Annual and Transition Report (foreign Private Issuer) (20-f)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC. 20549

FORM 20-F

(Mark One)



o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the fiscal year ended December 31, 2016
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________________to___________________
OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Date of event requiring this shell company report _______________________________



Commission file number	000-29106

Golden Ocean Group Limited

(Exact name of Registrant as specified in its charter)

(Translation of Registrant's name into English)

Bermuda

(Jurisdiction of incorporation or organization)

Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda

(Address of principal executive offices)

Georgina Sousa, Telephone: (1) 441 295 6935, Facsimile: (1) 441 295 3494,

Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act



Title of each class	Name of each exchange on which registered
Common Shares, Par Value $0.05 Per Share	NASDAQ Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

105,965,192 Common Shares, Par Value $0.05 Per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



Yes o	No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.



Yes o	No x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes x	No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



Yes x	No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer o	Accelerated filer x	Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP x	International Financial Reporting Standards as issued by the International Accounting Standards Board o	Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:



Item 17 o	Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes o	No x

INDEX TO REPORT ON FORM 20-F



		PAGE
PART I
Item 1.	Identity of Directors, Senior Management and Advisers	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	22
Item 4A.	Unresolved Staff Comments	35
Item 5.	Operating and Financial Review and Prospects	36
Item 6.	Directors, Senior Management and Employees	66
Item 7.	Major Shareholders and Related Party Transactions	71
Item 8.	Financial Information	72
Item 9.	The Offer and Listing	73
Item 10.	Additional Information	74
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	87
Item 12.	Description of Securities other than Equity Securities	89
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	90
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	90
Item 15.	Controls and Procedures	90
Item 16.	[Reserved]	91
Item 16A.	Audit committee financial expert	91
Item 16B.	Code of Ethics	91
Item 16C.	Principal Accountant Fees and Services	91
Item 16D.	Exemptions from the Listing Standards for Audit Committees	91
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	92
Item 16F.	Change in Registrant's Certifying Accountant	92
Item 16G.	Corporate Governance	92
Item 16H.	Mine Safety Disclosures	92
PART III
Item 17.	Financial Statements	94
Item 18.	Financial Statements	94
Item 19.	Exhibits	95

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this annual report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995, or the PSLRA, provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

We are taking advantage of the safe harbor provisions of the PSLRA and are including this cautionary statement in connection therewith. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. This annual report includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking statements.” We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. When used in this document, the words “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,” “would,” “could” and similar expressions or phrases may identify forward-looking statements.

The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.

In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include among other things:


•	our future operating or financial results;


•	our continued borrowing availability under our debt agreements and compliance with the covenants contained therein;


•	our ability to procure or have access to financing, our liquidity and the adequacy of cash flows for our operations;


•	our ability to successfully employ our existing and newbuilding dry bulk vessels;


•	changes in our operating expenses, including bunker prices, dry docking and insurance costs;


•	our ability to fund future capital expenditures and investments in the construction, acquisition and refurbishment of our vessels (including the amount and nature thereof and the timing of completion thereof, the delivery and commencement of operations dates, expected downtime and lost revenue);


•	planned, pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including drydocking, surveys, upgrades and insurance costs;


•	risks associated with vessel construction;


•	our expectations regarding the availability of vessel acquisitions and our ability to complete acquisition transactions planned;


•	vessel breakdowns and instances of off-hire;


•	potential conflicts of interest involving members of our board of directors, or the Board, and senior management;


•	potential liability from pending or future litigation;


•	potential exposure or loss from investment in derivative instruments;


•	general dry bulk shipping market trends, including fluctuations in charter hire rates and vessel values;


•	changes in supply and demand in the dry bulk shipping industry, including the market for our vessels and the number of newbuildings under construction;


•	the strength of world economies;


•	stability of Europe and the Euro;


•	fluctuations in interest rates and foreign exchange rates;


•	changes in seaborne and other transportation;


•	changes in governmental rules and regulations or actions taken by regulatory authorities;


•	general domestic and international political conditions;


•	potential disruption of shipping routes due to accidents or political events; and


•	other factors discussed in “Item 3.D. Risk Factors.”

We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except to the extent required by applicable law or regulation, we undertake no obligation to release publicly any revisions

to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events. These forward-looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

On October 7, 2014, Knightsbridge Shipping Limited, or Knightsbridge, and Golden Ocean Group Limited, or the Former Golden Ocean, entered into an agreement and plan of merger, or the Merger Agreement, pursuant to which the two companies agreed to merge, or the Merger, with Knightsbridge serving as the surviving legal entity. The Merger was completed on March 31, 2015, and the name of Knightsbridge was changed to Golden Ocean Group Limited. The Merger has been accounted for as a business combination using the acquisition method of accounting, with us selected as the accounting acquirer. See "Item 4.A-Information on the Company" for more information.

Throughout this report, unless the context otherwise requires, "Golden Ocean", the "Company", "we", "us" and "our" refer to Golden Ocean Group Limited and its subsidiaries as of the date of this annual report.

The term deadweight ton, or dwt, is used in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry.

We own, operate and have under construction dry bulk vessels of the following sizes:


1.	Newcastlemax, which are vessels with carrying capacities of between 200,000 dwt and 210,000 dwt;


2.	Capesize, which are vessels with carrying capacities of between 90,000 dwt and 200,000 dwt;


3.	Kamsarmax, which are vessels with carrying capacities of between 80,000 dwt and 90,000 dwt;


4.	Panamax, which are vessels with carrying capacities of between 65,000 and 80,000 dwt; and


5.	Supramax, which are vessels with carrying capacities of between 50,000 and 65,000 dwt.

Unless otherwise indicated, all references to "USD," "US$" and "$" in this report are to, and amounts are presented in, U.S. dollars.

Unless otherwise indicated, all share and per share amounts disclosed in this report give retroactive effect to the one-for-five reverse stock split effected on August 1, 2016, for all periods presented.

A. SELECTED FINANCIAL DATA

Our selected statement of operations data with respect to the fiscal years ended December 31, 2016, 2015 and 2014, and our selected balance sheet data as of December 31, 2016 and 2015, have been derived from our consolidated financial statements included herein and should be read in conjunction with such statements and the notes thereto. The selected statement of operations data with respect to the fiscal years ended December 31, 2013 and 2012 and the selected balance sheet data as of December 31, 2014, 2013 and 2012 have been derived from our consolidated financial statements not included herein. The following table should also be read in conjunction with "Item 5-Operating and Financial Review and Prospects" and the consolidated financial statements and notes thereto included herein. Our accounts are maintained in U.S. dollars. All share and per share amounts disclosed in the table below give retroactive effect to the one-for-five reverse stock split effected on August 1, 2016, for all periods presented. In addition as of January 1, 2016, we changed the presentation of debt issuance costs in the balance sheet as a direct deduction from the carrying amount of the related debt rather than as an asset. The change has been retrospectively applied for all periods presented.



	Fiscal year ended December 31,
	2016		2015		2014		2013		2012
(in thousands of $, except shares, per share data and ratios)
Statement of Operations Data:
Total operating revenues	257,808		190,238		96,715		37,546		37,315
Total operating expenses	328,366		414,363		77,229		30,722		27,307
Net operating (loss) income	(70,258	)	(234,913	)	19,486		6,824		10,008
Net (loss) income from continuing operations	(127,711	)	(220,839	)	16,253		3,530		5,882
Net (loss) income from discontinued operations ⁽¹⁾	—		—		(258	)	(7,433	)	(59,311	)
Net (loss) income	(127,711	)	(220,839	)	15,995		(3,903	)	(53,429	)
(Loss) earnings per share from continuing operations: basic ($)	($1.34)		($7.30)		$1.55		$0.70		$1.20
(Loss) earnings per share from continuing operations: diluted ($)	($1.34)		($7.30)		$1.55		$0.70		$1.20
Loss per share from discontinued operations: basic ($)	$0.00		$0.00		$0.00		($1.45)		($12.15)
Loss per share from discontinued operations: diluted ($)	$0.00		$0.00		$0.00		($1.45)		($12.05)
(Loss) earnings per share: basic ($)	($1.34)		($7.30)		$1.52		($0.75)		($10.95)
(Loss) earnings per share: diluted ($)	($1.34)		($7.30)		$1.52		($0.75)		($10.85)
Cash distributions per share declared ($)	$0.00		$0.00		$3.15		$3.50		$6.00

Balance Sheet Data (at end of year):
Cash and cash equivalents	212,942		102,617		42,221		98,250		79,259
Long term restricted cash	53,797		48,521		18,923		15,000		15,000
Newbuildings	180,562		338,614		323,340		26,706		—
Vessels and equipment, net	1,758,939		1,488,205		852,665		262,747		273,826
Total assets	2,361,623		2,172,870		1,259,207		409,194		396,198
Current portion of long-term debt	—		20,380		19,812		—		4,700
Current portion of obligations under capital lease	4,858		15,749		—		—		—
Long-term debt	1,058,418		908,116		340,155		94,336		105,756
Obligations under capital lease	12,673		17,531		—		—		—
Share capital	5,299		1,727		801		305		244
Total equity	1,238,719		1,158,649		884,273		307,441		277,694
Common shares outstanding	105,965,192		34,535,128		16,024,310		6,094,412		4,887,400
Other Financial Data:
Equity to assets ratio (percentage) ⁽²⁾	52.5	%	53.3	%	70.2	%	75.0	%	69.9	%
Debt to equity ratio ⁽³⁾	0.9		0.8		0.4		0.3		0.4
Price earnings ratio ⁽⁴⁾	(3.5	)	(0.7	)	14.9		(61.3	)	(2.4	)
Time charter equivalent revenue ⁽⁵⁾	187,906		134,547		42,407		30,737		32,992
Time charter equivalent rate ⁽⁶⁾	8,435		10,185		15,238		21,140		11,749


(1)	We classified our only very large crude carrier, or VLCC, as 'held for sale' as of December 31, 2012 and this vessel was sold during 2013. The operations of our VLCCs have been recorded as discontinued operations in 2014 and all prior years shown above.


(2)	Equity to assets ratio is calculated as total equity divided by total assets.


(3)	Debt to equity ratio is calculated as total interest bearing current and long-term liabilities divided by total equity.


(4)	Price earnings ratio is calculated using the year end share price divided by basic (loss) earnings per share. Historical periods have been adjusted for the 5 to 1 reverse split completed in August 2016.


(5)	A reconciliation of time charter equivalent revenues, or TCE revenue, to total operating revenues as reflected in the consolidated statements of operation is as follows:



(in thousands of $)	2016	2015	2014	2013	2012
Total operating revenues	257,808	190,238	96,715	37,546	37,315
Add: Amortization of favorable charter party contracts	27,277	23,714	—	—	—
Less: Bareboat charter revenue *	2,399	—	—	—	—
Less: Other operating income	4,894	1,306	20,353	—	—
Net time and voyage charter revenues	277,792	212,646	76,362	37,546	37,315
Less: Voyage expenses & commission	89,886	78,099	33,955	6,809	4,323
Time charter equivalent revenue	187,906	134,547	42,407	30,737	32,992

Consistent with general practice in the shipping industry, we use TCE revenue as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. We define TCE revenue as operating revenues less voyage expenses and commission plus amortization of favorable charter party contracts (being the fair value above market of acquired time charter agreements upon the completion of the Merger). Under time charter agreements, voyage costs, such as bunker fuel, canal and port charges and commissions; are borne and paid by the charterer whereas under voyage charter agreements, voyage costs are borne and paid by the owner. TCE revenue is a common shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e. spot charters and time charters) under which the vessels may be employed between the periods. Time charter equivalent revenues, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with operating revenues, the most directly comparable U.S. GAAP measure, because it assists management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, regardless of whether a vessel has been employed on a time charter or a voyage charter. For further information regarding the fleet deployment, refer to “Item 5. Operating and Financial Review and Prospects – A. Operating Results.”

* In 2016, we received $2.4 million in respect of claims for unpaid charter hire owed under bareboat charters of the VLCCs Titan Venus and Mayfair . The receipt was recorded as bareboat charter revenue as it related to services previously rendered under such terms. This amount was received as full and final settlement for the claims. For the purpose of determining our 2016 TCE revenue, this amount was excluded from the calculation as it relates to vessels sold in prior years.


(6)	Time charter equivalent rate, or TCE rate, represents the weighted average daily TCE revenue of our entire operating fleet.



(in thousands of $, except for TCE Rate and days)	2016		2015		2014		2013		2012
Time charter equivalent revenue	187,906		134,547		42,407		30,737		32,992

Fleet available days	22,397		13,330		2,841		1,460		2,809
Fleet offhire days	(121	)	(120	)	(58	)	(6	)	(1	)
Fleet onhire days	22,276		13,210		2,783		1,454		2,808

Time charter equivalent rate	8,435		10,185		15,238		21,140		11,749

TCE rate is a measure of the average daily revenue performance, following alignment of the revenue streams resulting from operation of the vessels under voyage or spot charters and time charters, as detailed in (5) above. Our method of calculating TCE rate is determined by dividing TCE revenue by onhire days during a reporting period. Onhire days are calculated on a vessel by vessel basis and represent the net of available days and offhire days for each vessel (owned or chartered in) in our possession during a reporting period. Available days for a vessel during a reporting period is the number of days the vessel (owned or chartered in) is in our possession during the period. By definition, available days for an owned vessel equal the calendar days during a reporting period, unless the vessel is delivered by the yard during the relevant period whereas; available days for a chartered-in vessel equal the tenure in days of the underlying time charter agreement, pro-rated to the relevant reporting period if such tenure

overlaps more than one reporting periods. Offhire days for a vessel during a reporting period is the number of days the vessel is in our possession during the period but is not operational as a result of unscheduled repairs, scheduled dry docking or special or intermediate surveys and lay-ups, if any.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

The following summarizes the risks that may materially affect our business, financial condition or results of operations. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or the trading price of our securities.

Risks Related to Our Industry

Charter hire rates for dry bulk vessels are volatile and have declined significantly since their historic highs and may remain at low levels or decrease in the future, which may adversely affect our earnings, revenue and profitability and our ability to comply with our loan covenants .

The dry bulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. The current downturn in the dry bulk charter market, from which we derive and plan to continue to derive our revenues, has severely affected the entire dry bulk shipping industry. The degree of charter hire rate volatility among different types of dry bulk vessels has varied widely, and charter hire rates for dry bulk vessels have declined significantly from historically high levels. For example, in the past, and presently, time charter and spot market rates for dry bulk vessels have declined below operating costs of vessels. The Baltic Dry Index, or BDI, an index published by the Baltic Exchange Limited of shipping rates for 20 key dry bulk routes, fell 97% from a peak of 11,793 in May 2008 to a low of 290 in February 2016. While the BDI has increased since February 2016 to 1,324 as of March 30, 2017, there can be no assurance that the dry bulk charter market will recover and the market could continue to decline.

Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major commodities carried by water internationally. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in charter rates are also unpredictable.

Furthermore, a significant decrease in charter rates would cause asset values to decline, or decline further, and we may have to record an impairment charge in our consolidated financial statements which could adversely affect our financial results. Because the market value of our vessels may fluctuate significantly, we may also incur losses when we sell vessels, which may adversely affect our earnings. If we sell vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel's carrying amount in our financial statements, resulting in a loss and a reduction in earnings. For instance, during the year ended December 31, 2016, we recorded impairment losses of $1.0 million in connection with the sale of vessels.

Factors that influence demand for vessel capacity include:


•	supply of and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;


•	changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;


•	the location of regional and global exploration, production and manufacturing facilities;


•	the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;


•	the globalization of production and manufacturing;


•	global and regional economic and political conditions, including armed conflicts and terrorist activities, embargoes and strikes;


•	developments in international trade;


•	changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;


•	environmental and other regulatory developments;


•	currency exchange rates; and


•	the weather.

Demand for our dry bulk vessels is dependent upon economic growth in the world’s economies, seasonal and regional changes in demand, changes in the capacity of the global dry bulk fleet and the sources and supply of dry bulk cargo transported by sea. Given the large number of new dry bulk vessels currently on order with shipyards, the capacity of the global dry bulk vessels fleet seems likely to increase and economic growth may not resume in areas that have experienced a recession or continue in other areas. As such, adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

Factors that influence the supply of vessel capacity include:


•	number of newbuilding orders and deliveries;


•	the number of shipyards and ability of shipyards to deliver vessels;


•	port and canal congestion;


•	scrapping of older vessels;


•	speed of vessel operation;


•	vessel casualties; and


•	number of vessels that are out of service or laid up.

In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, the efficiency and age profile of the existing dry bulk fleet in the market, and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.

Global economic conditions may continue to negatively impact the dry bulk shipping industry.

In the current global economy, operating businesses are faced with tightening credit, weak demand for goods and services, and weak international liquidity conditions. There has similarly been a general decline in the willingness by banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been negatively affected by this decline. In particular, lower demand for dry bulk cargoes as well as diminished trade credit available for the delivery of such cargoes have led to decreased demand for dry bulk vessels, creating downward pressure on charter rates and vessel values. Any further weakening in global economic conditions may have a number of adverse consequences for dry bulk and other shipping sectors, including, among other things:


•	low charter rates, particularly for vessels employed on short-term time charters or in the spot market;


•	decreases in the market value of dry bulk vessels and limited second-hand market for the sale of vessels;


•	limited financing for vessels;


•	widespread loan covenant defaults; and


•	declaration of bankruptcy by certain vessel operators, vessel owners, shipyards and charterers.

The occurrence of one or more of these events could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The over-supply of dry bulk vessel capacity may continue to prolong or further depress the current low charter rates, which has and may continue to limit our ability to operate our dry bulk vessels profitably.

The supply of dry bulk vessels has outpaced vessel demand growth over the past few years, thereby causing downward pressure on charter rates. As of December 31, 2016, newbuilding orders have been placed for approximately 9% of the existing fleet capacity. Until the new supply of vessels is fully absorbed by the market, charter rates may continue to be under pressure in the near to medium term.

We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.

We currently operate most of our vessels in the spot market, exposing us to fluctuations in spot market charter rates. Further, we may employ any additional vessels that we acquire in the spot market.

Although the number of vessels in our fleet that participate in the spot market will vary from time to time, we anticipate that a significant portion of our fleet will participate in this market. As a result, our financial performance will be significantly affected by conditions in the dry bulk spot market and only our vessels that operate under fixed-rate time charters may, during the period such vessels operate under such time charters, provide a fixed source of revenue to us.

Historically, the dry bulk markets have been volatile as a result of the many conditions and factors that can affect the price, supply of and demand for dry bulk capacity. The weak global economic trends may further reduce demand for transportation of dry bulk cargoes over longer distances, which may materially affect our revenues, profitability and cash flows. The spot charter market may fluctuate significantly based upon supply of and demand of vessels and cargoes. The successful operation of our vessels in the competitive spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods when spot rates have declined below the operating cost of vessels. If future spot charter rates decline, then we may be unable to operate our vessels trading in the spot market profitably, or meet our obligations, including payments on indebtedness. Furthermore, as charter rates for spot charters are fixed for a single voyage, which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.

Risks involved with operating ocean-going vessels could affect our business and reputation, which could have a material adverse effect on our results of operations and financial condition.

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:


•	a marine disaster,


•	terrorism,


•	environmental accidents,


•	cargo and property losses and damage, and


•	business interruptions caused by mechanical failure, human error, war, terrorism, piracy, political action in various countries, labor strikes, or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an oil spill or other environmental disaster may harm our reputation as a safe and reliable dry bulk operator.

World events could affect our operations and financial results.

Past terrorist attacks, as well as the threat of future terrorist attacks around the world, continue to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts, instability and other recent developments in the Middle East and elsewhere, and the presence of U.S. or other armed forces in Afghanistan and Syria, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. Any of these occurrences could have a material adverse impact on our business, financial condition and results of operations.

We face risks attendant to changes in economic and regulatory conditions around the world.

We face risks attendant to changes in economic environments, changes in interest rates, instability in the banking and securities markets and trade regulation around the world, among other factors. Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under credit facilities or any future financial arrangements.

For example, the economic slowdown in the Asia-Pacific region, especially in China, could negatively affect global economic markets and the market for dry bulk shipping. Chinese dry bulk imports have accounted for the majority of global dry bulk transportation growth annually over the last decade, with recent demand growth driven by stronger iron ore and coal imports into China. Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. The growth rate of China’s GDP for the year ended December 31, 2016, was 6.7%, down from a growth rate of 6.9% for the year ended December 31, 2015, and remaining well below pre-2008 levels. China and other countries in the Asia Pacific region may continue to experience slowed or even negative

economic growth in the future. Our financial condition and results of operations, as well as our future prospects, would likely be hindered by a continuing or worsening economic downturn in any of these countries or geographic regions.

The United States, the European Union and other parts of the world have likewise experienced relatively slow growth and weak economic trends since 2008. Over the past several years, the credit markets in the United States and Europe have remained contracted, deleveraged and less liquid, and the U.S. federal and state governments and European authorities have implemented governmental action and/or new regulation of the financial markets and may implement additional regulations in the future. While credit conditions are beginning to stabilize, global financial markets have been, and continue to be, disrupted and volatile. Specifically, concerns persist regarding the debt burden of certain European countries and their ability to meet future financial obligations. Potential adverse developments in the outlook for European countries, or market perceptions concerning these and related issues, could reduce the overall demand for dry bulk cargoes and for our service, which could negatively affect our financial position, results of operations and cash flow.

Further, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, leaders in the United States have indicated the United States may seek to implement more protective trade measures. The new U.S. president was elected on a platform promoting trade protectionism. The results of the presidential election have thus created significant uncertainty about the future relationship between the United States and China and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. On January 23, 2017, the U.S. President signed an executive order withdrawing the United States from the Trans-Pacific Partnership, a global trade agreement intended to include the United States, Canada, Mexico, Peru and a number of Asian countries. Protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, particularly the Asia-Pacific region, (b) the length of time required to transport goods and (c) the risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs.

While global economic conditions have generally improved, renewed adverse and developing economic and governmental factors, together with the concurrent volatility in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition and cash flows and could cause the price of our common shares to decline. An extended period of deterioration in the outlook for the world economy could reduce the overall demand for our services and could also adversely affect our ability to obtain financing on acceptable terms or at all.

Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.

The Chinese economy differs from the economies of western countries in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, bank regulation, currency and monetary policy, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a “planned economy.” Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken with the result that prices for certain commodities are principally determined by market forces. In addition, economic reforms may include reforms to the banking and credit sector and may produce a shift away from the export-driven growth model that has characterized the Chinese economy over the past few decades. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. The level of imports to and exports from China could be adversely affected by the failure to continue market reforms or changes to existing pro-export economic policies. The level of imports to and exports from China may also be adversely affected by changes in political, economic and social conditions (including a slowing of economic growth) or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, internal political instability, changes in currency policies, changes in trade policies and territorial or trade disputes. A decrease in the level of imports to and exports from China could adversely affect our business, operating results and financial condition.

We conduct a substantial amount of business in China. The legal system in China has inherent uncertainties that could have a material adverse effect on our business, financial condition and results of operations.

The Chinese legal system is based on written statutes and their legal interpretation by the Standing Committee of the National People’s Congress. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, there is a general lack of internal guidelines or authoritative interpretive guidance and because of the limited number of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties. Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities could affect our vessels that are either chartered to Chinese customers or that call to Chinese ports and our vessels being built at Chinese shipyards, and could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to obtain financing on acceptable terms, which may negatively impact our business.

As a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the ability to obtain money from the credit markets has become more difficult as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Due to these factors, we cannot be certain that financing will be available if needed and to the extent required, on acceptable terms. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise.

Acts of piracy on ocean-going vessels could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Sea piracy incidents continue to occur, increasingly in the Sulu Sea and the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping. The perception that our vessels are potential piracy or terrorist targets could have a material adverse impact on our business, financial condition and results of operations.

Further, if these piracy attacks occur in regions in which our vessels are deployed that insurers characterize as "war risk" zones or by the Joint War Committee as "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain, if available at all. In addition, crew costs, including costs that may be incurred to the extent we employ on-board security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations, cash flows, financial condition and may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.

Our vessels may call on ports located in countries that are subject to restrictions imposed by the U.S. or other governments, which could adversely affect our reputation and the market for our common shares.

From time to time on charterers' instructions, our vessels may call on ports located in countries subject to sanctions and embargoes imposed by the United States government and countries identified by the U.S. government as state sponsors of terrorism, such as Iran, Sudan and Syria. In 2016, none of our vessels had port calls in countries subject to sanctions and embargoes imposed by the U.S. government and countries identified by the U.S. government as state sponsors of terrorism. In 2015, one vessel, chartered-in through a joint venture 50% owned by us, had one port call to Iran transporting non-sanction cargo. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. With effect from July 1, 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the scope of the Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to companies, such as ours, and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products. In addition, on May 1, 2012, President Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation of any sanctions in effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to U.S. sanctions.

Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be banned from all contacts with the United States, including conducting business in U.S. dollars. Also in 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which created new sanctions and strengthened existing sanctions. Among other things, the Iran Threat Reduction Act intensifies existing sanctions regarding the provision of goods, services, infrastructure or technology to Iran's petroleum or petrochemical sector.

On July 14, 2015, the P5+1 (the United States, United Kingdom, Germany, France, Russia and China) and the E.U. announced that they reached a landmark agreement with Iran titled the Joint Comprehensive Plan of Action Regarding the Islamic Republic of Iran’s Nuclear Program, or the JCPOA, which is intended to significantly restrict Iran’s ability to develop and produce nuclear weapons for ten years while simultaneously easing sanctions directed toward non-U.S. persons for conduct involving Iran, but taking place outside of U.S. jurisdiction and does not involve U.S. persons. On January 16, 2016, or Implementation Day, the United States joined the E.U. and the United Nations in lifting a significant number of their nuclear-related sanctions on Iran following an announcement by the International Atomic Energy Agency, or IAEA that Iran had satisfied its respective obligations under the JCPOA.

U.S. sanctions prohibiting certain conduct that is now permitted under the JCPOA have not actually been repealed or permanently terminated at this time. Rather, the U.S. government has implemented changes to the sanctions regime by: (1) issuing waivers of certain statutory sanctions provisions; (2) committing to refrain from exercising certain discretionary sanctions authorities; (3) removing certain individuals and entities from OFAC's sanctions lists; and (4) revoking certain Executive Orders and specified sections of Executive Orders. These sanctions will not be permanently "lifted" until the earlier of “Transition Day,” set to occur on October 20, 2023, or upon a report from the IAEA stating that all nuclear material in Iran is being used for peaceful activities.

Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common shares may adversely affect the price at which our common shares trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of our common shares may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Compliance with safety and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and net income.

The hull and machinery of every commercial vessel must be certified as being "in class" by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention.

A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. We expect our vessels to be on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Most vessels are also required to be drydocked, or inspected by divers, every two to three years for inspection of its underwater parts.

Compliance with the above requirements may result in significant expense. If any vessel does not maintain its class or fails any annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

We are subject to complex laws and regulations, including environmental laws and regulations, which can adversely affect our business, results of operations and financial condition.

Our operations will be subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to E.U. regulations, the U.S. Oil Pollution Act of 1990, or OPA, requirements of the U.S. Coast Guard, or USCG, and the U.S. Environmental Protection Agency, or EPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Clean Air Act, or CAA, the U.S. Clean Water Act, or CWA, the International Maritime Organization, or IMO, International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and replaced by the 1992 protocol, and generally referred to as CLC, the IMO International Convention on Civil Liability for Bunker Oil Pollution Damage of 2001, or the Bunker Convention, the IMO International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL, including the designation of Emission Control Areas, or ECAs thereunder, the IMO International Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the IMO's International Management code for the safe Operation of Ships and for Pollution Prevention, or ISM Code, the IMO International Convention on Load Lines of 1966, as from time to time amended, and the U.S. Maritime Transportation Security Act of 2002, or MTSA.

Compliance with such laws and regulations, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. Compliance with such laws and regulations may require us to obtain certain permits or authorizations prior to commencing operations. Failure to obtain such permits or authorizations could materially impact our business results of operations and financial conditions by delaying or limiting our ability to accept charterers. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents.

A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability, without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil in U.S. waters, including the 200-nautical mile exclusive economic zone around the United States. An oil spill could also result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under other international and U.S. Federal, state and local laws, as well as third-party damages, including punitive damages, and could harm our reputation with current or potential charterers of our vessels. We will be required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although our technical manager will arrange for insurance to cover our vessels with respect to certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply with the ISM Code, we may be subject to increased liability, or may invalidate existing insurance or decrease available insurance coverage for our affected vessels, and such failure may result in a denial of access to, or detention in, certain ports.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by "arresting" or "attaching" a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss of earnings for the related off-hire period. In addition, in jurisdictions where the "sister ship" theory of liability applies, such as South Africa, a claimant may arrest the vessel that is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. In countries with "sister ship" liability laws, claims might be asserted against us or any of our vessels for liabilities of other vessels that we own.

Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.

A government of a vessel's registry could requisition for title or seize one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. A government could also requisition one or more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Risks Related to Our Business

The fair market values of our vessels have declined and may decline further, which could limit the amount of funds that we can borrow, cause us to breach certain financial covenants in our credit facilities, or result in an impairment charge, and cause us to incur a loss if we sell vessels following a decline in their market value.

The fair market values of dry bulk vessels, including our vessels, have generally experienced high volatility and have recently declined significantly. The fair market value of vessels may continue to fluctuate depending on but not limited to the following factors:


•	general economic and market conditions affecting the shipping industry;


•	competition from other shipping companies;


•	types and sizes of vessels;


•	the availability of other modes of transportations;


•	cost of newbuildings;


•	shipyard capacity;


•	governmental or other regulations;


•	age of vessels;


•	prevailing level of charter rates;


•	the need to upgrade secondhand and previously owned vessels as a result of charterer requirements, and


•	technological advances in vessel design or equipment or otherwise.

During the period a vessel is subject to a charter, we will not be permitted to sell it to take advantage of increases in vessel values without the charterer's consent. If we sell a vessel at a time when ship prices have fallen, the sale may be at less than the vessel's carrying amount in our financial statements, with the result that we could incur a loss and a reduction in earnings. The carrying values of our vessels are reviewed whenever events or changes in circumstances indicate that the carrying amount of the vessel may no longer be recoverable. We assess recoverability of the carrying value by estimating the future net cash flows expected to result from the vessel, including eventual disposal. If the future net undiscounted cash flows and the estimated fair market value of the vessel are less than the carrying value, an impairment loss is recorded equal to the difference between the vessel's carrying value and fair value. Any impairment charges incurred as a result of declines in charter rates and other market deterioration could negatively affect our business, financial condition or operating results or the trading price of our common shares. During the year ended December 31, 2016, we recorded an impairment loss of $1.0 million related to a sale of one vessel. During the year ended December 31, 2015, we recorded an impairment loss of $148.1 million related to five vessels sold to Ship Finance (defined below) and three newbuilding contracts sold to a third party.

In addition, if we determine at any time that a vessel's future useful life and earnings require us to impair its value in our financial statements, this would result in a charge against our earnings and a reduction of our shareholders' equity. If the fair market values of our vessels decline, the amount of funds we may draw down under our secured credit facilities may be limited and we may not be in compliance with certain covenants contained in our secured credit facilities, which may result in an event of default. In such circumstances, we may not be able to refinance our debt or obtain additional financing acceptable to us or at all. Further, if we are not able to comply with the covenants in our secured credit facilities, and are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our fleet.

Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect our business, results of operations, cash flow and financial condition.

We may require additional capital in the future, which may not be available on favorable terms, or at all.

Depending on many factors, including market developments, our future earnings, value of our assets and expenditures for any new projects, we may need additional funds. We cannot guarantee that we will be able to obtain additional financing at all or on terms acceptable to us. If adequate funds are not available, we may have to reduce expenditures for investments in new and existing

projects, which could hinder our growth, prevent us from realizing potential revenues from prior investments and have a negative impact on our cash flows and results of operations.

As of December 31, 2016, we had ten vessels under construction. During the period from January 1, 2017 to the date of this annual report, we took delivery of four vessels. We paid $101.2 million in final installments for these four vessels. As of the date of this annual report and following these deliveries, we have six vessels under construction with expected delivery in 2018. As of the date of this annual report and based on amended terms, our outstanding newbuilding commitment amounts to $183.7 million , subject to the yard's refund bank acknowledging amendments on two of the contracts.

As of December 31, 2016, we had available debt financing of $200.0 million for eight of our ten newbuilding contracts. During the period from January 1, 2017 to the date of this annual report, we took delivery of two of the financed vessels and drew down debt of $50.0 million. Based on the amended terms under our loan agreements (see "Item 5.B-Liquidity and Capital Resources") and draw down on delivered vessels, as of the date of this annual report, the available debt financing for the remaining six vessels is $150.0 million. We intend to finance the remaining newbuilding commitments and any shortfall in financing commitments arising from a fall in vessel values with cash on hand, operating cash flow, proceeds from our private placements in Norway in February 2016 and public equity offering in March 2017 and, if market conditions permit, proceeds from additional debt and equity financing. If such financing is not available when our capital commitments are due, we may be unable to meet such obligations and finance our other and future obligations. If for any reason we fail to take delivery of the newbuilding vessels described above, we would be prevented from realizing potential revenues from these vessels, we may be required to forego already paid deposits on construction and we may incur additional costs and liability to the shipyard under the construction contracts.

We are highly leveraged, which could significantly limit our ability to execute our business strategy and has increased the risk of default under our debt obligations.

As of December 31, 2016, we had $1,063.7 million of outstanding indebtedness under our credit facilities and debt securities. We cannot assure you that we will be able to generate cash flow in amounts that is sufficient to satisfy these obligations. If we are not able to satisfy these obligations, we may have to undertake alternative financing plans or sell our assets. In addition, debt service payments under our credit facilities may limit funds otherwise available for working capital, capital expenditures, payment of cash distributions and other purposes. If we are unable to meet our debt obligations, or if we otherwise default under our credit facilities, our lenders could declare the debt, together with accrued interest and fees, to be immediately due and payable and foreclose on our fleet, which could result in the acceleration of other indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by other lenders

Our credit facilities impose operating and financial restrictions on us that limit our ability, or the ability of our subsidiaries party thereto to:


•	pay dividends and make capital expenditures;


•	incur additional indebtedness, including the issuance of guarantees;


•	create liens on our assets;


•	change the flag, class or management of our vessels or terminate or materially amend the management agreement relating to each vessel;


•	sell our vessels;


•	merge or consolidate with, or transfer all or substantially all our assets to, another person; or


•	enter into a new line of business.

In addition, our loan agreements, which are secured by liens on our vessels, contain various financial covenants. Among those covenants are requirements that relate to our financial position, operating performance and liquidity. For example, there are financial covenants that require us, subject to the February 2016 amendments discussed below, to maintain (i) an equity ratio fixing a minimum value of adjusted equity that is based, in part, upon the market value of the vessels securing the loans, (ii) minimum levels of free cash, (iii) positive working capital, and (iv) a minimum value, or loan-to-value, covenant, which could require us to post collateral or prepay a portion of the outstanding borrowings should the value of the vessels securing borrowings decrease below a required level.

In February 2016, we agreed with our lenders to amend certain of the terms in our senior secured loan agreements. For the period from April 1, 2016 to September 30, 2018, or the Loan Waiver Period, there will be no principal repayments, the minimum value covenant is set at 100% and the market adjusted equity ratio is waived. We have also agreed that for the remaining newbuilding contracts that are to be financed under our $425.0 million term loan facility, there will be a fixed draw down of $25.0 million per vessel subject to compliance with the minimum value covenant of 100%. A cash sweep mechanism has also been put in place

whereby we will pay down on the deferred repayment amount under our loan facilities should our cash position improve. Subject to working capital changes in the first quarter of 2017, we expect to prepay the December 31, 2016 deferred repayment balance under our loan facilities of $40.5 million. The margins on our loan facilities are unchanged; however we will pay an increased margin of 4.25% for the deferred amount under our loan facilities. Additionally, our loan facilities contain a minimum ownership provision that requires Hemen Holding Limited, a company indirectly controlled by trusts established by Mr. Fredriksen, our director, for the benefit of his immediate family, or Hemen, to hold a minimum of 34% of our common shares during the Loan Waiver Period. The amendments to our loan agreements were subject to us raising $200 million in equity, which we completed in February 2016. See “Item 5.B-Liquidity and Capital Resources.”

The market value of dry bulk vessels is likewise sensitive to, among other things, changes in the dry bulk market, with vessel values deteriorating in times when dry bulk rates are falling or anticipated to fall and improving when charter rates are rising or anticipated to rise. Such conditions may result in us not being in compliance with our loan covenants either during or after the Loan Waiver Period. In such a situation, unless our lenders are willing to provide further waivers of covenant compliance or modifications to our covenants, or would be willing to refinance our indebtedness, we may have to sell vessels in our fleet and/or seek to raise additional capital in the equity markets in order to comply with our loan covenants. Furthermore, if the value of our vessels deteriorates significantly, we may have to record an impairment adjustment in our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital. For instance, during the year ended December 31, 2016, we recorded impairment losses of $1.0 million in connection with the sale of vessels.

If we are not in compliance with our covenants and are not able to obtain covenant waivers or modifications, our lenders could require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, or they could accelerate our indebtedness, any of which would impair our ability to continue to conduct our business. If our indebtedness is accelerated, we might not be able to refinance our debt or obtain additional financing and could lose our vessels if our lenders foreclose on their liens. In addition, if we find it necessary to sell our vessels at a time when vessel prices are low, we will recognize losses and a reduction in our earnings, which could affect our ability to raise additional capital necessary for us to comply with our loan agreements.

We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results of operations and financial position.

The operation of dry bulk vessels and transportation of dry bulk cargoes is extremely competitive. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of dry bulk cargoes by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Through our operating subsidiaries, we compete with other vessel owners, and, to a lesser extent, owners of other size vessels. The dry bulk market is highly fragmented. Due in part to the highly fragmented market, competitors with greater resources could enter the dry bulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer. Although we believe that no single competitor has a dominant position in the markets in which we compete, we are aware that certain competitors may be able to devote greater financial and other resources to their activities than we can, resulting in a significant competitive threat to us. As a result, we cannot assure you that we will be successful in finding employment for our newbuilding vessels immediately upon their deliveries to us or whether any such employment will be at profitable rates, nor can we assure you continued timely employment of our existing vessels.

We have significant risks relating to the construction of our newbuilding vessels.

As of the date of this annual report, we have contracts for six newbuilding vessels. Recently, we have agreed to postpone all remaining six newbuilding vessels until the first quarter of 2018, subject to a yard's refund bank's acknowledgment of the amended terms for two of the postponed newbuilding contracts. Vessel construction projects are generally subject to risks of delay or cost overruns that are inherent in any large construction project, which may be caused by numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, unanticipated cost increases between order and delivery, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force majeure. Significant cost overruns or delays could adversely affect our financial position, results of operations and cash flows. Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we will continue to incur costs and expenses related to delayed vessels, such as supervision expense and interest expense for the outstanding debt.

A drop in spot charter rates may provide an incentive for some charterers to default on their charters.

When we enter into a time charter or bareboat charter, charter rates under that charter may be fixed for the term of the charter. Eight of our vessels are currently on a fixed rate time charters expiring between September 2017 and December 2021. If the spot charter rates or short-term time charter rates in the dry bulk shipping industry become significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to comply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would be impaired.

Our ability to obtain additional debt financing may be dependent on the performance of our then existing charterers and their creditworthiness.

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources required to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at anticipated costs or at all may materially affect our results of operations and our ability to implement our business strategy.

Our financing arrangements have floating interest rates, which could negatively affect our financial performance as a result of interest rate fluctuations.

As certain of our current financing agreements have, and our future financing arrangements may have, floating interest rates, typically based on LIBOR, movements in interest rates could negatively affect our financial performance. Furthermore, historically interest in most loan agreements in our industry has been based on published LIBOR rates. Recently, however, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. If we are required to agree to such a provision in future loan agreements, our lending costs could increase significantly, which would have an adverse effect on our profitability, earnings and cash flow.

In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments, if any, may affectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position.

Certain of our directors, executive officers and major shareholders may have interests that are different from the interests of our other shareholders.

Certain of our directors, executive officers and major shareholders may have interests that are different from, or are in addition to, the interests of our other shareholders. In particular, Hemen and certain of its affiliates, may be deemed to beneficially own approximately 42.2% of our issued and outstanding shares.

Hemen is also a principal shareholder of a number of other large publicly traded companies involved in various sectors of the shipping and oil services industries, or the Hemen Related Companies. In addition, certain of our directors, including Mr. Lorentzon, Mr. Aas, Mr. Fredriksen and Mrs. Blankenship, also serve on the boards of one or more of the Hemen Related Companies, including but not limited to, Frontline Ltd. (NYSE:FRO), or Frontline, Ship Finance International Limited (NYSE:SFL), or Ship Finance, Seadrill Limited (NYSE:SDRL), or Seadrill, and North Atlantic Drilling Ltd. (NYSE:NADL), or NADL. There may be real or apparent conflicts of interest with respect to matters affecting Hemen and other Hemen Related Companies whose interests in some circumstances may be adverse to our interests.

To the extent that we do business with or compete with other Hemen Related Companies for business opportunities, prospects or financial resources, or participate in ventures in which other Hemen Related Companies may participate, these directors and officers may face actual or apparent conflicts of interest in connection with decisions that could have different implications for us. These decisions may relate to corporate opportunities, corporate strategies, potential acquisitions of businesses, newbuilding acquisitions, inter-company agreements, the issuance or disposition of securities, the election of new or additional directors and other matters. Such potential conflicts may delay or limit the opportunities available to us, and it is possible that conflicts may be resolved in a manner adverse to us or result in agreements that are less favorable to us than terms that would be obtained in arm's-length negotiations with unaffiliated third-parties.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

We have entered into various contracts, including charter parties with our customers, loan agreements with our lenders, and vessel management, pooling arrangements, newbuilding contracts and other agreements with other entities, which subject us to counterparty risks. The ability of each of the counterparties to perform its obligations under a contract with us or contracts entered into on our behalf will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter rates received for our vessels and the supply and demand for commodities. Should a counterparty fail to honor its obligations under any such contract, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities. In addition, in depressed market conditions, charterers may have incentive to renegotiate their charters or default on their obligations under charters. Should a charterer in the future fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure on the spot market or on charters may be at lower rates, depending on the then existing charter rate levels, compared to the rates currently being charged for our vessels. In addition, if the charterer of a vessel in our fleet that is used as collateral under one or more of our loan agreements defaults on its charter obligations to us, such default may constitute an event of default under our loan agreements, which may allow the bank to exercise remedies under our loan agreements. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations, cash flows and compliance with covenants in our loan agreements.

We are dependent on the success and profitability of the pools in which our vessels operate.

We are party to the pooling arrangement through Capesize Chartering Ltd, and may be in the future party to other pooling arrangements, pursuant to which the profitability of our vessels operating in these vessel pools is dependent upon the pool managers’ and other pool participants’ ability to successfully implement a profitable chartering strategy, which could include, among other things, obtaining favorable charters and employing vessels in the pool efficiently in order to service those charters. As of the date of this annual report, 20 of our vessels operate in pools. If vessels from other pool participants that enter into pools in which we participate are not of comparable design or quality to our vessels, or if the owners of such other vessels negotiate for greater pool weightings than those obtained by us, this could negatively impact the profitability of the pools in which we may participate or our profitability or dilute our interest in the pool's profits.

Further, in addition to bearing charterer credit risk indirectly, we may also face credit risk from our pool managers and other pool participants. Not all pool managers or pool participants will necessarily provide detailed financial information regarding their operations. As a result, pool manager and other pool participant risk is largely assessed on the basis of the reputation of our pool managers and other pool participants in the market, and even on that basis, there is no assurance that they can or will fulfill their obligations under the contracts we may enter into with them. As such, pool managers and other pool participants may fail to fulfill their obligations to us. Should a pool manager or other pool participant fail to honor its obligations under agreements with us, we may have to withdraw our vessels from the pool and it may be difficult to secure substitute employment for our vessels, and any new charter arrangements we secure on the spot market, on time charters or in alternative pooling arrangements may be at lower rates or on less favorable terms, depending on the then existing charter rate levels, compared to the rates currently being charged for our vessels, and other market conditions. If our pool managers or other pool participants fail to meet their obligations to us, we could sustain significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to implement our growth successfully.

Subject to the covenants in our credit facilities, our long term intention is to renew and grow our fleet through selective acquisitions of dry bulk tonnage. Our business plan will therefore depend upon our ability to identify and acquire suitable vessels to grow our fleet in the future and successfully employ our vessels. As of December 31, 2016, we had ten vessels under construction. During the period from January 1, 2017 to the date of this annual report, we took delivery of four vessels. As of the date of this annual report and following these deliveries, we have six vessels under construction with expected delivery in 2018. Further, we have recently entered into agreements, subject to definitive documentation and other customary closing conditions, to acquire additional 16 dry bulk vessels.

Growing any business by acquisition presents numerous risks, including undisclosed liabilities and obligations, difficulty obtaining additional qualified personnel and managing relationships with customers and suppliers. In addition, competition from other

companies, many of which may have significantly greater financial resources than us, may reduce our acquisition opportunities or cause us to pay higher prices. We cannot assure you that we will be successful in executing our plans to establish and grow our business or that we will not incur significant expenses and losses in connection with these plans. Our failure to effectively identify, purchase, develop and integrate any vessels could impede our ability to establish our operations or implement our growth successfully. Our acquisition growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:


•	fail to realize anticipated benefits, such as cost savings or cash flow enhancements;


•	incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired, particularly if any vessel we acquire proves not to be in good condition;


•	be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;


•	decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;


•	significantly increase our interest expense or financial leverage if we incur debt to finance acquisitions; or


•	incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

Purchasing and operating previously owned, or secondhand, vessels may result in increased drydocking costs and vessels off-hire, which could adversely affect our earnings.

Subject to the covenants in our credit facilities, our long term business strategy includes growth through the acquisition of previously owned vessels. Even following a physical inspection of secondhand vessels prior to purchase, we do not have the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels prior to purchase. Any such hidden defects or problems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Also, when purchasing previously owned vessels, we do not receive the benefit of any builder warranties if the vessels we buy are older than one year.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. The average age of our dry bulk vessel fleet is approximately four years. As our fleet ages, we will incur increased costs. Older vessels are typically less fuel efficient than more recently constructed vessels due to improvements in engine technology. Governmental regulations, safety and other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to some of our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. As a result, regulations and standards could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's useful life, our revenue will decline, which could adversely affect our business, results of operations and financial condition.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations and financial condition could be adversely affected. Any funds set aside for vessel replacement will not be available for cash distributions.

The operation of dry bulk vessels involves certain unique operational risks.

The operation of dry bulk vessels has certain unique operational risks. With a dry bulk vessel, the cargo itself and its interaction with the ship can be a risk factor. By their nature, dry bulk cargoes are often heavy, dense and easily shifted, and react badly to water exposure. In addition, dry bulk vessels are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small bulldozers. This treatment may cause damage to the dry bulk vessel. Dry bulk vessels damaged due to treatment during unloading procedures may be more susceptible to a breach to the sea. Hull breaches in dry bulk vessels may lead to the flooding of their holds. If a dry bulk vessel suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the dry bulk vessel's bulkheads leading to the loss of the dry bulk vessel.

If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition or results of operations. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Rising fuel, or bunker, prices may adversely affect our profits.

Since we primarily employ our vessels in the spot market, we expect that fuel, or bunkers, will typically be the largest expense in our shipping operations for our vessels. While we believe that we will experience a competitive advantage as a result of increased bunker prices due to the greater fuel efficiency of our vessels compared to the average global fleet, changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Despite lower fuel oil prices in 2016 and the beginning of 2017, fuel may become much more expensive in the future.

Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.

We operate our dry bulk vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charterhire rates. The dry bulk sector is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere. The celebration of Chinese New Year in the first quarter of each year, also results in lower volumes of seaborne trade into China during this period. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality may result in quarter-to-quarter volatility in our revenues and operating results, which could affect our ability to pay dividends, if any, in the future.

We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results of operations and financial position.

The operation of dry bulk vessels and transportation of dry bulk cargoes is extremely competitive. Through our operating subsidiaries, we compete with other vessel owners, and, to a lesser extent, owners of other size vessels. The dry bulk market is highly fragmented. It is possible that we could not obtain suitable employment for our vessels, which could adversely affect our results of operations and financial position.

Our fixed rate time charters may limit our ability to benefit from any improvement in charter rates, and at the same time, our revenues may be adversely affected if we do not successfully employ our vessels on the expiration of our charters.

Eight of our vessels are currently on a fixed rate time charters expiring between September 2017 and December 2021. Although our fixed rate time charters generally provide reliable revenues, they also limit the portion of our fleet available for spot market voyages during an upswing in the dry bulk industry cycle, when spot market voyages might be more profitable. By the same token, we cannot assure you that we will be able to successfully employ our vessels in the future or renew our existing charters at rates sufficient to allow us to operate our business profitably or meet our obligations. A decline in charter or spot rates or a failure to successfully charter our vessels could have a material adverse effect on our business, financial condition and results of operations.

Operational risks and damage to our vessels could adversely impact our performance.

Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy, labor strikes, boycotts and other circumstances or events. These hazards may result in death or injury to persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships and market disruptions, delay or rerouting.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover at all or in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located relative to our vessels' positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may adversely affect our business and financial condition.

Further, the total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss, which could negatively impact our business, financial condition, results of operations and cash flows.

Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and cause disruption of our business.

International shipping is subject to security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Under the U.S. Maritime Transportation Security Act of 2002, or MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. These security procedures can result in delays in the loading, offloading or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, carriers. Future changes to the existing security procedures may be implemented that could affect the dry bulk sector. These changes have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the volume of goods shipped, resulting in a decreased demand for vessels and have a negative effect on our business, revenues and customer relations.

Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, or U.S Foreign Corrupt Practices Act, and other anti-bribery legislation. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

Incurrence of expenses or liabilities may reduce or eliminate distributions.

Our credit facilities currently restrict us from paying dividends until after September 30, 2018. The amount and timing of cash distributions in the future will depend, among other things, on our compliance with covenants in our credit facilities, earnings, financial condition, cash position, Bermuda law affecting the payment of distributions, restrictions in our financing agreements and other factors. We could also incur other expenses or contingent liabilities that would reduce or eliminate the cash available for distribution by us as cash distributions. In addition, the declaration and payment of cash distributions is subject at all times to the discretion of our Board. We cannot assure you that it will pay cash distributions.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.

We may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract disputes, shareholder litigation, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's useful life, our revenue will decline, which would adversely affect our business, results of operations and financial condition.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations and financial condition would be adversely affected. Any funds set aside for vessel replacement will not be available for cash distributions.

We may not have adequate insurance to compensate us if our vessels are damaged or lost.

We procure insurance for our fleet against those risks that we believe companies in the shipping industry commonly insure. These insurances include hull and machinery insurance, protection and indemnity insurance, which include environmental damage and pollution insurance coverage, and war risk insurance. We can give no assurance that we will be adequately insured against all risks and we cannot guarantee that any particular claim will be paid, even if we have previously recorded a receivable or revenue in respect of such claim. Our insurance policies may contain deductibles for which we will be responsible and limitations and exclusions, which may increase our costs or lower our revenues.

We cannot assure you that we will be able to obtain adequate insurance coverage for our vessels in the future or renew our existing policies on the same or commercially reasonable terms, or at all. For example, more stringent environmental regulations have in the past led to increased costs for, and in the future may result in the lack of availability of, protection and indemnity insurance against risks of environmental damage or pollution. Any uninsured or underinsured loss could harm our business, results of operations, cash flows and financial condition. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we incur, or that disputes over insurance claims will not arise with our insurance carriers. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. In addition, our insurance policies may be subject to limitations and exclusions, which may increase our costs or lower our revenues, thereby possibly having a material adverse effect on our business, results of operations, cash flows and financial condition.

We may be subject to calls because we obtain some of our insurance through protection and indemnity associations.

We may be subject to increased premium payments, or calls, if the value of our claim records, the claim records of our fleet managers, and/or the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability (including pollution-related liability) significantly exceed projected claims. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows and financial condition. In addition, our protection and indemnity associations may not have enough resources to cover claims made against them.

We are a holding company, and depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations.

We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to satisfy our financial obligations in the future depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we may not be able to satisfy our financial obligations. Pursuant to the loan agreements we expect to enter into, our wholly-owned non-recourse subsidiary which indirectly will own the vessels acquired in the Quintana Acquisition (defined below) will be prohibited from paying dividends to us, without prior consent from the lenders.

Our acquisition of vessels from Quintana and Hemen is conditioned upon satisfaction of a number of conditions that are beyond our control; and as such the acquisition may not be consummated and we will incur transaction costs regardless of whether the acquisition is consummated, which could negatively affect our business, results of operation and financial condition.

On March 14, 2017, we entered into memoranda of agreement with Quintana Shipping Ltd., or Quintana, to acquire fourteen vessels, which we refer to as the Quintana Acquisition, and two vessels from Hemen, which we refer to as the Hemen Acquisition. The acquisition of vessels from Quintana and Hemen is conditional upon satisfaction of certain conditions, the satisfaction of which is beyond our control. If the acquisition is not consummated, transaction costs, including costs of advisors and the use of key management personnel's time and attention, will have been incurred without the expected benefits and at the expense of other business opportunities.

In addition, there will be no realization of any of the expected benefits of having completed the acquisition and failure to complete the transaction could result in a decline of our market share price.

If any of the above risks materialize, it could negatively affect our business, results of operation and financial condition.

The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.

We are incorporated under the laws of Bermuda and conduct operations in countries around the world. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries,

bankruptcy laws other than those of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.

Because we are a Bermuda corporation, our shareholders may have less recourse against us or our directors than shareholders of a U.S. company have against the directors of that U.S. Company.

Because we are a Bermuda company, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders in other jurisdictions, including with respect to, among other things, rights related to interested directors, amalgamations, mergers and acquisitions, takeovers, the exculpation and indemnification of directors and shareholder lawsuits.

Among these differences is a Bermuda law provision that permits a company to exempt a director from liability for any negligence, default, or breach of a fiduciary duty except for liability resulting directly from that director’s fraud or dishonesty. Our bye-laws provide that no director or officer shall be liable to us or our shareholders unless the director’s or officer’s liability results from that person’s fraud or dishonesty. Our bye-laws also require us to indemnify a director or officer against any losses incurred by that director or officer resulting from their negligence or breach of duty, except where such losses are the result of fraud or dishonesty. Accordingly, we carry directors’ and officers’ insurance to protect against such a risk.

In addition, under Bermuda law, the directors of a Bermuda company owe their duties to that company and not to the shareholders. Bermuda law does not, generally, permit shareholders of a Bermuda company to bring an action for a wrongdoing against the company or its directors, but rather the company itself is generally the proper plaintiff in an action against the directors for a breach of their fiduciary duties. Moreover, class actions and derivative actions are generally not available to shareholders under Bermuda law. These provisions of Bermuda law and our bye-laws, as well as other provisions not discussed here, may differ from the law of jurisdictions with which shareholders may be more familiar and may substantially limit or prohibit a shareholder's ability to bring suit against our directors or in the name of the company. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it. However, generally a derivative action will not be permitted where there is an alternative action available that would provide an adequate remedy. Any property or damages recovered by derivative action go to the company, not to the plaintiff shareholders. When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company or that the company be wound up.

It is also worth noting that under Bermuda law, our directors and officers are required to disclose to our board any interests they have in any material contract entered into by our company or any of its subsidiaries. Our directors and officers are also required to disclose their material interests in any corporation or other entity which is party to a material contract with our company or any of its subsidiaries. A director who has disclosed his or her interests in accordance with Bermuda law may participate in any meeting of our board, and may vote on the approval of a material contract, notwithstanding that he or she has an interest.

United States tax authorities could treat us as a "passive foreign investment company", which could have adverse United States federal income tax consequences to United States shareholders.

A foreign corporation will be treated as a "passive foreign investment company", or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income". For purposes of these tests, "passive income" includes cash distributions, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income". United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

Based on our current and proposed method of operation, we do not believe that we are or that we have been since the beginning of our 2004 taxable year, or that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering and voyage chartering activities as services income, rather than rental income. Accordingly, we believe that our income from these activities does not constitute "passive income", and the assets that we own and operate in connection with the production of that income do not constitute assets that produce, or are held for the production of, "passive income".

Although there is no direct legal authority under the PFIC rules addressing our method of operation there is substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service, or the IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority that characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election available under United States Internal Revenue Code of 1986, as amended, or the Code (which election could itself have adverse consequences for such shareholders, as discussed below under "Taxation-United States Federal Income Tax Considerations"), such shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our common shares.

We may have to pay tax on United States source income, which would reduce our earnings.

Under the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States, may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated thereunder.

We believe that we and each of our subsidiaries qualified for this statutory tax exemption for our taxable year ending on December 31, 2016 and we will take this position for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for future taxable years and thereby become subject to United States federal income tax on our United States source shipping income. For example, we would no longer qualify for exemption under Section 883 of the Code for a particular taxable year if certain non-qualified shareholders with a 5% or greater interest in our common shares owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year. It is possible that we could be subject to this rule for our taxable year ending on December 31, 2017. Due to the factual nature of the issues involved, there can be no assurances on our tax-exempt status or that of any of our subsidiaries.

If we or our subsidiaries are not entitled to exemption under Section 883 of the Code for any taxable year, we, or our subsidiaries, could be subject during those years to an effective 2% United States federal income tax on gross shipping income derived during such a year that is attributable to the transport of cargoes to or from the United States. The imposition of this tax would have a negative effect on our business. However, the amount of our shipping income that would be subject to this tax has historically not been material.

Our share price may be highly volatile and future sales of our common shares could cause the market price of our common shares to decline.

Our common shares commenced trading on the NASDAQ Global Select Market in February 1997 and currently trade under the symbol "GOGL". Beginning on April 7, 2015, our shares traded on the Oslo Stock Exchange, or the OSE, under the ticker code “GOGL”. We cannot assure you that an active and liquid public market for our common shares will continue. The market price of our common shares has historically fluctuated over a wide range and may continue to fluctuate significantly in response to many factors, such as actual or anticipated fluctuations in our operating results, changes in financial estimates by securities analysts, economic and regulatory trends, general market conditions, rumors and other factors, many of which are beyond our control. If the volatility in the broad stock market worsens, it could have an adverse effect on the market price of our common shares and impact a potential sale price if holders of our common shares decide to sell their shares.

Future issuance of shares or other securities may dilute the holdings of shareholders and could materially affect the price of our common shares.

It is possible that we may in the future decide to offer additional shares or other securities in order to secure financing for new projects, in connection with unanticipated liabilities or expenses or for any other purposes. Any such additional offering could reduce the proportionate ownership and voting interests of holders of our common shares, as well as our earnings per share and our net asset value per share, and any offering by us could have a material adverse effect on the market price of our common shares.

Because our offices and most of our assets are outside the United States, you may not be able to bring suit against us, or enforce a judgment obtained against us in the United States.

Our executive offices, administrative activities and assets are located outside the United States. As a result, it may be more difficult for investors to effect service of process within the United States upon us, or to enforce both in the United States and outside the United States judgments against us in any action, including actions predicated upon the civil liability provisions of the federal securities laws of the United States.

We are subject to certain anti-takeover provisions in our constitutional documents.

Several provisions of our bye-laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions could also discourage, delay or prevent the merger, amalgamation or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider to be in its best interests. For more detailed information, please see “Item 10. Additional Information-B. Memorandum and Articles of Association.”

We may fail to meet the continued listing requirements of the NASDAQ Global Select Market, which could cause our common shares to be delisted.

Pursuant to the listing requirements of the NASDAQ Global Select Market, if a company’s share price is below $1.00 per share for thirty consecutive trading days, NASDAQ will notify the company that it is no longer in compliance with the NASDAQ listing qualifications, which are set forth in NASDAQ Listing Rule 5450(a). If a company is not in compliance with the minimum bid price rule, the company will have 180 calendar days to regain compliance. The company may regain compliance if the bid price of its common shares closes at $1.00 per share or more for a minimum of ten consecutive business days at any time during the 180 day cure period.

On February 18, 2016, we received notice from the NASDAQ Global Select Market that the minimum bid price for our common shares was below $1.00 per share for a period of thirty consecutive business days, and that we therefore did not meet the minimum bid price requirement for the NASDAQ Global Select Market. In August 2016, we regained compliance with the minimum bid price requirement prior to the end of the 180 day cure period.

There can be no assurance that we will remain in compliance with the minimum bid price requirement or the other NASDAQ listing qualification rules, or that our common shares will not be delisted. A delisting of our common shares could have an adverse effect on the market price, and the efficiency of the trading market for, our common shares, and may constitute an event of default under our debt agreements.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

History

We are an international shipping company that owns and operates a fleet of dry bulk vessels, comprising of Newcastlemax, Capesize, Kamsarmax, Panamax and Supramax vessels. Our vessels transport a broad range of major and minor bulk commodities, including ores, coal, grains and fertilizers, along worldwide shipping routes. We were originally established for the purpose of owning and operating five very large crude oil carriers, or VLCCs, and gradually over the years through vessel disposals, acquisitions and corporate transactions have become an owner and operator of a dry bulk vessel fleet.

On September 18, 1996, we were incorporated in Bermuda under the name Knightsbridge Tankers Limited as an exempted company pursuant to the Bermuda Companies Act 1981.

In October 2014, we changed our name to Knightsbridge Shipping Limited.

On October 7, 2014, we and the Former Golden Ocean entered into the Merger Agreement. The Merger was approved by our shareholders and the shareholders of the Former Golden Ocean at separate special general meetings held on March 26, 2015. In addition, our shareholders approved the adoption of the Amended and Restated Bye-laws. Following the completion of the Merger on March 31, 2015, we changed our name to Golden Ocean Group Limited.

For a description of our recent equity issuances, please see "Item 5.B-Liquidity and Capital Resources-Equity Issuances."

Our registered and principal executive offices are located at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda, and our telephone number at this location is +1 (441) 295-6935.

Our common shares currently trade on the NASDAQ Global Select Market and Oslo Stock Exchange under the ticker code "GOGL".

Our Acquisitions, Disposals and Newbuildings

In February 1997, we completed our initial public offering, which resulted in $317.2 million net proceeds. We used these proceeds and bank debt to fund the acquisition of our initial fleet of five VLCCs, which we sold between 2007 and 2013. During 2009, we took delivery of two Capesize vessels ( Battersea and Belgravia) in accordance with newbuilding contracts entered into at an earlier stage. During 2010, we bought two Capesize vessels (Golden Future and Golden Zhejiang) from the Former Golden Ocean.

In March 2013, we entered into two newbuilding contracts for two Capesize vessels ( Golden Fulham and Golden Finsbury). In November 2013, we entered into newbuilding contracts for two additional Capesize vessels ( Golden Barnet and Golden Bexley) .

In April 2014, we acquired five special purpose companies, or SPCs, from Frontline 2012 Ltd, or Frontline 2012, each owning a Capesize newbuilding contract. The vessels were delivered to us by the yards during 2014 ( KSL Seattle, KSL Sapporo, KSL Singapore, KSL Sydney and KSL Salvador ). In addition, one of our subsidiaries acquired a Capesize vessel ( Bulk China renamed to KSL China ), from Karpasia Shipping Inc., or Karpasia, a wholly-owned subsidiary of Hemen.

In April 2014, we also agreed to acquire twenty-five additional SPCs from Frontline 2012, twenty-three of which were parties to Capesizes newbuilding contracts and two of which were parties to Newcastelmaxes newbuilding contracts. In September 2014, we completed the first stage of this transaction and issued share capital to Frontline 2012 in exchange for eleven SPCs, each with a Capesize newbuilding contract, and two SPCs, each with a Newcastlemax newbuilding contract. Three of the eleven Capesize newbuildings were delivered to us during 2014 ( KSL Santiago, KSL Santos and KSL San Francisco ).

In January 2015, we took delivery of four Capesize vessels ( KSL Seoul, Golden Kathrine, KSL Sakura and KSL Seville ) .

In March 2015, we completed the second stage of the SPC acquisition from Frontline 2012, and issued share capital in exchange for twelve SPCs, assuming newbuilding commitments of $404.0 million, net of a cash payment from Frontline 2012 of $108.6 million. No other working capital balances were acquired.

In March 2015, we took delivery of the KSL Stockholm , a Capesize vessel.

As of March 31, 2015, and prior to the Merger with the former Golden Ocean, we owned eighteen Capesize vessels and twenty-one newbuilding contracts for construction of nineteen Capesizes and two Newcastelmaxes.

After the completion of the Merger, on March 31, 2015, we acquired seven Capesize vessels ( Channel Navigator, Channel Alliance, Golden Feng, Golden Shui, Golden Magnum, Golden Beijing and Golden Zhoushan ), ten Ice-class Panamax vessels ( Golden Saguenay, Golden Opportunity, Golden Ice, Golden Strength, Golden Suek, Golden Bull, Golden Brilliant, Golden Pear, Golden Diamond and Golden Ruby ), eight Kamsarmax vessels ( Golden Eminence, Golden Empress, Golden Endeavour, Golden Endurer, Golden Enterprise, Golden Rose, Golden Daisy and Golden Ginger ), four Supramax vessels ( Golden Cecilie, Golden Cathrine, Golden Aries and Golden Gemini ) and three newbuilding contracts for construction of four respective Supramax vessels ( Golden Taurus, Golden Leo, Golden Virgo and Golden Libra) . We further acquired a Panamax vessel ( Golden Lydernhon) and a Kamsarmax vessel ( Golden Eclipse), both owned under a respective capital lease.

In April 2015, we sold two Capesize vessels ( Channel Alliance and Channel Navigator) to an unrelated third party. The vessels were delivered to the buyers in the second quarter of 2015.

In April 2015, we agreed to the sale of four newbuilding Capesize vessels ( Front Atlantic, Front Baltic, Front Caribbean, and Front Mediterranean ). Upon completion of the construction of the vessels and delivery of them from the yards, the vessels were delivered to the buyer and three of the four vessels were chartered in for periods between six and twelve months following delivery. At the date of this report all three vessels have been redelivered to their owners.

In April 2015, we also agreed to a sale and leaseback transaction with Ship Finance for eight Capesize vessels. Five of these vessels ( KSL China, Battersea, Belgravia, Golden Future and Golden Zhejiang ) were owned by us prior to the completion of the Merger and three vessels ( Golden Zhoushan, Golden Beijing and Golden Magnum ) were acquired as a result of the Merger. These were sold en-bloc for an aggregate price of $272.0 million or $34.0 million per vessel on average. The vessels were delivered to Ship Finance in the third quarter of 2015 and were chartered in for a period of ten years. We have a purchase option of $112 million en-bloc after ten years and, if such option is not exercised, Ship Finance will have the option to extend the charters by three years.

In May 2015, we took delivery of the Golden Taurus , a Supramax vessel.

In June 2015, we took delivery of the Golden Aso and Golden Finsbury, both Capesize vessels.

In August 2015, we took delivery of, and simultaneously sold, the Front Atlantic , a Capesize vessel. We chartered the vessel in for a period of twelve months.

In November 2015, we entered into an agreement with New Times Shipbuilding Co. Ltd in China, or New Times Shipbuilding, to convert two Capesize dry bulk newbuildings to Suezmax oil tanker newbuildings. On November 23, 2015, we agreed to sell these newbuilding contracts to Frontline for $1.9 million. The sale was completed on December 31, 2015.

In November 2015, we took delivery of, and simultaneously sold, the Front Baltic , a Capesize vessel. We chartered the vessel in for a period of twelve months.

In January 2016, we took delivery of the Golden Barnet and the Golden Bexley , two Capesize vessels and the Golden Scape and the Golden Swift , two Newcastlemax vessels.

In February 2016, we took delivery of, and simultaneously sold, the Front Caribbean , a Capesize vessel. We chartered the vessel in for a period of six months.

In May 2016, we took delivery of the Golden Fulham, a Capesize vessel.

Also, in May 2016, the owner of Golden Lyderhorn , a Panamax vessel held under a capital lease, notified us that they intended to exercise their option to sell the vessel for a net price of $9.5 million with expected delivery in August 2016. We entered into an agreement to sell the vessel at the time of its re-delivery to an unrelated third party for net proceeds of $3.5 million. The vessel was delivered to the new owner on August 22, 2016.

In August 2016, we took delivery of the Golden Leo , a Supramax vessel.

In October 2016, we took delivery of, and simultaneously sold, the Front Mediterranean , a Capesize vessel.

As of December 31, 2016, we owned two Newcastlemaxes, twenty Capesizes, eight Kamsarmaxes, ten Ice-class Panamaxes and six Supramaxes. We also had ten newbuilding contracts for the construction of eight Capesizes and two Supramaxes.

Subsequent Developments

In January 2017, we took delivery of the Golden Virgo and the Golden Libra , two Supramax vessels.

In February 2017, we took delivery of the Golden Surabaya and the Golden Savannah , two Capesize vessels .

On March 14, 2017, we entered into the Quintana Acquisition to acquire fourteen vessels. The vessels will be owned by our newly-established wholly-owned non-recourse subsidiary. The closing of our acquisition of the vessels is subject to customary conditions to closing and entry into final binding loan agreements substantially in accordance with the binding term sheets we have entered into. We have also agreed, subject to definitive documentation and other customary closing conditions, to acquire two 2017 ice

class Panamax vessels from affiliates of Hemen. These vessels will be owned through our separate newly-established wholly-owned non-recourse subsidiary that does not also own the vessels acquired in the Quintana Acquisition. See "Item 5.B-Liquidity and Capital Resources-Vessel Transactions" for more information.

B. BUSINESS OVERVIEW

Our Reporting Segment

We own and operate a fleet of dry bulk vessels, comprising of Newcastlemaxes, Capesizes, Kamsarmaxes, Panamaxes and Supramaxes. We operated in two segments from 2009 through 2012; the tanker and dry bulk vessel segments as an international provider of seaborne transportation of crude oil and dry bulk cargoes. Since January 1, 2013, following the completion of the sale of three VLCCs during 2012 and the classification of the forth VLCC as "held for sale" as at December 31, 2012 , we only operate in the dry bulk vessel segment.

Our vessels operate worldwide and as a result, our management does not, and did not, evaluate performance by geographical region because this information is not meaningful.

Our Business Strategy

Our business strategy is to operate a diversified fleet of dry bulk vessels with flexibility to adjust our exposure to the dry bulk market depending on existing factors such as charter rates, newbuilding costs, vessel resale and scrap values and vessel operating expenses resulting from, among other things, changes in the supply of and demand for dry bulk capacity. We may adjust our exposure through time charters, voyage charters, bareboat charters, sale and leasebacks, sales and purchases of vessels, newbuilding contracts and acquisitions. Our intention is to renew and grow our fleet through selective acquisitions, however, the amended terms of our loan agreements (see "Item 5.B-Liquidity and Capital Resources") require us to obtain our lenders permission to do so until September 30, 2018.

Our credit facilities currently restrict us from paying dividends until after September 30, 2018. Thereafter, the amount and timing of any dividend distributions in the future will depend, among other things, on our compliance with covenants in our credit facilities, earnings, financial condition, cash position, Bermuda law affecting the dividend distributions, restrictions in our financing agreements and other factors. In addition, the declaration and payment of dividend distributions is subject at all times to the discretion of our Board. For more information about the amended terms of our loan agreements see "Item 5.B-Liquidity and Capital Resources".

Capesize Chartering Ltd

In February 2015, the Former Golden Ocean, Bocimar International NV, CTM, Golden Union Shipping Co S.A., and Star Bulk Carriers Corp. announced the formation of a new joint venture company, Capesize Chartering Ltd, or CCL. The purpose of the new company is to combine and coordinate the chartering services of all the parties for their participating Capesize dry bulk vessels that are intended to trade on the spot market and ultimately achieve improved scheduling ability through the joint marketing opportunity, with the overall aim of enhancing economic efficiencies. CCL commenced operations in the second half of February 2015 from the existing offices of each of the five parties involved. Following the completion of the Merger, our participating Capesize dry bulk vessels that trade on the spot market are marketed by the joint venture.

In January 2016, Golden Union Shipping Co S.A. equally transferred its 20% stake in CCL to the remaining four joint venture partners. At the same time, we entered into a revenue sharing agreement for Capesize dry bulk vessels with Bocimar International NV, C Transport Holding Ltd. and Star Bulk Carriers Corp. and we agreed to include 21 Capesize dry bulk vessels in the revenue sharing agreement. The revenue sharing agreement applies to 65 modern Capesize dry bulk vessels across the joint venture partners and is being managed from our offices in Singapore and Bocimar’s offices in Antwerp.

Management Structure

Overall responsibility for the oversight of the management of our company and its subsidiaries rests with our Board. We operate management services through our subsidiary incorporated in Bermuda, Golden Ocean Group Management (Bermuda) Ltd, who in turn subcontracts services to Golden Ocean Management AS and Golden Ocean Management Asia Pte Ltd, subsidiaries incorporated in Norway and Singapore, respectively. Our principal executive officer and principal financial officer are employed by Golden Ocean Management AS. Our principal commercial officer is employed by Golden Ocean Management Asia Pte Ltd. The Board defines the scope and terms of the services to be provided, including day-to-day operations, by the aforementioned

subsidiaries, and requires that it be consulted on all matters of material importance and/or of an unusual nature and, for such matters, provides specific authorization to personnel to act on our behalf.

Until March 31, 2015, we were provided with general administrative services by ICB Shipping (Bermuda) Limited, or the General Manager, a wholly-owned subsidiary of Frontline. Pursuant to the terms of the Amended General Management Agreement effective April 2, 2010, the General Manager was entitled to a management fee of $2.3 million per annum from January 1, 2010, which was subject to annual adjustments, plus a commission of 1.25% on gross freight revenues from our vessels, 1% of proceeds on the sale of any of our vessels, and 1% of the cost of the purchase of our vessels. The Amended General Management Agreement was terminated on March 31, 2015.

Technical Supervision Services

Since April 1, 2015, we receive technical supervision services from Frontline Management (Bermuda) Limited, or Frontline Management. Pursuant to the terms of the agreement, Frontline Management receives a management fee of $31,875 ( 2015 : $33,000 ) per vessel per year. This fee is subject to annual review. Frontline Management is also our newbuilding supervision and charges us for costs incurred in relation to the supervision. Technical operations and crewing of all owned vessels are outsourced to several leading ship management companies.

Seasonality

The dry bulk trade has a history of tracking seasonal demand fluctuations, but the industry appears to have become less dependent on such fluctuations as a result of the increased transportation of certain dry bulk commodities. In the last few years, adverse weather conditions in the Southern Hemisphere, which often occur during the first quarter, have had a negative impact on iron ore and coal exports from Australia and iron ore exports from Brazil.

Grain has traditionally had the greatest impact on the seasonality in the dry bulk market, particularly during the peak demand seasons, which occurs during the second quarter in the Southern Hemisphere and at the end of the third quarter and throughout the fourth quarter in the Northern Hemisphere. The growth of iron ore and coal transportation over the last decade, however, has diminished the relative importance of grain to the dry bulk transportation industry. Since iron ore, like most other commodities, has moved from fixed price agreements between shippers and receivers to spot pricing, short term price fluctuations have had an impact on iron ore trading by reducing normal seasonal patterns. Other factors, however, such as weather and port congestion still impact market volatility.

Customers

For the year ended December 31, 2016 , two customers each accounted for 10 percent or more of our consolidated revenues in the amounts of $34.5 million and $27.1 million , respectively.

For the year ended December 31, 2015 , one customer accounted for 10 percent or more of our consolidated revenues in the amount of $28.0 million .

For the year ended December 31, 2014 , three customers each accounted for 10 percent or more of our consolidated revenues in the amounts of $8.2 million , $8.0 million and $7.9 million , respectively.

Competition

The market for international seaborne dry bulk transportation services is highly fragmented and competitive. Seaborne dry bulk transportation services are generally provided by independent ship-owner fleets. In addition, many owners and operators in the dry bulk sector pool their vessels together on an ongoing basis, and such pools are available to customers to the same extent as independently owned and operated fleets. Competition for charters in the dry bulk market is intense and is based upon price, location, size, age, condition and acceptability of the vessel and its manager. Competition is also affected by the availability of other size vessels to compete in the trades in which we engage. Charters are to a large extent brokered through international independent brokerage houses that specialize in finding the optimal ship for any particular cargo based on the aforementioned criteria. Brokers may be appointed by the cargo shipper or the ship owner.

Environmental and Other Regulations

Government regulations and laws significantly affect the ownership and operation of our vessels. We are subject to international conventions, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered and compliance with such laws, regulations and other requirements may entail significant expense.

Our vessels are subject to both scheduled and unscheduled inspections by a variety of government, quasi-governmental and private organizations including local port authorities, national authorities, harbor masters or equivalents, classification societies, flag state administrations (countries of registry) and charterers. Our failure to maintain permits, licenses, certificates or other approvals required by some of these entities could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels.

We believe that the heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations; however, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, we cannot predict with certainty the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that results in significant oil pollution or otherwise causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, or the IMO, is the United Nations agency for maritime safety and the prevention of pollution by ships. The IMO has adopted several international conventions that regulate the international shipping industry, including but not limited to the International Convention on Civil Liability for Oil Pollution Damage as from time to time amended, and generally referred to as CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, and the International Convention for the Prevention of Pollution from Ships, as from time to time amended and generally referred to as MARPOL. MARPOL is broken into six Annexes, each of which establishes environmental standards relating to different sources of pollution: Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI relates to air emissions.

The operation of our vessels is also affected by the requirements contained in the International Management Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, promulgated by the IMO under SOLAS. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We intend to rely upon the safety management system that our appointed ship managers have developed.

Noncompliance with the ISM Code or with other IMO regulations may subject a shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports including United States and European Union, or E.U., ports.

United States

The United States Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. OPA affects all "owners and operators" whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the United States territorial sea and the 200 nautical mile exclusive economic zone around the United States. The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, imposes liability for cleanup and natural resource damage from the release of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define

"owner and operator" in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Accordingly, both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are responsible parties who are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from oil spills from their vessels. OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. OPA limits the liability of responsible parties and with respect to tankers over 3,000 gross tons, other than single-hull tank vessels, it is the greater of $2,200 per gross ton or $18,796,800, and the greater of $1,100 per gross ton or $939,800 for any non-tank vessel, including any edible oil tank, and any oil spill response, vessel (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable United States federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party's gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

OPA permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, however, in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. Compliance with any new requirements of OPA may substantially impact our cost of operations or require us to incur additional expenses to comply with any new regulatory initiatives or statutes.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damage for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refuses to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA have no effect on the availability of damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA, CERCLA and all applicable state regulations in the ports where our vessels call.

OPA and CERCLA both require owners and operators of vessels to establish and maintain with the United States Coast Guard, USCG, evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. Under OPA and CERCLA, an owner or operator of more than one tanker is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the tanker having the greatest maximum liability. We have provided such evidence and received certificates of financial responsibility from the USCG for each of our vessels required to have one.

Other United States Environmental Initiatives

The United States Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in United States navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. Furthermore, many states in United States that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than United States federal law.

The United States Environmental Protection Agency, EPA, and USCG have enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, or otherwise restrict our vessels from entering United States waters.

The EPA regulates the discharge of ballast and bilge water and other substances in United States waters under the CWA. The EPA regulations require vessels 79 feet in length or longer (other than commercial fishing vessels and recreational vessels) comply with a permit that regulates ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters under the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP. For a new vessel delivered to an owner or operator after September 19, 2009 to be covered by the VGP, the owner must submit a Notice of Intent, or NOI, at least 30 days before the vessel operates in United States waters. In March 2013, the EPA re-issued the VGP for another five years, and the new VGP took effect in December 2013. The 2013 VGP focuses on authorizing discharges incidental to operations of commercial vessels and the 2013 VGP contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in United States waters, more stringent requirements for exhaust gas scrubbers and the use of environmentally acceptable lubricants.

We have submitted NOIs for our vessels where required and do not believe that the costs associated with obtaining and complying with the VGP will have a material impact on our operations.

USCG regulations adopted and proposed for adoption under the United States National Invasive Species Act, or the NISA, also impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering or operating in United States waters, which require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures, or otherwise restrict our vessels from entering United States waters. The USCG must approve any technology before it is placed on a vessel, but has not yet approved the technology necessary for vessels to meet the foregoing standards.

However, as of January 1, 2014, vessels became technically subject to the phasing-in of these standards. As a result, the USCG has provided waivers to vessels which cannot install the as-yet unapproved technology. The EPA, on the other hand, has taken a different approach to enforcing ballast discharge standards under the VGP. In December 2013, the EPA issued an enforcement response policy in connection with the new VGP in which the EPA indicated that it would take into account the reasons why vessels do not have the requisite technology installed, but will not grant any waivers.

It should also be noted that in October 2015, the Second Circuit Court of Appeals issued a ruling that directed the EPA to redraft the sections of the 2013 VGP that address ballast water. However, the Second Circuit stated that 2013 VGP will remains in effect until the EPA issues a new VGP. It presently remains unclear how the ballast water requirements set forth by the EPA, the USCG, and IMO BWM Convention (discussed below), some of which are in effect and some which are pending, will co-exist.

In addition, at the international level, the IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements to be replaced in time with mandatory concentration limits. All ships will also have to carry a ballast water record book and an International Ballast Water Management Certificate. The BWM Convention enters into force 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping. On September 8, 2016, this threshold was met (with 52 contracting parties making up 35.14%). Thus, the BWM Convention will enter into force on September 8, 2017. Many of the implementation dates originally written into the BWM Convention have already passed, so that once the BWM Convention enters into force, the period for installation of mandatory ballast water exchange requirements would be extremely short, with several thousand ships a year needing to install ballast water management systems, or BWMS. For this reason, on December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that they are triggered by the entry into force date and not the dates originally in the BWM Convention. This in effect makes all vessels constructed before the entry into force date ‘existing’ vessels, and allows for the installation of a BWMS on such vessels at the first renewal survey following entry into force. At the IMO’s Marine Environmental Protection Committee, or MEPC’s, 70th Session in October 2016, MEPC adopted updated “guidelines for approval of ballast water management systems (G8).” G8 updates previous guidelines concerning procedures to approve BWMS. Upon entry into force of the BWM Convention, mid-ocean ballast water exchange would become mandatory for our vessels. When mid-ocean ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance for ocean carriers could be significant and the costs of ballast water treatments may be material. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The United States, for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with

certain reporting requirements. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on our operations.

The United States Clean Air Act, or the CAA, including its amendments of 1977 and 1990, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in each State.

Compliance with future EPA and the USCG regulations could require the installation of certain engineering equipment and water treatment systems to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, or may otherwise restrict our vessels from entering United States waters.

European Union

In October 2009, the E.U. amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. Member States were required to enact laws or regulations to comply with the directive by the end of 2010. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

The E.U. has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained. The E.U. also adopted and then extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The regulation also provided the E.U. with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. The 2015 United Nations Convention on Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016. The Paris Agreement does not directly limit greenhouse gas emissions from ships. As of January 1, 2013, ships were required to comply with new MEPC mandatory requirements to address greenhouse gas emissions from ships. As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. It makes the limits of the Energy Efficiency Design Index, or EEDI, apply to new ships, and all ships must develop and implement Ship Energy Efficiency Management Plans, or SEEMPs.

For 2020, the E.U. made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels. The E.U. also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period, from 2013 to 2020. In April 2015, a regulation was adopted requiring that large ships (over 5,000 gross tons) calling at E.U. ports from January 2018 collect and publish data on carbon dioxide emissions and other information. In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and safety, has adopted regulations to limit greenhouse gas emissions from certain mobile sources and has proposed regulations to limit greenhouse gas emissions from large stationary sources. Although the mobile source emissions regulations do not apply to greenhouse gas emissions from vessels, the EPA has received petitions from the California Attorney General and environmental groups to regulate greenhouse gas emissions from ocean-going vessels. The EPA enforces both the CAA and the international standards found in Annex VI of MARPOL concerning marine diesel emissions, and the sulphur content found in marine fuel. Furthermore, in the United States individual states can also enact environmental regulations. For example, California has introduced caps for greenhouse gas emission and, in the end of 2016, signaled it might take additional actions regarding climate change.

Any passage of climate control legislation or other regulatory initiatives by the IMO, E.U., the United States or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restrict emissions of greenhouse gases could require us to make significant financial expenditures, including capital expenditures to upgrade our vessels, which we cannot predict with certainty at this time.

International Labour Organization

The International Labour Organization, or ILO, is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO has adopted the Maritime Labour Convention 2006, or MLC 2006. A Maritime Labour Certificate and a Declaration of Maritime Labour Compliance is required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. The MLC 2006 entered into force on August 20, 2013. Amendments to MLC 2006 were adopted in 2014 and 2016. The MLC 2006 could require us to develop new procedures to ensure full compliance with its requirements.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the United States Maritime Transportation Security Act of 2002, or the MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. The regulations also impose requirements on certain ports and facilities, some of which are regulated by the EPA.

Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new Chapter XI-2 became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates compliance with the International Ship and Port Facilities Security Code, or ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism.

After July 1, 2004, to trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel's flag state. The following are among the various requirements, some of which are found in SOLAS:


•	on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;


•	on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;


•	the development of vessel security plans;


•	ship identification number to be permanently marked on a vessel's hull;


•	a continuous synopsis record kept onboard showing a vessel's history, including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and


•	compliance with flag state security certification requirements.

A ship operating without a valid certificate, may be detained at port until it obtains an ISSC, or it may be expelled from port, or refused entry at port.

The USCG regulations, intended to align with international maritime security standards, exempt from the MTSA vessel security measures non- United States vessels that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel's compliance with SOLAS security requirements and the ISPS Code. We believe that our fleet is currently in compliance with applicable security requirements.

Inspection by Classification Societies

Every oceangoing vessel must be "classed" by a classification society. The classification society certifies that the vessel is "in-class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in-class" by a classification society which is a member of the International Association of Classification Societies. All our vessels are certified as being "in-class" by a recognized classification society.

Risk of loss and insurance

Our business is affected by a number of risks, including mechanical failure of the vessels, collisions, property loss to the vessels, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, the operation of any ocean-going vessel is subject to the inherent possibility of catastrophic marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the United States market.

Frontline, who provides technical supervision services to us, is responsible for arranging the insurance of our vessels in line with standard industry practice. In accordance with that practice, we maintain marine hull and machinery and war risks insurance, which include the risk of actual or constructive total loss, and protection and indemnity insurance with mutual assurance associations. We carry insurance covering the loss of hire resulting from marine casualties or hull and marine particular damages on our vessels. Currently, the amount of coverage for liability for pollution, spillage and leakage available to us on commercially reasonable terms through protection and indemnity associations and providers of excess coverage is $1.0 billion per vessel per occurrence. Protection and indemnity associations are mutual marine indemnity associations formed by shipowners to provide protection from large financial loss to one member by contribution towards that loss by all members.

We believe that our current insurance coverage is adequate to protect us against the accident-related risks involved in the conduct of our business and that we maintain appropriate levels of environmental damage and pollution insurance coverage, consistent with standard industry practice. However, there is no assurance that all risks are adequately insured against, that any particular claims will be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future.

C. ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 for a list of our significant subsidiaries.

D. PROPERTY, PLANT AND EQUIPMENT

The following table summarizes key information about our fleet of vessels and newbuildings as of December 31, 2016:



Vessel	Built	DWT	Flag	Type of Employment
Newcastlemax - Owned
Golden Scape	2016	211,112	HK	Spot market
Golden Swift	2016	211,112	HK	Spot market

Capesize - Owned
Golden Feng	2009	169,232	MI	Spot market with RSA ⁴
Golden Shui	2009	169,333	MI	Spot market with RSA ⁴
KSL Salvador	2014	180,958	HK	Index linked time charter plus premium
KSL San Francisco	2014	181,066	HK	Index linked time charter plus premium
KSL Santiago	2014	181,020	HK	Index linked time charter plus premium
KSL Santos	2014	181,055	HK	Spot market with RSA ⁴
KSL Sapporo	2014	180,960	HK	Spot market with RSA ⁴
KSL Seattle	2014	181,015	HK	Index linked time charter plus premium
KSL Singapore	2014	181,062	HK	Index linked time charter plus premium
KSL Sydney	2014	181,000	HK	Index linked time charter plus premium
KSL Sakura	2015	181,062	HK	Index linked time charter plus premium



Golden Kathrine	2015	182,486	HK	Spot market with RSA ⁴
KSL Seoul	2015	181,010	HK	Index linked time charter plus premium
KSL Seville	2015	181,062	HK	Index linked time charter plus premium
KSL Stockholm	2015	181,055	HK	Index linked time charter plus premium
Golden Aso	2015	182,472	HK	Spot market with RSA ⁴
Golden Finsbury	2015	182,418	HK	Spot market with RSA ⁴
Golden Barnet	2016	180,355	HK	Spot market with RSA ⁴
Golden Bexley	2016	180,209	HK	Spot market with RSA ⁴
Golden Fulham	2016	182,000	HK	Spot market with RSA ⁴

Capesize - Operating Lease - Related Party, Ship Finance
Battersea	2009	169,500	MI	Spot market with RSA ⁴
Belgravia	2009	169,500	MI	Spot market with RSA ⁴
Golden Future	2010	176,000	HK	Spot market with RSA ⁴
Golden Zhejiang	2010	176,000	HK	Spot market with RSA ⁴
KSL China	2013	179,000	MI	Spot market with RSA ⁴
Golden Magnum	2009	179,788	HK	Spot market with RSA ⁴
Golden Beijing	2010	176,000	HK	Spot market
Golden Zhoushan	2011	175,834	HK	Spot market with RSA ⁴

Capesize - Owned - Joint Venture
Golden Opus ¹	2010	180,716	HK	Spot market with RSA ⁴

Capesize - Owned - Newbuilding under construction
Golden Surabaya ²	2017	181,046	HK	n/a
Golden Cirrus	2018	180,000	n/a	n/a
Golden Savannah ²	2017	181,044	HK	n/a
Golden Arcus	2018	180,000	n/a	n/a
Golden Cumulus	2018	180,000	n/a	n/a
Golden Incus ⁵	2018	180,000	n/a	n/a
Golden Calvus ⁵	2018	180,000	n/a	n/a
Golden Nimbus	2018	180,000	n/a	n/a

Ice class Panamax - Owned
Golden Ice	2008	75,500	HK	Spot market
Golden Opportunity	2008	75,500	HK	Spot market
Golden Saguenay	2008	75,500	HK	Spot market
Golden Strength	2009	75,500	HK	Spot market
Golden Suek	2011	74,849	HK	Time charter (expires 2017)
Golden Bull	2012	75,000	HK	Time charter (expires 2017)
Golden Brilliant	2013	74,500	HK	Spot market
Golden Diamond	2013	74,500	HK	Spot market
Golden Pearl	2013	74,186	HK	Spot market
Golden Ruby	2014	74,052	HK	Spot market

Kamsarmax - Owned
Golden Eminence	2010	79,463	HK	Spot market
Golden Empress	2010	79,463	HK	Time charter (expires 2021)
Golden Endeavour	2010	79,454	HK	Time charter (expires 2020)
Golden Endurer	2011	79,474	HK	Time charter (expires 2020)



Golden Enterprise	2011	79,463	HK	Spot market
Golden Daisy	2012	81,507	MI	Spot market
Golden Ginger	2012	81,487	MI	Spot market
Golden Rose	2012	81,585	MI	Spot market

Kamsarmax - Capital Lease, Third party
Golden Eclipse ³	2010	79,600	HK	Time charter (expires 2020)

Supramax - Owned
Golden Aries	2015	63,605	HK	Spot market
Golden Cecilie	2015	60,263	HK	Spot market
Golden Cathrine	2015	60,000	HK	Spot market
Golden Gemini	2015	63,605	HK	Spot market
Golden Taurus	2015	64,000	HK	Spot market
Golden Leo	2016	63,250	HK	Spot market

Supramax - Operating Lease, Third party
Golden Hawk	2015	58,000	PAN	Spot market

Supramax - Newbuildings under construction
Golden Libra ²	2016	63,800	HK	n/a
Golden Virgo ²	2016	63,800	HK	n/a

1. Owned through a joint venture with ST Shipping and Transportation Pte Ltd.

2. Delivered in 2017.

3. Chartered in on bareboat terms expiring in February 2020 and is recorded as a vessel under capital lease.

4. RSA: Revenue sharing agreement, CCL.

5. Expected delivery in 2018, subject to yard’s refund bank’s acknowledgment of amended terms of the newbuilding contracts.

Key to Flags:

MI – Marshall Islands, HK – Hong Kong, PAN - Panama, MT - Malta.

Other than our interests in the vessels and newbuildings described above, we do not own or lease any other material physical properties, except for the lease for office space in Oslo from Seatankers Management Norway AS, a related party, at market rates.

On March 14, 2017, we entered into the Quintana Acquisition to acquire fourteen vessels, as described under "Item 5.B-Liquidity and Capital Resources-Vessel Transactions". Following the closing of our acquisition of the vessels that is subject to customary conditions to closing and entry into final binding loan agreements substantially in accordance with the binding term sheets we have entered into, we will acquire:



Vessel	Built	DWT	Flag	Type of Employment
Newcastlemax
Q Gayle	2011	206,565	MI	Time charter
Capesize
Q Houston	2014	181,214	MI	Time charter
Q Kaki	2014	180,560	MI	Index linked time charter
Q Amreen	2015	179,337	MI	Time charter
Q Anastasia	2014	179,189	MI	Time charter
Q Myrtalia	2011	177,979	MI	Time charter
Post Panamax
Q Deb	2014	84,970	MI	Index linked time charter
Q Sue	2013	83,789	MI	Index linked time charter
Q Kennedy	2015	83,789	MI	Time charter
Kamsarmax
Q Jake	2011	82,188	MI	Spot market
Q Arion	2011	82,188	MI	Index linked time charter
Q Ioanari	2011	81,827	MI	Index linked time charter
Q Keen	2012	81,586	MI	Index linked time charter
Panamax
Q Shea	2007	76,937	MI	Index linked time charter

On March 14, 2017, we entered into the Hemen Acquisition to acquire two 2017 ice class Panamax vessels, as described under "Item 5.B-Liquidity and Capital Resources-Vessel Transactions". Subject to definitive documentation and other customary closing conditions we will acquire:



Vessel	Built	DWT	Flag	Type of Employment
Ice class Panamax
Sea Amber	2017	74,500	MT	Spot
Sea Opal	2017	74,500	n/a	n/a

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

Overview

The following discussion should be read in conjunction with "Item 3-Selected Financial Data", "Item 4-Information on the Company" and the audited Consolidated Financial Statements and Notes thereto included herein.

As of December 31, 2016, we owned forty-six dry bulk vessels and had construction contracts for ten newbuildings. In addition, we had ten vessels chartered-in (of which eight are chartered in on operating leases from Ship Finance, one chartered in on an operating lease from a third party and one chartered in on a capital lease from a third party) and one vessel indirectly owned through a 50% joint venture. Each vessel is (or, in the case of newbuildings, expected to be) owned and operated by one of our subsidiaries and is (or expected to be) flagged either in the Marshall Islands, Hong Kong or Panama. Six of our vessels are chartered-out on fixed rate time charters, ten of our vessels are chartered out on index linked rate time charters and the remaining forty-one vessels operate in the spot market, of which eighteen Capesize vessels participate in the revenue sharing agreement operated by Capesize Chartering Ltd, in which we have a 25% controlling interest.

Fleet Changes

Refer to "Item 4-Information on the Company-A. History and Development of the Company" for a discussion on acquisitions and disposals of vessels. A summary of the changes in the vessels that we own and chartered in under long term operating and capital leases for the years ended December 31, 2016 , 2015 and 2014 is summarized below.



	2016			2015			2014
Newcastlemax
At start of period	—			—			—
Acquisitions and newbuilding deliveries	2		m	—			—
At end of period	2			—			—
Capesize
At start of period	28			13			4
Acquired as a result of the Merger	—			7		b	—
Acquisitions and newbuilding deliveries	5		n	9		c	9	a
Disposals	(2	)	o	(12	)	d	—
Chartered in/owned by joint venture	(2	)	p	11		e	—
At end of period	29			28			13
Ice class Panamax and Panamax
At start of period	11			—			—
Acquired as a result of the Merger	—			10		f	—
Acquisitions and newbuilding deliveries	—			—			—
Disposals	—			—			—
Chartered in	(1	)	q	1		g	—
At end of period	10			11			—
Kamsarmax
At start of period	9			—			—
Acquired as a result of the Merger	—			8		h	—
Acquisitions and newbuilding deliveries	—			—			—
Disposals	—			—			—
Chartered in	—			1		i	—
At end of period	9			9			—
Supramax
At start of period	6			—			—
Acquired as a result of the Merger	—			4		j	—
Acquisitions and newbuilding deliveries	1		r	1		k	—
Disposals	—			—			—
Chartered in	—			1		l	—
At end of period	7			6			—
Total
At start of period	54			13			4
Acquired as a result of the Merger	—			29			—
Acquisitions and newbuilding deliveries	8			10			9
Disposals	(2	)		(12	)		—
Chartered in/owned by joint venture	(3	)		14			—
	57			54			13


a.	(i) Delivery of five newbuildings ( KSL Seattle, KSL Sapporo, KSL Singapore, KSL Sydney and KSL Salvador ) purchased in April 2014 from Frontline 2012, (ii) Delivery of a vessel ( KSL China ) purchased from Karpasia and (iii) Delivery of three newbuildings ( KSL Santiago, KSL Santos and KSL San Francisco ) purchased in April 2014 from Frontline 2012.


b.	Seven vessels acquired upon the completion of the Merger ( Channel Navigator, Channel Alliance, Golden Feng, Golden Shui, Golden Magnum, Golden Beijing and Golden Zhoushan ).


c.	(i) Delivery of six newbuildings ( KSL Seoul, Golden Kathrine, KSL Sakura, KSL Seville, KSL Stockholm and Golden Aso ) purchased in September 2014 from Frontline 2012, (ii) Delivery of one newbuilding ( Golden Finsbury) contracted for construction in March 2013 and (iii) Delivery of two newbuildings ( Front Atlantic and Front Baltic) purchased in March 2015 from Frontline 2012.

(ii) Disposal of two vessels upon delivery from the yard ( Front Atlantic and Front Baltic), (ii) Disposal of two vessels acquired upon the completion of the Merger ( Channel Alliance and Channel Navigator) and (iii) Disposal of eight vessels to Ship Finance ( Four owned at January 1, 2013: Battersea, Belgravia, Golden Future and Golden Zhejiang, one purchased in 2015: KSL China and three acquired upon the completion of the Merger: Golden Magnum, Golden Beijing and Golden Zhoushan).

(i) One vessel owned through a joint venture ( Golden Opus) acquired upon the completion of the Merger, (ii) Eight vessels chartered in on long term operating leases from Ship Finance ( Battersea, Belgravia, Golden Future, Golden Zhejiang, KSL China, Golden Magnum, Golden Beijing and Golden Zhoushan) and (iii) Two vessels chartered in on long term operating leases from a third party ( Front Atlantic and Front Baltic).


f.	Ten vessels acquired upon the completion of the Merger ( Golden Saguenay, Golden Opportunity, Golden Ice, Golden Strength, Golden Suek, Golden Bull, Golden Brilliant, Golden Pear, Golden Diamond and Golden Ruby ).


g.	One vessel under a capital lease ( Golden Lydernhon) acquired upon the completion of the Merger.


h.	Eight vessels acquired upon the completion of the Merger ( Golden Eminence, Golden Empress, Golden Endeavour, Golden Endurer, Golden Enterprise, Golden Rose, Golden Daisy and Golden Ginger ).


i.	One vessel under a capital lease ( Golden Eclipse) acquired upon the completion of the Merger.


j.	Four vessels acquired upon the completion of the Merger ( Golden Cecilie, Golden Cathrine, Golden Aries and Golden Gemini ).


k.	Delivery of one newbuilding ( Golden Taurus ) acquired upon the completion of the Merger.


l.	One vessel under a long term operating lease ( Golden Hawk ) acquired upon the completion of the Merger.


m.	Delivery of two newbuildings ( Golden Scape and Golden Swift ) purchased in September 2014 from Frontline 2012.


n.	(ii) Delivery of two newbuilding ( Golden Barnet and Golden Bexley) contracted for construction in November 2013, (ii) Delivery of one newbuilding ( Golden Fulham) contracted for construction in March 2013 and (iii) Delivery of two newbuildings ( Front Caribbean and Front Mediterranean) purchased in March 2015 from Frontline 2012.


o.	Disposal of two vessels upon delivery from the yard ( Front Caribbean and Front Mediterranean).


p.	Redelivery of two vessels chartered in on long term operating leases to their owners ( Front Atlantic and Front Baltic).


q.	Disposal of one vessel under a capital lease ( Golden Lydernhon) acquired upon the completion of the Merger.


r.	Delivery of one newbuilding ( Golden Leo ) acquired upon the completion of the Merger.

Summary of Fleet Employment

As discussed below, as at December 31, 2016, our vessels are operated under time charters and voyage charters.

A time charter agreement is a contract entered into by an owner and a charterer whereby the charterer is entitled to the use of a vessel for a specific period of time for a specified daily fixed on index-linked rate of hire. Under a time charter agreement, voyage costs, such as bunker fuel and port charges, are borne and paid by the charterer. In the time charter market, rates vary depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption. An index-linked rate usually refers to freight rate indices issued by the Baltic Exchange, such as the BDI. These rates are based on actual charter hire rates under charter entered into by market participants, as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers.

A voyage or spot charter agreement is a contract entered into by an owner and a charterer whereby a charterer is entitled to the use of a vessel to transport commodities between specified geographical locations at a specified freight rate per ton. Under voyage charter agreements, voyage costs are borne and paid by the owner. In the voyage charter market, rates are also influenced by cargo size, commodity, port dues and canal transit fees, as well as delivery and redelivery regions. In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit. Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading area.



	As of December 31,
	2016			2015			2014
	Number of vessels	Percentage of fleet		Number of vessels	Percentage of fleet		Number of vessels	Percentage of fleet
Newcastlemax
Spot	2	100	%	—	—	%	—	—	%
Spot with RSA	—	—	%	—	—	%	—	—	%
Time charter	—	—	%	—	—	%	—	—	%
Index linked time charter	—	—	%	—	—	%	—	—	%
	2	100	%	—	—	%	—	—	%
Capesize
Spot	1	—	%	20	70	%	10	80	%
Spot with RSA	18	60	%	—	—	%	—	—	%
Time charter	—	—	%	—	—	%	—	—	%
Index linked time charter	10	30	%	8	30	%	3	20	%
	29	90	%	28	100	%	13	100	%
Ice class Panamax and Panamax
Spot	8	80	%	9	80	%	—	—	%
Spot with RSA		—	%	—	—	%	—	—	%
Time charter	2	20	%	2	20	%	—	—	%
Index linked time charter	—	—	%	—	—	%	—	—	%
	10	100	%	11	100	%	—	—	%
Kamsarmax
Spot	5	60	%	5	60	%	—	—	%
Spot with RSA	—	—	%	—	—	%	—	—	%
Time charter	4	40	%	4	40	%	—	—	%
Index linked time charter	—	—	%	—	—	%	—	—	%
	9	100	%	9	100	%	—	—	%
Supramax
Spot	7	100	%	6	100	%	—	—	%
Spot with RSA		—	%	—	—	%	—	—	%
Time charter	—	—	%	—	—	%	—	—	%
Index linked time charter	—	—	%	—	—	%	—	—	%
	7	100	%	6	100	%	—	—	%
Total
Spot	23	40	%	40	70	%	10	80	%
Spot with RSA	18	30	%	—	—	%	—	—	%
Time charter	6	10	%	6	10	%	—	—	%
Index linked time charter	10	20	%	8	10	%	3	20	%
	57	100	%	54	90	%	13	100	%

Below is an overview of vessels on time charter contracts with an initial contract duration of more than one year, as of December 31,2016:



Vessel Type	Vessel Name	Dwt	Net Rate	Expiry (min period)
Ice class Panamax	Golden Suek	74,500	17,000	March 2017
Ice class Panamax	Golden Bull	74,500	16,788	September 2017
Kamsarmax	Golden Empress	79,463	22,800	December 2021
Kamsarmax	Golden Endeavour	79,600	18,525	November 2020
Kamsarmax	Golden Endurer	79,600	22,800	November 2020
Kamsarmax	Golden Eclipse	79,600	28,025	January 2020

In January 2015, we entered into an agreement with RWE Supply & Trading GmbH, a wholly owned subsidiary of RWE AG (a major European energy company), to charter out a total of fifteen Capesize vessels on long term, index-linked contracts. In September 2015, the parties agreed to amend the terms to ten Capesize vessels at seven and a half year terms instead of fifteen Capesize vessels at five year terms. During 2015, eight vessels were delivered to RWE and the remaining two vessels were delivered in 2016. These charters are considered long term since their duration exceeds one year, however they have not been included in the table above as the time charter revenue earned on these is variable due to the index-linked daily time charter rate and therefore comparable to charter revenue earned in the spot market.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make estimates and assumptions affecting 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 revenues and expenses during the reporting period.

Management believes that the following accounting policies are the most critical in fully understanding and evaluating our reported financial results as they require a higher degree of judgment in their application resulting from the need to make estimates about the effect of matters that are inherently uncertain. See Note 2 to the audited Consolidated Financial Statements included herein for details of all significant accounting policies.

Business combinations

We accounted for the acquisition of the Former Golden Ocean on March 31, 2015 as a business combination and have measured the identifiable assets acquired and the liabilities assumed at their acquisition date fair values. The consideration transferred has been measured at fair value based on the closing price of our shares on the date of acquisition and the fair value of the vested share options in the Former Golden Ocean. The allocation of the purchase price for the Former Golden Ocean required us to make significant estimates and assumptions, including estimates of future revenues earned by vessels held under capital lease and the operating costs (including dry docking costs) of those vessels, the appropriate discount rate to value these cash flows. In developing estimates of future cash flows, we must make assumptions about future performance, with significant assumptions being related to charter rates, ship operating expenses, utilization and drydocking requirements. These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration the rates being earned at the time and estimated daily time charter equivalent rates for each vessel for the unfixed days over the remaining terms of the leases.

In addition, we were required to separately value the charters acquired with vessels and used an "excess earnings" technique where the terms of the contract are assessed relative to current market conditions. The values of the contract related intangibles were determined by means of calculating the incremental or decremental cash flows arising over the life of the contracts compared with contracts with terms at prevailing market rates. This gave rise to an acquisition date fair value asset of $127.1 million for favorable contracts asset in respect of vessels chartered out and an acquisition date fair value liability of $7.5 million for unfavorable contracts in respect of the vessels chartered in. These balances will be amortized over the remaining contract periods for each lease. We were also required to value the Convertible Bond (defined below) and this resulted in a $38.8 million discount to the principal amount, which is being amortized over the term of the bond. The surplus of the fair value of the net assets acquired over the fair value of the consideration transferred of $78.9 million was recognized as a bargain purchase gain in our consolidated statement of operations. Acquisition related costs are expensed as incurred.

Revenue and expense recognition

Revenues and expenses are recognized on the accruals basis. Revenues are generated from voyage charters, time charter and bareboat charter hires. Voyage revenues are recognized rateably over the estimated length of each voyage and, therefore, are allocated between reporting periods based on the relative transit time in each period. Voyage expenses are recognized as incurred. Probable losses on voyages are provided for in full at the time such losses can be estimated. Time charter and bareboat charter revenues are recorded over the term of the charter as a service is provided. When a time charter contract is linked to an index, we recognize revenue for the applicable period based on the actual index for that period. We use a discharge-to-discharge basis in determining percentage of completion for all voyage contracts whereby we recognize revenue rateably from when product is discharged (unloaded) at the end of one voyage to when it is discharged after the next voyage. However, we did not recognize revenue if a charter was not contractually committed to by a customer and us, even if the vessel discharged its cargo and was sailing to the anticipated load port on its next voyage. Revenues generated through revenue sharing agreements are presented gross when we are the primary obligor under the charter parties.

Demurrage is a form of damages for breaching the period allowed to load and unload cargo in a voyage charter, or the laytime, and is recognized as income according to the terms of the voyage charter contract when the charterer remains in possession of the vessel after the agreed laytime.

Claims for unpaid charter hire and damages for early termination of time and bareboat charters are recorded upon receipt of cash when collectability is not reasonably assured. Such amounts related to services previously rendered are recorded as time charter revenue. Amounts in excess of services previously rendered are classified as other operating income.

Marketable securities

Our marketable securities are considered to be available-for-sale securities and as such are carried at fair value. Any resulting unrealized gains and losses, net of deferred taxes if any, are recorded as a separate component of other comprehensive income in equity unless the securities are considered to be other than temporarily impaired, in which case unrealized losses are recorded in the consolidated statement of operations as impairment loss on shares.

We review our available-for-sale securities for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the securities. We record an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the securities held as available for sale occurs.

Vessels and depreciation

Vessels are stated at cost less accumulated depreciation. Depreciation is calculated based on cost less estimated residual value, using the straight-line method, over the useful life of each vessel. The useful life of each vessel is deemed to be 25 years. The residual value is calculated by multiplying the lightweight tonnage of the vessel by the market price of scrap per tonne. The market price of scrap per tonne is calculated as the 10 year average, up to the date of delivery of the vessel, across the three main recycling markets (Far East, Indian sub-continent and Bangladesh). Residual values are reviewed annually.

Impairment of long lived assets

The carrying values of our vessels and newbuildings may not represent their fair market value at any point in time since the market prices of second-hand vessels and the cost of newbuildings tend to fluctuate with changes in charter rates. Historically, both charter rates and vessel values tend to be cyclical. The carrying amounts of vessels that are held and used by us and newbuildings under construction are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular vessel or newbuilding may not be fully recoverable. Such indicators may include depressed spot rates and depressed second hand vessel values. We assess recoverability of the carrying value of each asset or newbuilding on an individual basis by estimating the future undiscounted cash flows expected to result from the asset, including any remaining construction costs for newbuildings, and eventual disposal. If the future net undiscounted cash flows are less than the carrying value of the asset, or the current carrying value plus future newbuilding commitments, an impairment loss is recorded equal to the difference between the asset's or newbuildings carrying value and fair value. Fair value is estimated based on values achieved for the sale/purchase of similar vessels and appraised valuations. In addition, long-lived assets to be disposed of are reported at the lower of carrying amount and fair value less estimated costs to sell.

In developing estimates of future cash flows, we must make assumptions about future performance, with significant assumptions being related to charter rates, ship operating expenses, utilization, drydocking requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent rates used for unfixed days are based on a combination of (i) trading exchange forecasts for five years, and (ii) estimate of implied charter rates based on the broker values received from third party brokers on a quarterly basis. The implied rate is a calculated rate for each vessel based on the charter rate the vessel would need to achieve, given our expected future operating costs and discount factors that once discounted would equate to the average broker values. We then use the resultant undiscounted cash flows in our model. Recognizing that the transportation of dry bulk cargoes is cyclical and subject to significant volatility based on factors beyond our control, management believes the use of estimates based on the combination of internally forecasted rates and calculated average rates as of the reporting date to be reasonable. We believe that the estimated future undiscounted cash flows expected to be earned by each of our vessels over their remaining estimated useful life will exceed the vessels' carrying value as of December 31, 2016, and accordingly, have not recorded an impairment charge.

Estimated outflows for operating expenses and drydocking requirements are based on historical and budgeted costs and are adjusted for assumed inflation. Finally, utilization is based on historical levels achieved and estimates of a residual value are consistent with the pattern of scrap rates used in management's evaluation of salvage value.

The more significant factors that could impact management's assumptions regarding cash flows include (i) loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of dry bulk cargoes, (iii) greater than anticipated levels of newbuilding orders or lower than anticipated levels of vessel scrappings, and (v) changes in rules and regulations applicable to the dry bulk industry, including legislation adopted by international organizations such as the IMO and the E.U. or by individual countries. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they were made, such assumptions are highly subjective and likely to change, possibly materially, in the future. There can be no assurance as to how long charter rates and vessel values will remain at their current low levels or whether they will improve by a significant degree. If charter rates were to remain at depressed levels future assessments of vessel impairment would be adversely affected.

Our Fleet – Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of Certain Vessels

In "Critical Accounting Policies – Impairment of long-lived assets", we discuss our policy for impairing the carrying values of our vessels and newbuildings. During the past few years, the market values of vessels have experienced particular volatility, with substantial declines in many vessel classes. As a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below those vessels' carrying value, even though we would not impair those vessels' carrying value under the accounting impairment policy, due to the belief that future undiscounted cash flows expected to be earned by such vessels over their operating lives would exceed such vessels' carrying amounts.

Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on the values achieved for the sale/purchase of similar vessels and appraised valuations and are inherently uncertain. In addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of the vessels or prices that we could achieve if we were to sell them.

The table set forth below indicates the carrying value of each of our owned vessels as of December 31, 2016 and 2015 :



Vessel Type	Vessel Name		Built	Dwt	2016 ($ millions)	2015 ($ millions)
Newcastlemax	Golden Scape		2016	211,112	69.8	—
Newcastlemax	Golden Swift		2016	211,112	68.3	—
Capesize	Golden Feng	¹	2009	169,232	32.9	34.2
Capesize	Golden Shui	¹	2009	169,333	32.9	34.2
Capesize	KSL Salvador		2014	180,958	64.5	66.9
Capesize	KSL San Francisco		2014	181,066	61.2	63.4
Capesize	KSL Santiago		2014	181,020	60.7	62.9
Capesize	KSL Santos		2014	181,055	61.1	63.3
Capesize	KSL Sapporo		2014	180,960	63.6	66.0
Capesize	KSL Seattle		2014	181,015	63.3	65.7
Capesize	KSL Singapore		2014	181,062	63.3	65.7
Capesize	KSL Sydney		2014	181,000	64.0	66.4
Capesize	KSL Sakura		2015	181,062	61.7	64.0
Capesize	KSL Seoul		2015	181,010	61.9	64.2
Capesize	KSL Stockholm		2015	181,055	62.3	64.5
Capesize	KSL Seville		2015	181,062	61.3	63.6
Capesize	Golden Kathrine		2015	182,486	62.9	65.2
Capesize	Golden Aso		2015	182,472	63.8	66.1
Capesize	Golden Finsbury		2015	182,418	50.5	52.2
Capesize	Golden Barnet		2016	180,355	54.1	—



Capesize	Golden Bexley		2016	180,209	53.9	—
Capesize	Golden Fulham		2016	182,000	51.8	—
Ice class Panamax	Golden Ice	¹	2008	75,500	14.9	15.5
Ice class Panamax	Golden Opportunity	¹	2008	75,500	14.9	15.5
Ice class Panamax	Golden Saguenay	¹	2008	75,500	14.9	15.5
Ice class Panamax	Golden Strength	¹	2009	75,500	15.9	16.5
Ice class Panamax	Golden Suek	¹	2011	74,849	17.4	18.0
Ice class Panamax	Golden Bull	¹	2012	75,000	18.6	19.2
Ice class Panamax	Golden Brilliant	¹	2013	74,500	20.2	21.1
Ice class Panamax	Golden Diamond	¹	2013	74,500	20.3	21.1
Ice class Panamax	Golden Pearl	¹	2013	74,186	20.3	21.1
Ice class Panamax	Golden Ruby	¹	2014	74,052	21.5	22.2
Kamsarmax	Golden Eminence	¹	2010	79,463	16.2	16.8
Kamsarmax	Golden Empress	¹	2010	79,463	16.2	16.8
Kamsarmax	Golden Endeavour	¹	2010	79,454	16.2	16.8
Kamsarmax	Golden Endurer	¹	2011	79,474	17.1	17.8
Kamsarmax	Golden Enterprise	¹	2011	79,463	17.1	17.8
Kamsarmax	Golden Daisy	¹	2012	81,507	19.8	20.5
Kamsarmax	Golden Ginger	¹	2012	81,487	19.8	20.5
Kamsarmax	Golden Rose	¹	2012	81,585	19.8	20.5
Supramax	Golden Aries	¹	2015	63,605	23.5	24.4
Supramax	Golden Cecilie	¹	2015	60,263	25	25.9
Supramax	Golden Cathrine	¹	2015	60,000	24.9	25.9
Supramax	Golden Gemini	¹	2015	63,605	23.6	24.5
Supramax	Golden Taurus	¹	2015	64,000	24.9	25.8
Supramax	Golden Leo		2016	63,650	25.7	—
					1,758.5	1,488.2


1.	These vessels were acquired as a result of the Merger.

We believe that the basic charter-free market value for each of the vessels above is lower than their carrying value and that the aggregate carrying value of these vessels exceeds their aggregate basic charter-free market value by approximately $667 million (December 31, 2015: $464 million). We believe that the estimated future undiscounted cash flows expected to be earned by each of these vessels over its remaining estimated useful life, exceed each of these vessel's carrying value as of December 31, 2016, and accordingly, have not recorded an impairment charge.

The basic charter-free market value for each of the ten (December 2015: eighteen ) newbuildings we owned at December 31, 2016 is lower than the newbuilding's total estimated cost of completion (being the aggregate of the carrying value, the remaining installments to be paid, the estimated newbuilding supervision costs and the estimated capitalized interest at December 31). We believe that the aggregate estimated cost of completion of these newbuildings exceeds their aggregate basic charter-free market value by approximately $159 million (December 2015: $227 million). We believe that the estimated future undiscounted cash flows expected to be earned by each newbuilding over its estimated useful life exceed the newbuilding's estimated cost of completion and, accordingly, have not recorded an impairment charge.

We refer you to the risk factor entitled "The fair market values of our vessels have declined and may decline further, which could limit the amount of funds that we can borrow, cause us to breach certain financial covenants in our credit facilities, or result in an impairment charge, and cause us to incur a loss if we sell vessels following a decline in their market value".

Factors Affecting Our Results

The principal factors which affect our results of operations and financial position include:


•	the earnings of our vessels;


•	gains (losses) from the sale of assets;


•	vessel operating expenses;


•	impairment losses on vessels and newbuilding contracts;


•	provisions for uncollectible receivables;


•	administrative expenses;


•	depreciation;


•	interest expense;


•	bargain purchase gain; and


•	discontinued operations.

We derive our earnings from time charters and voyage charters. As of December 31, 2016, 51 of our 57 vessels, which are owned or leased in by us, were employed in the voyage charter market or on short term time charters of less than a year. The dry bulk industry has historically been highly cyclical, experiencing volatility in profitability, vessel values and freight rates.

Operating costs are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and maintenance, drydockings, lubricating oils, insurance and management fees.

An impairment loss on a vessel is recognized when the vessel's carrying value exceeds the estimated future net undiscounted cash flows expected to be earned over the remaining estimated useful life of the vessel.

An impairment loss on a newbuilding under construction is recognized when the estimated cost of completion, being the aggregate of the carrying value, the remaining installments to be paid, the estimated newbuilding supervision costs and the estimated capitalized interest at the assessment day, exceeds the estimated future net undiscounted cash flows expected to be earned over the estimated useful life of the newbuilding upon its delivery.

Losses from uncollectible receivables are accrued when information is available before the financial statements are issued that indicates that it is probable that a receivable will not be collected.

Administrative expenses are comprised of general corporate overhead expenses, including personnel costs, property costs, audit fees, legal and professional fees, restricted stock unit, or RSU, expense and other general administrative expenses. Personnel costs include, among other things, salaries, pension costs, fringe benefits, travel costs and health insurance.

Depreciation, or the periodic costs charged to our income for the reduction in usefulness and long-term value of our vessels, is also related to the number of vessels we own or lease. We depreciate the cost of vessels we own, less their estimated residual value, over their estimated useful life on a straight-line basis. We depreciate the cost of vessels held under capital lease over the term of the lease. No charge is made for depreciation of vessels under construction until they are delivered.

Interest expense relates to vessel specific debt facilities and capital leases. Interest expense depends on our overall borrowing levels and may significantly increase when we acquire vessels or on the delivery of newbuildings. Interest incurred during the construction of a newbuilding is capitalized in the cost of the newbuilding. Interest expense may also change with prevailing interest rates, although the effect of these changes may be reduced by interest rate swaps or other derivative instruments.

We recorded a bargain purchase gain of $78.9 million in 2015, which resulted from the Merger, and is the amount by which the fair value of the net assets acquired exceeded the value of the consideration paid.

Lack of Historical Operating Data for Vessels before their Acquisition (other than those acquired in a Business Combination)

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is no historical financial due diligence process when we acquire vessels. Accordingly, we do not obtain the historical operating data for the vessels from the sellers because that information is not material to our decision to

make acquisitions, nor do we believe it would be helpful to potential investors in our common shares in assessing our business or profitability. Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel's classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller's technical manager and the seller is automatically terminated and the vessel's trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, we treat the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business. Although vessels are generally acquired free of charter, we have agreed to acquire (and may in the future acquire) some vessels with time charters. Where a vessel has been under a voyage charter, the vessel is delivered to the buyer free of charter. It is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer's consent and the buyer's entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter, because it is a separate service agreement between the vessel owner and the charterer. When we purchase a vessel and assume a related time charter, we must take the following steps before the vessel will be ready to commence operations:


•	obtain the charterer's consent to us as the new owner;


•	in some cases, obtain the charterer's consent to a new flag for the vessel;


•	arrange for a new crew for the vessel;


•	replace all hired equipment on board, such as gas cylinders and communication equipment;


•	negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;


•	register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;


•	implement a new planned maintenance program for the vessel; and


•	ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

Inflation

Although inflation has had a moderate impact on our vessel operating expenses and corporate overhead, management does not consider inflation to be a significant risk to direct costs in the current and foreseeable economic environment. It is anticipated that insurance costs, which have risen over the last three years, may continue to rise moderately over the next few years. Dry bulk cargo transportation is a specialized area and the number of vessels is increasing. There will therefore be an increased demand for qualified crew and this has and will continue to put inflationary pressure on crew costs. However, in a shipping downturn, costs subject to inflation can usually be controlled because shipping companies typically monitor costs to preserve liquidity and encourage suppliers and service providers to lower rates and prices in the event of a downturn.

Year ended December 31, 2016 compared with year ended December 31, 2015

Operating revenues



(in thousands of $)	2016	2015	Change
Time charter revenues	91,407	85,960	5,447
Voyage charter revenues	159,108	102,972	56,136
Bareboat charter revenues	2,399	—	2,399
Other operating income	4,894	1,306	3,588
Total operating revenues	257,808	190,238	67,570

Time charter revenues increased by $5.5 million in 2016 as compared to 2015, primarily due to:


•	an increase of $18.2 million generated from improved market conditions captured in index-linked time charter for ten of our Capesize vessels and full year results for the vessels acquired upon the completion of the Merger, and


•	an increase of $1.7 million generated from six vessels delivered during 2016 that traded on the time charter market.

These factors were partially offset by:


•	a decrease of $9.8 million generated from thirteen compared to twenty-six chartered-in vessels on short term charters and relets during 2016 and 2015, respectively, which we traded on time charter terms, and


•	a decrease of $4.6 million related to amortization of the estimated fair value allocated to favorable time charters of (2016: $27.3 million, 2015: $23.7 million)

Voyage charter revenues increased by $56.1 million in 2016 as compared to 2015, primarily due to:


•	an increase of $27.6 million generated from five of six vessels delivered during 2016 that traded on the spot market, and


•	an increase of $27.2 million generated from thirty-eight compared to twenty-four chartered-in vessels on short term charters and relets during 2016 and 2015, respectively, which we traded on the spot market.

During 2016, bareboat charter revenues of $2.4 million relates to a receipt of claims for unpaid charter hire owed under bareboat charters of the VLCCs Titan Venus and Mayfair . The receipt was recorded as bareboat charter revenue as it related to services previously rendered under such terms. This amount was received as full and final settlement for the claims.

During 2016, other operating income primarily comprises of $2.0 million for loss of hire in relation to warranty claims on four Capesize newbuilding deliveries, $0.9 million under the Capesize revenue sharing agreement and $1.9 million in respect of management fee income for services provided by Golden Ocean Group Management (Bermuda) Ltd to related parties. During 2015, other operating income primarily comprises of $0.3 million in respect of the reimbursement of expenses incurred in connection with the unlawful arrest of one vessel and $0.9 million in respect of management fee income for services provided by Golden Ocean Group Management (Bermuda) Ltd to related parties.

Gain (loss) on sale of assets and amortization of deferred gains



(in thousands of $)	2016	2015		Change
Net loss on sale of vessels	72	(2,062	)	2,134
Loss on sale of newbuilding contracts	—	(8,858	)	8,858
Amortization of deferred gains	228	132		96
Gain (loss) on sale of assets and amortization of deferred gains	300	(10,788	)	11,088

During 2016, gain on sale of vessels arose on the sales of Front Mediterranean ($13 thousand gain), Front Caribbean ($68 thousand gain) and Golden Lyderhorn ($9 thousand loss). Amortization of deferred gains arises on the sale and lease back of eight vessels with Ship Finance, which was completed in the third quarter of 2015.

During 2015, loss on sale of vessels arose on the sales of Front Atlantic ($2.2 million loss) and Front Baltic ($0.1 million gain), both vessels sold upon their delivery in August and November 2015, respectively. The loss on sale of newbuilding contracts is attributable to the sale of two newbuilding contracts to Frontline. Amortization of deferred gains arises on the sale and lease back of eight vessels with Ship Finance, which was completed in the third quarter of 2015.

Voyage expenses and commission



(in thousands of $)	2016	2015	Change
Voyage expenses and commission	89,886	78,099	11,787

Voyage expenses and commission increased by $11.8 million in 2016 as compared to 2015, primarily due to:


•	an increase of $15.9 million incurred by the delivery of six newbuildings in 2016, and


•	an increase of $9.0 million incurred by vessels that were chartered-in on short term charters and operated in the spot market.

These factors were partially offset by:


•	a decrease of $13.1 million related to vessels operated in the spot market in 2015, which traded under time charter terms in 2016.

Ship operating expenses



(in thousands of $)	2016	2015	Change
Ship operating expenses	105,843	83,022	22,821

Ship operating expenses are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and maintenance, lubricating oils, insurance and management fees.

Ship operating expenses increased by $22.8 million in 2016 as compared to 2015, primarily due to:


•	an increase of $9.9 million incurred by the 29 vessels acquired as a result of the Merger, for which full year expenses were incurred in 2016,


•	an increase of $8.8 million incurred by the delivery of six newbuildings in 2016,


•	an increase of $4.2 million incurred by the eight vessels that were delivered during 2015 and traded for the full year in 2016, and


•	an increase of $2.8 million primarily related to yard payments resulting from deferral of delivery under the newbuilding program.

These factors were partially offset by:


•	a decrease of $2.9 million related to drydock costs for three vessels in 2016 compared to six vessels in 2015.

Charter hire expenses



(in thousands of $)	2016	2015	Change
Charter hire expenses	53,691	30,719	22,972

Charter hire expenses increased by $23 million in 2016 as compared to 2015, primarily due to:


•	an increase of $3.7 million for vessels chartered in from third parties on short term charters and relets,


•	an increase of $9.7 million for vessels chartered in from third parties on long term charters resulting from a longer charter period of charter in 2016,


•	an increase of $13.5 million for the eight vessels chartered in from Ship Finance resulting from full year expenses in 2016, and


•	an increase of $1.0 million resulting from lower amortization of unfavorable time charter contracts, recognized as deduction of charter hire expenses.

These factors were partially offset by:


•	a decrease of $4.8 million resulting from reduction in onerous contracts provisions.

Administrative expenses



(in thousands of $)	2016	2015	Change
Administrative expenses	12,728	12,469	259

Administrative expenses increased by $0.3 million in 2016 as compared to 2015, primarily due to:


•	an increase of $1.7 million for personnel, travel and offices costs due full year expenses for the former Golden Ocean, and


•	an increase of $0.9 million in related party charges.

These factors were partially offset by:


•	a decrease of $2.0 million in legal, audit and professional fees incurred as a result of the Merger,


•	a decrease of $0.3 million in director fees, and


•	a decrease of $0.2 million in other expenses and RSU/Stock option expenses.

Provision for uncollectible receivables



(in thousands of $)	2016	2015	Change
Provision for uncollectible receivables	1,800	4,729	(2,929	)

The provision for uncollectible receivables of $1.8 million in 2016 was recorded against the carrying value of the long-term receivable acquired upon the completion of the Merger following an impairment review that was triggered by an agreement with the counterparty to collect $3.0 million .

Impairment loss on vessels and newbuildings



(in thousands of $)	2016	2015	Change
Impairment loss on vessels and newbuildings	985	152,597	(151,612	)

Impairment loss on vessels and newbuildings in 2016 is attributable to $1.0 million impairment loss on the Golden Lyderhorn, a vessel held under capital lease, following an impairment review that was triggered by the likelihood to dispose the vessel prior to the end of its useful life.

Impairment loss on vessels and newbuildings in 2015 is attributable to:


•	$141.0 million relates to impairment losses on five of the eight vessels that we agreed to sell to Ship Finance in April 2015 ( KSL China, Battersea, Belgravia, Golden Future and Golden Zhejiang ),

•

$7.1 million relates to the impairment loss on newbuildings. In April 2015, we agreed sell four newbuildings to a third party on delivery of the newbuilding. One of these vessels was delivered and sold in August 2015 at a loss of $2.2 million. The impairment review of the remaining three vessels indicated that the expected costs would exceed the agreed sales price of the vessels and an impairment loss was recognized, and


•	$4.5 million relates to an impairment loss on the Golden Lyderhorn, a vessel held under capital lease, following an impairment review that was triggered by a significant fall in rates in the BDI.

Depreciation



(in thousands of $)	2016	2015	Change
Depreciation	63,433	52,728	10,705

Depreciation expenses increased by $10.7 million in 2016 as compared to 2015, primarily due to:


•	an increase of $4.5 million due to full year depreciation on the 29 vessels acquired upon the completion of the Merger, of which two were vessels under capital lease,


•	an increase of $9.1 million due to the delivery of six newbuildings in 2016,


•	an increase of $3.6 million due to full year depreciation in 2016 of eight vessels delivered in 2015, and


•	a decrease of $6.5 million due to eight vessels sold to Ship Finance during 2015.

Interest income



(in thousands of $)	2016	2015	Change
Interest income	1,666	849	817

Interest income increased by $0.8 million in 2016 as compared to 2015, primarily due to:


•	an increase in interest income on bank deposits of $1.32 million due to higher cash deposits held during the year, and


•	a decrease of interest income of $0.4 million on an interest bearing long term receivable, acquired as a result of the Merger.

Interest expense



(in thousands of $)	2016		2015		Change
Interest on floating rate debt	26,768		20,475		6,293
Interest on fixed rate debt	6,122		4,719		1,403
Finance lease interest expense	1,952		1,981		(29	)
Interest on other obligations	16		2		14
Commitment fees	2,069		3,217		(1,148	)
Interest capitalized on newbuildings	(2,258	)	(8,968	)	6,710
Amortization of fair value adjustments as a result of the Merger	9,497		6,844		2,653
	44,166		28,270		15,896

Interest expense increased by $15.9 million in 2016 as compared to 2015, primarily due to:

•

an increase of $6.3 million in interest on floating rate debt, as a result of interest expense on $142.2 million drawdowns under the $425.0 million term loan facility, interest expense on $40.5 million deferred repayments at an increased margin of 4.25% following the debt restructuring in the first quarter of 2016 and full year interest expense accruing on facilities acquired as a result of the merger, on March 31, 2015,


•	an increase of $1.4 million in interest on fixed rate debt, as a result of full year interest expense accruing on the Convertible bond acquired as a result of the merger, on March 31, 2015,


•	a decrease of $1.2 million in commitment fees as the 2015 results included $1.5 million fees in relation to the new loan facility of $425.0 million, which was entered into in February 2015,


•	a decrease of $6.7 million in interest capitalized on newbuildings as eight of the eighteen newbuildings due for delivery at December 31, 2015 were delivered in 2016 and interest capitalization the remaining ten newbuildings due for delivery at December 31, 2016 was ceased during 2016 as they were concluded substantially complete, and


•	an increase of $2.7 due to full year the amortization of the fair value adjustment of $38.8 million on the Convertible Bond.

Associated companies



(in thousands of $)	2016		2015		Change
Equity results of associated companies	(381	)	(433	)	52
Impairment of associated companies	(2,142	)	(4,600	)	2,458
	(2,523	)	(5,033	)	2,510

In 2016 and 2015, the impairment loss relates to our 50% equity interest in Golden Opus Inc following an impairment review that was triggered by a significant fall in rates in the BDI.

Impairment loss on marketable securities



(in thousands of $)	2016		2015		Change
Other than temporary impairment on marketable securities	(10,050	)	(23,323	)	13,273

In 2016, the other than temporary impairment on marketable securities is comprised of $8.5 million in respect of an investment in a company listed on a U.S. stock exchange and $1.5 million in respect of an investment in a company listed on the Norwegian 'Over the Counter' market. In 2015, the other than temporary impairment on marketable securities is comprised of $19.1 million in respect of an investment in a company listed on a U.S. stock exchange which was acquired during 2015 and $4.2 million in respect of an investment in a company listed on the Norwegian 'Over the Counter' market that was acquired as a result of the Merger.

Loss on derivatives



(in thousands of $)	2016		2015		Change
Loss on derivatives	(675	)	(6,939	)	6,264

Loss on derivatives decreased by $6.3 million in 2016 as compared to 2015, primarily due gains on bunker derivatives of $5.4 million. In 2016, the loss on derivatives comprise losses of $1.8 million on interest rate swaps, losses of $0.1 million on foreign currency swaps, gains of $1.2 million on bunker derivatives and gains of $0.1 million on freight forward agreements. In 2015, the

loss on derivatives comprise losses of $2.5 million on interest rate swaps, losses of $0.2 million on foreign currency swaps, losses of $3.6 million on bunker derivatives and losses of $0.6 million on freight forward agreements. We did not engage in derivative transactions prior to the Merger.

Bargain purchase gain arising on consolidation



(in thousands of $)	2016	2015	Change
Bargain purchase gain arising on consolidation	—	78,876	(78,876	)

Other financial items



(in thousands of $)	2016		2015		Change
Other financial items	(1,860	)	(1,897	)	37

Other financial items remain at the same levels in 2016 as compared to 2015.

Year ended December 31, 2015 compared with year ended December 31, 2014

Operating revenues



(in thousands of $)	2015	2014	Change
Time charter revenues	85,960	22,656	63,304
Voyage charter revenues	102,972	53,706	49,266
Other operating income	1,306	20,353	(19,047	)
Total operating revenues	190,238	96,715	93,523

Voyage charter revenues increased in 2015 as compared to 2014 primarily due to:


•	an additional $31.7 million generated from sixteen of the additional 29 vessels acquired as a result of the Merger trading partly in the spot market,


•	an additional $20.3 million generated from five newbuildings delivered in 2015 trading partly in the spot market, and


•	an additional $10.2 million generated from vessels that were chartered-in on short term charters and relets in 2015.

These factors were partially offset by a decrease of $12.9 million attributable to the overall downturn of the dry bulk spot market compared to 2014.

Time charter revenues increased in 2015 as compared to 2014 primarily due to:


•	an additional $58.6 million generated from all of the vessels acquired as a result of the Merger,


•	an additional $9.8 million generated from two capital leased vessels acquired as a result of the Merger,


•	an additional $9.5 million generated from time charters of eight newbuildings delivered during 2015 of which five also completed voyages charters, and


•	an additional $9.1 million generated from vessels that were chartered-in on short term charters and relets in 2015.

These factors were partially offset by amortization of the estimated fair value allocated to favorable time charters of $23.7 million.

Other operating income in 2015 primarily comprises $0.3 million in respect of the reimbursement of expenses incurred in connection with the unlawful arrest of one vessel and $0.9 million in respect of management fee income for services provided by Golden Ocean Group Management (Bermuda) Ltd to related parties.

Other operating income in 2014 primarily comprised:


•	$17.5 million received in respect of a claim for unpaid charter hire and damages for early termination of the time charter for the Golden Zhejiang . We also received $1.9 million in connection therewith, which was recorded as time charter revenue as it related to unrecognized time charter revenue in respect of services previously rendered.


•	$0.3 million received in respect of a claim for unpaid charter hire and damages for early termination of the time charter for the Battersea , and


•	$2.6 million received as settlement for the early charter termination of a time charter for the Belgravia .

Loss on sale of assets and amortization of deferred gains



(in thousands of $)	2015		2014	Change
Net loss on sale of vessels	2,062		—	2,062
Loss on sale of newbuilding contracts	8,858		—	8,858
Amortization of deferred gains	(132	)	—	(132	)
	10,788		—	10,788

Loss on sale of vessels in 2015 principally relates to the Front Atlantic ($2.2 million loss) and the Front Baltic ($0.1 million gain), which were sold on delivery in August and November 2015, respectively. The loss on sale of newbuilding contracts in 2015 is attributable to the sale of two newbuilding contracts to Frontline in 2015. Amortization of deferred gains in 2015 arises on the sale and lease back of eight vessels with Ship Finance, which was completed in the third quarter of 2015.

Voyage expenses and commission



(in thousands of $)	2015	2014	Change
Voyage expenses and commission	78,099	33,955	44,144

Voyage expenses and commission increased in 2015 as compared to 2014 primarily due to:


•	an increase of $27.3 million incurred by the addition of 29 vessels acquired as a result of the Merger, of which two were sold during the year,


•	an increase of $13.0 million incurred by the delivery of eight newbuildings in 2015, and


•	an increase of $7.0 million incurred by vessels that were chartered-in on short term charters and operated in the spot market.

These factors were partially offset by a decrease of $3.1 million related to vessels operated in the spot market in 2014, which traded under time charter terms in 2015.

Ship operating expenses



(in thousands of $)	2015	2014	Change
Ship operating expenses	83,022	18,676	64,346

Ship operating expenses are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and maintenance, lubricating oils, insurance and management fees.

Ship operating expenses increased in 2015 as compared to 2014 primarily due to:


•	an increase of $40.8 million incurred by the 29 vessels acquired as a result of the Merger, of which two were sold during the year,


•	an increase of $10.7 million incurred by the delivery of eight newbuildings in 2015,


•	an increase of $9.8 million incurred by the nine vessels that were delivered during 2014 and traded for the full year in 2015,


•	an increase of $3.0 million incurred by the two capital leased vessels acquired as a result of the Merger, and


•	an increase in drydocking costs of $1.4 million related to six vessels in 2015, of which five were acquired as a result of the Merger, compared to three vessels in 2014.

This was partially offset by a decrease of $1.4 million mainly related to supplier rebates.

Charter hire expenses



(in thousands of $)	2015	2014	Change
Charter hire expenses	30,719	—	30,719

Charter hire expenses in 2015 are attributable to:


•	$17.6 million for vessels chartered in from third parties,


•	$12.1 million for the eight vessels chartered in from Ship Finance, and


•	$2.4 million related to the provision for onerous contracts

This was partially offset by $1.4 million amortization of unfavorable time charter contracts, which has been recognized as a reduction to charter hire expenses.

Administrative expenses



(in thousands of $)	2015	2014	Change
Administrative expenses	12,469	5,037	7,432

Administrative expenses increased in 2015 as compared to 2014 primarily due to:


•	an additional $5.5 million for personnel, travel and offices costs of the Former Golden Ocean since April 1, 2015,


•	an additional $2.9 million in legal, audit and professional fees incurred as a result of the Merger and the increased size of the Company since March 31, 2015, and


•	an additional $0.4 million in Board fees as a result of the Merger and the temporary increase in the size of the Board.

This was partially offset by the following:


•	a $0.7 million reduction in management fees as a result of the termination of the contract with the General Manager on March 31, 2015,


•	a $0.3 million reduction in RSU expense, and


•	a $0.3 million reduction in other expenses.

Provision for uncollectible receivables



(in thousands of $)	2015	2014	Change
Provision for uncollectible receivables	4,729	—	4,729

The provision for uncollectible receivables is attributable to a long-term receivable acquired as a result of the Merger and was recorded following an impairment review that was triggered by a significant fall in rates in the BDI.

Impairment loss on vessels and newbuildings



(in thousands of $)	2015	2014	Change
Impairment loss on vessels and newbuildings	152,597	—	152,597

Impairment loss on vessels and newbuildings in 2015 is attributable to:


•	$141.0 million relates to impairment losses on five of the eight vessels that we agreed to sell to Ship Finance in April 2015 ( KSL China, Battersea, Belgravia, Golden Future and Golden Zhejiang ),

•

$7.1 million relates to the impairment loss on newbuildings. In April 2015, we agreed sell four newbuildings to a third party on delivery of each newbuilding. One of these vessels was delivered and sold in August 2015 at a loss of $2.2 million. The impairment review of the remaining three vessels indicated that the expected costs would exceed the agreed sales price of the vessels and an impairment loss was recognized, and


•	$4.5 million relates to an impairment loss on the Golden Lyderhorn, a vessel held under capital lease, following an impairment review that was triggered by a significant fall in rates in the BDI.

Depreciation



(in thousands of $)	2015	2014	Change
Depreciation	52,728	19,561	33,167

Depreciation expenses increased in 2015 as compared to 2014 primarily due to:


•	an increase of $15.9 million as a result of 29 vessels acquired as a result of the Merger, of which two were vessels under capital lease,


•	an increase of $12.8 million as a result of the delivery of eight newbuildings in 2015, and


•	an increase of $4.5 million due to full year depreciation in 2015 of nine vessels delivered in 2014.

Interest income



(in thousands of $)	2015	2014	Change
Interest income	849	29	820

Interest income increased in 2015 as compared to 2014 primarily due to:


•	interest received on bank deposits was $0.3 million higher due to higher cash deposits held since the completion of the Merger, and


•	interest income of $0.6 million on an interest bearing long term receivable, acquired as a result of the Merger.

Interest expense



(in thousands of $)	2015		2014		Change
Interest on floating rate debt	20,475		4,973		15,502
Interest on fixed rate debt	4,719		—		4,719
Finance lease interest expense	1,981		—		1,981
Interest on other obligations	2		—		2
Commitment fees	(8,968	)	(4,179	)	(4,789	)
Interest capitalized on newbuildings	3,217		1,731		1,486
Amortization of fair value adjustments as a result of the Merger	6,844		—		6,844
	28,270		2,525		25,745

Interest expense increased in 2015 as compared to 2014 primarily due to:


•	a $15.5 million increase in bank loan interest expense, which is due to the following:


◦	$8.9 million increase resulting from debt facilities acquired as a result of the Merger,


◦	$6.8 million increase resulting from full year interest accruing on the $240.0 million drawn in the second half of 2014 under the $420.0 million term loan facility,


◦	$1.5 million increase resulting from additional drawdowns of $216.0 million during 2015, and


◦	$1.7 million decrease resulting from repayments of $244.0 million during 2015, including full repayments of the $175.0 million term loan facility and the $201.0 million term loan facility.


•	$4.7 million in interest on fixed rate debt, which resulted from the assumption of the Convertible Bond as a result of the Merger.


•	$2.0 million in interest on finance leases, which resulted from the assumption of capital lease obligations for two vessels as a result of the Merger.


•	$4.5 million in interest capitalized on newbuildings, which resulted from increased payments in 2015 following the assumption of four newbuildings as a result of the Merger and the 25 newbuilding contracts acquired from Frontline 2012 in September 2014 and March 2015.


•	$1.5 million increase in commitment fees resulting principally from the new loan facility of $425.0 million, which was entered into in February 2015, of which $27.2 million was drawn down at the end of 2015, and


•	Amortization adjustments related to the purchase price adjustments in respect of the Merger, of which $6.6 million is in respect of the $38.8 million fair value adjustment on the Convertible Bond and $0.2 million relates to the sellers credits.

Associated companies



(in thousands of $)	2015		2014	Change
Equity results of associated companies	(433	)	—	(433	)
Impairment of associated companies	(4,600	)	—	(4,600	)
	(5,033	)	—	(5,033	)

The investments were acquired as a result of the Merger and we had no such investments in the year ended December 31, 2014. The impairment loss relates to our 50% equity interest in Golden Opus Inc following an impairment review that was triggered by a significant fall in rates in the Baltic Dry Index.

Impairment loss on marketable securities



(in thousands of $)	2015		2014	Change
Other than temporary impairment on marketable securities	(23,323	)	—	(23,323	)

The other than temporary impairment on marketable securities is comprised of $19.1 million in respect of an investment in a company listed on a U.S. stock exchange, which was acquired during 2015, and $4.2 million in respect of an investment in a company listed on the Norwegian 'Over the Counter' market that was acquired as a result of the Merger.

Loss on derivatives



(in thousands of $)	2015		2014	Change
Loss on derivatives	(6,939	)	—	(6,939	)

The loss on derivatives comprise losses of $2.5 million on interest rate swaps, losses of $0.2 million on foreign currency swaps, losses of $3.6 million on bunker derivatives and losses of $0.6 million on freight forward agreements. We did not engage in derivative transactions prior to the Merger.

Bargain purchase gain arising on consolidation



(in thousands of $)	2015	2014	Change
Bargain purchase gain arising on consolidation	78,876	—	78,876

Other financial items



(in thousands of $)	2015		2014		Change
Other financial items	(1,897	)	(737	)	(1,160	)

Other financial items increased in 2015 as compared to 2014 primarily due to increased amortization of deferred charges resulting from the $3.8 million loan arrangement fee paid on the $425.0 million term loan facility.

Net loss from discontinued operations



(in thousands of $)	2015	2014		Change
Net loss from discontinued operations	—	(258	)	258

Net loss from discontinued operations in 2014 relates to the operations of our VLCCs, the last of which was sold during 2013. The loss in 2014 relates to legal fees incurred in connection with claims for unpaid charter hire and damages following early termination of charters.

Recently Issued Accounting Standards

Refer to Note 3 of "Item 18. Financial Statements".

B. LIQUIDITY AND CAPITAL RESOURCES

We operate in a capital-intensive industry and have historically financed our purchase of vessels through a combination of equity capital and borrowings from commercial banks, as well as the Convertible Bond issued to the Former Golden Ocean. Our ability to generate adequate cash flows on a short and medium term basis depends substantially on the trading performance of our vessels in the market. Periodic adjustments to the supply of and demand for dry bulk vessels cause the industry to be cyclical in nature.

Our funding and treasury activities are conducted within corporate policies to increase investment returns while maintaining appropriate liquidity for our requirements. Cash and cash equivalents are held primarily in U.S. dollars with some balances held in Norwegian Kroner and Singapore dollars.

We expect that our wholly-owned non-recourse subsidiary that will own the vessels acquired in the Quintana Acquisition, will be prohibited from paying dividends to us.

Our short-term liquidity requirements relate to payment of operating costs (including drydocking), funding working capital requirements, repayment of debt financing as required under the cash sweep mechanism, payment of newbuilding installments, lease payments for our chartered in fleet and maintaining cash reserves against fluctuations in operating cash flows and payment of cash distributions. Sources of short-term liquidity include cash balances, restricted cash balances, short-term investments and receipts from customers. Restricted cash balances are related to the minimum cash covenant in our loan agreements and to margin calls on derivative positions or minor amounts secured for tax payments or for claims processes.

Revenues from time and bareboat charters are generally received monthly or bi-weekly in advance while revenues from voyage charters are received on negotiated terms for each voyage, normally 90/95% after completed loading and the remaining after completed discharge.

We have significant exposure to the spot market as only six of our vessels were fixed on long term time charter contracts in 2016, and at the date of this report we have eight vessels on fixed rate time charter contracts with initial contract duration of more than nine months. The revenues and net operating income are therefore dependent on the earnings in the spot market. In February 2016, we agreed with our lenders to amend the repayment profile of the debt, whereby there is no debt repayment from April 1, 2016 to September 30, 2018. Based on this and the current level of operating expenses, interest expenses and general and administrative costs, the average cash breakeven rates on a TCE basis are (i) approximately $10,400 per day for our Capesize vessels, (ii) approximately $7,900 per day for our Panamax and Kamsarmax vessels and (iii) approximately $7,400 per day for our Supramax vessels. Average spot rates in 2017 to date were as follows: Capesize vessels approximately $10,160 per day, Panamax and Kamsarmax vessels approximately $8,245 per day and Supramax vessels approximately $8,190 per day.

In addition to the short-term funding requirements, our liquidity requirements include payment of newbuilding installments, funding the equity portion of investments in new or replacement vessels and repayment of bank loans. Additional sources of funding for our medium and long-term liquidity requirements include new loans, refinancing of existing arrangements, equity issues, public and private debt offerings, vessel sales, sale and leaseback arrangements and asset sales.

From January 1, 2017 and up to the date of this report, we have taken delivery of, and paid $101.2 million in final delivery installments on, four newbuildings. As of the date of this report, we have also paid $9.8 million on the remaining six newbuildings, the delivery of which have been postponed until the first quarter of 2018. As of the date of this report, our outstanding commitment amounts on our remaining six newbuildings is $183.7 million , subject to the yard's refund bank's acknowledgment of the amended terms of two of the postponed newbuilding contracts.

As of December 31, 2016, we had available, undrawn, debt financing of $200 million for eight Capesize newbuilding contracts. From January 1, 2017 and up to the date of this report, we took delivery of two of the financed vessels and drew down debt in total of $50.0 million. Based on the amended terms under the loan agreement and draw down on delivered vessels, as of the date of this report, the available debt financing for the remaining six vessels is $150 million. We intend to finance the remaining newbuilding commitments and any shortfall in financing commitments arising from a fall in vessel values with cash on hand, operating cash flow and, if market conditions permit, proceeds from debt and equity financings.

As of December 31, 2016 and 2015, we had cash and cash equivalents of $212.9 million and $102.6 million, respectively. As of December 31, 2016 and 2015, we had restricted cash of $53.8 million and $48.9 million, respectively, which corresponds to the minimum liquidity balance that we were required to maintain under our loan facilities.

Net cash used in operating activities in the year ended December 31, 2016 was $23.1 million compared with net cash provided by operations of $14.8 million in the year ended December 31, 2015. As a substantial part of our fleet trade on either voyage

charters or index linked time charter contracts, we are significantly exposed to the spot market. Therefore, our spot market exposure contributes to volatility in cash flows from operating activities. Any increase or decrease in the average rates earned by our vessels in periods subsequent to December 31, 2016, compared with the actual rates achieved during 2016, will as a consequence have a positive or negative comparative impact, respectively, on the amount of cash provided by operating activities.

Vessel Transactions

In April 2015, we agreed to a sale and leaseback transaction with Ship Finance for eight Capesize vessels. Five of these vessels ( KSL China , Battersea , Belgravia , Golden Future and Golden Zhejiang ) were owned by us prior to the completion of the Merger and three vessels ( Golden Zhoushan , Golden Beijing and Golden Magnum ) were acquired as a result of the Merger. These vessels were built in Korea and China between 2009 and 2013 and were sold en-bloc for an aggregate price of $272.0 million (or $34.0 million per vessel on average). $188.9 million of the sale proceeds was used to repay debt. The vessels were delivered in the third quarter of 2015. The vessels are time chartered-in by one of our subsidiaries for a period of ten years. The daily time charter rate is $17,600 during the first seven years and $14,900 in the remaining three years. In addition, 33% of our profit from revenues above the daily time charter rate will be calculated and paid on a quarterly basis to Ship Finance. We will have a purchase option of $112 million en-bloc after ten years and, if such option is not exercised, Ship Finance will have the option to extend the charters by three years at $14,900 per day.

In April 2015, two vessels, Channel Alliance and Channel Navigator, which were acquired as a result of the Merger were sold to an unrelated third party. The vessels were delivered in the second quarter of 2015. Net cash proceeds were $16.8 million from which we repaid debt of $14.3 million.

In May 2016, the owner of the Golden Lyderhorn, a 1999-built Panamax which was chartered in by us and classified as a vessel held under capital lease, notified us that they intended to exercise their option to sell the vessel to us for a net price of $9.5 million. We subsequently entered into an agreement to sell the vessel at the time of its sale to us in August to an unrelated third party for net proceeds of $3.5 million. The vessel was delivered to its new owner on August 22, 2016.

On March 14, 2017, we entered into the Quintana Acquisition. As consideration, we will issue 14.5 million common shares to Quintana and assume the vessels' corresponding debt of approximately $262.7 million . The vessels will be owned by a newly-established wholly-owned non-recourse subsidiary. According to binding term sheets we have entered into with the lenders with respect to the acquired vessels, we have negotiated a $17.4 million down-payment of the debt in exchange for no mandatory debt repayment until July 2019. In the period prior to July 2019, a cash sweep mechanism is put in place whereby if certain conditions are met, we will pay down on the deferred repayment amount of $40.5 million . The average interest rate of the debt to be assumed in connection with the acquisition of the vessels is LIBOR plus 3.1% margin and ordinary debt repayments, following the end of the waiver period in July 2019, will amount to $5.8 million per quarter. Pursuant to the loan agreements we expect to enter into, our wholly-owned non-recourse subsidiary that will own the acquired vessels will be prohibited from paying dividends to us. During the waiver period through June 2019, we will be required under the expected loan agreements to satisfy financial covenants including $10 million minimum cash and 105% minimum value covenant. Following the waiver period, the financial covenants under these loans will include 25% market adjusted equity, $10 million minimum cash and 125 - 135% minimum value covenant. In addition, we have granted customary registration rights with respect to the shares issued to Quintana. The aggregate of 14.5 million common shares to be issued in consideration for the acquired vessels will be issued gradually upon delivery of each of the vessels. The closing of the acquisition is subject to customary conditions to closing and entry into final binding loan agreements, substantially in accordance with the binding term sheets we have entered into.

We have also agreed, subject to definitive documentation and other customary closing conditions, to acquire two 2017 ice class Panamax vessels from affiliates of Hemen. The two vessels will be owned by a newly-established wholly-owned non-recourse subsidiary, separate from the one that will own the vessels acquired from Quintana. Hemen will issue a seller credit of $22.5 million , non-amortizing until June 2019 and with interest rate of LIBOR plus a margin of 3.0% . We will issue an aggregate of 3.3 million common shares in consideration for the vessels, which will be issued with respect to each vessel upon the delivery of the vessel.

Newbuildings

In March 2015, we acquired the remaining twelve SPCs from Frontline 2012 and issued 6,200,000 shares as consideration. We also assumed net newbuilding commitments of $404.0 million, net of a cash payment from Frontline 2012 of $108.6 million.

In April 2015, we agreed to the sale of four Capesize newbuildings, which were owned by us prior to the completion of the Merger and are currently under construction. Upon completion, two vessels were delivered in 2015, one in February 2016 and the fourth vessel in the fourth quarter of 2016. We time charter-in three of the sold vessels for periods between six and twelve months from

delivery. Sale proceeds of $92.4 million were received in 2015 and $92.4 million in 2016. The newbuilding vessels were not funded with any debt prior to delivery to the new owners.

In April 2015, we also reached agreements with several of our yards to delay the delivery dates of nineteen newbuildings by 79 months in the aggregate. In October 2015, we agreed the postponement of the delivery of three vessels from 2015 to February, March and April 2016.

In November 2015, we entered into an agreement with New Times Shipbuilding to convert two Capesize dry bulk newbuildings, with expected delivery in the first quarter of 2017 to Suezmax oil tanker newbuildings. On November 23, 2015, we agreed to sell these newbuilding contracts to Frontline for $1.9 million.

During the year ended December 31, 2015, we paid $519 million in connection with our newbuilding program. As of December 31, 2015, we had eighteen vessels under construction. There was no debt drawn in relation to these vessels. Our outstanding commitments as of December 31, 2015 for our eighteen newbuildings amounted to $570.1 million with expected payments of $502.8 million in 2016 and $67.3 million in 2017, for expected delivery of sixteen vessels in 2016 and two vessels in 2017.

In January 2016, we took delivery of Golden Barnet , Golden Bexley , Golden Scape and Golden Swift . Final installments of $112.6 million, in aggregate, were paid and $117.2 million was drawn down in debt.

In February 2016, we took delivery of and simultaneously sold the Front Caribbean and chartered the vessel in for a period of twelve months. The final installment of $33.4 million was paid upon delivery and sales proceeds of $46.2 million were received at the same time. There was no related debt. The vessel was redelivered to owners in December 2016.

In May 2016, we took delivery of Golden Fulham , a Capesize newbuilding. A final installment of $41.5 million was paid in connection with delivery of the vessel, and $25.0 million was drawn down in debt.

In August 2016, we took delivery of Golden Leo , a Supramax newbuilding. A final installment payment of $15.7 million was paid in connection with delivery of the vessel. There was no related debt.

In October 2016, we took delivery of the Capesize newbuilding Front Mediterranean and immediately sold and delivered the vessel to its new owner. The transaction resulted in net cash flow of $12.7 million, following payment of final installment for delivery of $33.5 million and sales proceeds of $46.2 million.

During the year ended December 31, 2016, we paid in total $267.3 million in connection with our newbuilding program. As of December 31, 2016, we had ten vessels under construction. In 2016, we reached agreement with shipyards to defer delivery of ten newbuildings and achieved aggregate price reductions of $15.3 million. As of December 31, 2016, our outstanding contractual commitments for the ten remaining newbuildings were $303.2 million due in 2017, and the available debt financing for the remaining ten vessels was $200 million. Our outstanding commitments are primarily nonrecourse to the parent company.

In January 2017, we took delivery of Golden Virgo and Golden Libra and paid final purchase installments of $32 million. There was no related debt on the vessels.

In February 2017, we took delivery of Golden Surabaya and Golden Savannah and paid final installment payments of $ 69.2 million in total. In connection with the delivery of these vessels, $50.0 million in debt was drawn down.

As of the date of this report, we have six vessels under construction. Following amended agreements with our yards, subject to final acceptance from the yards’ refund banks on two of the amendments, our outstanding commitments for these newbuildings amount to $183.7 million , and the available debt financing for the remaining six vessels is $150 million. We intend to finance the remaining newbuilding commitments and any shortfall in financing commitments arising from a fall in vessel values with cash on hand, proceeds from our recent equity offering and, if market conditions permit, proceeds from additional debt and equity financings.

We believe that our working capital, committed financing for remaining six Capesize newbuildings and cash on hand is sufficient for our current working capital requirements (including newbuilding installments) for, at least, the twelve months from the date of this report.

Equity Issuances

In April 2014, we acquired five SPCs from Frontline 2012, each owning a 180,000 dwt Capesize dry bulk newbuilding contract and one of our subsidiaries acquired a 2013-built Capesize dry bulk vessel, Bulk China (renamed KSL China ), from Karpasia. The consideration was settled by the issuance of 3,100,000 shares and 620,000 shares to Frontline 2012 and Hemen (on behalf of Karpasia), respectively, at a price of $62.70 per share. We assumed $150.0 million in remaining newbuilding installments in connection with the SPCs acquired from Frontline 2012 and we paid cash of $24.0 million to Karpasia. We also received $43.4 million in cash in connection with the purchase of the five SPCs. No other working capital balances were acquired.

On April 23, 2014, we, Frontline 2012 and Hemen entered into an agreement, or the First Registration Rights Agreement, whereby we agreed that we will, within a specified period in the future, prepare and file a shelf registration statement pursuant to Rule 415 of the U.S. Securities Act of 1933, as amended, to ensure that the common shares issued to Frontline 2012 and Hemen will be registered with the Securities and Exchange Commission, or the Commission. On July 16, 2014, the Commission declared effective our shelf registration statement on Form F-3, which registered the common shares previously issued to Frontline 2012 and Hemen in accordance with the terms of the First Registration Rights Agreement.

In April 2014, we agreed to acquire 25 SPCs from Frontline 2012, each owning a dry bulk newbuilding contract. In September 2014, we acquired thirteen of these SPCs. The consideration for the thirteen SPCs was settled by the issuance of 6,200,000 of our common shares as consideration to Frontline 2012. The issuance of the 6,200,000 shares was recorded at an aggregate value of $356.8 million based on the closing price of $57.55 per share on September 15, 2014. We assumed $490.0 million in remaining newbuilding installments and acquired cash of $25.1 million in connection with the purchase of the thirteen SPCs. We acquired the remaining twelve SPCs in March 2015. The consideration for the other twelve SPCs was settled by the issuance of 6,200,000 of our common shares as consideration to Frontline 2012. The shares were recorded at a price per share of $20.50 or $127.1 million in aggregate. Cash of $108.6 million and cost of newbuildings of $78.2 million were acquired with the SPCs.

Further, on September 15, 2014 and March 16, 2015, we and Frontline 2012 entered into registration rights agreements, or the Second and Third Registration Rights Agreements, whereby we agreed that we will, within a specified period in the future, prepare and file a shelf registration statement pursuant to Rule 415 of the U.S. Securities Act of 1933, as amended, to ensure that the Second Acquisition Agreement Shares will be registered with the Commission. On March 26, 2015, we filed a shelf registration statement pursuant to the terms of the Second and Third Registration Rights Agreements and amended the registration statement on May 21, 2015. This shelf registration statement was declared effective by the Commission on May 26, 2015. On June 26, 2015, Frontline 2012 made a distribution of approximately 15.1 million of our common shares as a dividend in kind to all of its shareholders as of June 15, 2015.

On March 31, 2015, we merged with the Former Golden Ocean and issued 12.3 million of our common shares to the Former Golden Ocean shareholders as merger consideration with one share in the Former Golden Ocean receiving 0.13749 of our common shares. Following completion of the Merger and, pursuant to the merger agreement, we canceled 10,390 common shares (which were held by the Former Golden Ocean) and 908 common shares (which account for fractional shares that we will not be distributed to the Former Golden Ocean shareholders as merger consideration).

In February 2016, we announced a private placement of 68,736,800 new common shares, or the Private Placement Shares, at NOK 25.00 per share, generating gross proceeds of NOK 1.7 billion (approximately $200 million ), in order to fulfill the equity requirement in our amended loan agreements. The conversion price on the $200 million convertible bond, or the Convertible Bond, was adjusted in accordance with clause 14.6 of the Bond Agreement from $19.93 to $17.63 per share effective from February 23, 2016 as a result of the private placement. As our existing unused authorized share capital was not sufficient to issue all the Private Placement Shares, our shareholders approved an increase of authorized share capital to $6,000,000.00 divided into 600,000,000 common shares of $0.01 par value each.

In total, the net proceeds from the Private Placement and the Subsequent Offering were $205.4 million comprising $208.0 million gross proceeds from the placement net of issue costs of $2.6 million . In addition to facilitate amendments of all of our debt facilities, including amortization deferral and covenant waivers, we used the net proceeds from the issuance of the Private Placement Shares and Subsequent Offering Shares to strengthen our balance sheet and liquidity position, and thereby strengthen the Company financially through the current market cycle.

On March 15, 2017, we issued 8,607,800 new common shares at NOK 60 per share (equaling $6.97 at a NOK/USD exchange rate of 8.6078) in a public offering, raising gross proceeds of NOK 516.5 million (approximately $60 million). Following the offering, we had 114,572,992 issued common shares each having a par value of $0.05.

Following issuance of the consideration shares as part of the Quintana Acquisition and Hemen Acquisition, we expect to have 132,372,992 common shares issued and outstanding.

Borrowing Activities

$420.0 Million Term Loan Facility

In June 2014, we entered into a term loan facility of up to $420.0 million, dependent on the market values of the vessels at the time of draw down, consisting of fourteen tranches of up to $30.0 million to finance, in part, fourteen of our newbuildings. Each tranche is repayable by quarterly installments based on a 20-year profile from the delivery date of each vessel and all amounts outstanding must be repaid on June 30, 2020. The loan has an interest rate of LIBOR plus a margin of 2.50%. During 2016, $7.3 million was repaid of which $2.2 million to comply with the minimum value covenant as of December 31, 2015, and the quarterly repayment schedule was amended to $5.2 million, in total, for all fourteen tranches.