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
      1934For
      the quarterly period endedMarch 31,
      2010OR[  ]
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      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.
 YES
[X]             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, 62,126,665 shares outstanding as of May 7,
2010.
  TABLE OF CONTENTSPagePART
      I
                    FINANCIAL
      INFORMATIONItem
      1.
                    Financial
      StatementsConsolidated
      Balance Sheets as of March 31, 2010 (unaudited) andDecember
      31, 2009
                    3Consolidated
      Statements of Operations (unaudited) for the three months ended March 31,
      2010 and 2009
                    4Consolidated
      Statement of Stockholders' Equity (unaudited) for the three months ended
      March 31, 2010
                    5Consolidated
      Statements of Cash Flows (unaudited) for the three months ended March 31,
      2010 and 2009
                    6Notes
      to Consolidated Financial Statements (unaudited)
                    7Item
      2.
                    Management's
      Discussion and Analysis of Financial Conditionand
      Results of Operations
                    15Item
      3.
                    Quantitative
      and Qualitative Disclosures about Market Risks
                    27Item
      4.
                    Controls
      and Procedures
                    27PART
      II
                    OTHER
      INFORMATIONItem
      1.
                    Legal
      Proceedings
                    28Item
      1A.
                    Risk
      Factors
                    28Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    28Item
      3.
                    Defaults
      upon Senior Securities
                    28Item
      4.
                    Submission
      of Matters to a Vote of Security Holders
                    28Item
      5.
                    Other
      Information
                    28Item
      6.
                    Exhibits
                    28Signatures
                    29
 
 
  2
  Part
1 : FINANCIAL INFORMATION
 Item
1 : Financial Statements
 EAGLE
BULK SHIPPING INC.
 CONSOLIDATED
BALANCE SHEETS
  March
      31, 2010
                    
                    
                    December
      31, 2009ASSETS:Current
      assets:Cash
      and cash equivalents
                    
                    $
                    84,153,391
                    
                    
                    $
                    71,344,773Accounts
      receivable
                    
                    
                    8,842,296
                    
                    
                    
                    7,443,450Prepaid
      expenses
                    
                    
                    3,240,664
                    
                    
                    
                    4,989,446Fair
      value above contract value of time charters acquired
                    
                    
                    550,213
                    
                    
                    
                    427,359Total
      current assets
                    
                    
                    96,786,564
                    
                    
                    
                    84,205,028Noncurrent
      assets:Vessels
      and vessel improvements, at cost, net of accumulated depreciation of
      $138,461,809 and $125,439,001, respectively
                    
                    
                    1,274,757,629
                    
                    
                    
                    1,010,609,956Advances
      for vessel construction
                    
                    
                    302,583,979
                    
                    
                    
                    464,173,887Other
      fixed assets, net of accumulated amortization of $76,049
      and  $59,519,  respectively
                    
                    
                    254,713
                    
                    
                    
                    258,347Restricted
      cash
                    
                    
                    16,776,056
                    
                    
                    
                    13,776,056Deferred
      drydock costs
                    
                    
                    5,281,565
                    
                    
                    
                    5,266,289Deferred
      financing costs
                    
                    
                    19,912,857
                    
                    
                    
                    21,044,379Fair
      value above contract value of time charters acquired
                    
                    
                    3,938,242
                    
                    
                    
                    4,103,756Fair
      value of derivative instruments
                    
                    
                    —
                    
                    
                    
                    4,765,116Total
      noncurrent assets
                    
                    
                    1,623,505,041
                    
                    
                    
                    1,523,997,786Total
      assets
                    
                    $
                    1,720,291,605
                    
                    
                    $
                    1,608,202,814LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                    
                    $
                    5,582,920
                    
                    
                    $
                    2,289,333Accrued
      interest
                    
                    
                    7,824,844
                    
                    
                    
                    7,810,931Other
      accrued liabilities
                    
                    
                    6,440,541
                    
                    
                    
                    3,827,718Deferred
      revenue and fair value below contract value of time charters
      acquired
                    
                    
                    6,385,258
                    
                    
                    
                    7,718,902Unearned
      charter hire revenue
                    
                    
                    6,821,703
                    
                    
                    
                    4,858,133Total
      current liabilities
                    
                    
                    33,055,266
                    
                    
                    
                    26,505,017Noncurrent
      liabilities:Long-term
      debt
                    
                    
                    1,002,143,426
                    
                    
                    
                    900,170,880Deferred
      revenue and fair value below contract value of time charters
      acquired
                    
                    
                    25,801,147
                    
                    
                    
                    26,389,796Fair
      value of derivative instruments
                    
                    
                    33,026,330
                    
                    
                    
                    35,408,049Total
      noncurrent liabilities
                    
                    
                    1,060,970,903
                    
                    
                    
                    961,968,725Total
      liabilities
                    
                    
                    1,094,026,169
                    
                    
                    
                    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, 62,126,665 shares
      issued and outstanding
                    
                    
                    621,267
                    
                    
                    
                    621,267Additional
      paid-in capital
                    
                    
                    728,596,252
                    
                    
                    
                    724,250,125Retained
      earnings (net of dividends declared of $262,118,388 as of  March
      31, 2010 and December 31, 2009,  respectively)
                    
                    
                    (69,925,753
                    )
                    
                    
                    (74,499,387
                    )Accumulated
      other comprehensive loss
                    
                    
                    (33,026,330
                    )
                    
                    
                    (30,642,933
                    )Total
      stockholders' equity
                    
                    
                    626,265,436
                    
                    
                    
                    619,729,072Total
      liabilities and stockholders' equity
                    
                    $
                    1,720,291,605
                    
                    
                    $
                    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 EndedMarch 31, 2010
                    
                    
                    March 31, 2009Revenues,
      net of commissions
                    
                    $
                    54,243,725
                    
                    
                    $
                    55,977,666Vessel
      expenses
                    
                    
                    15,362,733
                    
                    
                    
                    13,071,197Depreciation
      and amortization
                    
                    
                    13,706,370
                    
                    
                    
                    10,290,916General
      and administrative expenses
                    
                    
                    9,487,423
                    
                    
                    
                    8,903,028Total
      operating expenses
                    
                    
                    38,556,526
                    
                    
                    
                    32,265,141Operating
      income
                    
                    
                    15,687,199
                    
                    
                    
                    23,712,525Interest
      expense
                    
                    
                    11,176,987
                    
                    
                    
                    6,486,317Interest
      income
                    
                    
                    (63,422
                    )
                    
                    
                    (10,573
                    )Net
      interest expense
                    
                    
                    11,113,565
                    
                    
                    
                    6,475,744Net
      income
                    
                    $
                    4,573,634
                    
                    
                    $
                    17,236,781Weighted
      average shares outstanding :Basic
                    
                    
                    62,126,665
                    
                    
                    
                    47,031,300Diluted
                    
                    
                    62,282,017
                    
                    
                    
                    47,031,300Per
      share amounts:Basic
      net income
                    
                    $
                    0.07
                    
                    
                    $
                    0.37Diluted
      net income
                    
                    $
                    0.07
                    
                    
                    $
                    0.37
  ________________
 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 THREE MONTHS ENDED MARCH 31, 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
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    4,573,634
                    
                    
                    
                    4,573,634
                    
                    
                    
                    —
                    
                    
                    
                    4,573,634Net
      unrealized losses on derivatives
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (2,383,397
                    )
                    
                    
                    (2,383,397
                    )Comprehensive
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,190,237Non-cash
      compensation
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,346,127
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,346,127Balance
      at March 31, 2010
                    
                    
                    62,126,665
                    
                    
                    $
                    621,
      267
                    
                    
                    $
                    728,596,252
                    
                    
                    
                    
                    
                    
                    $
                    (69,925,753
                    )
                    
                    $
                    (33,026,330
                    )
                    
                    $
                    626,265,436
   ________________
 
 The
accompanying notes are an integral part of these Consolidated Financial
Statements.
 
 
  5
  EAGLE
BULK SHIPPING INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Three
      Months EndedMarch 31, 2010
                      
                      
                      March 31,
                        2009Cash
      flows from operating activities:Net
      income
                      
                      $
                      4,573,634
                      
                      
                      $
                      17,236,781Adjustments
      to reconcile net income to net cash provided by operating
      activities:Items
      included in net income not affecting cash flows:Depreciation
                      
                      
                      13,039,338
                      
                      
                      
                      9,694,910Amortization
      of deferred drydocking costs
                      
                      
                      667,032
                      
                      
                      
                      596,006Amortization
      of deferred financing costs
                      
                      
                      584,717
                      
                      
                      
                      240,057Amortization
      of fair value below contract value of time charter
acquired
                      
                      
                      (864,628
                      )
                      
                      
                      (649,731
                      )Non-cash
      compensation expense
                      
                      
                      4,346,127
                      
                      
                      
                      3,896,284Changes
      in operating assets and liabilities:Accounts
      receivable
                      
                      
                      (1,398,846
                      )
                      
                      
                      (884,324
                      )Other
      assets
                      
                      
                      —
                      
                      
                      
                      (3,549,732
                      )Prepaid
      expenses
                      
                      
                      1,748,782
                      
                      
                      
                      (79,954
                      )Accounts
      payable
                      
                      
                      3,293,587
                      
                      
                      
                      1,386,575Accrued
      interest
                      
                      
                      2,051,673
                      
                      
                      
                      350,812Accrued
      expenses
                      
                      
                      2,612,823
                      
                      
                      
                      1,822,404Drydocking
      expenditures
                      
                      
                      (682,308
                      )
                      
                      
                      (86,694
                      )Deferred
      revenue
                      
                      
                      (1,015,005
                      )
                      
                      
                      13,312,978Unearned
      charter hire revenue
                      
                      
                      1,963,570
                      
                      
                      
                      (262,193
                      )Net
      cash provided by operating activities
                      
                      
                      30,920,496
                      
                      
                      
                      43,024,179Cash
      flows from investing activities:Vessels
      and vessel improvements and advances for vessel
    construction
                      
                      
                      (117,071,528
                      )
                      
                      
                      (44,271,329
                      )Purchase
      of other fixed assets
                      
                      
                      (12,896
                      )
                      
                      
                      —Net
      cash used in investing activities
                      
                      
                      (117,084,424
                      )
                      
                      
                      (44,271,329
                      )Cash
      flows from financing activities:Bank
      borrowings
                      
                      
                      101,972,546
                      
                      
                      
                      12,875,000Changes
      in restricted cash
                      
                      
                      (3,000,000
                      )
                      
                      
                      (1,000,000
                      )Deferred
      financing costs
                      
                      
                      —
                      
                      
                      
                      (939,954
                      )Net cash provided by financing
      activities
                      
                      
                      98,972,546
                      
                      
                      
                      10,935,046Net
      increase in cash
                      
                      
                      12,808,618
                      
                      
                      
                      9,687,896Cash
      at beginning of period
                      
                      
                      71,344,773
                      
                      
                      
                      9,208,862Cash
      at end of period
                      
                      $
                      84,153,391
                      
                      
                      $
                      18,896,758
 ________________
 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 March 31, 2010, the Company's
operating fleet consisted of 33 vessels. The Company has an extensive vessel
newbuilding program and as of March 31, 2010 had contracts for the construction
of 14 vessels. The following tables present certain information concerning the
Company's fleet as of March 31, 2010:
 
 No. of Vessels
                    
                    Dwt
                    
                    Vessel
                      Type
                    
                    Delivery
                    
                    EmploymentVessels in Operation33
      Vessels
                    
                    
                    1,746,953
                    
                    30
      Supramax
                    
                    
                    
                    Time
      Charter3
      Handymax
                    
                    
                    
                    Time
      CharterVessels to be delivered1
      Vessels
                    
                    
                    53,100
                    
                    53,100
      dwt series Supramax
                    
                    
                    2010
                    
                    Charter
      Free13
      Vessels
                    
                    
                    754,000
                    
                    58,000
      dwt series Supramax
                    
                    
                    2010-2011
                    
                    13
      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:
 
 Charterer
                    
                    % of Consolidated time charter
      revenueThree Months Ended March
31,2010
                    
                    
                    2009Charterer
      A
                    
                    
                    22.0
                    %
                    
                    
                    20.3
                    %Charterer
      B
                    
                    
                    12.6
                    %
                    
                    
                    12.0
                    %Charterer
      C
                    
                    
                    -
                    
                    
                    
                    16.0
                    %Charterer
      D
                    
                    
                    13.9
                    %
                    
                    
                    18.2
                    %Charterer
      E
                    
                    
                    13.0
                    %
                    
                    
                    -
 
 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.
  7
 
 
 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 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 March 31, 2010, the Company's
operating fleet consisted of 33 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.
 
 Vessel
and vessel improvements:
  Vessels
      and Vessel Improvements, at December 31, 2009
                    
                    $
                    1,010,609,956Purchase
      of Vessel Improvements
                    
                    
                    797,258Delivery
      of Newbuild Vessels
                    
                    
                    276,373,223Depreciation
      Expense
                    
                    
                    (13,022,808
                    )Vessels
      and Vessel Improvements, at March 31, 2010
                    
                    $
                    1,274,757,629
 
  8
  
 
 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 four Chinese built vessels the Thrasher, Crane
and Egret, in January 2010, and the Avocet in February 2010. In 2009 the Company
took delivery of four newly constructed vessels. Two vessels from the Japanese
shipyard, the Crested Eagle and Stellar Eagle, delivered in January and March
2009, respectively and two vessels from the Chinese shipyard, Bittern and
Canary, delivered in October and December 2009, respectively. In 2008 the
Company took delivery of three vessels, the Wren and Woodstar were delivered by
the Chinese shipyard in June and October 2008, respectively, and the Crowned
Eagle, the first of the Company's five Japanese built vessels, was delivered in
November 2008.
 
 As of March 31, 2010, the Company had
14 Supramax vessels under construction at the shipyard in China. The total
contract cost of the construction project in China is approximately
$589,226,217, of which the Company has advanced $253,188,717 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
                    
                    
                    102,485,611Capitalized
      Interest
                    
                    
                    4,607,651Legal
      and Technical Supervision Costs
                    
                    
                    7,690,053Delivery
      of Newbuild Vessels
                    
                    
                    (276,373,223
                    )Advances
      for Vessel Construction, at March 31, 2010
                    
                    $
                    302,583,979
 
 Note
4.  Long-Term Debt
 
 At March
31, 2010, the Company's debt consisted of $1,002,143,426 in net borrowings under
the amended Revolving Credit Facility. These borrowings consisted of
$730,443,547 for the 33 vessels currently in operation and $271,699,879 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 March 31,
2010, $149,211,051 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 March 31, 2010, the Company has recorded $16,500,000 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 March 31, 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 5.98%. 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 EndedMarch 31, 2010
                    
                    
                    March 31, 2009Loan
      Interest
                    
                    $
                    10,592,270
                    
                    
                    $
                    6,246,260Amortization
      of Deferred Financing Costs
                    
                    
                    584,717
                    
                    
                    
                    240,057Total
      Interest Expense
                    
                    $
                    11,176,987
                    
                    
                    $
                    6,486,317
 
 Interest paid, exclusive of capitalized
interest, in the three-month periods ended March 31, 2010 and 2009 amounted to
$8,540,127 and $5,895,446, 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 March 31, 2010 and December 31, 2009.
 
 Notional
      Amount Outstanding –
                      March
      31, 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 $33,026,330 and $35,408,049 have been
recorded in Fair value of derivative instruments in the Company's balance sheets
as of March 31, 2010 and December 31, 2009.
  Foreign
Currency swaps
 
 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 to hedge foreign currency risks on its capital asset
transactions (vessel newbuildings). The swaps are designated and qualified as
cash flow hedges.
 
 In
February 2009, the Company fixed the gain on its outstanding foreign currency
swaps contracts. This gain will be 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.
During the period ended March 31, 2010, the Company recognized 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 March 31, 2010 there are no foreign currency swaps
outstanding. Accordingly, an amount of $0 and $4,765,116 have been recorded in
Fair value of derivative instruments in the accompanying balance sheets as of
March 31, 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:
 
 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)
  11
  
 The following table summarizes assets
and liabilities measured at fair value on a recurring basis at March 31,
2010:
  Level
      1
                    
                    
                    Level
      2
                    
                    
                    Level
      3Assets:Foreign
      currency contracts
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Liabilities:Interest
      rate contracts
                    
                    
                    —
                    
                    
                    $
                    33,026,330
                    
                    
                    
                    —
 
 The fair value of the interest rate and
foreign currency swap 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 three-month period ended March 31,
2010.
 
 Note  6.  Commitments
and Contingencies
 
 Vessel Technical Management
Contract
 
 The Company has technical management
agreements for certain of its vessels with independent technical managers. The
Company paid average monthly technical management fees of $9,687 and $9,173 per
vessel during the three months ended March 31, 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 as of March 31, 2010, does not
include 1,000,508 restricted stock units and 641,217 stock options as their
effect was anti-dilutive.
 
 Three
      Months EndedMarch 31, 2010
                    
                    
                    March 31, 2009Net
      Income
                    
                    $
                    4,573,634
                    
                    
                    $
                    17,236,781Weighted
      Average Shares – Basic
                    
                    
                    62,126,665
                    
                    
                    
                    47,031,300Dilutive
      effect of stock options and restricted stock units
                    
                    
                    155,352
                    
                    
                    
                    0Weighted
      Average Shares – Diluted
                    
                    
                    62,282,017
                    
                    
                    
                    47,031,300Basic
      Earnings Per Share
                    
                    $
                    0.07
                    
                    
                    $
                    0.37Diluted
      Earnings Per Share
                    
                    $
                    0.07
                    
                    
                    $
                    0.37
 
  12
  Note
8.  Capital Stock
 
 Dividends
 
 Payment
of dividends is in 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 this connection, the dry
bulk market has recently declined substantially. 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.
 
 The
Company granted restricted stock units ("RSUs") to members of its management
which vest ratably between three to five years. As of March 31, 2010, RSUs
covering a total of 2,144,508 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 three months ended March
31, 2010 and 2009, the amortization charge was $3,739,103 and $3,270,064,
respectively. The remaining expense for each of the years ending 2010, 2011, and
2012 will be $10,547,423, $7,326,562, and $6,680,767, respectively, and
$2,276,805 thereafter.
  13
  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,
 
 The non-cash compensation expenses
recorded by the Company and included in General and Administrative Expenses are
as follows:
  Three Months Ended March
31,2010
                    
                    
                    2009Stock
      Option Plans
                    
                    $
                    607,024
                    
                    
                    $
                    626,220Restricted
      Stock Grants
                    
                    
                    3,739,103
                    
                    
                    
                    3,270,064Total
      Non-cash compensation expense
                    
                    $
                    4,346,127
                    
                    
                    $
                    3,896,284
 
 In 2006
and 2007, 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 March 31, 2010,
DERs equivalent to 574,000 of the Company's common shares are outstanding. For
the three months ended March 31, 2010 and 2009, the Company has recorded in
General and Administrative Expense cash compensation expenses of
$0.
 
 
  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 periods ended March 31, 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 have recently declined significantly 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 March 31, 2010, we owned and operated a modern fleet of 33
Handymax segment dry bulk vessels, 30 of which are of the Supramax class. We
also have an on-going Supramax newbuilding program for the construction of 14
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. We also hold options for the
construction of an additional eight Supramax dry bulk vessels at the same
shipyard in China.
  15
  
 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 33 vessels in our operating fleet, with an aggregate
carrying capacity of 1,746,952 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 three months ended March 31,
2010, we took delivery of six newbuilding vessels, Thrasher, Crane, Egret,
Golden Eagle, Avocet and Imperial Eagle, which promptly 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
                      March
      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 November 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 (2,7)
                      2009
                      55,989
                      January
      2011 to April 2011
                      $11,500
      (with 50% Index share over $11,500)Crowned
      Eagle
                      2008
                      55,940
                      March
      2010 to May 2010
                      $25,000Egret
      Bulker(8)
                      2010
                      57,809
                      Oct
      2012 to Feb 2013
                      $17,650
      (with 50%profit
      share over $20,000)Falcon(9)
                      2001
                      51,268
                      April
      2010 to Jun 2010
                      $39,500Golden
      Eagle (2,10)
                      2010
                      55,989
                      Dec
      2010 to Mar 2011
                      IndexGoldeneye
      (2)
                      2002
                      52,421
                      May
      2010 to July 2010
                      Index
      (with minimum $8,500)Griffon
      (11)
                      1995
                      46,635
                      February
      2010 to May 2010
                      $14,375Harrier
                      2001
                      50,296
                      April
      2010 to August 2010
                      $13,500Hawk
      I
                      2001
                      50,296
                      May
      2010 to August 2010
                      $13,000Heron
      (12)
                      2001
                      52,827
                      January
      2011 to May 2011
                      $26,375Imperial
      Eagle (2,13)
                      2010
                      55,989
                      Jan
      2011 to Mar 2011
                      Index
 Jaeger
      (14)
                    2004
                    52,248
                    April
      2010 to July 2010
                    $26,000Kestrel
      I
                    2004
                    50,326
                    March
      2010 to July 2010
                    $11,500Kite
                    1997
                    47,195
                    November
      2010 to January 2011
                    $17,000Kittiwake
      (2)
                    2002
                    53,146
                    August
      2010 to October 2010
                    Index
      (with minimum $8,500)Merlin
      (15)
                    2001
                    50,296
                    December
      2010 to March 2011
                    $23,000Osprey
      I (16)
                    2002
                    50,206
                    March
      2010 to May 2010
                    $18,000Peregrine
      (2)
                    2001
                    50,913
                    January
      2010
                      Jan
      2010 to Jan 2011/Mar 2011
                    $8,500
                      $10,500
      (with 50% Index share over $10,500)Redwing
      (2)
                    2007
                    53,411
                    August
      2010 to October 2010
                    Index
      (with minimum $8,500)Shrike
                    2003
                    53,343
                    May
      2010 to August 2010
                    $25,600Skua
      (2)
                    2003
                    53,350
                    Sep
      2010 to November 2010
                    Index
      (with minimum $8,500)Sparrow
      (17)
                    2000
                    48,225
                    February
      2010 to May 2010
                    $10,000Stellar
      Eagle
                    2009
                    55,989
                    February
      2010 to May 2010
                    $12,000Tern
                    2003
                    50,200
                    Mar
      2010 to June2010/Aug 2010
                    $23,500Thrasher
      (18)
                    2010
                    53,360
                    Apr
      2016
                      Apr
      2016 to Dec 2018/Apr 2019
                    $18,400
                      $18,000
      (with 50%profit
      share over $22,000)Woodstar
      (19)
                    2008
                    53,390
                    January
      2014
                      Jan
      2014 to Dec 2018/Apr 2019
                    $18,300
                      $18,000
      (with 50%profit
      share over $22,000)Wren
      (20)
                    2008
                    53,349
                    Dec
      2011
                      Dec
      2011 to Dec 2018/Apr 2019
                    $24,750
                      $18,000
      (with 50%profit
      share over $22,000)
  17
 (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
      charterer of the CRESTED EAGLE has exercised an option to extend the
      charter period by 11 to 13 months from February
  2010.
 (8)
                    The
      EGRET BULKER has 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.
 (9)
                    Upon
      completion of the previous charter in April 2010, the FALCON commenced a
      charter for four to six months at $25,000 per
  day.
 (10)
                      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.
 (11)
                      The
      charter rate of the GRIFFON has been changed to $14,375 as a result of an
      arbitration settlement reached in March
  2010.
 (12)
                      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.
 (13)
                      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.
 (14)
                      Upon
      completion of the previous charter in January 2010, the JAEGER commenced a
      charter for three to five months at $26,000 per
  day.
 (15)
                      Revenue
      recognition for the MERLIN is based on an average daily rate of
      $25,000.
 (16)
                      Upon
      completion of the previous charter in April 2010, the OSPREY I commenced a
      charter for four to six months at $25,250 per
  day.
 (17)
                      Upon
      completion of the previous time charter in April 2010 the SPARROW
      commenced a charter for four to six months at $24,000 per
      day.
 (18)
                      Revenue
      recognition for the THRASHER is based on an average daily base rate of
      $18,280.
 (19)
                  Revenue
      recognition for the WOODSTAR is based on an average daily base rate of
      $18,154. (20)
                    Revenue
      recognition for the WREN is based on an average daily base rate of
      $20,245.
    The
following table, as of March 31, 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 ShareGannet Bulker (4,7)
                    58,000
                    2010Q2
                    Jan
      2013 to May 2013
                    $17,650
                    50%
      over $20,000Grebe Bulker(4,7)
                    58,000
                    2010Q2
                    Jan
      2013 to May 2013
                    $17,650
                    50%
      over $20,000Ibis Bulker(4)
                    58,000
                    2010Q2
                    Mar
      2013 to Jul 2013
                    $17,650
                    50%
      over $20,000Jay
                    58,000
                    2010Q3
                    Dec
      2015
                    $18,500
                    50%
      over $21,500Dec
      2015 to Dec 2018/Apr 2019
                    $18,000
                    50%
      over $22,000Kingfisher
                    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
  18
  
 Vessel
                    Dwt
                    Year Built – Actual or Expected
      Delivery(1)
                    Time Charter Employment
      Expiration(2)
                    Daily Time Charter Hire Rate(3)
                    Profit ShareCONVERTED INTO OPTIONSSnipe (6)
                    58,000
                    2012Q1
                    Charter
      Free
                    —
                    —Swift (6)
                    58,000
                    2012Q1
                    Charter
      Free
                    —
                    —Raptor (6)
                    58,000
                    2012Q2
                    Charter
      Free
                    —
                    —Saker (6)
                    58,000
                    2012Q2
                    Charter
      Free
                    —
                    —Besra
      (5,6)
                    58,000
                    2011Q4
                    Charter
      Free
                    —
                    —Cernicalo (5,6)
                    58,000
                    2011Q1
                    Charter
      Free
                    —
                    —Fulmar (5,6)
                    58,000
                    2011Q3
                    Charter
      Free
                    —
                    —Goshawk (5,6)
                    58,000
                    2011Q4
                    Charter
      Free
                    —
                    —  (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)
                        Options
      for construction declared on December 27,
2007.
 (6)
                        Firm
      contracts converted to options in December
  2008.
 (7)
                        The
      GANNET BULKER and GREBE BULKER were delivered Subsequent to the end of the
      first quarter.
  Fleet
Management
 
 The management of our fleet includes
the following functions:
 
 ·
                    Strategic management.
      We locate, 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 manager performs 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 thirty four
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 acquisition;
      and
  ·
                    financial, accounting and
      information technology
services.
 19
 Technical
Management
 
 The
technical management of majority our fleet is provided by our unaffiliated third
party technical managers, V.Ships, Wilhelmsen Ship Management and Anglo Eastern
International Ltd., that we believe are three of the world's largest providers
of independent ship management and related services. We have also set up our own
in-house technical management capability, under which we provide technical
management services to several of our vessels, in order to establish a vessel
management bench-mark with our external technical managers. We review the
performance of our 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.
  Our
third-party technical managers are paid a fixed management fee for each vessel
in our operating fleet for the technical management services provided. For the
three-month periods ended March 31, 2010 and 2009, the technical management fee
averaged $9,687 and $9,173 per vessel per month, respectively. Management fees
paid to our third-party technical managers are recorded under Vessel
Expenses.
 
 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.
  20
  
 Results
of Operations for the three-month periods ended March 31, 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 EndedMarch 31, 2010
                    
                    
                    March 31, 2009Ownership
      Days
                    
                    
                    2,826
                    
                    
                    
                    2,138Available
      Days
                    
                    
                    2,804
                    
                    
                    
                    2,137Operating
      Days
                    
                    
                    2,776
                    
                    
                    
                    2,128Fleet
      Utilization
                    
                    
                    99.0
                    %
                    
                    
                    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
March 31, 2010, increased 32% from the corresponding period in 2009 as we
operated 33 vessels in the first 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 three-month period ended March 31, 2010, the
Company drydocked one vessel and none in the comparable quarter in
2009.
 
 •           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 March 31, 2010 were $57,362,935 compared to $58,621,700 recorded
in the comparable quarter in 2009. Gross revenues declined due to lower rates on
charter renewals offset by operation of a larger fleet size. Vessels with legacy
time charters saw lower rates upon charter renewals. Gross revenues recorded in
the quarter ended March 31, 2010 include an arbitration settlement in the
amount of $1,089,759, reached in March 2010. Gross revenues recorded in the
quarter ended March 31, 2010 and 2009, include an amount of $864,628 and
$649,731, 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 March 31, 2010 and 2009 were $3,119,210
and $2,644,034, respectively. Net revenues during the quarter ended March 31,
2010 and 2009, were $54,243,725 and $55,977,666, respectively.
  21
  
 
 Vessel
Expenses
 
 Vessel expenses for the three-month
period ended March 31, 2010, were $15,362,733 compared to $13,071,197 in the
comparable quarter in 2009. The increase in vessel expense is attributable to a
larger fleet size in operation, increases in insurance costs, costs relating to
anti-piracy measures, and general increases in costs of stores and spares.
Vessel expenses for the three-month period ended March 31, 2010, included
$14,577,346 in vessel operating costs and $785,387 in technical management fees.
Vessel expenses for the comparable period in 2009 included $12,428,975 in vessel
operating costs and $642,222 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.
 
 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 March 31, 2010 and 2009, total depreciation and
amortization expense was $13,706,370 and $10,290,916, respectively. Total
depreciation and amortization expense for the three-month period ended March 31,
2010 includes $13,039,338 of vessel depreciation and other fixed assets
amortization, and $667,032 relating to the amortization of deferred drydocking
costs. Comparable amounts for the three-month period ended March 31, 2009 were
$9,694,910 of vessel depreciation and $596,006 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.
 
 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. Management 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 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 March 31, 2010 and 2009, the amortization of
deferred financing costs allocated to the vessels on the water was $584,717 and
$240,057, 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.
  22
  
 General
and administrative expenses for the three-month periods ended March 31, 2010 and
2009 were $9,487,423 and $8,903,028, respectively. These general and
administrative expenses include a non-cash compensation component of $4,346,127
and $3,896,284, respectively. The increase in general and administrative
expenses for the three-month period ended March 31, 2010, is primarily
attributable to higher administrative costs associated with operating a larger
fleet, our extensive newbuilding program, amortization of restricted stock
awards and stock option compensation.
  Capitalized Interest
 
 At March
31, 2010, we had contracts for the construction of 14 newbuilding vessels which
are expected to be delivered in 2010 and 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 March 31,
2010, capitalized interest amounted to $4,607,651 ($4,060,846 in interest and
$546,805 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 months period in 2009, capitalized
interest amounted to$6,779,318 ($6,322,705 in
interest and $456,613 in amortization of deferred financing costs) and this
amount has been recorded and included in Advances for Vessel Construction in the
financial statements.
 
 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 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:
 
 Three
      Months EndedMarch
      31, 2010
                    
                    
                    March
      31, 2009Net
      Income
                    
                    $
                    4,573,634
                    
                    
                    $
                    17,236,781Interest
      Expense
                    
                    
                    11,176,987
                    
                    
                    
                    6,486,317Depreciation
      and Amortization
                    
                    
                    13,706,370
                    
                    
                    
                    10,290,916Amortization
      of fair value (below) above market
                      of
      time charter acquired
                    
                    
                    (864,628
                    )
                    
                    
                    (649,731
                    )EBITDA
                    
                    
                    28,592,363
                    
                    
                    
                    33,364,283Adjustments
      for Exceptional Items:Non-cash
      Compensation Expense (1)
                    
                    
                    4,346,127
                    
                    
                    
                    3,896,284Credit
      Agreement EBITDA
                    
                    $
                    32,938,490
                    
                    
                    $
                    37,260,567
  (1)Stock
      based compensation related to stock options and restricted stock units
      (see Notes to our financial
statements).
 23
  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 three-month periods ended March 31,
2010 and 2009, was $30,920,496 and $43,024,179, respectively. The decrease was
primarily due to lower rates on charter renewals offset by operation of a larger
fleet.
 
 Net cash
used in investing activities during the three-month period ended March 31, 2010,
was $117,084,424, compared to $44,271,329 during the corresponding three-month
period ended March 31, 2009. Investing activities during the three-month period
ended March 31, 2010 related primarily to making progress payments and incurring
related vessel construction expenses for the newbuilding vessels.
 
 Net cash
provided by financing activities during the three-month period ended March 31,
2010, was $98,972,546, compared to net cash provided by financing activities of
$10,935,046 during the corresponding three-month period ended March 31, 2009.
Financing activities during the three-month period ended March 31, 2010,
primarily involved borrowings of $101,972,546 from our revolving credit
facility.  Financing activities during the three-month period ended
March 31, 2009, primarily involved borrowings of $12,875,000.
  As of
March 31, 2010, our cash balance was $84,153,391, compared to a cash balance of
$71,344,773 at December 31, 2009. In addition, $16,500,000 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 March 31, 2010.
Also recorded in Restricted Cash is an amount of $276,056, which is
collateralizing a letters of credit relating to our office leases.
 
 At March
31, 2010, the Company's debt consisted of $1,002,143,426 in net borrowings under
the amended Revolving Credit Facility. These borrowings consisted of
$730,443,547 for the 33 vessels currently in operation and $271,699,879 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 March
31, 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.
 
 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
recent general decline in the dry bulk carrier charter market has resulted in
lower charter rates for vessels in the dry bulk 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.
  24
  
 
 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 quarter 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 March 31,
2010:
  (in
      thousands of U.S. dollars)
                    
                    Within
                      One Year
                    
                    
                    One
      to
                      Three Years
                    
                    
                    Three
      to
                      Five Years
                    
                    
                    More
      than
                      Five years
                    
                    
                    TotalVessels
      (1)
                    
                    $
                    194,935
                    
                    
                    $
                    141,103
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    336,038Bank
      Loans
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    1,002,143
                    
                    
                    
                    —
                    
                    
                    
                    1,002,143Interest
      and borrowing fees (2)
                    
                    
                    58,987
                    
                    
                    
                    118,135
                    
                    
                    
                    73,693
                    
                    
                    
                    —
                    
                    
                    
                    250,815Office
      lease
                    
                    
                    649
                    
                    
                    
                    1,670
                    
                    
                    
                    1,670
                    
                    
                    
                    2,645
                    
                    
                    
                    6,634Total
                    
                    $
                    254,571
                    
                    
                    $
                    260,908
                    
                    
                    $
                    1,077,506
                    
                    
                    $
                    2,645
                    
                    
                    $
                    1,595,630
 
 (1)  The
balance of the contract price in US dollars for the 14 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 make
capital expenditures from time to time in connection with our vessel
acquisitions. As of March 31, 2010, our fleet consists of 33 vessels which are
currently operational and 14 newbuilding vessels which have been contracted for
construction.
 
 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 regularly 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.
Management 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.
  25
  
 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.
One vessel was drydocked in the three months ended March 31, 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)June
      30, 2010
                      
                      
                      66
                      
                      $1.65
      millionSeptember
      30, 2010
                      
                      
                      66
                      
                      $1.65
      millionDecember
      31, 2010
                      
                      
                      44
                      
                      $1.10
      millionMarch
      31, 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.
  26
  
  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.
   27
  
 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 - Submission of Matters to a Vote of Security Holders
  None.
 
 Item 5 - Other
Information
 
 None.
 
 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)
  28
  
 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 CEO31.2
                    Rule
      13a-14(d) / 15d-14(a) Certification of CFO32.1
                    Section
      1350 Certification of CEO32.2
                    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.
 
  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. ZoullasSophocles
      N. ZoullasChairman
      of the Board and Chief Executive OfficerDate:May 7,
    2010
   By:
                    /s/
      Alan S. GinsbergAlan
      S. GinsbergChief
      Financial Officer and
      Principal Accounting OfficerDate:May 7,
    2010 29