SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM
6-K/A
 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 Dated:
December 17, 2010
 Commission File No. 001-32520
 NEWLEAD HOLDINGS LTD.
  83 Akti Miaouli & Flessa Str. 185 38 Piraeus Greece
  þ o
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EXPLANATORY NOTE




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NEWLEAD HOLDINGS LTD.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Operating and Financial Review
     Recent Developments
 Fleet expansion
 Dropdown of six vessels and commercial/technical management companies
   1




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
    
    ISO 9001 from American Bureau of Shipping Quality
Evaluations for a quality management system, by
consistently providing a service that meets customer and
applicable statutory and regulatory requirements, and by
enhancing customer satisfaction through, among other
things, processes for continual improvement;
    
    ISO 14001 from American Bureau of Shipping for
environmental management, including policy and objectives
targeting legal and other requirements; and
    
    Certificate of Company Compliance by the American Bureau of
Shipping for safety, quality and environmental requirements
of the ABS HSQE guide.
 Acquisition of five vessels
  Agreement for the acquisition of one dry bulk vessel
  Newbuilding program and delivery of one new Kamsarmax vessel
     Sale of non-core vessels
     2




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Reverse share split
  New charter party agreements
  Sale and leaseback for four vessels and revolving credit facility
   Overview
 General
    3




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##### 




    
    Grow our diversified fleet through sourced networks at favorable terms;
    
    Create scalable operating platform to support growth;
    
    Implement a coherent charter strategy to achieve an optimal mix of spot charters, time
charters and bareboat charters to smooth
exposure to market cycles;
    
    Solidify a diverse customer base with established reliable charterers to reduce our counterparty risk;
    
    Provide quality in-house technical management to ensure efficient operations and optimum fleet utilization; and
    
    Employ leverage with a favorable repayment profile.
 FLEET
   SizeVessel Name
    
    (dwt)
    
    Vessel Type
    
    Year Built
    
    Charter Expiration
    
    Net Daily Charter Hire RateProduct Tanker
VesselsStena Compass
    
    
    72,736
    
    
    Panamax
    
    
    2006
    
    
    December 2010
    
    $18,233 (bareboat rate) plus 30% profit sharing above $26,000
    (1)Newlead Compassion
    
    
    72,782
    
    
    Panamax
    
    
    2006
    
    
    Spot
    
    
    Newlead Avra
    
    
    73,495
    
    
    Panamax
    
    
    2004
    
    
    
    Q1 2012
    
    
    $13,825 plus 50% profit sharing above $14,000
    (2)Newlead Fortune
    
    
    73,495
    
    
    Panamax
    
    
    2004
    
    
    min: November 2011 max: December 2011
    
    $13,825 plus 50% profit sharing above $14,000Hiotissa
    
    
    37,329
    
    
    Handymax
    
    
    2004
    
    
    min: April 2011 max: June 2011
    
    $19,013 plus profit sharing above $19,500Hiona
    
    
    37,337
    
    
    Handymax
    
    
    2003
    
    
    min: March 2011 max: May 2011
    
    $19,013 plus profit sharing above $19,500Dry bulk VesselsNewlead Tomi
    
    
    79,224
    
    
    Kamsarmax
    
    
    2010
    
    
    min: September 2015 max: March 2016
    
    $
    28,710
    
    (3)
 4




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Vessel
    
    Expected
    
    
    
    
    
    Charter RateNewbuildings
    
    Size (dwt)
    
    Type
    
    Delivery Date
    
    Charter term
    
    (daily, net)Newlead Prosperity
    
    
    34,682
    
    
    Handysize
    
    
    2003
    
    
    min: July 2017 max: January 2018
    
    $
    12,936
    
    (4)Newlead Victoria
    
    
    75,966
    
    
    Panamax
    
    
    2002
    
    
    min: July 2012 max: October 2012
    
    Floating rate time charter
    (5)Brazil
    
    
    151,738
    
    
    Capesize
    
    
    1995
    
    
    min: December 2013 max: February 2014
    
    $
    28,985

    
    (6)Australia
    
    
    172,972
    
    
    Capesize
    
    
    1993
    
    
    min: November 2011 max: January 2012
    
    $
    20,391China
    
    
    135,364
    
    
    Capesize
    
    
    1992
    
    
    min: November 2015 max: October 2016
    
    $
    12,753Grand Ocean
    
    
    149,498
    
    
    Capesize
    
    
    1990
    
    
    min: January 2012 max: May 2012
    (7)
    $
    19,680Grand Venetico
    
    
    134,982
    
    
    Capesize
    
    
    1990
    
    
    min: June 2012 max: October 2012
    (8)
    $
    17,760Grand Rodosi
    
    
    68,788
    
    
    Panamax
    
    
    1990
    
    
    min: December 2010 max: March 2011
    
    $
    21,516Newlead Markela
    
    
    71,733
    
    
    Panamax
    
    
    1990
    
    
    min: February 2013 max: June 2013
    
    $
    21,972Newlead Esmeralda
    
    
    69,458
    
    
    Panamax
    
    
    1990
    
    
    January 2011
    
    $
    18,281Grand Spartounta
    
    
    135,070
    
    
    Capesize
    
    
    1989
    
    
    January 2011
    
    $
    20,900Newlead TBN
    
    
    35,000
    
    
    Handysize
    
    
    Q1 2011
    
    
    Twelve years +/- 4 months
    
    $12,000 plus 40% profit sharing
    (9)Newlead TBN
    
    
    92,000
    
    
    Post-Panamax
    
    
    Q2 2011
    
    
    Seven year time charter
    
    $14,438 plus 50% profit sharing
    (10)Newlead TBN
    
    
    80,000
    
    
    Kamsarmax
    
    
    Q4 2011
    
    
    Seven year time charter
    
    
    $27,300Newlead TBN
    
    
    35,000
    
    
    Handysize
    
    
    Q3 2012
    
    
    Twelve years +/- 4 months
    
    $12,000 plus 40% profit sharing
    (9)
 
 (1)
    
    Vessel is under a bareboat charter party agreement. The operating expenses are for the account of the charterer.
Accordingly, the vessels Time Charter Equivalent (TCE) rate is grossed up to reflect estimated daily operating
costs. As a result, the vessels charter rate is adjusted to a TCE rate of $24,933, to include estimated operating
costs of $6,700.(2)
    
    The time charter is expected to commence in the first quarter 2011.(3)
    
    $28,710 five year time charter, plus charterers option for one year plus one additional year. The vessel owners
have a put option for a second two-year charter at a net charter rate between $19,800 and $28,710 per day. The
second charter is subject to the first charterer not exercising the optional years. The first and second charter
secure a total charter duration of seven years for the vessel.(4)
    
    The vessel was chartered-in during the fourth quarter 2010 until March 15, 2011, with an obligation to conclude
the purchase by the end of the charter period at the latest.(5)
    
    The vessel owner shall have the right for an earlier redelivery of the vessel, at any time within charter
duration, subject to vessel owners tendering to charterer three months advance notice.(6)
    
    $28,985 per day for the first three years and $26,180 per day thereafter, plus 50/50 profit sharing above
$26,600.(7)
    
    Charterers option to extend for one additional year.(8)
    
    Charterers option to extend for six additional months.(9)
    
    Base rate is $12,000 per day. Above a rate of $14,000 per day, profit sharing is 40% based on open book
accounting on actual earnings. Charterers have a 50% purchase option.(10)
    
    Charterers option for one year and one additional year. Hire rate for first optional year is $15,400 (net) per
day plus 50/50 profit sharing. Hire rate for second optional year is $16,844 per day (net) plus 50/50 profit
sharing. 5




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Seaborne Trade
    The Tanker Industry
  
    
    ULCCs (Ultra Large Crude Carrier) and VLCCs (Very Large Crude Carrier) carry cargos of
200,000 dwt or greater.
    
    Suezmax are midsized tankers with displacement between 120,000 and 200,000 dwt. Suezmax
vessels are capable of passing through the Suez Canal fully loaded.
    
    Aframax vessels are mid-size tankers with displacement between 80,000 and 120,000 metric
tons. A product tanker of the same carrying capacity is called LR2 (Long Range 2).
    
    Panamax tankers have a carrying capacity of between 50,000 and 80,000 dwt and contains
both crude tankers and product tankers. A Panamax tanker with coated tanks is usually
referred to as belonging to the LR1 (Long Range 1) segment.
    
    Handysize and MR (Medium Range) have a carrying capacity up to 50,000 dwt and they are
employed for the carriage of oil products.
     Supply Factors:
 
    
    Due to the market boom of 2007 and 2008, the orders for new vessels have increased to
123.7 million dwt, (27.5% of the existing fleet). Together with slightly higher deliveries
in 2011 as compared with 2010  the fleet growth in 2011 is projected to be 8.1%, while
the average fleet growth from 2005 to 2009 was 6.1%.
    
    It is estimated that more than the 35% of the projected (as per projections in December
2009) tanker deliveries for 2010 were not delivered. If the non deliveries approach the
same levels in 2011, the fleet growth will be much lower than expected.
 6




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Demand Factors:
 
    
    According to the last report of the International Energy Agency (as of December, 2010),
global oil demand for 2011 is revised 88.8 million barrels per day (mb/d) based on
stronger data from the Organization for Economic Co-operation and Develeopment (OECD)
North America and non-OECD Asia. Growth in 2010 (an increase of 2.5 mb/d year-over-year) is
largely driven by buoyant gasoil demand, but expansion should slow to an increase of 1.3
mb/d in 2011 as temporarily supportive factors fade.
    
    Increased oil demand is expected to grow during 2011, which will have a positive effect
on floating storage and the tanker market, especially on crude carriers.
    
    Total oil supply is also increasing from 84.3 mb/day (2009) to 86.1 mb/day (Q2 2010) due
to an increase both of the OPEC production and the non-OPEC supply.
    
    Seasonal demand, cold weather and ice in the northern hemisphere provide a big boost to
the tanker market by increasing the tanker demand and by decreasing the supply of tankers
to the non-ice tanker markets as the Ice class tankers are employed in the ice covered
areas.
    
    Increases in the distance petroleum products are transported due to the increased
exports from new refineries in the Middle East and Asia and the expected lack of growth in
the refining capacity of the refineries in the U.S. and Europe could lead to an increase in
ton-mile demand.
 The Dry Bulk Shipping Industry
  
    
    Capesize vesselshave carrying capacities of more than 130,000 dwt. These vessels generally
operate along long haul iron ore and coal trade routes. There are relatively few ports around the
world with the infrastructure to accommodate vessels of this size.
    
    Mini cape vesselshave dwt from 110,000 to 130,000 dwt.
    
    Postpanamax vesselshave dwt from 85,000 to 110,000 dwt and beam exceeding Panama canal limitation.
    
    Kamsarmax:Approximately 82,000 dwt Panamaxes with increased length overall (the length of a
vessel, referred to herein as LOA) of 229 meters (m), and are named for Port Kamsar in
Equatorial Guinea.
    
    Panamax vesselshave a carrying capacity of between
60,000 and 85,000 dwt. These vessels carry coal, grains,
and, to a lesser extent, minor bulks, including steel
products, forest products and fertilizers. Panamax
vessels are able to pass through the Panama Canal making
them more versatile than larger vessels.
 
    
    Handymax vesselshave a carrying capacity of between
35,000 and 60,000 dwt. These vessels operate along a
large number of geographically dispersed global trade
routes mainly carrying grains and minor bulks. Vessels
below 60,000 dwt are sometimes built with on-board
cranes enabling them to load and discharge cargo in
countries and ports with limited infrastructure.
    
    Handysize vesselshave a carrying capacity of up to 35,000 dwt. These
vessels carry exclusively minor bulk cargo. Increasingly, these
vessels have operated along regional trading routes. Handysize vessels
are well suited for small ports with length and draft restrictions
that may lack the infrastructure for cargo loading and unloading.
   7




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Supply Factors:
 
    
    Approximately 278 million dwt of dry bulk vessels are on order, representing
approximately 52.9% of the existing fleet.
    
    The Baltic and International Maritime Council (BIMCO) forecasts inflow of new dry bulk
tonnage in 2010 to reach 85 million dwt offset by demolition of 13 million dwt. This could
make the fleet grow by 15.6% in 2010 as compared to 10% in 2009.
    
    However, newbuilding delayed deliveries and order cancellations should limit new
additions to the global fleet, which could even turn into a positive surprise, should
demolition activity pick up any time soon. Especially for 2010, 40% of the projected
deliveries were not materialized.
    
    The average age at which a vessel is scrapped over the last five years has been 26
years, and more than the 22% of the fleet is currently over 20 years old.
 Demand Factors:
 
    
    According to the International Monetary Fund (October 2010), global growth will average
approximately 4.2% in 2011. Regarding the emerging economies, the International Monetary
Fund forecasts that next year Chinas GDP will expand 9.6% and Indias will expand 8.4%. If
world production recovers in conformity with these projections,, the effects of the
increased supply could be mitigated.
    
    Port congestion, which has been a feature of the market since 2004, absorbs tonnage and
therefore leads to a tighter balance between supply and demand. Total dry bulk congestion
is approximately 20.5 million dwt. Coal port congestion is around 12.5 million tons, while
ore port congestion is approx. 9.1 million tons driven by Australia, India and China.
Global congestion ties up just above 4% of the dry bulk fleet, versus a four year range of 2%-7% and is expected
to rise significantly as the world fleet grows larger.
 
    
    In Asia, thermal coal demand, particularly in China and India, remains strong. China is
expected to set new thermal coal import records this winter as its citizens stock up for
the winter to prevent shortage of supply. According to BIMCO, in the near future Chinese
coal imports could turn into an even stronger long term market driver than today. Both
China and India may increase imports of coal by 78% during 2011.
  Operating results
  8




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Factors Affecting Results of Operations
   
    
    Market exposure:We manage the size and composition of our
fleet by chartering our owned vessels to international
charterers. In order to diversify our market risk, we
attempt to achieve an appropriate balance of the
composition of our vessels between wet and dry vessels.
    
    Available days:Available days is the total number of days
a vessel is controlled by a company less the aggregate
number of days that the vessel is off-hire due to scheduled
repairs or repairs under guarantee, vessel upgrades or
special surveys. The shipping industry uses available days
to measure the number of days in a period during which
vessels should be capable of generating revenues.
    
    Operating days:Operating days is the number of available
days in a period less the aggregate number of days that the
vessels are off-hire due to any reason, including lack of
demand or unforeseen circumstances. The shipping industry
uses operating days to measure the aggregate number of days
in a period during which vessels actually generate
revenues.
    
    Fleet utilization:Fleet utilization is obtained by
dividing the number of operating days during a period by
the number of available days during the period for the core
vessels. The shipping industry uses fleet utilization to
measure a companys efficiency in finding suitable
employment for its vessels and minimizing the amount of
days that its vessels are off-hire for reasons other than
scheduled repairs or repairs under guarantee, vessel
upgrades, special surveys or vessel positioning.
    
    Equivalent vessels:Equivalent vessels, is the data of the
available days of the fleet divided by the number of the
calendar days in the respective period.
    
    TCE rates:Time Charter Equivalent, or TCE, rates are
defined as voyage, time charter and bareboat revenues, less
voyage expenses and commissions during a period, divided by
the number of available days during the period. The TCE
rate is a standard shipping industry performance measure
used primarily to compare daily earnings generated by
vessels on time charters with daily earnings generated by
vessels on voyage charters, because charter hire rates for
vessels on voyage charters are generally not expressed in
per day amounts, while charter hire rates for vessels on
time charters generally are expressed in such amounts. The
Stena Compass was employed on bareboat charter during the
six month periods ended June 30, 2010 and 2009. The Newlead
Compassion was employed on bareboat charter up to June 10,
2010, and during the three and six month period ended June
30, 2009 was employed on bareboat charters. Accordingly,
the Stena Compass and the Newlead Compassions charter
rates have been adjusted to reflect a TCE rate of
approximately $24,933 per day, assuming operating costs of
$6,700 per day, for the three and the six months ended June
30, 2010 and 2009, respectively.
 Voyage and Time Charter
  
    
    the duration of the charters;
    
    the level of spot market rates at the time of charters;
    
    decisions relating to vessel acquisitions and disposals;
    
    the amount of time spent positioning vessels;
    
    the amount of time that vessels spend in dry-dock undergoing repairs and
upgrades;
    
    the age, condition and specifications of the vessels; and
    
    the aggregate level of supply and demand in the dry bulk shipping industry.
  9




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Three months ended June 30, 2010 and three months ended June 30, 2009
    (unaudited)
    
    
    
    (unaudited)Successor
    
    
    
    PredecessorThree months
    
    
    
    Three monthsended June 30,
    
    
    
    ended June 30,2010
    
    
    
    2009OPERATING REVENUES
    
    $
    25,785
    
    
    
    $
    10,755EXPENSES:Commissions
    
    
    (702
    )
    
    
    
    (201
    )Voyage expenses
    
    
    (4,756
    )
    
    
    
    (1,425
    )Vessel operating expenses
    
    
    (9,734
    )
    
    
    
    (5,178
    )General and administrative expenses
    
    
    (3,911
    )
    
    
    
    (1,741
    )Depreciation and amortization expenses
    
    
    (10,958
    )
    
    
    
    (3,719
    )Impairment loss
    
    
    (3,224
    )
    
    
    
    Management fees
    
    
    (286
    )
    
    
    
    (293
    )(33,571
    )
    
    
    
    (12,557
    )Net operating loss from continuing operations
    
    
    (7,786
    )
    
    
    
    (1,802
    )OTHER (EXPENSES) / INCOME, NET:Interest and finance expense
    
    
    (12,923
    )
    
    
    
    (3,381
    )Interest income
    
    
    113
    
    
    
    
    4Other income / (expense), net
    
    
    50
    
    
    
    
    (5
    )Change in fair value of derivatives
    
    
    287
    
    
    
    
    1,244Total other expenses, net
    
    
    (12,473
    )
    
    
    
    (2,138
    )Loss from continuing operations
    
    
    (20,259
    )
    
    
    
    (3,940
    )Net income / (loss) from discontinued operations (includes
gain from sale of vessels $0 in 2010 and loss $5,584 in 2009,
respectively)
    
    
    224
    
    
    
    
    (4,277
    )Net loss
    
    $
    (20,035
    )
    
    
    $
    (8,217
    )(Loss) / income per share:Basic and dilutedContinuing operations
    
    $
    (2.84
    )
    
    
    $
    (1.65
    )Discontinued operations
    
    $
    0.03
    
    
    
    $
    (1.79
    )Total
    
    $
    (2.81
    )
    
    
    $
    (3.44
    )Weighted average number of shares:Basic and diluted
    
    
    7,133,033
    
    
    
    
    2,393,490
  10




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##### 



(Unaudited)Three months ended June 30,2010
    
    2009Available days
    
    
    1,467
    
    
    
    752Operating days
    
    
    1,293
    
    
    
    633Fleet utilization excluding non-core vessels
    
    
    97.4
    %
    
    
    98.4
    %Equivalent vessels
    
    
    16.1
    
    
    
    8.3Time Charter Equivalents
    
    $
    14,716
    
    
    $
    13,761Direct Daily Vessel Operating Expenses (1)
    
    $
    7,106
    
    
    $
    8,589
 
 1)
    
    Direct daily vessel operating expenses are defined as the sum of the
vessel operating expenses, exluding provision for claims, and management
fees, divided by the vessels calendar days. This has been adjusted to
exclude the calendar days with respect to the Stena Compass and the
Newlead Compassion, during their employment on bareboat charters. Revenues
   Commissions
  Voyage Expenses
  Vessel Operating Expenses
  11




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##### 



General and Administrative Expenses
  Depreciation and Amortization
  Impairment Loss
  Management Fees
  Interest and Finance Expense / Interest Income
  Change in Fair Value of Derivatives
  Net Loss
   Six months ended June 30, 2010 and six months ended June 30, 2009
   12




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##### 



(unaudited)
    
    
    
    (unaudited)Successor
    
    
    
    PredecessorSix months
    
    
    
    Six monthsended June 30,
    
    
    
    ended June 30,2010
    
    
    
    2009OPERATING REVENUES
    
    $
    43,851
    
    
    
    $
    22,490EXPENSES:Commissions
    
    
    (1,201
    )
    
    
    
    (462
    )Voyage expenses
    
    
    (9,731
    )
    
    
    
    (3,298
    )Vessel operating expenses
    
    
    (17,110
    )
    
    
    
    (10,541
    )General and administrative expenses
    
    
    (8,027
    )
    
    
    
    (3,059
    )Depreciation and amortization expenses
    
    
    (16,579
    )
    
    
    
    (7,491
    )Impairment loss
    
    
    (15,662
    )
    
    
    
    Management fees
    
    
    (816
    )
    
    
    
    (588
    )(69,126
    )
    
    
    
    (25,439
    )Net operating loss from continuing operations
    
    
    (25,275
    )
    
    
    
    (2,949
    )OTHER (EXPENSES) / INCOME, NET:Interest and finance expense
    
    
    (21,646
    )
    
    
    
    (6,849
    )Interest income
    
    
    390
    
    
    
    
    7Other income / (expense), net
    
    
    43
    
    
    
    
    (2
    )Change in fair value of derivatives
    
    
    1,718
    
    
    
    
    1,138Total other expenses, net
    
    
    (19,495
    )
    
    
    
    (5,706
    )Loss from continuing operations
    
    
    (44,770
    )
    
    
    
    (8,655
    )Net income / (loss) from discontinued operations (includes
gain from sale of vessels $2,497 in 2010 and loss $5,584 in
2009, respectively)
    
    
    2,478
    
    
    
    
    (3,808
    )Net loss
    
    $
    (42,292
    )
    
    
    $
    (12,463
    )(Loss) / income per share:Basic and dilutedContinuing operations
    
    $
    (6.60
    )
    
    
    $
    (3.62
    )Discontinued operations
    
    $
    0.37
    
    
    
    $
    (1.59
    )Total
    
    $
    (6.23
    )
    
    
    $
    (5.21
    )Weighted average number of shares:Basic and diluted
    
    
    6,780,991
    
    
    
    
    2,393,490
 13




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##### 



(Unaudited)Six months ended June 30,2010
    
    2009Available days
    
    
    2,480
    
    
    
    1,562Operating days
    
    
    2,128
    
    
    
    1,299Fleet utilization excluding non-core vessels
    
    
    94.7
    %
    
    
    99.3
    %Equivalent vessels
    
    
    13.7
    
    
    
    8.6Time Charter Equivalents
    
    $
    14,341
    
    
    $
    13,544Direct Daily Vessel Operating Expenses
    
    $
    7,791
    
    
    $
    8,784
 Revenues
   Commissions
  Voyage Expenses
  Vessel Operating Expenses
  14




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##### 



General and Administrative Expenses
  Depreciation and Amortization
  Impairment Loss
  Management Fees
  Interest and Finance Expense / Interest Income
  Change in Fair Value of Derivatives
  Net Loss
   Liquidity and Capital Resources
 Overview
  15




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##### 



(unaudited)Six months endedJune 30,2010
    
    
    2009Net cash used in operating activities
    
    $
    (11,098
    )
    
    
    $
    (1,722
    )Net cash (used in) / provided by
investing activities
    
    
    (7,798
    )
    
    
    
    2,216Net cash used in financing activities
    
    
    (15,764
    )
    
    
    
    (1,380
    )Net decrease in cash and cash equivalents
    
    
    (34,660
    )
    
    
    
    (886
    )Cash and cash equivalents, beginning of
the period
    
    
    106,255
    
    
    
    
    4,009Cash and cash equivalents, end of period
    
    $
    71,595
    
    
    
    $
    3,123
 Cash Flows
 Net cash used in operating activities
   16




---



##### 



Net cash (used in) / provided by investing activities
  Net cash used in financing activities
  Indebtedness
   Recapitalization
    17




---



##### 




    
    1.75% if our total shareholders equity divided by our total
assets, adjusting the book value of our fleet to its market value,
is equal to or greater than 50%;
    
    2.75% if our total shareholders equity divided by our total
assets, adjusting the book value of our fleet to its market value,
is equal to or greater than 27.5% but less than 50%; and
    
    3.25% if our total shareholders equity divided by our total
assets, adjusting the book value of our fleet to its market value,
is less than 27.5%.
   
    
    our shareholders equity as a percentage of our total assets,
adjusting the book value of our fleet to its market value, must be no
less than:
 (a)
    
    25% from the financial quarter ending September 30, 2012 until June 30, 2013; and(b)
    
    30% from the financial quarter ending September 30, 2013 onwards.
 
    
    maintain, on a consolidated basis on each financial quarter, working
capital (as defined in the loan facility) of not less than zero
dollars ($0);
    
    the minimum liquidity requirement, at 5% of the outstanding loan;
    
    the ratio of EBITDA (earnings before interest, taxes, depreciation
and amortization) to interest payable must be no less than;
 (a)
    
    2.00 to 1.00 from the financial quarter day ending September 30, 2012 until June 30, 2013;
and(b)
    
    2.50 to 1.00 from the financial quarter day ending September 30, 2013 onwards.
   18




---



##### 



(1)
    
    A Beneficial Conversion Feature (BCF); and(2)
    
    A Make Whole Fundamental Change conversion option which was valued separately.
  
    
    The BCF was valued at $100.5 million and is amortized over
the life of the 7% Notes as interest expense. The BCF
represents the difference between the conversion price of
the 7% Notes ($9.00) and the market price of our common
shares at the date of issuance ($15.24), multiplied by 1.34
million shares, assuming full conversion of the initial
$145.0 million of 7% Notes. Assuming no further conversions
of the remaining $125.0 million of 7% Notes, the annual BCF
amortization will be $14.4 million annually; and
    
    The Make Whole Fundamental Change was valued at $31,301
relating to an additional benefit of 10% of additional
shares that the holders can potentially acquire when
converting the 7% Notes should certain conditions exist.
This is also amortized over the life of the 7% Notes as an
interest expense.
  Dropdown of six vessels and commercial/technical management companies
    19




---



##### 



20




---



##### 



Newbuilding program
    Five vessel acquisition
    21




---



##### 



22




---



##### 



Sale and leaseback transaction
  New Marfin Revolving Credit Facility
  EBITDA and adjusted EBITDA reconciliation to Net Loss
  23




---



##### 



(Unaudited)Successor
    
    
    
    PredecessorJuly 1,
    
    
    
    July 1,to
    
    
    
    toJune 30, 2010
    
    
    
    June 30, 2009ADJUSTED EBITDA RECONCILIATIONLoss from continuing operations
    
    $
    (20,259
    )
    
    
    $
    (3,940
    )PLUS:Net interest expense
    
    
    12,810
    
    
    
    
    3,377Depreciation and amortization
    
    
    10,958
    
    
    
    
    3,719EBITDA
    
    $
    3,509
    
    
    
    $
    3,156Straight line revenue
    
    
    182
    
    
    
    
    Provision for doubtful receivables
    
    
    14
    
    
    
    
    7Provision for claims
    
    
    559
    
    
    
    
    Change in
fair value of derivatives (includes
warrants valuations)
    
    
    (287
    )
    
    
    
    (1,244
    )Impairment loss
    
    
    3,224
    
    
    
    
    Share based compensation
    
    
    673
    
    
    
    
    148Non-core vessels operating loss
    
    
    2,229
    
    
    
    
    1,996ADJUSTED EBITDA
    
    $
    10,103
    
    
    
    $
    4,063
  24




---



##### 



(Unaudited)Successor
    
    
    
    PredecessorJanuary 1,
    
    
    
    January 1,to
    
    
    
    toJune 30, 2010
    
    
    
    June 30, 2009ADJUSTED EBITDA RECONCILIATIONLoss from continuing operations
    
    $
    (44,770
    )
    
    
    $
    (8,655
    )PLUS:Net interest expense
    
    
    21,256
    
    
    
    
    6,842Depreciation and amortization
    
    
    16,579
    
    
    
    
    7,491EBITDA
    
    $
    (6,935
    )
    
    
    $
    5,678Straight line revenue
    
    
    362
    
    
    
    
    Provision for doubtful receivables
    
    
    209
    
    
    
    
    7Provision for claims
    
    
    559
    
    
    
    
    Change in fair value of derivatives (includes
 warrants valuations)
    
    
    (1,718
    )
    
    
    
    (1,138
    )Impairment loss
    
    
    15,662
    
    
    
    
    Share based compensation
    
    
    1,394
    
    
    
    
    294Non-core vessels operating loss
    
    
    5,677
    
    
    
    
    3,165ADJUSTED EBITDA
    
    $
    15,210
    
    
    
    $
    8,006
  Off-Balance Sheet Arrangements
  Commitments
 i) Rental agreements
  ii) Commercial and Technical Ship Management Agreements
   25




---



##### 



iii) Purchase / Sale of vessels
     (iv) Newbuildings
  Related Parties
 Management services and commissions
   Sea Breeze
  Newfront  Stamford
  Newlead Bulkers S.A.
  26




---



##### 



Newlead Shipping S.A.
  Terra Stabile A.E.
  Domina Petridou O.E.
  Aries Energy Corporation
  Amounts due from / (to) related parties
  (unaudited)As of June 30,
    
    
    As of December 31,2010
    
    
    2009Grand Markela
    
    $
    287
    
    
    $
    Grand Esmeralda
    
    
    261
    
    
    
    Newfront Shipping S.A.
    
    
    207
    
    
    
    40Grand Spartounta
    
    
    12
    
    
    
    Total due from
    
    
    767
    
    
    
    40Stamford Navigation Inc.
    
    
    (250
    )
    
    
    (234
    )Grandunion Inc.
    
    
    (174
    )
    
    
    Hian
    
    
    (1
    )
    
    
    Total due to
    
    $
    (425
    )
    
    $
    (234
    )
 27




---



##### 



Amounts due from / (to) managing agents
  (unaudited)As of June 30,
    
    
    As of December 31,2010
    
    
    2009International Tanker
Management Ltd
    
    $
    493
    
    
    $
    Wilhelmsen Ship Management
    
    
    
    
    
    
    8Total due from
    
    
    493
    
    
    
    8International Tanker
Management Ltd
    
    
    
    
    
    
    (1,812
    )Ernst Jacob Ship
Management GmbH
    
    
    (247
    )
    
    
    (56
    )Total due to
    
    $

    (247
    )
    
    $

    (1,868
    )
 Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Exposure
       
    
    On July 5, 2006, we entered into interest rate swaps with five banks on identical
terms. These five swaps have an effective date of July 3, 2006 and a maturity date of
April 3, 2011. Under the terms of the swap agreements, we pay a fixed interest rate of
5.63% per annum on a total of $100.0 million of our long-term debt.
    
    On April 3, 2008, we entered into a floored swap transaction with one bank and a
simultaneous swap and cap transaction with another bank. These two synthetic swaps have
an effective date of April 3, 2008 and maturity dates of April 3, 2011 and April 4, 2011,
respectively. Under the terms of the floored swap agreement, we pay a fixed interest rate
of 4.285% per annum on a total of $23.3 million of our long term debt. Under the terms of
the swap and cap transactions, we pay a fixed interest rate of 4.14% on a total of $23.3
million of our long-term debt and we have limited our interest rate exposure to 4.14% on
an additional amount of $23.3 million.
    
    In connection with the recapitalization, we entered into a credit facility and an
interest rate swap with Marfin Egnatia Bank. On May 6, 2010, we refinanced this credit
facility (see Note 10 of our Condensed Consolidated Financial Statements). The
aforementioned swap was re-attached to the new credit facility and has a termination date
of September 2, 2014. Under the terms of the swap agreement, we pay a fixed interest rate
of 4.08% per annum on the notional amount of the swap.
    
    In connection with the acquisition of the two Kamsarmaxes, we assumed two interest
rate swaps with Bank of Scotland both of which had maturity dates of April 4, 2013. Under
the terms of the swap agreements, we paid a fixed interest rate of 3.973% per annum.
These swaps were amended and extended to conform to the notional amounts, anticipated
drawings and repayment schedule as per the loan facilities. The amended and extended swap
agreements began July 6, 2010 and have maturity dates on October 15, 2015 and a fixed
interest rate of 4.01% per annum on the notional amount of the swaps.
  Foreign Exchange Rate Exposure
  28




---



##### 



INDEX TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 PageCondensed Consolidated Balance Sheets (Unaudited) as of June 30, 2010 and December 31, 2009
    
    F-2Condensed Consolidated Statements of Operations (Unaudited) for the Three and the Six Months
Ended June 30, 2010 (Successor) and 2009 (Predeccessor)
    
    F-3Condensed Consolidated Statements of Changes in Shareholders Equity (Unaudited) for the Six
Months Ended June 30, 2010 (Successor), for the Period January 1, 2009 to October 13, 2009
(Predeccessor) and the Period October 14, 2009 to December 31, 2009 (Successor)
    
    F-4Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30,
2010 (Successor) and 2009 (Predeccessor)
    
    F-5Notes to the Condensed Consolidated Financial Statements (Unaudited)
    
    F-6
 F-1




---



##### 



NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 As of
    
    
    As ofJune 30,
    
    
    December 31,Note
    
    
    2010
    
    
    2009(Restated)
    
    
    (Restated)ASSETSCurrent assetsCash and cash equivalents
    
    
    
    
    
    $
    71,595
    
    
    $
    106,255Restricted cash
    
    
    6
    
    
    
    10,267
    
    
    
    403Trade receivables, net
    
    
    
    
    
    
    4,217
    
    
    
    4,572Other receivables
    
    
    
    
    
    
    1,024
    
    
    
    496Due from related parties
    
    
    17
    
    
    
    767
    
    
    
    40Inventories
    
    
    7
    
    
    
    2,961
    
    
    
    3,085Prepaid expenses
    
    
    
    
    
    
    2,596
    
    
    
    1,082Due from managing agents
    
    
    17
    
    
    
    493
    
    
    
    8Backlog asset
    
    
    
    
    
    
    8,943
    
    
    
    5,528Total current assets
    
    
    
    
    
    
    102,863
    
    
    
    121,469Non-current assetsRestricted cash
    
    
    6
    
    
    
    14,963
    
    
    
    9,668Vessels under construction
    
    
    8
    
    
    
    36,224
    
    
    
    Assets held for sale
    
    
    
    
    
    
    14,791
    
    
    
    8,250Vessels and other fixed assets, net
    
    
    9
    
    
    
    342,620
    
    
    
    253,115Goodwill
    
    
    5
    
    
    
    100,316
    
    
    
    86,036Backlog asset
    
    
    
    
    
    
    26,545
    
    
    
    Deferred charges, net
    
    
    
    
    
    
    11,407
    
    
    
    6,831Total non-current assets
    
    
    
    
    
    
    546,866
    
    
    
    363,900Total assets
    
    
    
    
    
    $
    649,729
    
    
    $
    485,369LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    
    10
    
    
    $
    28,366
    
    
    $
    14,240Accounts payable, trade
    
    
    
    
    
    
    15,984
    
    
    
    11,048Accrued liabilities
    
    
    
    
    
    
    19,771
    
    
    
    16,957Deferred charter revenue
    
    
    
    
    
    
    2,176
    
    
    
    Deferred income
    
    
    
    
    
    
    663
    
    
    
    226Derivative financial instruments
    
    
    15
    
    
    
    10,179
    
    
    
    9,687Due to related parties
    
    
    17
    
    
    
    425
    
    
    
    234Due to managing agent
    
    
    17
    
    
    
    247
    
    
    
    1,868Total current liabilities
    
    
    
    
    
    
    77,811
    
    
    
    54,260Non-current liabilitiesDerivative financial instruments
    
    
    15
    
    
    
    9,209
    
    
    
    7,4077% convertible senior notes, net
    
    
    11
    
    
    
    48,597
    
    
    
    41,430Deferred income
    
    
    
    
    
    
    912
    
    
    
    730Long-term debt
    
    
    10
    
    
    
    388,434
    
    
    
    223,030Total non-current liabilities
    
    
    
    
    
    
    447,152
    
    
    
    272,597Total liabilities
    
    
    
    
    
    
    524,963
    
    
    
    326,857Commitments and contingencies
    
    
    16Shareholders equityPreference Shares, $0.01 par value, 500 million shares
authorized, none issued
    
    
    
    
    
    
    
    
    
    
    Common Shares, $0.01 par value, 1 billion shares authorized,
7.3 million and 6.6 million shares issued and outstanding as of
June 30, 2010 and December 31, 2009, respectively
    
    
    
    
    
    
    74
    
    
    
    67Additional paid-in capital
    
    
    
    
    
    
    204,856
    
    
    
    196,317Accumulated deficit
    
    
    13
    
    
    
    (80,164
    )
    
    
    (37,872
    )Total shareholders equity
    
    
    
    
    
    
    124,766
    
    
    
    158,512Total liabilities and shareholders equity
    
    
    
    
    
    $
    649,729
    
    
    $
    485,369
  F-2




---



##### 



NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    PredecessorThree months
    
    
    
    Three months
    
    
    Six months
    
    
    
    Six monthsended June 30,
    
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    
    ended June 30,Note
    
    
    2010
    
    
    
    2009
    
    
    2010
    
    
    
    2009OPERATING REVENUES
    
    
    14
    
    
    $
    25,785
    
    
    
    $
    10,755
    
    
    $
    43,851
    
    
    
    $
    22,490EXPENSES:Commissions
    
    
    
    
    
    
    (702
    )
    
    
    
    (201
    )
    
    
    (1,201
    )
    
    
    
    (462
    )Voyage expenses
    
    
    
    
    
    
    (4,756
    )
    
    
    
    (1,425
    )
    
    
    (9,731
    )
    
    
    
    (3,298
    )Vessel operating expenses
    
    
    
    
    
    
    (9,734
    )
    
    
    
    (5,178
    )
    
    
    (17,110
    )
    
    
    
    (10,541
    )General and administrative expenses
    
    
    
    
    
    
    (3,911
    )
    
    
    
    (1,741
    )
    
    
    (8,027
    )
    
    
    
    (3,059
    )Depreciation and amortization expenses
    
    
    
    
    
    
    (10,958
    )
    
    
    
    (3,719
    )
    
    
    (16,579
    )
    
    
    
    (7,491
    )Impairment loss
    
    
    3,9
    
    
    
    (3,224
    )
    
    
    
    
    
    
    
    (15,662
    )
    
    
    
    Management fees
    
    
    
    
    
    
    (286
    )
    
    
    
    (293
    )
    
    
    (816
    )
    
    
    
    (588
    )(33,571
    )
    
    
    
    (12,557
    )
    
    
    (69,126
    )
    
    
    
    (25,439
    )Net operating loss from continuing operations
    
    
    
    
    
    
    (7,786
    )
    
    
    
    (1,802
    )
    
    
    (25,275
    )
    
    
    
    (2,949
    )OTHER (EXPENSES) / INCOME, NET:Interest and finance expense
    
    
    10
    
    
    
    (12,923
    )
    
    
    
    (3,381
    )
    
    
    (21,646
    )
    
    
    
    (6,849
    )Interest income
    
    
    
    
    
    
    113
    
    
    
    
    4
    
    
    
    390
    
    
    
    
    7Other income / (expense), net
    
    
    
    
    
    
    50
    
    
    
    
    (5
    )
    
    
    43
    
    
    
    
    (2
    )Change in fair value of derivatives
    
    
    15
    
    
    
    287
    
    
    
    
    1,244
    
    
    
    1,718
    
    
    
    
    1,138Total other expenses, net
    
    
    
    
    
    
    (12,473
    )
    
    
    
    (2,138
    )
    
    
    (19,495
    )
    
    
    
    (5,706
    )Loss from continuing operations
    
    
    
    
    
    
    (20,259
    )
    
    
    
    (3,940
    )
    
    
    (44,770
    )
    
    
    
    (8,655
    )Net income / (loss) from discontinued operations
(includes gain from sale of vessels $2,497 in six
months ended 2010 and loss $5,584 in six months
ended 2009, respectively)
    
    
    18
    
    
    
    224
    
    
    
    
    (4,277
    )
    
    
    2,478
    
    
    
    
    (3,808
    )Net loss
    
    
    
    
    
    $
    (20,035
    )
    
    
    $
    (8,217
    )
    
    $
    (42,292
    )
    
    
    $
    (12,463
    )(Loss) / income per share:Basic and dilutedContinuing operations
    
    
    
    
    
    $
    (2.84
    )
    
    
    $
    (1.65
    )
    
    $
    (6.60
    )
    
    
    $
    (3.62
    )Discontinued operations
    
    
    
    
    
    $
    0.03
    
    
    
    $
    (1.79
    )
    
    $
    0.37
    
    
    
    $
    (1.59
    )Total
    
    
    
    
    
    $
    (2.81
    )
    
    
    $
    (3.44
    )
    
    $
    (6.23
    )
    
    
    $
    (5.21
    )Weighted average number of shares:Basic and diluted
    
    
    
    
    
    
    7,133,033
    
    
    
    
    2,393,490
    
    
    
    6,780,991
    
    
    
    
    2,393,490
  F-3




---



##### 



NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (unaudited)
 Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Share
    
    
    Paid-in
    
    
    Accumulated
    
    
    ShareholdersNote
    
    
    Shares
    
    
    Capital
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance at December 31, 2008
(Predecessor)
    
    
    
    
    
    
    2,414
    
    
    $
    24
    
    
    $
    114,053
    
    
    $
    (48,561
    )
    
    $
    65,516Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,764
    )
    
    
    (125,764
    )Issuance of common shares
    
    
    12
    
    
    
    7
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Share-based compensation
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    793
    
    
    
    
    
    
    
    793Balance at October 13, 2009
(Predecessor)
    
    
    
    
    
    
    2,421
    
    
    
    25
    
    
    
    114,846
    
    
    
    (174,325
    )
    
    
    (59,454
    )(Successor)Change in control  basis
adjustment, restated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,978
    )
    
    
    174,325
    
    
    
    96,347Contribution of vessels
    
    
    
    
    
    
    1,582
    
    
    
    16
    
    
    
    34,981
    
    
    
    
    
    
    
    34,997Beneficial conversion feature
on the
7% convertible senior notes
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    100,536
    
    
    
    
    
    
    
    100,536Conversion of the 7% convertible
senior notes ($20m)
    
    
    11
    
    
    
    2,222
    
    
    
    22
    
    
    
    19,978
    
    
    
    
    
    
    
    20,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,872
    )
    
    
    (37,872
    )Share-based compensation
    
    
    12
    
    
    
    390
    
    
    
    4
    
    
    
    3,954
    
    
    
    
    
    
    
    3,958Balance at December 31, 2009
(Successor), restated
    
    
    
    
    
    
    6,615
    
    
    
    67
    
    
    
    196,317
    
    
    
    (37,872
    )
    
    
    158,512Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,292
    )
    
    
    (42,292
    )Issuance of common shares
    
    
    12
    
    
    
    12
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0Shares issued for business
 acquisition
    
    
    5
    
    
    
    700
    
    
    
    7
    
    
    
    5,203
    
    
    
    
    
    
    
    5,210Warrants
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    1,943
    
    
    
    
    
    
    
    1,943Share-based compensation
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    1,393
    
    
    
    
    
    
    
    1,393Balance at June 30, 2010
(Successor), restated
    
    
    
    
    
    
    7,327
    
    
    $
    74
    
    
    $
    204,856
    
    
    $
    (80,164
    )
    
    $
    124,766
  F-4




---



##### 



NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 Successor
    
    
    
    PredecessorSix months
    
    
    
    Six monthsended June 30,
    
    
    
    ended June 30,2010
    
    
    
    2009OPERATING ACTIVITIES:Net loss
    
    $
    (42,292
    )
    
    
    $
    (12,463
    )Adjustments to reconcile net loss to net cash used in operating
activities:Non-cash adjustments
    
    
    41,010
    
    
    
    
    9,580(Gain) / loss on sale from vessels
    
    
    (2,546
    )
    
    
    
    5,584Payments for dry-docking / special survey costs
    
    
    (2,737
    )
    
    
    
    (304
    )Increase in operating assets
    
    
    (375
    )
    
    
    
    (319
    )Decrease in operating liabilities
    
    
    (4,158
    )
    
    
    
    (3,800
    )Net cash used in operating activities
    
    
    (11,098
    )
    
    
    
    (1,722
    )INVESTING ACTIVITIES:Advances for vessel under construction
    
    
    (16,497
    )
    
    
    
    Restricted cash for vessel installment payments
    
    
    (10,017
    )
    
    
    
    Cash acquired through business acquisition
    
    
    1,561
    
    
    
    
    Other fixed asset acquisitions
    
    
    (14
    )
    
    
    
    (63
    )Proceeds from the sale of vessels
    
    
    17,169
    
    
    
    
    2,279Net cash (used in) / provided by investing activities
    
    
    (7,798
    )
    
    
    
    2,216FINANCING ACTIVITIES:Principal repayments of long-term debt
    
    
    (271,480
    )
    
    
    
    Proceeds from long-term debt
    
    
    264,035
    
    
    
    
    Restricted cash for debt repayment
    
    
    (5,107
    )
    
    
    
    (1,380
    )Payments for deferred charges
    
    
    (3,213
    )
    
    
    
    Proceeds from issuance of common shares
    
    
    1
    
    
    
    
    Net cash used in financing activities
    
    
    (15,764
    )
    
    
    
    (1,380
    )Net decrease in cash and cash equivalents
    
    
    (34,660
    )
    
    
    
    (886
    )Cash and cash equivalentsBeginning of period
    
    
    106,255
    
    
    
    
    4,009End of period
    
    $
    71,595
    
    
    
    $
    3,123Supplemental Cash Flow information:Interest paid
    
    $
    11,615
    
    
    
    $
    6,776Issuance of common shares for business combination
    
    $
    5,210
    
    
    
    
    Issuance of warrants for deferred charges
    
    $
    1,943
    
    
    
    
    Assets disposed in connection with assumed acquisitions
    
    $
    8,501
    
    
    
    
    Acquired advances for vessels under construction
    
    $
    19,727
    
    
    
    
    Acquired other assets / liabilities, net
    
    $
    23,265
    
    
    
    
    Assets acquired and liabilities assumed under business acquisitions:- Vessels and other fixed assets, net
    
    $
    143,808
    
    
    
    
    - Long-term debt
    
    $
    154,475
    
    
    
    
    - Other assets and liabilities, net
    
    $
    36
    
    
    
    
    
  F-5




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 1. Description of Business
       
    
    ISO 9001 from American Bureau of Shipping Quality Evaluations for a quality management
system, by consistently providing a service that meets customer and applicable statutory
and regulatory requirements, and by enhancing customer satisfaction through, among other
things, processes for continual improvement;
    
    ISO 14001 from American Bureau of Shipping for environmental management, including
policy and objectives targeting legal and other requirements; and
    
    Certificate of Company Compliance by the American Bureau of Shipping for safety, quality
and environmental requirements
of the ABS HSQE guide.
 F-6




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 2.
Basis of Presentation (Restated)
       Restatement
of Previously Issued Financial Statements:
   F-7




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  Successor
    
    
    PredecessorCountry of
    
    
    
    Periods that
    
    
    Periods thatCompany Name
    
    Incorporation
    
    Nature / Vessel Name
    
    vessel operated
    
    
    vessel operated1. Land Marine S.A.
    
    Marshall Islands
    
    M/T High Land (1)
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20092. Rider Marine S.A.
    
    Marshall Islands
    
    Vessel owning company (2)
    
    1/01/2010  4/22/2010
    
    
    1/01/2009  6/30/20093. Ostria Waves Ltd.
    
    Marshall Islands
    
    M/T Ostria (3)
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20094. Altius Marine S.A.
    
    Marshall Islands
    
    Newlead Avra (4)
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20095. Fortius Marine S.A.
    
    Marshall Islands
    
    Newlead Fortune (5)
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20096. Ermina Marine Ltd.
    
    Marshall Islands
    
    M/T Nordanvind (6)
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20097. Chinook Waves Corporation
    
    Marshall Islands
    
    Vessel owning company (7)
    
    1/01/2010  4/15/2010
    
    
    1/01/2009  6/30/20098. Compass Overseas Ltd.
    
    Bermuda
    
    M/T Stena Compass
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/20099. Compassion Overseas Ltd.
    
    Bermuda
    
    M/T Newlead Compassion
    
    1/01/2010  6/30/2010
    
    
    1/01/2009  6/30/200910. Australia Holdings Ltd.
    
    Liberia
    
    M/V Australia
    
    1/01/2010  6/30/2010
    
    
    11. Brazil Holdings Ltd.
    
    Liberia
    
    M/V Brazil
    
    1/01/2010  6/30/2010
    
    
    12. China Holdings Ltd.
    
    Liberia
    
    M/V China
    
    1/01/2010  6/30/2010
    
    
    13. Curby Navigation Ltd.
    
    Liberia
    
    Hull S-1125 (8)
    
    
    
    
    14. Newlead Victoria Ltd.
    
    Liberia
    
    M/V Newlead Victoria (9)
    
    4/01/2010   6/30/2010
    
    
    15. Grand Venetico Inc.
    
    Marshall Islands
    
    M/V Grand Venetico
    
    4/01/2010   6/30/2010
    
    
    16. Grand Oceanos Inc.
    
    Liberia
    
    M/V Grand Oceanos
    
    4/01/2010  6/30/2010
    
    
    17. Grand Rodosi Inc.
    
    Liberia
    
    M/V Grand Rodosi
    
    4/01/2010  6/30/2010
    
    
    18.
Challenger Enterprises Ltd.
    
    Liberia
    
    M/V Hiona
    
    4/01/2010  6/30/2010
    
    
    19. Crusader Enterprises Ltd.
    
    Liberia
    
    M/V Hiotissa
    
    4/01/2010  6/30/2010
    
    
    20. Newlead Shipping S.A.
    
    Panama
    
    Management company
    
    
    
    
    21. Newlead Bulkers S.A.
    
    Liberia
    
    Management company
    
    
    
    
    22. Santa Ana Waves Corporation
    
    Marshall Islands
    
    Vessel owning company
    
    
    
    
    23. Makassar Marine Ltd.
    
    Marshall Islands
    
    Vessel owning company (10)
    
    1/01/2010  1/07/2010
    
    
    1/01/2009  6/30/200924. Seine Marine Ltd.
    
    Marshall Islands
    
    Vessel owning company (11)
    
    1/01/2010  1/20/2010
    
    
    1/01/2009  6/30/200925. Vintage Marine S.A.
    
    Marshall Islands
    
    Vessel owning company (12)
    
    
    
    
    26. Jubilee Shipholding S.A.
    
    Marshall Islands
    
    Vessel owning company (13)
    
    
    
    
    1/01/2009  6/29/200927. Olympic Galaxy Shipping Ltd.
    
    Marshall Islands
    
    Vessel owning company (14)
    
    
    
    
    28. Dynamic Maritime Co.
    
    Marshall Islands
    
    Vessel owning company (15)
    
    
    
    
    29. AMT Management Ltd.
    
    Marshall Islands
    
    Management company
    
    
    
    
    30. Newlead Holdings (ex Aries
Maritime) (US) LLC
    
    United States of America
    
    Operating company (16)
    
    
    
    
    31. Abroad Consulting Ltd.
    
    Marshall Islands
    
    Operating company (17)
    
    
    
    
    32. Leading Marine Consultants Inc.
    
    Marshall Islands
    
    Operating company
    
    
    
    
    33. Ayasha Trading Corporation
    
    Liberia
    
    Hull N213
    
    
    
    
    34. Bethune
Properties S.A.
    
    
    
    Hull N216
    
    
    
    
    35. Grand Victoria Pte Ltd.
    
    Singapore
    
    Vessel owning company (18)
    
    
    
    
    
 
 1)
    
    M/T High Land was sold on September 15, 2010. F-8




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 2)
    
    M/T High Rider was sold and delivered to her new owners on April 22, 2010 (see Note 16).3)
    
    A memorandum of agreement (MOA) for the sale of the M/T Ostria was signed on March 30, 2010 as amended by an
agreement dated August 12, 2010, and restated by an MOA dated August 12, 2010. The vessel was sold on September 7,
2010.4)
    
    M/T Altius was renamed to Newlead Avra on February 14, 2010.5)
    
    M/T Fortius was renamed to Newlead Fortune on March 11, 2010.6)
    
    An MOA for the sale of the M/T Nordanvind was signed on March 30, 2010, as amended by an agreement dated August
12, 2010 and restated by a memorandum of agreement (MOA) dated August 12, 2010. The vessel was sold on September
7, 2010.7)
    
    M/T Chinook was sold and delivered to her new owners on April 15, 2010 (see Note 16).8)
    
    On March 30, 2010, NewLead acquired Curby Navigation Ltd., a company which was incorporated on December 30,
2009.9)
    
    M/V Grand Victoria was renamed Newlead Victoria on June 4, 2010.10)
    
    M/V Saronikos Bridge was sold on January 7, 2010 (see Note 18).11)
    
    M/V MSC Seine was sold on January 20, 2010 (see Note 18).12)
    
    M/T Arius was sold on June 11, 2008.13)
    
    M/V Ocean Hope was sold on June 29, 2009.14)
    
    M/V Energy 1 was sold was June 2, 2008.15)
    
    M/V MSC Oslo was sold on April 30, 2008.16)
    
    Aries Maritime (US) LLC was incorporated on October 23, 2008, as a representative office in the United States.
The company changed its name to Newlead Holdings (US) LLC on January 19, 2010.17)
    
    The Company was dissolved on June 15, 2010.18)
    
    Previous owner of M/V Grand Victoria which was renamed Newlead Victoria (see item 9 above). 3. Summary of Significant Accounting Policies
 Use of Estimates:
  Impairment of Long-lived Assets:
   F-9




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 Accounting for Revenue and Expenses:
     Goodwill:
    Backlog asset / Deferred charter revenue:
  4. Recent Accounting Pronouncements
 Transfers of Financial Assets
  F-10




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 Determining the Primary Beneficiary of a Variable Interest Entity
  Measuring Liabilities at Fair Value
  Fair Value Disclosures
  Subsequent Events
  5.
Business Combination (Restated)
  F-11




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  Fair value onacquisition dateCash and cash equivalents
    
    $
    1,661Trade and other receivables, net
    
    
    1,342Inventories
    
    
    349Prepaid expenses
    
    
    950Backlog asset
    
    
    9,833Vessels
    
    
    143,808Restricted cash
    
    
    34Total assets
    
    
    157,977Accounts payable
    
    
    7,417Accrued liabilities
    
    
    1,105Deferred income
    
    
    352Due to related parties, net
    
    
    547Deferred charter revenue
    
    
    3,051Bank debt
    
    
    154,475Total liabilities
    
    
    166,947Fair value of net assets/(liabilities)
    
    
    (8,970
    )Fair value of additional consideration
    
    
    5,310Goodwill
    
    $
    14,280
   GoodwillSUCCESSORBalance
at January 1, 2010, restated
    
    $
    86,036Additions April 1, 2010
    
    
    14,280Balance at June 30, 2010, restated
    
    $
    100,316
    F-12




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
 6. Restricted Cash
 As of June 30,
    
    
    As of December 31,2010
    
    
    2009Minimum Liquidity
    
    $
    250
    
    
    $
    403Letter of guarantee
    
    
    10,017
    
    
    
    Short term restricted account
    
    
    10,267
    
    
    
    403Minimum Liquidity
    
    
    
    
    
    
    9,668Retention of proceeds from sale
of vessels
    
    
    14,932
    
    
    
    Letter of guarantee
    
    
    31
    
    
    
    Long term restricted account
    
    
    14,963
    
    
    
    9,668$
    25,230
    
    
    $
    10,071
 7. Inventories
 As of June 30,
    
    
    As of December 31,2010
    
    
    2009Bunkers
    
    $
    1,994
    
    
    $
    2,075Lubricants
    
    
    947
    
    
    
    953Provisions (Stores)
    
    
    20
    
    
    
    57$
    2,961
    
    
    $
    3,085
 8. Advances for Vessel Under Construction
  Post-Kamsarmax
    
    
    PanamaxVessels
    
    
    Vessel
    
    
    TotalAdvance payments in cash
    
    $
    12,500
    
    
    $
    3,700
    
    
    $
    16,200Acquired advances for vessels
under construction
    
    
    19,727
    
    
    
    
    
    
    
    19,727Capitalized expenses
    
    
    297
    
    
    
    
    
    
    
    297$
    32,524
    
    
    $
    3,700
    
    
    $
    36,224
   F-13




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
    9. Vessels and Other Fixed Assets, Net
  Special
    
    
    Other fixedCost
    
    Dry docking
    
    
    Vessels
    
    
    survey
    
    
    assets
    
    
    TotalPREDECESSORBalance at December 31, 2008
    
    $
    12,011
    
    
    $
    380,094
    
    
    $
    8,053
    
    
    $
    210
    
    
    $
    400,368Additions
    
    
    4,761
    
    
    
    
    
    
    
    1,358
    
    
    
    63
    
    
    
    6,182Disposals  Discontinued
operations
    
    
    (484
    )
    
    
    (17,224
    )
    
    
    (421
    )
    
    
    
    
    
    
    (18,129
    )Balance at October 13, 2009
    
    
    16,288
    
    
    
    362,870
    
    
    
    8,990
    
    
    
    273
    
    
    
    388,421SUCCESSORAdditions
    
    
    1,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,333Additions  Contribution from
Grandunion
    
    
    5,767
    
    
    
    98,985
    
    
    
    
    
    
    
    
    
    
    
    104,752Change in control  basis
adjustment
    
    
    (16,288
    )
    
    
    (82,870
    )
    
    
    (8,990
    )
    
    
    (273
    )
    
    
    (108,421
    )Transfer to assets held for sale
    
    
    
    
    
    
    (8,400
    )
    
    
    
    
    
    
    
    
    
    
    (8,400
    )Balance at December 31, 2009
    
    
    7,100
    
    
    
    370,585
    
    
    
    
    
    
    
    
    
    
    
    377,685Business combination
    
    
    
    
    
    
    143,050
    
    
    
    
    
    
    
    758
    
    
    
    143,808Additions
    
    
    2,081
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    2,095Transfer to assets held for sale
    
    
    
    
    
    
    (15,299
    )
    
    
    
    
    
    
    
    
    
    
    (15,299
    )Disposals
    
    
    (1,331
    )
    
    
    (14,262
    )
    
    
    
    
    
    
    
    
    
    
    (15,593
    )Balance at June 30, 2010
    
    
    7,850
    
    
    
    484,074
    
    
    
    
    
    
    
    772
    
    
    
    492,696Accumulated Depreciation and
AmortizationPREDECESSORBalance at December 31, 2008
    
    
    (9,413
    )
    
    
    (89,472
    )
    
    
    (4,921
    )
    
    
    (99
    )
    
    
    (103,905
    )Depreciation and Amortization
for the period
    
    
    (2,050
    )
    
    
    (14,073
    )
    
    
    (1,071
    )
    
    
    (174
    )
    
    
    (17,368
    )Impairment loss
    
    
    
    
    
    
    (91,601
    )
    
    
    
    
    
    
    
    
    
    
    (91,601
    )Disposals
    
    
    484
    
    
    
    9,361
    
    
    
    421
    
    
    
    
    
    
    
    10,266Balance at October 13, 2009
    
    
    (10,979
    )
    
    
    (185,785
    )
    
    
    (5,571
    )
    
    
    (273
    )
    
    
    (202,608
    )SUCCESSORAdditions  Contribution from
Grandunion
    
    
    (1,569
    )
    
    
    (27,894
    )
    
    
    
    
    
    
    
    
    
    
    (29,463
    )Change in control  basis
adjustment
    
    
    10,979
    
    
    
    94,184
    
    
    
    5,571
    
    
    
    273
    
    
    
    111,007Depreciation and Amortization
for the period
    
    
    (469
    )
    
    
    (3,187
    )
    
    
    
    
    
    
    
    
    
    
    (3,656
    )Transfer to assets held for sale
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Balance at December 31, 2009
    
    
    (2,038
    )
    
    
    (122,532
    )
    
    
    
    
    
    
    
    
    
    
    (124,570
    )Depreciation and Amortization
for the period
    
    
    (1,286
    )
    
    
    (9,631
    )
    
    
    
    
    
    
    (154
    )
    
    
    (11,071
    )Impairment loss (note 3)
    
    
    
    
    
    
    (15,662
    )
    
    
    
    
    
    
    
    
    
    
    (15,662
    )Transfer to assets held for sale
    
    
    
    
    
    
    508
    
    
    
    
    
    
    
    
    
    
    
    508Disposals
    
    
    156
    
    
    
    563
    
    
    
    
    
    
    
    
    
    
    
    719Balance at June 30, 2010
    
    
    (3,168
    )
    
    
    (146,754
    )
    
    
    
    
    
    
    (154
    )
    
    
    (150,076
    )PREDECESSORNet book value 
December 31, 2008
    
    
    2,598
    
    
    
    290,622
    
    
    
    3,132
    
    
    
    111
    
    
    
    296,463Net book value  October 13,
2009
    
    
    5,309
    
    
    
    177,085
    
    
    
    3,419
    
    
    
    
    
    
    
    185,813SUCCESSORNet book value 
December 31, 2009
    
    
    5,062
    
    
    
    248,053
    
    
    
    
    
    
    
    
    
    
    
    253,115Net book value  June 30,
2010
    
    $
    4,682
    
    
    $
    337,320
    
    
    $
    
    
    
    $
    618
    
    
    $
    342,620
 F-14




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  10. Long-Term Debt
  West LB
    
    
    Piraeus
    
    
    KamsarmaxSyndicate
    
    
    Marfin
    
    
    
    
    
    
    Bank
    
    
    Bank
    
    
    SyndicateFacility
    
    
    Credit
    
    
    Commerzbank
    
    
    Credit
    
    
    Credit
    
    
    FacilitiesDescription
    
    Agreement
    
    
    Facility
    
    
    Credit Facility
    
    
    Facility
    
    
    Facility
    
    
    Agreements
    
    
    TotalLong-term
    
    $
    180,881
    
    
    $
    57,740
    
    
    $
    7,786
    
    
    $
    25,625
    
    
    $
    75,550
    
    
    $
    40,852
    
    
    $
    388,434Current portion of long-term
    
    
    7,639
    
    
    
    7,540
    
    
    
    1,464
    
    
    
    1,875
    
    
    
    8,200
    
    
    
    1,648
    
    
    
    28,366Total
    
    $
    188,520
    
    
    $
    65,280
    
    
    $
    9,250
    
    
    $
    27,500
    
    
    $
    83,750
    
    
    $
    42,500
    
    
    $
    416,800
  (a) Syndicate Facility Agreement
      
    
    1.75% if the Companys total shareholders equity divided by the
Companys total assets, adjusting the book value of the Companys
fleet to its market value, is equal to or greater than 50%;
 F-15




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  
    
    2.75% if the Companys total shareholders equity divided
by the Companys total assets, adjusting the book value of
the Companys fleet to its market value, is equal to or
greater than 27.5% but less than 50%; and
    
    3.25% if the Companys total shareholders equity divided
by the Companys total assets, adjusting the book value of
the Companys fleet to its market value, is less than
27.5%.
   
    
    the Companys shareholders equity as a percentage of the Companys
total assets, adjusting the book value of the Companys fleet to its
market value, must be no less than:(a)
    
    25% from the financial quarter ending September 30, 2012 until
June 30, 2013; and(b)
    
    30% from the financial quarter ending September 30, 2013 onwards.
 
    
    maintain, on a consolidated basis on each financial quarter,
working capital (as defined in the loan facility) of not less
than zero dollars ($0);
    
    the minimum liquidity requirement, at 5% of the outstanding loan;
    
    the ratio of EBITDA (earnings before interest, taxes,
depreciation and amortization) to interest payable must be no
less than;(a)
    
    2.00 to 1.00 from the financial quarter day ending September 30, 2012 until
June 30, 2013; and(b)
    
    2.50 to 1.00 from the financial quarter day ending September 30, 2013 onwards.
 (b) Marfin Credit Facility
   F-16




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  (c) Commerzbank credit facility
  (d) West LB credit facility
  (e) Piraeus Bank credit facilities
  F-17




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
    (f) Kamsarmax Syndicate Facility Agreements
    F-18




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
   Successor
    
    
    
    PredecessorSix months ended
    
    
    
    Six months endedJune 30, 2010
    
    
    
    June 30, 2009Interest expense
    
    $
    13,044
    
    
    
    $
    6,291Amortization of deferred charges
    
    
    901
    
    
    
    
    382Amortization of the beneficial
conversion feature (see Note
11)
    
    
    7,162
    
    
    
    
    Other expenses
    
    
    539
    
    
    
    
    176$
    21,646
    
    
    
    $
    6,849
   June 30, 2011
    
    $
    28,366June 30, 2012
    
    
    29,415June 30, 2013
    
    
    38,369June 30, 2014
    
    
    37,872June 30, 2015
    
    
    187,360Thereafter
    
    
    95,418$
    416,800
 11. 7% Convertible Senior Notes
   F-19




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
       7% Notes7% convertible senior notes  initially issued
    
    $
    (145,000
    )Partial conversion of the convertible senior notes
    
    
    20,0007% convertible senior notes  outstanding
    
    
    (125,000
    )Beneficial Conversion Feature
    
    
    100,536Amortization of the Beneficial Conversion Feature
    
    
    (17,000
    )Make whole fundamental change
    
    
    34Balance at December 31, 2009
    
    
    (41,430
    )Amortization of the Beneficial Conversion Feature
    
    
    (7,162
    )Make whole fundamental change
    
    
    (5
    )Balance at June 30, 2010
    
    $
    (48,597
    )
 12. Share Based Compensation
 Equity Incentive Plan
    F-20




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
   Restricted Common Shares
    WeightedWeighted
    
    
    AverageNumber of
    
    
    Average
    
    
    Vesting PeriodShares
    
    
    Fair Values
    
    
    (Years)Outstanding and non-vested shares, as of December 31, 2008
(Predecessor)
    
    
    20,000
    
    
    $
    39.3
    
    
    
    1.6Outstanding and non-vested shares, as of June 30, 2009 (Predecessor)
    
    
    20,000
    
    
    
    39.3
    
    
    
    1.6Granted (1)
    
    
    7,293
    
    
    
    15.24
    
    
    
    0.0Vested
    
    
    (27,293
    )
    
    
    32.87
    
    
    
    Outstanding and non-vested shares, as of October 13, 2009
(Predecessor)
    
    
    
    
    
    
    
    
    
    
    0.0Granted (2)
    
    
    390,001
    
    
    
    15.13
    
    
    
    0.8Vested
    
    
    (208,334
    )
    
    
    15.24
    
    
    
    Outstanding and non-vested shares, as of December 31, 2009
(Successor)
    
    
    181,667
    
    
    
    15.01
    
    
    
    1.8Granted (3)
    
    
    12,085
    
    
    
    11.04
    
    
    
    1.2Outstanding and non-vested shares, as of June 30, 2010 (Successor)
    
    
    193,752
    
    
    $
    14.76
    
    
    
    1.7
 
 (1)
    
    Vested on the date of the recapitalization.(2)
    
    208,334 shares had immediate vesting, 166,667 have a two-year
vesting schedule (at January 1, 2011, and 2012), while 15,000
vests in three years (at January 1, 2011, 2012, and 2013).(3)
    
    6,668 shares were granted on January 1, 2010 and vest over a one
year period (January 1, 2011). 5,417 shares were granted on April
15, 2010 out of which 3,750 vest in three years (at January 1,
2011, 2012 and 2013) and 1,667 vests over a one year period
(January 1, 2011).  F-21




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  Share options
  Weighted
    
    
    Weighted
    
    
    WeightedNumber of
    
    
    Average
    
    
    Average Fair
    
    
    average VestingOptions
    
    
    Exercise Price
    
    
    Value
    
    
    Period (years)Outstanding, as of December 31, 2008 (Predecessor)
    
    
    25,000
    
    
    $
    104.00
    
    
    $
    6.20
    
    
    
    3.0Outstanding, as of June 30, 2009 (Predecessor)(1)
    
    
    25,000
    
    
    
    104.00
    
    
    
    6.20
    
    
    
    3.0Outstanding, as of October 13, 2009 (Predecessor)
    
    
    25,000
    
    
    
    104.00
    
    
    
    6.20
    
    
    
    3.0Granted (2)
    
    
    250,000
    
    
    
    19.80
    
    
    
    6.25
    
    
    
    3.0Outstanding, as of December 31, 2009 (Successor)
    
    
    275,000
    
    
    
    27.45
    
    
    
    6.24
    
    
    
    3.0Outstanding, as of June 30, 2010 (Successor)
    
    
    275,000
    
    
    
    27.45
    
    
    
    6.24
    
    
    
    2.7Exercisable at June 30, 2010
    
    
    87,501
    
    
    $
    43.86
    
    
    $
    6.24
    
    
    
    
 
 (1)
    
    In 2008, the Company granted 25,000 share options to purchase common shares subject to a vesting period of three
annual equal installments. The fair value of these share option awards has been calculated based on the Binomial
lattice model method. The Company used this model given that the options granted are exercisable at a specified time
after vesting period (up to 10 years). The assumptions utilized in the Binomial lattice valuation model for the
share option included a dividend yield of 5% and an expected volatility of 43%. For the first two vesting dates, the
risk-free interest rate was 3.8% and the fair value per share option amounted to $6.60 with an expected life of 6
years. For the third vesting date, the risk-free interest rate was 4.6% with an expected life of 10 years, while the
fair value per share option amounted to $5.40. On October 13, 2009, all these shares were vested due to the
recapitalization.(2)
    
    In 2009, the Company granted 250,000 share options to purchase common shares, which vest equally over 36 months and
are subject to accelerated vesting upon certain circumstances. The fair value of these share option awards has been
calculated based on the Binomial lattice model method. The Company used this model given that the options granted
are exercisable at a specified time after vesting period (through five years from October 13, 2009). Pursuant to the
Board of Directors resolution dated October 14, 2010, the exercisable period of these share options extended for
additional five years, i.e. until October 13, 2019. The assumptions utilized in the Binomial lattice valuation model
for the share option included a dividend yield of 0% and an expected volatility of 90%. The risk-free interest rate
was 2.3% and the weighted average fair value per share option amounted to $6.25. F-22




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
      13. Common Shares and Dividends
  14.
Segment Information (Restated)
   F-23




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  Wet
    
    
    Dry
    
    
    TotalSuccessor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    PredecessorThree months
    
    
    
    Three months
    
    
    Three months
    
    
    
    Three months
    
    
    Three months
    
    
    
    Three monthsended June 30,
    
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    
    ended June 30,2010
(Restated)
    
    
    
    2009
    
    
    2010
(Restated)
    
    
    
    2009
    
    
    2010
(Restated)
    
    
    
    2009Operating revenue
    
    $
    13,683
    
    
    
    $
    10,755
    
    
    $
    12,284
    
    
    
    $
    
    
    
    $
    25,967
    
    
    
    $
    10,755Commissions
    
    
    (474
    )
    
    
    
    (201
    )
    
    
    (228
    )
    
    
    
    
    
    
    
    (702
    )
    
    
    
    (201
    )Voyage expenses
    
    
    (4,424
    )
    
    
    
    (1,425
    )
    
    
    (332
    )
    
    
    
    
    
    
    
    (4,756
    )
    
    
    
    (1,425
    )Vessel operating expenses
    
    
    (5,097
    )
    
    
    
    (5,178
    )
    
    
    (4,637
    )
    
    
    
    
    
    
    
    (9,734
    )
    
    
    
    (5,178
    )General and administrative expenses
    
    
    (1,680
    )
    
    
    
    (1,586
    )
    
    
    (1,203
    )
    
    
    
    
    
    
    
    (2,883
    )
    
    
    
    (1,586
    )Management fees
    
    
    (246
    )
    
    
    
    (293
    )
    
    
    (40
    )
    
    
    
    
    
    
    
    (286
    )
    
    
    
    (293
    )Other income / (expense), net
    
    
    50
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    (5
    )Net operating income before
depreciation
and amortization
    
    
    1,812
    
    
    
    
    2,067
    
    
    
    5,844
    
    
    
    
    
    
    
    
    7,656
    
    
    
    
    2,067Depreciation and amortization
expense
    
    
    (6,856
    )
    
    
    
    (3,719
    )
    
    
    (4,102
    )
    
    
    
    
    
    
    
    (10,958
    )
    
    
    
    (3,719
    )Impairment loss
    
    
    (3,224
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,224
    )
    
    
    
    Net operating (loss) / income
    
    
    (8,268
    )
    
    
    
    (1,652
    )
    
    
    1,742
    
    
    
    
    
    
    
    
    (6,526
    )
    
    
    
    (1,652
    )Transaction costs
    
    
    (197
    )
    
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    
    (343
    )
    
    
    
    Straight line revenue
    
    
    
    
    
    
    
    
    
    
    
    (182
    )
    
    
    
    
    
    
    
    (182
    )
    
    
    
    Compensation costs
    
    
    (385
    )
    
    
    
    (148
    )
    
    
    (286
    )
    
    
    
    
    
    
    
    (671
    )
    
    
    
    (148
    )Provision for doubtful recivables
    
    
    33
    
    
    
    
    (7
    )
    
    
    (47
    )
    
    
    
    
    
    
    
    (14
    )
    
    
    
    (7
    )Interest and finance expense, net
    
    
    (5,780
    )
    
    
    
    (3,381
    )
    
    
    (7,143
    )
    
    
    
    
    
    
    
    (12,923
    )
    
    
    
    (3,381
    )Interest income
    
    
    64
    
    
    
    
    4
    
    
    
    49
    
    
    
    
    
    
    
    
    113
    
    
    
    
    4Change in fair value of derivatives
    
    
    164
    
    
    
    
    1,244
    
    
    
    123
    
    
    
    
    
    
    
    
    287
    
    
    
    
    1,244Loss from continuing operations
    
    $
    (14,369
    )
    
    
    $
    (3,940
    )
    
    $
    (5,890
    )
    
    
    $
    
    
    
    $
    (20,259
    )
    
    
    $
    (3,940
    )
 Wet
    
    
    Dry
    
    
    TotalSuccessor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    PredecessorSix months
    
    
    
    Six months
    
    
    Six months
    
    
    
    Six months
    
    
    Six months
    
    
    
    Six monthsended June 30,
    
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    
    ended June 30,2010
(Restated)
    
    
    
    2009
    
    
    2010
(Restated)
    
    
    
    2009
    
    
    2010
(Restated)
    
    
    
    2009Operating revenue
    
    $
    25,385
    
    
    
    $
    22,490
    
    
    $
    18,828
    
    
    
    $
    
    
    
    $
    44,213
    
    
    
    $
    22,490Commissions
    
    
    (839
    )
    
    
    
    (462
    )
    
    
    (362
    )
    
    
    
    
    
    
    
    (1,201
    )
    
    
    
    (462
    )Voyage expenses
    
    
    (9,399
    )
    
    
    
    (3,298
    )
    
    
    (332
    )
    
    
    
    
    
    
    
    (9,731
    )
    
    
    
    (3,298
    )Vessel operating expenses
    
    
    (10,358
    )
    
    
    
    (10,541
    )
    
    
    (6,752
    )
    
    
    
    
    
    
    
    (17,110
    )
    
    
    
    (10,541
    )General and administrative expenses
    
    
    (3,398
    )
    
    
    
    (2,758
    )
    
    
    (1,736
    )
    
    
    
    
    
    
    
    (5,134
    )
    
    
    
    (2,758
    )Management fees
    
    
    (638
    )
    
    
    
    (588
    )
    
    
    (178
    )
    
    
    
    
    
    
    
    (816
    )
    
    
    
    (588
    )Other income / (expense), net
    
    
    49
    
    
    
    
    (2
    )
    
    
    (6
    )
    
    
    
    
    
    
    
    43
    
    
    
    
    (2
    )Net operating income before
depreciation
and amortization
    
    
    802
    
    
    
    
    4,841
    
    
    
    9,462
    
    
    
    
    
    
    
    
    10,264
    
    
    
    
    4,841Depreciation and amortization
expense
    
    
    (10,534
    )
    
    
    
    (7,491
    )
    
    
    (6,045
    )
    
    
    
    
    
    
    
    (16,579
    )
    
    
    
    (7,491
    )Impairment loss
    
    
    (15,662
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,662
    )
    
    
    
    Net operating (loss) / income
    
    
    (25,394
    )
    
    
    
    (2,650
    )
    
    
    3,417
    
    
    
    
    
    
    
    
    (21,977
    )
    
    
    
    (2,650
    )Transaction costs
    
    
    (909
    )
    
    
    
    
    
    
    
    (383
    )
    
    
    
    
    
    
    
    (1,292
    )
    
    
    
    Straight line revenue
    
    
    
    
    
    
    
    
    
    
    
    (362
    )
    
    
    
    
    
    
    
    (362
    )
    
    
    
    Compensation costs
    
    
    (927
    )
    
    
    
    (294
    )
    
    
    (465
    )
    
    
    
    
    
    
    
    (1,392
    )
    
    
    
    (294
    )Provision for doubtful recivables
    
    
    (162
    )
    
    
    
    (7
    )
    
    
    (47
    )
    
    
    
    
    
    
    
    (209
    )
    
    
    
    (7
    )Interest and finance expense, net
    
    
    (12,361
    )
    
    
    
    (6,849
    )
    
    
    (9,285
    )
    
    
    
    
    
    
    
    (21,646
    )
    
    
    
    (6,849
    )Interest income
    
    
    271
    
    
    
    
    7
    
    
    
    119
    
    
    
    
    
    
    
    
    390
    
    
    
    
    7Change in fair value of derivatives
    
    
    1,237
    
    
    
    
    1,138
    
    
    
    481
    
    
    
    
    
    
    
    
    1,718
    
    
    
    
    1,138Loss from continuing operations
    
    $
    (38,245
    )
    
    
    $
    (8,655
    )
    
    $
    (6,525
    )
    
    
    $
    
    
    
    $
    (44,770
    )
    
    
    $
    (8,655
    )Total assets
     
    $
    331,370
    
    
    
    $
    299,598
    
    
    $
    318,359
    
    
    
    
    
    
    
    $
    649,729
    
    
    
    $
    299,598Goodwill
     
    $
    72,692
    
    
    
    
    
    
    
    $
    27,624
    
    
    
    
    
    
    
    $
    100,316
    
    
    
    
    Long lived assets
    
    $
    179,450
    

    

    
 $
    277,616

 
    
    $
    199,394
    




    

    
    
    
    

    
 $
    378,844
    
    

    
    $
    277,616
 F-24




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  15. Financial Instruments
  Fair Values
  Warrant Derivative Liability
     Interest Rate Risk
  Concentration of Credit Risk
  Interest Rate Swaps
   F-25




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
   Counter-party
 Fair ValueContract
    
    
    
    
    
    
    
    
    
    
    As of
    
    
    
    As ofValue
    
    
    Termination
    
    
    Notional
    
    
    Fixed
    
    
    Floating
    
    
    June 30,
    
    
    
    December 31,Interest rate swaps
    
    Date
    
    
    Date
    
    
    Amount
    
    
    Rate
    
    
    Rate
    
    
    2010
    
    
    
    2009SMBC Bank
    
    
    7/3/2006
    
    
    
    4/4/2011
    
    
    $
    20,000
    
    
    
    5.63
    %
    
    3-month LIBOR
    
    $
    (1,018
    )
    
    
    $
    (1,475
    )Bank of Ireland
    
    
    7/3/2006
    
    
    
    4/4/2011
    
    
    $
    20,000
    
    
    
    5.63
    %
    
    3-month LIBOR
    
    
    (1,017
    )
    
    
    
    (1,484
    )HSH Nordbank
    
    
    7/3/2006
    
    
    
    4/4/2011
    
    
    $
    20,000
    
    
    
    5.63
    %
    
    3-month LIBOR
    
    
    (1,018
    )
    
    
    
    (1,483
    )Nordea Bank
    
    
    7/3/2006
    
    
    
    4/4/2011
    
    
    $
    20,000
    
    
    
    5.63
    %
    
    3-month LIBOR
    
    
    (1,017
    )
    
    
    
    (1,481
    )Bank of Scotland
    
    
    7/3/2006
    
    
    
    4/4/2011
    
    
    $
    20,000
    
    
    
    5.63
    %
    
    3-month LIBOR
    
    
    (1,018
    )
    
    
    
    (1,481
    )Nordea Bank*
    
    
    4/3/2008
    
    
    
    4/4/2011
    
    
    $
    23,333
    
    
    
    4.14
    %
    
    3-month LIBOR
    
    
    (837
    )
    
    
    
    (1,195
    )Bank of Scotland**
    
    
    4/3/2008
    
    
    
    4/3/2011
    
    
    $
    46,667
    
    
    
    4.28
    %
    
    3-month LIBOR
    
    
    (874
    )
    
    
    
    (1,249
    )Marfin Egnatia Bank***
    
    
    9/2/2009
    
    
    
    9/2/2014
    
    
    $
    37,400
    
    
    
    4.08
    %
    
    3-month LIBOR
    
    
    (2,299
    )
    
    
    
    (1,926
    )Bank of Scotland
    
    
    4/6/2010
    
    
    
    7/6/2010
    
    
    $
    81,070
    
    
    
    3.97
    %
    
    3-month LIBOR
    
    
    (209
    )
    
    
    
    Bank of Scotland
    
    
    4/6/2010
    
    
    
    7/6/2010
    
    
    $
    16,950
    
    
    
    3.97
    %
    
    3-month LIBOR
    
    
    (140
    )
    
    
    
    Bank of Scotland
    
    
    7/6/2010
    
    
    
    10/15/15
    
    
    $
    63,636
    
    
    
    4.01
    %
    
    3-month LIBOR
    
    
    (5,104
    )
    
    
    
    Bank of Scotland
    
    
    7/6/2010
    
    
    
    10/15/15
    
    
    $
    13,333
    
    
    
    4.01
    %
    
    3-month LIBOR
    
    
    (1,240
    )
    
    
    
    $
    (15,791
    )
    
    
    $
    (11,774
    )
 Fair ValueAs of
    
    
    
    As ofJune 30,
    
    
    
    December 31,2010
    
    
    
    2009Short-term
    
    $
    (10,179
    )
    
    
    $
    (9,687
    )Long-term
    
    
    (5,612
    )
    
    
    
    (2,087
    )$
    (15,791
    )
    
    
    $
    (11,774
    )
 F-26




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##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  
 *
    
    Synthetic swap including interest rate cap detailed as follows:
 Counter-party
    
    Value Date
    
    Termination Date
    
    Notional Amount
    
    CapNordea
    
    
    4/3/08
    
    
    
    4/4/11
    
    
    $
    23,333
    
    
    
    4.14
    %
 **
    
    Synthetic swap including interest rate floor detailed as follows:
 Counter-party
    
    Value Date
    
    Termination Date
    
    Notional Amount
    
    FloorBank of Scotland
    
    
    4/3/08
    
    
    
    4/3/11
    
    
    $
    23,333
    
    
    
    4.285
    %
 ***
    
    As part of the contribution from Grandunion on October 13, 2009,
the Company assumed a $37,400 interest rate swap by Marfin
Egnatia Bank.
  Fair Value Hierarchy
   Quoted Prices
    
    Significantin Active
    
    Other
    
    SignificantMarkets for
    
    Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    InputsTotal
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)December 31, 2009LiabilitiesInterest rate swaps
    
    $
    11,774
    
    
    $
    
    
    
    $
    11,774
    
    
    $
    Warrants
    
    $
    5,273
    
    
    $
    
    
    
    $
    5,273
    
    
    $
    Make Whole
Fundamental Change
    
    $
    42
    
    
    $
    
    
    
    $
    42
    
    
    $
    June 30, 2010AssetsVessels
    
    $
    4,266
    
    
    $
    
    
    
    $
    4,266
    
    
    $
    LiabilitiesInterest rate swaps
    
    $
    15,791
    
    
    $
    
    
    
    $
    15,791
    
    
    $
    Warrants
    
    $
    3,591
    
    
    $
    
    
    
    $
    3,591
    
    
    $
    Make Whole
Fundamental Change
    
    $
    6
    
    
    $
    
    
    
    $
    6
    
    
    $
    
  F-27




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##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
   16. Commitments and Contingent Liabilities
 (1) Commitments
 Rental Agreements
    June 30, 2011
    
    $
    390June 30, 2012
    
    
    395June 30, 2013
    
    
    401June 30, 2014
    
    
    407June 30, 2015
    
    
    413Thereafter
    
    
    2,832$
    4,838
 Commercial & Technical Ship Management Agreements
   F-28




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##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
    Purchase / Sale of vessels
   Newbuildings
  (2) Contingencies
  
    
    The charterers of the Newlead Avra notified the Company in October
2008 of their intention to pursue the following claims and notified
the appointment of an arbitrator in relation to them:a)
    
    Damages suffered by sub-charterers of the vessel relating to remaining on board cargo in New York in September 2007;b)
    
    Damages suffered by sub-charterers of the vessel as a result of a change in management and the consequent dispute
regarding oil major approval from October 2007; andc)
    
    Damages suffered by sub-charterers of the vessel resulting from grounding in Houston in October 2007.
    
    The charterers of the Newlead Fortune notified the Company in October
2008 of their intention to pursue the following claims, and notified
the appointment of an arbitrator in relation to them:a)
    
    Damages as a result of a change in management and the consequent dispute regarding oil major approval from
October 2007; andb)
    
    Damages resulting from the creation of hydrogen sulphide in the vessels tanks at two ports in the United States.
  F-29




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  17. Transactions Involving Related Parties
 Management Services and Commissions
  Sea Breeze
  Newfront  Stamford
  Newlead Bulkers S.A.
  Newlead Shipping S.A.
  Terra Stabile A.E.
  Grandunion Inc.
  F-30




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  Domina Petridou O.E.
  Aries Energy Corporation
  Amounts due from / (to) managing agent
  As of June 30,
    
    
    As of December 31,2010
    
    
    2009International Tanker Management Ltd.
    
    $
    493
    
    
    $
    Wilhelmsen Ship Management
    
    
    
    
    
    
    8Total due from
    
    
    493
    
    
    
    8International Tanker Management Ltd.
    
    
    
    
    
    
    (1,812
    )Ernst Jacob Ship Management GmbH
    
    
    (247
    )
    
    
    (56
    )Total due to
    
    $
    (247
    )
    
    $
    (1,868
    )
 Amounts due from / (to) related parties
  As of June 30,
    
    
    As of December 31,2010
    
    
    2009Grand Markela
    
    $
    287
    
    
    $
    Grand Esmeralda
    
    
    261
    
    
    
    Newfront Shipping S.A.
    
    
    207
    
    
    
    40Grand Spartounta
    
    
    12
    
    
    
    Total due from
    
    
    767
    
    
    
    40Stamford Navigation Inc.
    
    
    (250
    )
    
    
    (234
    )Grandunion Inc.
    
    
    (174
    )
    
    
    Hian Tankers Inc.
    
    
    (1
    )
    
    
    Total due to
    
    $
    (425
    )
    
    $
    (234
    )
 F-31




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  18. Discontinued Operations
      Successor
    
    
    PredecessorJanuary 1, to
    
    
    January 1, toJune 30, 2010
    
    
    June 30, 2009Operating Revenues
    
    $
    1,207
    
    
    
    $
    10,106Net income/(loss)
    
    $
    2,478
    
    
    
    $
    (3,808
    )
  19. Subsequent Events
    F-32




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##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  
    
    The Company assumed a Loan Agreement with First Business Bank, dated July 2, 2010, as
supplemented by a First Supplemental Agreement, dated October 15, 2010, for a loan facility
of up to $24,150, in relation to the Grand Spartounta. The loan is payable in 19 quarterly
installments of $800 followed by a $8,950 payment due in July 2015. Borrowings under this
loan facility currently bear an effective interest rate, including the margin, of
approximately 3.8% (assuming current LIBOR of 0.288%, plus a 3.5% margin). This loan
facility, includes, among other things, a value to loan ratio that must be at all times
100% from January 1, 2012 up until December 31, 2012 and 120% up until maturity date and a
cash sweep for 50% of the vessels excess earnings (all as defined in such loan facility)
to be applied against the balloon payment. This loan facility, includes, among other
things, financial covenants including: (i) a minimum market adjusted equity ratio (as
defined in the loan facility) of 25% to be tested on December 31, 2012, increasing to 30%,
annually thereafter; (ii) liquidity of not less than 5% of the total debt (as defined in
the loan facility) during the period the loan facility remains outstanding; (iii) working
capital (as defined in the loan facility) to be not less than zero dollars ($0) during the
period the loan facility remains outstanding; and (iv) minimum interest coverage ratio (as
defined in the loan facility) on a trailing four financial quarter basis of 2:1 as at
December 31, 2012 and 2.5:1 as at December 31, 2013 and annually thereafter.
    
    The Company assumed a Loan Agreement with Emporiki Bank, dated November 29, 2006, as
supplemented by a Third Supplemental Agreement, dated July 2, 2010, for a loan facility of
up to $14,750, in relation to the Grand Markela. The Loan Agreement was further
supplemented by a Fourth Supplemental Agreement, dated September 8,2010, to
reflect the renaming of the Grand Markela to the Newlead Markela, and the change of
registry of the vessel from Liberia to Marshall Islands, and it was further supplemented by
a Fifth Supplemental Agreement, dated November 8,2010. The loan is payable in
four semi annual installments of $1,170 followed by a $5,120 payment due in November 2012.
Borrowings under this loan facility currently bear an effective interest rate, including
the margin, of approximately 3.3% (assuming current LIBOR of 0.288%, plus a 3.0% margin).
The loan facility, includes, among other things, a value to loan ratio that must be at all
times 125% up until the maturity date, a cash sweep for 50% of the vessels excess earnings
(all as defined in such loan facility) to be applied towards reducing the balloon payment
from the initial $3,950 to the amount of $2,500 and an average monthly balance of the
earnings account held within the bank in the name of the borrower of $400. As of the date
of assumption, the outstanding balance on such loan facility was $9,800. The loan facility,
includes, among other things, financial covenants including: (i) a minimum market adjusted
equity ratio (as defined in the loan facility) of 25% for the period from September 30,
2012 until June 30, 2013, increasing to 30%, thereafter; (ii) liquidity to be not less than
5% of the total debt during the period the loan facility remains outstanding; (iii) working
capital (as defined in the loan facility) of not less than zero dollars ($0) at each
quarter end during the period the loan facility remains outstanding; and (iv) minimum
interest coverage ratio (as defined in the loan facility) on a trailing four financial
quarter basis of 2:1 for the period from September 30, 2012 until June 30, 2013, increasing
to 2.5:1 thereafter. This loan facility terminated on December 14, 2010 and its outstanding
balance of $9,800 was fully repaid through the proceeds of the new Marfin revolving credit
facility (see item (h) below).
    
    The Company assumed a Loan Agreement with EFG Eurobank, dated October 22, 2007, as
supplemented by a Third Supplemental Agreement, dated July 9, 2010, for a loan facility of
up to $32,000, in relation to the Grand Esmeralda. The Loan Agreement was further
supplemented by a Fourth Supplemental Agreement, dated August 13, 2010, to reflect the
renaming of the Grand Esmeralda to the Newlead Esmeralda, and the change of registry of the
vessel from Liberia to Marshall Islands. The Loan Agreement was further supplemented by a
Fifth Supplemental Agreement, dated October 15, 2010, to reflect the application of $1,130
to the initial outstanding amount of $14,790. The loan is payable in 15 quarterly
installments of $525 followed by a $5,785 payment due in April 2014. Borrowings under this
loan facility currently bear an effective interest rate, including the margin, of
approximately 4.1% (assuming current LIBOR of 0.288%, plus a 3.75% margin). This loan
facility includes, among other things, a waiver to the minimum security clause for a period
starting from July 1, 2010 and ending on the June 30, 2011. As of the date of assumption,
the outstanding balance on such loan facility was $15,355. The loan facility, includes,
among other things, financial covenants including: (i) a minimum market adjusted equity
ratio (as defined in the loan facility) of 25% for the period from January 1, 2013 until
December 30, 2013, increasing to 30%, thereafter; (ii) liquidity to be not less than 5% of
the total debt during the period the loan facility remains outstanding; and (iii) a minimum
interest coverage ratio (as defined in the loan facility) of 2:1 for the period from
January 1, 2013 until December 30, 2013, increasing to 2.5:1, thereafter.
 F-33




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
  
    
    The Company assumed a Loan Agreement signed with DVB Bank, Nord LB and Emporiki Bank,
dated July 9, 2010, as supplemented by a Third  Supplemental Agreement dated December 15,
2010 (which was initially amended and supplemented by a First Supplemental Agreement, dated July 14, 2010 and was further supplemented by a Second Supplemental Agreement dated November  9, 2010)
for a loan facility of up to $48,000, in relation to two newbuilding vessels. The loan is
payable, for the first vessel, in 12 quarterly installments of $362.5 followed by 12
quarterly installments of $387.5 followed by 15 quarterly installments of $400, with the
last installment payable together with the $9,000 of the balloon payment due in December
2020. The loan is payable, for the second vessel, in 12 quarterly installments of $362.5
followed by 12 quarterly installments of $387.5 followed by 10 quarterly installments of
$400, with the last installment payable together with the $11,000 of the balloon payment
due in December 2020. Borrowings under this loan facility currently bear an effective
interest rate, including the margin, of approximately 3.3% (assuming current LIBOR of
0.288%, plus a 3.0% margin). The loan facility, includes, among other things, a value to
loan ratio (as defined in the loan facility) that must be at all times 110% over the first
five years and 120% thereafter, a cash sweep on the earnings of the vessels, representing
the 100% of the excess cash flow (as defined in the loan facility) for the period
commencing on delivery date of each vessel until the relevant balloon amount is reduced to
$3,000 and the 50% of the excess cash flow of each vessel thereafter and a minimum
liquidity reserve for each borrower to be kept with the agent bank of not less than $500
(applicable after each vessels respective deliveries). As of the date of assumption, the
outstanding balance on such loan facility was $14,100. The loan facility, includes, among
other things, financial covenants including: (i) a minimum market adjusted equity ratio (as
defined in the loan facility) of 25% for the period from September 30, 2012 until June 30,
2013, increasing to 30%, thereafter; (ii) liquidity to be not less than 5% of the total
debt during the period the loan facility remains outstanding; (iii) maintenance of the
ratio of EBITDA to interest payable (as both are defined in the loan facility) on a
trailing four financial quarter basis of 2:1 for the period from September 30, 2012 until
June 30, 2013, increasing to 2.5:1, thereafter; (iv) maintenance of free cash in an amount
no less than $5,000; and (v) working capital (as defined in the loan facility) of no less
than zero dollars ($0) at each quarter end.
    
    The Company assumed a Loan Agreement with Marfin Egnatia Bank, dated July 21, 2010, as
novated, amended and restated by a Novation, Amendment & Restatement Agreement, dated July
21, 2010 for a reducing revolving credit facility of up to $23,000. The loan is payable in
12 quarterly installments of $100 followed by a $21,800 payment due in October 2013.
Borrowings under this loan facility currently bear an effective interest rate, including
the margin, of approximately 4.0% (assuming current LIBOR of 0.288%, plus a 3.75% margin).
The loan facility includes financial covenants, all as described in the loan facility
including: (i) the Companys shareholders equity as a percentage of the Companys total
assets, adjusting the book value of the fleet to the market value, must be no less than:
(a) 25% from the financial quarter ending September 30, 2012 until June 30, 2013; and (b)
30% from the financial quarter ending September 30, 2013 onwards; (ii) the maintenance, on
a consolidated basis on each financial quarter, of working capital (as defined in the loan
facility) of not less than zero dollars ($0); (iii) maintenance of the minimum liquidity
requirement, at five percent of the outstanding loan; and (iv) the maintenance of the ratio
of EBITDA (as defined in the loan facility) to interest payable on a trailing four
financial quarter basis to be no less than: (a) 2.00 to 1.00 from the financial quarter day
ending September 30, 2012 until June 30, 2013; and (b) 2.50 to 1.00 from the financial
quarter day ending September 30, 2013 onwards. As of the date of assumption, the
outstanding balance on such loan facility was $23,000. This loan facility terminated on
November 23, 2010 and its outstanding balance of $22,900 was fully repaid through the
proceeds from the sale and leaseback transaction which concluded at the same date (for more
details about this transaction refer to item (d) below).
  F-34




---



##### 



NEWLEAD HOLDINGS LTD.
 Notes to Condensed Consolidated Financial Statements (unaudited)
        F-35




---



##### 



SIGNATURES
  NEWLEAD HOLDINGS LTD.By:
    /s/ Michail ZolotasMichail ZolotasChief Executive OfficerDated: June 30, 2011