(

)

NEW ACCOUNTING PRONOUNCEMENTS

May 2014,

the FASB

issued Accounting Standards Update, or ASU,

2014

09,

“Revenue from Contracts with Customers.” The ASU will replace most existing revenue recognition guidance in U.S. GAAP. The FASB subsequently issued ASU

2015

which delayed the effective date from

January 1, 2017

until

January 1, 2018.

Early application is permitted only to the original effective date. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating this standard in conjunction with the new lease standard (ASU

2016

) discussed in the next paragraph.

February 2016,

the FASB issued ASU

2016

02,

“Leases” to increase transparency and comparability among organizations by recognizing all leases on the balance sheet and disclosing key information about leasing arrangements. The main difference between current accounting standards and ASU

2016

is the recognition of assets and liabilities by lessees for those leases classified as operating leases under current accounting standards. The new standard is effective for fiscal years beginning after

December 15, 2018.

We are evaluating this standard in conjunction with the new revenue standard discussed in the previous paragraph.

We intend to adopt the new revenue and lease standards on

January 1, 2018.

While we continue to assess all potential impacts of these standards, we expect our overall revenues to remain substantially unchanged. However, the actual revenue recognition treatment required under the new standards

may

depend on contract-specific terms and

may

vary in some instances. In addition, we anticipate that our revenues will be classified into

two

general categories – lease revenue and service revenue. The lease revenue will reflect the consideration earned while our vessels are being chartered to our customers while the service revenue component will be primarily composed of the services rendered by our crews that operate the vessels.

August 2016,

the FASB issued ASU

2016

15,

“Statement of Cash Flows

Classification of Certain Cash Receipts and Cash Payments.” The objective of the new standard is to eliminate diversity in practice related to the classification of certain cash receipts and payments by adding or clarifying guidance on

eight

cash flow classification issues: debt prepayment or extinguishment costs; settlement of

zero

-coupon bonds; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This standard is effective for annual and interim periods in fiscal years beginning after

December 15, 2017.

Early adoption is permitted. The standard should be applied retrospectively to all periods presented. We do

not

expect the adoption of this standard to have a material effect on our financial condition or results of operations.

October 2016,

the FASB issued ASU

2016

16,

“Income Taxes, Intra-Entity Transfers of Assets Other Than Inventory.” This standard requires recognition of tax consequences in the period in which a transfer takes place, with the exception of inventory transfers. There will be an immediate effect on earnings if the tax rates in the tax jurisdictions of the selling entity and buying entity are different. The new standard is effective for fiscal years beginning after

December 15, 2017.

We do

not

expect the adoption of this standard to have a material effect on our financial condition or results of operations.

January 2017,

the FASB issued ASU

2017

01,

“Business Combinations - Clarifying the Definition of a Business”

to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU

2017

is effective in annual periods beginning after

December 15, 2017.

We do

not

expect the adoption of this standard to have a material effect on our financial condition or results of operations.

May 2017,

the FASB issued ASU

2017

09,

“Compensation - Stock Compensation (ASC

718

) - Scope of Modification Accounting.” The objective of this standard is to provide clarity and reduce both (

) diversity in practice and (

) cost and complexity when applying the guidance in ASC

718

to a change to the terms or conditions of a share-based payment award. An entity

may

change the terms or conditions of a share-based payment award for many different reasons, and the nature and effect of the change can vary significantly. The new standard is effective for fiscal years beginning after

December 15, 2017,

and early adoption is permitted. We are currently evaluating the potential effect this standard will have on our financial condition and results of operations.