FreeSeas Inc. Reports Full Year 2006 Financial Results

Company Reports 13.6% Year Over Year Operating Revenue Growth 


PIRAEUS, Greece, April 25  /PRNewswire-FirstCall/ -- FreeSeas Inc. (Nasdaq: FREE; FREEW; FREEZ) (FreeSeas), a provider of seaborne transportation for dry bulk cargoes, announced today unaudited operating results for the full year ended December 31, 2006. For the year ended December 31, 2006, FreeSeas reported operating revenue growth of 13.6% to $11.73 million, compared with $10.33 million in 2005. Net loss for the year was $3.32 million, or $0.53 per share, based on 6,290,100 basic shares outstanding. Excluding non-cash compensation costs of $651,000, net loss for the year ended December 31, 2006 would have been $2.67 million, or $0.42 per basic share. In 2005, the Company reported net income of $152,000, or $0.03 per share, based on 4,574,588 basic shares outstanding. Excluding non-cash compensation costs of $180,000, net income for the year ended December 31, 2005 would have been $332,000, or $0.07 per basic share.

In January 2007, FreeSeas and its Board of Directors announced a comprehensive restructuring of the business aimed at streamlining management and positioning the Company for continued growth.

"We enter 2007 with a new operating strategy that is already providing us with measurable results," said Mr. Ion Varouxakis, Chairman of the Board, President and Chief Executive Officer. "While we ended 2006 with operating revenue growth in excess of 13%, we believe that the next several years will provide us with the foundation for future growth as we actively pursue second hand tonnage to increase the size of our fleet and further enhance our cash position."

Operating loss for the year ended December 31, 2006 was $2.28 million, compared with operating income of $1.21 million for the comparable period in 2005. Excluding the aforementioned non-cash compensation costs, operating loss for 2006 would have been $1.63 million, compared with operating income of $1.41 million for 2005.   EBITDA, adjusted for certain non-cash compensation expenses, for 2006 was $3.24 million, compared with $5.31 million for 2005. A reconciliation of EBITDA to net income is provided below.

Mr. Varouxakis continued, "As we move through 2007, we are continuing to enjoy strong market fundamentals in the drybulk industry, and our recent corporate initiatives have helped position FreeSeas to take advantage of the current rate environment.  As an example, the recent proposed sale of the M/V Free Fighter is expected to generate a $1.6 million capital gain for the Company in the second quarter of 2007, which we plan to leverage as we evaluate vessel acquisitions."

Mr. Varouxakis concluded, "FreeSeas will continue to execute on its new operating strategy and we look forward to updating our shareholders on our progress through increased communications."

  FREESEAS INC.
  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
  (All amounts in tables in thousands of United States Dollars, except for
   share data)

                                                             For the Period
                                                              from Date of
                                                                Inception
                            For the year      For the year  (April 23, 2004)
                                ended            ended       to December 31,
                          December 31,2006  December 31,2005       2004

  OPERATING REVENUES           11,727            10,326           2,830
  OPERATING EXPENSES:
  Vessel operating
   expenses                    (4,483)           (3,596)           (786)
  Voyage expenses                (689)              (55)            (16)
  Depreciation expense         (4,479)           (3,553)           (872)
  Amortization of deferred
   dry-docking and special
   survey costs                  (442)             (355)           (109)
  Management fees to a
   related party                 (540)             (488)           (180)
  Commissions                    (799)             (553)           (127)
  Compensation costs             (651)             (200)              -
  General and
   administrative expenses     (1,925)             (321)            (34)
  Income from operations       (2,281)            1,205             706

  OTHER INCOME (EXPENSE):
  Finance Costs                (1,004)           (1,076)           (240)
  Interest income                  19                 8               4
  Other                           (58)               15
  Other expense                (1,043)           (1,053)           (236)

  Net (loss) income            (3,324)              152             470

  Basic (loss) earnings
   per share                   $(0.53)            $0.03           $0.10

  Diluted (loss) earnings
   per share                   $(0.53)            $0.03           $0.10
  Basic weighted average
   number of shares         6,290,100         4,574,588       4,500,000
  Diluted weighted
   average number of shares 6,290,100         4,600,444       4,500,000



  FREESEAS INC.
  CONSOLIDATED BALANCE SHEETS (UNAUDITED)
  (All amounts in tables in thousands of United States Dollars, except for
   share data)

                                                 December 31,
                                             2006            2005
  ASSETS
  CURRENT ASSETS
  Cash in hand and at bank                    372           3,285
  Trade receivables, net                      278             520
  Inventories                                 242              42
  Insurance claims                            485             762
  Due from related party                       40             677
  Total current assets                      1,417           5,286

  Fixed assets, net                        19,369          23,848
  Deferred charges, net                     2,300             706

  Total Assets                             23,086          29,840

  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES:
  Bank overdraft                            2,000               -
  Accounts payable                          2,003           1,176
  Accrued liabilities                       1,515           1,540
  Unearned revenue                            179             172
  Shareholders' loans, current portion      1,218             950
  Due to related parties                        -             893
  Long-term debt, current portion           3,345           5,500
  Total current liabilities                10,260          10,231

  Long-term debt, net of current portion    4,485           7,500
  Shareholders' loans, net                  1,334           2,250
  Other liabilities                             -             154

  Total long-term liabilities               5,819           9,904

  Total Liabilities                        16,079          20,135


  Commitments and contingencies
  SHAREHOLDERS' EQUITY
  Preferred shares (5,000,000 authorized
   with par value $0.001, nil issued
   and outstanding as at 2006 and 2005)         -               -
  Common shares (40,000,000 authorized
   with par value $0.001, 6,290,100
   shares issued and outstanding at 2006
   and 2005, respectively)                      6               6
  Additional paid-in capital                9,703           9,242
  Retained earnings / (deficit)            (2,702)            622
  Deferred stock compensation                   -            (165)
  Total shareholders' equity                7,007           9,705
  Total Liabilities and Shareholders'
   Equity                                  23,086          29,840



  FREESEAS INC.
  EBITDA TO NET INCOME RECONCILIATION  (UNAUDITED)
  (All amounts in tables in thousands of United States Dollars, except for
   share data)

                                                 December 31,
                                             2006            2005

  EBITDA
  Net Income (Loss)                        (3,324)            152
  Interest Expense                          1,004           1,075
  Interest Income                             (19)             (8)
  Depreciation                              4,479           3,554
  Amortization                               442             355
  Non-Cash Compensation Cost                  651             180
  EBITDA                                    3,233           5,308

  EBITDA Reconciliation


FreeSeas Inc. considers EBITDA to represent net earnings before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its liquidity position and because FreeSeas believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. The Company's definition of EBITDA may not be the same as that used by other companies in the shipping or other industries.

About FreeSeas Inc.

FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk vessels. Currently, it has a fleet of two Handysize vessels. FreeSeas' common stock and warrants trade on the NASDAQ Capital Market under the symbols FREE, FREEW and FREEZ, respectively. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the US Securities and Exchange Commission, which can be obtained free of charge on the SEC's website at http://www.sec.gov/. For more information about FreeSeas Inc. please go to our corporate website http://www.freeseas.gr/.

Forward-Looking Statements

This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

  For further information please contact:

  Company Contact: Ion Varouxakis
  Chief Executive Officer
  FreeSeas Inc.
  89 Akti Miaouli Street
  185 38 Piraeus, Greece
  Tel: [phone]
  Fax: [phone]
  E-Mail: 
  http://www.freeseas.gr/

  Investor Relations / Financial Media:
  Thomas J. Rozycki, Jr.
  Sr. Vice President
  Cubitt Jacobs & Prosek Communications
  350 Fifth Avenue - Suite 3901
  New York, NY 10118, USA
  Tel: [phone] x208
  Fax: +1.212.279-3117
  E-Mail: 
  http://www.cjpcom.com/

DATASOURCE: FreeSeas Inc.



CONTACT:  Ion Varouxakis, Chief Executive Officer of FreeSeas Inc.,

+011-30-210-45-28-770, fax, +011-30-210-429-10-10, ; or

Investor Relations-Financial Media, Thomas J. Rozycki, Jr., Sr. Vice President

of Cubitt Jacobs & Prosek Communications, [phone] x208, fax,

[phone], 



Web site: http://www.freeseas.gr/ 

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