Handy-sized and Panamax Bulk Carriers are generally used to transport iron ore, coal, grain, bauxite, phosphate, sugar, steel products and other dry bulk commodities. Handy-size bulk carriers are able to transport bulk commodities to and from most ports in the world, including those found in less developed countries, while Panamax bulk carriers are designed to serve larger ports with more sophisticated cargo handling facilities. The Company believes that, although the market for bulk carriers in general is now depressed, the market is expected to begin improving in the near future. There are now outstanding possibilities of acquiring such vessels at low prices (compared to the prices their owners were asking one or two years ago).

Several factors make handy-size bulk carriers more flexible than other sizes. These ships can carry anywhere from 10.000 to 25.000 tons of cargo which would be unprofitable for large bulk carriers such as Panamax 50.000 to 80.000 dwt ships to carry. Further, if necessary to fill the ships, several different cargoes can be carried economically in the various cargo holds of handy-size bulk carriers and delivered to various ports. Additionally, some ports in South America have draft restrictions of 32 feet, thus precluding full utilization by larger ships.

During the 1970’s, 1980’s and 1990’s, Panamax bulk carriers became the workhorses of the dry bulk fleet, carrying grain and coal on major trade routes such as U.S. Gulf to Japan and Northern Europe, North Pacific to Japan and Hampton Roads to Japan and Northern Europe. These vessels typically carry 50.000 to 55.000 tons of cargo on such voyages. Cargo handling facilities in both the loading and discharging ports of these routes are highly efficient, unlike many of the ports frequented by handy-size bulk carriers. Typically, Panamax bulk carriers do not have cargo gear onboard, unlike the handy-size bulk carriers. The countries involved in these major Panamax trade routes typically have internal transportation systems (barge, rail and track) which are oriented towards serving the sophisticated ports where Panamax bulk carriers are loaded and discharged. The Company believes that the high degree of cargo handling efficiency in these ports, combined with the efficiency of carrying 50.000 to 55.000 tons of cargo in one vessel, should continue to create strong demand for Panamax bulk carriers.

Ultra-modern fuel-efficient vessels need long voyages to take advantage of their fuel efficient engines. Further, fuel prices are lower now (approximately $18 to $20 per barrel). The Company’s handy-size ships, which will concentrate on short voyages between North and South America, will spend relatively more days in port than at sea compared to transatlantic and transpacific voyages. Management believes that the projected low capital cost of the Company’s ships, combined with the nature of their voyages, the low fuel prices, will make the Company’s vessels competitive will more fuel efficient and higher cost vessels.

Although the Company has no current agreements or understandings to purchase any specific vessels, management believes that there are a sufficient number of satisfactory vessels available to purchase as of the date of this Offering. Among the factors to be assessed by management in choosing vessels are the vessel’s age, deadweight, draft, cubic capacity, cargo hold configuration, cargo gear, speed, fuel consumption, main and auxiliary engines, and her classification society records. Classification society records reflect the ship’s history, whether it has incurred chronic mechanical failures, her accident history and other pertinent data as to the vessel’s soundness. When possible, the Company will engage independent contractors to physically inspect the vessel to be purchased and its deck and engine logbooks.

Historically, market prices for secondhand handy-size and Panamax bulk carriers have fluctuated widely. Accordingly, the Company is unable to specify which vessels and how many of each type will be purchased and the amount the Company will pay for each such vessel. Under certain market conditions, the Company may defer the purchase of vessels and thus not fully utilize the proceeds of this Offering immediately or, if relative market prices for handy-size and Panamax bulk carriers change, alter the mix of vessels to be purchased. Based upon current market conditions, the Company believes that the process of investing the proceeds of this Offering in vessels will be completed within six to eight months following the Closing. There can be no assurance, however, that the Company will meet this schedule. In the event the proceeds of this Offering allocated for vessels purchases are not expended or committed for such purchases within eighteen months following the Closing, the Company intends to return such unused funds to shareholders as a dividend.

Pending the utilization of the proceeds of this Offering, the Company intends to invest such proceeds to interest-bearing investments, including investment-grade, marketable securities. Accordingly, during the period prior to utilization of such proceeds, the return on such investments may be no greater than the return that a shareholder could obtain by directly purchasing such investments without assuming the risk of investment in the Company.