Rand Logistics (RLOG) 10-K 2014 FY Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

XANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended March 31, 2014

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33345

RAND LOGISTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	No. 20-1195343
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)
500 Fifth Avenue, 50th Floor
New York, NY	10110
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:

(212) 644-3450

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.0001 par value per share	The NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No X

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to the filing requirements for at least the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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

Large accelerated filer	Accelerated filer X
Non-accelerated filer	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

The aggregate market value of voting stock held by non-affiliates of the registrant as of September 30, 2013 was $70,590,200.40

17,933,859 shares of Common Stock were outstanding at June 11, 2014.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant's fiscal year covered by this Annual Report on Form 10-K, with respect to the Annual Meeting of Stockholders to be held on September 23, 2014, are incorporated by reference into Part III of this Annual Report on Form 10-K.

RAND LOGISTICS, INC.

TABLE OF CONTENTS

PART I			4
	Item 1.	Business	4
	Item 1A.	Risk Factors	9
	Item 1B.	Unresolved Staff Comments	18
	Item 2.	Properties	18
	Item 3.	Legal Proceedings	18
	Item 4.	Mine Safety Disclosures	18
PART II			19
	Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
	Item 6.	Selected Financial Data	21
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	46
	Item 8.	Financial Statements and Supplementary Data	46
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	46
	Item 9A.	Controls and Procedures	47
	Item 9B.	Other Information	47
PART III			47
	Item 10.	Directors, Executive Officers and Corporate Governance	48
	Item 11.	Executive Compensation	48
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	48
	Item 14.	Principal Accountant Fees and Services	48
PART IV			49
	Item 15.	Exhibits and Financial Statement Schedules	49

PART I

In this Annual Report on Form 10-K, unless the context otherwise requires, references to Rand Logistics, Inc. (“Rand”), “we,” “our,” “us” and the “Company” include Rand and its wholly-owned direct and indirect subsidiaries, and references to Lower Lakes' business or the business of Lower Lakes mean the combined businesses of Lower Lakes Towing Ltd. (“Lower Lakes Towing”), Lower Lakes Transportation Company (“Lower Lakes Transportation”), Grand River Navigation Company, Inc. (“Grand River”), Black Creek Shipping Company, Inc. (“Black Creek”), Lower Lakes Ship Repair Company Ltd. ("Lower Lakes Ship Repair") and Lower Lakes Towing (17) Ltd. ("Lower Lakes (17)")

Cautionary Note Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements, including those relating to our capital needs, business strategy, expectations and intentions. Statements that use the terms “believe”, “anticipate”, “expect”, “plan”, “estimate”, “intend” and similar expressions of a future or forward-looking nature identify forward-looking statements for purposes of the U.S. federal securities laws or otherwise. For these statements and all other forward-looking statements, we claim the protection of the Safe Harbor for Forward-Looking Statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated. Forward-looking statements reflect our current views with respect to future events and because our business is subject to such risks and uncertainties, actual results, our strategic plan, our financial position, results of operations and cash flows could differ materially from those described in or contemplated by the forward-looking statements contained in this report.

Important factors that contribute to such risks include, but are not limited to, those factors set forth under Item 1A of this Form 10-K as well as the following: the continuing effects of the economic downturn in our markets; the weather conditions on the Great Lakes; and our ability to maintain and replace our vessels as they age. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this report. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

ITEM 1.BUSINESS

Background

Rand (formerly Rand Acquisition Corporation) was incorporated in the State of Delaware in 2004 as a blank check company. In 2006, we acquired all of the outstanding shares of capital stock of Lower Lakes Towing and its affiliate, Grand River.

Subsequent to our acquisition of Lower Lakes Towing and Grand River, we have added ten vessels to our fleet through acquisition transactions, including the calendar year 2011 acquisitions of three articulated tug and self-unloading barge units and two bulk carriers, and we also retired two smaller vessels.

On December 27, 2012, Lower Lakes Ship Repair Company Ltd. ("Lower Lakes Ship Repair"), a wholly-owned subsidiary of Lower Lakes Towing, was incorporated under the laws of Canada. Lower Lakes Ship Repair provides ship repair services exclusively to the Company.

On March 11, 2014, Lower Lakes Towing (17) Ltd. ("Lower Lakes (17)"), a wholly-owned subsidiary of Lower Lakes Towing, was incorporated under the laws of Canada.

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Vessel Acquisitions

On July 21, 2011, Lower Lakes Towing acquired a Canadian-flagged bulk carrier for CDN $2.7 million with borrowings under its Canadian term loan.

On October 14, 2011, Lower Lakes Towing purchased a bulk carrier from United Ocean Service, LLC (“USUOS”) for a purchase price of approximately $5.3 million, which acquisition was financed with proceeds from a September 2011 public offering of our common stock.

On December 1, 2011, Grand River purchased a tug from USUOS for a purchase price of approximately $7.8 million. Also on December 1, 2011, Grand River acted as USUOS's third-party designee to purchase a self-unloading barge from U.S. Bank National Association, as Trustee of the GTC Connecticut Statutory Trust, for a purchase price of approximately $12.0 million. The acquisitions of the tug and barge were financed with additional borrowings under our U.S. term loan. Subsequent to these acquisitions, the Company undertook modifications to the tug/barge vessel to meet Great Lakes standards. This tug/barge vessel was put into service on October 23, 2012.

On March 11, 2014, Lower Lakes (17) acquired the LALANDIA SWAN from Uni-Tankers M/T "Lalandia Swan" for a purchase price of $7.0 million. The Lalandia Swan is a Danish flagged chemical tanker that we intend to convert into a Canadian flagged river class self-unloader vessel. We currently plan to introduce this vessel into service during the second half of the 2015 sailing season.

Business Overview

Introduction

Our shipping business is operated in Canada by Lower Lakes Towing and in the United States by Lower Lakes Transportation. Lower Lakes Towing was organized in March 1994 under the laws of Canada to provide marine transportation services to dry bulk goods suppliers and purchasers operating in ports on the Great Lakes and has grown from its origin as a small tug and barge operator to a full service shipping company with a fleet of sixteen cargo-carrying vessels. We have grown to become one of the largest bulk shipping companies operating on the Great Lakes and the leading service provider in the River Class market segment, which we define as vessels less than 650 feet in overall length. We transport construction aggregates, coal, iron ore, salt, grain and other dry bulk commodities for customers in the construction, electric utility, integrated steel and food industries.

We believe that Lower Lakes is the only company providing significant domestic port-to-port services to both Canada and the United States in the Great Lakes region. Lower Lakes maintains this operating flexibility by operating both U.S. and Canadian flagged vessels in compliance with the Shipping Act, 1916, and the Merchant Marine Act, 1920, commonly referred to as the Jones Act in the U.S. and the Coasting Trade Act in Canada.

Fleet

Lower Lakes' fleet consists of five self-unloading bulk carriers and four conventional bulk carriers in Canada and seven self-unloading bulk carriers in the U.S., including one integrated tug and barge unit and three articulated tug and barge units. Lower Lakes Towing owns the nine Canadian vessels. Lower Lakes Transportation time charters the seven U.S. vessels, including the four tug and barge units, from Grand River. With the exception of one barge (which Grand River bareboat charters from an unrelated third party) and two of the articulated tug and barge units (which Grand River bareboat charters from Black Creek), Grand River owns the vessels that it time charters to Lower Lakes Transportation.

Lower Lakes operates over one-half of all River Class vessels and boom-forward equipped vessels servicing the Great Lakes. River Class vessels represent the smaller end of Great Lakes vessels, with maximum dimensions of approximately 650 feet in length and 72 feet in beam and carrying capacities of 15,000 to 20,000 tons, and are ideal for customers seeking to move significant quantities of dry bulk product to or from ports that restrict non-River Class vessels due to size and capacity constraints. Boom forward self-unloading vessels - those with their booms located in front of the cargo holds - offer greater accessibility for

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delivery of cargo to locations where only forward access is possible. Six of the vessels used in Lower Lakes' operations are boom forward self-unloaders and six vessels are boom aft self-unloaders.

As of March 31, 2014, our fleet consisted of the following vessels:

Self-Unloading Bulk Carriers
Vessel Name	Dimensions	Horsepower	Year Built/Rebuilt	Cargo capacity at mid-summer draft in gross tons
Canadian-flagged:
Cuyahoga	620x60x35	3,084	1943/1974/2000	15,675
Michipicoten	698x70x37	8,160	1952/1980/2011	22,300
Mississagi	620x60x35	4,500	1943/1967/1985	15,800
Robert S. Pierson	630x68x37	5,598	1974	19,650
Saginaw	640x72x36	8,160	1953/2008	20,200
U.S.-flagged:
Calumet	630x68x37	5,598	1973	19,650
Manitowoc	630x68x37	5,598	1973	19,650
Manistee	620x60x35	2,950	1943/1964/1976	14,900

Straight Deck Bulk carriers (all Canadian-flagged)
Vessel Name	Dimensions	Horsepower	Year Built/Rebuilt	Cargo capacity at mid-summer draft in gross tons
Kaministiqua	730x75x48	11,679	1983	33,824
Manitoba	608x62x36	5,328	1967	19,093
Ojibway	642x67x35	4,100	1952/2005	20,668
Tecumseh	640x78x45	12,000	1972	29,984

Self-Unloading Articulated Tug and Barge Units (all U.S.-flagged)
Vessel Name	Dimensions	Horsepower	Year Built/Rebuilt	Cargo capacity at mid-summer draft in gross tons
Barge Ashtabula	700x78x51		1982	28,959
Tug Defiance		7,200	1982
Barge James L. Kuber	815x70x36		1953/1983/2007	25,500
Tug Victory		7,994	1981
Barge Lewis J Kuber	728x70x37		1952/1980/2006	22,300
Tug Olive L. Moore		6,600	1928
Tug Invincible		5,750	1979
Barge McKee Sons	610x72x39		1953/1991	19,900

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Customers

Lower Lakes services approximately 50 customers in a diverse array of end markets by shipping dry bulk commodities such as grain, coal, iron ore, construction aggregates and salt. Lower Lakes' top ten customers accounted for approximately 64%, 60% and 63% of its revenue during the fiscal years ended March 31, 2014, 2013 and 2012, respectively. The timing of the end of the Company's fiscal year in relation to the sailing season allows most of a sailing season's receivables to be collected prior to the end of the Company's fiscal year. Lower Lakes is the sole-source shipping provider to several of its customers. With few exceptions, Lower Lakes' customers are under long-term contracts with Lower Lakes, which contracts typically average three to five years in duration and provide for minimum and maximum annual tonnage requirements, annual price escalation features and fuel surcharge adjustments. Certain of our customer contracts also provide for water level adjustments. Lower Lakes' key customers include ADM Agri-Industries; Bunge Canada; Cargill; CARMEUSE S.A.; Essar Steel Algoma Inc.; Holcim Inc.; James Richardson International Ltd.; and Lafarge S.A. James Richardson International Ltd. and Essar Steel Algoma Inc. each represent more than 10% of our revenues.

Industry and Competition

Lower Lakes faces competition from other marine and land-based transporters of dry bulk commodities in and around the Great Lakes area. In the River Class market segment, Lower Lakes generally faces two primary competitors: Algoma Central Corporation and American Steamship Company. Algoma Central Corporation is a Canadian company that owns 18 self-unloading vessels, two of which are River Class boom-forward vessels, and six gearless bulk carriers. American Steamship Company operates in the U.S. and maintains a fleet of 17 vessels, three of which are River Class vessels. We believe that industry participants compete on the basis of customer relationships, price and service, and that the ability to meet a customer's schedule and offer shipping flexibility is a key competitive factor. Moreover, we believe that customers are generally willing to continue to use the same carrier assuming such carrier provides satisfactory service with competitive pricing.

Employees

As of March 31, 2014, Lower Lakes had approximately 504 full-time employees, 83 of whom were shoreside and management and 421 of whom were shipboard employees. Approximately 40% of Lower Lakes' shipboard employees (all U.S. based Grand River crews) are unionized with the International Organization of Masters, Mates and Pilots, AFL-CIO. Lower Lakes has never experienced a work stoppage on its crewed vessels as a result of labor issues, and we believe that our employee relations are good.

Our executive officers are Laurence S. Levy, who serves as our executive chairman; Edward Levy, who serves as our president; and Joseph W. McHugh, Jr., who serves as our chief financial officer. Carol Zelinski is the secretary of Rand.

Seasonality

Lower Lakes operates in a seasonal waterway system, primarily due to the cold weather patterns on the Great Lakes from December through March which cause lock closures, waterway ice, and customer facility closings, which typically shut down Great Lakes shipping for a period of up to 90 days commencing from late December until late March. Lower Lakes also experiences a seasonal pattern for its capital spending cycle, typically off-season from the shipping revenues, to permit annual maintenance and investment in the vessels. This pattern causes seasonal fluctuations in Lower Lakes' liquidity and capital resources. Such winter work, capital expenditures and drydocking costs are incurred during a period when customer collections have largely ended in February from the prior season, and fit-out and vessel operating costs will be incurred at the beginning of the season as much as 30 to 60 days prior to the receipt of significant customer collections for services provided at the beginning of the shipping season.  To manage working capital cycles, Lower Lakes' Fourth Amended and Restated Credit Facility includes a revolver feature with a seasonal overadvance facility which provides working capital from the April through June period, after which customer collections typically exceed cash disbursements.

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Government Regulations

General. The Company's marine transportation operations are subject to regulation by the United States Coast Guard (USCG), the Environmental Protection Agency (EPA), various federal laws, Canadian laws, state laws and certain international conventions.

Jones Act. In theUnited States, the Merchant Marine Act of 1920 (the “Jones Act”) reserves domestic marine transportation to vessels built and registered in the United States, manned by United States citizens, and owned and operated by United States citizens. For a corporation to qualify a United States citizen for the purpose of domestic trade it must be 75% owned and controlled by United States citizens. The Company monitors citizenship and meets the requirements of the Jones Act for its vessels. The Canadian Coasting Trade Act reserves Canadian domestic marine transportation to Canadian registered and crewed vessels.

Compliance with United States and Canadian domestic trade requirements are important to the operations of the Company. The loss of Jones Act status could have a material negative effect on the Company. The Company monitors the citizenship of its employees and stockholders.

Environmental

The Company operations are subject to environmental protection legislation enacted by the United States and Canadian governments, Great Lakes and St Lawrence River states and provinces and companion regulations, many of which were adopted after public rulemaking proceedings.  

Water Pollution Regulations. The Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, the Comprehensive Environment Response, Compensation and Liability Act of 1981 ("CERCLA") and the Oil Pollution Act of 1990 ("OPA") impose strict prohibitions against the discharge of oil and its derivatives and of other discharges that are incidental to the normal operation of our vessels. These acts impose civil and criminal penalties for any prohibited discharges and impose substantial strict liability for cleanup of these discharges and any associated damages. Certain states have water pollution laws that prohibit discharges into waters that traverse the state or adjoin the state, and impose civil and criminal penalties and liabilities similar in nature to those imposed under federal laws. The EPA discharge rules are enforced under Vessel General Permit (VGP) regulations that are the subject of public rulemaking proceedings.

Ballast Water Discharges. The USCG has been involved with ballast water management issues for almost 30 years. Its current “Standards for Living Organisms in Ships Ballast Water Discharged in U.S. Waters” became effective on June 21, 2012 and apply generally to all vessels operating in U.S. waters. The EPA has parallel compliance rules to regulate ballast water discharges under its VGP system.

The Company's vessel operations are limited to the Great Lakes and St. Lawrence River ecosystem services. Ballast water management for these services is governed by overlapping USCG and EPA rules. Canada is a signatory to the International Maritime Organization (“IMO”) Convention on ballast water discharges, which has yet to be enacted.

Clean Air Regulations. The Company's Great Lakes and St. Lawrence River services are subject to North American Emissions Control Area ("ECA") rules. These rules have limited the sulfur content of marine fuels to 1.0% since August 1, 2012. Such limit will decrease to 0.1% of marine fuels effective August 1, 2015.

Under a reciprocal agreement between the U.S. and Canada, a "Fleet Averaging" framework for Canadian flag vessels, including those of the Company, was put in place to coincide with the imposition of the U.S. ECA. Fleet Averaging allows Canadian flag ship owners to achieve a reduction in emissions across their fleets in a phased-in manner through the period ending 2020. The Company anticipates achieving its required marine emissions through a variety of improvement programs such as the use of exhaust gas scrubbers, switching to low sulfur content fuels (including, potentially, liquefied natural gas) and through other means.

Financial Information About Geographic Areas

Our shipping business is operated in Canada by Lower Lakes Towing and in the United States by Lower Lakes Transportation. Lower Lakes provides domestic port-to-port services to both Canada and the United States in the Great Lakes region and operates both U.S. and Canadian flagged vessels.

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Information about our geographic operations is as follows:

	Year ended March 31, 2014		Year ended March 31, 2013		Year ended March 31, 2012
Revenue by country:
Canada	$	91,109	$	92,813	$	79,381
United States	64,695		63,825		68,444
	$	155,804	$	156,638	$	147,825

Revenues from external customers are allocated based on the country of the legal entity of the Company in which the revenues were recognized.

	March 31, 2014		March 31, 2013
Property and equipment by country:
Canada	$	99,050	$	100,887
United States	116,437		118,197
	$	215,487	$	219,084
Intangible assets by country:
Canada	$	9,666	$	8,081
United States	6,567		4,531
	$	16,233	$	12,612
Goodwill by country:
Canada	$	8,284	$	8,284
United States	1,909		1,909
	$	10,193	$	10,193

Availability of Information

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC”). The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

We make available through our Internet website (http://www.randlogisticsinc.com) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after electronically filing such material with the SEC. The reference to our website address is a textual reference only, meaning that it does not constitute incorporation by reference of the information contained on the website and should not be considered part of this document.

ITEM 1A.   RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following material risks before you decide to buy our common stock. If any of the following risks actually occur, our business, results of operations and financial condition would likely suffer. In these circumstances, the market price of our common stock could decline and you may lose all or part of your investment.

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Risks Associated with our Business

The recent worldwide financial and credit crisis could lead to an extended worldwide economic recession and have a material adverse effect on our financial results and financial condition.

During recent years, there has been substantial volatility and losses in worldwide equity markets that could lead to an extended worldwide economic recession. In addition, due to the substantial uncertainty in the global economies, there has been deterioration in the credit and capital markets and access to financing is uncertain. These conditions could have an adverse effect on our industry and our business and future operating results. Our customers may curtail their capital and operating expenditure programs, which could result in a decrease in demand for our vessels and a reduction in rates and/or utilization. In addition, certain of our customers could experience an inability to pay suppliers, including us, in the event they are unable to access the capital markets to fund their business operations. Likewise, our suppliers may be unable to sustain their current level of operations, fulfill their commitments and/or fund future operations and obligations, each of which could adversely affect our operations.

Capital expenditures and other costs necessary to operate and maintain Lower Lakes' vessels tend to increase with the age of the vessel and may also increase due to changes in governmental regulations, safety or other equipment standards.

Capital expenditures and other costs necessary to operate and maintain Lower Lakes' vessels tend to increase with the age of each vessel. Accordingly, it is likely that the operating costs of Lower Lakes' older vessels will increase. In addition, changes in governmental regulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customer requirements or competition, may require Lower Lakes to make additional expenditures. For example, if the U.S. Coast Guard, Transport Canada, the American Bureau of Shipping or Lloyd's Register of Shipping (independent classification societies that inspect the hull and machinery of commercial ships to assess compliance with minimum criteria as set by U.S., Canadian and international regulations) enact new standards, Lower Lakes may be required to incur significant costs for alterations to its fleet or the addition of new equipment. In order to satisfy any such requirement, Lower Lakes may be required to take its vessels out of service for extended periods of time, with corresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable Lower Lakes to operate its older vessels profitably during the remainder of their anticipated economic lives.

If Lower Lakes is unable to fund its capital expenditures, drydock costs and winter work expenses, Lower Lakes may not be able to continue to operate some of its vessels, which would have a material adverse effect on our business.

In order to fund Lower Lakes' capital expenditures, drydock costs and winter work expenses, we may be required to incur borrowings or raise capital through the sale of debt or equity securities. Our ability to access the capital markets for future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond its control. Our failure to obtain the funds for necessary future capital expenditures and winter work expenses would limit our ability to continue to operate some of our vessels and could have a material adverse effect on our business, results of operations and financial condition.

The climate in the Great Lakes region limits Lower Lakes' vessel operations to approximately nine months per year.

Lower Lakes' operating business is seasonal, meaning that it experiences higher levels of activity in some periods of the year than in others. Ordinarily, Lower Lakes is able to operate its vessels on the Great Lakes for approximately nine months per year beginning in late March or April and continuing through December or mid-January. However, weather conditions and customer demand cause increases and decreases in the number of days Lower Lakes actually operates.

The shipping industry has inherent operational risks that may not be adequately covered by Lower Lakes' insurance.

Lower Lakes maintains insurance on its fleet for risks commonly insured against by vessel owners and operators, including hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). Lower Lakes does not, however, insure the loss of a vessel's income when it is being repaired due to an insured hull and machinery claim. We can give no assurance that Lower Lakes will be adequately insured against all risks or that its insurers will pay a particular claim. Even if its insurance coverage is adequate to cover its losses, Lower Lakes may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, in the future, Lower Lakes may not be able to obtain adequate insurance coverage at reasonable rates for Lower Lakes' fleet. Lower Lakes may also be subject to calls, or premiums,

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in amounts based not only on its own claims record but also the claims record of all other members of the protection and indemnity associations through which Lower Lakes may receive indemnity insurance coverage. Lower Lakes' insurance policies will also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase its costs.

Lower Lakes is subject to certain credit risks with respect to its counterparties on contracts and failure of such counterparties to meet their obligations could cause us to suffer losses on such contracts, decreasing our revenues and earnings.

Lower Lakes enters into contracts of affreightment (COAs) pursuant to which Lower Lakes agrees to carry cargoes, typically for industrial customers, who transport dry bulk cargoes. Lower Lakes also enters into spot market voyage contracts, where Lower Lakes is paid a rate per ton to carry a specified cargo from one location to another. All of these contracts subject Lower Lakes to counterparty credit risk. As a result, we are subject to credit risks at various levels, including with charterers, cargo interests, or terminal customers. If the counterparties fail to meet their obligations, Lower Lakes could suffer losses on such contracts which would decrease our revenues and earnings.

Lower Lakes may not be able to generate sufficient cash flows to meet its debt service obligations.

Lower Lakes' ability to make payments on its indebtedness will depend on its ability to generate cash from its future operations. Lower Lakes' business may not generate sufficient cash flow from operations or from other sources sufficient to enable it to repay its indebtedness and to fund its liquidity needs, including capital expenditures and winter work expenses. Lower Lakes' indebtedness under its credit facilities bears interest at floating rates, and therefore, if interest rates increase, Lower Lakes' debt service requirements will increase, except for that portion of Lower Lakes' term debt that is limited by interest rate caps. Lower Lakes may need to refinance or restructure all or a portion of its indebtedness on or before maturity. Lower Lakes may not be able to refinance any of its indebtedness on commercially reasonable terms, or at all. If Lower Lakes cannot service or refinance its indebtedness, it may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, any of which could have a material adverse effect on our operations. Additionally, Lower Lakes may not be able to effect such actions, if necessary, on commercially reasonable terms, or at all.

A default under Lower Lakes' indebtedness may have a material adverse effect on our financial condition.

In the event of a default under Lower Lakes’ indebtedness, the holders of the indebtedness under Lower Lakes’ credit facilities generally would be able to declare all of the indebtedness under such facilities, together with accrued interest, to be due and payable. In addition, borrowings under Lower Lakes’ senior credit facility are secured by a first priority lien on all of the assets of Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek and, in the event of a default under that facility, the lenders thereunder generally would be entitled to seize the collateral, including assets which are necessary to operate our business.  Borrowings under Lower Lakes’ second-lien credit facility are secured by a second priority lien on all of the assets of Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek.  Subject to the terms of the intercreditor agreement between the lenders under our senior credit facility and the lenders under our second-lien credit facility, in the event of a default under our second-lien credit facility, the lenders thereunder generally would be entitled to seize the collateral, including assets which are necessary to operate our business.  In addition, default under one debt instrument within Lower Lakes’ credit facilities could in turn permit lenders under other debt instruments within Lower Lakes’ credit facilities to declare borrowings outstanding under those other instruments to be due and payable pursuant to cross default and cross acceleration clauses. Moreover, upon the occurrence of an event of default under Lower Lakes' credit facilities, the commitment of the lenders to make any further loans to us could be terminated. Accordingly, the occurrence of a default under any debt instrument, unless cured or waived, may have a material adverse effect on our results of operations.

Servicing debt could limit funds available for other purposes, such as the payment of dividends.

Lower Lakes will use cash to pay the principal and interest on its debt, and to fund capital expenditures, drydock costs and winter work expenses. Such payments limit funds that would otherwise be available for other purposes, including distributions of cash to our stockholders.

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Lower Lakes' credit facilities contain restrictive covenants that will limit its liquidity and corporate activities.

Lower Lakes' credit facilities impose operating and financial restrictions that limit its ability to:

o incur additional indebtedness;

o create additional liens on its assets;

o make investments;

o engage in mergers or acquisitions;

o pay dividends; and

o sell any of Lower Lakes' vessels or any other assets outside the ordinary course of business.

Therefore, Lower Lakes will need to seek permission from its lenders in order to engage in some corporate actions. Lower Lakes' lenders' interests may be different from those of Lower Lakes and no assurance can be given that Lower Lakes will be able to obtain its lenders' permission when needed. This may prevent Lower Lakes from taking actions that are in its best interest.

Because Lower Lakes generates approximately 60% of its revenues and expenses in Canadian dollars, exchange rate fluctuations could cause us to suffer reduced U.S. dollar earnings.

Lower Lakes generates a significant portion of its revenues and incurs a significant portion of its expenses in Canadian dollars. This could lead to fluctuations in our net income due to changes in the value of the U.S. Dollar relative to the Canadian Dollar.

Lower Lakes depends upon unionized labor for its U.S. operations. Any work stoppages or labor disturbances could disrupt its business.

All of Grand River's shipboard employees are unionized with the International Organization of Masters, Mates and Pilots, AFL-CIO. Any work stoppages or other labor disturbances could have a material adverse effect on our business, results of operations and financial condition.

A labor union has attempted to unionize Lower Lakes' Canadian employees.

The Seafarers International Union of Canada, or SIU, attempted without success to organize Lower Lakes' unlicensed Canadian employees several years ago. Although we believe that support for this union is low, if SIU is ever successful in organizing a union among Lower Lakes' Canadian employees, it could result in increased labor costs or reduced productivity for Lower Lakes, which could have a material adverse effect on our results of operations.

Lower Lakes' employees are covered by U.S. Federal laws that may subject it to job-related claims in addition to those provided by state laws.

All of Grand River's shipboard employees are covered by the Jones Act and general maritime law. These laws typically operate to make liability limits established by state workers' compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue actions against employers for job-related injuries in Federal courts. Because Lower Lakes is not generally protected by the limits imposed by state workers' compensation statutes, Lower Lakes has greater exposure for claims made by these employees as compared to employers whose employees are not covered by these provisions.

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Our capital stock is subject to restriction on foreign ownership and possible required divestiture by non-U.S. citizen stockholders.

Under U.S. maritime laws, in order for us to maintain our eligibility to own and operate vessels in the U.S. domestic trade, 75% of our outstanding capital stock and voting power is required to be held by U.S. citizens. Although our amended and restated certificate of incorporation contains provisions limiting non-citizenship ownership of our capital stock, we could lose our ability to conduct operations in the U.S. domestic trade if such provisions prove unsuccessful in maintaining the required level of citizen ownership. Such loss would have a material adverse effect on our results of operations. If our board of directors determines that persons who are not citizens of the U.S. own more than 23% of our outstanding capital stock or more than 23% of our voting power, we may redeem such stock or, if redemption is not permitted by applicable law or if our board of directors, in its discretion, elects not to make such redemption, we may require the non-citizens who most recently acquired shares to divest such excess shares to persons who are U.S. citizens in such manner as our board of directors directs. The required redemption would be at a price equal to the average closing price during the preceding 30 trading days, which price could be materially different from the current price of the common stock or the price at which the non-citizen acquired the common stock. If a non-citizen purchases the common stock, there can be no assurance that he or she will not be required to divest the shares and such divestiture could result in a material loss.  Such restrictions and redemption rights may make Rand's equity securities less attractive to potential investors, which may result in Rand's publicly traded common stock having a lower market price than it might have in the absence of such restrictions and redemption rights.

Our business is dependent upon key personnel whose loss may adversely impact our business.

We depend on the expertise, experience and continued services of Lower Lakes' senior management employees, especially Scott Bravener, its President. Mr. Bravener has acquired specialized knowledge and skills with respect to Lower Lakes and its operations and most decisions concerning the business of Lower Lakes are made or significantly influenced by him. The loss of Mr. Bravener or other senior management employees, or an inability to attract or retain other key individuals, could materially adversely affect our business. We seek to compensate and incentivize executives, as well as other employees, through competitive salaries and bonus plans, but there can be no assurance that these programs will allow us to retain key employees or hire new key employees. As a result, if Mr. Bravener were to leave Lower Lakes, we could face substantial difficulty in hiring a qualified successor and could experience a loss in productivity while any such successor obtains the necessary training and experience.

Some of our officers and directors may have conflicts of interest in business opportunities.

Some of our officers and directors may become aware of business opportunities which may be appropriate for presentation to us as well as the other entities with which they are or may be affiliated. Due to our officers' and directors' existing affiliations with other entities, they may have fiduciary obligations to present potential business opportunities to those entities in addition to presenting them to us which could cause additional conflicts of interest. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

The conversion of our series A convertible preferred stock will result in significant and immediate dilution of our existing stockholders and the book value of their common stock.

The shares of series A convertible preferred stock issued in connection with the acquisition of Lower Lakes are convertible into 2,419,355 shares of our common stock, subject to certain adjustments, which, on an “as converted” basis, represents approximately 12% of our aggregate outstanding common stock.  The conversion price of our series A convertible preferred stock is subject to weighted average anti-dilution provisions whereby, if Rand issues shares in the future for consideration below the existing conversion price of $6.20, then the conversion price of the series A convertible preferred stock would automatically be decreased, allowing the holders of the series A convertible preferred stock to receive additional shares of common stock upon conversion. Upon any conversion of the series A convertible preferred stock, the equity interests of our existing common stockholders, as a percentage of the total number of the outstanding shares of our common stock, and the net book value of the shares of our common stock will be significantly diluted.

We may issue shares of our common stock and preferred stock to raise additional capital, including to complete a future acquisition, which would reduce the equity interest of our stockholders.

Our amended and restated certificate of incorporation authorizes the issuance of up to 50,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. We currently have 31,586,356

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authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of shares upon full exercise of our outstanding employee stock options) and 700,000 shares of preferred stock available for issuance. Although we currently have no other commitments to issue any additional shares of our common or preferred stock, we may in the future determine to issue additional shares of our common or preferred stock to raise additional capital for a variety of purposes, including to complete a future acquisition. The issuance of additional shares of our common stock or preferred stock may significantly reduce the equity interest of stockholders and may adversely affect prevailing market prices for our common stock.

Future acquisitions of vessels or businesses by Rand or Lower Lakes would subject Rand and Lower Lakes to additional business, operating and industry risks, the impact of which cannot presently be evaluated, and could adversely impact Rand's or Lower Lakes' capital structure.

Rand intends to pursue acquisition opportunities in an effort to diversify its investments and/or grow its business. While neither Rand nor Lower Lakes is presently committed to any acquisition, Rand may be actively pursuing one or more potential acquisition opportunities.

Future acquisitions may be of individual or groups of vessels or of businesses operating in the shipping or other industries. Rand is not limited to any particular industry or type of business that it may acquire. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular business or assets that Rand may acquire, or of the industry in which any such business may operate. To the extent Rand acquires an operating business, we may be affected by numerous risks inherent in the acquired business's operations.

In addition, the financing of any acquisition completed by Rand could adversely impact Rand's capital structure as any such financing could include the issuance of additional equity securities and/or the borrowing of additional funds. The issuance of additional equity securities may significantly reduce the equity interest of existing stockholders and/or adversely affect prevailing market prices for Rand's common stock. Increasing Rand's indebtedness could increase the risk of a default that would entitle the holder to declare all of such indebtedness due and payable and/or to seize any collateral securing the indebtedness. In addition, default under one debt instrument could in turn permit lenders under other debt instruments to declare borrowings outstanding under those other instruments to be due and payable pursuant to cross default clauses. Accordingly, the financing of future acquisitions could adversely impact our capital structure and your equity interest in Rand.

Except as required by law or the rules of any securities exchange on which our securities might be listed at the time we seek to consummate an acquisition, you will not be asked to vote on any proposed acquisition.

Risks Associated with the Shipping Industry

The cyclical nature of the Great Lakes dry bulk shipping industry may lead to decreases in shipping rates, which may reduce Lower Lakes' revenue and earnings.

The shipping business, including the dry cargo market, has been cyclical in varying degrees, experiencing fluctuations in charter rates, profitability and, consequently, vessel values. Rand anticipates that the future demand for Lower Lakes' dry bulk carriers and dry bulk charter rates will be dependent upon continued demand for commodities, economic growth in the United States and Canada, seasonal and regional changes in demand, and changes to the capacity of the Great Lakes fleet which cannot be predicted. Adverse economic, political, social or other developments could decrease demand and growth in the shipping industry and thereby reduce revenue and earnings. Fluctuations, and the demand for vessels, in general, have been influenced by, among other factors:

o global and regional economic conditions;

o developments in international and Great Lakes trade;

o changes in seaborne and other transportation patterns, such as port congestion and canal closures;

o weather, water levels and crop yields;

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o political developments; and

o embargoes and strikes.

The market values of Lower Lakes' vessels may decrease, which could cause Lower Lakes to breach covenants in its credit facilities, which could reduce earnings and revenues as a result of potential foreclosures.

Vessel values are influenced by several factors, including:

o changes in environmental and other regulations that may limit the useful life of vessels;

o changes in Great Lakes dry bulk commodity supply and demand;

o types and sizes of vessels;

o development of and increase in use of other modes of transportation;

o governmental or other regulations; and

o prevailing level of contract of affreightment rates and charter rates.

If the market values of Lower Lakes' owned vessels decrease, Lower Lakes may breach some of the covenants contained in its credit facilities. If Lower Lakes breaches such covenants and is unable to remedy the relevant breach, Lower Lakes' lenders could accelerate their debt and foreclose on the collateral, including Lower Lakes' vessels. Any loss of vessels would significantly decrease the ability of Rand to generate revenue and income. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, or a vessel is sold at a price below its book value, Rand would incur a loss that would reduce earnings.

A failure to pass inspection by classification societies and regulators could result in one or more vessels being unemployable unless and until they pass inspection, resulting in a loss of revenues from such vessels for that period and a corresponding decrease in earnings, which may be material.

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry, as well as being subject to inspection by shipping regulatory bodies such as Transport Canada. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the United Nations Safety of Life at Sea Convention. Lower Lakes' owned fleet is currently enrolled with either the American Bureau of Shipping or Lloyd's Register of Shipping.

A vessel must undergo Annual Surveys, Intermediate Surveys, and Special Surveys by its classification society, as well as periodic inspections by shipping regulators. As regards classification surveys, in lieu of a Special Survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Lower Lakes' vessels are on Special Survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every five years for inspection of the underwater parts of such vessel.

Due to the age of several of the vessels, the repairs and remediations required in connection with such classification society surveys and other inspections may be extensive and require significant expenditures. Additionally, until such time as certain repairs and remediations required in connection with such surveys and inspections are completed (or if any vessel fails such a survey or inspection), the vessel may be unable to trade between ports and, therefore, would be unemployable. Any such loss of the use of a vessel could have an adverse impact on Rand's revenues, results of operations and liquidity, and any such impact may be material.

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Lower Lakes' business would be adversely affected if Lower Lakes failed to comply with U.S. maritime laws or the Coasting Trade Act (Canada) provisions on coastwise trade, or if those provisions were modified or repealed.

Rand is subject to the Jones Act, other U.S. laws and the Coasting Trade Act (Canada) that restrict domestic maritime transportation to vessels operating under the flag of the subject state. In the case of the United States, vessels must be at least 75% owned and operated by U.S. citizens and manned by U.S. crews and, in addition, the vessels must have been built in the United States. Compliance with the foregoing legislation increases the operating costs of the vessels. With respect to its U.S. flagged vessels, Rand is responsible for monitoring the ownership of its capital stock to ensure compliance with U.S. maritime laws. If Rand does not comply with these restrictions, Rand will be prohibited from operating its vessels in U.S. coastwise trade, and under certain circumstances Rand will be deemed to have undertaken an unapproved foreign transfer, resulting in severe penalties, including permanent loss of U.S. coastwise trading rights for its vessels, and fines or forfeiture of the vessels.

Over the past decade, interest groups have lobbied Congress to modify or repeal U.S. maritime laws so as to facilitate foreign flag competition. Foreign vessels generally have lower construction costs and generally operate at significantly lower costs than vessels in the U.S. markets, which would likely result in reduced charter rates. Rand believes that continued efforts will be made to modify or repeal these laws. If these efforts are successful, it could result in significantly increased competition and have a material adverse effect on our business, results of operations and financial condition.

We may be unable to maintain or replace our vessels as they age.

As of March 31, 2014, the average age of the vessels operated by Lower Lakes was approximately 53 years. The expense of maintaining, repairing and upgrading Lower Lakes' vessels typically increases with age, and after a period of time the cost necessary to satisfy required marine certification standards may not be economically justifiable. There can be no assurance that Lower Lakes will be able to maintain its fleet by extending the economic life of existing vessels, or that our financial resources will be sufficient to enable us to make expenditures necessary for these purposes. In addition, the supply of replacement vessels is very limited and the costs associated with acquiring a newly constructed vessel are prohibitively high. In the event that Lower Lakes were to lose the use of any of its vessels, our financial performance would be adversely affected.

Lower Lakes is subject to environmental laws that could require significant expenditures both to maintain compliance with such laws and to pay for any uninsured environmental liabilities resulting from a spill or other environmental disaster.

Our shipping business and vessel operations are materially affected by environmental and other government regulations in the form of international conventions, United States and Canadian treaties, national, state, provincial, and local laws, and regulations in force in the jurisdictions in which vessels operate. Because such conventions, treaties, laws and regulations are often revised, we cannot predict the ultimate cost of compliance or its impact on the resale price or useful life of our vessels. Additional conventions, treaties, laws and regulations may be adopted which could limit our ability to do business or increase the cost of its doing business, which may materially adversely affect its operations, as well as the shipping industry generally. Lower Lakes is required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, and certificates with respect to its operations and any increased cost in connection with obtaining such permits, licenses and certificates, or the imposition on Lower Lakes of the obligation to obtain additional permits, licenses and certificates, could adversely affect our results of operations. Lower Lakes currently maintains pollution liability coverage insurance. However, if the damages from a catastrophic incident exceed this insurance coverage, it could have a significant adverse impact on Rand's cash flow, profitability and financial position.

The operation of Lower Lakes' vessels is dependent on the price and availability of fuel. Continued periods of historically high fuel costs may materially adversely affect Rand's operating results.

Rand's operating results may be significantly impacted by changes in the availability or price of fuel for Lower Lakes' vessels. Fuel prices have increased substantially since 2004. Although fuel price escalation clauses are included in substantially all of Lower Lakes' contracts of affreightment, which enable Lower Lakes to pass the majority of its increased fuel costs on to its customers, these measures may not be sufficient to enable Lower Lakes to fully recoup increased fuel costs or assure the continued availability of its fuel supplies. Although we are currently able to obtain adequate supplies of fuel, it is impossible to predict the price of fuel. Political disruptions or wars involving oil-producing countries (including, but not limited to, recent political unrest

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in the Middle East), changes in government policy, changes in fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages and additional fuel price increases in the future. There can be no assurance that Lower Lakes will be able to fully recover its increased fuel costs by passing these costs on to its customers. In the event that Lower Lakes is unable to do so, Rand's operating results will be adversely affected.

Governments could requisition Lower Lakes' vessels during a period of war or emergency, resulting in loss of revenues and earnings from such requisitioned vessels.

The United States or Canada could requisition title or seize Lower Lakes' vessels during a war or national emergency. Requisition of title occurs when a government takes a vessel and becomes the owner. A government could also requisition Lower Lakes vessels for hire, which would result in the government's taking control of a vessel and effectively becoming the charterer at a dictated charter rate. Requisition of one or more of Lower Lakes' vessels would have a substantial negative effect on Rand, as Rand would potentially lose all or substantially all revenues and earnings from the requisitioned vessels and/or permanently lose the vessels. Such losses might be partially offset if the requisitioning government compensated Rand for the requisition.

The operation of Great Lakes-going vessels entails the possibility of marine disasters including damage or destruction of the vessel due to accident, the loss of a vessel due to piracy or terrorism, damage or destruction of cargo and similar events that may cause a loss of revenue from affected vessels and damage Lower Lakes' business reputation, which may in turn, lead to loss of business.

The operation of Great Lakes-going vessels entails certain inherent risks that may adversely affect Lower Lakes' business and reputation, including:

o damage or destruction of a vessel due to marine disaster such as a collision;

o the loss of a vessel due to piracy and terrorism;

o cargo and property losses or damage as a result of the foregoing or less drastic causes such as human error, mechanical failure, low water levels and bad weather;

o environmental accidents as a result of the foregoing; and

o business interruptions and delivery delays caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions.

Any of these circumstances or events could substantially increase Lower Lakes' costs, as for example, the costs of replacing a vessel or cleaning up a spill, or lower its revenues by taking vessels out of operation permanently or for periods of time. The involvement of Lower Lakes' vessels in a disaster or delays in delivery or damages or loss of cargo may harm its reputation as a safe and reliable vessel operator and cause it to lose business.

If Lower Lakes' vessels suffer damage, they may need to be repaired at Lower Lakes' cost at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. Lower Lakes may have to pay repair costs that insurance does not cover. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, could decrease its revenues and earnings substantially, particularly if a number of vessels are damaged or repaired at the same time.

Maritime claimants could arrest Lower Lakes' vessels, which could interrupt its cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo, and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages against such vessel. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of Lower Lakes' vessels could interrupt its cash flow and require it to pay large sums of funds to have the arrest lifted.

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ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.PROPERTIES

We maintain our executive offices at 500 Fifth Avenue, 50th Floor, New York, New York 10110 pursuant to an agreement with Hyde Park Real Estate LLC, an affiliate of Laurence S. Levy, our executive chairman, and Edward Levy, our president. We also currently lease the following properties:

o Lower Lakes Towing leases approximately 12,000 square feet of warehouse space at 107 Greenock Street, Port Dover, Ontario under a lease that expires on August 31, 2022.

o Lower Lakes Towing leases approximately 24,800 square feet of warehouse space at 109 Greenock Street, Port Dover, Ontario under a lease that expires on August 31, 2022.

o Lower Lakes Towing leases approximately 5,000 square feet of office space at 517 Main Street, Port Dover, Ontario under a lease that expires in October, 2018.

o Grand River leases approximately 1,300 square feet of space at 32861 Pin Oak Parkway, Suite B, Avon Lake, Ohio under a lease that expires on March 31, 2016.

o Grand River leases approximately 1,194 square feet at 3301 Veterans Drive, Suite 210, Traverse City, Michigan under a lease that expires October 31, 2015.

o Rand Finance Corp. (“Rand Finance”), a wholly-owned subsidiary of the Company, leases approximately 400 square feet at 17 Wilson Road, Chelmsford, Massachusetts under a lease that is renewed on a monthly basis.

We consider our current office space adequate for our current operations.

Item 3. Legal Proceedings.

The nature of our business exposes us to the potential for legal proceedings related to labor and employment, personal injury, property damage, and environmental matters. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of each particular claim, as well as our current reserves and insurance coverage, we do not expect that any known legal proceeding will in the foreseeable future have a material adverse impact on our financial condition or the results of our operations.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II. OTHER INFORMATION

ITEM 5.MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is currently traded on the NASDAQ Capital Market under the symbol RLOG. The following table sets forth the high and low sales prices for each full quarterly period within the two most recent fiscal years.

	Common Stock
Quarter Ended	High	Low
June 30, 2012	$9.25	$7.11
September 30, 2012	$8.50	$6.59
December 31, 2012	$7.79	$5.91
March 31, 2013	$7.39	$5.47
June 30, 2013	$6.10	$4.80
September 30, 2013	$5.58	$4.66
December 31, 2013	$6.20	$4.69
March 31, 2014	$7.49	$5.58

Holders

As of June 11, 2014, there were 12 holders of record of our common stock.

Dividends

We have not paid any dividends on our common stock to date and do not intend to pay dividends on our common stock in the near future. The payment of dividends in the future will be contingent upon our revenues, earnings, capital requirements and general financial condition. The payment of dividends is within the discretion of our board of directors. Other than dividends which our board of directors may determine to pay on our preferred stock, it is the present intention of our board of directors to retain all earnings for future investment and use in our business operations. Accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future on our common stock. In addition, no dividends may be declared or paid on our common stock unless all accrued dividends on our preferred stock have been paid.

Stock Performance Graph

The following graph compares from March 31, 2009 the cumulative total stockholder return on our common stock over the cumulative total returns of The NASDAQ Composite Index and an industry peer group consisting of Algoma Central Corp., International Shipholding Company, and Horizon Lines Inc. The following graph is based on the closing price of our common stock from March 31, 2009 through March 31, 2014.

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ITEM 6.SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data of the Company as of and for the years ended March 31, 2014, 2013, 2012, 2011 and 2010. The information in the following table should be read together with the Company's consolidated financial statements and accompanying notes as of and for the years ended March 31, 2014, 2013, 2012, 2011 and 2010 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included under Item 7 of this report. These historical results are not necessarily indicative of the results to be expected in the future.

Selected Financial Data (USD millions except share data)	2014			2013			2012		2011			2010
Revenue
Freight and related revenue	$	128.1		$	117.8		$	107.6	$	90.4		$	85.1
Fuel and other surcharges	$	26.5		$	37.4		$	38.9	$	20.5		$	15.4
Outside voyage charter revenue	$	1.2		$	1.4		$	1.3	$	7.1		$	7.7
	$	155.8		$	156.6		$	147.8	$	118.0		$	108.2
Operating income	$	10.9		$	8.1		$	15.2	$	6.8		$	7.6
Net (loss) income applicable to common shareholders	$	(7.9	)	$	(7.0	)	$	5.3	$	(2.2	)	$	0.8
Net (loss) income per share -basic	$	(0.44	)	$	(0.39	)	$	0.33	$	(0.16	)	$	0.06
Net (loss) income per share - diluted	$	(0.44	)	$	(0.39	)	$	0.33	$	(0.16	)	$	0.06
Weighted average shares - basic	17,912,647			17,740,372			16,336,930		13,632,961			13,071,651
Weighted average shares - diluted	17,912,647			17,740,372			16,336,930		13,632,961			13,071,651
Other Operating Data
Depreciation	$	17.0		$	15.4		$	11.6	$	7.7		$	9.2
Amortization of drydock costs	$	3.3		$	3.5		$	3.0	$	2.8		$	2.5
Amortization of intangibles	$	1.3		$	1.3		$	1.3	$	1.2		$	1.4
Property and equipment, net	$	215.5		$	219.1		$	200.9	$	166.7		$	98.5
Total assets	$	265.0		$	270.8		$	257.8	$	215.5		$	148.0
Long-term debt, including current portion	$	104.9		$	143.4		$	133.6	$	112.2		$	62.7
Subordinated debt	$	72.5		$	—		$	—	$	—		$	—
Total equity	$	60.7		$	72.4		$	79.3	$	58.3		$	51.5
Number of vessels operated as of the year end date	15			16			14		12			12

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ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All dollar amounts are presented in millions except share, per share and per day amounts. The following management's discussion and analysis (“MD&A”) is written to help the reader understand our company. The MD&A is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the accompanying financial statement notes of the Company appearing elsewhere in this Annual Report on Form 10-K for the fiscal year ended March 31, 2014.

Overview

Business

Rand (formerly Rand Acquisition Corporation) was incorporated in the State of Delaware in 2004 as a blank check company. In 2006, we acquired all of the outstanding shares of capital stock of Lower Lakes Towing and its affiliate, Grand River.

Subsequent to the acquisition of Lower Lakes Towing and Grand River, we have added ten vessels to our fleet through acquisition transactions, including the calendar year 2011 acquisitions of three self-unloading articulated tug and barge units and two bulk carriers. We have also retired two smaller vessels.

Our shipping business is operated in Canada by Lower Lakes Towing and in the United States by Lower Lakes Transportation. Lower Lakes Towing was organized in March 1994 under the laws of Canada to provide marine transportation services to dry bulk goods suppliers and purchasers operating in ports on the Great Lakes and has grown from its origin as a small tug and barge operator to a full service shipping company with a fleet of sixteen cargo-carrying vessels. We have grown to become one of the largest bulk shipping companies operating on the Great Lakes and the leading service provider in the River Class market segment, which we define as vessels less than 650 feet in overall length. We transport construction aggregates, coal, iron ore, salt, grain and other dry bulk commodities for customers in the construction, electric utility, integrated steel and food industries.

We believe that Lower Lakes is the only company providing significant domestic port-to-port services to both Canada and the United States in the Great Lakes region. Lower Lakes maintains this operating flexibility by operating both U.S. and Canadian flagged vessels in compliance with the Shipping Act, 1916, and the Merchant Marine Act, 1920, commonly referred to as the Jones Act in the U.S. and the Coasting Trade Act in Canada.

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Results of Operations

Fiscal year ended March 31, 2014 compared to fiscal years ended March 31, 2013 and 2012

Selected Financial Information

(USD in 000's)	Year ended March 31, 2014		Year ended March 31, 2013		Year ended March 31, 2012
Revenue:
Freight and related revenue	$	128,145	$	117,797	$	107,618
Fuel and other surcharges	$	26,475	$	37,404	$	38,886
Outside voyage charter revenue	$	1,184	$	1,437	$	1,321
Total	$	155,804	$	156,638	$	147,825
Expenses:
Outside voyage charter fees	$	1,086	$	1,447	$	1,312
Vessel operating expenses	$	102,804	$	104,896	$	97,274
Repairs and maintenance	$	7,191	$	8,350	$	7,179
Sailing days:	4,166		3,922		3,721
Number of vessels operated:	15		16		14
Per day in whole USD:
Revenue per sailing day:
Freight and related revenue	$	30,760	$	30,035	$	28,922
Fuel and other surcharges	$	6,355	$	9,537	$	10,450
Expenses per sailing day:
Vessel operating expenses	$	24,677	$	26,746	$	26,142
Repairs and maintenance	$	1,726	$	2,129	$	1,929

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Fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013

Selected Financial Information

(USD in 000's)	Year ended March 31, 2014		Year ended March 31, 2013		Change			% Change
Revenue:
Freight and related revenue	$	128,145	$	117,797	$	10,348		8.8	%
Fuel and other surcharges	$	26,475	$	37,404	$	(10,929	)	(29.2	)%
Outside voyage charter revenue	$	1,184	$	1,437	$	(253	)	(17.6	)%
Total	$	155,804	$	156,638	$	(834	)	(0.5	)%
Expenses:
Outside voyage charter fees	$	1,086	$	1,447	$	(361	)	(24.9	)%
Vessel operating expenses	$	102,804	$	104,896	$	(2,092	)	(2.0	)%
Repairs and maintenance	$	7,191	$	8,350	$	(1,159	)	(13.9	)%
Sailing Days:	4,166		3,922		244			6.2	%
Number of vessels operated:	15		16		(1		)	(6.3	)%
Per day in whole USD:
Revenue per Sailing Day:
Freight and related revenue	$	30,760	$	30,035	$	725		2.4	%
Fuel and other surcharges	$	6,355	$	9,537	$	(3,182	)	(33.4	)%
Expenses per Sailing Day:
Vessel operating expenses	$	24,677	$	26,746	$	(2,069	)	(7.7	)%
Repairs and maintenance	$	1,726	$	2,129	$	(403	)	(18.9	)%

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The following table summarizes the changes in the components of our revenue and vessel operating expenses as a result of changes in Sailing Days, which we define as days a vessel is crewed and available for sailing, during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013:

(USD in 000's)	Sailing Days	Freight and related revenue			Fuel and other surcharges			Outside voyage charter			Total revenue			Vessel operating expenses
Fiscal year ended March 31, 2013	3,922	$	117,797		$	37,404		$	1,437		$	156,638		$	104,896
Changes in fiscal year ended March 31, 2014
Decrease attributable to weaker Canadian dollar		(2,914		)	(672		)	(66		)	(3,652		)	(2,361		)
Net increase attributable to customer demand, pricing (excluding currency impact) and reduction of lost time due to incidents.	244	13,262			(10,257		)	—			3,005			269
Changes in outside voyage charter revenue (excluding currency impact)								(187		)	(187		)	—
Sub-total	244	$	10,348		$	(10,929	)	$	(253	)	$	(834	)	$	(2,092	)
Fiscal year ended March 31, 2014	4,166	$	128,145		$	26,475		$	1,184		$	155,804		102,804

Total revenue during the fiscal year ended March 31, 2014 was $155.8 million, a decrease of 0.5%, compared to $156.6 million during the fiscal year ended March 31, 2013. This decrease was primarily attributable to reduced fuel surcharges and a weaker Canadian dollar, offset by increased tonnage carried and increased prices.

According to the Lake Carriers' Association, during the 2013 sailing season, U.S.-flagged vessels on the Great Lakes experienced a modest 0.3% decrease in overall customer shipments for the commodities that we carry compared to the 2012 sailing season. The 3.0% decline in iron ore tonnage hauled was offset by a 3.7% increase in coal and a 1.6% increase in aggregates hauled by U.S.-flagged vessels during the 2013 sailing season compared to the 2012 sailing season. In the 2013 sailing season, on a total Great Lakes basis, which includes Canadian and U.S. ports, iron ore shipments decreased 5.4%, coal shipments decreased 2.8% and aggregates cargos increased 1.7% compared to the 2012 sailing season.

During the three month period ended March 31, 2014, the Great Lakes experienced one of its harshest winters in approximately thirty years. Ice coverage on the Great Lakes reached near record levels during the winter season, delaying the formal opening of the St. Lawrence Seaway. Once the locks were opened, passage on the lakes and the seaway was limited, requiring Coast Guard ice breaker assistance to facilitate the limited movements that did occur. During the three month period ended March 31, 2014, on a total Great Lakes basis, iron ore shipments decreased 32.7% and coal shipments decreased 15.2% compared to the three month period ended March 31, 2013. There was no movement of aggregates cargoes during the three month period ended March 31, 2014. According to the Lake Carriers Association, U.S.-flagged vessels on the Great Lakes experienced a 38.3% decrease in overall customer shipments for the commodities that we carry during the three month period ended March 31, 2014. During the three month period ended March 31, 2014, iron ore tonnage hauled by U.S.-flagged vessels decreased 40.5%, coal tonnage hauled by U.S.-flagged vessels decreased 27.7% and there was no movement of aggregates due to the delay in the opening of the quarries.

During the fiscal year ended March 31, 2014, we more than offset the decline in our iron ore and coal shipments by altering our commodity mix, which resulted in a 4.8% increase in our tonnage carried for the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013. Our tonnage carried in the fiscal year ended March 31, 2014 was significantly negatively impacted by the adverse weather conditions experienced throughout such fiscal year.

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Freight and other related revenue generated from Company-operated vessels increased $10.3 million or 8.8%, to $128.1 million during the fiscal year ended March 31, 2014 compared to $117.8 million during the fiscal year ended March 31, 2013. Excluding the impact of currency changes, freight revenue increased 11.3% during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013.

The increase in freight and related revenue was attributable to the increase in tonnage carried, 244 additional Sailing Days and contractual price increases. Additionally, certain customer contract renewals included a reset of the base fuel price to reflect prevailing market conditions for fuel, resulting in an increase in freight revenue and an equivalent reduction in fuel surcharges during the fiscal year ended March 31, 2014. The changes to these agreements had no impact on our actual fuel expenses and did not change the fuel escalation provisions that are part of all of our contracts. There was no impact to operating income resulting from these changes.

We operated fifteen and sixteen vessels during the fiscal years ended March 31, 2014 and March 31, 2013, respectively. One of our vessels was in long-term layup status during the fiscal year ended March 31, 2014. This vessel operated for 251 days during the fiscal year ended March 31, 2013. The reduction of Sailing Days attributable to such vessel not sailing during the fiscal year ended March 31, 2014 was offset by the elimination of lost time due to vessel incidents and the addition of our newest vessel, which sailed for 296 days during the fiscal year ended March 31, 2014, compared to 92 days during the fiscal year ended March 31, 2013. Management believes that each of our vessels should achieve a theoretical maximum of 275 Sailing Days in the sailing season, assuming no major repairs, incidents or vessel layups and normal drydocking cycle times performed during the winter lay-up period. The Company’s operated vessels sailed an average of approximately 278 Sailing Days during the fiscal year ended March 31, 2014, compared to an average of 255 Sailing Days during the fiscal year ended March 31, 2013.

We also measure Delay Days, which we define as the lost time incurred by our vessels while in operation and includes delays caused by inclement weather, dock delays, traffic congestion and vessel mechanical issues. We experienced 470 Delay Days during the fiscal year ended March 31, 2014 compared to 375 Delay Days during the fiscal year ended March 31, 2013. We reduced Delay Days arising from vessel mechanical issues during the fiscal year ended March 31, 2014 by 40 days, or 31%, compared to the fiscal year ended March 31, 2013. However, the reduction in mechanical-related Delay Days during the fiscal year ended March 31, 2014 was offset by an increase of 137 Delay Days during the fiscal year ended March 31, 2014 related to increased weather-related delays, dock delays and traffic congestion. Weather-related delays accounted for approximately 43% of the Delay Days during the fiscal year ended March 31, 2014 compared to approximately 28% of the Delay Days during the fiscal year ended March 31, 2013. Such Delay Days represent a Lost Time Factor, calculated as Delay Days as a percentage of Sailing Days, of 11.3% for the fiscal year ended March 31, 2014 compared to 9.6% for the fiscal year ended March 31, 2013.

Freight and related revenue per Sailing Day increased $725, or 2.4%, to $30,760 per Sailing Day during the fiscal year ended March 31, 2014 compared to $30,035 per Sailing Day during the fiscal year ended March 31, 2013. This revenue increase was due to an approximate 26%, 19% and 5% increases in salt, grain and aggregates tonnages carried, respectively, during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013, and was somewhat offset by a weaker Canadian dollar and an approximate 18% decrease in ore tonnage hauled during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013. The overall increase in tonnage carried and the efficient deployment of our vessels were not optimized due to the challenging weather conditions on the Great Lakes throughout the fiscal year ended March 31, 2014 generally, and further exacerbated in the three month period ended March 31, 2014.

All of our customer contracts have fuel surcharge provisions pursuant to which changes in our fuel costs are passed on to our customers. Such increases and decreases in fuel surcharges impact margin percentages, but do not significantly impact our margin dollars. Fuel and other surcharges decreased $10.9 million, or 29.2%, to $26.5 million during the fiscal year ended March 31, 2014 compared to $37.4 million during the fiscal year ended ended March 31, 2013. This decrease was attributable to reduced fuel prices, a weaker Canadian dollar and the renewal of several customer contracts that reset the base fuel price and reduced the fuel surcharge (which surcharge was added to freight and other related revenue), slightly offset by an increased number of Sailing Days. Fuel and other surcharges per Sailing Day decreased by $3,182, or 33.4%, to $6,355 per Sailing Day during the fiscal year ended March 31, 2014 compared to $9,537 per Sailing Day during the fiscal year ended March 31, 2013.

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Vessel operating expenses decreased $2.1 million, or 2.0%, to $102.8 million during the fiscal year ended March 31, 2014 compared to $104.9 million during the fiscal year ended March 31, 2013. This decrease was primarily due to a weaker Canadian dollar, reduced fuel pricing and reduced expenses related to vessel incident costs, offset by a greater number of Sailing Days attributable to the elimination of lost time due to incidents. Vessel operating expenses per Sailing Day decreased $2,069, or 7.7%, to $24,677 per Sailing Day during the fiscal year ended March 31, 2014 from $26,746 per Sailing Day during the fiscal year ended March 31, 2013.

Repairs and maintenance expenses, which primarily consist of expensed winter work, decreased $1.2 million to $7.2 million during the fiscal year ended March 31, 2014 from $8.4 million during the fiscal year ended March 31, 2013 primarily due to the three acquired vessels acquired in fiscal 2012 which incurred higher costs in the prior year, as well as lower fitout costs, which were delayed due to the late start of the 2014 sailing season. Repairs and maintenance per Sailing Day decreased $403, or 18.9%, to $1,726 per Sailing Day during the fiscal year ended March 31, 2014 from $2,129 per Sailing Day during the fiscal year ended March 31, 2013.

Our general and administrative expenses were $12.2 million during the fiscal year ended March 31, 2014, a decrease of 1.3 million, or 9.8%, from $13.5 million during the fiscal year ended March 31, 2013. The reduction was due to a weaker Canadian dollar and reduced legal expenses and bank fees, partially offset by additional compensation and benefit costs. Our general and administrative expenses represented 9.5%of freight revenues during the fiscal year ended March 31, 2014 compared to 11.4% of freight revenues during the fiscal year ended March 31, 2013.

Depreciation expense increased $1.6 million to $17.0 million during the fiscal year ended March 31, 2014 compared to $15.4 million during the fiscal year ended March 31, 2013. This increase was primarily attributable to the articulated tug and barge unit that began sailing in October 2012 and winter 2013 capital expenditures, offset by a weaker Canadian dollar during the fiscal year ended March 31, 2014.

Amortization of drydock costs decreased $207 to $3.3 million during the fiscal year ended March 31, 2014 from $3.5 million during the fiscal year ended March 31, 2013. During each of the fiscal years ended March 31, 2014 and 2013, the Company amortized the deferred drydock costs of twelve of its sixteen vessels.

As a result of the items described above, during the fiscal year ended March 31, 2014, the Company’s operating income increased $2.8 million, or 35.1%, to $10.9 million compared to operating income of $8.1 million during the fiscal year ended March 31, 2013. Operating income plus depreciation, amortization of drydock costs and amortization of intangibles increased 14.9%, or $4.2 million, to $32.5 million during the fiscal year ended March 31, 2014 from $28.3 million during the fiscal year ended March 31, 2013.

Interest expense decreased $798 to $9.4 million during the fiscal year ended March 31, 2014 from $10.2 million during the fiscal year ended March 31, 2013. This decrease in interest expense was primarily attributable to the expiration of interest rate swap contracts on March 31, 2013, a slightly lower average debt balance and a weaker Canadian dollar that translated into lower interest expenses for our Canadian dollar borrowings.

Our interest rate swap contracts expired on March 31, 2013. During the fiscal year ended March 31, 2013, we recorded a gain on such contracts of $1.1 million.

Our income before income taxes was $316during the fiscal year ended March 31, 2014 compared to loss before income taxes of $4.3 million during the fiscal year ended March 31, 2013.

Our effective tax rate for fiscal year ended March 31, 2014 was 1,526.3% on pre-tax income of $316 resulting in an income tax expense of $4.8 million. Other than statutory minimum foreign federal tax of approximately $100, none of our federal or foreign income tax expense is payable in cash due to our net operating loss carry-forwards ("NOL"). Our effective tax rate for fiscal year ended March 31, 2013 was 11.4% on pre-tax loss of $4.3 million resulting in an income tax recovery of $0.5 million.

Our current effective tax expense is primarily driven by the establishment of a $4.1 million reserve or valuation allowance against our U.S. federal net deferred tax assets. Our U.S. NOL was $46.1 million as of March 31, 2014. As it relates to the $4.1 million valuation allowance against our US federal net deferred tax assets, the Company is required to establish a valuation allowance when future deductibility is uncertain. At March 31, 2014, the Company determined that its U.S. Federal net deferred tax assets, including net operating loss carry-forwards, may not be utilized. Generally accepted accounting principles in the U. S.

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("US GAAP") requires the evaluation of the prior three years cumulative US pre-tax earnings to determine the usability of an NOL. Based on the US GAAP requirements, management determined that the reserve was warranted as of March 31, 2014. On an ongoing basis, the valuation allowance will be reviewed and adjusted based on management's assessment of the realizability of the net deferred tax assets.

Our provision for income tax expense was $4.8 million during the fiscal year ended March 31, 2014 compared to an income tax recovery of $0.5 million during the fiscal year ended March 31, 2013. The increase in income tax expense was due to higher net income before income taxes and a higher consolidated tax rate during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013.  In addition to pre-tax earnings variances, the increase in income tax expense was due to the implementation of a full Federal valuation allowance against the U.S. Federal net deferred tax assets. 

Our net income before preferred stock dividends was $4.5 million during the fiscal year ended March 31, 2014 compared to $3.8 million during the fiscal year ended March 31, 2013.

We accrued $3.4 million for dividends on our preferred stock during the fiscal year ended March 31, 2014 compared to $3.2 million during the fiscal year ended March 31, 2013. The dividends accrued at a rate of 12.0% during the fiscal year ended March 31, 2013 and through March 11, 2014 in the fiscal year ended March 31, 2014. Beginning on March 12, 2014, dividends accrued at a rate of 7.75%. As of March 31, 2014, all preferred stock dividends had been paid.

Our net loss applicable to common stockholders was $7.9 million during the fiscal year ended March 31, 2014 compared to a net loss of $7.0 million during the fiscal year ended March 31, 2013.

The Canadian dollar weakened by 4.9% compared to the U.S. dollar during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013, averaging approximately $0.950 USD per CDN during the fiscal year ended March 31, 2014 compared to approximately $0.999 USD per CDN during the fiscal year ended March 31, 2013. The Company's balance sheet translation rate decreased from $0.984 USD per CDN at March 31, 2013 to $0.905 USD per CDN at March 31, 2014.

During the fiscal year ended March 31, 2014, the Company operated an average of six vessels in the U.S. and nine vessels in Canada. The percentage of our total freight and other revenue, fuel and other surcharge revenue, vessel operating expenses, repairs and maintenance costs and combined depreciation and amortization costs approximate the percentage of vessels operated by country. Approximately half of our general and administrative costs are incurred in Canada. Approximately 50% of our interest expense is incurred in Canada, reflecting the approximate percentage of total debt. All of our preferred stock dividends are accrued in the U.S.

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Fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012

Selected Financial Information

(USD in 000's)	Year ended March 31, 2013		Year ended March 31, 2012		Change			% Change
Revenue:
Freight and related revenue	$	117,797	$	107,618	$	10,179		9.5	%
Fuel and other surcharges	$	37,404	$	38,886	$	(1,482	)	(3.8	)%
Outside voyage charter revenue	$	1,437	$	1,321	$	116		8.8	%
Total	$	156,638	$	147,825	$	8,813		6.0	%
Expenses:
Outside voyage charter fees	$	1,447	$	1,312	$	135		10.3	%
Vessel operating expenses	$	104,896	$	97,274	$	7,622		7.8	%
Repairs and maintenance	$	8,350	$	7,179	$	1,171		16.3	%
Sailing Days:	3,922		3,721		201			5.4	%
Number of vessels operated:	16		14		2			14.3	%
Per day in whole USD:
Revenue per Sailing Day:
Freight and related revenue	$	30,035	$	28,922	$	1,113		3.8	%
Fuel and other surcharges	$	9,537	$	10,450	$	(913	)	(8.7	)%
Expenses per Sailing Day:
Vessel operating expenses	$	26,746	$	26,142	$	604		2.3	%
Repairs and maintenance	$	2,129	$	1,929	$	200		10.4	%

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The following table summarizes the changes in the components of our revenue and vessel operating expenses as a result of changes in Sailing Days during the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012:

(USD in 000's)	Sailing Days		Freight and related revenue			Fuel and other surcharges			Outside voyage charter			Total revenue			Vessel operating expenses
Fiscal year ended March 31, 2012	3,721		$	107,618		$	38,886		$	1,321		$	147,825		$	97,274
Changes in fiscal year ended December 31, 2013:
Decrease attributable to weaker Canadian dollar			(470		)	(139		)	(7		)	(616		)	(434		)
Net decrease attributable to vessel incidents	(123	)	(3,428		)	(2,101		)				(5,529		)	(1,525		)
Net increase attributable to customer demand, pricing (excluding currency impact) and reduction of lost time due to incidents.	324		14,077			758						14,835			9,581
Changes in outside voyage charter revenue (excluding currency impact)									123			123
Sub-total	201		$	10,179		$	(1,482	)	$	116		$	8,813		$	7,622
Fiscal year ended March 31, 2013	3,922		$	117,797		$	37,404		$	1,437		$	156,638		$	104,896

Total revenue during the fiscal year ended March 31, 2013 was $156.6 million, an increase of $8.8 million, or 6.0%, compared to $147.8 million during the fiscal year ended March 31, 2012. This increase was primarily attributable to higher freight revenue, partially offset by reduced fuel surcharges and the effect of the slightly weaker Canadian dollar.

According to the Lake Carriers' Association, during the 2012 sailing season, U.S.-flagged vessels industry-wide experienced a 5.1% decrease in overall customer demand for the commodities that we carry on the Great Lakes compared to the 2011 sailing season. Other than aggregates, for which U.S.-flagged shipments increased 1.7%, overall industry tonnage decreased for all of the major commodities that we carried on the Great Lakes during the 2012 sailing season compared to the 2011 sailing season.

Freight and other related revenue generated from Company-operated vessels increased $10.2 million, or 9.5%, to $117.8 million during the fiscal year ended March 31, 2013 compared to $107.6 million during the fiscal year ended March 31, 2012. Excluding the impact of currency changes, freight revenue increased 9.9% during the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012. Tonnage hauled by our operated vessels for the fiscal year ended March 31, 2013 increased 6.5% compared to the fiscal year ended March 31, 2012.

The increase in revenue was attributable to contractual price increases and 201 net additional Sailing Days. Of these additional Sailing Days, only 290 Sailing Days out of a potential 443 Sailing Days were gained from two of the three vessels acquired in the fiscal year ended March 31, 2012. One of these vessels was delayed in being put into service until October 23, 2012 versus our projected introduction date of August 1, 2012 due to modifications to such vessel taking longer than anticipated. The second of the two acquired vessels was impacted by a poor grain market earlier in the year (45 Sailing Days lost) and an early layup for further modifications at the end of the year (25 Sailing Days lost). The third vessel sailed 92 days more than in the prior

30

year. The increase in freight and other related revenue for the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012 was muted because the benefits from the acquisition of our three new vessels were partially offset by two vessel incidents that (i) reduced 123 Sailing Days from the directly affected vessels and (ii) impacted the trade patterns on our other vessels. Furthermore, our vessels sailed 52 fewer days in the three month period ended March 31, 2013 as compared to the three month period ended March 31, 2012 due to an earlier onset of winter weather as compared to the prior year.

We operated sixteen vessels during the fiscal year ended March 31, 2013, including the three vessels acquired during the fiscal year ended March 31, 2012, compared to fourteen vessels operated during the fiscal year ended March 31, 2012. However, one of the aforementioned vessels however only began sailing on October 23, 2012. Management believes that each of our vessels should achieve a theoretical maximum 275 Sailing Days (April1 through December 31), assuming no major repairs, incidents or vessel layups and normal drydocking cycle times performed during the winter lay-up period. The Company’s operated vessels sailed an average of approximately 255 Sailing Days during the fiscal year ended March 31, 2013 compared to an average of 266 Sailing Days during the fiscal year ended March 31, 2012.

The average number of Sailing Days per vessel during the fiscal year ended March 31, 2013 was adversely impacted by the following events that we consider non-recurring:

◦ 7.7 Sailing Days lost as a result of the loss of 123 Sailing Days due to mechanical repairs on two vessels following incidents that occurred during the sailing season;

◦ 1.6 Sailing Days lost related to a bulker that was taken out of service on December 6, 2012 for further modifications ( 25 Sailing Days lost); and

◦ 11.4 Sailing Days lost related to the articulated tug/barge which was introduced into service on October 23, 2012 and only sailed 92 days during such period.

Freight and related revenue per Sailing Day increased $1,113, or 3.8%, to $30,035 per Sailing Day in the fiscal year ended March 31, 2013 compared to $28,922 per Sailing Day during the fiscal year ended March 31, 2012. This increase was somewhat offset by a slightly weaker Canadian dollar and an approximately 34% decrease in salt tonnage hauled for the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012. The reduction in our salt tonnage carried was due to an abnormally dry winter during the fiscal year ended March 31, 2012 in the Great Lakes region. Finally, we experienced erratic customer demand throughout the fiscal year ended March 31, 2013, which impacted the efficiency of our delivery patterns.

All of our customer contracts have fuel surcharge provisions whereby changes in our fuel costs are passed on to our customers. Such increases and decreases in fuel surcharges impact margin percentages, but do not significantly impact our margin dollars. Fuel and other surcharges decreased $1.5 million, or 3.8%, to $37.4 million during the fiscal year ended March 31, 2013 compared to $38.9 million during the fiscal year ended March 31, 2012. This decrease was attributable to reduced fuel prices and a weaker Canadian dollar, offset by an increased number of Sailing Days. Fuel and other surcharges per Sailing Day decreased by $913, or 8.7%, to $9,537 per Sailing Day during the fiscal year ended March 31, 2013 compared to $10,450 per Sailing Day during the fiscal year ended March 31, 2012.

Vessel operating expenses increased $7.6 million, or 7.8%, to $104.9 million during the fiscal year ended March 31, 2013 compared to $97.3 million during the fiscal year ended March 31, 2012. This increase was primarily due to a greater number of Sailing Days attributable to three additional vessels acquired in the fiscal year ended March 31, 2012. Vessel operating expenses were adversely impacted by associated start up and incremental operating costs related to the three vessels we acquired during the fiscal year ended March 31, 2012. Vessel operating expenses were partially offset by a slightly weaker Canadian dollar, reduced fuel pricing and reduced operating expenses due to vessel repairs. Vessel operating expenses per Sailing Day increased $604, or 2.3%, to $26,746 per Sailing Day during the fiscal year ended March 31, 2013 from $26,142 per Sailing Day during the fiscal year ended March 31, 2012.

Repairs and maintenance expenses, which primarily consist of expensed winter work, increased $1.2 million to $8.4 million during the fiscal year ended March 31, 2013 from $7.2 million during the fiscal year ended March 31, 2012 primarily due to the two acquired vessels which first sailed in fiscal 2013. Repairs and maintenance per Sailing Day increased $200, or 10.4%, to $2,129 per Sailing Day during the fiscal year ended March 31, 2013 from $1,929 per Sailing Day during the fiscal year ended March 31, 2012. This increase was primarily due to the combined impact of the delays in completing winter work at the start of

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the 2012 sailing season, the normal winter work done during the fourth quarter of the fiscal year ended March 31, 2013 and the associated impact of fewer Sailing Days for two of the three recently acquired vessels.

Our general and administrative expenses were $13.5 million during the fiscal year ended March 31, 2013 compared to $11.0 million during the fiscal year ended March 31, 2012, an increase of $2.5 million or 22.3%. These costs increased due to higher legal and consulting costs, financing/amendment fees related to our credit agreements and increased compensation and benefit costs related in part to higher engineering and IT headcount. Our general and administrative expenses represented 11.4%of freight revenues during the fiscal year ended March 31, 2013 and 10.2% during the fiscal year ended March 31, 2012. During the fiscal year ended March 31, 2013, $4.1 million of our general and administrative expenses was attributable to our parent company and $9.4 million was attributable to our operating companies.

Depreciation expense increased $3.8 million to $15.4 million during the fiscal year ended March 31, 2013 compared to $11.6 million during the fiscal year ended March 31, 2012. The increase in depreciation expense was primarily attributable to two bulkers and the articulated tug/barge unit acquired during the fiscal year ended March 31, 2012 that we sailed during the fiscal year ended March 31, 2013, winter 2012 capital expenditures and the repowering of one vessel that was completed in June 2011, offset by a weaker Canadian dollar during the fiscal year ended March 31, 2013.

Amortization of drydock costs increased $0.4 million to $3.5 million during the fiscal year ended March 31, 2013 from $3.1 million during the fiscal year ended March 31, 2012. During the fiscal year ended March 31, 2013, the Company amortized the deferred drydock costs of twelve of its sixteen operated vessels, compared to nine vessels during the fiscal year ended March 31, 2012.

As a result of the items described above, during the fiscal year ended March 31, 2013, the Company’s operating income decreased $7.1 million to $8.1 million compared to operating income of $15.2 million during the fiscal year ended March 31, 2012. Operating income plus depreciation, amortization of drydock costs and amortization of intangibles decreased 9.3%, or $2.9 million, to $28.3 million during the fiscal year ended March 31, 2013 from $31.2 million during the fiscal year ended March 31, 2012

Interest expense increased $0.8 million to $10.2 million during the fiscal year ended March 31, 2013 from $9.3 million during the fiscal year ended March 31, 2012. This increase in interest expense was primarily attributable to higher average debt balances due to the CDN $4.0 million increase in the Canadian Term Loan in July 2011, the $25.0 million increase in the U.S. Term Loan on December 1, 2011, the $15.3 million net increase in U.S. Term Loan on August 30, 2012 and higher average revolver balance.

As a result of the Third Amended and Restated Credit Agreement discussed below, we recognized a loss on extinguishment of debt of $3.3 million during the fiscal year ended March 31, 2013, which comprised the unamortized deferred financing costs in connection with our previously existing financing arrangements.

We recorded a gain on interest rate swap contracts of $1.1 million during the fiscal year ended March 31, 2013 compared to a gain of $0.8 million during the fiscal year ended March 31, 2012. Such gains were due to the recording of the fair value of our two interest rate swaps at the end of each such period. The contracts for these two interest swaps expired March 31, 2013.

Our loss before income taxes was $4.3 millionduring the fiscal year ended March 31, 2013 compared to income before income taxes of $6.7 million during the fiscal year ended March 31, 2012.

Our effective tax rate was 11.4% on a pre-tax loss for the fiscal year ended March 31, 2013 compared to (21.3%) on pre-tax income for the fiscal year ended March 31, 2012.

Our provision for income tax was a benefit of $0.5 million for the fiscal year ended March 31, 2013 compared to a tax benefit of $1.4 million for the fiscal year ended March 31, 2012. In addition to pre-tax earnings variances, the decrease in income tax benefit was due to a foreign statutory rate change as applied to the foreign net deferred tax liabilities in the fiscal year ended March 31, 2013 and the absence of a tax benefit from a change in valuation allowance during the fiscal year ended March 31, 2013 as compared to the fiscal year ended March 31, 2012.

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The effective tax rate for the fiscal year ended March 31, 2013 is lower than the statutory tax rate due to permanent differences, primarily imputed interest, and the change in the foreign statutory rate as applied to the foreign net deferred tax liabilities. The effective rate for the fiscal year ended March 31, 2012 was lower than the statutory rate due to the tax benefit associated with the full reversal of the valuation allowance totaling $4.3 million.

Our net loss before preferred stock dividends was $3.8 million during the fiscal year ended March 31, 2013 compared to our net income of $8.1 million during the fiscal year ended March 31, 2012.

We accrued $3.2 million for dividends on our preferred stock during the fiscal year ended March 31, 2013 compared to $2.8 million during the fiscal year ended March 31, 2012. The dividends accrued at a rate of 12.0% during the fiscal year ended March 31, 2013 compared to an average rate of 11.90% during the fiscal year ended March 31, 2012. The dividend rate increased to a cap of 12.0% effective July 1, 2011.

Our net loss applicable to common stockholders was $7.0 million during the fiscal year ended March 31, 2013 compared to net income of $5.3 million during the fiscal year ended March 31, 2012.

The Canadian dollar weakened by 0.9% compared to the U.S. dollar, averaging approximately $0.999 USD per CDN during the fiscal year ended March 31, 2013 compared to approximately $1.008 USD per CDN during the fiscal year ended March 31, 2012. The Company's balance sheet translation rate decreased from $1.002 USD per CDN at March 31, 2012 to $0.984 USD per CDN at March 31, 2013.

During the fiscal year ended March 31, 2013, the Company operated an average of seven vessels in the U.S. and nine vessels in Canada. The percentage of our total freight and other revenue, fuel and other surcharge revenue, vessel operating expenses, repairs and maintenance costs and combined depreciation and amortization costs approximate the percentage of vessels operated by country. Our outside voyage charter revenue and costs relate solely to our Canadian subsidiary and approximately half of our general and administrative costs are incurred in Canada. Nearly half of our interest expense is incurred in Canada. All of our preferred stock dividends are accrued in the U.S..

Impact of Inflation and Changing Prices

During the fiscal years ended March 31, 2012, 2013 and 2014, there were major fluctuations in our fuel costs. However, our contracts with our customers provide for recovery of these costs over specified rates through fuel surcharges. In addition, there was volatility in the exchange rate between the U.S. dollar and the Canadian dollar during the past three fiscal years, which impacted the average of monthly translation rates for total revenue and costs to U.S. dollars by a decrease of approximately 4.9% during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013 and a decrease of approximately 0.9% during the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012.

Liquidity and Capital Resources

Our primary sources of liquidity are cash from operations, the proceeds of our credit facility and proceeds from sales of our common stock. Our principal uses of cash are vessel acquisitions, capital expenditures, drydock expenditures, operations and interest and principal payments under our credit facility. Information on our consolidated cash flow is presented in the consolidated statements of cash flows (categorized by operating, investing and financing activities) which is included in our consolidated financial statements for the fiscal years ended March 31, 2014 and March 31, 2013. The Company makes seasonal net borrowings under its revolving credit facility during the first quarter of each fiscal year to fund working capital needed to commence the sailing season. Such borrowings are then reduced during the second half of each fiscal year. We believe cash generated from our operations and availability of borrowings under our credit facilities will provide sufficient cash availability to cover our anticipated working capital needs, capital expenditures and debt service requirements for the next twelve months. However, if the Company experiences a material shortfall to its financial forecasts or if the Company's customers materially delay their receivable payments due to further deterioration of economic conditions, the Company may breach its financial covenants and collateral thresholds and be strained for liquidity. The Company has maintained its focus on productivity gains and cost controls, and is closely monitoring customer credit and accounts receivable balances.

Net cash provided by operating activities during the fiscal year ended March 31, 2014 was $11.2 million, a decrease of $9.4 million from $20.6 million during the fiscal year ended March 31, 2013. The decrease in cash provided reflected an increase in working capital partially offset by higher cash earnings compared to the prior year.

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The Company did not incur any significant bad-debt write-offs or material slowdowns in receivable collections during the fiscal years ended March 31, 2014, 2013 or 2012. The timing of the end of the Company's fiscal year in relation to the sailing season allows most of a sailing season's receivables to be collected prior to the end of the Company's fiscal year.

Net cash used in investing activities decreased by $22.0 million to net cash used of $17.1 million during the fiscal year ended March 31, 2014 from net cash used of $39.1 million during the fiscal year ended March 31, 2013. This decrease was primarily due to payments during the fiscal year ended March 31, 2013 for upgrades of two acquired vessels, compared to payments for regular capital expenditures, drydocking projects and the acquisition of a vessel during the fiscal year ended March 31, 2014.

Net cash provided by financing activities increased $5.7 million to $8.3 million used during the fiscal year ended March 31, 2014 compared to $14.0 million provided during the fiscal year ended March 31, 2013. During the fiscal year ended March 31, 2014, the Company received proceeds of $21.7 million from its revolving credit facility, refinanced the debt structure of the Company, resulting in proceeds of $177.5 million as discussed below, made principal payments and repaid the balance of its term debt of $139.4 million, repaid $27.4 million of the revolver balance and paid accrued preferred stock dividends of $16.9 million . During the fiscal year ended March 31, 2013, the Company received proceeds of $13.1 million in term loan proceeds (net of debt financing costs), proceeds of $24.3 million from its revolving credit facility and made principal payments on its term debt of $4.6 million and repaid $18.3 million of the revolver balances.

Fourth Amended and Restated Credit Agreement

On March 11, 2014, Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek Shipping, as borrowers, Rand LL Holdings Corp. ("Rand LL Holdings"), Rand Finance, Black Creek Shipping Holdings Company, Inc. ("Black Creek Holdings"), Lower Lakes Ship Repair and Lower Lakes (17) and Rand, as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders, entered into a Fourth Amended and Restated Credit Agreement (the "Fourth Amended and Restated Credit Agreement"), which (i) amends and restates the existing Third Amended and Restated Credit Agreement to which the borrowers are a party, dated as of August 30, 2012, as the same has been amended from time to time, in its entirety, (ii) consolidates the existing U.S. term loans into a single term loan, (iii) provides for certain new loans and (iv) provides working capital financing, funds for other general corporate purposes and funds for other permitted purposes. The Fourth Amended and Restated Credit Agreement provides for (i) a revolving credit facility under which Lower Lakes Towing may borrow up to CDN $17.5 million with a seasonal overadvance facility equal to the lesser of US $17.0 million or CDN $17.5 million, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Transportation, and a swing line facility of CDN $4 million subject to limitations, (ii) a revolving credit facility under which Lower Lakes Transportation may borrow up to US $17.5 million with a seasonal overadvance facility of US $17 million, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Towing, and a swing line facility of US $.05 million subject to limitations, (iii) the continuation of an existing Canadian dollar denominated term loan facility under which Lower Lakes Towing is obligated to the lenders in the amount of CDN $54.9 million as of the date of the Fourth Amended and Restated Credit Agreement (the “CDN Term Loan”), (iv) the modification and continuation of a U.S. dollar denominated term loan facility under which Grand River and Black Creek are obligated to the lenders in the amount of $55.2 million as of the date of the Fourth Amended and Restated Credit Agreement (the “U.S. Term Loan”).

Under the Fourth Amended and Restated Credit Agreement, the revolving credit facilities and swing line loans expire on April 1, 2019. The outstanding principal amount of the CDN Term Loan borrowings will be repayable as follows: (i) payments equal to one percent (1%) of the initial principal amount thereof paid quarterly commencing September 1, 2014 and (ii) a final payment in the outstanding principal amount of the CDN Term Loan upon the CDN Term Loan’s maturity on April 1, 2019. The outstanding principal amount of the U.S. Term Loan borrowings will be repayable as follows: (i) payments equal to one percent (1%) of the initial principal amount thereof paid quarterly commencing September 1, 2014 and (iii) a final payment in the outstanding principal amount of the U.S. Term Loan upon the U.S. Term Loan’s maturity on April 1, 2019. Borrowings under the Canadian revolving credit facility, the Canadian swing line facility and the CDN Term Loan will bear an interest rate per annum, at the borrowers' option, equal to (i) the Canadian Prime Rate (as defined in the Fourth Amended and Restated Credit Agreement), plus 3.00% per annum or (ii) the BA Rate (as defined in the Fourth Amended and Restated Credit Agreement) plus 4.00% per annum. Borrowings under the U.S. revolving credit facility, the U.S. swing line facility and the U.S. Term Loan will bear interest, at the borrowers’ option, equal to (i) LIBOR (as defined in the Fourth Amended and Restated Credit Agreement) plus 4.00% per annum or (ii) the U.S. Base Rate (as defined in the Fourth Amended and Restated Credit Agreement) plus 3.00% per annum.

Obligations under the Fourth Amended and Restated Credit Agreement are secured by (i) a first priority lien and security interest on all of the borrowers’ and guarantors’ assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers other than Black Creek and Lower Lakes Towing, and a pledge of 65% of the outstanding capital stock of Lower Lakes Towing; (iii) a pledge by Black Creek Holdings of

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all of the outstanding capital stock of Black Creek; (iv) a pledge by Lower Lakes Towing of all of the outstanding capital stock of Lower Lakes Ship Repair and Lower Lakes (17) and (v) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holdings. The indebtedness of each domestic borrower under the Fourth Amended and Restated Credit Agreement is unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty is secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also guarantees the obligations of the Canadian borrower and each Canadian guarantor guarantees the obligations of the Canadian borrower. Under the Fourth Amended and Restated Credit Agreement, the borrowers will be required to make mandatory prepayments of principal on term loan borrowings (i) if the outstanding balance of the term loans plus the outstanding balance of the seasonal facilities exceeds the sum of 85% of the orderly liquidation value of the vessels owned by the borrowers, less the amount of outstanding liens against the vessels with priority over the lenders’ liens, in an amount equal to such excess, (ii) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom and (iii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower’s debt or equity securities (all subject to certain exceptions).

The Fourth Amended and Restated Credit Agreement contains certain covenants, including those limiting the guarantors’, the borrowers’ and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Fourth Amended and Restated Credit Agreement requires the borrowers to maintain certain financial ratios. Failure of the borrowers or the guarantors to comply with any of these covenants or financial ratios could result in the loans under the Fourth Amended and Restated Credit Agreement being accelerated.

As a result of the execution of the Fourth Amended and Restated Credit Agreement discussed above, the Company recognized a loss on extinguishment of debt of $1.3 million during the fiscal year ended March 31, 2014, that consisted of the unamortized deferred financing costs in connection with the previously existing financing arrangement.

As of March 31, 2014, the Company was in compliance with covenants under the Fourth Amended and Restated Credit Agreement.

Term Loan Credit Agreement

On March 11, 2014, Lower Lakes Towing, Grand River and Black Creek, as borrowers, Rand LL Holdings, Rand Finance , Black Creek Holdings and Rand, as guarantors, Guggenheim Corporate Funding, LLC, as agent and Lender, and certain other lenders, entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”), which provides term loans (i) to partially repay outstanding indebtedness of borrowers under the Third Amended and Restated Credit Agreement, (ii) to partially pay the acquisition and conversion costs for a new vessel, (iii) pay accrued but unpaid dividends due on our Series A Convertible Preferred Stock and (iv) to provide working capital financing, funds for other general corporate purposes and funds for other permitted purposes. The Term Loan Credit Agreement provides for (i) a U.S. Dollar denominated term loan facility under which Lower Lakes Towing is obligated to the lenders in the amount of $34.2 million (the “Second Lien CDN Term Loan”), (ii) U.S. dollar denominated term loan facility under which Grand River and Black Creek are obligated to the Lenders in the amount of $38.3 million (the “Second Lien U.S. Term Loan”) and (iii) an uncommitted incremental term loan facility of up to $32.5 million.

The outstanding principal amount of the Second Lien CDN Term Loan borrowings will be repayable upon the Second Lien CDN Term Loan’s maturity on March 11, 2020. The outstanding principal amount of the Second Lien U.S. Term Loan borrowings will be repayable upon the Second Lien U.S. Term Loan’s maturity on March 11, 2020.

The Second Lien CDN Term Loan and Second Lien U.S. Term Loan will bear an interest rate per annum at borrowers’ option, equal to (i) LIBOR (as defined in the Term Loan Credit Agreement) plus 9.50% per annum, or (ii) the U.S. Base Rate (as defined in the Term Loan Credit Agreement), plus 8.50% per annum.

Obligations under the Term Loan Credit Agreement are secured by (i) a first priority lien and security interest on all of the borrowers’ and guarantors’ assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers, other than Black Creek and Lower Lakes Towing, and a pledge of 65% of the outstanding capital stock of Lower Lakes Towing, (iii) a pledge by Black Creek Holdings of all of the outstanding capital stock of Black Creek, (iv) a pledge by Lower Lakes Towing of all of the outstanding capital stock of Lower Lakes Ship Repair and Lower Lakes (17) and (v) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holding. The indebtedness of each domestic borrower under the Term Loan Credit Agreement is unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty is secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also

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guarantees the obligations of the Canadian borrower and each Canadian guarantor guarantees the obligations of the Canadian borrower.

Under the Term Loan Credit Agreement and subject to the terms of the Intercreditor Agreement (as defined below), the borrowers will be required to make mandatory prepayments of principal on term loan borrowings (i) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom and (ii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower’s debt or equity securities (all subject to certain exceptions).

The Term Loan Credit Agreement contains certain covenants, including those limiting the guarantors, the borrowers, and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Term Loan Credit Agreement requires the borrowers to maintain certain financial ratios. Failure of the borrowers or the guarantors to comply with any of these covenants or financial ratios could result in the loans under the Term Loan Credit Agreement being accelerated.

The obligations of the borrowers and the liens of the lenders under the Term Loan Credit Agreement are subject to the terms of an Intercreditor Agreement, which is further described below under the heading “Intercreditor Agreement”.

As of March 31, 2014, the Company was in compliance with covenants under the Term Loan Credit Agreement.

Intercreditor Agreement

Also on March 11, 2014, Lower Lakes Towing, Lower Lakes Transportation, Grand River, Black Creek, Lower Lakes Ship Repair, Rand, Rand LL Holdings, Rand Finance, Black Creek Holdings and Lower Lakes (17) (collectively, the “Credit Parties”), General Electric Capital Corporation, as agent for the lenders under the Fourth Amended and Restated Credit Agreement (the “First Lien Lenders”) and Guggenheim Corporate Funding , LLC, as agent for the lenders under the Term Loan Credit Agreement (the “Second Lien Lenders”), entered into an Intercreditor Agreement (the “Intercreditor Agreement”), pursuant to which the Second Lien Lenders have agreed to subordinate the obligations of the Credit Parties to them to the repayment of the obligations of the Credit Parties to the First Lien Lenders and have further agreed to subordinate their liens on the assets of the Credit Parties to the liens in granted in favor of the First Lien Lenders.  Absent the occurrence of an Event of Default under the Fourth Amended and Restated Credit Agreement, the Second Lien Lenders are permitted to receive regularly scheduled principal and  interest payments under the Term Loan Credit Agreement.

Previous Agreements

On August 30, 2012, Lower Lakes Towing, Lower Lakes Transportation, Grand River, and Black Creek, as borrowers, Rand LL Holdings, Rand Finance, Black Creek Holdings and Rand, as guarantors, General Electric Capital Corporation, as agent and lender, and certain other lenders, entered into a Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) which (i) amended and restated the amended and restated credit agreement to which the borrowers were a party, dated as of September 28, 2011 (as the same had been amended from time to time, the “2011 Credit Agreement”), in its entirety, (ii) continued the tranches of loans provided for under the 2011 Credit Agreement, (iii) refinanced the indebtedness of Black Creek under its existing credit facility and adds Black Creek as a U.S. Borrower, (iv) provided for certain new loans and (v) provided working capital financing, funds for other general corporate purposes and funds for other permitted purposes.

The Third Amended and Restated Credit Agreement provided for (i) a revolving credit facility under which Lower Lakes Towing could borrow up to CDN $13.5 million with a seasonal overadvance facility of CDN $12 million, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Transportation, and a swing line facility of CDN $4 million, subject to limitations, (ii) a revolving credit facility that included letters of credit under which Lower Lakes Transportation could borrow up to US $13.5 million with a seasonal overadvance facility of US $12 million, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Towing, and a swing line facility of US $0.1 million, subject to limitations, (iii) the modification and continuation of an existing Canadian dollar denominated term loan facility under which Lower Lakes was obligated to the lenders in the amount of CDN $53.0 million as of the date of the Third Amended and Restated Credit Agreement (the “2012 CDN Term Loan”), (iv) the modification and continuation of a U.S. dollar denominated term loan facility under which Grand River was obligated to the lenders in the amount of $64.1 million as of the date of the Third Amended and Restated Credit Agreement (the “Grand River Term Loan”) and (v) a U.S. dollar denominated term loan facility under which Black Creek was obligated to lenders in the amount of $28.9 million as of the date of the Third Amended and Restated Credit Agreement (the “Black Creek Term Loan”).

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Under the Third Amended and Restated Credit Agreement, total scheduled term loan principal payments paid on a quarterly basis were approximately $3.6 million per year (2.5% of the total term debt at inception) in the fiscal year ended March 31, 2014, approximately $5.4 million in the fiscal year ending March 31, 2015, approximately $7.3 million in the fiscal year ending March 31, 2016 and the remaining balance to be repaid in the fiscal year ending March 31, 2017, subject to customary excess cash flow and collateral coverage conditions. Under the prior credit agreements, the Company was obligated to pay approximately $9.2 million per year in scheduled principal payments.

Under the Third Amended and Restated Credit Agreement, the revolving credit facilities and swing line loans expire on August 1, 2016. The outstanding principal amount of the 2012 CDN Term Loan borrowings was repayable as follows: (i) quarterly payments of CDN $0.3 million commencing December 1, 2012 and ending September 2014, (ii) quarterly payments of CDN $0.7 million commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the 2012 CDN Term Loan upon the 2012 CDN Term Loan's scheduled maturity on August 1, 2016. The outstanding principal amount of the Grand River Term Loan borrowings was repayable as follows: (i) quarterly payments of US $0.4 million commencing December 1, 2011 and ending on September 1, 2014, (ii) quarterly payments of US $0.8 million commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the Grand River Term Loan upon the Grand River Term Loan's scheduled maturity on August 1, 2016. The outstanding principal amount of the Black Creek Term Loan borrowings was repayable as follows: (i) quarterly payments of US $0.2 million commencing quarterly December 1, 2011 and ending September 1, 2014, (ii) quarterly payments of US $0.4 million commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the Black Creek Term Loan upon the Black Creek Term Loan's scheduled maturity on August 1, 2016.

Borrowings under the Canadian revolving credit facility, Canadian swing line facility and the 2012 CDN Term Loan bore an interest rate per annum, at the borrowers' option, equal to (i) the Canadian Prime Rate (as defined in the Third Amended and Restated Credit Agreement), plus 3.75% per annum or (ii) the BA Rate (as defined in the Third Amended and Restated Credit Agreement) plus 4.75% per annum. Borrowings under the U.S. revolving credit facility, U.S. swing line facility and the Grand River Term Loan and Black Creek Term Loan bore interest, at the borrowers' option, equal to (i) LIBOR (as defined in the Third Amended and Restated Credit Agreement) plus 4.75% per annum, or (ii) the U.S. Base Rate (as defined in the Third Amended and Restated Credit Agreement), plus 3.75% per annum.

Obligations under the Third Amended and Restated Credit Agreement were secured by (i) a first priority lien and security interest on all of the borrowers' and guarantors' assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers other than Black Creek; (iii) a pledge by Black Creek Holdings of all of the outstanding capital stock of Black Creek; and (iv) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holdings. The indebtedness of each domestic borrower under the Third Amended and Restated Credit Agreement was unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty is secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also guaranteed the obligations of the Canadian borrower and each Canadian guarantor guaranteed the obligations of the Canadian borrower.

Under the Third Amended and Restated Credit Agreement, the borrowers are required to make mandatory prepayments of principal on term loan borrowings (i) if the outstanding balance of the term loans plus the outstanding balance of the seasonal facilities exceeded the sum of 75% of the fair market value of the vessels owned by the borrowers, less the amount of outstanding liens against the vessels with priority over the lenders' liens, in an amount equal to such excess, (ii) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom, and (iii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower's debt or equity securities.

The Third Amended and Restated Credit Agreement contained certain covenants, including those limiting the guarantors', the borrowers', and their subsidiaries' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Third Amended and Restated Credit Agreement required the borrowers to maintain certain financial ratios. Failure of the borrowers or the guarantors to comply with any of these covenants or financial ratios could have resulted in the loans under the Third Amended and Restated Credit Agreement being accelerated.

On March 29, 2013, Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek, as borrowers, Rand LL Holdings, Rand Finance, Black Creek Holdings and Rand, as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders, entered into a First Amendment (the “First Amendment”) to the Third Amended and Restated

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Credit Agreement. The First Amendment modified the Credit Agreement's Minimum Fixed Charge Coverage Ratio, Minimum EBITDA, Maximum Senior Funded Debt to EBITDA Ratio and Maximum Capital Expenditures covenants and the definitions of EBITDA and Fixed Charge Coverage Ratio.

In connection with the execution of the Third Amended and Restated Credit Agreement, on August 30, 2012, Black Creek and Black Creek Holdings terminated their Credit Agreement (the “Black Creek Credit Agreement”) with General Electric Capital Corporation, as agent and lender, and certain other lenders, dated as of February 11, 2011, as amended. All outstanding amounts due under the Black Creek Credit Agreement were repaid in connection with the refinancing of Black Creek's indebtedness under the Third Amended and Restated Credit Agreement, as more fully described above.

Preferred Stock and Preferred Stock Dividends

The shares of the Company's series A convertible preferred stock rank senior to the Company's common stock with respect to liquidation and dividends; are entitled to receive a cash dividend at the annual rate of 7.75% (based on the $50 per share issue price), payable quarterly (subject to increases of 0.5% for each six month period in respect of which the dividend is not paid in cash, up to a maximum of 12%, subject to reversion to 7.75% upon payment of all accrued and unpaid dividends); are convertible into shares of the Company's common stock at any time at the option of the series A preferred stockholder at a conversion price of $6.20 per share (based on the $50 per share issue price and subject to adjustment) or 8.065 shares of common stock for each Series A Preferred Share (subject to adjustment); are convertible into shares of the Company's common stock (based on a conversion price of $6.20 per share, subject to adjustment) at the option of the Company if, after the third anniversary of our acquisition of Lower Lakes, the trading price of the Company's common stock for 20 trading days within any 30 trading day period equals or exceeds $8.50 per share (subject to adjustment); may be redeemed by the Company in connection with certain change of control or acquisition transactions; will vote on an as-converted basis with the Company's common stock; and have a separate vote over certain material transactions or changes involving the Company.

As of March 31, 2014, the Company had fully paid all accrued dividends on its preferred stock. The accrued dividend payable at March 31, 2014 was $nil, compared to $13.5 million at March 31, 2013. As of March 31, 2014, the effective rate of preferred dividends was 7.75%. As of March 31, 2013, the effective rate of preferred dividends was 12.0%. The dividend rate decreased to 7.75% upon the cash payment of the accrued dividends.

Investments in Capital Expenditures and Drydockings

We incurred $15.8 million in paid and unpaid capital expenditures and drydock expenses during the fiscal year ended March 31, 2014 (excluding $7.6 million for an acquired vessel described below), including $1.9 million of carryover from the 2013 winter season, compared to $40.1 million in paid and unpaid capital expenditures and drydock expenses during the fiscal year ended March 31, 2013, including $7.5 million in the fiscal year ended March 31, 2013 relating to carryover from the 2012 winter season and $26.1 million, including a carryover of $2.3 million from the 2011 winter season, in the fiscal year ended March 31, 2012.

Vessel Acquisitions

On March 11, 2014, Lower Lakes (17) acquired the LALANDIA SWAN from Uni-Tankers M/T "Lalandia Swan" for a purchase price of $7,000,000. The Lalandia Swan is a Danish flagged chemical tanker that we intend to convert into a Canadian flagged river class self-unloader vessel. We currently plan to introduce this new vessel into service during the 2015 sailing season.

On July 21, 2011, Lower Lakes acquired a Canadian-flagged dry bulk carrier for CDN $2.7 million with borrowings under its Canadian term loan.

On September 21, 2011, Lower Lakes Towing and Grand River entered into an Asset Purchase Agreement with USUOS pursuant to which Lower Lakes Towing agreed to purchase a bulk carrier from USUOS for a purchase price of $5.3 million plus the value of the remaining bunkers and unused lubricating oils onboard such bulk carrier at the closing of the acquisition. We completed the acquisition of such bulk carrier on October 14, 2011. We used a portion of the net proceeds from the equity offering described above under “Liquidity and Capital Resources” to fund deferred drydock costs and improvements to such bulk carrier.

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Also on September 21, 2011, Grand River entered into an Asset Purchase Agreement (the “Tug Agreement”) with USUOS pursuant to which Grand River purchased a tug (the “Tug”) from USUOS for a purchase price of $7.8 million plus the value of the remaining bunkers and unused lubricating oils onboard the Tug at the closing of the acquisition. We completed the acquisition of the Tug on December 1, 2011.

Additionally, on September 21, 2011, Grand River entered into an Asset Purchase Agreement (the “Barge Agreement”) with USUOS pursuant to which USUOS granted Grand River the option to act as USUOS's third-party designee to purchase a self-unloading barge (the “Barge”) for a purchase price of $12.0 million plus the value of the remaining bunkers and unused lubricating oils onboard the Barge at the closing of the acquisition. In connection with the option described in the preceding sentence, on December 1, 2011, Grand River entered into, and consummated the transactions contemplated by, an Asset Purchase Agreement with U.S. Bank National Association, as Trustee of the GTC Connecticut Statutory Trust, pursuant to which Grand River acquired the Barge.

Contractual Commitments

The following table summarizes the Company's contractual obligations for the next five years and thereafter as of March 31, 2014.

	Payment Due By Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-Term Debt Obligations	$	104,890	$	787	$	2,098	$	2,098	$	99,907
Subordinated Debt Obligations	$	72,500	—		—		—		$	72,500
Capital Lease Obligations	—		—		—		—		—
Operating Lease Obligations	2,029		499		702		380		448
Purchase Obligations	1,801		1,801		—		—		—
Bareboat Charter Agreement	3,800		760		1,520		1,520		—
Total	$	185,020	$	3,847	$	4,320	$	3,998	$	172,855

As of June 11, 2014, we had aggregate purchase obligations of $19.3 million, including $3.7 million due in less than one year.

Foreign Exchange Rate Risk

We have foreign currency exposure related to the currency related translation of various financial instruments denominated in the Canadian dollar (fair value risk) and operating cash flows denominated in the Canadian dollar (cash flow risk). These exposures are associated with period to period changes in the exchange rate between the U.S. dollar and the Canadian dollar. At March 31, 2014, our liability for financial instruments with exposure to foreign currency risk was approximately CDN $54.8 million of term borrowings and CDN $nil of revolving borrowings. Although we have tried to match our indebtedness and cash flows from earnings by country, a sudden increase in the Canadian dollar exchange rates could increase the indebtedness converted to U.S. dollars before operating cash flows can make up for such a currency conversion change.

From a cash flow perspective, our operations are insulated against changes in currency rates as operations in Canada and the United States have revenues and expenditures denominated in local currencies and our operations are cash flow positive. However, as stated above, a significant portion of our financial liabilities are denominated in Canadian dollars, exposing us to currency risks related to principal payments and interest payments on such financial liability instruments.

Interest Rate Risk

We are exposed to changes in interest rates associated with our banking facilities and senior debt bearing variable interest rates under our Fourth Amended and Restated Credit Agreement, which carries interest rates which vary with Canadian Prime

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Rates and B.A. Rates for Canadian borrowings, and U.S. Prime Rates and Libor Rates on U.S. borrowings under the Term Loan Credit Agreement, which carries interest rates which vary with the Libor rates, the U.S. Prime rates and the Federal Funds rates.

In December 2012, the Company entered into two interest rate cap contracts through December 1, 2015 covering 38% of its outstanding term debt at a cap of three month Libor at 2.5% on 50% of its U.S. Term Debt borrowings and three month BA rates at 3.0% on 50% of its Canadian Term Debt borrowings. The notional amount on each of these instruments decreases in accordance with the principal payments schedule of the Third Amended and Restated Credit Agreement dated August 30, 2012.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

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Lack of Historical Operating Data for Acquired Vessels

From time to time, as opportunities arise and depending on the availability of financing, we may acquire additional secondhand drybulk carriers.

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is typically no historical financial due diligence process conducted when we acquire vessels. Accordingly, in such circumstances, we do not obtain the historical operating data for the vessels from the sellers because that information is not material to our decision to make vessel acquisitions, nor do we believe it would be helpful to potential investors in our stock in assessing our business or profitability.

Consistent with shipping industry practice, we generally treat the acquisition of a vessel as the acquisition of an asset rather than a business. In cases where a vessel services a contract of affreightment with a third party customer and the buyer desires to acquire such contract, the seller generally cannot transfer the contract to the buyer without the customer's consent. The purchase of a vessel itself typically does not transfer the contracts of affreightment serviced by such vessel because such contracts are separate service agreements between the vessel owner and its customers.

Where we identify any intangible assets or liabilities associated with the acquisition of a vessel, we allocate the purchase price of acquired tangible and intangible assets based on their relative fair values.

When we purchase a vessel and assume or renegotiate contracts of affreightment associated with the vessel, we must take the following steps before the vessel will be ready to commence operations:

• obtain the customer's consent to us as the new owner if applicable; arrange for a new crew for the vessel;

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

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

• implement a new planned maintenance program for the vessel.

The following discussion is intended to provide an understanding of how acquisitions of vessels affect our business and results of operations.

Our business is comprised of the following main elements:

• employment and operation of our drybulk vessels;

• scheduling our vessels to satisfy customer's contracts of affreightment; and

• management of the financial, general and administrative elements involved in the conduct of our business and ownership of our drybulk vessels.

The employment and operation of our vessels requires the following main components:

• vessel maintenance and repair;

• crew selection and training;

• vessel spares and stores supply;

• planning and undergoing drydocking, special surveys and other major repairs;

• organizing and undergoing regular classification society surveys;

• contingency response planning;

• onboard safety procedures auditing;

• accounting;

• vessel insurance arrangement;

• vessel scheduling;

• vessel security training and security response plans (ISPS);

• obtain ISM certification and audit for each vessel within six months of taking over a vessel;

• vessel hire management;

• vessel surveying; and

• vessel performance monitoring.

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The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires the following main components:

• management of our financial resources, including banking relationships (e.g., administration of bank loans);

• management of our accounting system and records and financial reporting;

• administration of the legal and regulatory requirements affecting our business and assets; and

• management of the relationships with our service providers and customers.

The principal factors that affect our profitability, cash flows and stockholders' return on investment include:

• rates of contracts of affreightment and charterhire;

• scheduling to match vessels with customer requirements, including dock limitation, vessel trade patterns and backhaul opportunities;

• weather conditions;

• vessel incidents;

• levels of vessel operating expenses;

• depreciation and amortization expenses;

• financing costs; and

• fluctuations in foreign exchange rates.

Critical accounting policies

Rand's significant accounting policies are presented in Note 2 to its audited consolidated financial statements, and the following summaries should be read in conjunction with the financial statements and the related notes included in this annual report on Form 10-K. While all accounting policies affect the financial statements, certain policies may be viewed as critical.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the application of certain accounting policies, many of which require the Company to make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the financial statements.

Revenue and operating expenses recognition

The Company generates revenues from freight billings under contracts of affreightment (voyage charters) generally on a rate per ton basis based on origin-destination and cargo carried. Voyage revenue is recognized ratably over the duration of a voyage based on the relative transit time in each reporting period when the following conditions are met: the Company has a signed contract of affreightment, the contract price is fixed or determinable and collection is reasonably assured. Included in freight billings are other fees such as fuel surcharges and other freight surcharges, which represent pass-through charges to customers for toll fees, lockage fees and ice breaking fees paid to other parties. Fuel surcharges are recognized ratably over the duration of the voyage, while freight surcharges are recognized when the associated costs are incurred. Freight surcharges are less than 5% of total revenue.

Marine operating expenses such as crewing costs, fuel, tugs and insurance are recognized as incurred or consumed and thereby are recognized ratably in each reporting period. Repairs and maintenance and certain other insignificant costs are recognized as incurred.

The Company subcontracts excess customer demand to other freight providers. Service to customers under such arrangements is transparent to the customer and no additional services are provided to customers. Consequently, revenues recognized for customers serviced by freight subcontractors are recognized on the same basis as described above. Costs for subcontracted freight providers, presented as “outside voyage charter fees” in the consolidated statements of operations, are recognized as incurred and therefore are recognized ratably over the voyage.

The Company accounts for sales taxes imposed on its services on a net basis in the consolidated statements of operations. In addition, all revenues are presented on a gross basis.

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Vessel acquisitions

Vessels are stated at cost, which consists of the purchase price and any material expenses incurred upon acquisition, such as initial repairs, improvements, delivery expenses and other expenditures to prepare the vessel for its initial voyage. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels. Significant financing costs incurred during the construction period of the vessels are also capitalized and included in the vessels' cost. Otherwise these amounts are charged to expense as incurred.

Intangible assets and goodwill

Intangible assets consist primarily of goodwill, financing costs, trademarks, trade names and customer relationships and contracts. Intangible Assets are amortized as follows:

Trademarks and trade names         10 years straight-line

Customer relationships and contracts     15 years straight-line

Deferred financing costs are amortized on a straight-line basis over the term of the related debt, which approximates the effective interest method.

Impairment of fixed assets

Fixed assets (e.g. property and equipment) and finite-lived intangible assets (e.g. customer lists) are tested for impairment upon the occurrence of a triggering event that indicates the carrying value of such an asset or asset groups e.g. tugs and barges, might be no longer recoverable. Examples of such triggering events include a significant disposal of a portion of such assets, an adverse change in the market involving the business employing the related asset(s), a significant decrease in the benefits realized from an acquired business, difficulties or delays in integrating the business, and a significant change in the operations of an acquired business.

Once a triggering event has occurred, the recoverability test employed is based on whether the intent is to hold the asset(s) for continued use or to hold the asset(s) for sale. If the intent is to hold the asset(s) for continued use, the recoverability test involves a comparison of undiscounted cash flows excluding interest expense, against the carrying value of the asset(s) as an initial test. If the carrying value of such asset(s) exceeds the undiscounted cash flow, the asset(s) would be deemed to be impaired. Impairment would then be measured as the difference between the fair value of the fixed or amortizing intangible asset and the carrying value of such asset(s). The Company generally determines fair value by using the discounted cash flow method. If the intent is to hold the asset(s) for sale and certain other criteria are met (i.e., the asset(s) can be disposed of currently, appropriate levels of authority have approved the sale and there is an actively pursuing buyer), the impairment test is a comparison of the asset's carrying value to its fair value less costs to sell. To the extent that the carrying value is greater than the asset's fair value less costs to sell, an impairment loss is recognized for the difference. The Company has determined that there were no adverse changes in our markets or other triggering events that could affect the valuation of our assets during the fiscal year ended March 31, 2014.

Impairment of goodwill

The Company annually reviews the carrying value of goodwill to determine whether impairment may exist. Accounting Standards Codification (“ASC”) 350 “Intangibles-Goodwill and Other” and Accounting Standards Update (“ASU”) 2011-08 Intangibles—Goodwill and Other (Topic 350) - Testing Goodwill for Impairment requires that goodwill and certain intangible assets be assessed annually for impairment using fair value measurement techniques. Specifically, goodwill impairment is determined using a three-step process. The first step of the goodwill impairment test is to perform a qualitative assessment before calculating the fair value of the reporting unit when testing goodwill for impairment. If the fair value of the reporting unit is determined, based on qualitative factors, to be more likely than not less than the carrying amount of the reporting unit, then entities are required to perform the two-step goodwill impairment test. The second step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The estimates of fair value of the Company’s two reporting units, which are the Company’s Canadian and US operations (excluding the parent), are determined using various valuation techniques with the primary techniques being a discounted cash flow analysis and peer

43

analysis. A discounted cash flow analysis requires various judgmental assumptions, including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s forecast and long-term estimates. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The third step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.  As of March 31, 2014, the Company conducted the qualitative assessment and determined that the fair value of its two reporting units exceeded their carrying amounts and the remaining two-step impairment testing was therefore not necessary.  The Company has determined that there were no adverse changes in our markets or other triggering events that indicated that it is more likely than not that the fair value of our reporting units was less than the carrying value of our reporting units during the twelve month period ended March 31, 2014.

Income taxes

The Company accounts for income taxes in accordance with ASC 740 “Income Taxes”, which requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax bases of tax assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.  A valuation allowance is recognized, if necessary, to measure tax benefits to the extent that, based on available evidence, it is more likely than not that they will be realized.

The Company classifies interest expense related to income tax liabilities, when applicable, as part of the interest expense in its consolidated statements of operations rather than income tax expense.  To date, the Company has not incurred material interest expenses or penalties relating to assessed taxation amounts.

There is a current examination taking place by the U.S. taxing authorities for the financial year 2012 with no adjustments proposed as of the date of this Annual Report on Form 10-K. Lower Lakes was examined by the Canadian taxing authority for the tax years 2009 and 2010 and such examination is now complete.  This audit did not result in any material adjustments for such periods. The Company's primary U.S. state income tax jurisdictions are Illinois, Indiana, Michigan, Minnesota, Pennsylvania, Wisconsin and New York and its only international jurisdictions are Canada and its province of Ontario. The following table summarizes the open fiscal tax years for each major jurisdiction:

Jurisdiction	Open Tax Years
Federal (USA)	2010 – 2013
Various states	2010 – 2013
Federal (Canada)	2009 – 2013
Ontario	2009 – 2013

Stock-based compensation

The Company recognizes compensation expense for all newly granted awards and awards modified, repurchased or

cancelled based on fair value at the date of grant.

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Recently Issued Pronouncements

Disclosures about offsetting assets and liabilities

In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about offsetting assets and liabilities" ("ASU 2011-11"). ASU 2011-11 requires entities to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on an entity's financial position. ASU 2011-11 requires enhanced disclosure by requiring improved information about financial instruments and derivative instruments that are either (i) offset in accordance with current literature or (ii) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current literature. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Company adopted ASU 2010-11 as of April 1, 2013. Such adoption had no impact on the Company's consolidated financial statements.

Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, ASU 2013-05 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in ASU 2013-05 resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes referred to as step acquisitions) involving a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a material effect on the Company's consolidated financial statements.

Presentation of Unrecognized Tax Benefits

In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss ("NOL") Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset in the financial statements for an NOL carryforward, a similar tax loss, or a tax credit carryforward except in circumstances when the carryforward or tax loss is not available at the reporting date under the tax laws of the applicable jurisdiction to settle any additional income taxes or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purposes. When those circumstances exist, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new financial statement presentation provisions relating to this update are prospective and effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. The Company does not anticipate a material impact to its consolidated financial statements related to this guidance.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our primary market risk is the potential impact of changes in interest rates on our variable rate borrowings. Excluding the interest rate cap agreements discussed below, as of March 31, 2014, approximately $104.9 million of our senior debt bore interest at interest rates ranging from 4.24% to 5.26% and $72.6 million of our subordinated debt bore interest at 10.75%. Based on our total outstanding floating rate debt as of March 31, 2014 and subject to the interest rate cap agreements discussed below, the impact of a 1% change in interest rates would result in a change in interest expense, and a corresponding impact on income before income taxes, of approximately $0.6 million annually on the Company's U.S. term debt and subordinated debt borrowings and approximately $0.5 million annually on the Company's Canadian term debt and subordinated debt borrowings.

As of March 31, 2014, the Company had two outstanding interest rate cap agreements covering 38% of its outstanding term debt at a cap of three month Libor at 2.5% on 50% of its U.S. term debt borrowings and three month BA rates at 3.0% on 50% of its Canadian term debt borrowings. The notional amount on each of these instruments will decrease with each previously scheduled principal payment under the Third Amended and Restated Credit Agreement. As of March 31, 2014, we were paying a weighted average fixed rate of 7.2% (including applicable margins). The primary objective of these contracts is to reduce the aggregate risk of higher interest costs associated with variable rate debt. We are exposed to credit related losses in the event of non-performance by counterparties to these instruments; however, the counterparties are major financial institutions and we consider such risk of loss to be minimal. We do not hold or issue derivative financial instruments for trading purposes.

Fuel Price Risk

We partially mitigate our direct fuel price risk through fuel price escalation clauses, which are included in substantially all of Lower Lakes' contracts of affreightment and which enable Lower Lakes to pass the majority of its increased fuel costs on to its customers. Additionally, fuel costs are only one element of the potential movement in spot market pricing, which generally respond only to long-term changes in fuel pricing. We also believe that fuel is a significant element of the economic model of our vendors on the Great Lakes, with increases passed through to us in the form of higher costs for external shifting and towing.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data of Rand Logistics, Inc. required by this Item are described in Item 15 of this Annual Report on Form 10-K and are presented beginning on page F-1.

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Our senior management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d - 15(e) under the Exchange Act), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures.

We have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, with the participation of our Principal Executive Officer and Chief Financial Officer, as well as other members of our management. Based on this evaluation, our Principal Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2014.

Changes in Internal Control Over Financial Reporting

No change occurred in our internal controls concerning financial reporting during the fourth quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Management's Annual Report on Internal Control Over Financial Reporting

Our senior management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934), designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has evaluated the effectiveness of its internal control over financial reporting as of March 31, 2014 based on the criteria set forth in a report entitled 1992 Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, we have concluded that, as of March 31, 2014, our internal control over financial reporting is effective based on those criteria.

Our independent registered public accounting firm, Grant Thornton LLP, has issued an audit report on the effectiveness of our internal control over financial reporting and its report is included herein.

ITEM 9B. OTHER INFORMATION

None.

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ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to this item is incorporated by reference from our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 11.EXECUTIVE COMPENSATION

Information with respect to this item is incorporated by reference from our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table provides certain information, as of June 11, 2014, about our common stock that may be issued upon the exercise of options, warrants and rights, as well as the issuance of restricted shares granted to employees, consultants or members of our Board of Directors, under our existing equity compensation plan, the Rand Logistics, Inc. 2007 Long-Term Incentive Plan.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan
Equity compensation plans approved by security holders	479,785	$5.66	589,066
Equity compensation plans not approved by security holders	—	—	—
Total	479,785	$5.66	589,066

Additional information with respect to this item is incorporated by reference from our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to this item is incorporated by reference from our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated by reference from our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

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ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. The financial statements at page F-1 are filed as a part of this Annual Report on Form 10-K.

2. Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

3. Exhibits included or incorporated herein:

See Exhibit Index below.

Exhibit Index

Exhibit No.	Description
2.1	Stock Purchase Agreement, dated as of September 2, 2005, among Rand Acquisition Corporation, LL Acquisition Corp. and the stockholders of Lower Lakes Towing Ltd. (Omitted: Appendices-Seller Disclosure Schedule and Purchase Seller Disclosure Schedule; Exhibits - 1) Allocation among Sellers, 2) Employment Agreement, 3) Escrow Agreement, 4) Release, 5) Opinion of Sellers' Counsel, 6) Opinion of Rand's and Purchaser's Counsel, 7) Section 116 Escrow Agreement, 8) Company Indebtedness, 9) Seller's Addresses, 10) Working Capital Statement, 11) Management Bonus Program, 12) Sellers Several Liability Allocation, 13) Financing Commitments (filed separately), 14) Bonus Program Participant Agreement and 15) Redemption Agreement). (1)
2.2	Amendment to Stock Purchase Agreement, dated December 29, 2005. (2)
2.3	Amendment to Stock Purchase Agreement, dated January 27, 2006. (3)
2.4	Amendment to Stock Purchase Agreement, dated February 27, 2006. (4)
3.1	Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on March 3, 2006. (6)
3.2	Amended and Restated Certificate of Designations, filed with the Secretary of State of the State of Delaware on August 8, 2006. (7)
3.3	Second Amended and Restated By-laws. (8)
4.1	Specimen Common Stock Certificate. (5)
10.1	Rand Logistics, Inc. 2007 Long-Term Incentive Plan, dated July 26, 2007. (9)
10.2	Employment Agreement, dated October 8, 2009, by and between Scott Bravener and Lower Lakes Towing Ltd. (10)
10.3	Form of Restricted Share Award Agreement by and between Rand Logistics, Inc. and Scott Bravener. (10)
10.4	Second Amended and Restated Credit Agreement, dated September 28, 2011, among Lower Lakes Towing Ltd, Lower Lakes Transportation Company and Grand River Navigation Company, Inc., as borrowers, Rand LL Holdings Corp., Rand Finance Corp. and Rand Logistics, Inc., as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders. (11)
10.5	First Amendment to Second Amended and Restated Credit Agreement, dated as of December 1, 2011, by and among Lower Lakes Towing Ltd., Lower Lakes Transportation Company, Grand River Navigation Company, Inc., the other Credit Parties signatory thereto, the other Lenders signatory thereto and General Electric Capital Corporation, as Agent. (12)
10.6	Third Amended and Restated Loan Agreement, dated August 30, 2012, among Lower Lakes Towing Ltd, Lower Lakes Transportation Company, Grand River Navigation Company, Inc. and Black Creek Shipping Company, Inc. as borrowers, Rand LL Holdings Corp., Rand Finance Corp., Black Creek Shipping Holding Company, Inc. and Rand Logistics, Inc., as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders. (13)

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10.7	First Amendment to Third Amended and Restated Credit Agreement, dated March 29, 2013, among Lower Lakes Towing Ltd., Lower Lakes Transportation Company, Grand River Navigation Company, Inc. and Black Creek Shipping Company, Inc. as borrowers, Rand LL Holdings Corp., Rand Finance Corp., Black Creek Shipping Holding Company, Inc. and Rand Logistics, Inc., as guarantors, General Electric Capital Corporation, as agent and lender, and certain other lenders. (14)
10.8	Employment Agreement, dated June 12, 2013, by and between Rand Logistics, Inc. and Laurence S. Levy. (15)
10.9	Employment Agreement, dated June 12, 2013, by and between Rand Logistics, Inc. and Edward Levy. (15)
10.10	Employment Agreement, dated June 12, 2013, by and between Rand Logistics, Inc. and Joseph W. McHugh, Jr. (15)
10.11	Fourth Amended and Restated Credit Agreement, dated March 11, 2014, among Lower Lakes Towing Ltd, Lower Lakes Transportation Company, Grand River Navigation Company, Inc. and Black Creek Shipping Company, Inc. as borrowers, Rand LL Holdings Corp., Rand Finance Corp., Black Creek Shipping Holding Company, Inc., Lower Lakes Ship Repair Company Ltd., Lower Lakes Towing (17) Ltd. and Rand Logistics, Inc., as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders. (16)
10.12	Term Loan Credit Agreement, dated as of March 11, 2014, among Lower Lakes Towing Ltd, , Grand River Navigation Company, Inc. and Black Creek Shipping Company, Inc. as borrowers, Rand LL Holdings Corp., Rand Finance Corp., Black Creek Shipping Holding Company, Inc. and Rand Logistics, Inc., as guarantors, Guggenheim Corporate Funding, LLC, as agent and Lender, and certain other lenders. (16)
10.13	Intercreditor Agreement, dated as of March 11, 2014, by and among General Electric Capital Corporation, in its capacity as agent for the lenders under the Fourth Amended and Restated Credit Agreement, Guggenheim Corporate Funding, LLC, in its capacity as administrative agent for the lenders under the Term Loan Credit Agreement, Lower Lakes Towing Ltd, Lower Lakes Transportation Company, Grand River Navigation Company, Inc. and Black Creek Shipping Company, Inc. as borrowers, and Rand LL Holdings Corp., Rand Finance Corp., Black Creek Shipping Holding Company, Inc., Lower Lakes Ship Repair Company Ltd., Lower Lakes Towing (17) Ltd. and Rand Logistics, Inc., as obligors. (16)
10.14	Memorandum of Agreement, dated March 11, 2014, by and between Uni-Tankers M/T “Lalanida Swan” ApS and Lower Lakes Towing Ltd. (16)
21	Subsidiaries of Rand. (17)
23	Consent of Grant Thornton LLP, independent registered public accounting firm. (17)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (17)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (17)
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (17)
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (17)
101.INS	XBRL Instance Document (17)
101.SCH	XBRL Taxonomy Extension Schema Document (17)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (17)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (17)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (17)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (17)
(1)	Incorporated by reference to the Registrant's Amended Quarterly Report on Form 10-QSB/A, filed with the Securities and Exchange Commission on January 20, 2006.
(2)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 3, 2006.
(3)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 31, 2006.

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(4)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 1, 2006.
(5)	Incorporated by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-117051).
(6)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 9, 2006.
(7)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 10, 2006.
(8)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 17, 2007.
(9)	Incorporated by reference to the Registrant's Proxy Statement for the Annual Meeting of Stockholders held on September 21, 2012, filed with the Securities and Exchange Commission on July 27, 2012.
(10)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 9, 2009.
(11)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 4, 2011.
(12)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 6, 2011.
(13)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 31, 2012.
(14)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 1, 2013.
(15)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 14, 2013.
(16)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 17, 2014.
(17)	Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RAND LOGISTICS, INC.
By:	/s/ Laurence S. Levy
	Laurence S. Levy
	Executive Chairman

Date: June 11, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on behalf of the Registrant, and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Laurence S. Levy	Executive Chairman	June 11, 2014
Laurence S. Levy	(Principal Executive Officer)
/s/ Edward Levy	President	June 11, 2014
Edward Levy
/s/ Joseph W. McHugh, Jr.	Vice President	June 11, 2014
Joseph W. McHugh, Jr.	and Chief Financial Officer
	(Principal Financial and Accounting Officer)
/s/ Scott Bravener	Director	June 11, 2014
Scott Bravener
/s/ H. Cabot Lodge, III	Director	June 11, 2014
H. Cabot Lodge, III
/s/ Jonathan Brodie	Director	June 11, 2014
Jonathan Brodie
/s/ Michael D. Lundin	Director	June 11, 2014
Michael D. Lundin
/s/ John Binion	Director	June 11, 2014
John Binion

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and

Stockholders of Rand Logistics, Inc.

We have audited the accompanying consolidated balance sheets of Rand Logistics, Inc. (a Delaware corporation) and its subsidiaries (the “Company”) as of March 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended March 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rand Logistics, Inc. and its subsidiaries as of March 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of March 31, 2014, based on criteria established in the 1992 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 11, 2014 expressed an unqualified opinion.

Mississauga, Ontario, Canada	/s/ Grant Thornton LLP
June 11, 2014	Chartered Accountants
	Licensed Public Accountants

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and

Stockholders of Rand Logistics, Inc.

We have audited the internal control over financial reporting of Rand Logistics, Inc. (a Delaware Corporation) and its subsidiaries (the “Company”) as of March 31, 2014, based on criteria established in the 1992 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2014, based on criteria established in the 1992 Internal Control - Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended March 31, 2014, and our report dated June 11, 2014 expressed an unqualified opinion on those financial statements.

Mississauga, Ontario, Canada	/s/ Grant Thornton LLP
June 11, 2014	Chartered Accountants
	Licensed Public Accountants

F-2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

RAND LOGISTICS, INC.

Consolidated Balance Sheets

(U.S. Dollars 000’s except for Shares and Per Share data)

	March 31, 2014			March 31, 2013
ASSETS
CURRENT
Cash and cash equivalents	$	2,602		$	848
Accounts receivable, net (Note 4)	2,629			5,486
Income tax receivable	96			113
Loan to employee	250			250
Prepaid expenses and other current assets (Notes 5 and 8)	7,344			7,842
Deferred income taxes (Note 6)	121			262
Total current assets	13,042			14,801
PROPERTY AND EQUIPMENT, NET (Note 7)	215,487			219,084
OTHER ASSETS (Note 8)	730			1,050
DEFERRED INCOME TAXES (Note 6)	—			2,203
DEFERRED DRYDOCK COSTS, NET (Note 9)	9,321			10,895
INTANGIBLE ASSETS, NET (Note 10)	16,233			12,612
GOODWILL (Note 10)	10,193			10,193
Total assets	$	265,006		$	270,838
LIABILITIES
CURRENT
Bank indebtedness (Note 12)	$	—		$	5,997
Accounts payable	11,792			21,697
Accrued liabilities (Note 13)	7,956			21,316
Income taxes payable	100			—
Deferred income taxes (Note 6)	35			173
Current portion of deferred payment liability (Note 11)	499			431
Current portion of long-term debt  (Note 14)	787			3,630
Total current liabilities	21,169			53,244
LONG-TERM PORTION OF DEFERRED PAYMENT LIABILITY (Note 11)	1,100			1,631
LONG-TERM DEBT  (Note 14)	104,103			139,760
SUBORDINATED DEBT (Note 15)	72,500			—
OTHER LIABILITIES	253			253
DEFERRED INCOME TAXES (Note 6)	5,134			3,532
Total liabilities	204,259			198,420
COMMITMENTS AND CONTINGENCIES (Notes 16 and 17)
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, Authorized 1,000,000 shares, Issued and outstanding 300,000 shares (Note 18)	14,900			14,900
Common stock, $.0001 par value Authorized 50,000,000 shares, Issuable and outstanding 17,933,859 shares (Note 18)	1			1
Additional paid-in capital	89,486			89,077
Accumulated deficit	(40,277		)	(32,341		)
Accumulated other comprehensive (loss) income	(3,363		)	781
Total stockholders’ equity	60,747			72,418
Total liabilities and stockholders’ equity	$	265,006		$	270,838

The accompanying notes are an integral part of these consolidated financial statements.

F-3

RAND LOGISTICS, INC.

Consolidated Statements of Operations

(U.S. Dollars 000’s except for Shares and Per Share data)

	Year ended March 31, 2014			Year ended March 31, 2013			Year ended March 31, 2012
REVENUE
Freight and related revenue	$	128,145		$	117,797		$	107,618
Fuel and other surcharges	26,475			37,404			38,886
Outside voyage charter revenue	1,184			1,437			1,321
TOTAL REVENUE	155,804			156,638			147,825
EXPENSES
Outside voyage charter fees (Note 19)	1,086			1,447			1,312
Vessel operating expenses	102,804			104,896			97,274
Repairs and maintenance	7,191			8,350			7,179
General and administrative	12,159			13,477			11,024
Depreciation	16,994			15,373			11,581
Amortization of drydock costs	3,290			3,497			3,048
Amortization of intangibles	1,263			1,310			1,319
Loss (gain) on foreign exchange	68			186			(159		)
	144,855			148,536			132,578
OPERATING INCOME	10,949			8,102			15,247
OTHER (INCOME) AND EXPENSES
Interest expense (Note 20)	9,373			10,171			9,327
Interest income	(7		)	(9		)	(6		)
Gain on interest rate swap contracts (Note 22)	—			(1,087		)	(771		)
Loss on extinguishment of debt	1,267			3,339			—
	10,633			12,414			8,550
INCOME (LOSS) BEFORE INCOME TAXES	316			(4,312		)	6,697
PROVISION (RECOVERY) FOR INCOME TAXES (Note 6)
Current	117			(134		)	208
Deferred	4,706			(359		)	(1,634		)
	4,823			(493		)	(1,426		)
NET (LOSS) INCOME BEFORE PREFERRED STOCK DIVIDENDS	(4,507		)	(3,819		)	8,123
PREFERRED STOCK DIVIDENDS	3,429			3,173			2,806
NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS	$	(7,936	)	$	(6,992	)	$	5,317
Net (loss) income per share basic and diluted (Note 23)	$	(0.44	)	$	(0.39	)	$	0.33
Weighted average shares basic and diluted	17,912,647			17,740,372			16,336,930

The accompanying notes are an integral part of these consolidated financial statements.

F-4

RAND LOGISTICS, INC.

Consolidated Statements of Comprehensive (Loss) Income

(U.S. Dollars 000’s except for Shares and Per Share data)

	Year ended March 31, 2014		Year ended March 31, 2013		Year ended March 31, 2012
NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS	(4,507	)	(3,819	)	8,123
Other comprehensive loss:
Change in foreign currency translation adjustment	(4,144	)	(1,159	)	(651	)
COMPREHENSIVE (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS	(8,651	)	(4,978	)	7,472

The accompanying notes are an integral part of these consolidated financial statements.

F-5

RAND LOGISTICS, INC.

Statements of Stockholders' Equity

(U.S. Dollars 000’s except for Shares and Per Share data)

	Common Stock			Preferred Stock			Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balances, March 31, 2011	14,779,339	$	1	300,000	$	14,900	$	71,503	$	(30,666	)	$	2,591		$	58,329
Net Income	—	—		—	—		—		8,123			—			8,123
Preferred stock dividends	—	—		—	—		—		(2,806		)	—			(2,806		)
Restricted stock issued (Note 18)	86,217	—		—	—		685		—			—			685
Unrestricted stock issued (Note 18)	10,722	—		—	—		75		—			—			75
Stock options issued (Note 18)	—	—		—	—		65		—			—			65
Stock issued (Note 18)	2,800,000	—		—	—		15,525		—			—			15,525
Translation adjustment	—	—		—	—		—		—			(651		)	(651		)
Balances, March 31, 2012	17,676,278	$	1	300,000	$	14,900	$	87,853	$	(25,349	)	$	1,940		$	79,345
Net Loss	—	—		—	—		—		(3,819		)	—			(3,819		)
Preferred stock dividends	—	—		—	—		—		(3,173		)	—			(3,173		)
Stock issued in lieu of cash compensation (Note 18)	94,993	—		—	—		559		—			—			559
Restricted stock issued (Note 18)	78,141	—		—	—		590		—			—			590
Unrestricted stock issued (Note 18)	10,854	—		—	—		75		—			—			75
Translation adjustment	—	—		—	—		—		—			(1,159		)	(1,159		)
Balances, March 31, 2013	17,860,266	$	1	300,000	$	14,900	$	89,077	$	(32,341	)	$	781		$	72,418
Net Loss	—	—		—	—		—		(4,507		)	—			(4,507		)
Preferred stock dividends	—	—		—	—		—		(3,429		)	—			(3,429		)
Restricted stock issued (Note 18)	54,337	—		—	—		301		—			—			301
Unrestricted stock issued (Note 18)	19,256	—		—	—		108		—			—			108
Translation adjustment	—	—		—	—		—		—			(4,144		)	(4,144		)
Balances, March 31, 2014	17,933,859	$	1	300,000	$	14,900	$	89,486	$	(40,277	)	$	(3,363	)	$	60,747

The accompanying notes are an integral part of these consolidated financial statements.

F-6

RAND LOGISTICS, INC.

Consolidated Statements of Cash Flows

(U.S. Dollars 000’s except for Shares and Per Share data)

	Year ended March 31, 2014			Year ended March 31, 2013			Year ended March 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(4,507	)	$	(3,819	)	$	8,123
Adjustments to reconcile net (loss) income to net cash provided  by operating activities:
Depreciation and amortization of drydock costs	20,284			18,870			14,629
Amortization of intangibles and deferred financing costs	1,847			2,124			2,337
Deferred income taxes	4,706			(359		)	(1,634		)
Gain on interest rate swap contracts	—			(1,087		)	(771		)
Loss on extinguishment of debt	1,267			3,339			—
Equity compensation granted	409			1,224			825
Deferred drydock costs paid	(3,700		)	(3,782		)	(6,166		)
Changes in operating assets and liabilities:
Accounts receivable	2,857			(143		)	1,648
Prepaid expenses and other current assets	498			(1,332		)	(3,536		)
Accounts payable and accrued liabilities	(12,942		)	5,258			4,699
Other assets and liabilities	320			489			(1,162		)
Income taxes payable (net)	117			(189		)	125
	11,156			20,593			19,117
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(9,480		)	(39,091		)	(22,918		)
Purchase of vessel	(7,635		)	—			(28,936		)
	(17,115		)	(39,091		)	(51,854		)
CASH FLOWS FROM FINANCING ACTIVITIES
Deferred payment liability obligation	(463		)	(431		)	(395		)
Proceeds from equity offering	—			—			15,525
Proceeds from long-term debt	177,500			15,298			29,121
Repayment of subordinated note	—			—			(1,482		)
Long-term debt repayment	(139,369		)	(4,614		)	(5,836		)
Debt financing cost	(6,807		)	(2,207		)	(3,594		)
Proceeds from bank indebtedness	21,724			24,270			27,052
Repayment of bank indebtedness	(27,413		)	(18,275		)	(26,452		)
Payment of preferred stock dividend	(16,885		)	—			—
	8,287			14,041			33,939
EFFECT OF FOREIGN EXCHANGE RATES ON CASH	(574		)	(258		)	(147		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1,754			(4,715		)	1,055
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	848			5,563			4,508
CASH AND CASH EQUIVALENTS, END OF  PERIOD	$	2,602		$	848		$	5,563
SUPPLEMENTAL CASH FLOW DISCLOSURE
Payments for interest	$	8,832		$	10,010		$	8,249
Unpaid purchases of property and equipment	$	9,081		$	4,931		$	8,620
Unpaid purchases of deferred drydock cost	$	646		$	2,196		$	1,321
Payment of income taxes	$	—		$	34		$	60
Capitalized interest	$	—		$	538		$	172

The accompanying notes are an integral part of these consolidated financial statements.

F-7

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

1.     DESCRIPTION OF BUSINESS

Rand Logistics, Inc. (the “Company”) is a shipping company that, through its operating subsidiaries, is engaged in the operation of bulk carriers on the Great Lakes. Rand Acquisition Corporation was incorporated in Delaware on June 2, 2004 as a blank check company whose objective was to acquire an operating business. On March 3, 2006, the Company, through its wholly-owned subsidiary, LL Acquisition Corp., acquired all of the outstanding shares of capital stock of Lower Lakes Towing Ltd. (“Lower Lakes Towing”) from the shareholders of Lower Lakes Towing, in accordance with the terms of the Stock Purchase Agreement, dated September 2, 2005, by and among the Company, LL Acquisition Corp. and the stockholders of Lower Lakes Towing, as amended. Immediately following completion of the acquisition, and in conjunction therewith, LL Acquisition Corp. and Lower Lakes Towing were amalgamated under Canadian law and the shares of capital stock of Grand River Navigation Company, Inc. (“Grand River”) and Lower Lakes Transportation Company (“Lower Lakes Transportation”) owned by Lower Lakes Towing at the time of the amalgamation were transferred to the Company's wholly-owned subsidiary, Rand LL Holdings Corp. (“Rand LL Holdings”). Upon completion of such transfer, the outstanding shares of Grand River not owned by Rand LL Holdings were redeemed in accordance with the terms of the Redemption Agreement, dated September 2, 2005, between Grand River and GR Holdings, Inc. Following completion of the foregoing transactions, as of March 3, 2006, each of Lower Lakes Towing, Grand River and Lower Lakes Transportation became indirect, wholly-owned subsidiaries of the Company. In conjunction with the foregoing transactions, as of March 3, 2006, the Company, formerly known as Rand Acquisition Corporation, changed its name to Rand Logistics, Inc.

On February 4, 2011, Black Creek Shipping Company, Inc. (“Black Creek”), an indirect wholly-owned subsidiary of the Company, and Black Creek Shipping Holding Company, Inc. (“Black Creek Holdings”), a wholly-owned subsidiary of the Company and the parent corporation of Black Creek, were incorporated to acquire certain assets discussed in Note 11.

On December 27, 2012, Lower Lakes Ship Repair Company Ltd. ("Lower Lakes Ship Repair"), a wholly-owned subsidiary of Lower Lakes Towing was incorporated under the laws of Canada. This subsidiary provides ship repair services exclusively for the Company.

On March 11, 2014, Lower Lakes Towing (17) Ltd. ("Lower Lakes (17)"), a wholly-owned subsidiary of Lower Lakes Towing, was incorporated under the laws of Canada.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of Rand Finance Corp. (“Rand Finance”), Rand LL Holdings and Black Creek Holdings, wholly-owned subsidiaries of the Company, the accounts of Lower Lakes Towing, Lower Lakes Transportation and Grand River, each of which is a wholly-owned subsidiary of Rand LL Holdings, Black Creek, which is a wholly owned subsidiary of Black Creek Holdings, Lower Lakes Ship Repair and Lower Lakes (17), each of which is a wholly-owned subsidiary of Lower Lakes Towing.

The consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F-8

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable and concentration of credit risk

The majority of the Company’s accounts receivable are amounts due from customers and other accounts receivable, including insurance and Harmonized Sales Tax refunds.  The majority of accounts receivable are due within 30 to 60 days and are stated at amounts due from customers net of an allowance for doubtful accounts. The Company extends credit to its customers based upon its assessment of their creditworthiness and past payment history. Accounts outstanding longer than the contractual payment terms are considered past due. The Company has historically had no significant bad debts. Interest is not accrued on outstanding receivables.

Revenue and operating expenses recognition

The Company generates revenues from freight billings under contracts of affreightment (voyage charters) generally on a rate per ton basis based on origin-destination and cargo carried. Voyage revenue is recognized ratably over the duration of a voyage based on the relative transit time in each reporting period when the following conditions are met: the Company has a signed contract of affreightment, the contract price is fixed or determinable and collection is reasonably assured.  Included in freight billings are other fees such as fuel surcharges and other freight surcharges, which represent pass-through charges to customers for toll fees, lockage fees and ice breaking fees paid to other parties.  Fuel surcharges are recognized ratably over the duration of the voyage, while freight surcharges are recognized when the associated costs are incurred. Freight surcharges are less than 5% of total revenue.

Marine operating expenses such as crewing costs, fuel, tugs and insurance are recognized as incurred or consumed and thereby are recognized ratably in each reporting period. Repairs and maintenance and certain other insignificant costs are recognized as incurred.

The Company subcontracts excess customer demand to other freight providers.  Service to customers under such arrangements is transparent to the customer and no additional services are provided to customers.  Consequently, revenues recognized for customers serviced by freight subcontractors are recognized on the same basis as described above.  Costs for subcontracted freight providers, presented as “outside voyage charter fees” in the consolidated statements of operations, are recognized as incurred and therefore are recognized ratably over the voyage.

The Company accounts for sales taxes imposed on its services on a net basis in the consolidated statements of operations.

In addition, all revenues are presented on a gross basis.

Vessel acquisitions

Vessels are stated at cost, which consists of the purchase price and any material expenses incurred upon acquisition, such as initial repairs, improvements, delivery expenses and other expenditures to prepare the vessel for its initial voyage. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels. Significant financing costs incurred during the construction period of the vessels are also capitalized and included in the vessels' cost.

Fuel and lubricant inventories

Raw materials, fuel and certain operating supplies are accounted for on a first-in, first-out cost method (based on monthly averages). Raw materials and fuel are stated at the lower of actual cost (first-in, first-out method) or market. Operating supplies are stated at actual cost or average cost.

F-9

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible assets and goodwill

Intangible assets consist primarily of goodwill, deferred financing costs, trademarks, trade names and customer relationships and contracts. Intangible assets are amortized as follows:

Trademarks and trade names	10 years straight-line
Customer relationships and contracts	15 years straight-line

Deferred financing costs are amortized on a straight-line basis over the term of the related debt, which approximates the effective interest method.

Property and equipment

Property and equipment are recorded at cost.  Depreciation methods for property and equipment are as follows:

Vessels	5 - 25 years straight-line
Leasehold improvements	7 - 11 years straight-line
Vehicles	20% declining-balance
Furniture and equipment	20% declining-balance
Computer equipment	45% declining-balance
Communication equipment	20% declining-balance

Impairment of fixed assets

Fixed assets (e.g. property and equipment) and finite-lived intangible assets (e.g. customer lists) are tested for impairment upon the occurrence of a triggering event that indicates the carrying value of such an asset or asset group (e.g. tugs and barges), might be no longer recoverable. Examples of such triggering events include a significant disposal of a portion of such assets, an adverse change in the market involving the business employing the related asset(s), a significant decrease in the benefits realized from an acquired business, difficulties or delays in integrating the business, and a significant change in the operations of an acquired business.

Once a triggering event has occurred, the recoverability test employed is based on whether the intent is to hold the asset(s) for continued use or to hold the asset(s) for sale. If the intent is to hold the asset(s) for continued use, the recoverability test involves a comparison of undiscounted cash flows excluding interest expense, against the carrying value of the asset(s) as an initial test. If the carrying value of such asset(s) exceeds the undiscounted cash flow, the asset(s) would be deemed to be impaired. Impairment would then be measured as the difference between the fair value of the fixed or amortizing intangible asset and the carrying value of such asset(s). The Company generally determines fair value by using the discounted cash flow method. If the intent is to hold the asset(s) for sale and certain other criteria are met (i.e. the asset(s) can be disposed of currently, appropriate levels of authority have approved the sale and there is an actively pursuing buyer), the impairment test is a comparison of the asset’s carrying value to its fair value less costs to sell. To the extent that the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. The Company has determined that there were no adverse changes in our markets or other triggering events that could affect the valuation of our assets during the twelve month period ended March 31, 2014.

F-10

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of goodwill

The Company annually reviews the carrying value of goodwill to determine whether impairment may exist. Accounting Standards Codification (“ASC”) 350 “Intangibles-Goodwill and Other” and Accounting Standards Update (“ASU”) 2011-08 Intangibles—Goodwill and Other (Topic 350) - Testing Goodwill for Impairment requires that goodwill and certain intangible assets be assessed annually for impairment using fair value measurement techniques. Specifically, goodwill impairment is determined using a three-step process. The first step of the goodwill impairment test is to perform a qualitative assessment before calculating the fair value of the reporting unit when testing goodwill for impairment. If the fair value of the reporting unit is determined, based on qualitative factors, to be more likely than not less than the carrying amount of the reporting unit, then entities are required to perform the two-step goodwill impairment test. The second step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The estimates of fair value of the Company’s two reporting units, which are the Company’s Canadian and US operations (excluding the parent), are determined using various valuation techniques with the primary techniques being a discounted cash flow analysis and peer analysis. A discounted cash flow analysis requires various judgmental assumptions, including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s forecast and long-term estimates. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The third step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.  As of March 31, 2014, the Company conducted the qualitative assessment and determined that the fair value of its two reporting units exceeded their carrying amounts and the remaining two-step impairment testing was therefore not necessary.  The Company has determined that there were no adverse changes in our markets or other triggering events that indicated that it is more likely than not that the fair value of our reporting units was less than the carrying value of our reporting units during the twelve month period ended March 31, 2014.

Drydock costs

Drydock costs incurred during statutory Canadian and United States certification processes are capitalized and amortized on a straight-line basis over the benefit period, which is generally 60 months. Drydock costs include costs of work performed by third party shipyards and subcontractors and other direct expenses to complete the mandatory certification process.

Repairs and maintenance

The Company’s vessels require repairs and maintenance each year to ensure the fleet is operating efficiently during the shipping season.  The majority of repairs and maintenance are completed in January, February, and March of each year when the vessels are inactive.  The Company expenses such routine repairs and maintenance costs.  Significant repairs to the Company’s vessels (whether owned or available to the Company under a time charter), such as major engine overhauls and major hull steel repairs, are capitalized and amortized over the remaining useful life of the upgrade or asset repaired, or the remaining lease term.

F-11

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes

The Company accounts for income taxes in accordance with ASC 740 “Income Taxes”, which requires the determination of deferred tax assets and liabilities based on the differences between the financial statement and income tax bases of tax assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.  A valuation allowance is recognized, if necessary, to measure tax benefits to the extent that, based on available evidence, it is more likely than not that they will be realized.

The Company classifies interest expense related to income tax liabilities, when applicable, as part of the interest expense in its consolidated statements of operations rather than income tax expense.  To date, the Company has not incurred material interest expenses or penalties relating to assessed taxation amounts.

There is a current examination taking place by the U.S. taxing authorities for the financial year 2012 with no adjustments proposed as of the date of this Annual Report on Form 10-K. Lower Lakes was examined by the Canadian taxing authority for the tax years 2009 and 2010 and such examination is now complete.  This audit did not result in any material adjustments for such periods. The Company's primary U.S. state income tax jurisdictions are Illinois, Indiana, Michigan, Minnesota, Pennsylvania, Wisconsin and New York and its only international jurisdictions are Canada and its province of Ontario. The following table summarizes the open fiscal tax years for each major jurisdiction:

Jurisdiction	Open Tax Years
Federal (USA)	2010 – 2013
Various states	2010 – 2013
Federal (Canada)	2009 – 2013
Ontario	2009 – 2013

Foreign currency translation

The Company uses the U.S. Dollar as its reporting currency.  The functional currency of the Company's Canadian subsidiaries is the Canadian Dollar.  The functional currency of the Company’s U.S. subsidiaries is the U.S. Dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the rate of exchange at the balance sheet date, while revenue and expenses are translated at the average exchange rates prevailing during the respective month.  Components of stockholders’ equity are translated at historical exchange rates.  Exchange gains and losses resulting from translation are reflected in accumulated other comprehensive income or loss.

Advertising costs

The Company expenses all advertising costs as incurred. These costs are included in general and administrative costs and were insignificant during the periods presented.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates used in the preparation of these financial statements include the assumptions used in determining the useful lives of long-lived assets, the assumptions used in determining whether assets are impaired, the assumptions used in determining the valuation allowance for deferred income tax assets and the assumptions used in stock based compensation awards. Actual results could differ from those estimates.

F-12

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Benefit plans

The Company contributes to employee Registered Retirement Savings Plans in Canada and 401(k) plans in the United States.     Contributions are expensed as operating expenses when incurred. The Company made contributions of $1,569 in 2014, $1,533 in 2013 and $1,389 in 2012.

Stock-based compensation

The Company recognizes compensation expense for all newly granted awards and awards modified, repurchased or cancelled based on fair value at the date of grant.

Financial instruments

The Company accounted for its two expired interest rate swap contracts on its term debt utilizing ASC 815 “Derivatives and Hedging”. All changes in the fair value of such swap contracts were recorded in earnings. The fair value of settlement costs, when the contracts were in place, were included in current liabilities on the consolidated balance sheets. No liability remains. Disclosure requirements of ASC 815 are disclosed in Note 22.

Fair value of financial instruments

ASC 820 “Fair Value Measurements and Disclosures” ("ASC 820") defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and establishes a hierarchy that categorizes and prioritizes the inputs to be used to estimate fair value. The three levels of inputs used are as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The disclosure requirements of ASC 820 related to the Company’s financial assets and liabilities are presented in Note 22.

3. RECENTLY ISSUED PRONOUNCEMENTS

Disclosures about offsetting assets and liabilities

In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about offsetting assets and liabilities" ("ASU 2011-11"). ASU 2011-11 requires entities to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on an entity's financial position. ASU 2011-11 requires enhanced disclosure by requiring improved information about financial instruments and derivative instruments that are either (i) offset in accordance with current literature or (ii) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with current literature. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Company adopted ASU 2010-11 as of April 1, 2013. Such adoption had no impact on the Company's consolidated financial statements.

F-13

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

3.    RECENTLY ISSUED PRONOUNCEMENTS (continued)

Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

In March 2013, the FASB issued ASU 2013-05 Topic 830 - Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, ASU 2013-05 applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in ASU 2013-05 resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes referred to as step acquisitions) involving a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a material effect on the Company's consolidated financial statements.

Presentation of Unrecognized Tax Benefits

In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss ("NOL") Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset in the financial statements for an NOL carryforward, a similar tax loss, or a tax credit carryforward except in circumstances when the carryforward or tax loss is not available at the reporting date under the tax laws of the applicable jurisdiction to settle any additional income taxes or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purposes. When those circumstances exist, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new financial statement presentation provisions relating to this update are prospective and effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. The Company does not anticipate a material impact to its consolidated financial statements related to this guidance.

4. ACCOUNTS RECEIVABLE

Trade receivables are presented net of an allowance for doubtful accounts. The allowance was $58 as of March 31, 2014 and $49 as of March 31, 2013. The Company manages and evaluates the collectability of its trade receivables as follows: management reviews aged accounts receivable listings and contact is made with customers that have extended beyond agreed upon credit terms. Senior management and operations are notified so that when they are contacted by such customers for a future delivery, they can request that the customer pay any past due amounts before any future cargo is booked for shipment. Customer credit risk is also managed by reviewing the history of payments by the customer, the size and credit quality of the customer, the period of time remaining within the shipping season and demand for future cargos.

5.PREPAIDEXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets are comprised of the following:

	March 31, 2014		March 31, 2013
Prepaid insurance	$	565	$	334
Fuel and lubricants	4,351		5,063
Deposits and other prepaids	2,428		2,445
	$	7,344	$	7,842

F-14

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

6. INCOME TAXES

Income (loss) before income taxes was derived from the following sources:

	Year ended March 31, 2014			Year ended March 31, 2013			Year ended March 31, 2012
United States	$	(5,601	)	$	(4,515	)	$	5,357
Foreign	5,917			203			1,340
	$	316		$	(4,312	)	$	6,697

The components of the provision (recovery) for income taxes are as follows:

	Year ended March 31, 2014		Year ended March 31, 2013			Year ended March 31, 2012
Current:
Federal	$	—	$	(21	)	$	41
State and local	17		(113		)	167
Foreign	100		—			—
Deferred:
Federal	2,898		(947		)	(1,950		)
State and local	85		84			(67		)
Foreign	1,723		504			383
	$	4,823	$	(493	)	$	(1,426	)

The total provision (recovery) for income taxes differs from that amount which would be computed by applying the U.S. Federal and Canadian income tax rates to income (loss) before provision for income taxes as follows:

	Year ended March 31, 2014			Year ended March 31, 2013			Year ended March 31, 2012
Statutory U.S. federal    income tax rate		34.0	%		34.0	%		34.0	%
State and foreign    income taxes		(124.6	)%		(0.1	)%		(1.0	)%
Imputed interest income		183.0	%		(11.5	)%		8.7	%
Federal Valuation Allowance		1,318.2	%		—	%		(63.9	)%
Foreign Permanent Items/Other		115.7	%		(5.3	)%		0.9	%
Foreign Statutory Rate Change		—	%		(5.7	)%		—	%
Effective income tax rate		1,526.3%			11.4%			(21.3)%

The primary reasons that the effective income tax rate for fiscal 2014 is higher than the statutory U.S. federal tax rate are the recognition of the full federal valuation allowance at March 31, 2014, the mix of income between jurisdictions and the comparative magnitude of the domestic permanent differences.

F-15

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

6.    INCOME TAXES (continued)

The significant components of current deferred tax assets and liabilities are as follows:

	March 31, 2014			March 31, 2013
Assets:
Accrued liabilities not yet deductible for tax	$	159		$	273
Other	13			13
	172			286
Valuation allowance	(37		)	(1		)
Total current deferred tax assets	135			285
Liability:
Deferred foreign exchange gain	101			(196		)
Other	(150		)	—
Total current deferred tax liabilities	(49		)	(196		)
Net current deferred tax assets (liabilities)	$	86		$	89

The Company has net current deferred assets of $121 ($262 as of March 31, 2013) in United States federal and state jurisdictions and net current deferred tax liabilities of $35 ($173 as of March 31, 2013) in Canadian jurisdictions.

The significant components of long-term deferred tax assets and liabilities are as follows:

	March 31, 2014			March 31, 2013
Long-term deferred tax assets
Operating loss carry forwards	$	20,807		$	18,623
Interest rate swap	—			—
Other	585			918
	21,392			19,541
Valuation allowance	(4,126		)	(53		)
Net long-term deferred tax assets	$	17,266		$	19,488
Long-term deferred tax liabilities
Separately identifiable intangibles	$	(585	)	$	(1,150	)
Depreciation and dry dock expenses	(21,614		)	(19,411		)
Other	(201		)	(256		)
Total long-term deferred tax liabilities	$	(22,400	)	$	(20,817	)
Net long-term deferred tax assets (liabilities)	$	(5,134	)	$	(1,329	)

F-16

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

6.    INCOME TAXES (continued)

The Company has net long-term deferred tax liabilities of $638 ($2,203 net long-term deferred assets as of March 31, 2013) in United States federal and state jurisdictions and net long term deferred tax liabilities of $4,496 ($3,532 as of March 31, 2013) in Canadian jurisdictions. The Company establishes a valuation allowance when it is more likely than not that it will not be able to realize the benefit of the deferred tax assets, or when future deductibility is uncertain.  Periodically, the valuation allowance is reviewed and adjusted based on management’s assessment of realizable deferred tax assets.

The Company determined at March 31, 2013 that it was more likely than not that its deferred income tax assets would be realized while in a net deferred tax asset position based on the timing of the expected reversal of the deferred tax liabilities.

However, at March 31, 2014, the Company determined that its U.S. federal net deferred tax assets, including net operating loss carry-forwards, will not be utilized due to a cumulative break-even position over the past three fiscal years, coupled with anticipated cumulative three year losses in the near future. As such, the Company recorded a full valuation allowance against the U.S. Federal net deferred tax assets.

The Company determined that the Canadian deferred income tax asset relating to capital or non-capital losses on Lower Lakes Towing will be realized based on performance of the entity and the expected timing of the reversal of the deferred tax liabilities. The Company also determined that the Canadian deferred income tax assets on Lower Lakes Ship Repair, formed during the fiscal year ended March 31, 2013, will not be realized based on uncertainty of future income. As such, a full valuation allowance was recorded against Lower Lakes Ship Repair’s deferred tax assets.

The valuation allowance against the U.S. state deferred tax assets decreased by $47 for the fiscal year ended March 31, 2014, increased by $4 for the year ended March 31, 2013 and decreased by $37 for the fiscal year ended March 31, 2012.

At March 31, 2014, the Company had unused U.S. federal net operating loss carry-forwards totaling $46,085 that expire between fiscal 2020 and 2044, of which a small portion is subject to Internal Revenue Code section 382 annual limitations.  At March 31, 2014, the Company also had unused Canadian net operating loss carry-forwards totaling CDN $16,876 that expire between fiscal 2025 and 2033.

F-17

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

7. PROPERTY AND EQUIPMENT

Property and equipment are comprised of the following:

	March 31, 2014		March 31, 2013
Cost
Vessels	$	274,919	$	264,685
Leasehold improvements	3,834		3,779
Furniture and equipment	534		494
Vehicles	19		21
Computer, communication equipment and purchased software	2,937		2,912
	$	282,243	$	271,891
Accumulated depreciation
Vessels	$	62,694	$	49,404
Leasehold improvements	1,953		1,496
Furniture and equipment	249		200
Vehicles	13		13
Computer, communication equipment  and purchased software	1,847		1,694
	66,756		52,807
	$	215,487	$	219,084

Depreciable assets as at March 31, 2014 included $7,635 related to a recently acquired vessel. Depreciation on this asset will commence after the vessel is converted to a self-unloading dry-bulk vessel and is available for commercial sailing.

8. OTHER ASSETS

Other assets includes certain customer contract related expenditures, which are amortized over a five year period.

	March 31, 2014		March 31, 2013
Customer contract costs	$	850	$	1,156
Prepaid expenses and other assets	7,224		7,736
Total	$	8,074	$	8,892
Current portion	7,344		7,842
Other long term assets	$	730	$	1,050

F-18

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

9. DEFERRED DRYDOCK COSTS

Deferred drydock costs are comprised of the following:

	March 31, 2014			March 31, 2013
Drydock expenditures	$	15,635		$	19,477
Accumulated amortization	(6,314		)	(8,582		)
	$	9,321		$	10,895

The following table shows periodic deferrals of drydock costs and amortization.

Balance as of March 31, 2012	$	9,879
Drydock costs accrued and incurred	4,656
Amortization of drydock costs	(3,497		)
Foreign currency translation adjustment	(143		)
Balance as of March 31, 2013	$	10,895
Drydock costs accrued and incurred	2,150
Amortization of drydock costs	(3,290		)
Foreign currency translation adjustment	(434		)
Balance as of March 31, 2014	$	9,321

F-19

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

10. INTANGIBLE ASSETS AND GOODWILL

Intangibles are comprised of the following:

	March 31, 2014		March 31, 2013
Intangible assets:
Deferred financing costs	$	7,331	$	2,120
Trademarks and trade names	951		1,010
Customer relationships and contracts	16,884		17,926
Total identifiable intangibles	$	25,166	$	21,056
Accumulated amortization:
Deferred financing costs	$	75	$	309
Trademarks and trade names	768		715
Customer relationships and contracts	8,090		7,420
Total accumulated amortization	8,933		8,444
Net intangible assets	$	16,233	$	12,612
Goodwill	$	10,193	$	10,193

Intangible asset amortization over the next five years is estimated as follows:

Twelve month period ending:

March 31, 2015	$	2,704
March 31, 2016	2,696
March 31, 2017	2,602
March 31, 2018	2,602
March 31, 2019	2,601
	$	13,205

11. VESSEL ACQUISITIONS

On July 21, 2011, Lower Lakes Towing completed the acquisition of the MARITIME TRADER (the "Trader"), a Canadian-flagged dry bulk carrier, pursuant to the terms of an asset purchase agreement, dated as of July 8, 2011, by and between the Company and Marcon International Inc., in its capacity as court-appointed seller of the Trader.  Pursuant to the terms of such asset purchase agreement, Lower Lakes Towing’s acquisition of the Trader was subject only to the final approval of the Federal Court of Canada, which approval was granted on July 15, 2011.  Lower Lakes Towing purchased the Trader for an aggregate purchase price of CDN $2,667 with borrowings under the Canadian term loan. Following its acquisition, the Trader was renamed the MANITOBA.

On October 14, 2011, Lower Lakes Towing completed the acquisition of the bulk carrier TINA LITRICO (the "Tina"), pursuant to the terms of an Asset Purchase Agreement, dated as of September 21, 2011, by and among Lower Lakes Towing, Grand River and U.S. United Ocean Service, LLC ("USUOS"). Lower Lakes Towing purchased the Tina for $5,250, plus the value of the remaining bunkers and unused lubricating oils on board the Tina at the closing of the acquisition. The acquisition was funded by the proceeds from the equity offering described in Note 18. Following its acquisition, the Tina was renamed the TECUMSEH.

F-20

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

11.    VESSEL ACQUISITIONS (continued)

On December 1, 2011, Grand River entered into, and consummated the transactions contemplated by, an Asset Purchase Agreement (the “Barge Agreement”) with U.S. Bank National Association, as Trustee of the GTC Connecticut Statutory Trust, pursuant to which Grand River acquired a self-unloading barge MARY TURNER (the “Barge”). The purchase price for the Barge, together with the related stores and equipment, was $11,954 plus the value of the remaining bunkers and unused lubricating oils onboard the Barge at the closing of the acquisition. Following its acquisition, the Barge was renamed the ASHTABULA.

Also on December 1, 2011, Grand River completed the acquisition of a tug BEVERLY ANDERSON (the “Tug”), pursuant to the terms of an Asset Purchase Agreement, dated as of September 21, 2011 (the “Tug Agreement”), by and between Grand River and USUOS. Grand River purchased the Tug for $7,796 plus the value of the remaining bunkers and unused lubricating oils on board the Tug at the closing of the acquisition. Following its acquisition, the Tug was renamed the DEFIANCE.

The acquisitions of the Barge and the Tug were funded with additional borrowings under the U.S. term loan as described in Note 14.

On March 11, 2014, Lower Lakes Towing entered into and consummated the transactions under a Memorandum of Agreement with Uni-Tankers M/T “Lalandia Swan” ApS (the "Seller") pursuant to which Lower Lakes Towing purchased the LALANDIA SWAN from the Seller for a purchase price of $7,000. Lower Lakes Towing transferred the title of the vessel to Lower Lakes (17).

Such acquisition was funded with borrowings under the subordinated loan as described in Note 15.

12. BANK INDEBTEDNESS

As discussed in detail in Note 14, on March 11, 2014, Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek, as borrowers, and Rand LL Holdings, Rand Finance, Black Creek Holdings, Lower Lakes Ship Repair and Lower Lakes (17), and the Company as guarantors, entered into a Fourth Amended and Restated Credit Agreement (the "Fourth Amended and Restated Credit Agreement"), with General Electric Capital Corporation, as agent and a lender, and certain other lenders, which amends and restates the Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) entered on August 30, 2012.

As of March 31, 2014 the Company had authorized operating lines of credit under the Fourth Amended and Restated Credit Agreement of CDN $17,500 and US $17,500 (CDN $13,500 and US $13,500 as of March 31, 2013, under the Third Amended and Restated Credit Agreement) and was utilizing CDN $Nil as of March 31, 2014 and CDN $2,925 as of March 31, 2013 and US $Nil as of March 31, 2014 and US $3,118 as of March 31, 2013, and maintained letters of credit of CDN $100 as of each of March 31, 2014 and March 31, 2013.

The Fourth Amended and Restated Credit Agreement provides that the line of credit bears interest, at the borrowers' option, at Canadian Prime Rate plus 3.00% or Canadian BA rate plus 4.00% on Canadian Dollar borrowings, and the U.S. Base rate plus 3.00% or LIBOR plus 4.00% on U.S. Dollar borrowings, compared to a Canadian Prime Rate plus 3.75% or Canadian BA rate plus 4.75% on Canadian Dollar borrowings, and the U.S. Base rate plus 3.75% or LIBOR plus 4.75% on U.S. Dollar borrowings under the Third Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement provided for interest at the Canadian Prime Rate plus 3.50% or Canadian BA rate plus 4.50% on Canadian Dollar borrowings and a U.S. Base rate plus 3.50% or LIBOR plus 4.50% on U.S. Dollar borrowings. The Fourth Amended and Restated Credit Agreement is subject to the terms and conditions described in Note 14. Available collateral for borrowings and letters of credit are based on eligible accounts receivable, which are limited to 85% of those receivables that are not over 90 days old, not in excess of 20%-30% per customer in each line and certain other standard limitations. As of March 31, 2014, the Company had credit availability of US $17,129 on the combined lines of credit based on eligible receivables and the seasonal overadvance facilities.

F-21

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

13. ACCRUED LIABILITIES

Accrued liabilities are comprised of the following:

	March 31, 2014		March 31, 2013
Deferred financing and other transaction costs	$	560	$	26
Payroll compensation and benefits	957		1,926
Preferred stock dividends	—		13,456
Professional fees	386		385
Interest	767		754
Winter work, deferred drydock expenditures and capital expenditures	3,961		2,438
Capital and franchise taxes	36		113
Other	1,289		2,218
	$	7,956	$	21,316

F-22

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

14. LONG-TERM DEBT

		March 31, 2014		March 31, 2013
a)	Canadian term loan bearing interest at Canadian Prime rate plus 3.00% (3.75% at March 31, 2013) or Canadian BA rate plus 4.00% (4.75% at March 31, 2013) at the Company’s option.  The loan is repayable until April 1, 2019 with quarterly payments of CDN $137 commencing September 1, 2014 and the balance due April 1, 2019.	$	49,644	$	51,493
b)	U.S. term loan bearing interest at LIBOR rate plus 4.00% (4.75% at March 31, 2013) or U.S. base rate plus 3.00% (3.75% at March 31, 2013) at the Company’s option.  The loan is repayable until April 1, 2019 with quarterly payments of US $138 commencing September 1, 2014 and the balance due April 1, 2019.	55,246		63,325
c)	Black Creek U.S. term loan bearing interest at LIBOR rate plus 4.75% at March 31, 2013 or US base rate plus 3.75% at March 31, 2013 at the Company’s option. The loan was repayable until August 1, 2016 with quarterly payments of US $181 commencing December 1, 2012, increasing to US $362 commencing December 1, 2014, and the balance due August 1, 2016.  The loan was consolidated into U.S. term loan (above) under Fourth Amended and Restated Credit Agreement on March 11, 2014.	—		28,572
		$	104,890	$	143,390
	Less amounts due within 12 months	787		3,630
		$	104,103	$	139,760

The effective interest rates on the term loans at March 31, 2014 were 5.26% (6.03% at March 31, 2013) on the Canadian term loan and 4.24% (5.88% at March 31, 2013) on the U.S. term loan and Black Creek U.S. term loan (for March 31, 2013).

Principal payments are due as follows:

Twelve month period ending:

March 31, 2015	$	787
March 31, 2016	1,049
March 31, 2017	1,049
March 31, 2018	1,049
March 31, 2019	1,049
	$	4,983

F-23

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

14. LONG-TERM DEBT (continued)

On March 11, 2014, Lower Lakes Towing, Lower Lakes Transportation, Grand River , Black Creek Shipping, as borrowers, Rand LL Holdings Corp. ("Rand LL Holdings"), Rand Finance and Black Creek Shipping Holdings Company, Inc. ("Black Creek Holdings"), Lower Lakes Ship Repair and Lower Lakes (17) and Rand, as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders, entered into a Fourth Amended and Restated Credit Agreement (the "Fourth Amended and Restated Credit Agreement"), which (i) amends and restates the existing Third Amended and Restated Credit Agreement to which the borrowers are a party, dated as of August 30, 2012, as the same has been amended from time to time, in its entirety, (ii) consolidates the existing U.S. term loans into a single term loan, (iii) provides for certain new loans and (iv) provides working capital financing, funds for other general corporate purposes and funds for other permitted purposes. The Fourth Amended and Restated Credit Agreement provides for (i) a revolving credit facility under which Lower Lakes Towing may borrow up to CDN $17,500 with a seasonal overadvance facility of the lesser of US$ 17,000 or CDN $17,500 less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Transportation, and a swing line facility of CDN $4,000 subject to limitations, (ii) a revolving credit facility under which Lower Lakes Transportation may borrow up to US $17,500 with a seasonal overadvance facility of US $17,000 less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Towing, and a swing line facility of US $50 subject to limitations, (iii) the continuation of an existing Canadian dollar denominated term loan facility under which Lower Lakes Towing is obligated to the lenders in the amount of CDN $54,882 as of the date of the Fourth Amended and Restated Credit Agreement (the “CDN Term Loan”), (iv) the modification and continuation of a U.S. dollar denominated term loan facility under which Grand River and Black Creek are obligated to the lenders in the amount of $55,246 as of the date of the Fourth Amended and Restated Credit Agreement (the “U.S. Term Loan”).

Under the Fourth Amended and Restated Credit Agreement, the revolving credit facilities and swing line loans expire on April 1, 2019. The outstanding principal amount of the CDN Term Loan borrowings will be repayable as follows: (i) payments equal to one percent (1%) of the initial principal amount thereof paid quarterly commencing September 1, 2014 and (ii) a final payment in the outstanding principal amount of the CDN Term Loan upon the CDN Term Loan’s maturity on April 1, 2019. The outstanding principal amount of the U.S. Term Loan borrowings will be repayable as follows: (i) payments equal to one percent (1%) of the initial principal amount thereof paid quarterly commencing September 1, 2014, and (iii) a final payment in the outstanding principal amount of the U.S. Term Loan upon the U.S. Term Loan’s maturity on April 1, 2019. Borrowings under the Canadian revolving credit facility, the Canadian swing line facility and the CDN Term Loan will bear an interest rate per annum, at the borrowers' option, equal to (i) the Canadian Prime Rate (as defined in the Fourth Amended and Restated Credit Agreement), plus 3.00% per annum or (ii) the BA Rate (as defined in the Fourth Amended and Restated Credit Agreement) plus 4.00% per annum. Borrowings under the U.S. revolving credit facility, the U.S. swing line facility and the U.S. Term Loan will bear interest, at the borrowers’ option, equal to (i) LIBOR (as defined in the Fourth Amended and Restated Credit Agreement) plus 4.00% per annum, or (ii) the U.S. Base Rate (as defined in the Fourth Amended and Restated Credit Agreement) plus 3.00% per annum.

Obligations under the Fourth Amended and Restated Credit Agreement are secured by (i) a first priority lien and security interest on all of the borrowers’ and guarantors’ assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers other than Black Creek and Lower Lakes Towing, and a pledge of 65% of the outstanding capital stock of Lower Lakes Towing; (iii) a pledge by Black Creek Holdings of all of the outstanding capital stock of Black Creek; (iv) a pledge by Lower Lakes Towing of all of the outstanding capital stock of Lower Lakes Ship Repair and Lower Lakes (17) and (v) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holdings. The indebtedness of each domestic borrower under the Fourth Amended and Restated Credit Agreement is unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty is secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also guarantees the obligations of the Canadian borrower and each Canadian guarantor guarantees the obligations of the Canadian borrower. Under the Fourth Amended and Restated Credit Agreement, the borrowers will be required to make mandatory prepayments of principal on term loan borrowings (i) if the outstanding balance of the term loans plus the outstanding balance of the seasonal facilities exceeds the sum of 85% of the orderly liquidation value of the vessels owned by the borrowers, less the amount of outstanding liens against the vessels with priority over the lenders’ liens, in an amount equal to such excess, (ii) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom and (iii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower’s debt or equity securities (all subject to certain exceptions).

F-24

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

14. LONG-TERM DEBT (continued)

The Fourth Amended and Restated Credit Agreement contains certain covenants, including those limiting the guarantors’, the borrowers’, and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Fourth Amended and Restated Credit Agreement requires the borrowers to maintain certain financial ratios. Failure of the borrowers or the guarantors to comply with any of these covenants or financial ratios could result in the loans under the Fourth Amended and Restated Credit Agreement being accelerated.

As a result of the execution of the Fourth Amended and Restated Credit Agreement discussed above, the Company recognized a loss on extinguishment of debt of $1,267 during the fiscal year ended March 31, 2014, that consisted of the unamortized deferred financing costs in connection with previously existing financing arrangement.

On August 30, 2012, Lower Lakes Towing, Lower Lakes Transportation, Grand River and Black Creek, as borrowers, Rand LL Holdings, Rand Finance, Black Creek Holdings and the Company, as guarantors, General Electric Capital Corporation, as agent and Lender, and certain other lenders, entered into the Third Amended and Restated Credit Agreement which (i) amended and restated the Second Amended and Restated Credit Agreement in its entirety, (ii) continued the tranches of loans provided for under the Second Amended and Restated Credit Agreement, (iii) refinanced the indebtedness of Black Creek under its then-existing credit facility and added Black Creek as a U.S. Borrower, (iv) provided for certain new loans and (v) provided working capital financing, funds for other general corporate purposes and funds for other permitted purposes.

The Third Amended and Restated Credit Agreement provided for (i) a revolving credit facility including letters of credit under which Lower Lakes Towing was able to borrow up to CDN $13,500 with a seasonal overadvance facility of US $12,000, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Transportation, and a swing line facility of CDN $4,000, subject to limitations, (ii) a revolving credit facility under which Lower Lakes Transportation was able to borrow up to US $13,500 with a seasonal overadvance facility of US $12,000, less the principal amount outstanding under the seasonal overadvance facility for Lower Lakes Towing, and a swing line facility of US $50, subject to limitations, (iii) the modification and continuation of an existing Canadian dollar denominated term loan facility under which Lower Lakes Towing was obligated to the Lenders in the amount of CDN $52,979 as of the date of the Third Amended and Restated Credit Agreement (the “2012 CDN Term Loan”), (iv) the modification and continuation of a U.S. dollar denominated term loan facility under which Grand River was obligated to the Lenders in the amount of $64,127 as of the date of the Third Amended and Restated Credit Agreement (“Grand River Term Loan”) and (v) a U.S. dollar denominated term loan facility under which Black Creek was obligated to Lenders in the amount of $28,934 as of the date of the Third Amended and Restated Credit Agreement (“Black Creek Term Loan”).

Under the Third Amended and Restated Credit Agreement, the revolving credit facilities and swing line loans were to expire on August 1, 2016. The outstanding principal amount of the 2012 CDN Term Loan borrowings was repayable as follows: (i) quarterly payments of CDN $331 commenced December 1, 2012 and ending September 2014, (ii) quarterly payments of CDN $662 commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the 2012 CDN Term Loan upon the 2012 CDN Term Loan's scheduled maturity on August 1, 2016. The outstanding principal amount of the Grand River Term Loan borrowings was repayable as follows: (i) quarterly payments of US $401 commenced December 1, 2012 and ending on September 1, 2014, (ii) quarterly payments of US $802 commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the Grand River Term Loan upon the Grand River Term Loan's scheduled maturity on August 1, 2016. The outstanding principal amount of the Black Creek Term Loan borrowings was repayable as follows: (i) quarterly payments of US $181 commenced December 1, 2012 and ending September 1, 2014, (ii) quarterly payments of US $362 commencing December 1, 2014 and ending June 1, 2016 and (iii) a final payment in the outstanding principal amount of the Black Creek Term Loan upon the Black Creek Term Loan's scheduled maturity on August 1, 2016.

F-25

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

14. LONG-TERM DEBT (continued)

Borrowings under the Canadian revolving credit facility, Canadian swing line facility and the 2012 CDN Term Loan bore an interest rate per annum, at the borrowers' option, equal to (i) the Canadian Prime Rate (as defined in the Third Amended and Restated Credit Agreement), plus 3.75% per annum or (ii) the BA Rate (as defined in the Third Amended and Restated Credit Agreement) plus 4.75% per annum. Borrowings under the U.S. revolving credit facility, U.S. swing line facility and the Grand River Term Loan and Black Creek Term Loan bore interest, at the borrowers' option equal to (i) LIBOR (as defined in the Third amended and Restated Credit Agreement) plus 4.75% per annum, or (ii) the U.S. Base Rate (as defined in the Third Amended and Restated Credit Agreement), plus 3.75% per annum. Obligations under the Third Amended and Restated Credit Agreement were secured by (i) a first priority lien and security interest on all of the borrowers' and guarantors' assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers other than Black Creek; (iii) a pledge by Black Creek Holdings of most of the outstanding capital stock of Black Creek; and (iv) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holdings. The indebtedness of each domestic borrower under the Third Amended and Restated Credit Agreement was unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty was secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also guaranteed the obligations of the Canadian borrower and each Canadian guarantor guaranteed the obligations of the Canadian borrower.

Under the Third Amended and Restated Credit Agreement, the borrowers were required to make mandatory prepayments of principal on term loan borrowings (i) if the outstanding balance of the term loans plus the outstanding balance of the seasonal facilities exceeds the sum of 75% of the fair market value of the vessels owned by the borrowers, less the amount of outstanding liens against the vessels with priority over the lenders' liens, in an amount equal to such excess, (ii) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom, and (iii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower's debt or equity securities.

The Third Amended and Restated Credit Agreement contained certain covenants, including those limiting the guarantors', the borrowers' and their subsidiaries' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Third Amended and Restated Credit Agreement required the borrowers to maintain certain financial ratios.

As a result of the execution of the Third Amended and Restated Credit Agreement discussed above, the Company recognized a loss on extinguishment of debt of $3,339 during the fiscal year ended March 31, 2013, that consisted of the unamortized deferred financing costs in connection with previously existing financing arrangements.

On March 29, 2013, the Company entered into a First Amendment to the Third Amended and Restated Credit Agreement that modified such agreement's Minimum Fixed Charge Coverage Ratio, Minimum EBITDA, Maximum Senior Funded Debt to EBITDA Ratio and Maximum Capital Expenditures covenants and the definitions of EBITDA and Fixed Charge Coverage Ratio.

As of March 31, 2014, the Company was in compliance with covenants contained in the Fourth Amended and Restated Credit Agreement.

F-26

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

15.    SUBORDINATED DEBT

		March 31, 2014		March 31, 2013
a)	U.S. Dollar denominated term loan (Second Lien CDN Term loan)bearing interest at LIBOR rate (as defined) plus 9.5% or U.S. base rate (as defined) plus 8.5% at the Company’s option. The loan is repayable upon maturity on March 11, 2020.	$	34,200	$	—
b)	U.S. Dollar denominated term loan (Second Lien U.S. Term loan) bearing interest at LIBOR rate (as defined) plus 9.5% or U.S. base rate (as defined) plus 8.5% at the Company’s option. The loan is repayable upon maturity on March 11, 2020.	$	38,300	$	—
		$	72,500	$	—

On March 11, 2014, Lower Lakes Towing, Grand River and Black Creek, as borrowers, Rand LL Holdings, Rand Finance , Black Creek Holdings and Rand, as guarantors, Guggenheim Corporate Funding, LLC, as agent and Lender, and certain other lenders, entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”), which provides term loans (i) to partially repay outstanding indebtedness of borrowers under the Third Amended and Restated Credit Agreement, (ii) to partially pay the acquisition and conversion costs for a new vessel, (iii) pay accrued but unpaid dividends due on our Series A Convertible Preferred Stock and (iv) to provide working capital financing, funds for other general corporate purposes and funds for other permitted purposes. The Term Loan Credit Agreement provides for (i) a U.S. Dollar denominated term loan facility under which Lower Lakes Towing is obligated to the lenders in the amount of $34,200 (the “Second Lien CDN Term Loan”), (ii) U.S. dollar denominated term loan facility under which Grand River and Black Creek are obligated to the Lenders in the amount of $38,300 (the “Second Lien U.S. Term Loan”) and (iii) an uncommitted incremental term loan facility of up to $32,500.

The outstanding principal amount of the Second Lien CDN Term Loan borrowings will be repayable upon the Second Lien CDN Term Loan’s maturity on March 11, 2020. The outstanding principal amount of the Second Lien U.S. Term Loan borrowings will be repayable upon the Second Lien U.S. Term Loan’s maturity on March 11, 2020. The Second Lien CDN Term Loan and Second Lien U.S. Term Loan will bear an interest rate per annum at borrowers’ option, equal to (i) LIBOR (as defined in the Term Loan Credit Agreement) plus 9.50% per annum, or (ii) the U.S. Base Rate (as defined in the Term Loan Credit Agreement), plus 8.50% per annum.

Obligations under the Term Loan Credit Agreement are secured by (i) a first priority lien and security interest on all of the borrowers’ and guarantors’ assets, tangible or intangible, real, personal or mixed, existing and newly acquired, (ii) a pledge by Rand LL Holdings of all of the outstanding capital stock of the borrowers, other than Black Creek and Lower Lakes Towing, and a pledge of 65% of the outstanding capital stock of Lower Lakes Towing; (iii) a pledge by Black Creek Holdings of all of the outstanding capital stock of Black Creek; (iv) a pledge by Lower Lakes Towing of all of the outstanding capital stock of Lower Lakes Ship Repair and Lower Lakes (17) and (v) a pledge by Rand of all of the outstanding capital stock of Rand LL Holdings, Rand Finance and Black Creek Holding. The indebtedness of each domestic borrower under the Term Loan Credit Agreement is unconditionally guaranteed by each other domestic borrower and by the guarantors which are domestic subsidiaries, and such guaranty is secured by a lien on substantially all of the assets of each borrower and each guarantor. Each domestic borrower also guarantees the obligations of the Canadian borrower and each Canadian guarantor guarantees the obligations of the Canadian borrower. Under the Term Loan Credit Agreement and subject to the terms of the Intercreditor Agreement (as defined below), the borrowers will be required to make mandatory prepayments of principal on term loan borrowings (i) in the event of certain dispositions of assets and insurance proceeds (all subject to certain exceptions), in an amount equal to 100% of the net proceeds received by the borrowers therefrom, and (ii) in an amount equal to 100% of the net proceeds to a borrower from any issuance of a borrower’s debt or equity securities (all subject to certain exceptions). The Term Loan Credit Agreement contains certain covenants, including those limiting the guarantors, the borrowers, and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Term Loan Credit Agreement requires the borrowers to

F-27

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

15.    SUBORDINATED DEBT (continued)

maintain certain financial ratios. Failure of the borrowers or the guarantors to comply with any of these covenants or financial ratios could result in the loans under the Term Loan Credit Agreement being accelerated. The obligations of the borrowers and the liens of the lenders under the Term Loan Credit Agreement are subject to the terms of an Intercreditor Agreement, which is further described below under the heading “Intercreditor Agreement”.

Intercreditor Agreement

Also on March 11, 2014, Lower Lakes Towing, Lower Lakes Transportation, Grand River, Black Creek, Lower Lakes Ship Repair, Rand, Rand LL Holdings, Rand Finance, Black Creek Holdings and Lower Lakes (17) (collectively, the “Credit Parties”), General Electric Capital Corporation, as agent for the lenders under the Fourth Amended and Restated Credit Agreement (the “First Lien Lenders”) and Guggenheim Corporate Funding , LLC, as agent for the lenders under the Term Loan Credit Agreement (the “Second Lien Lenders”), entered into an Intercreditor Agreement (the “Intercreditor Agreement”), pursuant to which the Second Lien Lenders have agreed to subordinate the obligations of the Credit Parties to them to the repayment of the obligations of the Credit Parties to the First Lien Lenders and have further agreed to subordinate their liens on the assets of the Credit Parties to the liens in granted in favor of the First Lien Lenders. Absent the occurrence of an Event of Default under the Fourth Amended and Restated Credit Agreement, the Second Lien Lenders are permitted to receive regularly scheduled principal and interest payments under the Term Loan Credit Agreement.

F-28

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

16. COMMITMENTS

The Company did not have any leases which met the criteria of a capital lease as of March 31, 2014. Leases which do not qualify as capital leases are classified as operating leases. Operating lease rental and sublease rental payments included in general and administrative expenses are as follows:

	Year ended March 31, 2014		Year ended March 31, 2013		Year ended March 31, 2012
Operating leases	$	562	$	459	$	358
Operating sublease	159		155		151
	$	721	$	614	$	509

The Company’s future minimum rental commitments under other operating leases are as follows.

Twelve month period ending:

March 31, 2015	$	499
March 31, 2016	411
March 31, 2017	291
March 31, 2018	212
March 31, 2019	168
Thereafter	448
	$	2,029

The Company is party to a bareboat charter agreement for the McKee Sons barge that expires in December 2018.  The chartering cost included in vessel operating expenses $760 for the twelve month period ended March 31, 2014 ($759 for the twelve month period ended March 31, 2013). The lease was amended on February 22, 2008 to provide a lease payment deferment in return for leasehold improvements. The lease contains a clause whereby annual payments escalate at the Consumer Price Index, capped at a maximum annual increase of 3%. Total charter commitments for the McKee Sons vessel for the term of the lease before inflation adjustments are set forth below. 

Twelve month period ending:

March 31, 2015	$	760
March 31, 2016	760
March 31, 2017	760
March 31, 2018	760
March 31, 2019	760
Thereafter
	$	3,800

As of March 31, 2014, Lower Lakes Towing had signed contractual commitments with several suppliers totaling $1,801 ($731 as of March 31, 2013) in connection with capital expenditure and drydock projects. As of June 11, 2014, the company had aggregate purchase obligations of $19,355, including $3,727 due in less than one year.

F-29

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

17. CONTINGENCIES

The Company is not involved in any legal proceedings which are expected to have a material effect on its business, financial position, results of operations or liquidity, nor is the Company aware of any proceedings that are pending or threatened which may have a material effect on the Company’s business, financial position, results of operations or liquidity.  From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business involving principally commercial charter party disputes, and claims for alleged property damages, personal injuries and other matters. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.  It is expected that larger claims would be covered by insurance, subject to customary deductibles, if they involve liabilities that may arise from allision, other marine casualty, damage to cargoes, oil pollution, death or personal injuries to crew. The Company evaluates the need for loss accruals under the requirements of ASC 450 – Contingencies. The Company records an estimated loss for any claim, lawsuit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can reasonably be estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, then the Company records the minimum amount in the range as the loss accrual. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of March 31, 2014 an accrual of $138 ($490 as of March 31, 2013) was recorded for various claims.  Management does not anticipate material variations in actual losses from the amounts accrued related to these claims.

18. STOCKHOLDERS’ EQUITY

On September 21, 2011, the Company completed a public underwritten offering of 2,800,000 shares of the Company’s common stock for $6.00 per share.  The Company’s proceeds from the offering, net of underwriter’s commissions and expenses, were $15,525.

On February 11, 2011, in connection with the transactions contemplated by the Asset Purchase Agreement with the Sellers discussed in Note 11, the Company issued 1,305,963 shares of the Company’s common stock to Buckeye. Such shares were valued at the average of high and low price on that day of $5.175.

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences that may be determined from time to time by the Board of Directors. The shares of the Company’s series A convertible preferred stock: rank senior to the Company’s common stock with respect to liquidation and dividends; are entitled to receive a cash dividend at the annual rate of 7.75% (based on the $50 per share issue price) payable quarterly (subject to increases of 0.5% for each six month period in respect of which the dividend is not timely paid, up to a maximum of 12%, subject to reversion to 7.75% upon payment of all accrued and unpaid dividends); are convertible into shares of the Company’s common stock at any time at the option of the series A preferred stockholder at a conversion price of $6.20 per share (based on the $50 per share issue price and subject to adjustment) or 8.065 shares of common stock for each Series A Preferred Share (subject to adjustment); are convertible into shares of the Company’s common stock (based on a conversion price of $6.20 per share, subject to adjustment) at the option of the Company if, after the third anniversary of the acquisition, the trading price of the Company’s common stock for 20 trading days within any 30 trading day period equals or exceeds $8.50 per share (subject to adjustment); may be redeemed by the Company in connection with certain change of control or acquisition transactions; will vote on an as-converted basis with the Company’s common stock; and have a separate vote over certain material transactions or changes involving the Company.

The accrued preferred stock dividends payable at March 31, 2014 were $Nil and at March 31, 2013 were $13,456. As of March 31, 2014, the effective rate of preferred dividend was 7.75% and as of March 31, 2013, the effective rate of preferred dividends was 12% (maximum).

F-30

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

18. STOCKHOLDERS’ EQUITY (continued)

Since January 2007, share-based compensation has been granted to management and directors from time to time.  The Company had no surviving, outstanding share-based compensation agreements with employees or directors prior to that date except as described below.  The Company has reserved 2,500,000 shares for issuance under the Company’s 2007 Long Term Incentive Plan (the “LTIP”) to employees, officers, directors and consultants.  At March 31, 2014, a total of 589,066 shares (662,659 shares at March 31, 2013) were available under the LTIP for future awards.

The following table summarizes shares issued to officers under employment agreements and restricted stock agreements from time to time.

Date issued	No. of Officers Covered	No. of Shares	Share Price	Reference	Expense for the Year ended
				Vesting	March 31, 2014	March 31, 2013
Oct 13, 2009	1	39,660	3.17	Employment Agreement	26	26
				20% in each of five fiscal years ending March 31, 2014.
Feb 24, 2010	2	76,691	4.34	Restricted Share Award Agreement	—	93
				Three years in equal installments on each anniversary date.
Apr 5, 2010	4	37,133	5.32	Restricted Share Award Agreement	—	66
				Three years in equal installments on each anniversary date.
Apr 8, 2011	6	86,217	7.94	Restricted Share Award Agreement	225	226
				Three years in equal installments on each anniversary date.
Apr 11, 2012	2	45,754	8.68	Restricted Share Award Agreement	132	132
				Three years in equal installments on each anniversary date.
Feb 22, 2013	4	32,387	5.96	Restricted Share Award Agreement	95	8
				Two years in equal installments on each anniversary date.
Jun 5, 2013	6	54,337	5.55	Restricted Share Award Agreement	83	—
				Three years in equal installments on each anniversary date.

For all share-based compensation, as employees and directors render service over the vesting periods, expense is recorded in general and administrative expenses. Generally this expense is for the straight-line amortization of the grant date fair market value adjusted for expected forfeitures. Other paid-in capital is correspondingly increased as the compensation is recorded. Grant date fair market value for all non-option share-based compensation is the average of the high and low trading prices on the date of grant.

F-31

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

18.STOCKHOLDERS’ EQUITY (continued)

The general characteristics of issued types of share-based awards granted under the LTIP through March 31, 2014 are as follows:

Stock Awards - All of the shares issued to non-employee outside directors vest immediately.  The first award to non-employee outside directors in the amount of 12,909 shares was made on February 13, 2008 for services through March 31, 2008.  During the fiscal year ended March 31, 2009, the Company awarded 15,948 shares for services from April 1, 2008 through December 31, 2008. The Company awarded 37,144 shares during the fiscal year ended March 31, 2010 for services from January 1, 2009 through March 31, 2010. During the fiscal year ended March 31, 2011, the Company awarded 14,007 shares for services provided from April 1, 2010 through March 31, 2011. During the fiscal year ended March 31, 2012, the Company awarded 10,722 shares for services from April 1, 2011 to March 31, 2012. During the fiscal year ended March 31, 2013, the Company awarded 10,854 shares for services provided from April 1, 2012 to March 31, 2013. During the fiscal year ended March 31, 2014, the Company awarded 19,256 shares for the services rendered from April 1, 2013 to March 31, 2014. Grant date fair market value for all these awards is the average of the high and low trading prices of the Company’s common stock on the date of grant.

On July 31, 2008, the Company’s Board of Directors authorized management to make payments effective as of that date to the participants in the management bonus program. Pursuant to the terms of the management bonus program, Rand issued 478,232 shares of common stock to such employee participants.

Stock Options - Stock options granted to management employees vest over three years in equal annual installments. All options issued through March 31, 2014 expire ten years from the date of grant. Stock option grant date fair values are determined at the date of grant using a Black-Scholes option pricing model, a closed-form fair value model based on market prices at the date of grant. At each grant date the Company has estimated a dividend yield of 0%.  The weighted average risk free interest rate within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant, which was 4.14% for the fiscal 2009 (July 2008) grant. Expected volatility for the fiscal 2009 grants was based on the prior 26 week period, which reflected trading and volume after the Company made major announcements on acquisitions and capital investments. Expected volatility was 39.49% for the fiscal 2009 grant. Options outstanding (479,785) at March 31, 2014, had a remaining weighted average contractual life of approximately four years.  The Company recorded compensation expenses of $Nil for the twelve month periods ended March 31, 2014 and March 31, 2013, respectively. All of the stock options granted in February 2008 (243,199) and July 2008 (236,586), had vested as of March 31, 2014.

Shares issued under Employees’ Retirement Savings Plans - The Company issued an aggregate of 204,336 shares to the individual retirement plans of all eligible Canadian employees under the LTIP from July 1, 2009 through March 31, 2014.  The Canadian employees’ plans are managed by independent brokerages. These shares vested immediately but are subject to the Company’s Insider Trading Policy. The shares were issued using the fair value share price, as defined by the LTIP, as of the first trading day of each month for that previous period’s accrued expense. The Company granted $Nil of equity of such accrued compensation expense for each of the twelve month periods ended March 31, 2014 and March 31, 2013.

Shares issued in lieu of cash compensation - The Company experienced a decrease in customer demand at the beginning of the 2009 sailing season and in an effort to maximize the Company’s liquidity, the Compensation Committee of the Company’s Board of Directors requested that five of the Company’s executive officers and all of its outside directors receive common stock as compensation in lieu of cash until the Company had better visibility about its outlook. As of November 16, 2009, the Company issued 158,325 shares to such officers and all of its outside directors at the average of the high and low trading prices Company’s common stock on the date of grant. The shares were issued under the LTIP and vested immediately. Beginning the third quarter of the fiscal year ended March 31, 2010, such executives and outside directors’ compensation reverted back to cash.

F-32

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

18.STOCKHOLDERS’ EQUITY (continued)

On September 16, 2010, the Company issued 15,153 shares to a key executive for payment of the fiscal year 2010 bonus at the average of the high and low trading prices of the Company’s common stock on the date of grant. The shares were issued under the LTIP and vested immediately. On February 15, 2013, the Company issued 94,993 shares to eligible Canadian and U.S. employees for a bonus at the average of the high and low trading prices of the Company’s common stock on the date of grant. The shares were issued under the LTIP and vested immediately.

Stock Options:	March 31, 2014			March 31, 2013
	Number of Options	Weighted Average Exercise Price per Share		Number of Options	Weighted Average Exercise Price per Share
Outstanding - beginning of year	479,785	$	5.66	479,785	$	5.66
Granted	—	—		—	—
Exercised	—	—		—	—
Forfeitures	—			—
Expired	—			—
Outstanding-end of year	479,785	$	5.66	479,785	$	5.66

Other data (In thousands except weighted average fair value):	March 31, 2014	March 31, 2013	March 31, 2012
Weighted average grant date fair value of options granted during year	—	—	—
Compensation expense	—	—	65
Unrecognized compensation cost at March 31	—	—	—
Weighted average remaining life for unrecognized compensation	0	0	0

F-33

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

18.STOCKHOLDERS’ EQUITY (continued)

Restricted Stock:		March 31, 2014				March 31, 2013
Date Issued		Number of Shares		Weighted Average Value at Grant Date		Number of Shares		Weighted Average Value at Grant Date
	Unvested beginning of the year	155,929		$	6.80	152,399		$	6.42
Jun 5, 2013	Granted	54,337		5.55		—		—
Feb 22, 2013	Granted	—		—		32,387		5.96
Apr 11, 2012	Granted	—		—		45,754		8.68
Oct 13, 2009	Vested	(7,932	)	3.17		(7,932	)	3.17
Feb 24, 2010	Vested	—		—		(25,563	)	4.34
Apr 5, 2010	Vested	(12,377	)	5.32		(12,377	)	5.32
Apr 8, 2011	Vested	(28,740	)	7.94		(28,739	)	7.94
Apr 11, 2012	Vested	(15,251	)	8.68		—		—
Feb 22, 2013	Vested	(16,194	)	5.96		—		—
	Cancelled	—		—		—		—
	Unvested - end of the year	129,772		$	6.47	155,929		$	6.80
	Other data (In thousands):			March 31, 2014				March 31, 2013
	Compensation expense			$	561			$	489
	Unrecognized compensation cost March 31			468				702
	Weighted average remaining life for unrecognized compensation			1.3 years				1.5 years

19. OUTSIDEVOYAGE CHARTER FEES

Outside voyage charter fees relate to the subcontracting of external vessels chartered to service the Company’s customers and supplement the existing shipments made by the Company’s operated vessels.

F-34

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

20. INTEREST EXPENSE

Interest expense is comprised of the following:

	Year ended March 31, 2014		Year ended March 31, 2013			Year ended March 31, 2012
Bank indebtedness	$	748	$	839		$	536
Amortization of deferred financing costs	584		814			1,018
Long-term debt -senior	7,444		7,719			6,409
Long-term debt -subordinated	454		—			—
Interest rate swaps	—		1,104			1,261
Interest rate caps	8		65			—
Subordinated note	—		—			83
Deferred payment liability	135		168			192
Interest capitalized	—		(538		)	(172		)
	$	9,373	$	10,171		$	9,327

F-35

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

21. SEGMENT INFORMATION

The Company has identified only one reportable segment under ASC 280 “Segment Reporting”.

Information about geographic operations is as follows:

	Year ended March 31, 2014		Year ended March 31, 2013		Year ended March 31, 2012
Revenue by country:
Canada	$	91,109	$	92,813	$	79,381
United States	64,695		63,825		68,444
	$	155,804	$	156,638	$	147,825

Revenues from external customers are allocated based on the country of the legal entity of the Company in which the revenues were recognized.

	March 31, 2014		March 31, 2013
Property and equipment by country:
Canada	$	99,050	$	100,887
United States	116,437		118,197
	$	215,487	$	219,084
Intangible assets by country:
Canada	$	9,666	$	8,081
United States	6,567		4,531
	$	16,233	$	12,612
Goodwill by country:
Canada	$	8,284	$	8,284
United States	1,909		1,909
	$	10,193	$	10,193
Total assets by country:
Canada	$	130,817	$	134,230
United States	134,189		136,608
	$	265,006	$	270,838

F-36

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

22. FINANCIAL INSTRUMENTS

Fair value of financial instruments

Financial instruments are comprised of cash and cash equivalents, accounts receivable, accounts payable, long-term debts, a deferred payment liability, accrued liabilities and bank indebtedness.  The estimated fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate book values because of the short-term maturities of these instruments.  The estimated fair value of senior debt approximates the carrying value as the debt bears interest at variable interest rates, which are based on rates for similar debt with similar credit rates in the open market.  The subordinated note and deferred payment liabilities are valued based on the interest rate of similar debt in the open market.

Fair value guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The contract for two interest rate swaps that was entered into effective February 15, 2008, expired on March 31, 2013. The fair value adjustment of the interest rate swap contract resulted in a gain of $1,087 for the twelve month period ended March 31, 2013 and a gain of $771 for the twelve month period ended March 31, 2012. This gain was included in the Company’s earnings for the twelve month periods ended March 31, 2013 and March 31, 2012.

Foreign exchange risk

Foreign currency exchange risk to the Company results primarily from changes in exchange rates between the Company’s reporting currency, the U.S. Dollar, and the Canadian dollar.  The Company is exposed to fluctuations in foreign exchange as a significant portion of revenue and operating expenses are denominated in Canadian dollars.

F-37

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

22. FINANCIAL INSTRUMENTS (continued)

Interest rate risk

The Company is exposed to fluctuations in interest rates as a result of its banking facilities and senior debt bearing variable interest rates.

In December 2012, the Company entered into two interest rate cap contracts covering 50% of its outstanding term debt on the date of such contracts at a cap of three month Libor at 2.5% on its U.S. Term Debt borrowings and a cap of three month BA rates at 3.0% on its Canadian Term Debt borrowings. The notional amount on each of these instruments will decrease with each scheduled principal payment of the term loan under the Third Amended and Restated Credit Agreement. The interest rate cap contracts will terminate on December 1, 2015. Such contracts cover approximately 65% of first lien term debt as of March 31, 2014.

The Company did not designate the two expired swap contracts for hedge accounting treatment and therefore changes in fair value of these contracts were recorded in earnings as follows:

Derivatives not designated as hedging instrument:	Location of gain -Recognized in earnings	Year ended March 31, 2014		Year ended March 31, 2013			Year ended March 31, 2012
Interest rate swap contracts liability	Other (income) and expenses	$	—	$	(1,087	)	$	(771	)

Credit risk

Accounts receivable credit risk is mitigated by the diversification of the Company’s customers among industries and the short shipping season.

Liquidity risk

The ongoing tightened credit in financial markets and continued general economic downturn may adversely affect the ability of the Company’s customers and suppliers to obtain financing for significant operations and purchases and to perform their obligations under agreements with the Company.  The tightening of credit could (i) result in a decrease in, or cancellation of, existing business, (ii) limit new business, (iii) negatively impact the Company’s ability to collect accounts receivable on a timely basis and (iv) affect the eligible receivables that are collateral for the Company’s lines of credit.  The Company makes seasonal net borrowings under its revolving credit facility during the first quarter of each fiscal year to fund working capital needed to commence the sailing season. Such borrowings are then reduced during the second half of each fiscal year.

F-38

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

23. EARNINGS PER SHARE

The Company had a total of 17,933,859 shares of common stock issued and outstanding as of March 31, 2014, out of an authorized total of 50,000,000 shares. The fully diluted calculation utilizes a total of 20,332,002 shares for the twelve month period ended March 31, 2014, 20,265,284 for the twelve month period ended March 31, 2013 and 18,853,364 shares for the twelve month period ended March 31, 2012. Since the calculation for twelve months periods ended March 31, 2014, March 31, 2013 and March 31, 2012 are anti-dilutive, the basic and fully diluted weighted average shares outstanding are 17,912,647, 17,740,372 and 16,336,930 respectively. The convertible preferred shares convert to an aggregate of 2,419,355 common shares based on a conversion price of $6.20.

	Year ended March 31, 2014			Year ended March 31, 2013			Year ended March 31, 2012
Numerator:
Net income before preferred dividends	$	(4,507	)	$	(3,819	)	$	8,123
Preferred stock dividends	(3,429		)	(3,173		)	(2,806		)
Net income applicable to common stockholders	$	(7,936	)	$	(6,992	)	$	5,317
Denominator:
Weighted average common shares for basic EPS	17,912,647			17,740,372			16,336,930
Effect of dilutive securities:
Average price during period	5.62			7.26			7.10
Long term incentive stock option plan	479,785			479,785			479,785
Average exercise price of stock options	5.66			5.66			5.66
Shares that could be acquired with the proceeds of options	—			374,228			382,705
Dilutive shares due to options	—			105,557			97,080
Weighted average convertible preferred shares at $6.20	2,419,355			2,419,355			2,419,355
Weighted average common shares for diluted EPS	17,912,647			17,740,372			16,336,930
Basic EPS	$	(0.44	)	$	(0.39	)	$	0.33
Diluted EPS	$	(0.44	)	$	(0.39	)	$	0.33

F-39

RAND LOGISTICS, INC.

Notes to the Consolidated Financial Statements

(U.S. Dollars 000’s except for Shares and Per Share data)

24. RELATED PARTY TRANSACTIONS

The Company presently occupies office space provided by the affiliates of our Executive Chairman and our President. Such related parties have agreed that they will make such office space, as well as certain office and secretarial services, available to the Company as may be required by the Company from time to time. The Company agreed to pay such affiliates $13 per month, such that total lease expense paid to such affiliates was $165 in the fiscal year ended March 31, 2014, $155 in the fiscal year ended March 31, 2013 and $151 in the fiscal year ended March 31, 2012.   The Company reimbursed such affiliates for certain out of pocket costs of $75 in 2014, $57 in 2013 and $39 in 2012 for office expenses and other services. The consolidated statements of operations for the fiscal years ended March 31, 2014, 2013 and 2012 include $240, $212 and $190 respectively, related to such agreement.

25. ECONOMIC DEPENDENCE

The Company had two customers in the fiscal year ended March 31, 2014, one customer in the fiscal year ended March 31, 2013 and one customer in the fiscal year ended March 31, 2012, in excess of 10% of revenue. Customers in excess of 10% of revenues accounted for a total of 24% of net revenue in the fiscal year ended March 31, 2014, 12% of net revenue in the fiscal year ended March 31, 2013 and 14.1% of net revenue in the fiscal year March 31, 2012.

26. ACCUMULATED OTHER COMPREHENSIVE INCOME

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive income (loss), which is defined as the change in equity arising from non-owner sources. Comprehensive (loss) income is reflected in the Consolidated Statement of Stockholder's equity and Other Comprehensive (Loss) Income. The components of, and changes in, comprehensive income (loss) and accumulated other comprehensive (loss) income consist of translation adjustments arising from the translation of the parent Company accounts in the Canadian subsidiary from Canadian dollar functional currency to U.S. dollar reporting currency. Included in comprehensive (loss) income and accumulated other comprehensive income are the effects of foreign currency translation adjustments loss of $4,144 in the fiscal year ended March 31, 2014, loss of $1,159 in the fiscal year ended March 31, 2013 and loss of $651 in fiscal year ended March 31, 2012.

27. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a tabulation of the unaudited quarterly results of operations for the two years ended March 31, 2014:

	Three Months Ended
	June 30, 2013		September 30, 2013		December 31, 2013		March 31, 2014
Total Revenue	$	48,401	$	50,541	$	49,899	$	6,963
Operating Income	6,492		10,200		7,674		(13,417		)
Net income applicable to common stockholders	1,724		336		775		(10,771		)
Net income (loss) per share – basic and diluted	$	0.10	$	0.02	$	0.04	$	(0.60	)

	Three Months Ended
	June 30, 2012		September 30, 2012		December 31, 2012		March 31, 2013
Total Revenue	$	49,612	$	50,571	$	49,542	$	6,913
Operating Income	7,579		9,911		6,059		(15,447		)
Net income applicable to common stockholders	2,337		2,100		2,612		(14,041		)
Net income (loss) per share – basic and diluted	$	0.13	$	0.12	$	0.15	$	(0.79	)

F-40