking statements. Such forward looking statements are based on the beliefs of
management, as well as assumptions made by, and information currently available
to, our management. Actual results could differ materially from those
contemplated by the forward looking statements as a result of the risk factors
and other factors detailed in our filings with the Securities and Exchange
Commission, including the risk factors set forth in Part I, Item 1A, above. All
subsequent written or oral forward looking statements attributable to us or
persons acting on our behalf are qualified in their entirety by this paragraph.

Overview

Critical Accounting Policies

The discussion and analysis of the Company's financial condition and results of
operations is based upon the Company's consolidated financial statements, which
have been prepared in accordance with 
U.S.
 GAAP. The preparation of those
financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues, expenses and
related disclosure of contingent assets and liabilities at the date of its
financial statements. Actual results may differ from these estimates under
different assumptions and conditions. Significant estimates include the
establishment of the allowance for doubtful accounts and the estimate of salvage
value used in determining vessel depreciation expense.

Critical accounting policies are those that reflect significant judgments or
uncertainties and potentially result in materially different results under
different assumptions and conditions. The critical accounting policies are
revenue recognition, deferred revenue, allowance for doubtful accounts, vessels
and depreciation and long-lived assets impairment considerations.

Revenue Recognition. Voyage revenues represent revenues earned by the Company,
principally from voyage charters. A voyage charter involves the carriage of a
specific amount and type of cargo on a load port to discharge port basis,
subject to various cargo handling terms. Under a voyage charter, the revenues
are earned and recognized ratably over the duration of the voyage. Estimated
losses under a voyage charter are provided for in full at the time such losses
become probable. Demurrage, which is included in voyage revenues, represents
payments by the charterer to the vessel owner when loading and discharging time
exceed the stipulated time in the voyage charter. Demurrage is measured in
accordance with the provisions of the respective charter agreements and the
circumstances under which demurrage revenues arise, and is also earned and
recognized ratably over the duration of the voyage to which it pertains. Voyage
revenue recognized is presented net of address commissions.

Charter revenues relate to a time charter arrangement under which the Company is
paid charter hire on a per day basis for a specified period of time. Revenues
from time charters are earned and recognized on a straight-line basis over the
term of the charter, as the vessel operates under the charter. Revenue is not
earned when vessels are offhire.

Deferred Revenue. Billings for services for which revenue is not recognized in
the current period are recorded as deferred revenue. All deferred revenue
recognized in the accompanying consolidated balance sheets is expected to be
realized within 12 months of the balance sheet date.

Allowance for Doubtful Accounts. The Company provides a specific reserve for
significant outstanding accounts that are considered potentially uncollectible
in whole or in part. In addition, the Company establishes a reserve equal to
approximately 25% of accounts receivable balances that are 30 - 180 days past
due and approximately 50% of accounts receivable balances that are 180 or more
days past due, and which are not otherwise reserved. The reserve estimates are
adjusted as additional information becomes available, or as payments are made.

Vessels and Depreciation. Vessels are stated at cost, which includes contract
price and acquisition costs. Significant betterments to vessels are capitalized;
maintenance and repairs that do not improve or extend the lives of the vessels
are expensed as incurred.

                                       43
--------------------------------------------------------------------------------


Depreciation is provided using the straight-line method over the remaining
estimated useful lives of the vessels based on cost less salvage value. Each
vessel's salvage value is equal to the product of its lightweight tonnage and an
estimated scrap rate of $375 per lightweight ton which was determined by
reference to quoted rates and is reviewed annually. The Company estimates the
useful life of its vessels to be 25 years to 30 years from the date of initial
delivery from the shipyard. The remaining estimated useful lives of the current
fleet are 4 - 25 years. The Company does not incur depreciation expense when
vessels are taken out of service for drydocking.

Drydocking Expenses and Amortization. Significant upgrades made to the vessels
during drydocking are capitalized when incurred and amortized on a straight-line
basis over the five year period until the next drydocking. Costs capitalized as
part of the drydocking include direct costs incurred to meet regulatory
requirements that add economic life to the vessel, that increase the vessel's
earnings capacity or which improve the vessel's efficiency. Direct costs include
the shipyard costs, parts, inspection fees, steel, blasting and painting.
Expenditures for normal maintenance and repairs, whether incurred as part of the
drydocking or not, are expensed as incurred. Unamortized drydocking costs of
vessels that are sold are written off and included in the calculation of the
resulting gain or loss on sale.

Long-lived Assets Impairment Considerations. The carrying values of the
Company's vessels may not represent their fair market value or the amount that
could be obtained by selling the vessel at any point in time because the market
prices of second-hand vessels tend to fluctuate with changes in charter rates
and the pricing of new vessels. Historically, both charter rates and vessel
values tend to be cyclical. The carrying value of each group of vessels
(allocated by size, age and major characteristic or trade), which are classified
as held and used by the Company, are reviewed for potential impairment when
events or changes in circumstances indicate that the carrying value of a
particular group may not be fully recoverable. In such instances, an impairment
charge would be recognized if the estimate of the undiscounted future cash flows
expected to result from the use of the group and its eventual disposition is
less than its carrying value. This assessment is made at the group level, which
represents the lowest level for which identifiable cash flows are largely
independent of other groups of assets. The asset groups established by the
Company are defined by vessel size and major characteristic or trade.

The significant factors and assumptions used in the undiscounted projected net
operating cash flow analysis include the Company's estimate of future TCE rates
based on current rates under existing charters and contracts or an index TCE
rate applicable to the size of the ship. When existing contracts expire, the
Company uses an estimated TCE based on actual results and extends these rates
out to the end of the vessel's useful life. TCE rates can be highly volatile,
may affect the fair value of the Company's vessels and may have a significant
impact on the Company's ability to recover the carrying amount of its fleet.
Accordingly, the volatility is contemplated in the undiscounted projected net
operating cash flow by using a sensitivity analysis based on percent changes in
the TCE rates. The Company prepares a series of scenarios in an attempt to
capture the range of possible trends and outcomes. For example, in the event
that TCE rates over the estimated useful lives of the entire fleet are 10% lower
than expected, the impact on the total undiscounted projected net operating cash
flow would be a decrease of 22%. Projected net operating cash flows are net of
brokerage and address commissions and assume no revenue on scheduled offhire
days. The Company uses the current vessel operating expense budget, estimated
costs of drydocking and historical general and administrative expenses as the
basis for its expected outflows, and applies an inflation factor it considers
appropriate. The net of these inflows and outflows, plus an estimated salvage
value, constitutes the projected undiscounted future cash flows. If these
projected cash flows do not exceed the carrying value of the asset group, an
impairment charge would be recognized.

At December 31, 2015 and 2014, the Company identified a potential impairment
indicator by reference to industry-wide estimated market values of its vessel
groups. As a result, the Company evaluated each group for impairment by
estimating the total undiscounted cash flows expected to result from the use of
the group and its eventual disposal.

At December 31, 2105, the carrying amount of the m/v Nordic Barents and m/v
Nordic Bothnia were determined to be higher than their estimated undiscounted
future cash flows because estimated TCE rates anticipated in the analysis have
declined. The decrease in TCE rates is due to the fact that these vessels are
older and are not preferable in a weakening market where there is an oversupply
of newer tonnage. As a result, a loss on impairment of these vessels totaling
approximately $5.4 million is included in the consolidated statements of
operations.

At December 31, 2014, the carrying amount of the m/v Bulk Discovery was
determined to be higher than its estimated undiscounted future cash flows
because of the higher than expected estimate of upcoming drydocking costs. At
December 31, 2014, the carrying amount of the m/v Nordic Barents and m/v Nordic
Bothnia were determined to be higher than their estimated undiscounted future
cash flows because the TCE rates anticipated in the Company's annual budget for
2015, which were used to calculate such cash flows, were lower than the rates
forecasted as of the third quarter due to deteriorated market conditions in the
fourth quarter. As a result, a loss on impairment of approximately $10.0 million
is included in the consolidated statements of operations for the year ended
December 31, 2014. In addition, the Company sold the m/v Bulk Cajun in February
2015. A loss on

                                       44
--------------------------------------------------------------------------------

impairment of approximately $1.5 million was included in the consolidated statements of operations for the year ended December 31, 2014 because the vessel was sold for its scrap value, which was less than its carrying amount.

The table set forth below indicates the purchase price of the Company's vessels and the carrying value of each vessel as of December 31, 2015.

(In thousands of

U.S.
dollars)

Carrying

Vessel Name Date Acquired Size Purchase Price Value m/v Nordic Orion April 2012 PMX-1A $ 32,363 $ 29,243 m/v Nordic Odyssey April 2012 PMX-1A

             32,691       

28,537

m/v Nordic Oshima    September 2014   PMX-1A             33,709       

32,540

m/v Nordic Odin      February 2015    PMX-1A             32,625       

32,972

m/v Nordic Olympic   February 2015    PMX-1A             32,600       32,781
m/v Bulk Pangaea     December 2009    PMX                26,500       19,556
m/v Bulk Patriot     October 2011     PMX                15,350       13,733
m/v Bulk Juliana     April 2012       SMX                14,750       13,096
m/v Bulk Trident     September 2012   SMX                17,010       15,697
m/v Bulk Beothuk     February 2013    SMX                14,197       12,653
m/v Bulk Newport     September 2013   SMX                15,546       14,109
m/v Nordic Bothnia   January 2014     HMX-1A              7,640        

3,700

m/v Nordic Barents   March 2014       HMX-1A              7,640        3,700
Total                                          $        239,556    $ 252,317



The table set forth below indicates the total cost of the Company's newbuildings
on order. As of December 31, 2015, the Company made deposit payments of $42.5
million for the purchase of these newbuildings.

(In thousands of

U.S.
dollars)

Carrying

Vessel Name            Date Acquired   Size      Purchase Price      Value
m/v Nordic Oasis (1)   January 2016    PMX-1A             32,600         N/A
Newbuild 5(2)          Q1 2017         UMX-1C             28,950         N/A
Newbuild 6(2)          Q1 2017         UMX-1C             28,950         N/A
Total                                           $        155,725         N/A


(1) The m/v Nordic Oasis was delivered to the Company on January 5, 2016.

(2) The name of the vessel will be determined at the delivery date.

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

Use of Estimates The preparation of financial statements in conformity with 
U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of expenses during the reporting period. Actual results could differ from those
estimates.

Recent Accounting Pronouncements

In April 2015, the FASB issued an update Accounting Standards Update for
Presentation of Debt Issuance Costs. The amendments are intended to simplify the
presentation of debt issuance costs. These amendments require that debt issuance
costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. The recognition and measurement guidance for
debt issuance costs are not affected by the amendments in this ASU. The new
standard is effective for interim and annual reporting periods in fiscal years
that begin after December 15, 2015 and earlier adoption is permitted. The
Company adopted this guidance for the year ended December 31, 2015, and
retroactively applied this guidance for the year ended December 31, 2014. Such
application did not have a material impact on its consolidated financial
statements.

                                       45
--------------------------------------------------------------------------------



In May 2014, the FASB issued an update Accounting Standards Update for Revenue
from Contracts with Customers. The core principle of the guidance is that an
entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The new
standard is effective for interim and annual reporting periods in fiscal years
that begin after December 15, 2018. The Company is evaluating the impact of the
adoption of this guidance to determine whether or not it has a material impact
on its consolidated financial statements.

In August 2014, the FASB issued an Accounting Standards Update for Disclosure of
Uncertainties about an Entity's Ability to Continue as a Going Concern. Under
this new guidance, if conditions or events raise substantial doubt about an
entity's ability to continue as a going concern, but the substantial doubt is
alleviated as a result of consideration of management's plans, the entity should
disclose information that enables users of the financial statements to
understand all of the following:

a. Principal conditions or events that raised substantial doubt about the

entity's ability to continue as a going concern (before consideration of

       management's plans)


b. Management's evaluation of the significance of those conditions or events

       in relation to the entity's ability to meet its obligations


c. Management's plans that alleviated substantial doubt about the entity's

ability to continue as a going concern.

The new standard is effective for annual periods ending after December 15, 2016. The Company does not expect a material impact on its consolidated financial statements as a result of the adoption of this standard.

Important Financial and Operational Terms and Concepts

The Company uses a variety of financial and operational terms and concepts when analyzing its performance.

These include revenue recognition, deferred revenue, allowance for doubtful accounts, vessels and depreciation and long-lived assets impairment considerations, as defined above as well as the following:

Voyage Expenses. The Company incurs expenses for voyage charters, including bunkers (fuel), port charges, canal tolls, brokerage commissions and cargo handling operations, which are expensed as incurred.

Charter Expenses. The Company charters in vessels to supplement its owned fleet
to support its voyage charter operations. The Company hires vessels under time
charters with third party vessel owners, and recognizes the charter hire
payments as an expense on a straight-line basis over the term of the charter.
Charter hire payments are typically made in advance, and the unrecognized
portion is reflected as advance hire in the accompanying consolidated balance
sheets. Under the time charters, the vessel owner is responsible for the vessel
operating costs such as crews, maintenance and repairs, insurance, and stores.

Vessel Operating Expenses. Vessel operating expenses represent the cost to
operate the Company's owned vessels. Vessel operating expenses include crew hire
and related costs, the cost of insurance, expenses relating to repairs and
maintenance, the cost of spares and consumable stores, tonnage taxes, other
miscellaneous expenses, and technical management fees. These expenses are
recognized as incurred. Technical management services include day-to-day vessel
operations, performing general vessel maintenance, ensuring regulatory and
classification society compliance, arranging the hire of crew, and purchasing
stores, supplies, and spare parts.

Fleet Data. The Company believes that the measures for analyzing future trends in its results of operations consist of the following:

• Shipping days. The Company defines shipping days as the aggregate number of
days in a period during which its owned or chartered-in vessels are performing
either a voyage charter (voyage days) or a time charter (time charter days).

• Daily vessel operating expenses. The Company defines daily vessel operating
expenses as vessel operating expenses divided by ownership days for the period.
Vessel operating expenses include crew hire and related costs, the cost of
insurance, expenses relating to repairs and maintenance, the costs of spares and
consumable stores, tonnage taxes, other miscellaneous expenses, and technical
management fees.

• Chartered in days. The Company defines chartered in days as the aggregate
number of days in a period during which it chartered in vessels from third party
vessel owners.

                                       46
--------------------------------------------------------------------------------



• Time Charter Equivalent ''TCE'' rates. The Company defines TCE rates as total
revenues less voyage expenses divided by the length of the voyage, which is
consistent with industry standards. TCE rate is a common shipping industry
performance measure used primarily to compare daily earnings generated by
vessels on time charters with daily earnings generated by vessels on voyage
charters, because rates for vessels on voyage charters are generally not
expressed in per-day amounts while rates for vessels on time charters generally
are expressed in per-day amounts.

Overview

The seaborne drybulk transportation industry is cyclical and volatile. Demand
for drybulk tonnage remains weak, rates are at the lowest point since 1985 and
asset values for modern tonnage continue to decline due to the over-supply of
dry bulk carriers. The decline in and volatility of charter and freight rates
has been due to various factors, including lower crude oil prices, falling
demand from 
China
 , a strong 
U.S.
 Dollar and the associated weakening of other
world currencies and the deflationary cycle being experienced in many
commodities such as iron ore, coal and agricultural products. Concurrently, with
these factors, vessel supply continues to increase. However, this falling rate
environment highlighted the differentiation of our business model. Reduced rates
mean reduced fronthaul margins, and given our strategy to charter in vessels to
serve only contracted business, we deemed it best to reduce our carried volume
of chartered-in vessels. This shielded us from excessive losses as compared to a
long-term charter-in strategy.

Moreover, consistent with our approach to continually optimize our fleet, the
Company sold the 30 year old m/v Bulk Cajun on February 26, 2015 and the 1989
built m/v Bulk Discovery on August 17, 2015. We took advantage of the strong
secondhand market in the first quarter of 2014 to sell two vessels that no
longer fit our overall fleet profile.

Results of Operations

Fiscal Year Ended December 31, 2015 Compared to Fiscal Year Ended December 31, 2014

Revenues

Pangaea's revenues are derived predominantly from voyage charters and time
charters. Total revenue for the fiscal year ended December 31, 2015, was $287.3
million, compared to $398.3 million for the same period in 2014. The number of
shipping days decreased 17% from 16,953 in the fiscal year ended December 31,
2014, to 14,094 for the same period in 2015. Pangaea's strategy is to optimize
the number of days a third party vessel is chartered in specifically to match
existing cargo commitments in a weak market or to provide excess available days
when market conditions improve. The revenue decrease was due to this decrease in
the number of shipping days and to the significant decline in market rates
stemming from weak demand and an oversupply of drybulk tonnage.The average TCE
rate was $11,473 per day for the year ended December 31, 2015, compared to
$12,317 per day in 2014.

Components of revenue are as follows:

Voyage revenues for the fiscal year ended December 31, 2015, decreased 23% to
$266.7 million from $345.2 million for the same period in 2014. The decrease in
voyage revenues was driven by an 11% decrease in voyage days from 13,056 days
for the fiscal year ended December 31, 2014, to 11,671 days for the same period
in 2015; and to the weak market for drybulk transportation. The reduction in
voyage days reflects the Company's disciplined strategy of focusing on its core
COA business and reducing its exposure to weak market rates. The Baltic Dry
Index ("BDI"), a measure of dry bulk market performance, was at its lowest since
inception of the index.

Charter revenues decreased 61%, from $53.0 million for the year ended
December 31, 2014, to $20.7 million for the year ended December 31, 2015. The
decrease in charter revenues was driven by the 38% decrease in time charter days
and to the decline in market rates. The number of time charter days decreased to
2,423 days for the fiscal year ended December 31, 2015, compared to 3,896 days
for the same period in 2014. The Company continued to focus on limiting its
exposure to decreasing rates by chartering in vessels only to meet the demands
of specific COAs and voyage contracts, which reduces the days available to
produce time-charter revenue but also reduces the risk that this additional
capacity may result in operating losses in a turbulent market.

Voyage Expenses

Voyage expenses for the fiscal year ended December 31, 2015 were $125.6 million,
compared to $189.5 million for the same period in 2014, a decrease of
approximately 34%. The decrease in voyage expenses was primarily due to the
decrease in voyage days as well as the decrease in bunker fuel expenses that
resulted from the decline in oil prices. Bunker fuel prices were 65% of

                                       47
--------------------------------------------------------------------------------


total voyage expenses in 2014, but only 48% in 2015. On a per day basis, bunker
fuel expense was 44% lower, at $5,224 per day in 2015 as compared to $9,369 in
2014.

Charter Expenses

Charter expenses paid to third party shipowners decreased to $75.9 million for
the fiscal year ended December 31, 2015 from $149.7 million for the year ended
December 31, 2014. The 49% decrease in charter expenses was due to lower market
rates and 26% fewer chartered-in days. In response to lower front haul demand,
the Company chartered in ships only to meet committed cargo days to reduce the
likelihood of incurring operating losses on chartered-in tonnage.

Vessel Operating Expenses

Vessel operating expenses for the year ended December 31, 2015 were $31.6
million, compared to $29.6 million in the comparable period in 2014, an increase
of approximately 7%.The increase in vessel operating expenses was due to the
increase in ownership days. Ownership days are the aggregate number of days in a
period the Company has owned each vessel. The increase in ownership days was due
to the acquisition of interests in two vessels during 2015, net of the impact of
selling two vessels, and to the acquisition of three vessels in 2014 which were
owned for the full year. Ownership days increased 5% from 4,721 in 2014 to 4,949
in 2015. The vessel operating expense expressed on a per day basis increased to
$6,377 for the year ended December 31, 2015 from $6,268 for the same period in
2014.

General and Administrative Expenses

General and administrative expenses increased $2.1 million to $15.0 million for
the year ended December 31, 2015, from $12.8 million for the year ended December
31, 2014, most of which is attributable to being a public company. Professional
fees increased $0.4 million, predominantly consulting costs incurred for public
relations and advisory services. In addition, there was an increase in salary
and related expenses, including employee stock compensation, of $0.6 million.
Fees paid to directors increased $0.3 million, legal fees increased $0.4
million, partly for review of public company filings, for the defense of a
lawsuit brought by a shareholder and for the modification of certain loan
agreements, and audit fees increased $0.2 million. This was offset by a decrease
of $0.1 million in miscellaneous expenses.

Loss on Impairment

The Company determined that there was an impairment indicator and performed an
analysis of estimated undiscounted cash flows for each of its asset groups
(vessels by size, age and special classification). See "Long-lived Assets
Impairment Considerations," above, for details regarding the Company's
accounting for impairment. At December 31, 2015, the carrying amount of the m/v
Nordic Barents and m/v Nordic Bothnia were determined to be higher than their
estimated undiscounted future cash flows because estimated TCE rates anticipated
in the analysis have declined. The decrease in TCE rates is due to the fact that
these vessels are older and are not preferable in a weakening market where there
is an oversupply of newer tonnage. As a result, a loss on impairment of these
vessels totaling approximately $5.4 million is included in the consolidated
statements of operations. At December 31, 2014, the carrying amount of the m/v
Bulk Discovery was determined to be higher than its estimated undiscounted
future cash flows because of the higher than expected estimate of upcoming
drydocking costs. Also at December 31, 2014, the carrying amounts of the m/v
Nordic Barents and m/v Nordic Bothnia were determined to be higher than their
estimated undiscounted future cash flows because the TCE rates anticipated in
the Company's annual budget for 2015, which were used to calculate such cash
flows, were lower than the rates forecasted as of the third quarter due to
deteriorated market conditions in the fourth quarter. As a result, a loss on
impairment of these vessels totaling approximately $10.0 million is included in
the consolidated statements of operations. In addition, the Company recorded a
loss on impairment of the m/v Bulk Cajun of approximately $1.5 million, because
the vessel was sold in February 2015 for its scrap value.

Loss (Gain) on Sale of Vessels

Consistent with our approach to continually optimize our fleet, we sold our two oldest vessels in 2015 and incurred an aggregate loss of approximately $0.6 million.

We took advantage of the strong secondhand market in the first quarter of 2014
to sell two vessels that no longer fit our overall fleet profile. The sale of
m/v Bulk Providence resulted in a gain of approximately $2.2 million and the
sale of the m/v Bulk Liberty resulted in a gain of approximately $1.7 million.




                                       48
--------------------------------------------------------------------------------

Income (loss) from Operations

Income from operations was $20.5 million for the year ended December 31, 2015,
compared to losses from operations of $2.5 million for the fiscal year ended
December 31, 2014. The increase reflects the Company's disciplined strategy of
focusing on its core COA business and reducing its exposure to weak market
rates. Higher margins on this core business were made possible by the decrease
in bunker fuel cost and to the decrease in the cost to hire third party owned
vessels to support these operations. In addition, the charge for losses on
impairment of owned vessels was $5.4 million in 2015, as compared to $11.5
million in 2014.

Unrealized Loss on Derivative Instruments

The unrealized loss on derivative instruments represents the decrease in the
fair value of bunker swaps. The decline in the value of fuel swaps is due to the
decrease in oil prices since the contracts were executed.

Other (Expense) Income

The decrease in other expense is due to losses in 2014 of approximately $2.1
million incurred in connection with the bankruptcy of the counterparty to
certain of the Company's bunker fuel swaps for positions that had not settled at
the time of the bankruptcy filing. In addition, the Company recorded
approximately $1.5 million of expenses resulting from legal actions in 2014. No
such charges were incurred in 2015.

Income Attributable to Non-controlling Interests

This amount represents the net income attributable to non-controlling interest
in NBH, NBHC, BVH, and Bulk Cajun. Net income attributable to non-controlling
interest for the year ended December 31, 2015 and 2014 was a gain of $2.1
million and a loss of $1.5 million, respectively. The decrease was predominantly
due to the fact that NBH had income of $2.5 million in 2015 as compared to $6.2
million of losses for the year ended December 31, 2014.

Liquidity and Capital Resources

Liquidity and Cash Needs

The Company has historically financed its capital requirements with cash flow
from operations, the issuance of convertible redeemable preferred stock,
proceeds from related party debt, and proceeds from long-term debt. The Company
has used its funds primarily to fund its operations, vessel acquisitions, and
the repayment of debt and the associated interest expense. The Company may
consider debt or additional equity financing alternatives from time to time.
However, if market conditions are negative, the Company may be unable to raise
additional debt or equity financing on acceptable terms or at all. As a result,
the Company may be unable to pursue opportunities to expand its business.

BVH, a 50% owned subsidiary of the Company, has made all of its newbuilding
deposits required to date by using funds from related party loans from its
shareholders, the Company and ST Shipping and Transport Ltd. ("ST Shipping")
(see the Related Party Transactions section below). The Company believes that ST
Shipping will continue to meet the deposit schedule for the newbuildings by
making additional related party loans, and will not call any existing related
party loans. However, if BVH's shareholders do not provide required funds, BVH
would likely need to seek replacement financing, which may not be available on
acceptable terms. In such case, the Company may not be able to pursue
opportunities to expand its business or meet its other commitments.

At December 31, 2015, the Company has a working capital deficit of $2.8 million,
due primarily to dividends payable to the Founders and their affiliated entities
which will only be paid when cash flow is sufficiently in excess of normal
operating requirements. At December 31, 2014, the Company had a working capital
deficit of $59.8 million and a net loss of $12.1 million. This working capital
deficit was predominantly due to the $49.4 million of related party loans (most
of which were converted to equity on December 15, 2015), and loans of
approximately $9.7 million payable to the Founders and their affiliated
entities. The net loss was due primarily to non-cash loss on impairment of
vessels and to other non-operating expenses.

Considerations made by management in assessing the Company's ability to continue
as a going concern are its ability to consistently generate positive cash flows
from operations, which were approximately $26.0 million in 2015, $19.7 million
in 2014 and $21.1 million in 2013; its excess of cash on hand over the current
portion of secured long-term debt and its focus on contract employment (COAs).
In addition, the Company has demonstrated its ability to adapt to changing
market conditions by changing the chartered-in profile to meet its cargo
commitments. This is evidenced by the increase in its gross margin (total
revenue less

                                       49
--------------------------------------------------------------------------------


voyage, charter hire and vessel operating expenses) which increased to 18.5% in
2015 from 7.4% in 2014. For more information on the results of operations, see
Part II. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Results of Operations.

Capital Expenditures

The Company's capital expenditures relate to the purchase of interests in
vessels, and capital improvements to its vessels which are expected to enhance
the revenue earning capabilities and safety of these vessels. The Company's
owned fleet includes eight Panamax drybulk carriers (six of which are Ice-Class
1A), four Supramax drybulk carriers and two Handymax drybulk carriers (both of
which are Ice-Class 1A).

In addition to vessel acquisitions that the Company may undertake in future
periods, its other major capital expenditures include funding its program of
regularly scheduled drydockings necessary to make improvements to its vessels,
as well as to comply with international shipping standards and environmental
laws and regulations. The Company has some flexibility regarding the timing of
drydocking, but the costs are unpredictable. Funding of these requirements is
anticipated to be met with cash from operations. The Company anticipates that
this process of recertification will require it to reposition these vessels from
a discharge port to shipyard facilities, which will reduce the Company's
available days and operating days during that period. The Company expects to
drydock three vessels during 2016 and three vessels during 2017, at an aggregate
anticipated cost of $1.5 million and $1.1 million, respectively, not including
any unanticipated repairs.

The following table summarizes Pangaea's net cash flows from operating,
investing and financing activities for the fiscal years ended December 31, 2015
and 2014:
(In millions of U.S. dollars)                2015      2014

Net cash provided by operating activities 26.0 19.7 Net cash used in investing activities (64.0 ) (34.3 ) Net cash provided by financing activities 45.7 25.5



Net Cash Provided by Operating Activities. Net cash provided by operating
activities during the year ended December 31, 2015 was $26.0 million, compared
to net cash provided by operating activities of $19.7 million during the year
ended December 31, 2014. The increase is due to changes in operating assets and
liabilities, predominantly accounts payable which declined dramatically over the
period due to falling fuel prices and fewer voyages; accounts receivable which
fluctuates significantly depending on the timing and number of voyages and the
days outstanding; and inventory, which varies with the number of voyages in
process and with bunker fuel prices.

Net Cash Used in Investing Activities. Net cash used in investing activities
during the year ended December 31, 2015 was $64.0 million, compared to $34.3
million for the year ended December 31, 2014. The Company invested $44.8 million
in new vessels in 2015 and $27.2 million in deposits on newbuildings. This was
offset by the sale of two vessels for $8.3 million. The Company invested $43.9
million in new vessels in 2014 and $13.1 million in deposits on newbuildings.
This was offset by the sale of two vessels for $23.3 million.

Net Cash Provided by Financing Activities. Net cash provided by financing
activities during the year ended December 31, 2015 was $45.7 million, compared
to $25.5 million for the year ended December 31, 2014. Joint venture partners
provided net financing of $6.9 million in 2015 as compared to $24.3 million in
2014, predominantly for vessel acquisitions and deposits on newbuildings. During
the years ended December 31, 2015 and 2014, cash provided through long-term debt
was $40.8 million and $5.2 million, respectively, net of payments and financing
fees.


                                       50
--------------------------------------------------------------------------------

Borrowing Activities

Long-term debt consists of the following:

                                               December 31, 2015      December 31, 2014
Bulk Pangaea Secured Note (1)                 $        1,734,375     $      

3,121,875

Bulk Discovery Secured Note (2)                                -              3,780,000
Bulk Patriot Secured Note (1)                          2,312,500              4,762,500
Bulk Cajun Secured Note (2)                                    -                853,125
Bulk Trident Secured Note (1)                          6,375,000              7,650,000
Bulk Juliana Secured Note (1)                          3,718,229              5,070,312
Bulk Nordic Odin Ltd., Bulk Nordic Olympic
Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic
Orion Ltd. and Bulk Nordic Oshima Ltd. -
Amended and Restated Loan Agreement                   89,625,000            

-

Bulk Nordic Odyssey Ltd., Bulk Nordic Orion
Ltd and Bulk Nordic Oshima Ltd. Loan
Agreement                                                      -            

51,125,000

Bulk Atlantic Secured Note (2)                         6,530,000            

7,890,000

Bulk Phoenix Secured Note (1)                          7,649,997            

8,916,665

Term Loan Facility of USD 13,000,000
(Nordic Bulk Barents Ltd. and Nordic Bulk
Bothnia Ltd.)                                         10,717,370            

12,021,730

Bulk Nordic Oasis Ltd. Loan Agreement                 21,500,000            

-

Long Wharf Construction to Term Loan                     978,210                998,148
Total                                                151,140,681            106,189,355
Less: current portion                                (19,499,262 )          (17,807,674 )
Less: unamortized bank fees                           (2,145,266 )           (1,755,530 )
Secured long-term debt                        $      129,496,153     $       86,626,151



(1)    The Bulk Pangaea Secured Note, the Bulk Patriot Secured Note, the Bulk

Trident Secured Note, the Bulk Juliana Secured Note, and the Bulk Phoenix

Secured Note are cross-collateralized by the vessels m/v Bulk Juliana, m/v

Bulk Patriot, m/v Bulk Trident, m/v Bulk Pangaea, and m/v Bulk Newport and

       are guaranteed by the Company.


(2)    The Bulk Atlantic Secured Note collateralized by the vessel m/v Bulk
       Beothuk and is guaranteed by the Company. The Bulk Discovery Secured Note
       and the Bulk Cajun Secured Note were repaid in conjunction with the sale
       of the m/v Bulk Discovery and the m/v Bulk Cajun during 2015.


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

The Senior Secured Post-Delivery Term Loan Facility

On April 15, 2013, the Company, through its wholly-owned subsidiaries, Bulk
Pangaea, Bulk Patriot, Bulk Juliana and Bulk Trident, entered into a $30.3
million Senior Secured Post-Delivery Term Loan Facility (the "Post-Delivery
Facility") to refinance the Bulk Pangaea Secured Term Loan Facility dated
December 15, 2009, the Bulk Patriot Secured Term Loan Facility dated September
29, 2011, the Bulk Juliana Secured Term Loan Facility dated April 18, 2012, and
the Bulk Trident Secured Term Loan Facility dated August 28, 2012, the proceeds
of which were used to finance the acquisitions of the m/v Bulk Pangaea, the m/v
Bulk Patriot, the m/v Bulk Juliana and the m/v Bulk Trident, respectively. The
Post-Delivery Facility was subsequently amended on May 16, 2013 by the First
Amendatory Agreement, to increase the facility by $8.0 million to finance the
acquisition of the m/v Bulk Providence and again on August 28, 2013, by the
Second Amendatory Facility, to increase the facility by $10.0 million to finance
the acquisition of the m/v Bulk Newport. The m/v Bulk Providence was sold on May
27, 2014.

The Post-Delivery Facility contains financial covenants that require the Company
to maintain a minimum consolidated net worth, and requires the Company to
maintain a consolidated debt service coverage ratio, tested annually, as
defined. In addition, the facility contains other Company and vessel related
covenants that, among other things, restricts changes in management and
ownership of the vessel, declaration of dividends, further indebtedness and
mortgaging of a vessel without the bank's prior consent. It also requires
minimum collateral maintenance, which is tested at the discretion of the lender.
As of December 31, 2014 , the Company was not in compliance with the
consolidated debt service coverage ratio. Accordingly, the Company obtained

                                       51
--------------------------------------------------------------------------------

a waiver from the Facility Agent through December 31, 2015. As a result, the Company is not required to test and is therefore in compliance with the consolidated debt service ratio at December 31, 2015.

The Post-Delivery Facility is divided into five tranches, as follows:

Bulk Pangaea Secured Note

Initial amount of $12,250,000, entered into in December 2009, for the
acquisition of m/v Bulk Pangaea. The interest rate was fixed at 3.96% in April
2013, in conjunction with the post-delivery amendment discussed above. The
amendment also modified the repayment schedule to 15 equal quarterly payments of
$346,875 ending in January 2017.

Bulk Patriot Secured Note

Initial amount of $12,000,000, entered into in September 2011, for the
acquisition of the m/v Bulk Patriot. Loan requires repayment in 24 equal
quarterly installments of $500,000 beginning in January 2012. The interest rate
was fixed at 4.01% in April 2013 in conjunction with the post-delivery amendment
discussed above.

Bulk Trident Secured Note

Initial amount of $10,200,000, entered into in April 2012, for the acquisition
of the m/v Bulk Trident. Loan requires repayment in 24 equal quarterly
installments of $318,750 beginning in December 2012 with a balloon payment of
$2,550,000 together with the last quarterly installment. Interest was fixed at
4.29% in April 2013 in conjunction with the post-delivery amendment discussed
above.

Bulk Juliana Secured Note

Initial amount of $8,112,500, entered into in April 2012, for the acquisition of
the m/v Bulk Juliana. Loan requires repayment in 24 equal quarterly installments
of $338,021 beginning in October 2012. Interest was fixed at 4.38% in April 2013
in conjunction with the post-delivery amendment discussed above.

Bulk Phoenix Secured Note

Initial amount of $10,000,000, entered into in May 2013, for the acquisition of
m/v Bulk Newport. Loan requires repayment in 7 equal quarterly installments of
$216,667 and 16 equal quarterly installments of $416,667 with a balloon payment
of $1,816,659 due in July 2019. Interest is fixed at 5.09%.

Other secured debt:

Bulk Cajun Secured Note

Initial amount of $4,550,000, entered into in October 2011, for the acquisition
of the m/v Bulk Cajun. Loan required repayment in 16 equal quarterly
installments of $284,375 beginning in January 2012 with a balloon payment of
$2,000,000 together the last quarterly installment. Interest was fixed at 6.51%.
This note was repaid in February 2015 in conjunction with the sale of the m/v
Bulk Cajun.

Bulk Discovery Secured Note

Initial amount of $9,120,000, entered into in February 2011, for the acquisition
of the m/v Bulk Discovery. Loan required repayment in 20 equal quarterly
installments of $356,000 beginning in June 2011 with a balloon payment of
$2,000,000 together with the last quarterly installment. Interest was fixed at a
rate of 8.16%. This note was repaid in July 2015.

Bulk Atlantic Secured Note

Initial amount of $8,520,000, entered into on February 18, 2013, for the
acquisition of m/v Bulk Beothuk. Loan requires repayment in 8 equal quarterly
installments of $90,000 beginning in May 2013, 12 equal quarterly installments
of $295,000 and a balloon payment of $4,260,000 due in February 2018. Interest
is fixed at 6.46%. In November 2015, the Company paid an additional $385,000 of
the note to remain in compliance with the collateral maintenance clause.


                                       52
--------------------------------------------------------------------------------


The other secured debt, as outlined above, contains a ratio of EBITDA to fixed
charges clause and a collateral maintenance ratio clause. If the Company
encountered a change in financial condition which, in the opinion of the lender,
is likely to affect the Company's ability to perform its obligations under the
loan facility, the Company's credit agreement could be cancelled at the lender's
sole discretion. The lender could then elect to declare the indebtedness,
together with accrued interest and other fees, to be immediately due and
payable, and proceed against any collateral securing such indebtedness. As of
December 31, 2015, the Company is in compliance with these clauses. As
December 31, 2014, the Company was not in compliance with the EBITDA to fixed
charges ratio. Accordingly, the Company obtained a waiver from the Facility
Agent.

The Bulk Nordic Odyssey and Bulk Nordic Orion Loan Agreement dated August 6, 2012

Initial amount of $40,000,000, was entered into in order to fund the acquisition
of the m/v Nordic Odyssey and the m/v Nordic Orion. The loan was amended on
September 17, 2014 in conjunction with the delivery of the m/v Nordic Oshima and
repaid in conjunction with the Amended and Restated Loan Agreement dated
September 18, 2015, which is discussed below.

Senior Secured Term Loan Facility of USD 45,000,000 (Bulk Nordic Odin Ltd. and Bulk Nordic Olympic Ltd.)

On January 28, 2015, Bulk Nordic Odin Ltd. and Bulk Nordic Olympic Ltd. entered
into a senior secured term loan facility to finance the acquisition of the m/v
Nordic Odin and the m/v Nordic Olympic. This agreement was amended and restated
on September 18, 2015 as discussed below.

The Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd., Bulk Nordic Odyssey Ltd.,
Bulk Nordic Orion Ltd. and Bulk Nordic Oshima Ltd. - Amended and Restated Loan
Agreement dated September 18, 2015.

The amended agreement advanced $21,750,000 in respect of each the m/v Nordic
Odin and the m/v Nordic Olympic, $13,500,000 in respect of each the m/v Nordic
Odyssey and the m/v Nordic Orion and $21,000,000 in respect of the m/v Nordic
Oshima.

The agreement requires repayment of the advances as follows:

In respect of the Odin and Olympic advances of $21,750,000 each, with repayment
to be made in twenty-eight equal quarterly installments of $375,000 per borrower
(one of which was paid prior to the amendment by each borrower) and balloon
payments of $12,000,000 due with each of the final installments. Interest on
these advances is floating at LIBOR plus 2.00% (2.61% at December 31, 2015).

In respect of the Odyssey and Orion advances of $13,500,000 each, with repayment to be made in twenty equal quarterly installments of $375,000 and balloon payments of $6,000,000 due with each of the final installments. Interest on these advances is floating at LIBOR plus 2.40% (3.01% at December 31, 2015).

In respect of the Oshima advance of $21,000,000, twenty-eight equal quarterly
installments of $375,000 (four of which were paid prior to the amendment) and a
balloon payment of $12,000,000 due with the final installment. Interest on this
advance is floating at LIBOR plus 2.25% (2.86% at December 31, 2015).

The amended loan is secured by first preferred mortgages on the m/v Nordic Odin,
the m/v Nordic Olympic, the m/v Nordic Odyssey, the m/v Nordic Orion and m/v
Nordic Oshima, the assignment of earnings, insurances and requisite compensation
of the five entities, and by guarantees of their shareholders.

Additionally, the agreement contains a collateral maintenance ratio clause which
requires the aggregate fair market value of the vessel plus the net realizable
value of any additional collateral previously provided to remain above defined
ratios. As of December 31, 2015, the Company was in compliance with this
covenant.

The Bulk Nordic Oasis Ltd. - Loan Agreement -- Dated December 11, 2015

The agreement advanced $21,500,000 in respect of the m/v Nordic Oasis. The
agreement requires repayment of the advance in twenty-four equal quarterly
installments of $375,000 beginning on March 28, 2016 and a balloon payment of
$12,500,000 due with the final installment. Interest on this advance is floating
at LIBOR plus 2.30% (2.91% at December 31, 2015).

The loan is secured by a first preferred mortgage on the m/v Nordic Oasis, the
assignment of earnings, insurances and requisite compensation of the entity, and
by guarantees of its shareholders. Additionally, the agreement contains a
collateral maintenance ratio clause which requires the aggregate fair market
value of the vessel plus the net realizable value of any additional collateral

                                       53
--------------------------------------------------------------------------------

previously provided to remain above defined ratios. As of December 31, 2015, the Company was in compliance with this covenant.

Term Loan Facility of USD 13,000,000 (Nordic Bulk Barents Ltd. and Nordic Bulk Bothnia Ltd.)

Nordic Bulk Barents and Nordic Bulk Bothnia entered into a secured Term Loan
Facility of $13,000,000 in two tranches of $6,500,000 which were drawn in
conjunction with the delivery of the m/v Nordic Bothnia on January 23, 2014 and
the m/v Nordic Barents on March 7, 2014. The loan is secured by mortgages on
these two vessels.

The facility bears interest at LIBOR plus 2.5% (3.11% at December 31, 2015). The
loan requires repayment in 22 equal quarterly installments of $163,045 (per
borrower) beginning in September 2014, one installment of $163,010 (per
borrower) and a balloon payment of $2,750,000 (per borrower) due in December
2019. In addition, any cash in excess of $750,000 per borrower on any repayment
date shall be applied toward prepayment of the relevant loan in inverse order,
so the balloon payment is prepaid first. The agreement also contains a profit
split in respect of the proceeds from the sale of either vessel, a minimum value
clause ("MVC") of not less than 100% of the indebtedness and a minimum liquidity
clause. The Company deposited additional cash collateral to cure MVC breaches of
approximately $309,000 per vessel on August 4, 2015 and approximately $299,000
per vessel on December 22, 2015. As of December 31, 2015 and 2014, the Company
was in compliance with all required covenants.

On February 22, 2016, the Company was notified by the facility agent of the need to deposit cash collateral totaling $3.3 million to cure an MVC breach. The Company anticipates making this deposit on or about March 25, 2016.

Long Wharf Construction to Term Loan

Initial amount of $1,048,000 entered into in January 2011. The loan is payable
monthly based on a 25 year amortization schedule with a final balloon payment of
all unpaid principal and accrued interest due January 2021. Interest is floating
at LIBOR plus 2.85%. The Company entered into an interest rate swap which
matures January 2021 and fixes the interest rate at 6.63%. The loan is
collateralized by all real estate located at 109 Long Wharf, 
Newport, RI
, as
well as personal guarantees from the Founders and a corporate guarantee of the
Company. The loan contains one financial covenant that requires the Company to
maintain a minimum debt service coverage ratio. As of December 31, 2015, the
Company was in compliance with this covenant. As of December 31, 2014 the
Company was not in compliance with this covenant. Accordingly, the Company
obtained a waiver from the lender.

The future minimum annual payments under the debt agreements are as follows:

            Years ending December 31,

2016       $                19,499,262
2017                        16,147,613
2018                        21,004,294
2019                        18,480,107
2020                        20,277,444
Thereafter                  55,731,961
           $               151,140,681




Covenants

With the exception of the Company's related party loans, certain debt agreements contain financial covenants, which require it, among other things, to maintain:

• a consolidated leverage ratio of at least 200%;

• a consolidated debt service ratio of at least 125%;

                                       54
--------------------------------------------------------------------------------

• a minimum consolidated net worth of $45 million; plus 25% of the purchase

price or (finance) lease amount of such vessels; and

• a consolidated minimum liquidity of not less than $16.0 million plus $1

million for each additional vessel the Company acquires.

Certain debt agreements also contain restrictive covenants, which may limit it and its subsidiaries' ability to, among other things:

• effect changes in management of the Company's vessels;

• sell or dispose of any of the Company's assets, including its vessels;

• declare and pay dividends;

• incur additional indebtedness;

• mortgage the Company's vessels; and

• incur and pay management fees or commissions.



A violation of any of the Company's financial covenants or operating
restrictions contained in its credit facilities may constitute an event of
default under its credit facilities, which, unless cured within the grace period
set forth under the applicable credit facility, if applicable, or waived or
modified by the Company's lenders, provides its lenders with the right to, among
other things, require the Company to post additional collateral, enhance its
equity and liquidity, increase its interest payments, pay down its indebtedness
to a level where it is in compliance with its loan covenants, sell vessels in
its fleet, reclassify its indebtedness as current liabilities and accelerate its
indebtedness and foreclose their liens on its vessels and the other assets
securing the credit facilities, which would impair the Company's ability to
continue to conduct its business.

Certain of the Company's credit facilities contain a cross-default provision
that may be triggered by a default under one of its other credit facilities. A
cross-default provision means that a default on one loan would result in a
default on certain other loans. Because of the presence of cross-default
provisions in certain of the Company's credit facilities, the refusal of any one
lender under its credit facilities to grant or extend a waiver could result in
certain of the Company's indebtedness being accelerated, even if its other
lenders under the Company's credit facilities have waived covenant defaults
under the respective credit facilities. If the Company's secured indebtedness is
accelerated in full or in part, it would be very difficult in the current
financing environment for the Company to refinance its debt or obtain additional
financing and the Company could lose its vessels and other assets securing its
credit facilities if the Company's lenders foreclose their liens, which would
adversely affect the Company's ability to conduct its business.

In connection with any waivers of or amendments to the Company's credit
facilities that it may obtain, its lenders may impose additional operating and
financial restrictions on the Company or modify the terms of its existing credit
facilities. These restrictions may further restrict the Company's ability to,
among other things, pay dividends, make capital expenditures or incur additional
indebtedness, including through the issuance of guarantees. In addition, the
Company's lenders may require the payment of additional fees, require prepayment
of a portion of its indebtedness to them, accelerate the amortization schedule
for the Company's indebtedness and increase the interest rates they charge the
Company on its outstanding indebtedness.


                                       55
--------------------------------------------------------------------------------

Related Party Transactions

Amounts and notes payable to related parties consist of the following:

                                             December 31, 2014        Activity         December 31, 2015
Included in accounts payable and accrued
expenses on the consolidated balance
sheets:
Affiliated companies (trade payables)      $         4,037,850     $  (2,400,433 )   $         1,637,417

Included in current related party debt
on the consolidated balance sheets:
Loan payable - 2011 Founders Note          $         4,325,000     $           -     $         4,325,000
Interest payable in-kind - 2011 Founders
Note (i)                                               334,605           219,314                 553,919
Promissory Note                                      5,000,000        (1,000,000 )             4,000,000
Loan payable - BVH shareholder (STST)
(ii)                                                 4,442,500                 -               4,442,500
Loan payable to NBHC shareholder (STST)             22,500,000       (22,500,000 )                     -
Loan payable to NBHC shareholder
(ASO2020) (iii)                                     22,499,972       (22,499,972 )                     -
Total current related party debt           $        59,102,077     $ (45,780,658 )   $        13,321,419



i.  Paid in cash

ii. ST Shipping and Transport Pte. Ltd. ("STST")

iii. ASO2020 Maritime S.A. ("ASO2020")

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

On October 1, 2011, the Company entered into a $10,000,000 loan agreement with
the Founders, which was payable on demand at the request of the lenders (the
2011 Founders Note). The note bears interest at a rate of 5%. On January 1, 2012
the Company issued 5,675 shares of convertible redeemable preferred stock to the
Founders, representing a partial repayment of the note (see Note 12). The
outstanding balance of the note was $4,325,000 at December 31, 2015 and 2014.

In November 2014, the Company entered into a $5 million Promissory Note (the
"Note") with Bulk Invest Ltd., a company controlled by the Founders. The Note
was amended in 2015 and is payable on demand. Interest on the Note is 5%.

BVH entered into an agreement for the construction of two new ultramax
newbuildings in 2013. STST has provided a loans totaling of $4,442,500 used to
make deposits on the contracts. The loans are payable on demand and do not bear
interest.

Loans provided by NBHC shareholders to purchase four 1A ice-class panamax
newbuildings were converted to ordinary shares of NBHC on December 15, 2015. The
conversion was made by discharging all of NBHC obligations pursuant to the
shareholder loans, through the issuance of ordinary share of NBHC at par value,
with the number of additional shares to be issued equal to the outstanding
principal of such shareholder loans (the "Equity Conversion"). Following the
Equity Conversion, the shareholders' loans were terminated and the equity
ownership percentage of each partner remained unchanged.

Under the terms of a technical management agreement between the Company and
Seamar Management S.A. (Seamar), an equity method investee, Seamar is
responsible for the day-to-day operation of some of the Company's owned vessels.
During the years ended December 31, 2015 and 2014, the Company incurred
technical management fees of $2,262,000 and $2,356,500 under this arrangement,
which is included in vessel operating expenses in the consolidated statements of
income. The total amount payable to Seamar at December 31, 2015 and 2014 was
$1,254,985 and $4,037,850, respectively, which includes amounts payable for
vessel operating expenses.

On July 1, 2015, the Company entered into a conlusting agreement with Mark Filanowski, a member of the Board of Directors, under which Mr. Filanowski will be paid $120,000 per annum.



                                       56
--------------------------------------------------------------------------------

Contractual Obligations

The following table sets forth the Company's contractual obligations and their maturity dates as of December 31, 2015. Purchase obligations reflect the Company's agreements for:

• The construction of the final Ice-Class 1A Panamax vessel from a Japanese

shipyard through NBHC, a joint venture in which the Company owns a one-third

interest. NBHC took delivery of the vessel in January 2016.

• The construction of two Ice-Class 1C Ultramax vessels from a Japanese shipyard

through BVH, a joint venture which the Company owns a 50% interest. BVH expects

  to take delivery of these vessels in 2017.



                                                  One to
                                   Less than      Three       Three to     

More than (USD in millions) Total One Year Years Five Years Five Years

Long-Term Debt         $ 151.1           19.5    $  37.1    $      38.8    $      55.7
Purchase Obligations   $  49.2    $       7.4    $  41.8    $         -    $         -
                       $ 200.3    $      26.9    $  78.9    $      38.8    $      55.7



 Effect of Inflation

We do not believe that inflation has had a material effect on our business, results of operations or financial condition in the past two years.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2015 or 2014.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Source: Equities.com News (March 23, 2016 - 8:46 AM EDT)

News by QuoteMedia
www.quotemedia.com

Legal Notice