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January
11,
2008
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1.
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We
note from your disclosure in your critical accounting policies section,
that under a voyage charter the revenues and associated voyage costs
are
recognized ratably over the estimated duration of the
voyage. In light of the revenue recognition guidance in EITF
91-09, please explain to us why you believe it is appropriate to
recognize
expenses ratably over the duration of the
voyage.
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1.
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recognition
of revenue when freight is received from the shipper or when freight
leaves the carrier’s terminal with expenses recognized as
incurred,
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2.
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recognition
of revenue when freight is received from the shipper or when freight
leaves the carrier’s terminal with accrual of the estimated direct costs
to complete delivery of
freight-in-transit,
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3.
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recognition
of both revenue and direct cost when the shipment is
completed,
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4.
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recognition
of revenue when the shipment is completed with expenses recognized
as
incurred, and
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5.
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the
allocation of revenue between reporting periods based on relative
transit
time in each reporting period with expenses recognized as
incurred.
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2.
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We
note from your disclosure in Note 5 that trade accounts receivable
are
presented net of an allowance for doubtful accounts. Please
revise future filings to present trade accounts receivable as “trade
accounts receivable, net” on the face of the balance
sheet.
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3.
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We
note from your disclosure in Note 1 that accounts receivables or
payables
arising from profit sharing arrangements are accrued based on the
estimates of amounts earned as at the reporting date. Please
explain to us the nature and terms of the profit sharing arrangement
and
tell us how you determine or calculate the estimated amount earned
at each
reporting date. Please note that if this revenue is contingent
on achieving a certain level of profit, revenue should be recorded
either
upon final measurement, or recognized for the amount of the contingent
payment that would be due under the agreement at any point in time
(e.g.
end of reporting period) as if the agreement was terminated at that
date,
provided the amount is realizable. See EITF Topic
D-96. Please advise or revise
accordingly.
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4.
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We
note from your disclosures in Item 4A. History and Development of
the
Company, that the current loan agreement contains a number of covenants
that among other things, restrict the ability of the Company to incur
additional indebtedness, pay dividends if the Company is in default,
create liens on assets or dispose of assets. Please revise
future filings to include disclosure of all restrictive covenants
contained in debt agreements. See paragraphs 18-19 of SFAS No.
5 and Rule 4-08(c) of Regulation
SX.
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5.
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We
note your disclosure that in 2006, four customers accounted for $71.1
million, or 67% of gross revenue, while in 2005 two customers accounted
for $42.6 million or 42% of gross revenue. In future filings,
if revenues from transactions with a single external customer amount
to 10
percent or more from your revenues, please disclose that fact, and
the
total amount of revenues from each such customer. See paragraph
39 of SFAS No. 141.
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▪
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The
Company is responsible for the adequacy and accuracy of the disclosure
in
the filing;
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▪
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Staff
comments or changes to disclosure in response to Staff comments do
not
foreclose the Commission from taking any action with respect to the
filing; and
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▪
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The
Company may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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Very
truly yours,
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Seward
& Kissel LLP
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By:
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/s/
Gary J. Wolfe
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Gary
J. Wolfe, Esq.
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cc:
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Kate
Blankenship
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Inger
M. Klemp
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Knightsbridge
Tankers Limited
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Claire
Erlanger
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Division
of Corporation Finance
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