The balance of drybulk trade—minor bulks—subdivides into secondary bulks (free-flowing cargo) and neo-bulks (non free-flowing or part manufactured). The latter are mainly transported in small vessels below 40,000 deadweight tons. Minor bulk cargoes include bauxite/alumina, phosphate rock and other fertilizer raw materials (plus finished fertilizers), other agricultural and mineral cargoes, cement, forest products and steel products (including scrap). In 2003, total trade in minor bulks amounted to 917.0 million tons.

Over the past two decades the average annualized growth of the seaborne drybulk trade has been close to 2%, which reflects a mature industry with slow growth. This changed entering the new millennium, when Chinese demand for raw materials doubled the growth rate in the drybulk trade. Over the period from 1999 to 2003, total seaborne trade in all drybulk commodities increased from 1.97 billion tons to 2.30 billion tons, an increase of 17%.

Drybulk trade is influenced by the underlying demand for these commodities, which in turn is influenced by the level of economic activity. Generally, growth in GDP and Industrial production correlate with peaks in demand for seaborne transportation. Certain economies will act from time to time as the "locomotive" of the drybulk carrier market. In the 1990s Japan acted as the locomotive with demand for seaborne trade correlating with Japanese industrial production. At the present time, China is the main driving force behind the increase in seaborne drybulk trades and the demand for bulk carriers. In addition to coal and iron ore, Chinese imports of steel products have also increased sharply in the last five years, thereby creating additional demand for drybulk carriers.

The Company’s Initial Fleet principally carries a variety of drybulk commodities including coal, iron ore, and grains, or major bulks, as well as bauxite, phosphate, fertilizers and steel products, or minor bulks. The Company intends to acquire 11 additional drybulk carriers for a cash payment of $299.3 million plus approximately 1.35 million shares of the Company’s common stock.

The Identified Vessels consist of one Capesize drybulk carrier, eight Panamax drybulk carriers and two Handymax drybulk carriers. Unless indicated otherwise, references to the Company’s combined fleet are to the Company’s fleet of drybulk vessels after giving effect to the purchase of the Identified Vessels. The Company’s acquisition of the Identified Vessels will increase the size of the Company’s combined fleet to 17 drybulk carriers representing approximately 1.3 million dwt and consisting of two Capesize, 13 Panamax and two Handymax drybulk carriers. The Company expects that the average age of the vessels in its combined fleet will be 13 years.

Voyage expenses increased $1.9 million, or 52.8%, to $5.5 million for the year ended October 31, 2004, compared to $3.6 million for the year ended October 31, 2003.

Vessel operating expenses increased by $3.1 million, or 46.3%, to $9.8 million for 2004 compared to $6.7 million for 2003.

General and administrative expenses increased by $0.2 million, or 15.4%, to $1.5 million for 2004 compared to $1.3 million for 2003.

Depreciation and amortization increased by $1.3 million, or 25.0% to $6.5 million for 2004 compared to $5.2 million for 2003.

Net interest expense increased by $0.4 million, or 36.4%, to $1.5 million for 2004 compared to $1.1 million for 2003.