UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.
20549


________________




FORM
10-Q




(Mark One)


[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
quarterly period endedJune 30,
2010




OR




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






For the
transition period
from                    to


________________




Commission File
Number 001–33831






EAGLE
BULK SHIPPING INC.




(Exact name of Registrant as specified
in its charter)







Republic
      of the Marshall Islands
            
            98–0453513(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





477
      Madison Avenue
              New
      York, New York 10022
              (Address
      of principal executive offices)(Zip
Code)





Registrant's
telephone number, including area code: (212) 785–2500


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


YESX          NO
__




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, 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 (or for such shorter period that the registrant was required to submit
and post such files).


YES  __           NO
__




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




Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.


Common
Stock, par value $0.01 per share, 62,215,915 shares outstanding as of August 6,
2010.





















TABLE OF CONTENTSPagePART
      I
            FINANCIAL
      INFORMATIONItem
      1.
            Financial
      StatementsConsolidated
      Balance Sheets as of June 30, 2010 (unaudited) andDecember
      31, 2009
            3Consolidated
      Statements of Operations (unaudited) for the three and six months ended
      June 30, 2010 and 2009
            4Consolidated
      Statement of Stockholders' Equity (unaudited) for the six months ended
      June 30, 2010
            5Consolidated
      Statements of Cash Flows (unaudited) for the six months ended June 30,
      2010 and 2009
            6Notes to Consolidated Financial Statements (unaudited)
            7Item
      2.
            Management's
      Discussion and Analysis of Financial Condition
              and
      Results of
      Operations
            15Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risks
            28Item
      4.
            Controls
      and Procedures
            28PART
      II
            OTHER
      INFORMATIONItem
      1.
            Legal
      Proceedings
            29Item
      1A.
            Risk
      Factors
            29Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            29Item
      3.
            Defaults
      upon Senior Securities
            29Item
      4.
            (Removed
      and Reserved)
            29Item
      5.
            Other
      Information
            29Item
      6.
            Exhibits
            30Signatures
            31











Part
1 : FINANCIAL INFORMATION


Item
1 : Financial Statements


EAGLE
BULK SHIPPING INC.


CONSOLIDATED
BALANCE SHEETS


June
      30, 2010
            
            
            December
      31, 2009ASSETS:Current
      assets:Cash
      and cash equivalents
            
            $
            102,134,080
            
            
            $
            71,344,773Accounts
      receivable
            
            
            10,552,202
            
            
            
            7,443,450Prepaid
      expenses
            
            
            3,552,789
            
            
            
            4,989,446Fair
      value above contract value of time charters acquired
            
            
            597,008
            
            
            
            427,359Total
      current assets
            
            
            116,836,079
            
            
            
            84,205,028Noncurrent
      assets:Vessels
      and vessel improvements, at cost, net of accumulated
              depreciation
      of $153,210,344 and $125,439,001, respectively
            
            
            1,409,037,717
            
            
            
            1,010,609,956Advances for vessel construction
            
            
            240,592,076
            
            
            
            464,173,887Other fixed assets, net of accumulated amortization of $94,914
      and  $59,519,
              respectively
            
            
            298,875
            
            
            
            258,347Restricted cash
            
            
            18,276,056
            
            
            
            13,776,056Deferred drydock costs
            
            
            5,087,373
            
            
            
            5,266,289Deferred
      financing costs
            
            
            18,768,770
            
            
            
            21,044,379Fair value above contract value of time charters acquired
            
            
            3,868,278
            
            
            
            4,103,756Fair value of derivative instruments
            
            
            —
            
            
            
            4,765,116Total
      noncurrent assets
            
            
            1,695,929,145
            
            
            
            1,523,997,786Total
      assets
            
            $
            1,812,765,224
            
            
            $
            1,608,202,814LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts payable
            
            $
            2,385,864
            
            
            $
            2,289,333Accrued interest
            
            
            8,363,052
            
            
            
            7,810,931Other accrued liabilities
            
            
            10,831,045
            
            
            
            3,827,718Deferred revenue and fair value below contract value of time
      charters
              acquired
            
            
            6,164,231
            
            
            
            7,718,902Unearned charter hire revenue
            
            
            5,970,032
            
            
            
            4,858,133Total
      current liabilities
            
            
            33,714,224
            
            
            
            26,505,017Noncurrent
      liabilities:Long-term debt
            
            
            1,080,240,926
            
            
            
            900,170,880Deferred revenue and fair value below contract value of time
      charters
              acquired
            
            
            25,187,956
            
            
            
            26,389,796Fair value of derivative instruments
            
            
            29,520,148
            
            
            
            35,408,049Total
      noncurrent liabilities
            
            
            1,134,949,030
            
            
            
            961,968,725Total
      liabilities
            
            
            1,168,663,254
            
            
            
            988,473,742Commitment
      and contingenciesStockholders'
      equity:Preferred stock, $.01 par value, 25,000,000 shares authorized, none
      issued
            
            
            —
            
            
            
            —Common stock, $.01 par value, 100,000,000 shares authorized, 62,215,915
      and 62,126,665 shares issued and outstanding, respectively
            
            
            622,159
            
            
            
            621,267Additional paid-in capital
            
            
            731,913,790
            
            
            
            724,250,125Retained earnings (net of dividends declared of $262,118,388 as
      of
              June
      30, 2010 and December 31, 2009, respectively)
            
            
            (58,913,831
            )
            
            
            (74,499,387
            )Accumulated other comprehensive loss
            
            
            (29,520,148
            )
            
            
            (30,642,933
            )Total
      stockholders' equity
            
            
            644,101,970
            
            
            
            619,729,072Total
      liabilities and stockholders' equity
            
            $
            1,812,765,224
            
            
            $
            1,608,202,814






The
accompanying notes are an integral part of these Consolidated Financial
Statements.


3





EAGLE
BULK SHIPPING INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)








Three Months Ended
            
            
            Six Months EndedJune 30, 2010
            
            
            June 30, 2009
            
            
            June 30, 2010
            
            
            June 30, 2009Revenues,
      net of Commissions
            
            $
            65,612,840
            
            
            $
            53,021,338
            
            
            $
            119,856,565
            
            
            $
            108,999,004Vessel
      Expenses
            
            
            16,052,945
            
            
            
            12,933,808
            
            
            
            31,530,334
            
            
            
            26,005,005Depreciation
      and Amortization
            
            
            15,537,068
            
            
            
            10,943,247
            
            
            
            29,243,437
            
            
            
            21,234,163General
      and Administrative Expenses
            
            
            10,479,379
            
            
            
            9,041,185
            
            
            
            19,852,146
            
            
            
            17,944,213Total
      Operating Expenses
            
            
            42,069,392
            
            
            
            32,918,240
            
            
            
            80,625,917
            
            
            
            65,183,381Operating
      Income
            
            
            23,543,448
            
            
            
            20,103,098
            
            
            
            39,230,648
            
            
            
            43,815,623Interest
      Expense
            
            
            12,607,754
            
            
            
            6,815,853
            
            
            
            23,784,740
            
            
            
            13,302,170Interest
      Income
            
            
            (76,227
            )
            
            
            (60,290
            )
            
            
            (139,648
            )
            
            
            (70,863
            )Net
      Interest Expense
            
            
            12,531,527
            
            
            
            6,755,563
            
            
            
            23,645,092
            
            
            
            13,231,307Net
      Income
            
            $
            11,011,921
            
            
            $
            13,347,535
            
            
            $
            15,585,556
            
            
            $
            30,584,316Weighted
      Average Shares Outstanding:Basic
            
            
            62,176,684
            
            
            
            52,252,714
            
            
            
            62,215,915
            
            
            
            49,656,431Diluted
            
            
            62,336,774
            
            
            
            52,295,221
            
            
            
            62,366,183
            
            
            
            49,686,359Per
      Share Amounts:Basic
      Net Income
            
            $
            0.18
            
            
            $
            0.26
            
            
            $
            0.25
            
            
            $
            0.62Diluted
      Net Income
            
            $
            0.18
            
            
            $
            0.26
            
            
            $
            0.25
            
            
            $
            0.62










The
accompanying notes are an integral part of these Consolidated Financial
Statements.














4





EAGLE
BULK SHIPPING INC.


CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)


FOR
THE SIX MONTHS ENDED JUNE 30, 2010







Common
                Shares
            
            
            Common
                Shares
                Amount
            
            
            Additional
                Paid-In
                Capital
            
            
            Net Income
            
            
            Accumulated
      Deficit
            
            
            Other Comprehensive Income
      (Loss
            
            
            Total Stockholders'
      EquityBalance
      at December 31, 2009
            
            
            62,126,665
            
            
            $
            621,
      267
            
            
            $
            724,250,125
            
            
            
            
            
            $
            (74,499,387
            )
            
            $
            (30,642,933
            )
            
            $
            619,729,072Comprehensive
      income :Net
      income
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            $
            15,585,556
            
            
            
            15,585,556
            
            
            
            —
            
            
            
            15,585,556Net
      unrealized gain on derivatives
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            1,122,785
            
            
            
            1,122,785Comprehensive
      income
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            16,708,341Issuance
      of restricted shares
            
            
            89,250
            
            
            
            892
            
            
            
            (366,300
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (365,408
            )Non-cash
      compensation
            
            
            —
            
            
            
            —
            
            
            
            8,029,965
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            8,029,965Balance
      at June 30, 2010
            
            
            62,215,915
            
            
            $
            622,159
            
            
            $
            731,913,790
            
            
            
            
            
            
            $
            (58,913,831
            )
            
            $
            (29,520,148
            )
            
            $
            644,101,970





_________________________




The
accompanying notes are an integral part of these Consolidated Financial
Statements.










5


EAGLE
BULK SHIPPING INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)






Six
      Months EndedJune 30, 2010
              
              
              June 30, 2009Cash
      flows from operating activities:Net
      income
              
              $
              15,585,556
              
              
              $
              30,584,316Adjustments
      to reconcile net income to net cash provided by operating
      activities:Items
      included in net income not affecting cash flows:Depreciation
              
              
              27,806,738
              
              
              
              20,019,912Amortization
      of deferred drydocking costs
              
              
              1,436,699
              
              
              
              1,214,251Amortization
      of deferred financing costs
              
              
              1,332,743
              
              
              
              509,514Amortization
      of fair value below contract value of time charter acquired
              
              
              (2,036,105
              )
              
              
              (1,297,180
              )Non-cash
      compensation expense
              
              
              8,029,965
              
              
              
              7,241,717Changes in operating assets and liabilities:Accounts
      receivable
              
              
              (3,108,752
              )
              
              
              (1,015,571
              )Other
      assets
              
              
              —
              
              
              
              (1,901,716
              )Prepaid
      expenses
              
              
              1,436,657
              
              
              
              (211,897
              )Accounts
      payable
              
              
              96,531
              
              
              
              750,332Accrued
      interest
              
              
              2,403,559
              
              
              
              487,835Accrued
      expenses
              
              
              7,003,327
              
              
              
              4,990,685Drydocking
      expenditures
              
              
              (1,257,783
              )
              
              
              (1,186,408
              )Deferred
      revenue
              
              
              (654,577
              )
              
              
              6,551,463Unearned
      charter hire revenue
              
              
              1,111,899
              
              
              
              (280,749
              )Net
      cash provided by operating activities
              
              
              59,186,457
              
              
              
              66,456,504Cash
      flows from investing activities:Vessels
      and vessel improvements and advances for vessel construction
              
              
              (203,525,865
              )
              
              
              (60,436,569
              )Purchase
      of other fixed assets
              
              
              (75,923
              )
              
              
              (61,689
              )Net cash used in investing activities
              
              
              (203,601,788
              )
              
              
              (60,498,258
              )Cash flows from financing activities:Issuance
      of Common Stock
              
              
              —
              
              
              
              99,999,997Equity
      issuance costs
              
              
              —
              
              
              
              (2,708,951
              )Bank
      borrowings
              
              
              180,070,046
              
              
              
              19,505,000Changes
      in restricted cash
              
              
              (4,500,000
              )
              
              
              (1,000,000
              )Deferred
      financing costs
              
              
              —
              
              
              
              (1,296,994
              )Cash used to settle net share
      equity awards
              
              
              (365,408
              )
              
              
              (406,487
              )Net cash
      provided by financing
      activities
              
              
              175,204,638
              
              
              
              114,092,565Net
      increase in cash
              
              
              30,789,307
              
              
              
              120,050,811Cash
      at beginning of period
              
              
              71,344,773
              
              
              
              9,208,862Cash at end of period
              
              $
              102,134,080
              
              
              $
              129,259,673
 _________________________


The
accompanying notes are an integral part of these Consolidated Financial
Statements.


6


EAGLE
BULK SHIPPING INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





Note
1.  Basis of Presentation and General Information





The accompanying consolidated financial
statements include the accounts of Eagle Bulk Shipping Inc. and its wholly-owned
subsidiaries (collectively, the "Company", "we" or "our"). The Company is
engaged in the ocean transportation of dry bulk cargoes worldwide through the
ownership and operation of dry bulk vessels. The Company's fleet is comprised of
Supramax and Handymax bulk carriers and the Company operates its business in one
business segment.





The Company is a holding company
incorporated in 2005 under the laws of the Republic of the Marshall Islands and
is the sole owner of all of the outstanding shares of its wholly-owned
subsidiaries incorporated in the Republic of the Marshall Islands. The primary
activity of each of the subsidiaries is the ownership of a vessel. The
operations of the vessels are managed by a wholly-owned subsidiary of the
Company, Eagle Shipping International (USA) LLC, a Republic of the Marshall
Islands limited liability company.





As of June 30, 2010, the Company's
operating fleet consisted of 36 vessels. The Company has an extensive vessel
newbuilding program and as of June 30, 2010 had contracts for the construction
of 11 vessels. The following tables present certain information concerning the
Company's fleet as of June 30, 2010:





No. of Vessels
            
            Dwt
            
            Vessel
              Type
            
            Delivery
            
            EmploymentVessels in Operation36
      Vessels
            
            
            1,920,346
            
            33
      Supramax
            
            
            
            Time
      Charter3
      Handymax
            
            
            
            Time
      CharterVessels to be delivered1
      Vessel
            
            
            53,100
            
            53,100
      dwt series Supramax
            
            
            2010
            
            Charter
      Free10
      Vessels
            
            
            580,000
            
            58,000
      dwt series Supramax
            
            
            2010-2011
            
            10
      Vessels on Time Charter







The following table represents certain
information about the Company's charterers which individually accounted for more
than 10% of the Company's gross time charter revenue during the periods
indicated:








%
      of Consolidated Time Charter RevenueThree
      Months Ended
            Six
      Months EndedJune
      30, 2010
            June
      30, 2009
            June
      30, 2010
            June
      30, 2009ChartererCharterer
      A
            20%
            14%
            21%
            17%Charterer
      B
            -
            12%
            10%
            12%Charterer
      C
            -
            17%
            -
            17%Charterer
      D
            -
            20%
            11%
            19%Charterer
      E
            16%
            -
            14%
            -





7




The accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States, and the rules and regulations of the
Securities and Exchange Commission ("SEC") which apply to interim financial
statements and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
normally included in
consolidated financial statements prepared in conformity with generally accepted
accounting principles in the United States. They should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's 2009 Annual Report on Form 10-K.





The
accompanying unaudited consolidated financial statements include all adjustments
(consisting of normal recurring adjustments) that management considers necessary
for a fair presentation of its consolidated financial position and results of
operations for the interim periods presented. The results of operations for the
interim periods are not necessarily indicative of the results that may be
expected for the entire year.





Note
2.  New Accounting Pronouncements




In
January 2010, the Financial Accounting Standards Board ("FASB") issued ASU
2010-06, Fair Value
Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair
Value Measurements. This ASU requires new disclosures and clarifies
certain existing disclosure requirements about fair value measurements. ASU
2010-06 requires a reporting entity to disclose significant transfers in and out
of Level 1 and Level 2 fair value measurements, to describe the reasons for the
transfers, and to present separately information about purchases, sales,
issuances, and settlements for fair value measurements using significant
unobservable inputs. ASU 2010-06 is effective for interim and annual reporting
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of activity in
Level 3 fair value measurements, which is effective for interim and annual
reporting periods beginning after December 15, 2010, early adoption is
permitted. The adoption of ASU 2010-06 did not have a material impact on our
financial position, results of operations, or cash flows.





In
February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855)
- Amendments to Certain
Recognition and Disclosure Requirements. This ASU removes the requirement
for an SEC filer to disclose a date through which subsequent events have been
evaluated in both issued and revised financial statements. All the amendments in
ASU 2010-09 were effective upon issuance (February 24, 2010) except for the use
of the issued date for conduit debt obligors. That amendment is effective for
interim or annual periods ending after June 15, 2010. The adoption of ASU
2010-09 did not have a material impact on our financial position, results of
operations, or cash flows.





In March
2010, the FASB issued ASU 2010-11, Derivatives and Hedging (Topic
815) – Scope Exception
Related to Embedded Credit Derivatives. This ASU removes a scope
exception, and an entity that has a beneficial interest in securitized financial
assets that includes a credit derivative feature must evaluate that feature for
bifurcation from the host financial asset in accordance with the guidance at ASC
815. ASU 2010-11 is effective at the beginning of a reporting entity's first
fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the
beginning of an entity's first fiscal quarter beginning after March 5, 2010. We
do not expect that the adoption of ASU 2010-11 will have a material impact on
our financial position, results of operations, or cash flows.




Note
3.  Vessels





a. Vessel and Vessel
Improvements





At June 30, 2010, the Company's
operating fleet consisted of 36 dry bulk vessels. In January the Company took
delivery of the Thrasher, Crane, Egret and Golden Eagle.  In February
the Company took delivery of the Avocet and Imperial Eagle. In April, May and
June the Company took delivery of the Gannet Bulker, Grebe Bulker and Ibis
Bulker, respectively.





On April 5, 2010, the Company decided
to sell the oldest and smallest vessel in its fleet, the Griffon a
1995-built Handymax.  On May 18, 2010, the Company reached an
agreement to sell the vessel for $21,070,000, after brokerage commission payable
to a third party.  The Company expects to realize a net gain of
approximately $110,000 during the third quarter of 2010. The Griffon is not
available for delivery before August 16, 2010.





8


Vessel
and vessel improvements:


Vessels
      and Vessel Improvements, at December 31, 2009
            $
            1,010,609,956Vessel
      Improvements
            
            2,557,053Delivery
      of Newbuild Vessels
            
            423,642,051Depreciation
      Expense
            
            (27,771,343
            )Vessels
      and Vessel Improvements, at June 30, 2010
            $
            1,409,037,717





b. Advances for Vessel
Construction





The Company took delivery of the Golden
Eagle and Imperial Eagle, the last two Japanese-built vessels, in
January and February 2010, respectively, and seven Chinese-built vessels the
Thrasher, Crane and Egret, in January 2010, Avocet in February 2010 and Gannet
Bulker, Grebe Bulker and Ibis Bulker in April, May and June, respectively. In
2009, the Company took delivery of four newly constructed vessels. Two vessels
from a Japanese shipyard, the Crested Eagle and Stellar Eagle, were delivered in
January and March 2009, respectively. Two vessels from a Chinese shipyard, the
Bittern and Canary, were delivered in October and December 2009, respectively.
In 2008 the Company took delivery of three vessels, the Wren and Woodstar were
delivered by a Chinese shipyard in June and October 2008, respectively, and the
Crowned Eagle, first of our five Japanese built vessels, was delivered in
November 2008.





As of June 30, 2010, the Company has 11
Supramax vessels under construction at a shipyard in China. The total contract
cost of the construction project in China is approximately $399,600,000, of
which the Company has advanced $143,460,000 in payments towards the construction
of these vessels. These vessels are expected to be delivered between 2010 and
2011. The Company will incur additional costs relating to the construction of
these vessels, including capitalized interest, insurance, legal, and technical
supervision costs.





Advances
for Vessel Construction:


Advances
      for Vessel Construction, at December 31, 2009
            $
            464,173,887Progress
      Payments
            
            180,662,487Capitalized
      Interest
            
            8,275,439Legal
      and Technical Supervision Costs
            
            11,122,314Delivery
      of Newbuild Vessels
            
            (423,642,051
            )Advances
      for Vessel Construction, at June 30, 2010
            $
            240,592,076





Note
4.  Long-Term Debt





At June
30, 2010, the Company's debt consisted of $1,080,240,926 in net borrowings under
its amended Revolving Credit Facility. These borrowings consisted of
$872,944,334 for the 36 vessels currently in operation and $207,296,592 to fund
the Company's newbuilding program.





On August
4, 2009, the Company entered into a third Amendatory Agreement to its revolving
credit facility dated October 19, 2007. Among other things, the credit facility
reduces the amount of the credit facility to $1,200,000,000 with maturity in
July 2014. The agreement also modifies the minimum security covenant, the
minimum net worth covenant, and the minimum interest coverage ratio covenant,
until such time as the Company can comply with the original covenants for two
consecutive accounting periods. In the interim, the measurement of the three
covenants at the end of each accounting period has been amended as follows: (a)
The minimum security covenant has been suspended, (b) the minimum net worth
covenant has been amended to a threshold minimum of $400 million plus an amount
equal to fifty percent of any equity received by the Company, with the
determination of net worth to utilize book value of vessel assets as stated in
the financial statements rather than the market value, and (c) until
reinstatement of the original minimum security and net worth covenants, for 24
months from July 1, 2009 to June 30, 2011, at each accounting period, the
Company's cumulative EBITDA (EBITDA as defined in the credit agreement) will at
all times be not
less than 120% of the cumulative loan interest incurred on a trailing
four-quarter basis, and for each accounting period after June 30, 2011, the
Company's cumulative EBITDA will at all times be not less than 130% of the
cumulative loan interest incurred on a trailing four-quarter basis. The
amendment also requires that until the Company is in compliance with the
original covenants for two consecutive accounting periods, the Company will use
half the net proceeds from any equity issuance to reduce the facility, including
$48,645,523 from the equity raised in 2009.  These payments reduced
the available amount of the credit facility to $1,151,354,477. As of June 30,
2010, $71,113,551 is available for additional borrowings under the credit
facility. The Company will continue to be able to borrow the undrawn portion of
the facility and the amounts borrowed will bear interest at LIBOR plus 2.50%.
Undrawn portions of the facility will bear a commitment fee of 0.7%. The
facility is available in full until July 2012 when availability will begin to
decline in four semi-annual reductions of $53,969,741 with a full repayment at
maturity.






9





Under the terms of the third amendment
of the revolving credit facility, among other things, we will maintain with the
lender an amount not less than the greater of $500,000 per delivered vessel or
an amount equal to any reductions in the total commitments scheduled to be
effected within the next six months less the amount of the then unutilized
facility. As of June 30, 2010, the Company has recorded $18,000,000 as
Restricted cash in the accompanying balance sheets.





Our obligations under the amended
revolving credit facility are secured by a first priority mortgage on each of
the vessels in our fleet and such other vessels that we may from time to time
include with the approval of our lender, and by a first assignment of all
freights, earnings, insurances and requisition compensation relating to our
vessels. The facility also limits our ability to create liens on our assets in
favor of other parties.





For the three months ended June 30,
2010, interest rates on the outstanding debt ranged from 2.75% to 7.73%,
including a margin of 2.50% over LIBOR applicable under the terms of the amended
revolving credit facility. The weighted average effective interest rate was
5.57%. The Company incurred a commitment fee of 0.70% on the undrawn portion of
the revolving credit facility. Interest costs on borrowings used to fund the
Company's newbuilding program are capitalized until the vessels are delivered.
Interest Expense, exclusive of capitalized interest, consists of:





Three
      Months Ended
            
            
            Six
      Months EndedJune
      30, 2010
            
            
            June
      30, 2009
            
            
            June
      30, 2010
            
            
            June
      30, 2009Loan
      Interest
            
            $
            11,859,728
            
            
            $
            6,546,396
            
            
            $
            22,451,997
            
            
            $
            12,792,656Amortization
      of Deferred Financing Costs
            
            
            748,026
            
            
            
            269,457
            
            
            
            1,332,743
            
            
            
            509,514Total
      Interest Expense
            
            $
            12,607,754
            
            
            $
            6,815,853
            
            
            $
            23,784,740
            
            
            $
            13,302,170








Interest
paid, exclusive of capitalized interest, in the six month periods ended June 30,
2010 and 2009 amounted to $20,048,980 and $6,425,528, respectively.





Interest
Rate Swaps





The Company has entered into interest
rate swaps to effectively convert a portion of its debt from a floating to a
fixed rate basis. Under these swap contracts, exclusive of applicable margins,
the Company will pay fixed rate interest and receive floating-rate interest
amounts based on three-month LIBOR settings. The swaps are designated and
qualify as cash flow hedges. The following table summarizes the interest rate
swaps in place as of June 30, 2010 and December 31, 2009.





Notional
      Amount Outstanding –
              June
      30, 2010
            
            Notional
      Amount Outstanding –
              December
      31, 2009
            
            Fixed
      Rate
            
            Maturity$                  —
            
            $     25,776,443
            
            4.905%
            
            03/201010,995,000
            
            10,995,000
            
            4.980%
            
            08/2010202,340,000
            
            202,340,000
            
            5.040%
            
            08/2010100,000,000
            
            100,000,000
            
            4.220%
            
            09/201030,000,000
            
            30,000,000
            
            4.538%
            
            09/2010144,700,000
            
            144,700,000
            
            3.580%
            
            10/20119,162,500
            
            9,162,500
            
            3.515%
            
            10/20113,405,174
            
            3,405,174
            
            3.550%
            
            10/201117,050,000
            
            17,050,000
            
            3.160%
            
            11/201125,048,118
            
            25,048,118
            
            4.740%
            
            12/201136,752,038
            
            36,752,038
            
            5.225%
            
            08/201281,500,000
            
            81,500,000
            
            3.895%
            
            01/201384,800,000
            
            84,800,000
            
            3.900%
            
            09/2013$  745,752,830
            
            $  771,529,273





10





The
Company records the fair value of the interest rate swaps as an asset or
liability on its balance sheet. The effective portion of the swap is recorded in
accumulated other comprehensive income. Accordingly, liabilities of $29,520,148
and $35,408,049 have been recorded in Fair value of derivative instruments in
the Company's balance sheets as of June 30, 2010 and December 31,
2009.




Foreign
Currency swaps





The
Company has entered into foreign exchange swap transactions to hedge foreign
currency risks on its capital asset transactions (vessel newbuildings). The
swaps were designated and qualified as cash flow hedges.





At
December 31, 2008, the Company had outstanding foreign currency swap contracts
for notional amounts aggregating 8.6 billion Japanese yen swapped into the
equivalent of $80,378,030. In February 2009, the Company fixed the gain on its
outstanding foreign currency swaps contracts. This gain was recognized upon
delivery of the remaining vessels as an offset to the cost of the vessels.
During the year ended December 31, 2009, the Company recognized a foreign
currency gain of $8,710,806 which offset the cost of the Japanese vessels upon
delivery or payment incurred. The Company recognized in the first quarter of
2010 a foreign currency gain of $4,765,116 which offset the cost of the last two
Japanese vessels upon their delivery in January 2010 and February
2010.





The Company records the fair value of
the currency swaps as an asset or liability in its financial statements. The
effective portion of the currency swap is recorded in accumulated other
comprehensive income. As of June 30, 2010 there are no foreign currency swaps
outstanding. Accordingly, an amount of $0 and $4,765,116 had been recorded as an
asset in Fair value of derivative instruments in the accompanying balance sheets
as of June 30, 2010, and December 31, 2009, respectively.





Note  5.  Fair
Value Measurements





The following methods and assumptions
were used to estimate the fair value of each class of financial
instrument:





Cash and cash equivalents—the
carrying amounts reported in the consolidated balance sheet for interest-bearing
deposits approximate their fair value due to their short-term nature
thereof.





Debt—the carrying amounts of
borrowings under the revolving credit agreement approximate their fair value,
due to the variable interest rate nature thereof.





Interest rate swaps—the fair
value of interest rate swaps (used for hedging purposes) is the estimated amount
that the Company would receive or pay to terminate the swaps at the reporting
date.





Foreign currency swaps—the
fair value of foreign currency swaps (used for hedging purposes) is the
estimated amount that the Company would receive or pay to terminate the swaps at
the reporting date.





The Company defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements.  The fair value hierarchy for disclosure of
fair value measurements is as follows:


11




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


Level 2 –
Quoted prices for similar assets and liabilities in active markets or inputs
that are observable


Level 3 –
Inputs that are unobservable (for example cash flow modeling inputs based on
assumptions)





The following table summarizes assets
and liabilities measured at fair value on a recurring basis at June 30,
2010:


Level
      1
            
            
            Level
      2
            
            
            Level
      3Assets:Foreign
      currency contracts
            
            
            —
            
            
            
            —
            
            
            
            —Liabilities:Interest
      rate contracts
            
            
            —
            
            
            $
            29,520,148
            
            
            
            —





The fair value of the interest rate
contracts are based on quoted market prices for a similar contract that can be
obtained from external sources.





The Company's policy is to recognize
any transfers into fair value measurement hierarchy levels and transfers out of
levels at the beginning of each reporting period. There were no transfers in or
out of Level 2 measurements for the six-month period ended June 30,
2010.





Note  6.  Commitments
and Contingencies





Vessel Technical Management
Contract





The Company has technical management
agreements for some of its vessels with independent technical managers. The
Company paid average monthly technical management fees of $9,652 and $9,035 per
vessel during the six months ended June 30, 2010 and 2009,
respectively.





On August
4, 2009, the Company entered into a management agreement (the "Management
Agreement") with Delphin Shipping LLC ("Delphin"), a Marshall Islands limited
liability company affiliated with Kelso Investment Associates VII, and KEP VI,
LLC and the Company's Chief Executive Officer, Sophocles
Zoullas.  Delphin was formed for the purpose of acquiring and
operating dry bulk and other vessels. Under the terms of the Management
Agreement, the Company will provide commercial and technical supervisory vessel
management services to dry bulk vessels to be acquired by Delphin for a fixed
monthly management fee based on a sliding scale. Pursuant to the terms of the
Management Agreement the Company has been granted an opportunity to acquire for
its own account any dry bulk vessel that Delphin proposes to
acquire.  The Company has also been granted a right of first refusal
on any dry bulk charter opportunity, other than a renewal of an existing charter
for a Delphin owned vessel, that the Company reasonably deems suitable for a
Company owned vessel.  The Management Agreement also provides the
Company a right of first offer on the sale of any dry bulk vessel by Delphin.
The term of the Management Agreement is one year and is renewable for successive
one year terms at the option of Delphin.





Note
7.  Earnings Per Common Share





The computation of basic earnings per
share is based on the weighted average number of common shares outstanding
during the period. Diluted net income per share gives effect to stock options
and restricted stock units using the treasury stock method, unless the impact is
anti-dilutive. Diluted net income per share for the six months as of June 30,
2010, does not include 989,519 restricted stock units and 790,668 stock options
as their effect was anti-dilutive.







12








Three
      Months Ended
            
            
            Six
      Months EndedJune
      30, 2010
            
            
            June
      30, 2009
            
            
            June
      30, 2010
            
            
            June
      30, 2009Net
      Income
            
            $
            11,011,921
            
            
            $
            13,347,535
            
            
            $
            15,585,556
            
            
            $
            30,584,316Weighted
      Average Shares – Basic
            
            
            62,176,684
            
            
            
            52,252,714
            
            
            
            62,215,915
            
            
            
            49,656,431Dilutive
      effect of stock options and restricted stock units
            
            
            160,090
            
            
            
            42,507
            
            
            
            150,268
            
            
            
            29,928Weighted
      Average Shares – Diluted
            
            
            62,336,774
            
            
            
            52,295,221
            
            
            
            62,366,183
            
            
            
            49,686,359Basic
      Earnings Per Share
            
            $
            0.18
            
            
            $
            0.26
            
            
            $
            0.25
            
            
            $
            0.62Diluted
      Earnings Per Share
            
            $
            0.18
            
            
            $
            0.26
            
            
            $
            0.25
            
            
            $
            0.62








Note
8.  Capital Stock





Dividends





Payment
of dividends is at the discretion of the board of directors and is limited
by the terms of certain agreements to which the Company and its subsidiaries are
parties to and provisions of Marshall Islands law. The Company's revolving
credit facility permits it to pay quarterly dividends in amounts up to its
cumulative free cash flows, which is our earnings before extraordinary or
exceptional items, interest, taxes, depreciation and amortization (Credit
Agreement EBITDA), less the aggregate amount of interest incurred and net
amounts payable under interest rate hedging agreements during the relevant
period and an agreed upon reserve for dry-docking for the period, provided that
the Company is in compliance with its loan covenants. Depending on market
conditions in the dry bulk shipping industry and acquisition opportunities that
may arise, the Company may be required to obtain additional debt or equity
financing which could affect its dividend policy. In December 2008, the
Company's board of directors suspended the payment of dividends to stockholders
in order to increase cash flow, optimize financial flexibility and enhance
internal growth.  In the future, the declaration and payment of
dividends, if any, will always be subject to the discretion of the board of
directors, restrictions contained in the credit facility and the requirements of
Marshall Islands law. The timing and amount of any dividends declared will
depend on, among other things, the Company's earnings, financial condition and
cash requirements and availability, the ability to obtain debt and equity
financing on acceptable terms as contemplated by the Company's growth strategy,
the terms of its outstanding indebtedness and the ability of the Company's
subsidiaries to distribute funds to it.





Note
9.  Stock Incentive Plans





2009 Equity Incentive plan.
In May 2009, our shareholders approved the 2009 Equity Incentive Plan (2009
Plan) for the purpose of affording an incentive to eligible persons. The 2009
Equity Incentive Plan provides for the grant of equity based awards, including
stock options, stock appreciation rights, restricted stock, restricted stock
units, dividend equivalents, unrestricted stock, other equity based or equity
related awards, and/or performance compensation awards based on or relating to
the Company's common shares to eligible non-employee directors, officers,
employees or consultants. The 2009 Plan is administered by a compensation
committee or such other committee of the Company's board of directors. A maximum
of 4.2 million of the Company's common shares have been authorized for issuance
under the 2009 Plan.





2005 Equity Incentive plan.
In 2005, the Company adopted the 2005 Equity Incentive Plan (2005 Plan) for the
purpose of affording an incentive to eligible persons. The 2005 Equity Incentive
Plan provides for the grant of equity-based awards, including stock options,
stock appreciation rights, restricted stock, restricted stock units, stock
bonuses, dividend equivalents and other awards based on or relating to the
Company's common shares to eligible non-employee directors, selected officers
and other employees and independent contractors. The plan is administered by a
committee of the Company's board of directors. An aggregate of 2.6 million
shares of the Company's common stock were authorized for issuance under the
plan. None of the Company's common shares remain available for issuance under
the 2005 Plan.


13


The Company granted restricted stock
units ("RSUs") to members of its management which vest ratably over periods
running from three to five years. As of June 30, 2010, RSUs covering a total of
1,977,841 of the Company's shares are outstanding. These RSUs also entitle the
participant to receive a dividend equivalent payment on the unvested portion of
the underlying shares granted under the award, each time the Company pays a
dividend to the Company's shareholders. The dividend equivalent rights on the
unvested RSU are forfeited upon termination of employment.The Company is
amortizing to non-cash compensation expense the fair value of the non-vested
restricted stock at the grant date. For the six and three months ended June 30,
2010, the amortization charge was $7,307,797 and $3,569,435, respectively. The
remaining expense for each of the years ending 2010, 2011, and 2012 will be
$6,696,529, $7,285,562, and $6,640,759, respectively, and $2,276,805
thereafter.





As of
December 31, 2009, options covering 813,483 of the Company's common shares were
outstanding.  These options were awarded to members of its management
and its independent non-employee directors. On March 8, 2010 and May 20, 2010,
the Company granted options to purchase 200,000 and 50,000, respectively, of the
Company's common shares to its independent non-employee directors. These options
vested and became exercisable on the grant date at an exercise price of $5.91
and $4.59, respectively, per share and expire five years from the date of grant.
For purposes of determining the non-cash compensation cost for the Company's
stock option plans using the fair value method of FAS 123(R), the fair value of
the options granted of $597,034 and $114,403, respectively, was estimated on the
date of grant using the Black-Scholes option pricing model. The weighted average
assumptions used for the 2010 grants included a risk free interest rate of 1.16%
and 1%, respectively, and an expected stock price volatility factor of 85% and
84%, respectively.  For the six and three months ended June 30, 2010,
the Company has recorded a non-cash compensation charge of $722,168 and
$114,403, respectively. As of June 30, 2010, options covering 1,063,483 of the
Company's common shares are outstanding with exercise prices ranging from $4.59
to $21.88 per share (the market prices at dates of grants). The options granted
to the independent non-employee directors vested and became exercisable on the
grant dates. The options granted to members of its management vest and become
exercisable over three years. All options expire between six to ten years from
the date of grant.





The non-cash compensation expenses
recorded by the Company and included in General and Administrative Expenses are
as follows:




Three Months Ended
            
            
            Six Months EndedJune
      30, 2010
            
            
            June
      30, 2009
            
            
            June
      30, 2010
            
            
            June
      30, 2009Stock
      Option Plans
            
            $
            114,403
            
            
            $
            75,370
            
            
            $
            722,168
            
            
            $
            701,590Restricted
      Stock Grants
            
            
            3,569,435
            
            
            
            3,270,063
            
            
            
            7,307,797
            
            
            
            6,540,127Total
      Non-cash compensation expense
            
            $
            3,683,838
            
            
            $
            3,345,433
            
            
            $
            8,029,965
            
            
            $
            7,241,717





The
Company granted Dividend Equivalent Rights Awards ("DERs") to its independent
non-employee directors and members of its management. These DERs entitle the
participant to receive a dividend equivalent payment each time the Company pays
a dividend to the Company's shareholders. As of June 30, 2010, DERs equivalent
to 574,000 of the Company's common shares are outstanding. For the six months
ended June 30, 2010 and 2009, the Company has recorded cash compensation
expenses of $0 in General and Administrative Expenses.








14





ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION





The
following is a discussion of the Company's financial condition and results of
operation for the three-month and six-month periods ended June 30, 2010 and
2009. This section should be read in conjunction with the consolidated financial
statements included elsewhere in this report and the notes to those financial
statements.





This
discussion contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended and the Private Securities Litigation Reform
Act of 1995, and are intended to be covered by the safe harbor provided for
under these sections.  These statements may include words such as
"believe," "estimate," "project," "intend," "expect," "plan," "anticipate," and
similar expressions in connection with any discussion of the timing or nature of
future operating or financial performance or other events. Forward looking
statements reflect management's current expectations and observations with
respect to future events and financial performance. Where we express an
expectation or belief as to future events or results, such expectation or belief
is expressed in good faith and believed to have a reasonable
basis.  However, our forward-looking statements are subject to risks,
uncertainties, and other factors, which could cause actual results to differ
materially from future results expressed, projected, or implied by those
forward-looking statements. The principal factors that affect our financial
position, results of operations and cash flows include, charter market rates,
which declined significantly in 2009 from historic highs, periods of charter
hire, vessel operating expenses and voyage costs, which are incurred primarily
in U.S. dollars, depreciation expenses, which are a function of the cost of our
vessels, significant vessel improvement costs and our vessels' estimated useful
lives, and financing costs related to our indebtedness. Our actual results may
differ materially from those anticipated in these forward looking statements as
a result of certain factors which could include the following: (i) changes in
demand in the dry bulk market, including, without limitation, changes in
production of, or demand for, commodities and bulk cargoes, generally or in
particular regions; (ii) greater than anticipated levels of dry bulk vessel new
building orders or lower than anticipated rates of dry bulk vessel scrapping;
(iii) changes in rules and regulations applicable to the dry bulk industry,
including, without limitation, legislation adopted by international bodies or
organizations such as the International Maritime Organization and the European
Union or by individual countries; (iv) actions taken by regulatory authorities;
(v) changes in trading patterns significantly impacting overall dry bulk tonnage
requirements; (vi) changes in the typical seasonal variations in dry bulk
charter rates; (vii) changes in the cost of other modes of bulk commodity
transportation; (viii) changes in general domestic and international political
conditions; (ix) changes in the condition of the Company's vessels or applicable
maintenance or regulatory standards (which may affect, among other things, our
anticipated drydocking costs); (x) and other factors listed from time to time in
our filings with the Securities and Exchange Commission. This discussion also
includes statistical data regarding world dry bulk fleet and orderbook and fleet
age. We generated some of this data internally, and some were obtained from
independent industry publications and reports that we believe to be reliable
sources. We have not independently verified this data nor sought the consent of
any organizations to refer to their reports in this quarterly report. We
disclaim any intent or obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.





Overview





We are
Eagle Bulk Shipping Inc., a Republic of the Marshall Islands corporation
headquartered in New York City. We own one of the largest fleets of Supramax dry
bulk vessels in the world. Supramax dry bulk vessels range in size from 50,000
to 60,000 dwt. We transport a broad range of major and minor bulk cargoes,
including iron ore, coal, grain, cement and fertilizer, along worldwide shipping
routes. As of June 30, 2010, we owned and operated a modern fleet of 36 Handymax
segment dry bulk vessels, 33 of which are of the Supramax class. We also have an
on-going Supramax newbuilding program for the construction of an additional 11
newbuilding vessels in China. Upon delivery of all newbuilding vessels by the
end of 2011, our total fleet will consist of 47 vessels with a combined carrying
capacity of approximately 2.55 million dwt.






15





On April
5, 2010, the Company decided to sell the oldest and smallest vessel in its
fleet, the Griffon a 1995-built Handymax.  On May 18, 2010, the
Company reached an agreement to sell the vessel for $21,070,000, after brokerage
commission payable to a third party.  The Company expects to realize a
net gain of approximately $110,000 during the third quarter of 2010. The Griffon
is not available for delivery before August 16, 2010. After the sell and upon
delivery of all newbuilding vessels by the end of 2011, our total fleet will
consist of 46 vessels with a combined carrying capacity of approximately 2.08
million dwt.





We are focused on maintaining a high
quality fleet that is concentrated primarily in one vessel type —Handymax dry bulk
carriers and its sub-category of Supramax vessels, which are Handymax vessels
ranging in size from 50,000 to 60,000 dwt. These vessels have the cargo loading
and unloading flexibility of on-board cranes while offering cargo carrying
capacities approaching that of Panamax dry bulk vessels, which range in size
from 60,000 to 100,000 dwt and rely on port facilities to load and offload their
cargoes. We believe that the cargo handling flexibility and cargo carrying
capacity of the Supramax class vessels make them attractive to cargo interests
and vessel charterers. The 36 vessels in our operating fleet, with an aggregate
carrying capacity of 1,920,346 deadweight tons, have an average age of only five
years compared to an average age for the world Handymax dry bulk fleet of
approximately 15 years.





Each of
our vessels is owned by us through a separate wholly owned Republic of the
Marshall Islands limited liability company.





We
maintain our principal executive offices at 477 Madison Avenue, New York, New
York 10022. Our telephone number at that address is (212) 785-2500. Our website
address is www.eagleships.com. Information contained on our website does not
constitute part of this quarterly report.





Our
      financial performance is based on the following key elements of our
      business strategy:





(1)
            concentration
      in one vessel category: Supramax class of Handymax dry bulk vessels, which
      we believe offer size, operational and geographical advantages over
      Panamax and Capesize vessels,





(2)
            our
      strategy is to charter our vessels primarily pursuant to one- to
      three-year time charters to allow us to take advantage of the stable cash
      flow and high utilization rates that are associated with medium to
      long-term time charters. A significant proportion of our charters on the
      vessels in our operating fleet range in length from one to three years,
      and a few of the newly constructed vessels are on long term charters with
      an average duration of eight years. A few of our vessels in the operating
      fleet are on charters whose revenues are linked to the Baltic Supramax
      index and have durations of one-year or less. These index linked charters
      provide us with the revenue upside as the market improves. We believe that
      this structure provides significant visibility to our future financial
      results and allows us to take advantage of the stable cash flows and high
      utilization rates that are associated with medium- to long-term time
      charters, while at the same time providing us with the revenue upside
      potential from the index linked charters. Our use of time charters also
      mitigates in part the seasonality of the spot market business. Generally,
      spot markets are strongest in the first and fourth quarters of the
      calendar year and weaker in the second and third quarters. Our time
      charters provide for fixed semi-monthly payments in advance. While we
      remain focused on securing charters with fixed base rates, we have also
      entered into contracts with fixed minimum rates and profit sharing
      arrangements, enabling us to benefit from an increasing rate environment
      while still minimizing downside risk. We regularly monitor the dry bulk
      shipping market and based on market conditions we may consider taking
      advantage of short-term charter
rates,





(3)
            maintain
      high quality vessels and improve standards of operation through improved
      environmental procedures, crew training and maintenance and repair
      procedures, and





(4)
            maintain
      a balance between purchasing vessels as market conditions and
      opportunities arise and maintaining prudent financial ratios (e.g.
      leverage ratio).









16


We have employed all of our vessels in
our operating fleet on time charters. During the six months ended June 30, 2010,
we took delivery of nine newbuilding vessels, the Thrasher, Crane, Egret, Golden
Eagle, Avocet, Imperial Eagle, Gannet Bulker, Grebe Bulker and Ibis Bulker,
which entered into their respective charters. The following table represents
certain information about the Company's revenue earning charters on its
operating fleet:





Vessel
            
            Year Built
            
            Dwt
            
            Time Charter Expiration(1)
            
            Daily
      Time
              Charter Hire RateAvocet
      (3)
            
            2010
            
            53,462
            
            May
      2016
              May
      2016 to Dec 2018/May 2019
            
            $18,400
              $18,000
      (with 50%
              profit
      share over $22,000)Bittern
      (4)
            
            2009
            
            57,809
            
            Jan
      2015
              Jan
      2015 to Dec 2018/Apr 2019
            
            $18,850
              $18,000
      (with 50%
              profit
      share over $22,000)Canary
      (5)
            
            2009
            
            57,809
            
            Mar
      2015
              Mar
      2015 to Dec 2018/Apr 2019
            
            $18,850
              $18,000
      (with 50%
              profit
      share over $22,000)Cardinal
            
            2004
            
            55,362
            
            Sep
      2010 to Nov 2010
            
            $16,250Condor
            
            2001
            
            50,296
            
            Jul
      2010 to Oct 2010
            
            $22,000Crane
      (6)
            
            2010
            
            57,809
            
            Apr
      2015
              Apr
      2015 to Dec 2018/Apr 2019
            
            $18,850
              $18,000
      (with 50%
              profit
      share over $22,000)Crested
      Eagle (2)
            
            2009
            
            55,989
            
            Jan
      2011 to Apr 2011
            
            $11,500
      (with 50% Index share over $11,500)Crowned
      Eagle
            
            2008
            
            55,940
            
            Jul
      2010
            
            $26,500Jul
      2010 to Jun/Aug 2011
            
            IndexEgret
      Bulker(7)
            
            2010
            
            57,809
            
            Oct
      2012 to Feb 2013
            
            $17,650
      (with 50%
              profit
      share over $20,000)Falcon
            
            2001
            
            51,268
            
            Aug
      2010 to Nov 2010
            
            $25,000Gannet
      Bulker(7)
            
            2010
            
            57,809
            
            Jan
      2013 to May 2013
            
            $17,650
      (with 50%
              profit
      share over $20,000)Golden
      Eagle (2,8)
            
            2010
            
            55,989
            
            Dec
      2010 to Mar 2011
            
            IndexGoldeneye
      (2)
            
            2002
            
            52,421
            
            Sep
      2010 to Dec 2010
            
            $23,000 Grebe
      Bulker(7)
              
              2010
              
              57,809
              
              Feb
      2013 to Jun 2013
              
              $17,650
      (with 50%
                profit
      share over $20,000)Griffon
              
              1995
              
              46,635
              
              July
      2010 to Sep 2010
              
              $22,500Harrier
              
              2001
              
              50,296
              
              Aug
      2010
              
              $18,500Hawk
      I (9)
              
              2001
              
              50,296
              
              Aug
      2010
              
              $13,000Jul
      2011 to Sep 2011
              
              $20,000Heron
      (10)
              
              2001
              
              52,827
              
              Jan
      2011 to May 2011
              
              $26,375Ibis
      Bulker(7)
              
              2010
              
              57,775
              
              Mar
      2013 to Jul 2013
              
              $17,650
      (with 50%
                profit
      share over $20,000)Imperial
      Eagle (2,11)
              
              2010
              
              55,989
              
              Jan
      2011 to Mar 2011
              
              Index
  17
  Vessel
              
              Year Built
              
              Dwt
              
              Time Charter Expiration(1)
              
              Daily
      Time
                Charter Hire
Rate
  Jaeger
      (2)
            
            2004
            
            52,248
            
            Oct
      2010 to Jan 2011
            
            IndexKestrel
      I
            
            2004
            
            50,326
            
            Sep
      2010 to Dec 2010
            
            $23,000Kite
            
            1997
            
            47,195
            
            Nov
      2010 to Jan 2011
            
            $17,000Kittiwake
      (2)
            
            2002
            
            53,146
            
            Aug
      2010 to Oct 2010
            
            Index
      (with minimum $8,500)Merlin
      (12)
            
            2001
            
            50,296
            
            Dec
      2010 to Mar 2011
            
            $23,000Osprey
      I
            
            2002
            
            50,206
            
            Jul
      2010 to Oct 2010
            
            $25,250Peregrine
      (2)
            
            2001
            
            50,913
            
            Jan
      2011/Mar 2011
            
            $10,500
      (with 50% Index share over $10,500)Redwing
      (2)
            
            2007
            
            53,411
            
            Aug
      2010
            
            Index
      (with minimum $8,500)Aug
      2010 to Jul/Sep 2011
            
            $20,000Shrike
            
            2003
            
            53,343
            
            Jun
      to Aug 2011
            
            $20,000Skua
      (2)
            
            2003
            
            53,350
            
            Sep
      2010 to Nov 2010
            
            Index
      (with minimum $8,500)Sparrow
            
            2000
            
            48,225
            
            Aug
      2010 to Nov 2010
            
            $24,000Stellar
      Eagle
            
            2009
            
            55,989
            
            Apr/
      Jun 2011
            
            IndexTern
            
            2003
            
            50,200
            
            Aug
      2010
            
            $23,500Thrasher
      (13)
            
            2010
            
            53,360
            
            Apr
      2016
              Apr
      2016 to Dec 2018/Apr 2019
            
            $18,400
              $18,000
      (with 50%
              profit
      share over $22,000)Woodstar
      (14)
            
            2008
            
            53,390
            
            Jan
      2014
              Jan
      2014 to Dec 2018/Apr 2019
            
            $18,300
              $18,000
      (with 50%
              profit
      share over $22,000)Wren
      (15)
            
            2008
            
            53,349
            
            Dec
      2011
              Dec
      2011 to Dec 2018/Apr 2019
            
            $24,750
              $18,000
      (with 50%
              profit
      share over $22,000)


(1)
            The
      date range provided represents the earliest and latest date on which the
      charterer may redeliver the vessel to the Company upon the termination of
      the charter. The time charter hire rates presented are gross daily charter
      rates before brokerage commissions, ranging from 1.25% to 6.25%, to third
      party ship brokers.


(2)
            Index,
      an average of the trailing Baltic Supramax
  Index.


(3)
            Revenue
      recognition for the AVOCET is based on an average daily base rate of
      $18,281.


(4)
              Revenue
      recognition for the BITTERN is based on an average daily base rate of
      $18,485.
 (5)
              Revenue
      recognition for the CANARY is based on an average daily base rate of
      $18,493.
 (6)
              Revenue
      recognition for the CRANE is based on an average daily base rate of
      $18,497.
 (7)
              The
      EGRET BULKER, GANNET BULKER, GREBE BULKER and IBIS BULKER have entered
      into a charter for 33 to 37 months. The charter rate is $17,650 per day
      with a 50% profit share for earned rates over $20,000 per day. The
      charterer has an option to extend the charter by 2 periods of 11 to 13
      months each.
 (8)
              The
      GOLDEN EAGLE commenced an index based charter for 11 to 13 months. The
      index rate will be an average of the trailing Baltic Supramax Index for
      each 15 day hire period.
 (9)
              Upon
      completion of the previous charter in August 2010, the Hawk I commenced a
      new charter for a period of 11 to 13 months at
  $20,000.
 (10)
              The
      charterer of the HERON has an option to extend the charter period by 11 to
      13 months at a time charter rate of $27,375 per day. The charterer has a
      second option for a further 11 to 13 months at a time charter rate of
      $28,375 per day.
 (11)
              The
      IMPERIAL EAGLE commenced an index based charter for 11 to 13 months. The
      index rate will be an average of the trailing Baltic Supramax Index for
      each 15 day hire period.
 (12)
              Revenue
      recognition for the MERLIN is based on an average daily rate of
      $25,000.
 (13)
              Revenue
      recognition for the THRASHER is based on an average daily base rate of
      $18,280.
 (14)
              Revenue
      recognition for the WOODSTAR is based on an average daily base rate of
      $18,154.
 (15)
              Revenue
      recognition for the WREN is based on an average daily base rate of
      $20,245.
  18
 The
following table, as of June 30, 2010, represents certain information about the
Company's newbuilding vessels being constructed and their expected employment
upon delivery:





Vessel
              
              Dwt
              
              
              Year Built – Actual or Expected
      Delivery(1)
              
              Time Charter Employment
      Expiration(2)
              
              Daily Time Charter Hire Rate(3)
              
              
              Profit ShareJay(5)
              
              
              58,000
              
              
              
              2010Q3
              
              Dec
      2015
              
              $
              18,500
              
              
              50%
      over $21,500Dec
      2015 to Dec 2018/Apr 2019
              
              $
              18,000
              
              
              50%
      over $22,000Kingfisher(5)
              
              
              58,000
              
              
              
              2010Q3
              
              Dec
      2015
              
              $
              18,500
              
              
              50%
      over $21,500Dec
      2015 to Dec 2018/Apr 2019
              
              $
              18,000
              
              
              50%
      over $22,000Martin
              
              
              58,000
              
              
              
              2010Q3
              
              Feb
      2017 to Feb 2018
              
              $
              18,400
              
              
              —Thrush
              
              
              53,100
              
              
              
              2010Q4
              
              Charter
      Free
              
              
              —
              
              
              —Nighthawk
              
              
              58,000
              
              
              
              2011Q1
              
              Sep
      2017 to Sep 2018
              
              $
              18,400
              
              
              —Oriole
              
              
              58,000
              
              
              
              2011Q3
              
              Jan
      2018 to Jan 2019
              
              $
              18,400
              
              
              —Owl
              
              
              58,000
              
              
              
              2011Q3
              
              Feb
      2018 to Feb 2019
              
              $
              18,400
              
              
              —Petrel (4)
              
              
              58,000
              
              
              
              2011Q4
              
              Jun
      2014 to Oct 2014
              
              $
              17,650
              
              
              50%
      over $20,000Puffin (4)
              
              
              58,000
              
              
              
              2011Q4
              
              Jul
      2014 to Nov 2014
              
              $
              17,650
              
              
              50%
      over $20,000Roadrunner (4)
              
              
              58,000
              
              
              
              2011Q4
              
              Aug
      2014 to Dec 2014
              
              $
              17,650
              
              
              50%
      over $20,000Sandpiper (4)
              
              
              58,000
              
              
              
              2011Q4
              
              Sep
      2014 to Jan 2015
              
              $
              17,650
              
              
              50%
      over $20,000
  (1)
              Vessel
      build and delivery dates are estimates based on guidance received from
      shipyard.
 (2)
              The
      date range represents the earliest and latest date on which the charterer
      may redeliver the vessel to the Company upon the termination of the
      charter.
 (3)
              The
      time charter hire rate presented are gross daily charter rates before
      brokerage commissions ranging from 1.25% to 6.25% to third party ship
      brokers.
 (4)
                The
      charterer has an option to extend the charter by 2 periods of 11 to 13
      months each.
 (5)
                The
      JAY and KINGFISHER
      were delivered subsequent to the end of the second quarter. Revenue
      recognition for the JAY and KINGFISHER are based on an average daily base
      rate of $18,320.
  19


Fleet
Management





The management of our fleet includes
the following functions:




•      Strategic management. We
locate and obtain financing and insurance for purchase and sell
vessels.
 •      Commercial management. We
obtain employment for our vessels and manage our relationships with
charterers.
 •      Technical management. The
technical managers perform day-to-day operations and maintenance of our
vessels.


Commercial
      and Strategic Management





We carry
out the commercial and strategic management of our fleet through our wholly
owned subsidiary, Eagle Shipping International (USA) LLC, a Republic of the
Marshall Islands limited liability company that maintains its principal
executive offices in New York City. We currently have a total of forty shore
based personnel, including our senior management team and our office staff, who
either directly or through this subsidiary, provides the following
services:





•      commercial
operations and technical supervision;


•      safety
monitoring;


•      vessel
acquisitions; and


•      financial,
accounting and information technology services.





Technical
      Management





The technical management of the
majority of our fleet is provided by unaffiliated third party technical
managers, V.Ships, Wilhelmsen Ship Management and Anglo Eastern International
Ltd., which we believe are three of the world's largest providers of
independent ship management and related services. We have also established
in-house technical management capability, through which we provide technical
management services to several of our vessels, in order to establish a vessel
management bench-mark with the external technical managers. We review the
performance of the managers on an annual basis and may add or change technical
managers.





Technical management includes managing
day-to-day vessel operations, performing general vessel maintenance, ensuring
regulatory and classification society compliance, supervising the maintenance
and general efficiency of vessels, arranging our hire of qualified officers and
crew, arranging and supervising drydocking and repairs, purchasing supplies,
spare parts and new equipment for vessels, appointing supervisors and technical
consultants and providing technical support. Our technical managers also manage
and process all crew insurance claims. Our technical managers maintain records
of all costs and expenditures incurred in connection with their services that
are available for our review on a daily basis. Our technical managers are
members of marine contracting associations which arrange bulk purchasing thereby
enabling us to benefit from economies of scale.





The third-party technical managers are
paid a fixed management fee for each vessel in our operating fleet for the
technical management services they provide. For the three-month periods ended
June 30, 2010 and 2009, the technical management fee averaged $9,619 and $8,906
per vessel per month, respectively. For the six-month periods ended June 30,
2010 and 2009, the technical management fee averaged $9,652 and $9,035 per
vessel per month, respectively. Management fees paid to our third-party
technical managers are recorded as a component of Vessel
Expenses.


20


Value
of Assets and Cash Requirements





The replacement costs of comparable new
vessels may be above or below the book value of our fleet. The market value of
our fleet may be below book value when market conditions are weak and exceed
book value when markets conditions are strong. Customary with industry practice,
we may consider asset redeployment which at times may include the sale of
vessels at less than their book value.





The Company's results of operations and
cash flow may be significantly affected by future charter markets.





Critical
Accounting Policies





The discussion and analysis of our
financial condition and results of operations is based upon our interim,
unaudited, consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States,
and the rules and regulations of the SEC which apply to interim financial
statements. The preparation of those financial statements requires us to make
estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities at the date of our financial statements. Actual results may
differ from these estimates under different assumptions and
conditions.





Critical accounting policies are those
that reflect significant judgments of uncertainties and potentially result in
materially different results under different assumptions and conditions. As the
discussion and analysis of our financial condition and results of operations is
based upon our interim, unaudited, consolidated financial statements, they do
not include all of the information on critical accounting policies normally
included in consolidated financial statements. Accordingly, a detailed
description of these critical accounting policies should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Annual Reports on Form 10-K. There have been no material changes from
the "Critical Accounting Policies" previously disclosed in our Form 10-K for the
year ended December 31, 2009.





Results
of Operations for the three month periods ended June 30, 2010 and
2009:





Fleet
Data





We
believe that the measures for analyzing future trends in our results of
operations consist of the following:





Three
      Months Ended
            Six
      Months EndedJune
      30, 2010
            June
      30, 2009
            June
      30, 2010
            June
      30, 2009Ownership
      Days
            3,129
            2,275
            5,955
            4,413Available
      Days
            3,091
            2,249
            5,895
            4,386Operating
      Days
            3,087
            2,242
            5,863
            4,370Fleet
      Utilization
            99.9%
            99.7%
            99.5%
            99.6%





•           Ownership
days:  We define ownership days as the aggregate number of days
in a period during which each vessel in our fleet has been owned by us.
Ownership days are an indicator of the size of our fleet over a period and
affect both the amount of revenues and the amount of expenses that we record
during a period.  Ownership days for the three month period ended June
30, 2010, increased 38% from the corresponding period in 2009 as we operated 36
vessels in the second quarter of 2010 compared to 25 vessels in the
corresponding period in 2009.





•           Available
days:  We define available days as the number of our ownership
days less the aggregate number of days that our vessels are off-hire due to
vessel familiarization upon acquisition, scheduled repairs or repairs under
guarantee, vessel upgrades or special surveys and the aggregate amount of time
that we spend positioning our vessels. The shipping industry uses available days
to measure the number of days in a period during which vessels should be capable
of generating revenues. During the six-month period ended June 30, 2010, the
Company drydocked three vessels and two in the comparable period in
2009.


21





•           Operating
days:  We define operating days as the number of our available
days in a period less the aggregate number of days that our vessels are off-hire
due to any reason, including unforeseen circumstances. The shipping industry
uses operating days to measure the aggregate number of days in a period during
which vessels actually generate revenues.





•           Fleet
utilization:  We calculate fleet utilization by dividing the
number of our operating days during a period by the number of our available days
during the period. The shipping industry uses fleet utilization to measure a
company's efficiency in finding suitable employment for its vessels and
minimizing the amount of days that its vessels are off-hire for reasons other
than scheduled repairs or repairs under guarantee, vessel upgrades, special
surveys or vessel positioning. Our fleet continues to perform at high
utilization rates.





Revenues





All of our
vessels are employed on time charters. Our time charter equivalent ("TCE") rate
is equal to the time charter rate. As is common in the shipping industry, we pay
commissions ranging from 1.25% to 6.25% of the total daily charter hire rate of
each charter to unaffiliated ship brokers and in-house brokers associated with
the charterers, depending on the number of brokers involved with arranging the
charter.





Gross time charter revenues
in the quarter ended June 30, 2010 were $69,061,932, an increase of 23% from
$55,933,747 recorded in the comparable quarter in 2009, primarily due to
operation of a larger fleet offset by lower charter rates. Gross revenues
recorded in the quarter ended June 30, 2010 and 2009, include an amount of
$1,171,477 and $647,449, respectively, relating to the non-cash amortization of
fair value below contract value of time charters acquired. Brokerage commissions
incurred on revenues earned in the quarter ended June 30, 2010 and 2009 were
$3,449,092 and $2,912,409, respectively. Net revenues during the quarter ended
June 30, 2010, increased 24% to $65,612,840 from $53,021,338 in the comparable
quarter in 2009.
 
 Gross time charter revenues
for the six-month period ended June 30, 2010 were $126,424,868, an increase of
10% from $114,555,447 recorded in the comparable period in 2009, primarily due
to operation of a larger fleet offset by lower charter rates. Gross revenues
recorded in the six-month period ended June 30, 2010 and 2009, include an amount
of $2,036,105 and $1,297,180, respectively, relating to the non-cash
amortization of fair value below contract value of time charters acquired. Gross
revenues recorded in 2010 include an arbitration settlement amounted of
$1,089,759, reached in March 2010. Brokerage commissions incurred on revenues
earned in the six-month periods ended June 30, 2010 and 2009 were $6,568,303 and
$5,556,443, respectively. Net revenues during the six-month period ended June
30, 2010, increased 10% to $119,856,565 from $108,999,004 in the comparable
period in 2009.


Vessel
Expenses





Vessel expenses for the
three-month period ended June 30, 2010, were $16,052,945 compared to $12,933,808
in the comparable quarter in 2009. The increase in vessel expense is
attributable to a larger fleet size in operation. Vessel expenses for the
three-month period ended June 30, 2010, included $15,222,455 in vessel operating
costs and $830,490 in technical management fees. Vessel expenses for the
comparable period in 2009 included $12,267,670 in vessel operating costs and
$666,138 in technical management fees.





Vessel expenses for the
six-month period ended June 30, 2010 were $31,530,334 compared to $26,005,005 in
the comparable six-month period ended June 30, 2009. The increase in vessel
expense is attributable to a larger fleet size in operation for the six-month
period of 2010. Vessel expenses for the six-month period ended June 30, 2010
included $29,914,457, in vessel operating costs and $1,615,877 in technical
management fees. Vessel expenses for the six-month period ended June 30, 2009
included $24,696,513 in vessel operating costs and $1,308,492 in technical
management fees.





Vessel operating expenses
include crew wages and related costs, the cost of insurance, expenses relating
to repairs and maintenance, the cost of spares and consumable stores and related
inventory, tonnage taxes, pre operating costs associated
with the delivery of acquired vessels including providing the newly acquired
vessels with initial provisions and stores, other miscellaneous expenses, and
technical management fees paid to our third party
managers.


22




Our vessel expenses will
increase with the enlargement of our fleet. Other factors beyond our control,
some of which may affect the shipping industry in general, may also cause these
expenses to increase, including, for instance, developments relating to market
prices for crew, insurance and petroleum-based lubricants and
supplies.





Depreciation
and Amortization





For the three-month periods
ended June 30, 2010 and 2009, total depreciation and amortization expense were
$15,537,068 and $10,943,247, respectively. Total depreciation and amortization
expense for the three-month period ended June 30, 2010 includes $14,767,400 of
vessel depreciation and other assets amortization, and $769,667 relating to the
amortization of deferred drydocking costs.Comparable amounts for the
three-month period ended June 30, 2009 were $10,325,002 of vessel depreciation
and $618,245 of amortization of deferred drydocking costs. The increase in
depreciation expense is attributable to a larger fleet size in operation during
the three-month period in 2010 compared to 2009.





For the six-month periods
ended June 30, 2010 and 2009, total depreciation and amortization expense were
$29,243,437 and $21,234,163, respectively. Total depreciation and amortization
expense for the six-month period ended June 30, 2010 includes $27,806,738 of
vessel depreciation and other assets amortization, and $1,436,699 relating to
the amortization of deferred drydocking costs. Comparable amounts for the
six-month period ended June 30, 2009 were $20,019,912 of vessel depreciation and
$1,214,251 of amortization of deferred drydocking
costs.





The cost of our vessels is
depreciated on a straight-line basis over the expected useful life of each
vessel. Depreciation is based on the cost of the vessel less its estimated
residual value. We estimate the useful life of our vessels to be 28 years from
the date of initial delivery from the shipyard to the original owner.
Furthermore, we estimate the residual values of our vessels to be $150 per
lightweight ton, which we believe is common in the dry bulk shipping industry.
Our depreciation charges will increase as our fleet is enlarged. Drydocking
relates to our regularly scheduled maintenance program necessary to preserve the
quality of our vessels as well as to comply with international shipping
standards and environmental laws and regulations. The Company anticipates that
vessels are to be drydocked every two and a half years and, accordingly, these
expenses are deferred and amortized over that period.





Amortization of deferred
financing costs which relate to debt increased to purchase the vessels on the
water is included in interest expense. These financing costs relate to costs
associated with our revolving credit facility and these are amortized over the
life of the facility. For the three-month periods ended June 30, 2010 and 2009,
the amortization of deferred financing costs allocated to the vessels on the
water was $748,026 and $269,457, respectively. For the six-month periods ended
June 30, 2010 and 2009, the amortization of deferred financing costs allocated
to the vessels on the water was $1,332,743 and $509,514,
respectively.





General
and Administrative Expenses





Our general
and administrative expenses include onshore vessel administration related
expenses such as legal and professional expenses and administrative and other
expenses including payroll and expenses relating to our executive officers and
office staff, office rent and expenses, directors fees, and directors and
officers insurance. General and administrative expenses also include non-cash
compensation expenses.





General
and administrative expenses for the three-month periods ended June 30, 2010 and
2009 were $10,479,379 and $9,041,185, respectively. These general and
administrative expenses include a non-cash compensation component of $3,683,838
and $3,345,433, respectively. The increase in general and administrative
expenses for the three-month period ended June 30, 2010, is primarily
attributable to higher administrative costs associated with operating a larger
fleet, our extensive newbuilding program, accruals of compensation expense and
amortization of restricted stock awards.


23


General and administrative
expenses for the six-month periods ended June 30, 2010 and 2009 were $19,852,146
and $17,944,213, respectively. These general and administrative expenses include
a non-cash compensation component of $8,029,965 and $7,241,717, respectively.
The increase in general and administrative expenses for the six-month period
ended June 30, 2010, is primarily attributable to higher administrative costs
associated with operating a larger fleet, our extensive newbuilding program,
accruals of compensation expense and amortization of restricted stock
awards.




Capitalized Interest





At June 30,
2010, we had contracts for the construction of 11 newbuilding vessels which are
expected to be delivered through 2011.  Interest costs on borrowings used
to fund the Company's newbuilding program are capitalized as part of the cost of
the newbuilding vessels until the vessels are delivered.
 
 For the
three-month period ended June 30, 2010, capitalized interest amounted to
$3,667,788 ($3,271,727 in interest and $396,061 in amortization of deferred
financing costs) and this amount has been recorded and included in Advances for
Vessel Construction in the financial statements. For the corresponding
three-month period in 2009, capitalized interest amounted to$6,733,097
($6,288,312 in interest and $444,785 in amortization of deferred financing
costs).





For the
six-month period ended June 30, 2010, capitalized interest amounted to
$8,275,439 ($7,332,573 in interest and $942,866 in amortization of deferred
financing costs) and this amount has been recorded and included in Advances for
Vessel Construction in the financial statements. For the corresponding six-month
period in 2009, capitalized interest amounted to$13,512,415
($12,611,017 in interest and $901,398 in amortization of deferred financing
costs).




EBITDA





EBITDA
represents operating earnings before extraordinary items, depreciation and
amortization, interest expense, and income taxes, if any. EBITDA is included
because it is used by certain investors to measure a company's financial
performance. EBITDA is not an item recognized by GAAP and should not be
considered a substitute for net income, cash flow from operating activities and
other operations or cash flow statement data prepared in accordance with
accounting principles generally accepted in the United States or as a measure of
profitability or liquidity. EBITDA is presented to provide additional
information with respect to the Company's ability to satisfy its obligations
including debt service, capital expenditures, and working capital requirements.
While EBITDA is frequently used as a measure of operating results and the
ability to meet debt service requirements, the definition of EBITDA used here
may not be comparable to that used by other companies due to differences in
methods of calculation.





Our
revolving credit facility permits us to pay dividends, subject to certain
limitations, in amounts up to our cumulative free cash flows which is our
earnings before extraordinary or exceptional items, interest, taxes,
depreciation and amortization (Credit Agreement EBITDA), less the aggregate
amount of interest incurred and net amounts payable under interest rate hedging
agreements during the relevant period and an agreed upon reserve for
dry-docking. Therefore, we believe that this non-GAAP measure is important for
our investors as it reflects our ability to pay dividends. The following table
is a reconciliation of net income, as reflected in the consolidated statements
of operations, to the Credit Agreement EBITDA:


24





Three Months Ended
            
            
            Six Months EndedJune 30, 2010
            
            
            June 30, 2009
            
            
            June 30, 2010
            
            
            June 30, 2009Net
      Income
            
            $
            11,011,921
            
            
            $
            13,347,535
            
            
            $
            15,585,556
            
            
            $
            30,584,316Interest
      Expense
            
            
            12,607,754
            
            
            
            6,815,853
            
            
            
            23,784,740
            
            
            
            13,302,170Depreciation
      and Amortization
            
            
            15,537,068
            
            
            
            10,943,247
            
            
            
            29,243,437
            
            
            
            21,234,163Amortization
      of fair value below market of time charter acquired
            
            
            (1,171,477
            )
            
            
            (647,449
            )
            
            
            (2,036,105
            )
            
            
            (1,297,180
            )EBITDA
            
            
            37,985,266
            
            
            
            30,459,186
            
            
            
            66,577,628
            
            
            
            63,823,469Adjustments
      for Exceptional Items:Non-cash
      Compensation Expense (1)
            
            
            3,683,838
            
            
            
            3,345,433
            
            
            
            8,029,965
            
            
            
            7,241,717Credit
      Agreement EBITDA
            
            $
            41,669,104
            
            
            $
            33,804,619
            
            
            $
            74,607,593
            
            
            $
            71,065,186





(1)Stock based compensation
related to stock options and restricted stock units.








Effects
of Inflation





We
do not believe that inflation has had
or is likely, in the foreseeable future, to have a significant impact on vessel
operating expenses, drydocking expenses or general and administrative
expenses.





Liquidity
and Capital Resources





Net cash
provided by operating activities during the six-month periods ended June 30,
2010 and 2009, was $59,186,457 and $66,456,504, respectively. The decrease was
due to lower rates on charter renewals offset by the additional revenue from the
larger fleet, increased operational cost and interest expense resulting from
delivery of additional 11 newbuilding vessels.





Net cash
used in investing activities during the six-month period ended  2010,
was $203,601,788, compared to $60,498,258 during the corresponding six-month
period ended June 30, 2009. Investing activities during the six-month period
ended June 30, 2010 related primarily to making progress payments and incurring
related vessel construction expenses for the newbuilding vessels, of which nine
delivered during the first six months of 2010.





Net cash
provided by financing activities during the six-month period ended June 30,
2010, was $175,204,638, compared to net cash provided by financing activities of
$114,092,565 during the corresponding six-month period ended June 30, 2009.
Financing activities during the six-month period ended June 30, 2010, primarily
involved borrowings of $180,070,046 from our revolving credit
facility.  During the six-month period ended June 30, 2009 we received
$97,291,046 in net proceeds from the distribution of common shares of the
Company. We borrowed $19,505,000 from our revolving credit
facility.


As of
June 30, 2010, our cash balance was $102,134,080, compared to a cash balance of
$71,344,773 at December 31, 2009. In addition, $18,000,000 in cash deposits are
maintained with our lender for loan compliance purposes and this amount is
recorded in Restricted Cash in our financial statements as of June 30, 2010.
Also recorded in Restricted Cash is an amount of $276,056, which is
collateralizing letters of credit relating to our office leases.





At June
30, 2010, the Company's debt consisted of $1,080,240,926 in net borrowings under
the amended Revolving Credit Facility. These borrowings consisted of
$872,944,334 for the 36 vessels currently in operation and $207,296,592 to fund
the Company's newbuilding program.





On August
4, 2009, the Company entered into a third Amendatory Agreement to its revolving
credit facility dated October 19, 2007 (See section in the Company's 2009 Annual
Report on Form 10-K entitled "Revolving Credit Facility" for a description of
the facility and its amendments). The facility also provides us with the ability
to borrow up to $20,000,000 for working capital purposes. We were in compliance
with all of the covenants contained in our amended debt agreements as of June
30, 2010. We anticipate that our current financial resources, together with cash
generated from operations and, if necessary, borrowings under our revolving
credit facility will be sufficient to fund the operations of our fleet,
including our working capital requirements, for the next twelve months. We will
rely on operating cash flows as well as our revolving credit facility and
possible additional equity and debt financing alternatives to fund our long term
capital requirements for vessel construction and implement future growth
plans.






25







Our loan
agreements for our borrowings are secured by liens on our vessels and contain
various financial covenants. The covenants relate to our financial position,
operating performance and liquidity. The market value of dry bulk
vessels is sensitive, among other things, to changes in the dry bulk charter
market. The decline in charter rates in the dry bulk market coupled with the
prevailing difficulty in obtaining financing for vessel purchases have adversely
affected dry bulk vessel values. A continuation of these conditions, could lead
to a significant decline in the fair market values of our vessels, which could
impact our compliance with these loan covenants. The recent developments in the
credit markets and related impact on the dry bulk charter market and have also
resulted in additional risks. The occurrence of one or more of these risk
factors could adversely affect our results of operations or financial condition.
Please refer to the section entitled "Risk Factors" in Part II of this document
which should be read in conjunction with the risk factors included in the
Company's 2009 Annual Report on Form 10-K.





It is our
intention to fund our future acquisition related capital requirements initially
through borrowings under the amended revolving credit facility and to repay all
or a portion of such borrowings from time to time with cash generated from
operations and from net proceeds of issuances of securities. The Company has a
shelf registration filed on Form S-3 in March 2, 2009, subsequently amended,
which would enable the Company to issue such securities.





Dividends





The
Company did not make any dividend payments in the first and second quarters of
2010 and 2009. In the future, the declaration and payment of dividends, if any,
will always be subject to the discretion of the board of directors, restrictions
contained in the amended credit facility and the requirements of Marshall
Islands law. The timing and amount of any dividends declared will depend on,
among other things, the Company's earnings, financial condition and cash
requirements and availability, the ability to obtain debt and equity financing
on acceptable terms as contemplated by the Company's growth strategy, the terms
of its outstanding indebtedness and the ability of the Company's subsidiaries to
distribute funds to it.








Contractual
Obligations





The following table sets forth our
expected contractual obligations and their maturity dates as of June 30,
2010:




(in
      thousands of U.S. dollars)
            
            Within
              One Year
            
            
            One
      to
              Three Years
            
            
            Three
      to
              Five Years
            
            
            More
      than
              Five years
            
            
            TotalVessels
      (1)
            
            $
            115,937
            
            
            $
            140,203
            
            
            
            —
            
            
            
            —
            
            
            $
            256,140Bank
      Loans
            
            
            —
            
            
            
            —
            
            
            $
            1,080,241
            
            
            
            —
            
            
            
            1,080,241Interest
      and borrowing fees (2)
            
            
            55,306
            
            
            
            117,894
            
            
            
            38,930
            
            
            
            —
            
            
            
            212,130Office
      lease
            
            
            695
            
            
            
            1,670
            
            
            
            1,670
            
            
            
            2,436
            
            
            
            6,471Total
            
            $
            171,938
            
            
            $
            259,767
            
            
            $
            1,120,841
            
            
            $
            2,436
            
            
            $
            1,554,982





(1)  The
      balance of the contract price in US dollars for the 11 newbuilding
      vessels which are to be constructed and delivered between 2010 and
      2011.


(2)  The
      Company is a party to floating-to-fixed
      interest rate swaps covering
      aggregate notional amount of $745,752,830. Interest and borrowing fees
      includes capitalized interest for the newbuilding
      vessels.





Capital
Expenditures





Our capital expenditures
relate to the purchase of vessels and capital improvements to our vessels which
are expected to enhance the revenue earning capabilities and safety of these
vessels.





We may incur additional
capital expenditures from time to time related to our acquired
vessels.  As of June 30, 2010, our fleet consists of 36 vessels which
are currently operational and 11 newbuilding vessels which have been contracted
for construction.


26


In addition to acquisitions
that we may undertake in future periods, the Company's other major capital
expenditures include funding the Company's maintenance program of scheduled
drydocking necessary to preserve the quality of our vessels as well as to comply
with international shipping standards and environmental laws and regulations. Although the
Company has some flexibility regarding the timing of its dry docking, the costs
are relatively predictable. The Company anticipates that vessels are to be
drydocked every two and a half years. Funding of these requirements is
anticipated to be met with cash from operations. We anticipate that this process
of recertification will require us to reposition these vessels from a discharge
port to shipyard facilities, which will reduce our available days and operating
days during that period.





Drydocking costs incurred are
amortized to expense on a straight-line basis over the period through the date
the next drydocking for those vessels are scheduled to occur. Two vessels were
drydocked in the three-months ended June 30, 2010. The following table
represents certain information about the estimated costs for anticipated vessel
drydockings in the next four quarters, along with the anticipated off-hire
days:





Quarter Ending
              
              Off-hire Days(1)
              
              Projected Costs(2)September
      30, 2010
              
              
              44
              
              $1.10
      millionDecember
      31, 2010
              
              
              66
              
              $1.65
      millionMarch
      31, 2011
              
              
              44
              
              $1.10
      millionJune
      30, 2011
              
              
              44
              
              $1.10
      million
  (1)
            Actual
      duration of drydocking will vary based on the condition of the vessel,
      yard schedules and other factors.(2)
            Actual
      costs will vary based on various factors, including where the drydockings
      are actually performed.





Off-balance
Sheet Arrangements





We do not have any off-balance sheet
arrangements.


27







Item 3.Quantitative and
Qualitative Disclosures about Market Risk




Interest
Rate Risk





There
have been no material changes from the "Interest Rate Risk" previously disclosed
in our Form 10-K for the year ended December 31, 2009.





Currency
and Exchange Rates





There
have been no material changes from the "Currency and Exchange Rates" risk
previously disclosed in our Form 10-K for the year ended December 31,
2009.




Item 4.Controls and
Procedures




Disclosure
Controls and Procedures




Our
management, including our Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended, (the "Exchange Act")) as of the end of the period covered by
this report. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures are effective.




Internal Control
Over Financial Reporting




There
have been no changes in our internal control over financial reporting during the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.


















28





PART
II: OTHER INFORMATION





Item
1 - Legal Proceedings





We are
not aware of any legal proceedings or claims to which we or our subsidiaries are
party or of which our property is subject. From time to time in the future, we
may be subject to legal proceedings and claims in the ordinary course of
business, principally personal injury and property casualty claims. Those
claims, even if lacking merit, could result in the expenditure by us of
significant financial and managerial resources.





Item
1A – Risk Factors





There
have been no material changes from the "Risk Factors" previously disclosed in
our Form 10-K for the year ended December 31, 2009.





Item
2 – Unregistered Sales of Equity Securities and Use of Proceeds





None.





Item
3 - Defaults Upon Senior Securities





None.




Item
4 - (Removed and Reserved)






Item 5 - Other
Information




(a) The Annual
Meeting of Shareholders of the Company was held on May 20, 2010. There were
62,126,665 common shares outstanding and entitled to vote at the meeting. A
majority of the outstanding common shares entitled to vote were present in
person or by proxy. At the meeting the matters described below were approved by
the shareholders.




1.           The
following persons were re-elected Class II directors of the Company to serve
until the Annual Meeting of Shareholders in 2013 and until their respective
successors are duly elected and qualified or until his earlier death,
resignation, retirement, disqualification or removal, by the following number of
votes:




Votes
      For
            Votes
      Withheld
            Broker
      Non-VotesMr.
      Joseph M. Cianciolo
            15,751,124
            3,343,659
            26,395,818Mr.
      David B. Hiley
            18,238,100
            856,683
            26,395,818Mr.
      Thomas B. Winmill
            17,789,246
            1,305,537
            26,395,818




The
following persons continue as Class I directors of the Company: Jon Tomasson and
Sophocles N. Zoullas. The following persons continue as Class III directors of
the Company: Douglas P. Haensel and Alexis P. Zoullas.




2.           The
ratification of the appointment of Ernst & Young LLP as the independent
registered public accounting firm to audit the financial statements of the
Company and its subsidiaries for the fiscal year ending December 31, 2010, was
approved by the following number of votes:




Votes
      For
            Votes
      Against
            Abstentions
            Broker
      Non-VotesRatification
      ofErnst
      & Young LLP
            44,918,087
            449,798
            122,716
            -





There
were no broker non-votes.









29





Item 6 –
Exhibits




EXHIBIT
INDEX







3.1
            Amended
      and Restated Articles of Incorporation of the Company
  (1)


3.2
            Amended
      and Restated Bylaws of the Company
(2)


3.3
            Certificate
      of Designation of Series A Junior Participating Preferred Stock
      (3)


4.1
            Form
      of Share Certificate of the Company
(4)


4.2
            Form
      of Senior Indenture (5)


4.3
            Form
      of Subordinated Indenture (6)


4.4
            Rights
      Agreement (7)


10.1
            Amendatory
      Agreement, dated as of July 3, 2008, among the Company and certain of its
      subsidiaries and the banks and financial institutions party thereto and
      the Royal Bank of Scotland plc, as mandated lead arranger
    (8)


10.2
            Second
      Amendatory Agreement, dated as of December 17, 2008, among the Company and
      certain of its subsidiaries and the banks and financial institutions party
      thereto and the Royal Bank of Scotland plc, as mandated lead arranger
      (9)


10.3
            Third Amendatory Agreement, dated
      as of August 4, 2009, among the Company and certain of its subsidiaries
      and the banks and financial institutions party thereto and the Royal Bank
      of Scotland plc, as mandated lead arranger
  (10)


10.4
            Amended
      and Restated Employment Agreement for Mr. Sophocles N. Zoullas
      (11)


10.5
            Eagle
      Bulk Shipping Inc. 2009 Equity Incentive Plan
  (12)


10.6
            Delphin
      Management Agreement (13)


31.1
            Rule
      13a-14(d) / 15d-14(a) Certification of
CEO


31.2
            Rule
      13a-14(d) / 15d-14(a) Certification of
CFO


32.1
            Section
      1350 Certification of CEO


32.2
            Section
      1350 Certification of CFO





(1) 
 Incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1/A, File No. 333-123817, filed on June 20,
2005.


(2)  
Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement
on Form S-1/A, File No. 333-123817, filed on June 20, 2005.


(3)  
Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement
on Form 8-A, File No. 001-33831, dated November 13, 2007.


(4)  
Incorporated by reference to Exhibit 4 to the Company's Registration Statement
on Form S-1/A, File No. 333-123817, filed on June 20, 2005.


(5)  
Incorporated by reference to Exhibit 4.7 to the Company's Registration Statement
on Form S-3, File No. 333-139745, filed on December 29, 2006.


(6)  
Incorporated by reference to Exhibit 4.8 to the Company's Registration Statement
on Form S-3, File No. 333-139745, filed on December 29, 2006.


(7)  
Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement
on Form 8-A, File No. 001-33831, dated November 13, 2007.


(8)  
Incorporated by reference to the Company's Current Report on Form 8-K filed on
July 7, 2008.


(9)  
Incorporated by reference to Exhibit 4.9 to the Company's Post-Effective
Amendment to an automatic shelf registration statement on Form POSASR, File No.
333-148417, filed on March 2, 2009.


(10)
Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q filed on November 6, 2009.


(11)
Incorporated by reference to the Company's Current Report on Form 8-K filed on
June 20, 2008.


(12)
Incorporated by reference to Appendix A to the Company's Proxy Statement
pursuant to Schedule 14A filed on April 10, 2009.


(13)
Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form
10-K filed on March 5, 2010.


30




SIGNATURES






Pursuant
to the requirements 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.











EAGLE
BULK SHIPPING INC.





By:    /s/
Sophocles N. Zoullas


--------------------------------------------------------------------------------


Sophocles
N. Zoullas


Chairman
of the Board and


Chief
Executive Officer


Date:August 6,
2010








By:    /s/
Alan S. Ginsberg


--------------------------------------------------------------------------------


Alan S.
Ginsberg


Chief
Financial Officer


and
Principal Accounting Officer


Date: August 6,
2010