Note

Vessels

As of

December

31,

2016,

the Company’s operating fleet consisted of

dry bulk vessels. As of

October

15,

2014,

the Company’s vessels were adjusted to a fair value aggregating

$842,625,000

as part of fresh start accounting. The Company estimated the fair values based primarily on valuations obtained from

third

-party specialists principally utilizing the market value approach.

As of

December

31,

2015,

we determined that the future undiscounted cash flows did not exceed the net book value on

six

of our vessels. This resulted from our intention to divest

six

of our older vessels in the short-term period. As a result, we reduced the carrying value of each identified vessel to its fair market value as of

December

31,

2015

and recorded an impairment charge of

$50,872,734.

As of

March

31,

2016,

due to further reduction in asset values of the aforementioned

six

vessels during the

first

quarter of

2016,

we determined that the future undiscounted cash flows of

six

of our vessels did not exceed their net book value. As a result, we reduced the carrying value of each vessel to its fair market value as of

March

31,

2016

and recorded an impairment charge of

$6,167,262.

Out of the

six

vessels, the Company sold

four

vessels during

2016

and

two

vessels were sold during the

first

quarter of

2017.

The

two

vessels sold in the

first

quarter of

2017

were reclassified to assets held for sale as of

December

31,

2016.

April

26,

2016,

the Company sold the vessel Peregrine for

$2.6

million, after brokerage commissions and associated selling expenses, and recorded a net loss of approximately

$150,000

in the

second

quarter of

2016.

A portion of the proceeds was used towards repayment of the term loan under the First Lien Facility.

June

16,

2016,

the Company sold the vessel Falcon for

$3.2

million, after brokerage commissions and associated selling expenses, and recorded a net loss of approximately

$140,000

in the

second

quarter of

2016.

A portion of the proceeds was used towards repayment of the term loan under the First Lien Facility.

July

13,

2016,

the Company sold the vessel Harrier for

$3.2

million, after brokerage commissions and associated selling expenses, and recorded a net loss of

$134,000.

A portion of the proceeds was used towards repayment of the term loan under the First Lien Facility.

September

2016,

the Company sold the vessel Kittiwake for

$4.0

million, after brokerage commission, associated selling expenses, and recorded a net gain of approximately

$316,000

in the

third

quarter of

2016.

A portion of the proceeds was used towards repayment of the term loan under the First Lien Facility.

September

30,

2016,

the Company, through Eagle Shipco, signed a memorandum of agreement to acquire a

2016

NACKS built Ultramax

61,000

dwt vessel for

$18.85

million. The Company took the delivery of the vessel in the

fourth

quarter of

2016.

The purchase has been financed with cash on hand.

November

14,

2016,

the Company, through Eagle Shipco, signed a memorandum of agreement to acquire a

2017

built

64,000

dwt SDARI-

Ultramax dry bulk vessel constructed at Chengxi Shipyard Co., Ltd for

$17.9

million. The Company paid

$1.9

million advance towards the purchase as of

December

31,

2016.

The Company took the delivery of the vessel in the

first

quarter of

2017.

December

22,

2016,

the Company signed a memorandum of agreement to sell the vessel Redwing for

$5.8

million after brokerage commissions and associated selling expenses. The vessel was delivered to the buyers in

first

quarter of

2017.

The Company will record a gain of

$0.1

million in the

first

quarter of

2017.

A portion of the proceeds was used towards repayment of the term loan under the First Lien Facility. As of

December

31,

2016,

the Company determined that all held for sale criteria were met for the vessel and classified the carrying amount of the vessel as a current asset in its consolidated balance sheet.

March

15,

2017,

the Company signed a memorandum of agreement to sell the vessel Sparrow for

$4.8

million after brokerage commissions and associated selling expenses. The vessel will be delivered to the buyers in the

second

quarter of

2017.

The Company will record a gain of

$1.8

million in the

second

quarter of

2017.

A portion of the proceeds will be used towards repayment of the term loan under the First Lien Facility. As of

December

31,

2016,

the Company determined that held for sale criteria were met for the vessel and classified the carrying amount of the vessel as a current asset in its consolidated balance sheet.

As of

December

31,

2016,

the Company is considering divesting some of the older as well as inefficient vessels from its fleet to achieve operating cost savings as well as potentially acquiring newer and more efficient vessels. The expected sale of vessels in the next

two

years reduces the useful life of the vessels resulting in impairment charge. As a result, we reduced the carrying value of each vessel to its fair market value as of

December

31,

2016

and recorded an impairment charge of

$122,860,600.



Vessels and Vessel Improvements, at December 31, 2015	$	733,960,731
Purchase of Vessel and Vessel Improvements		19,860,401
Disposal of Vessels		(13,102,860	)
Reclassification to vessels held for sale		(8,688,601	)
Depreciation Expense		(35,408,859	)
Vessel impairment charge		(129,027,862	)
Vessels and Vessel Improvements, at December 31, 2016	$	567,592,950