UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2005


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


                        Commission File Number 000-51366
                            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                        (I.R.S. Employer
    incorporation or organization)                        Identification No.)
                              Registrant's Address:
                               477 Madison Avenue
                            New York, New York 10022

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

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

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

                     Common Stock, par value $.01 per share

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


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


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|


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


Large accelerated filer |_|    Accelerated filer |_| Non-Accelerated filer |X|


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


The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant  on June 30, 2005,  the last  business day of the  registrant's  most
recently completed second quarter, was $366,525,000,  based on the closing price
of  $13.50  per share on the  NASDAQ  Stock  Exchange  on that  date.  (For this
purpose,  all  outstanding  shares of Common Stock have been  considered held by
non-affiliates,  other than the shares beneficially owned by directors, officers
and certain 5% shareholders of the registrant; without conceding that any of the
excluded  parties are "affiliates" of the registrant for purposes of the federal
securities laws.)


As of March 14, 2006,  33,150,000  shares of the  registrants  Common Stock were
outstanding.



                       DOCUMENTS INCORPORATED BY REFERENCE


Portions  of the  registrant's  definitive  proxy  statement  to be filed by the
registrant  within 120 days of  December  31, 2005 in  connection  with its 2006
Annual Meeting of  Shareholders  are  incorporated by reference into Part III of
this Form 10-K.



<PAGE>






                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----
PART I
Item 1.     Business......................................................   3
Item 1A.    Risk Factors..................................................  21
Item 1B.    Unresolved SEC Comments.......................................  31
Item 2.     Properties....................................................  31
Item 3.     Legal Proceedings.............................................  31
Item 4.     Submission of Matters to a Vote of Security Holders...........  31

PART II
Item 5.     Market for Registrant's Common Equity, Related Stockholder
                 Matters and Issuer Purchases of Equity Securities........  32
Item 6.     Selected Financial Data.......................................  33
Item 7.     Management's Discussion and Analysis of Financial Condition
                 and Results of Operations................................  35
Item 7A.    Quantitative and Qualitative Disclosures about Market Risks...  53
Item 8.     Financial Statements and Supplementary Data...................  54
Item 9.     Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure......................  54
Item 9A.    Controls and Procedures.......................................  54
Item 9B.    Other Information.............................................  54

PART III
Item 10.    Directors and Executive Officers of the Registrant............  55
Item 11.    Executive Compensation........................................  55
Item 12.    Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters...............  55
Item 13.    Certain Relationships and Related Transactions................  55
Item 14.    Principal Accounting Fees and Services........................  55

PART IV
Item 15.    Exhibits, Financial Statement Schedules.......................  56
            Signatures....................................................  57


<PAGE>



                                     PART I

ITEM 1.    BUSINESS

Overview
--------

          Eagle Bulk Shipping Inc. (the "Company"),  incorporated under the laws
of the Republic of the Marshall  Islands and  headquartered in New York City, is
engaged  primarily  in the ocean  transportation  of a broad  range of major and
minor bulk cargoes,  including iron ore,  coal,  grain,  cement and  fertilizer,
along worldwide  shipping routes. As of December 31, 2005, we owned and operated
a modern fleet of 13  oceangoing  vessels with a combined  carrying  capacity of
643,980 deadweight tons and an average age of 6 years.

          We are the largest  U.S.  based owner of  Handymax  dry bulk  vessels.
Handymax dry bulk vessels  range in size from 35,000 to 60,000 dwt.  Nine of the
13 vessels in our operating  fleet are classed as Supramax dry bulk  vessels,  a
class of  Handymax  dry bulk  vessels,  which  range in size from  50,000 dwt 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
must 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 charterers.

          A glossary of shipping terms (the "Glossary") that should be used as a
reference  when  reading  this  Annual  Report on Form  10-K  begins on page 18.
Capitalized  terms that are used in this Annual  Report are either  defined when
they are first used or in the Glossary.

Forward-Looking Statements
--------------------------

          This Form  10-K  contains  forward-looking  statements  regarding  the
outlook for dry cargo markets, and the Company's  prospects.  There are a number
of factors,  risks and  uncertainties  that could cause actual results to differ
from the expectations reflected in these forward-looking  statements,  including
changes in production of or demand for major and minor bulk commodities,  either
globally or in particular  regions;  greater than  anticipated  levels of vessel
newbuilding orders or less than anticipated rates of scrapping of older vessels;
changes in trading patterns for particular commodities  significantly  impacting
overall  tonnage  requirements;  changes in the rates of growth of the world and
various  regional  economies;  risks  incident  to vessel  operation,  including
discharge  of  pollutants;   unanticipated  changes  in  laws  and  regulations;
increases in costs of  operation;  the  availability  to the Company of suitable
vessels  for  acquisition  or  chartering-in  on terms it deems  favorable;  the
ability  to  attract  and  retain  customers.   This  Form  10-K  also  includes
statistical  data regarding world dry bulk fleet and orderbook and fleet age. We
generated some of these data internally, and some were obtained from independent
industry  publications  and reports that we believe to be reliable  sources.  We
have not  independently  verified  these  data nor  sought  the  consent  of any
organizations  to refer to their  reports in this  annual  report.  The  Company
assumes  no  obligation  to  update or revise  any  forward-looking  statements.
Forward-looking   statements   in  this   Form   10-K  and   written   and  oral
forward-looking  statements  attributable to the Company or its  representatives
after  the  date of this  Form  10-K are  qualified  in  their  entirety  by the
cautionary  statement contained in this paragraph and in other reports hereafter
filed by the Company with the Securities and Exchange Commission.

Corporate Structure
-------------------

          Eagle Bulk Shipping Inc. is a holding company  incorporated  under the
laws of the Republic of the Marshall  Islands on March 23, 2005.  Following  our
incorporation,  we merged with Eagle  Holdings LLC, a Marshall  Islands  limited
liability  company  formed  on  January  26,  2005,  and  became a  wholly-owned
subsidiary of Eagle Ventures LLC, or Eagle Ventures,  a Marshall Islands limited
liability company.  Eagle Ventures is owned by Kelso Investment  Associates VII,
L.P.  and KEP VI,  LLC,  both  affiliates  of Kelso & Company,  L.P.,  or Kelso,
members of our management,  a director,  and outside  investors.  Eagle Ventures
currently  owns  approximately  37.5% of our  outstanding  common  stock.  Eagle
Ventures is 92.6% owned by affiliates of Kelso.

          We carry out the  commercial  and  strategic  management  of our fleet
through our wholly-owned  subsidiary,  Eagle Shipping International (USA) LLC, a
Marshall Islands limited  liability  company that was formed in January 2005 and
maintains its principle  executive offices in New York City. Each of our vessels
is  owned by us  through  a  separate  wholly  owned  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 annual report.

Management of Our Fleet
-----------------------

          Our New York City based  management  team, with an average of 20 years
of experience  in the shipping  industry  primarily  focused on the Handymax and
Handysize dry bulk sectors,  undertakes all commercial and strategic  management
of our fleet  and  supervises  the  technical  management  of our  vessels.  The
technical  management of our fleet is provided by an  unaffiliated  third party,
V.Ships,  which we believe is the world's largest  provider of independent  ship
management  and  related  services,  and to which  we refer to as our  technical
manager. The management of our fleet includes the following functions:

o    Strategic  management.  We locate,  obtain  financing  and  insurance  for,
     purchase and sell vessels.

o    Commercial management.  We obtain employment for our vessels and manage our
     relationships with charterers.

o    Technical management.  The technical manager performs day-to-day operations
     and maintenance of our vessels.

Our Competitive Strengths
-------------------------

          We believe that we have a number of  strengths  that provide us with a
competitive advantage in the dry bulk shipping industry, including:

        o      A fleet of 13 Handymax dry bulk vessels.  We are the largest U.S.
               based  owner of  Handymax  dry  bulk  vessels.  We view  Handymax
               vessels as a highly  attractive  sector of the dry bulk  shipping
               industry relative to larger vessel sectors due to their:

                - reduced volatility in charter rates;
                - smaller newbuilding orderbook;
                - increased operating flexibility;
                - ability to access more ports;
                - ability to carry a more diverse range of cargoes; and
                - broader customer base.

        o      A modern,  high  quality  fleet The 13  Handymax  vessels  in our
               operating  fleet  have  an  average  age of  only 6  years  as of
               December  31,  2005,  compared  to an  average  age for the world
               Handymax dry bulk fleet of over 15 years.  We believe that owning
               a modern,  high quality fleet reduces  operating costs,  improves
               safety and provides us with a  competitive  advantage in securing
               employment for our vessels. Our fleet was built to high standards
               and all of our vessels were built at leading Japanese  shipyards,
               including  Mitsui  Engineering  and  Shipbuilding  Co.,  Ltd., or
               Mitsui,  which built 6 of our  vessels,  and Oshima  Shipbuilding
               Co., Ltd., or Oshima, which built 5 of our vessels.

        o      A fleet of sister  and  similar  ships.  Our fleet  includes  6
               identical  sister ships built at the Mitsui  shipyard  based upon
               the same design  specifications  and 3 similar ships built at the
               Oshima  shipyard  that use many of the same parts and  equipment.
               Operating  sister and similar ships provides us with  operational
               and scheduling flexibility, efficiencies in employee training and
               lower  inventory and maintenance  expenses.  We believe that this
               should  allow us both to  increase  revenue  and lower  operating
               costs.

        o      A medium-to  long-term  fixed-rate time charter program.  We have
               entered into time  charters for all of our vessels.  Our charters
               range in length  from one to three  years and  provide  for fixed
               semi-monthly  payments in advance. 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.

        o      A strong balance sheet with a low level of indebtedness.  We used
               substantially  all of the  net  proceeds  of our  initial  public
               offering,  which we  completed  on June 28,  2005,  to repay  the
               majority of our  outstanding  indebtedness  at that time. We also
               used a  substantial  portion of the net proceeds of our follow-on
               public offering, which we completed on October 28, 2005, to repay
               part of our  outstanding  indebtedness  at that time.  We believe
               that  our  relatively  low  level  of  outstanding   indebtedness
               strengthens  our balance  sheet and increases the amount of funds
               we may draw under our credit  facility in connection  with future
               acquisitions.

Our Business Strategy
---------------------

          Our  strategy  is to manage  and  expand  our  fleet in a manner  that
enablesus to pay attractive  dividends to our  stockholders.  To accomplish this
objective, we intend to:

        o      Operate  a  modern,  high  quality  fleet  of  Handymax  dry bulk
               vessels. We believe that our ability to maintain and increase our
               customer base will depend largely on the quality of our fleet. We
               believe  that  owning  a  modern,   high  quality  fleet  reduces
               operating   costs,   improves  safety  and  provides  us  with  a
               competitive advantage in obtaining employment for our vessels. We
               will carry out regular  inspections  and maintenance of our fleet
               in order to maintain its high quality.

        o      Pursue  medium-to  long-term  charters  with the  flexibility  to
               pursue  short-term  charters in the future. We have chartered our
               vessels  pursuant  to a  combination  of one-to  three-year  time
               charters  that  provide  stable  cash flows.  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.  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. We
               have  entered  into time  charters  for all of our vessels  which
               range in length  from one to three  years and  provide  for fixed
               semi-monthly  payments in advance.  We regularly  monitor the dry
               bulk  shipping  market  and  based on  market  conditions  we may
               consider taking advantage of short-term charter rates.

        o      Maintain low cost, highly efficient  operations.  We believe that
               we are a  cost-efficient  and reliable  owner and operator of dry
               bulk vessels due to the young age of our  vessels,  our groups of
               sister and similar ships and the strength of our management team.
               We  intend to  actively  monitor  and  control  vessel  operating
               expenses while  maintaining the high quality of our fleet through
               regular  inspection and maintenance  programs.  We also intend to
               take advantage of savings that result from the economies of scale
               that V.Ships  provides us through  access to bulk  purchasing  of
               supplies,  quality crew members and a global  service  network of
               engineers, naval architects and port captains.

        o      Expand  our  fleet  through  selective  acquisitions  of dry bulk
               vessels.  We intend to continue grow our fleet through timely and
               selective  acquisitions of additional vessels in a manner that is
               accretive to earnings and dividends per share. We expect to focus
               primarily  in the  Handymax  sector  of  the  dry  bulk  shipping
               industry,  and in particular on Supramax  class  vessels.  We may
               also  consider  acquisitions  of other sizes of dry bulk vessels,
               including  Handysize  vessels,  but  do  not  intend  to  acquire
               tankers.

        o      Maintain  a  strong  balance  sheet  with low  leverage.  We used
               substantially  all of the  net  proceeds  of our  initial  public
               offering,  which we  completed  on June 28,  2005,  to repay  the
               majority of our  outstanding  indebtedness  at that time. We also
               used a  substantial  portion of the net proceeds of our follow-on
               public offering, which we completed on October 28, 2005, to repay
               part of our outstanding indebtedness at that time. In the future,
               we expect to draw funds under our credit  facility or use the net
               proceeds   from   future   equity   issuances   to  fund   vessel
               acquisitions.  We  intend  to  repay  all  or a  portion  of  our
               acquisition  related debt from time to time with the net proceeds
               of equity  issuances.  While our leverage will vary  according to
               our acquisition strategy and our ability to refinance acquisition
               related debt through equity  offerings on terms acceptable to us,
               we generally  intend to limit the amount of indebtedness  that we
               have  outstanding at any time to low levels for our industry.  We
               believe  this  strategy  will  provide  us  with  flexibility  in
               pursuing   acquisitions   that  are  accretive  to  earnings  and
               dividends per share.

Our Fleet
---------

          The following table presents certain information  concerning our fleet
as of December 31, 2005.

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

 Vessel             Year Built     Dwt    Time Charter Employment Expiration (1)
 ------             ----------     ---    --------------------------------------

 SUPRAMAX:
  Condor (2).........   2001       50,296    November 2006 to March 2007
  Falcon (2).........   2001       50,296    February 2008 to June 2008
  Harrier (2)........   2001       50,296    March 2007 to June 2007
  Hawk I (2).........   2001       50,296    March 2007 to June 2007
  Merlin (2).........   2001       50,296    October 2007 to December 2007
  Osprey I (2) (4)      2002       50,206    July 2008 to November 2008
  Cardinal (3).......   2004       55,408    March 2007 to June 2007
  Peregrine (3)......   2001       50,913    October 2006 to January 2007
  Heron .............   2001       52,827    December 2007 to February 2008
 HANDYMAX:
  Sparrow (3)........   2000       48,220    November 2006 to February 2007
  Kite...............   1997       47,195    March 2006 to May 2006
  Griffon............   1995       46,635    February 2006
  Shikra.............   1984       41,096    July 2006 to November 2006

-------------------------------------------------------------------------------
(1) The date range provided represents the earliest and latest
    date on which the charterers may redeliver the vessel to us
    upon the termination of the charter.
(2) These vessels are sister ships.
(3) These vessels are similar ships built at the same shipyard.
(4) The charterer of the OSPREY I has an option to extend the
    charter period by up to 26 month.

         All of our vessels are flagged in the Marshall Islands. We own each of
our vessels through a separate wholly owned Marshall Islands subsidiary.

Nature of Business
------------------

          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.  We have entered into time charters for all of our vessels which range
in  length  from one to three  years.  We will  regularly  monitor  the dry bulk
shipping market and based on market  conditions we may consider taking advantage
of short-term charter rates.

          A time  charter  involves  the hiring of a vessel from its owner for a
period of time  pursuant to a contract  under which the vessel  owner places its
ship (including its crew and equipment) at the service of the charterer. Under a
typical time charter,  the charterer  periodically pays us a fixed daily charter
hire rate and bears all voyage expenses, including the cost of fuel and port and
canal charges.  Once we have time chartered a vessel,  trading of the vessel and
the  commercial  risks shift to the  customer.  Subject to certain  restrictions
imposed by us in the contract, the charterer determines the type and quantity of
cargo to be carried  and the ports of loading  and  discharging.  The  technical
operation and  navigation of the vessel at all times remain our  responsibility,
including  vessel  operating  expenses,  such as the cost of crewing,  insuring,
repairing and maintaining the vessel, costs of spare parts and supplies, tonnage
taxes and other miscellaneous expenses.

          In  connection  with  the  charter  of  each  of our  vessels,  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  to  in-house  ship  brokers
associated with the charterers, depending on the number of brokers involved with
arranging the relevant charter.

          Our vessels operate worldwide within the trading limits imposed by our
insurance  terms  and do not  operate  in areas  where  United  States or United
Nations sanctions have been imposed.

Our Customers
-------------

          Our customers  currently include national,  regional and international
companies  such as Norden  A/S,  Korea Line,  Ltd.,  Western  Bulk ASA,  Daeyang
Shipping Ltd., Armada Bulk Shipping Ltd., MUR Shipping  Contracting  (Metall und
Rohstoff),  Strategic Bulk Carriers and Fairfield Bulk Carriers.  Our assessment
of a charterer's  financial  condition and reliability is an important factor in
negotiating  employment  for our  vessels.  We expect to charter  our vessels to
major trading houses (including commodities traders), publicly traded companies,
reputable  vessel owners and  operators,  major  producers and  government-owned
entities  rather  than to more  speculative  or  undercapitalized  entities.  We
evaluate the counterparty risk of potential charterers based on our management's
experience in the shipping  industry  combined with the additional  input of two
independent  credit risk  consultants.  During the period from our  inception to
December 31, 2005,  four customers  individually  accounted for more than 10% of
our time charter revenue.

Operations
----------

          There are two central aspects to the operation of our fleet:

        o      Commercial Operations,  which involves chartering and operating a
               vessel; and
        o      Technical  Operations,  which involves  maintaining,  crewing and
               insuring a vessel.

          We carry out the  commercial  and  strategic  management  of our fleet
through our wholly owned subsidiary,  Eagle Shipping  International (USA) LLC, a
Marshall Islands limited  liability  company that was formed in January 2005 and
maintains its principle  executive  offices in New York City.  Our office staff,
either directly or through this subsidiary, provides the following services:

        o      commercial operations and technical supervision;
        o      safety monitoring;
        o      vessel acquisition; and
        o      financial, accounting and information technology services.

We currently have a total of seven shore-based personnel, including our senior
management team.

Commercial and Strategic Management
-----------------------------------

          We perform  all of the  commercial  and  strategic  management  of our
fleet, including:

        o      Obtaining   employment  for  our  vessels  and   maintaining  our
               relationships  with our  charterers.  We believe that because our
               management  team  has  an  average  of  20  years  experience  in
               operating Handymax and Handysize dry bulk vessels, we have access
               to  a  broad  range  of  charterers  and  can  employ  the  fleet
               efficiently in any market and achieve high utilization rates.

          We  have  entered  into  time  charters  for  all of our  vessels,  in
accordance  with our strategy.  In general,  our time charters afford us greater
assurance  that we will be able to cover a fixed portion of our costs,  mitigate
revenue volatility,  provide stable cash flow and achieve high utilization rates
than if our vessels were employed on the shorter term voyage  charters or on the
spot market.

          We regularly  monitor the dry bulk shipping market and based on market
conditions,  when a time  charter  ends,  we may  consider  taking  advantage of
short-term  charter  rates.  In such cases we will arrange  voyage  charters for
those vessels that we will operate in the spot market.  Under a voyage  charter,
the owner of a vessel  provides the vessel for the  transport  of goods  between
specific  ports in return for the payment of an  agreed-upon  freight per ton of
cargo or, alternatively, a specified total amount. All operating costs are borne
by the owner of the vessel.  A single voyage  charter is often  referred to as a
"spot market"  charter,  which generally lasts from two to ten weeks.  Operating
vessels  in the spot  market  may  afford  greater  speculative  opportunity  to
capitalize  on  fluctuations  in the spot market;  when vessel demand is high we
earn higher  rates,  but when demand is low our rates are lower and  potentially
insufficient to cover costs.  Spot market rates are volatile and are affected by
world economics, international events, weather conditions, strikes, governmental
policies,  supply and  demand,  and other  factors  beyond our  control.  If the
markets are especially weak for protracted periods, there is a risk that vessels
in the spot market may spend time idle waiting for  business,  or may have to be
"laid up".

        o      Identifying, purchasing, and selling vessels. We believe that our
               commercial management team has longstanding  relationships in the
               dry bulk  industry,  which  provides  us access  to an  extensive
               network of ship  brokers and vessel  owners that we believe  will
               provide us with an advantage in future transactions.

        o      Obtaining   insurance   coverage   for  our   vessels.   We  have
               well-established relationships with reputable marine underwriters
               in all the major  insurance  markets  around the world that helps
               insure   our  fleet  with   insurance   at   competitive   rates.
               Additionally,  our protection and indemnity insurance is directly
               placed with the underwriter, thereby eliminating broker expenses.

        o      Supervising  V.Ships,  our  third  party  technical  manager.  We
               regularly monitor the expenditures,  crewing,  and maintenance of
               our vessels by our technical  manager.  Our  management  team has
               direct experience with vessel  operations,  repairs,  drydockings
               and construction.

Technical Management
--------------------

          The  technical  management  of our fleet is provided by our  technical
manager,  V.Ships,  an unaffiliated  third party, that we believe is the world's
largest provider of independent ship management and related services.  We review
the  performance  of V.Ships 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.  V.Ships  also  manages  and  processes  all crew
insurance  claims.  Our  technical  manager  maintains  records of all costs and
expenditures incurred in connection with its services that are available for our
review on a daily basis. Our technical manager is a member of Marine Contracting
Association  Limited (MARCAS),  an association that arranges bulk purchasing for
its members, which enables us to benefit from economies of scale.

          We  currently  crew our vessels  with  Ukrainian  officers  and seamen
supplied by V.Ships in its capacity as  technical  manager.  These  officers and
seamen are employees of our wholly owned vessel owning subsidiaries while aboard
our vessels.  We  currently  employ a total of 288 officers and seamen on the 13
vessels in our  operating  fleet.  Our technical  manager  handles each seaman's
training,  travel,  and  payroll  and  ensures  that  all our  seamen  have  the
qualifications  and licenses required to comply with  international  regulations
and shipping  conventions.  Additionally,  our seafaring  employees perform most
commissioning  work and assist in  supervising  work at  shipyards  and  drydock
facilities.  We  typically  man our  vessels  with  more crew  members  than are
required  by the  country  of the  vessel's  flag  in  order  to  allow  for the
performance of routine  maintenance  duties. All of our crew members are subject
to and are paid commensurate with international collective bargaining agreements
and,  therefore,  we do not anticipate any labor  disruptions.  No international
collective  bargaining  agreements  to  which we are a party  are set to  expire
within two years.

          In fiscal year 2005, we paid our technical manager a fee of $8,333 per
vessel per month, plus actual costs incurred by our vessels.

Permits and Authorizations
--------------------------

          We  are  required  by  various  governmental  and   quasi-governmental
agencies to obtain certain permits,  licenses and  certificates  with respect to
our vessels.  The kinds of permits,  licenses and  certificates  required depend
upon several factors,  including the commodity transported,  the waters in which
the vessel  operates,  the  nationality  of the  vessel's  crew and the age of a
vessel.  We expect to be able to obtain all permits,  licenses and  certificates
currently  required  to permit  our  vessels  to  operate.  Additional  laws and
regulations,  environmental  or otherwise,  may be adopted which could limit our
ability to do business or increase the cost of us doing business.

Environmental and Other Regulations
-----------------------------------

          Government   regulation   significantly   affects  the  ownership  and
operation of our vessels. We are subject to international conventions, national,
state and local  laws and  regulations  in force in the  countries  in which our
vessels may operate or are registered.

          A variety of government  and private  entities  subject our vessels to
both scheduled and  unscheduled  inspections.  These entities  include the local
port  authorities  (United  States Coast Guard,  harbor  master or  equivalent),
classification  societies,  flag state administrations (country of registry) and
charterers,  particularly terminal operators.  Certain of these entities require
us to  obtain  permits,  licenses  and  certificates  for the  operation  of our
vessels.  Failure to maintain necessary permits or approvals could require us to
incur substantial  costs or temporarily  suspend the operation of one or more of
our vessels.

          We believe  that the  heightened  level of  environmental  and quality
concerns among insurance  underwriters,  regulators and charterers is leading to
greater inspection and safety requirements on all vessels and may accelerate the
scrapping of older vessels throughout the dry bulk shipping industry.

          Increasing  environmental  concerns  have created a demand for vessels
that  conform  to the  stricter  environmental  standards.  We are  required  to
maintain operating  standards for all of our vessels that emphasize  operational
safety,  quality maintenance,  continuous training of our officers and crews and
compliance with United States and international regulations. We believe that the
operation  of  our  vessels  is  in  substantial   compliance   with  applicable
environmental  laws  and  regulations  applicable  to us as of the  date of this
annual report.

International Maritime Organization
-----------------------------------

          The  International  Maritime  Organization,  or  IMO,  has  negotiated
international   conventions   that  impose   liability   for  oil  pollution  in
international waters and a signatory's territorial waters. The IMO adopted Annex
VI to the International Convention for the Prevention of Pollution from Ships to
address air pollution  from ships which became  effective in May 2005.  Annex VI
set limits on sulfur oxide and nitrogen  oxide  emissions from ship exhausts and
prohibit   deliberate   emissions  of  ozone  depleting   substances,   such  as
chlorofluorocarbons.  Annex VI also includes a global cap on the sulfur  content
of fuel oil and allows for special areas to be  established  with more stringent
controls on sulfur emissions. Our vessels are in compliance with Annex VI.

          The operation of our vessels is also affected by the  requirements set
forth in the IMO's Management Code for the Safe Operation of Ships and Pollution
Prevention,  or ISM  Code.  The ISM  Code  requires  ship  owners  and  bareboat
charterers to develop and maintain an extensive "Safety  Management System" that
includes the adoption of a safety and  environmental  protection  policy setting
forth  instructions and procedures for safe operation and describing  procedures
for dealing with emergencies.  The failure of a ship owner or bareboat charterer
to comply with the ISM Code may subject such party to increased  liability,  may
decrease available insurance coverage for the affected vessels and may result in
a denial of access to, or detention in,  certain  ports.  As of the date of this
annual  report,   each  of  the  13  vessels  in  our  operating  fleet  is  ISM
Code-certified.

The United States Oil Pollution Act of 1990
-------------------------------------------

          The United States Oil Pollution  Act of 1990, or OPA,  established  an
extensive  regulatory and liability regime for the protection and cleanup of the
environment from oil spills.  OPA affects all owners and operators whose vessels
trade in the United States,  its  territories  and  possessions or whose vessels
operate in United States waters,  which includes the United States'  territorial
sea and its two hundred nautical mile exclusive economic zone.

          Under OPA,  vessel  owners,  operators  and  bareboat  charterers  are
"responsible parties" and are jointly, severally and strictly liable (unless the
spill results solely from the act or omission of a third party, an act of God or
an act of war) for all  containment and clean-up costs and other damages arising
from discharges or threatened  discharges of oil from their vessels. OPA defines
these other damages broadly to include:

        o   natural resources damage and the costs of assessment thereof;
        o   real and personal property damage;
        o   net loss of taxes, royalties, rents, fees and other lost revenues;
        o   lost profits or impairment of earning capacity due to property or
            natural resources damage; and
        o   net cost of public  services  necessitated  by a spill  response,
            such as protection from fire, safety or health hazards,  and loss
            of subsistence use of natural resources.

          OPA limits the liability of responsible parties to the greater of $600
per gross ton or $0.5  million  per dry bulk  vessel that is over 300 gross tons
(subject to possible adjustment for inflation). These limits of liability do not
apply if an incident was  directly  caused by  violation  of  applicable  United
States federal safety, construction or operating regulations or by a responsible
party's gross  negligence or willful  misconduct,  or if the  responsible  party
fails or refuses to report the incident or to cooperate and assist in connection
with oil removal activities.

          We maintain pollution liability coverage insurance in the amount of $1
billion per incident for each of our vessels. If the damages from a catastrophic
spill were to exceed our insurance  coverage it could have an adverse  effect on
our business and results of operation.

          OPA requires owners and operators of vessels to establish and maintain
with  the  United  States  Coast  Guard  evidence  of  financial  responsibility
sufficient to meet their potential  liabilities under the OPA. In December 1994,
the United  States Coast Guard  implemented  regulations  requiring  evidence of
financial  responsibility  in the amount of $1,500 per gross ton, which includes
the OPA  limitation  on liability of $1,200 per gross ton and the United  States
Comprehensive Environmental Response,  Compensation, and Liability Act liability
limit of $300 per gross ton. Under the regulations,  vessel owners and operators
may evidence  their  financial  responsibility  by showing  proof of  insurance,
surety bond,  self-insurance  or guaranty.  Under OPA, an owner or operator of a
fleet  of  vessels  is  required  only  to  demonstrate  evidence  of  financial
responsibility  in an amount sufficient to cover the vessels in the fleet having
the greatest maximum liability under OPA.

          The United States Coast Guard's regulations concerning certificates of
financial  responsibility  provide,  in accordance  with OPA, that claimants may
bring suit directly against an insurer or guarantor that furnishes  certificates
of financial responsibility. In the event that such insurer or guarantor is sued
directly,  it is prohibited from asserting any  contractual  defense that it may
have had  against  the  responsible  party and is  limited  to  asserting  those
defenses  available to the  responsible  party and the defense that the incident
was  caused  by  the  willful  misconduct  of  the  responsible  party.  Certain
organizations,   which  had  typically   provided   certificates   of  financial
responsibility  under pre-OPA laws, including the major protection and indemnity
organizations,  have declined to furnish evidence of insurance for vessel owners
and  operators  if they are  subject  to direct  actions  or  required  to waive
insurance policy defenses.

          The United States Coast Guard's financial  responsibility  regulations
may also be satisfied by evidence of surety bond, guaranty or by self-insurance.
Under the self-insurance  provisions, the ship owner or operator must have a net
worth and  working  capital,  measured  in assets  located in the United  States
against  liabilities  located anywhere in the world, that exceeds the applicable
amount of financial  responsibility.  We have  complied  with the United  States
Coast Guard regulations by providing a certificate of responsibility  from third
party entities that are  acceptable to the United States Coast Guard  evidencing
sufficient self-insurance.

          OPA  specifically  permits  individual  states  to  impose  their  own
liability regimes with regard to oil pollution  incidents occurring within their
boundaries,  and some states have enacted  legislation  providing  for unlimited
liability  for oil  spills.  In some  cases,  states,  which have  enacted  such
legislation,  have not yet  issued  implementing  regulations  defining  vessels
owners'  responsibilities  under  these  laws.  We  intend  to  comply  with all
applicable state regulations in the ports where our vessels call.

Other Environmental Initiatives
-------------------------------

          The European  Union is  considering  legislation  that will affect the
operation  of  vessels  and the  liability  of owners for oil  pollution.  It is
difficult  to  predict  what  legislation,  if any,  may be  promulgated  by the
European Union or any other country or authority.

          Although the United States is not a party thereto, many countries have
ratified and follow the liability  scheme  adopted by the IMO and set out in the
International  Convention on Civil Liability for Oil Pollution Damage,  1969, as
amended,   or  the  CLC,  and  the  Convention  for  the   Establishment  of  an
International  Fund  for  Oil  Pollution  of  1971,  as  amended.   Under  these
conventions, a vessel's registered owner is strictly liable for pollution damage
caused  on the  territorial  waters  of a  contracting  state  by  discharge  of
persistent oil, subject to certain complete defenses. Many of the countries that
have  ratified  the CLC have  increased  the  liability  limits  through  a 1992
Protocol to the CLC. The liability  limits in the  countries  that have ratified
this Protocol are currently approximately $4.0 million plus approximately $566.0
per gross  registered ton above 5,000 gross tons with an approximate  maximum of
$80.5 million per vessel,  with the exact amount tied to a unit of account which
varies  according  to a basket of  currencies.  The right to limit  liability is
forfeited under the CLC where the spill is caused by the owner's actual fault or
privity and, under the 1992  Protocol,  where the spill is caused by the owner's
intentional or reckless  conduct.  Vessels  trading to  contracting  states must
provide  evidence of insurance  covering the limited  liability of the owner. In
jurisdictions where the CLC has not been adopted, various legislative schemes or
common law govern, and liability is imposed either on the basis of fault or in a
manner similar to the CLC.

Vessel Security Regulations
---------------------------

          Since the terrorist  attacks of September 11, 2001,  there have been a
variety of  initiatives  intended to enhance  vessel  security.  On November 25,
2002, the Maritime  Transportation  Security Act of 2002, or the MTSA, came into
effect.  To implement  certain  portions of the MTSA,  in July 2003,  the United
States Coast Guard issued  regulations  requiring the  implementation of certain
security  requirements  aboard  vessels  operating  in  waters  subject  to  the
jurisdiction of the United States.  Similarly,  in December 2002,  amendments to
the International  Convention for the Safety of Life at Sea, or SOLAS, created a
new chapter of the convention dealing  specifically with maritime security.  The
new chapter came into effect in July 2004 and imposes various detailed  security
obligations on vessels and port authorities,  most of which are contained in the
newly created International Ship and Port Facilities Security Code or ISPS Code.
Among the various requirements are:

        o      on-board  installation of automatic  information systems, or AIS,
               to enhance  vessel-to-vessel and vessel-to-shore  communications;
        o      on-board   installation  of  ship  security  alert  systems;
        o      the development of vessel  security  plans;  and
        o      compliance  with flag state security certification requirements.

          The United  States  Coast  Guard  regulations,  intended to align with
international maritime security standards, exempt non-United States vessels from
MTSA  vessel  security  measures  provided  such  vessels  have on board a valid
International Ship Security  Certificate,  or ISSC, that attests to the vessel's
compliance  with  SOLAS  security  requirements  and  the  ISPS  Code.  We  have
implemented the various security  measures  addressed by the MTSA, SOLAS and the
ISPS Code.

Inspection by Classification Societies
--------------------------------------

          Every seagoing vessel must be "classed" by a  classification  society.
The  classification  society certifies that the vessel is "in class," signifying
that the vessel has been built and  maintained in  accordance  with the rules of
the classification society and complies with applicable rules and regulations of
the vessel's country of registry and the international conventions of which that
country is a member.  In addition,  where surveys are required by  international
conventions  and  corresponding  laws  and  ordinances  of  a  flag  state,  the
classification  society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

          The  classification  society also  undertakes on request other surveys
and checks that are required by regulations and  requirements of the flag state.
These surveys are subject to agreements  made in each individual case and /or to
the regulations of the country concerned.

          For  maintenance of the class,  regular and  extraordinary  surveys of
hull,  machinery,  including the  electrical  plant,  and any special  equipment
classed are required to be performed as follows:

        o      Annual Surveys.  For seagoing ships, annual surveys are conducted
               for the hull and the machinery,  including the  electrical  plant
               and where applicable for special equipment classed,  at intervals
               of 12 months from the date of  commencement  of the class  period
               indicated in the certificate.

        o      Intermediate Surveys.  Extended annual surveys are referred to as
               intermediate surveys and typically are conducted two and one-half
               years after  commissioning  and each class renewal.  Intermediate
               surveys may be carried out on the occasion of the second or third
               annual survey.

        o      Class  Renewal  Surveys.  Class  renewal  surveys,  also known as
               special surveys, are carried out for the ship's hull,  machinery,
               including  the  electrical  plant and for any  special  equipment
               classed,   at  the  intervals   indicated  by  the  character  of
               classification  for the hull. At the special survey the vessel is
               thoroughly  examined,  including  audio-gauging  to determine the
               thickness of the steel structures.  Should the thickness be found
               to be less than class  requirements,  the classification  society
               would prescribe steel renewals.  The  classification  society may
               grant a one year  grace  period  for  completion  of the  special
               survey.  Substantial  amounts  of money  may have to be spent for
               steel renewals to pass a special survey if the vessel experiences
               excessive wear and tear. In lieu of the special survey every four
               or five years, depending on whether a grace period was granted, a
               ship owner has the option of  arranging  with the  classification
               society for the vessel's  hull or machinery to be on a continuous
               survey cycle, in which every part of the vessel would be surveyed
               within a five year cycle. At an owner's application,  the surveys
               required  for class  renewal may be split  according to an agreed
               schedule to extend over the entire period of class.  This process
               is referred to as continuous class renewal.

          All areas subject to survey as defined by the  classification  society
are  required  to be  surveyed at least once per class  period,  unless  shorter
intervals  between  surveys are  prescribed  elsewhere.  The period  between two
subsequent  surveys of each area must not exceed  five  years.  Vessels  under 5
years  of age can  waive  drydocking  in order to  increase  available  days and
decrease capital expenditures, provided that the vessel is inspected underwater.

          Most vessels are also  drydocked  every 30 to 36 months for inspection
of the underwater  parts and for repairs related to inspections.  If any defects
are found, the classification  surveyor will issue a "recommendation" which must
be rectified by the ship owner within prescribed time limits.

          Most insurance underwriters make it a condition for insurance coverage
that a vessel be certified as "in class" by a classification  society which is a
member of the International  Association of Classification  Societies,  or IACS.
All our vessels that we have  purchased  and may agree to purchase in the future
must be certified as being "in class" prior to their delivery under our standard
purchase  contracts and memorandum of agreement.  If the vessel is not certified
on the date of closing, we have no obligation to take delivery of the vessel. We
have all of our  vessels,  and intend to have all vessels that we acquire in the
future, classed by IACS members.

Risk of Loss and Liability Insurance
------------------------------------

         General

          The operation of any dry bulk vessel includes risks such as mechanical
failure,   collision,   property  loss,   cargo  loss  or  damage  and  business
interruption due to political  circumstances in foreign  countries,  hostilities
and labor  strikes.  In  addition,  there is always an inherent  possibility  of
marine  disaster,  including oil spills (from fuel oil) and other  environmental
mishaps,  and the  liabilities  arising  from  owning and  operating  vessels in
international  trade.  OPA,  which imposes  virtually  unlimited  liability upon
owners,  operators and demise charterers of vessels trading in the United States
exclusive  economic  zone for  certain  oil  pollution  accidents  in the United
States,  has  made  liability  insurance  more  expensive  for ship  owners  and
operators trading in the United States market.

          We  maintain  hull  and  machinery  insurance,  war  risks  insurance,
protection and indemnity cover, and freight, demurrage and defense cover for our
operating  fleet in amounts  that we believe to be prudent to cover normal risks
in our  operations,  we may not be able to  achieve  or  maintain  this level of
coverage  throughout a vessel's useful life.  Furthermore,  not all risks can be
insured,  and there can be no guarantee that any specific claim will be paid, or
that we will always be able to obtain adequate  insurance coverage at reasonable
rates.

         Hull & Machinery and War Risks Insurance

          We maintain marine hull and machinery and war risks insurances,  which
cover the risk of actual or constructive total loss, for all of our vessels. Our
vessels are each covered up to at least their fair market value with deductibles
of $75,000 - $100,000 per vessel per incident.

         Protection & Indemnity Insurance

          Protection  and indemnity  insurance is provided by mutual  protection
and indemnity  associations,  or P&I Associations,  which insure our third party
liabilities  in  connection   with  our  shipping   activities.   This  includes
third-party  liability and other related  expenses  resulting from the injury or
death of crew,  passengers and other third parties, the loss or damage to cargo,
claims arising from collisions with other vessels,  damage to other  third-party
property, pollution arising from oil or other substances and salvage, towing and
other related costs, including wreck removal. Protection and indemnity insurance
is a form of mutual  indemnity  insurance,  extended by protection and indemnity
mutual  associations,  or "clubs." Subject to the "capping" discussed below, our
coverage, except for pollution, is unlimited.

          Our current protection and indemnity  insurance coverage for pollution
is $1 billion  per vessel per  incident.  The  fourteen  P&I  Associations  that
comprise  the  International  Group  insure  approximately  90% of  the  world's
commercial  tonnage and have entered into a pooling  agreement to reinsure  each
association's liabilities.  As a member of a P&I Association,  which is a member
of the International  Group, we are subject to calls payable to the associations
based on the  group's  claim  records as well as the claim  records of all other
members  of  the  individual  associations  and  members  of  the  pool  of  P&I
Associations comprising the International Group.

Competition
-----------

          We  compete  with  a  large  number  of  international   fleets.   The
international  shipping industry is highly  competitive and fragmented with many
market participants.  There are approximately 6,100 drybulk carriers aggregating
approximately  350 million  dwt, and the  ownership of these  vessels is divided
among approximately 1,400 mainly private independent dry bulk vessel owners with
no one shipping group owning or controlling more than 5.0% of the world dry bulk
fleet.  We  primarily  compete  with  other  owners of dry bulk  vessels  in the
Handymax class that are mainly privately owned fleets.

          Competition in the ocean shipping industry varies primarily  according
to the nature of the  contractual  relationship  as well as with  respect to the
kind of commodity  being  shipped.  Our business will fluctuate in line with the
main  patterns of trade of dry bulk  cargoes and varies  according to changes in
the supply and demand for these items.  Competition in virtually all bulk trades
is intense and based primarily on supply and demand.  We compete for charters on
the basis of price,  vessel location,  size, age and condition of the vessel, as
well  as on  our  reputation  as an  owner  and  operator.  Increasingly,  major
customers are  demonstrating  a preference  for modern vessels based on concerns
about the  environmental  and operational  risks  associated with older vessels.
Consequently,  owners of large modern fleets have gained a competitive advantage
over owners of older fleets.

          As in the spot market,  the time charter market is price sensitive and
also depends on our ability to  demonstrate  the high quality of our vessels and
operations  to  chartering  customers.  However,  because  of  the  longer  term
commitment,  customers  entering  time charters are more  concerned  about their
exposure and image from chartering vessels that do not comply with environmental
regulations or that will be forced out of service for extensive  maintenance and
repairs.  Consequently,  in the time charter market, factors such as the age and
quality of a vessel and the reputation of the owner and operator tend to be more
significant than in the spot market in competing for business.

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 are
strong.  In common with other  shipowners,  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.

Exchange Controls
-----------------

          Under Marshall Islands law, there are currently no restrictions on the
export or import of capital, including foreign exchange controls or restrictions
that  affect  the  remittance  of  dividends,  interest  or  other  payments  to
non-resident holders of our common stock.

United States Tax Considerations
--------------------------------

          The following is a discussion of certain  United States federal income
tax  considerations  relevant  to owning  our  common  stock by a United  States
Holder,  as defined below. This discussion does not purport to deal with the tax
consequences  of  owning  the  Company's  common  stock  to  all  categories  of
investors,  some of which (such as financial institutions,  regulated investment
companies, real estate investment trusts,  tax-exempt  organizations,  insurance
companies,  persons  holding our common stock as part of a hedging,  integrated,
conversion or constructive sale transaction or a straddle, traders in securities
that have elected the mark-to-market  method of accounting for their securities,
persons  liable for  alternative  minimum  tax,  persons  who are  investors  in
pass-through entities, dealers in securities or currencies,  persons who own 10%
or more of our common stock and investors whose  functional  currency is not the
United  States  dollar)  may be  subject  to  special  rules.  Shareholders  are
encouraged  to  consult  their  own tax  advisors  concerning  the  overall  tax
consequences  arising in any particular  situation  under United States federal,
state, local or foreign law of the ownership of our common stock.

United States Federal Income Taxation of Our Company
----------------------------------------------------

         Taxation of Operating Income

          The Company  anticipates that it will derive  substantially all of its
gross income from the use and operation of vessels in international commerce and
that this income will principally  consist of hire from time and voyage charters
for the  transportation  of cargoes and the  performance  of  services  directly
related thereto, which is referred to herein as "shipping income."

          Shipping income that is attributable to transportation  that begins or
ends, but that does not both begin and end, in the U.S. will be considered to be
50% derived from sources within the United States.  Shipping income attributable
to  transportation  that  both  begins  and ends in the  United  States  will be
considered to be 100% derived from sources within the United States. The Company
does not engage in  transportation  that gives rise to 100% U.S.  source income.
Shipping income  attributable to  transportation  exclusively  between  non-U.S.
ports will be  considered  to be 100% derived  from  sources  outside the United
States.  Shipping  income  derived  from  sources  outside the U.S.  will not be
subject to any U.S. federal income tax.

          The Company's vessels operate in various parts of the world, including
to or from U.S. ports. We believe that we currently qualify under Section 883 of
the U.S. Internal Revenue Code of 1986, as amended (the "Code") for an exemption
from U.S. federal income tax on substantially  all of our shipping income.  This
exemption  may be lost if 50% or more of our stock is owned,  for more than half
the  number of days  during  the  taxable  year,  by  persons  who  actually  or
constructively  own  5% or  more  of our  stock  and we  cannot  qualify  for an
exemption from such rule.

          While we believe that we qualify for exemption  from tax under Section
883 for 2005,  we can give no  assurance  that  changes in the  ownership of our
stock will permit us to qualify for the Section 883 exemption in the future.  If
we do not qualify for an exemption  pursuant to Section 883 of the Code, we will
be subject to U.S. federal income tax imposed on a gross basis at 4% on our U.S.
source  shipping  income.  In such a case,  our net income and cash flow will be
reduced by the amount of such tax.

          If the Section 883  exemption  were not  available  to the Company for
2005, the 4% tax so imposed would be approximately  $200,000.  However, since no
more that 50% of our  shipping  income  would be treated  as  derived  from U.S.
sources, our maximum tax liability under the 4% tax regime would never exceed 2%
of our shipping income.

          No  assurance  can be  given  that  changes  in or  interpretation  of
existing  laws will not  occur or will not be  retroactive  or that  anticipated
future  circumstances  will in fact occur.  The  Company's  views  should not be
considered official, and no assurances on the conclusions discussed above can be
given.

United States Federal Income Taxation of United States Holders
--------------------------------------------------------------

      Passive Foreign Investment Company Status and Significant Tax Consequences

          Special  United  States  federal  income  tax rules  apply to a United
States  Holder (as used herein means a beneficial  owner of common stock that is
an individual United States citizen or resident,  a United States corporation or
other United States  entity  taxable as a  corporation,  an estate the income of
which is subject to United  States  federal  income  taxation  regardless of its
source,  or a trust if a court  within  the  United  States is able to  exercise
primary jurisdiction over the administration of the trust and one or more United
States  persons have the authority to control all  substantial  decisions of the
trust)  that  holds  stock in a foreign  corporation  classified  as a  "passive
foreign  investment  company" for United States federal income tax purposes.  In
general,  the Company will be treated as a passive  foreign  investment  company
with  respect to a United  States  Holder if, for any taxable year in which such
holder holds the Company's common stock, either

        o at least 75% of our gross  income for such  taxable  year  consists of
          passive  income (e.g.,  dividends,  interest,  capital gains and rents
          derived other than in the active conduct of a rental business), or

        o at least 50% of the average  value of our assets  during such  taxable
          year produce, or are held for the production of, passive income.

          Income earned, or deemed earned, by the Company in connection with the
performance of services would not constitute passive income. By contrast, rental
income  would  generally  constitute  "passive  income"  unless the  Company was
treated under specific rules as deriving its rental income in the active conduct
of a trade or business.

          Based on the Company's current operations and future  projections,  we
do not believe  that the Company has been or is, nor do we expect the Company to
become, a passive foreign  investment  company with respect to any taxable year.
Although  there is no legal  authority  directly  on point,  our belief is based
principally  on the  position  that,  for  purposes of  determining  whether the
Company is a passive  foreign  investment  company,  the gross income it derives
from its time  chartering and voyage  chartering  activities  should  constitute
services income, rather than rental income. Accordingly,  such income should not
constitute  passive income, and the assets that the Company owns and operates in
connection  with the  production  of such income,  in  particular,  the vessels,
should not constitute  passive  assets for purposes of  determining  whether the
Company is a passive  foreign  investment  company.  In the absence of any legal
authority  specifically  relating to the statutory  provisions governing passive
foreign  investment  companies,  the Internal  Revenue  Service or a court could
disagree with our position. In addition, although the Company intends to conduct
its  affairs  in a  manner  to  avoid  being  classified  as a  passive  foreign
investment  company with respect to any taxable  year, we cannot assure you that
the nature of its operations will not change in the future.

          As discussed more fully below,  if the Company were to be treated as a
passive foreign  investment company for any taxable year, a United States Holder
would be subject to  different  taxation  rules  depending on whether the United
States  Holder makes an election to treat the Company as a  "Qualified  Electing
Fund," which  election we refer to as a "QEF  election."  As an  alternative  to
making  a QEF  election,  a  United  States  Holder  should  be  able  to make a
"mark-to-market"  election  with  respect  to the  Company's  common  stock,  as
discussed below.

         Taxation of United States Holders Making a Timely QEF Election

          If a United States  Holder makes a timely QEF  election,  which United
States  Holder we refer to as an "Electing  Holder,"  the  Electing  Holder must
report for United States  federal  income tax purposes its pro rata share of the
Company's  ordinary earnings and net capital gain, if any, for each taxable year
of the Company for which it is a passive  foreign  investment  company that ends
with or within the taxable year of the Electing Holder, regardless of whether or
not  distributions  were  received from the Company by the Electing  Holder.  No
portion  of any  such  inclusions  of  ordinary  earnings  will  be  treated  as
"qualified  dividend  income."  Net capital  gain  inclusions  of United  States
Non-Corporate  Holders  would be eligible  for  preferential  capital  gains tax
rates.  The  Electing  Holder's  adjusted  tax basis in the common stock will be
increased to reflect taxed but undistributed earnings and profits. Distributions
of  earnings  and  profits  that had been  previously  taxed  will  result  in a
corresponding  reduction  in the adjusted tax basis in the common stock and will
not be taxed again once distributed.  An Electing Holder would not, however,  be
entitled  to a  deduction  for its pro rata share of any losses that the Company
incurs with respect to any year. An Electing  Holder would  generally  recognize
capital gain or loss on the sale, exchange or other disposition of the Company's
common stock. A United States Holder would make a timely QEF election for shares
of the  Company  by  filing  one copy of IRS Form 8621  with his  United  States
federal  income tax return for the first year in which he held such  shares when
the Company was a passive foreign investment  company. If the Company were to be
treated as a passive  foreign  investment  company  for any  taxable  year,  the
Company would  provide each United States Holder with all necessary  information
in order to make the QEF election described above.

         Taxation of United States Holders Making a "Mark-to-Market" Election

          Alternatively,  if the Company were to be treated as a passive foreign
investment  company for any taxable  year and,  as we  anticipate,  its stock is
treated as "marketable stock," a United States Holder would be allowed to make a
"mark-to-market"  election with respect to the Company's common stock,  provided
the United  States Holder  completes and files IRS Form 8621 in accordance  with
the relevant instructions and related Treasury regulations.  If that election is
made,  the United States Holder  generally  would include as ordinary  income in
each  taxable  year the excess,  if any, of the fair market  value of the common
stock at the end of the taxable  year over such  holder's  adjusted tax basis in
the common  stock.  The United States Holder would also be permitted an ordinary
loss in respect of the excess,  if any, of the United States  Holder's  adjusted
tax  basis in the  common  stock  over its fair  market  value at the end of the
taxable year,  but only to the extent of the net amount  previously  included in
income as a result of the mark-to-market  election. A United States Holder's tax
basis in his common  stock  would be adjusted to reflect any such income or loss
amount.  Gain  realized  on the  sale,  exchange  or  other  disposition  of the
Company's  common  stock  would be  treated  as  ordinary  income,  and any loss
realized on the sale, exchange or other disposition of the common stock would be
treated as  ordinary  loss to the extent  that such loss does not exceed the net
mark-to-market  gains  previously  included  by the  United  States  Holder.  No
ordinary  income  inclusions  under this  election will be treated as "qualified
dividend income."

         Taxation of United States Holders Not Making a Timely QEF or
            Mark-to-Market Election

          Finally,  if the  Company  were to be  treated  as a  passive  foreign
investment  company for any taxable  year, a United  States  Holder who does not
make either a QEF election or a "mark-to-market" election for that year, whom we
refer to as a  "Non-Electing  Holder,"  would be subject  to special  rules with
respect to (1) any excess  distribution  (i.e., the portion of any distributions
received by the  Non-Electing  Holder on the common  stock in a taxable  year in
excess of 125  percent  of the  average  annual  distributions  received  by the
Non-Electing  Holder in the three preceding  taxable years, or, if shorter,  the
Non-Electing  Holder's  holding period for the common  stock),  and (2) any gain
realized on the sale,  exchange or other  disposition  of the  Company's  common
stock. Under these special rules:

        o the excess  distribution  or gain would be allocated  ratably over the
          Non-Electing Holder's aggregate holding period for the common stock;

        o the amount allocated to the current taxable year, and any taxable year
          prior to the first  taxable  year in which the  Company  was a passive
          foreign  investment  company,  would be taxed as  ordinary  income and
          would not be "qualified dividend income"; and

        o the  amount  allocated  to each of the other  taxable  years  would be
          subject to tax at the highest rate of tax in effect for the applicable
          class of taxpayer for that year, and an interest charge for the deemed
          deferral  benefit  would be imposed with respect to the  resulting tax
          attributable to each such other taxable year.

          These  special  rules would not apply to a qualified  pension,  profit
sharing or other retirement trust or other tax-exempt  organization that did not
borrow money or otherwise utilize leverage in connection with its acquisition of
the  Company's  common  stock.  If the Company is a passive  foreign  investment
company and a  Non-Electing  Holder who is an  individual  dies while owning the
Company's common stock,  such holder's  successor  generally would not receive a
step-up in tax basis with respect to such stock.

<PAGE>
GLOSSARY OF SHIPPING TERMS
--------------------------

          Following are definitions of shipping terms used in this Form 10-K.

Annual Survey--The inspection of a vessel by a classification society, on behalf
of a flag state, that takes place every year.

Bareboat  Charter--Also  known as "demise  charter."  Contract or hire of a ship
under which the  shipowner  is usually  paid a fixed amount of charter hire rate
for a certain period of time during which the charterer is  responsible  for the
operating costs and voyage costs of the vessel as well as arranging for crewing.

Bulk  Vessels/Carriers--Vessels  which are specially designed and built to carry
large volumes of cargo in bulk cargo form.

Bunkers--Heavy fuel oil used to power a vessel's engines.

Capesize--A dry bulk carrier in excess of 100,000 dwt.

Charter--The hire of a vessel for a specified period of time or to carry a cargo
for a fixed fee from a loading port to a  discharging  port.  The contract for a
charter is called a charterparty.

Charterer--The individual or company hiring a vessel.

Charter Hire Rate--A sum of money paid to the vessel owner by a charterer  under
a time charterparty for the use of a vessel.

Classification  Society--An  independent  organization  which  certifies  that a
vessel  has been  built  and  maintained  in  accordance  with the rules of such
organization  and complies  with the  applicable  rules and  regulations  of the
country of such vessel and the  international  conventions of which that country
is a member.

Deadweight Ton--"dwt"--A unit of a vessel's capacity for cargo, fuel oil, stores
and crew,  measured in metric tons of 1,000  kilograms.  A vessel's DWT or total
deadweight  is the total weight the vessel can carry when loaded to a particular
load line.

Draft--Vertical  distance  between the  waterline and the bottom of the vessel's
keel.

Dry Bulk--Non-liquid cargoes of commodities shipped in an unpackaged state.

Drydocking--The  removal of a vessel from the water for inspection and/or repair
of submerged parts.

Gross  Ton--Unit of 100 cubic feet or 2.831 cubic meters used in arriving at the
calculation of gross tonnage.

Handymax--A dry bulk carrier of approximately 35,000 to 60,000 dwt.

Handysize--A dry bulk carrier having a carrying  capacity of up to approximately
35,000 dwt.

Hull--The shell or body of a vessel.

International Maritime Organization--"IMO"--A United Nations agency that issues
international trade standards for shipping.

Intermediate  Survey--The  inspection  of a vessel by a  classification  society
surveyor  which  takes place  between two and three years  before and after each
Special  Survey  for  such  vessel  pursuant  to  the  rules  of   international
conventions and classification societies.

ISM Code--The International  Management Code for the Safe Operation of Ships and
for Pollution Prevention, as adopted by the IMO.

Metric Ton--A unit of measurement equal to 1,000 kilograms.

Newbuilding--A newly constructed vessel.

OPA--The United States Oil Pollution Act of 1990 (as amended).

Orderbook--A  reference  to  currently  placed  orders for the  construction  of
vessels (e.g., the Panamax orderbook).

Panamax--A  dry bulk carrier of  approximately  60,000 to 100,000 dwt of maximum
length,  depth and draft  capable of passing  fully  loaded  through  the Panama
Canal.

Protection   &  Indemnity   Insurance--Insurance   obtained   through  a  mutual
association formed by shipowners to provide liability insurance  protection from
large  financial loss to one member through  contributions  towards that loss by
all members.

Scrapping--The disposal of old or damaged vessel tonnage by way of sale as scrap
metal.

Short-Term Time Charter--A time charter which lasts less than  approximately  12
months.

Sister  Ships--Vessels of the same class and  specification  which were built by
the same shipyard.

SOLAS--The  International  Convention  for the  Safety of Life at Sea  1974,  as
amended, adopted under the auspices of the IMO.

Special Survey--The  inspection of a vessel by a classification society surveyor
which  takes  place a minimum  of every  four  years and a maximum of every five
years.

Spot Market--The market for immediate  chartering of a vessel usually for single
voyages.

Strict Liability--Liability that is imposed without regard to fault.

Supramax--A  new class of Handymax dry bulk carrier of  approximately  50,000 to
60,000 dwt.

Time  Charter--Contract for hire of a ship. A charter under which the ship-owner
is paid charter hire rate on a per day basis for a certain  period of time,  the
shipowner being  responsible  for providing the crew and paying  operating costs
while the charterer is  responsible  for paying the voyage costs.  Any delays at
port or during the voyages are the  responsibility  of the  charterer,  save for
certain  specific  exceptions such as loss of time arising from vessel breakdown
and routine maintenance.

Ton--A metric ton.

Voyage  Charter--Contract  for hire of a vessel  under which a shipowner is paid
freight on the basis of moving  cargo from a loading  port to a discharge  port.
The shipowner is responsible  for paying both operating  costs and voyage costs.
The  charterer  is  typically  responsible  for  any  delay  at the  loading  or
discharging ports.

Available Information
---------------------

          The  Company  makes  available  free of charge  through  its  internet
website, www.eagleships.com its Annual Report on Form 10-K, quarterly reports on
Form 10-Q,  current reports on Form 8-K and amendments to these reports filed or
furnished  pursuant to Section 13(a) or 15(d) of the Securities  Exchange Act of
1934,  as  amended,  as  soon  as  reasonably   practicable  after  the  Company
electronically  files such material with, or furnishes it to, the Securities and
Exchange Commission.  You may read and copy any document we file with the SEC at
the SEC's public reference facilities  maintained by the Securities and Exchange
Commission at 100 Fifth Street, N.E., Room 1580, Washington,  D.C. 20549. Please
call the SEC at 1-800-SEC-0330  for further  information on the public reference
facilities.  Our SEC filings are also  available  to the public at the SEC's web
site at  http://www.sec.gov.  The information on our website is not incorporated
by reference into this report.


<PAGE>

ITEM 1A. RISK FACTORS
---------------------

          We operate in an intensely competitive industry. Some of the following
risks relate principally to the industry in which we operate and our business in
general.  Other risks relate  principally to the securities market and ownership
of our common  stock.  The  occurrence  of any of the events  described  in this
section could cause  results to differ  materially  from those  contained in the
forward-looking  statements  made in this report,  and could  significantly  and
negatively affect our business,  financial condition,  operating results or cash
available for dividends.

Industry Specific Risk Factors
------------------------------

Charter hire rates for dry bulk  vessels may  decrease in the future,  which may
adversely  affect our earning.  The dry bulk shipping  industry is cyclical with
attendant  volatility  in charter  hire rates and  profitability.  The degree of
charter  hire rate  volatility  among  different  types of dry bulk  vessels has
varied  widely,  and  charter  hire  rates for dry bulk  vessels  have  recently
declined from  historically  high levels.  Fluctuations  in charter rates result
from  changes in the supply and demand for vessel  capacity  and  changes in the
supply and demand for the major  commodities  carried by water  internationally.
Because the factors  affecting  the supply and demand for vessels are outside of
our control and are unpredictable,  the nature, timing,  direction and degree of
changes in industry conditions are also unpredictable.

         Factors that influence demand for vessel capacity include:
         ----------------------------------------------------------

              o  demand for and production of dry bulk products;

              o  global and regional economic conditions;

              o  the distance dry bulk is to be moved by sea; and

              o  changes in seaborne and other transportation patterns.

         Factors that influence the supply of vessel capacity include:
         -------------------------------------------------------------

              o  the number of newbuilding deliveries;

              o  the scrapping of older vessels;

              o  vessel casualties; and

              o  the number of vessels that are out of service.

          We anticipate  that the future demand for our dry bulk vessels will be
dependent upon continued  economic  growth in the world's  economies,  including
China and  India,  seasonal  and  regional  changes  in  demand,  changes in the
capacity  of the global dry bulk  fleet and the  sources  and supply of dry bulk
cargo to be  transported  by sea.  The  capacity of the global dry bulk  carrier
fleet  seems  likely to increase  and there can be no  assurance  that  economic
growth will continue. Adverse economic,  political, social or other developments
could have a material adverse effect on our business and operating results.

          Our ability to recharter  our dry bulk vessels upon the  expiration or
termination  of their time  charters  and the charter  rates  payable  under any
renewal or  replacement  charters  will depend  upon,  among other  things,  the
current state of the dry bulk shipping  market.  If the dry bulk shipping market
is in a period of depression when our vessels' charters expire, we may be forced
to  re-charter  them at reduced rates or even possibly a rate whereby we incur a
loss, which may reduce our earnings or make our earnings volatile.

          In  addition,  because the market  value of our vessels may  fluctuate
significantly, we may incur losses when we sell vessels, which may adversely
affect our earnings. If we sell vessels at a time when vessel prices have fallen
and before we have recorded an impairment adjustment to our financial
statements, the sale may be at less than the vessel's carrying amount on our
financial statements, resulting in a loss and a reduction in earnings.

The market values of our vessels may  decrease,  which could limit the amount of
funds that we can borrow under our credit  facility.  The fair market  values of
our vessels  have  generally  experienced  high  volatility.  Market  prices for
secondhand dry bulk vessels have recently been at historically high levels.  You
should expect the market values of our vessels to fluctuate depending on general
economic and market  conditions  affecting the shipping  industry and prevailing
charter hire rates, competition from other shipping companies and other modes of
transportation,   the  types,   sizes  and  ages  of  our  vessels,   applicable
governmental  regulations and the cost of  newbuildings.  If the market value of
our  fleet  declines,  we may not be able to draw  down the full  amount  of our
credit  facility and we may not be able to obtain other  financing or incur debt
on terms that are acceptable to us or at all.

The market  values of our vessels may  decrease,  which could cause us to breach
covenants in our credit facility and adversely affect our operating results.  If
the market values of our vessels,  which have recently been at historically high
levels, decrease, we may breach some of the covenants contained in the financing
agreements relating to our indebtedness at the time,  including covenants in our
credit facility.  If we do breach such covenants and we are unable to remedy the
relevant  breach,  our lenders  could  accelerate  our debt and foreclose on our
fleet. In addition, if the book value of a vessel is impaired due to unfavorable
market  conditions or a vessel is sold at a price below its book value, we would
incur a loss that could adversely affect our operating results.

World events could affect our results of  operations  and  financial  condition.
Terrorist attacks such as the attacks on the United States on September 11, 2001
and in London on July 7, 2005 and the  continuing  response of the United States
to these  attacks,  as well as the  threat of future  terrorist  attacks  in the
United  States  or  elsewhere,  continues  to  cause  uncertainty  in the  world
financial  markets and may affect our business,  operating results and financial
condition.  The  continuing  conflict  in Iraq  may lead to  additional  acts of
terrorism and armed conflict  around the world,  which may contribute to further
economic instability in the global financial markets.  These uncertainties could
also  adversely  affect our  ability  to obtain  additional  financing  on terms
acceptable to us or at all. In the past,  political conflicts have also resulted
in  attacks  on  vessels,  mining of  waterways  and other  efforts  to  disrupt
international  shipping,  particularly  in the  Arabian  Gulf  region.  Acts  of
terrorism and piracy have also affected  vessels  trading in regions such as the
South China Sea. Any of these  occurrences  could have a material adverse impact
on our operating results, revenues and costs.

Our  operating  results  will be subject to seasonal  fluctuations,  which could
affect our operating  results and the amount of available cash with which we can
pay  dividends.  We  operate  our  vessels  in  markets  that have  historically
exhibited seasonal variations in demand and, as a result, in charter hire rates.
To the extent we operate vessels in the spot market, this seasonality may result
in  quarter-to-quarter  volatility in our operating results,  which could affect
the amount of dividends that we pay to our stockholders from quarter to quarter.
The dry bulk shipping market is typically stronger in the fall and winter months
in anticipation of increased  consumption of coal and other raw materials in the
northern hemisphere during the winter months. In addition, unpredictable weather
patterns  in these  months tend to disrupt  vessel  scheduling  and  supplies of
certain  commodities.  While this  seasonality  will not  affect  our  operating
results,  as long as our fleet is employed on time charters,  if our vessels are
employed  in the spot  market in the  future,  it could  materially  affect  our
operating results and cash available for distribution to our stockholders.

We are subject to  international  safety  regulations  and the failure to comply
with these  regulations  may subject us to increased  liability,  may  adversely
affect  our  insurance  coverage  and may  result in a denial  of access  to, or
detention  in,  certain  ports.  The operation of our vessels is affected by the
requirements   set  forth  in  the  United   Nation's   International   Maritime
Organization's International Management Code for the Safe Operation of Ships and
Pollution  Prevention,  or the ISM Code. The ISM Code requires shipowners,  ship
managers and bareboat  charterers  to develop and maintain an extensive  "Safety
Management  System" that  includes  the  adoption of a safety and  environmental
protection  policy setting forth  instructions and procedures for safe operation
and  describing  procedures  for  dealing  with  emergencies.  The  failure of a
shipowner  or bareboat  charterer  to comply with the ISM Code may subject it to
increased  liability,  may invalidate  existing  insurance or decrease available
insurance coverage for the affected vessels and may result in a denial of access
to, or detention in, certain ports.  Each of the vessels that has been delivered
to us is ISM  Code-certified  and we expect that each other  vessel that we have
agreed to purchase will be ISM Code-certified when delivered to us.

Maritime  claimants  could  arrest  one or  more  of our  vessels,  which  could
interrupt  our cash flow.  Crew  members,  suppliers  of goods and services to a
vessel,  shippers of cargo and other  parties may be entitled to a maritime lien
against  a  vessel  for   unsatisfied   debts,   claims  or  damages.   In  many
jurisdictions, a claimant may seek to obtain security for its claim by arresting
a vessel  through  foreclosure  proceedings.  The arrest or attachment of one or
more of our vessels  could  interrupt  our cash flow and require us to pay large
sums of money to have the arrest or  attachment  lifted.  In  addition,  in some
jurisdictions,  such as South  Africa,  under the  "associated  ship"  theory of
liability,  a  claimant  may  arrest  both the  vessel  which is  subject to the
claimant's maritime lien and any "associated"  vessel, which is any vessel owned
or controlled by the same owner.  Claimants could attempt to assert  "associated
ship"  liability  against one vessel in our fleet for claims relating to another
of our vessels.

Governments  could  requisition our vessels during a period of war or emergency,
resulting in a loss of earnings.  A government could  requisition one or more of
our  vessels  for  title  or for  hire.  Requisition  for  title  occurs  when a
government  takes control of a vessel and becomes her owner,  while  requisition
for hire  occurs when a  government  takes  control of a vessel and  effectively
becomes her charterer at dictated charter rates.  Generally,  requisitions occur
during  periods  of  war  or  emergency,   although  governments  may  elect  to
requisition  vessels in other  circumstances.  Although  we would be entitled to
compensation  in the event of a requisition  of one or more of our vessels,  the
amount and timing of payment would be uncertain.  Government  requisition of one
or more of our vessels may negatively  impact our revenues and reduce the amount
of cash we have available for distribution as dividends to our stockholders.

Company Specific Risk Factors
-----------------------------

We are a recently  formed  company  and have a limited  operating  history.  Our
company and our  predecessor  company,  Eagle Holdings LLC, were formed in March
2005 and January 2005,  respectively,  and we did not own or operate any vessels
prior to April 2005. We therefore,  have a limited operating history and limited
historical  financial data on which to evaluate our operations or our ability to
implement and achieve our business strategy.

We cannot  assure you that our board of directors  will declare  dividends.  Our
policy is to declare  quarterly  dividends to stockholders  in February,  April,
July and October in amounts that are  substantially  equal to our available cash
from  operations  during  the  previous  quarter  less  any  cash  reserves  for
drydockings and working  capital.  The declaration and payment of dividends,  if
any,  will  always be  subject  to the  discretion  of our  board of  directors,
restrictions  contained in our credit facility and the  requirements of Marshall
Islands law.  The timing and amount of any  dividends  declared  will depend on,
among other things, our earnings,  financial condition and cash requirements and
availability,  our ability to obtain  debt and equity  financing  on  acceptable
terms as  contemplated  by our  growth  strategy,  the terms of our  outstanding
indebtedness  and the ability of our  subsidiaries  to  distribute  funds to us.
Although our fleet is currently  committed to time charters,  the  international
dry bulk  shipping  industry  is highly  volatile,  and we cannot  predict  with
certainty the amount of cash, if any, that will be available for distribution as
dividends in any period.  Also,  there may be a high degree of variability  from
period to period in the  amount of cash that is  available  for the  payment  of
dividends.

We may incur expenses or liabilities or be subject to other circumstances in the
future that reduce or eliminate  the amount of cash that we have  available  for
distribution as dividends,  including as a result of the risks described in this
prospectus.   Our  growth  strategy   contemplates  that  we  will  finance  our
acquisitions  of additional  vessels through debt financings or the net proceeds
of future  equity  issuances  on terms  acceptable  to us. If  financing  is not
available to us on  acceptable  terms,  our board of directors  may determine to
finance or refinance acquisitions with cash from operations,  which would reduce
or even eliminate the amount of cash available for the payment of dividends.

          Under the terms of our credit  facility,  we will not be  permitted to
pay dividends if there is a default or a breach of a loan covenant. In addition,
we are permitted to pay  dividends  only in amounts up to our EBITDA (as defined
in our credit  agreement) 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  drydockings.  Please see the section of
this prospectus  entitled  "Credit  Facility" for more  information  relating to
restrictions  on our  ability  to pay  dividends  under the terms of our  credit
facility.

          Marshall  Islands law  generally  prohibits  the payment of  dividends
other than from  surplus  (retained  earnings  and the  excess of  consideration
received  for the sale of shares  above the par value of the  shares) or while a
company is  insolvent  or would be rendered  insolvent  by the payment of such a
dividend.  We may not have sufficient surplus in the future to pay dividends and
our subsidiaries may not have sufficient funds or surplus to make  distributions
to us. We can give no assurance that dividends will be paid at all.

We may  have  difficulty  managing  our  planned  growth  properly.  The  recent
formation of our company and our initial public offering and the acquisition and
management  of the 13 vessels in our operating  fleet have  imposed,  as well as
additional  dry bulk  vessels  that we may acquire in the future,  will  impose,
significant  responsibilities  on our  management  and staff.  The  addition  of
vessels to our fleet may require us to increase the number of our personnel.  We
will also have to manage  our  customer  base so that we can  provide  continued
employment for our vessels upon the expiration of our existing time charters.

          We intend to continue  to grow our  business.  Our future  growth will
primarily depend on:

         o  locating and acquiring suitable vessels;

         o  identifying and consummating acquisitions;

         o  enhancing our customer base;

         o  managing our expansion; and

         o  obtaining required financing on acceptable terms.

          Growing any business by acquisition  presents  numerous risks, such as
undisclosed  liabilities and obligations,  the possibility that  indemnification
agreements will be  unenforceable  or insufficient to cover potential losses and
difficulties associated with imposing common standards, controls, procedures and
policies, obtaining additional qualified personnel,  managing relationships with
customers and  integrating  newly acquired  assets and operations  into existing
infrastructure.  We cannot  give any  assurance  that we will be  successful  in
executing  our growth plans or that we will not incur  significant  expenses and
losses in connection with our future growth.

          We cannot assure you that we will be able to borrow  amounts under our
credit  facility and  restrictive  covenants  in our credit  facility may impose
financial and other restrictions on us

          We entered into a senior  secured  revolving  credit  facility in July
2005.  We used  borrowings  under the revolving  credit  facility to refinance a
portion  of our  outstanding  indebtedness  at the  time of our  initial  public
offering  in June 2005 and to fund  vessel  acquisitions.  Our ability to borrow
future amounts under our credit facility will be subject to the  satisfaction of
certain customary  conditions precedent and compliance with terms and conditions
included in the loan documents. In connection with vessel acquisitions,  amounts
borrowed may not exceed 60% of the value of the vessels securing our obligations
under the credit  facility.  Our ability to borrow such  amounts,  in each case,
will be subject to our lender's approval of the vessel acquisition. Our lender's
approval  will be based on the  lender's  satisfaction  of our  ability to raise
additional  capital through equity issuances in amounts acceptable to our lender
and the proposed employment of the vessel to be acquired.  To the extent that we
are not able to satisfy these  requirements,  including as a result of a decline
in the value of our vessels, we may not be able to draw down the credit facility
in connection with a vessel  acquisition  without  obtaining a waiver or consent
from the lender.

          The credit facility also imposes operating and financial  restrictions
on us. These restrictions may limit our ability to, among other things:

         o  pay dividends in amounts exceeding our 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 drydockings;

         o  change our Chief Executive Officer without the approval of our
            lender;

         o  incur additional indebtedness;

         o  change the flag, class or management of our vessels;

         o  create liens on our assets;

         o  sell our vessels;

         o  merge or consolidate with, or transfer all or substantially all
            our assets to, another person;

         o  enter into a new line of business; and

         o  enter into a time charter or consecutive voyage charters that has a
            term that exceeds, or which by virtue of any optional extensions may
            exceed, thirteen months.

          In  addition,  we may not pay  dividends  if there is a  default  or a
breach of a loan  covenant  under the credit  facility  or if the payment of the
dividends  would  result  in a  default  or  breach  of  a  loan  covenant.  Our
indebtedness  may also be  accelerated  if we  experience  a change of  control.
Therefore,  we may need to seek permission from our lender in order to engage in
some corporate actions. Our lender's interests may be different from ours and we
cannot guarantee you that we will be able to obtain our lender's permission when
needed.  This may limit our ability to pay dividends to you,  finance our future
operations, make acquisitions or pursue business opportunities.

We cannot  assure you that we will be able to  refinance  indebtedness  incurred
under our credit facility.  Our business strategy contemplates that we repay all
or a  portion  of our  acquisition  related  debt from time to time with the net
proceeds  of  equity  issuances.  We cannot  assure  you that we will be able to
refinance our  indebtedness  through equity offerings or otherwise on terms that
are  acceptable  to us  or  at  all.  If  we  are  not  able  to  refinance  our
indebtedness,  we will  have  to  dedicate  a  portion  of our  cash  flow  from
operations  to pay the principal  and interest of this  indebtedness.  We cannot
assure  you  that we will be able to  generate  cash  flow in  amounts  that are
sufficient for these purposes.  If we are not able to satisfy these obligations,
we may have to undertake  alternative  financing  plans or sell our assets.  The
actual or perceived credit quality of our charterers,  any defaults by them, and
the market value of our fleet,  among other things,  may  materially  affect our
ability to obtain  alternative  financing.  In addition,  debt service  payments
under our credit  facility or  alternative  financing may limit funds  otherwise
available for working capital,  capital  expenditures,  payment of dividends and
other  purposes.  If we are  unable  to  meet  our  debt  obligations,  or if we
otherwise  default  under  our  credit  facility  or  an  alternative  financing
arrangement,  our lender could declare the debt,  together with accrued interest
and fees, to be  immediately  due and payable and foreclose on our fleet,  which
could result in the acceleration of other  indebtedness that we may have at such
time and the commencement of similar foreclosure proceedings by other lenders.

Purchasing and operating  secondhand  vessels may result in increased  operating
costs and reduced  fleet  utilization  The 13 Handymax  dry bulk  vessels in our
operating  fleet are all  secondhand  vessels.  We also may purchase  additional
secondhand vessels in the future.  While we have the right to inspect previously
owned vessels prior to purchase, such an inspection does not provide us with the
same  knowledge  about their  condition  that we would have if these vessels had
been built for and  operated  exclusively  by us. A  secondhand  vessel may have
conditions  or  defects  that we were not aware of when we bought the vessel and
which may require us to incur costly  repairs to the vessel.  These  repairs may
require  us  to  put a  vessel  into  drydock,  which  would  reduce  our  fleet
utilization. Furthermore, we usually do not receive the benefit of warranties on
secondhand vessels.

We depend upon a few significant  customers for a large part of our revenues and
the loss of one or more of these customers could adversely  affect our financial
performance. We derive a significant part of our revenues from a small number of
charterers.  The  charterers'  payments to us under their  charters are our sole
source of revenue.  Some of our  charterers  are privately  owned  companies for
which limited credit and financial information was available to us in making our
assessment of counterparty risk when we entered into our charter. If one or more
of these  charterers  terminates  its charter or chooses not to  re-charter  our
vessel or is unable to perform  under its charter with us and we are not able to
find a  replacement  charter,  we could  suffer a loss of  revenues  that  could
adversely  affect  our  financial  condition,  results  of  operations  and cash
available for distribution as dividends to our stockholders. In addition, we may
be required to change the flagging or registration of the related vessel and may
incur additional costs, including maintenance and crew costs if a charterer were
to default on its obligations. Our stockholders do not have any recourse against
our charterers.

In the highly competitive international shipping industry, we may not be able to
compete for charters  with new entrants or  established  companies  with greater
resources.  Our vessels  are  employed  in a highly  competitive  market that is
capital intensive and highly fragmented. Competition arises primarily from other
vessel owners,  some of whom have  substantially  greater  resources than we do.
Competition  for the  transportation  of dry bulk  cargo by sea is  intense  and
depends on price,  location,  size, age,  condition and the acceptability of the
vessel and its operators to the charterers. Due in part to the highly fragmented
market,  competitors  with greater  resources  could enter the dry bulk shipping
industry and operate larger fleets through  consolidations  or acquisitions  and
may be able to offer lower charter rates and higher quality  vessels than we are
able to offer.

We may be unable to  attract  and  retain  key  management  personnel  and other
employees  in  the  shipping   industry,   which  may   negatively   impact  the
effectiveness  of our management and results of operations.  Our success depends
to a significant  extent upon the abilities and efforts of our management  team.
We have  entered  into an  employment  contract  with  our  Chairman  and  Chief
Executive Officer,  Sophocles Zoullas.  Our success will depend upon our ability
to retain key members of our  management  team and to hire new members as may be
necessary.  The loss of any of these  individuals  could  adversely  affect  our
business prospects and financial  condition.  Difficulty in hiring and retaining
replacement  personnel could have a similar effect. We do not intend to maintain
"key man" life insurance on any of our officers.

Risks  associated  with operating  ocean going vessels could affect our business
and reputation,  which could adversely  affect our revenues and stock price. The
operation of ocean going vessels carries inherent risks. These risks include the
possibility of:

     o    marine disaster;

     o    environmental accidents;

     o    cargo and property losses or damage;

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

     o    piracy.

          Any of these circumstances or events could increase our costs or lower
our revenues.  The involvement of our vessels in an  environmental  disaster may
harm our reputation as a safe and reliable vessel owner and operator.

The shipping industry has inherent  operational risks that may not be adequately
covered by our  insurance.  We procure  insurance  for our fleet  against  risks
commonly  insured  against by vessel owners and  operators,  including  hull and
machinery insurance,  war risks insurance and protection and indemnity insurance
(which include  environmental  damage and pollution  insurance).  We can give no
assurance that we are adequately  insured against all risks or that our insurers
will pay a particular claim. Even if our insurance coverage is adequate to cover
our  losses,  we may not be able to timely  obtain a  replacement  vessel in the
event  of a loss.  Furthermore,  in the  future,  we may  not be able to  obtain
adequate  insurance  coverage at reasonable  rates for our fleet. We may also be
subject  to  calls,  or  premiums,  in  amounts  based not only on our own claim
records but also the claim  records of all other members of the  protection  and
indemnity associations through which we receive indemnity insurance coverage for
tort liability. Our insurance policies also contain deductibles, limitations and
exclusions which, although we believe are standard in the shipping industry, may
nevertheless increase our costs or decrease our recovery in the event of a loss.

The aging of our fleet may result in  increased  operating  costs in the future,
which could adversely affect our earnings. In general, the cost of maintaining a
vessel  in good  operating  condition  increases  with  the  age of the  vessel.
Although the average age of the 13 Handymax  dry bulk  vessels in our  operating
fleet is six years as of December 31, 2005,  one of our vessels is 22 years old.
As our fleet ages, we will incur  increased  costs.  Older vessels are typically
less fuel  efficient and more costly to maintain than more recently  constructed
vessels due to improvements in engine technology. Cargo insurance rates increase
with the age of a vessel,  making older  vessels less  desirable to  charterers.
Governmental  regulations and safety or other equipment standards related to the
age of vessels may also require  expenditures for alterations or the addition of
new  equipment,  to our vessels and may restrict the type of activities in which
our vessels may engage.  We cannot assure you that,  as our vessels age,  market
conditions  will justify those  expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.

We may have to pay tax on United  States source  income,  which would reduce our
earnings.  Under the United States Internal Revenue Code of 1986, as amended, or
the Code,  50% of the gross  shipping  income of a vessel  owning or  chartering
corporation,  such as ourselves and our  subsidiaries,  that is  attributable to
transportation that begins or ends, but that does not both begin and end, in the
United States is  characterized as United States source shipping income and such
income is subject to a 4% United States federal income tax without allowance for
any deductions,  unless that corporation  qualifies for exemption from tax under
Section 883 of the Code and the Treasury regulations promulgated thereunder.

          While we believe that we qualify for  exemption  under Section 883 for
2005,  our ability to qualify for this  statutory  tax exemption is dependent on
certain  circumstances  related to the  ownership  of our common stock which are
beyond our control and on interpretations  of existing Treasury  regulations and
we can therefore  give no assurance  that we in fact will be eligible to qualify
for exemption under Section 883 for future years.

          In  addition,  changes in the Code,  the Treasury  regulations  or the
interpretation  thereof by the  Internal  Revenue  Service  or the courts  could
adversely  affect our ability to take  advantage of the exemption  under Section
883.

          If we are not  entitled to this  exemption  under  Section 883 for any
taxable  year,  we would be subject for such taxable year to a 4% United  States
federal income tax on our United States source shipping  income.  The imposition
of this taxation  could have a negative  effect on our business and would result
in decreased earnings available for distribution to our stockholders.

          Based on the current  operation of our vessels,  if we were subject to
this tax, our United States federal income tax liability would be  approximately
$200,000 per year.  Because the  operations of our vessels are under the control
of third  party  charterers,  we can give no  assurance  that our United  States
federal income tax liability would be substantially  higher.  However,  since no
more that 50% of our  shipping  income  would be treated  as  derived  from U.S.
sources, our maximum tax liability under the 4% tax regime would never exceed 2%
of our shipping income.

United States tax authorities  could treat us as a "passive  foreign  investment
company," which could have adverse United States federal income tax consequences
to United States holders.  A foreign  corporation  will be treated as a "passive
foreign  investment  company," or PFIC,  for United  States  federal  income tax
purposes  if either (1) at least 75% of its gross  income for any  taxable  year
consists of certain types of "passive income" or (2) at least 50% of the average
value of the  corporation's  assets  produce or are held for the  production  of
those types of "passive  income." For purposes of these tests,  "passive income"
includes dividends,  interest, and gains from the sale or exchange of investment
property  and rents and  royalties  other  than  rents and  royalties  which are
received from unrelated parties in connection with the active conduct of a trade
or business. For purposes of these tests, income derived from the performance of
services does not constitute  "passive income." United States  stockholders of a
PFIC are subject to a  disadvantageous  United States  federal income tax regime
with respect to the income derived by the PFIC, the  distributions  they receive
from  the  PFIC  and the  gain,  if any,  they  derive  from  the  sale or other
disposition of their shares in the PFIC.

          Based on our  current  and  proposed  method of  operation,  we do not
believe  that we have been,  are or will be a PFIC with  respect to any  taxable
year.  In this  regard,  we intend  to treat  the gross  income we derive or are
deemed to derive from our time chartering  activities as services income, rather
than  rental  income.  Accordingly,  we believe  that our  income  from our time
chartering  activities does not constitute "passive income," and the assets that
we own and  operate in  connection  with the  production  of that  income do not
constitute passive assets.

          There is,  however,  no direct  legal  authority  under the PFIC rules
addressing our proposed  method of operation.  Accordingly,  no assurance can be
given that the United States Internal Revenue Service, or IRS, or a court of law
will  accept  our  position,  and there is a risk that the IRS or a court of law
could determine that we are a PFIC. Moreover,  no assurance can be given that we
would not  constitute  a PFIC for any  future  taxable  year if there were to be
changes in the nature and extent of our operations. If the IRS were to find that
we are or have been a PFIC for any taxable year, our United States  stockholders
would face adverse United States tax consequences.  Under the PFIC rules, unless
those  stockholders  made an election  available  under the Code (which election
could itself have adverse consequences for such stockholders, as discussed below
under "United States Federal Income  Taxation of United States  Holders"),  such
stockholders would be liable to pay United States federal income tax upon excess
distributions  and upon any gain from the disposition of our common stock at the
then prevailing  income tax rates applicable to ordinary income plus interest as
if the  excess  distribution  or gain  had  been  recognized  ratably  over  the
stockholder's holding period of our common stock. Please see the section of this
Form 10-K entitled "Tax Considerations--United States Federal Income Taxation of
United States Holders" for a more comprehensive  discussion of the United States
federal income tax consequences to United States  stockholders if we are treated
as a PFIC.

Our vessels may suffer damage and we may face unexpected drydocking costs, which
could  adversely  affect our cash flow and financial  condition.  If our vessels
suffer damage, they may need to be repaired at a drydocking facility.  The costs
of  drydock  repairs  are  unpredictable  and can be  substantial.  The  loss of
earnings while our vessels are being repaired and  repositioned,  as well as the
actual cost of these repairs,  would decrease our earnings and reduce the amount
of cash that we have available for dividends.  We may not have insurance that is
sufficient to cover these costs or losses and may have to pay  drydocking  costs
not covered by our insurance.

We are a holding  company,  and we depend on the ability of our  subsidiaries to
distribute funds to us in order to satisfy our financial obligations and to make
dividend payments.  We are a holding company and our subsidiaries conduct all of
our  operations  and own all of our  operating  assets.  We have no  significant
assets other than the equity  interests in our  subsidiaries.  As a result,  our
ability to make dividend  payments depends on our subsidiaries and their ability
to  distribute  funds  to  us.  If we  are  unable  to  obtain  funds  from  our
subsidiaries,  our board of directors may exercise its discretion not to declare
or pay  dividends.  We do not intend to obtain  funds from other  sources to pay
dividends.

As we expand our  business,  we may need to improve our  operating and financial
systems and will need to recruit  suitable  employees  and crew for our vessels.
Our current  operating and financial systems may not be adequate as we implement
our plan to expand  the size of our  fleet and our  attempts  to  improve  those
systems may be ineffective. In addition, as we expand our fleet, we will need to
recruit  suitable  additional   seafarers  and  shore  side  administrative  and
management personnel.  We cannot guarantee that we will be able to hire suitable
employees as we expand our fleet. If we or our crewing agent encounters business
or financial  difficulties,  we may not be able to adequately staff our vessels.
If we are  unable to grow our  financial  and  operating  systems  or to recruit
suitable  employees as we expand our fleet,  our  financial  performance  may be
adversely  affected and,  among other things,  the amount of cash  available for
distribution as dividends to our stockholders may be reduced.

Risks Relating to Our Common Stock
----------------------------------

There is no guarantee that there will continue to be an active and liquid public
market for you to resell our common  stock.  The price of our common stock after
this offering may be volatile and may fluctuate due to factors such as:

     o    actual or anticipated fluctuations in our quarterly and annual results
          and those of other public companies in our industry;

     o    mergers and strategic alliances in the dry bulk shipping industry;

     o    market conditions in the dry bulk shipping industry;

     o    changes in government regulation;

     o    shortfalls in our operating results from levels forecast by securities
          analysts;

     o    announcements concerning us or our competitors; and

     o    the general state of the securities market.

          The dry bulk  shipping  industry  has been  highly  unpredictable  and
volatile. The market for common stock in this industry may be equally volatile.

Our largest  stockholder  will continue to have a significant  amount of control
over the  outcome of matters on which our  stockholders  are  entitled  to vote.
Eagle Ventures,  which is controlled by affiliates of Kelso, owns  approximately
37.5% of our outstanding common stock.  Therefore,  Eagle Ventures will continue
to have a significant amount of control over the outcome of all matters on which
our stockholders  are entitled to vote,  including the election of directors and
other  significant  corporate  actions.  The  interests  of Eagle  Ventures  and
affiliates of Kelso may be different from your interests.

Future  changes in the  market  price of our common  stock  could  result in our
incurring non-cash  compensation charges that could lower our earnings.  Members
of our management have been awarded profits interests in Eagle Ventures.  Please
see "Management's  Discussion and Analysis of Financial Condition and Results of
Operations--Non-Cash  Compensation  Charges" for a discussion  of these  profits
interests.  These profits interests dilute the interests of the holders of Eagle
Ventures  and not the  interests  of holders of our common  stock.  However,  we
record  non  cash  charges  in our  income  statement  for  compensation  to our
management's profits interests in Eagle Ventures, which is based on, among other
things, changes to the market price of our common stock.

We  are   incorporated  in  the  Marshall   Islands,   which  does  not  have  a
well-developed  body of corporate law. Our corporate affairs are governed by our
amended and restated  articles of  incorporation  and bylaws and by the Marshall
Islands  Business  Corporations  Act,  or the  BCA.  The  provisions  of the BCA
resemble  provisions of the corporation laws of a number of states in the United
States.  However,  there have been few judicial  cases in the  Marshall  Islands
interpreting  the BCA. The rights and  fiduciary  responsibilities  of directors
under the laws of the  Marshall  Islands are not as clearly  established  as the
rights and fiduciary  responsibilities  of directors  under statutes or judicial
precedent in  existence  in the United  States.  The rights of  stockholders  of
companies  incorporated  in the  Marshall  Islands may differ from the rights of
stockholders  of  companies  incorporated  in the United  States.  While the BCA
provides  that it is to be  interpreted  according  to the laws of the  State of
Delaware and other states with  substantially  similar  legislative  provisions,
there have been few, if any,  court cases  interpreting  the BCA in the Marshall
Islands and we can not predict whether  Marshall  Islands courts would reach the
same conclusions as United States courts.  Thus, you may have more difficulty in
protecting your interests in the face of actions by the management, directors or
controlling  stockholders than would stockholders of a corporation  incorporated
in  a  United  States   jurisdiction  which  has  developed  a  relatively  more
substantial body of case law.

Future  sales of our common  stock  could  cause the market  price of our common
stock to decline. Sales of a substantial number of shares of our common stock in
the public market,  or the perception that these sales could occur,  may depress
the market price for our common stock. These sales could also impair our ability
to raise  additional  capital  through the sale of our equity  securities in the
future.  We intend to issue additional  shares of our common stock in the future
and our stockholders, including Eagle Ventures LLC, our largest stockholder, may
elect to sell  large  numbers  of shares  held by them  from  time to time.  Our
amended and restated articles of incorporation authorize us to issue 100 million
shares of common stock of which 33,150,000 shares are outstanding currently.

Anti-takeover provisions in our organizational documents could make it difficult
for our stockholders to replace or remove our current board of directors or have
the effect of  discouraging,  delaying or  preventing  a merger or  acquisition,
which  could  adversely  affect the market  price of our common  stock.  Several
provisions  of our amended and  restated  articles of  incorporation  and bylaws
could make it difficult for our  stockholders  to change the  composition of our
board  of  directors  in  any  one  year,  preventing  them  from  changing  the
composition  of management.  In addition,  the same  provisions may  discourage,
delay  or  prevent  a merger  or  acquisition  that  stockholders  may  consider
favorable. These provisions will include:

        o      authorizing  our  board  of  directors  to  issue  "blank  check"
               preferred stock without stockholder approval;

        o      providing  for a classified  board of directors  with  staggered,
               three year terms;

        o      authorizing vacancies on our board of directors to be filled only
               by a vote  of the  majority  of  directors  then  in  office  and
               specifically denying our stockholders the right to fill vacancies
               on the board;

        o      establishing  certain advance notice requirements for nominations
               for election to our board of directors or for  proposing  matters
               that can be acted on by stockholders at stockholder meetings;

        o      prohibiting cumulative voting in the election of directors; and

        o      limiting   the   persons  who  may  call   special   meetings  of
               stockholders.

        o      From and  after  the time  that  Eagle  Ventures  no  longer  has
               beneficial  ownership  of 35% or more of our  outstanding  common
               stock, these provisions will also include:

        o      authorizing the removal of directors only for cause and only upon
               the  affirmative  vote  of  the  holders  of a  majority  of  the
               outstanding  shares of our common stock  entitled to vote for the
               directors;

        o      prohibiting stockholder action by written consent; and

        o      establishing  supermajority  voting  provisions  with  respect to
               amendments  to certain  provisions  of our amended  and  restated
               articles of incorporation and bylaws.

          These anti-takeover  provisions could substantially impede the ability
of public stockholders to benefit from a change in control and, as a result, may
adversely  affect  the  market  price of our  common  stock and your  ability to
realize any potential change of control premium.

<PAGE>

ITEM 1B. UNRESOLVED STAFF COMMENTS
----------------------------------

         None


ITEM 2.  PROPERTIES
-------------------

          We do not own any real property.  We lease office space at 477 Madison
Avenue, New York, New York 10022.


ITEM 3.  LEGAL PROCEEDINGS
--------------------------

          We have not been involved in any legal  proceedings which may have, or
have had a significant effect on our business,  financial  position,  results of
operations or liquidity, nor are we aware of any proceedings that are pending or
threatened  which  may have a  significant  effect  on our  business,  financial
position,  results of  operations  or  liquidity.  From time to time,  we may be
subject to legal  proceedings  and claims in the  ordinary  course of  business,
principally  personal injury and property  casualty claims. We expect that these
claims would be covered by insurance,  subject to customary  deductibles.  Those
claims,  even if lacking merit,  could result in the  expenditure of significant
financial and managerial resources.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

         None



<PAGE>


                                     PART II

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

Common Stock
------------

          The  trading  market  for  shares of our  common  stock is the  Nasdaq
National  Market,  on which our shares are quoted under the symbol "EGLE." As of
March 13,  2006 the number of  stockholders  of record of the  Company's  common
stock was approximately  20,000. The following table sets forth the high and low
closing prices for shares of our common stock since our initial public  offering
of common stock at $14.00 per share on June 23, 2005,  as reported by the Nasdaq
National Market:


        For the period:                                     High        Low
        ---------------                                     ----        ---

 June 23, 2005 to June 30, 2005..................         $13.50     $12.90
 July 1, 2005 to September 30, 2005..............         $17.57     $12.36
 October 1, 2005 to December 31, 2005............         $17.74     $14.38


          On October 28, 2005,  we completed an offering of 6,000,000  shares of
our common  stock.  Please see Item 7, "Sale of Common  Stock",  for  additional
information relating to this offering.

Restricted Stock
----------------

None

Equity Compensation Plans
-------------------------

None

Payment of Dividends to Stockholders
------------------------------------

          The Company paid a dividend on its common stock in the amount of $0.54
per  share on  October  31,  2005 to  holders  of record on  October  17,  2005.
Aggregate  payments  were $14.7  million for  dividends  declared  in 2005.  The
Company  paid a dividend of $0.57 per share on  February  24, 2006 to holders of
record on February 15, 2006. Aggregate payments were $19.0 million for dividends
paid in February 2006. The Company currently intends to pay quarterly  dividends
to  stockholders  in  February,  April,  July and  October in  amounts  that are
substantially  equal to our available cash from  operations  during the previous
quarter less any cash reserves for drydockings and working capital; however, any
determination  to pay  dividends in the future will be at the  discretion of the
Board of Directors  and will depend upon the  Company's  results of  operations,
financial condition, covenants and other factors deemed relevant by the Board of
Directors.  Payment of  dividends  is  limited  by the terms of  certain  credit
agreements to which the Company and its  subsidiaries  are party.  (See Notes to
the Consolidated Financial Statements.)


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

          We were  incorporated  on March 23,  2005 and our  predecessor,  Eagle
Holdings  LLC,  was  formed  on  January  26,  2005.   The  following   selected
consolidated  financial data are derived from the audited consolidated financial
statements  of the Company  included  elsewhere in this report,  which have been
audited by Ernst & Young LLP, an independent  registered public accounting firm.
The data presented  herein should be read in conjunction  with the  consolidated
financial  statements,  related notes and other financial  information  included
herein.  In accordance  with standard  shipping  industry  practice,  we did not
obtain  from the  sellers  historical  operating  data for the  vessels  that we
acquired, as that data was not material to our decision to purchase the vessels.
Accordingly,  we have not included any historical financial data relating to the
results of operations of our vessels from the period before our  acquisition  of
them.  Please  see the  section of this  annual  report  entitled  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations--Lack
of Historical Operating Data for Vessels Before their Acquisition."

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

                                                         Period from January 26,
(Dollar amounts in thousands except Per Share amounts)       2005 (inception) to
                                                               December 31, 2005
                                                               -----------------
Income Statement Data
 Revenues, net of commissions................................          $56,066
                                                                 --------------
 Vessel Expenses.............................................           11,053
 Depreciation and Amortization...............................           10,412
 General and Administrative Expenses.........................            3,491
 Management and Other Fees to Affiliates.....................            6,175
 Non-cash Compensation Expense...............................           11,735
                                                                 --------------
Total Operating Expenses.....................................           42,866
Net Interest Expense.........................................            6,547
                                                                 --------------
 Net Income..................................................         $  6,653
                                                                 ==============

Share and Per Share Data
 Basic and Diluted Income per Share .........................            $0.30
 Weighted Average Shares Outstanding ........................       21,968,824
 Cash Dividend Declared per Share ...........................           $ 0.54

Consolidated Cash Flow Data
 Net cash from operating activities..........................       $   26,616
 Net cash used in investing activities.......................       ($427,966)
 Net cash from financing activities..........................        $ 425,877

                                                       As of December 31, 2005
                                                       -----------------------
Consolidated Balance Sheet Data
 Current assets .............................................          $33,829
 Total assets ...............................................          462,344
 Total liabilities ..........................................          146,551
 Long-term debt .............................................          140,000
 Stockholders' equity .......................................         $315,793

Other Data (in `000)
 EBITDA (a)..................................................           43,075
 Capital Expenditures :
       Vessels...............................................          427,966
       Payments for Drydocking...............................              422
 Ratio of Total Debt to Total Capitalization (b).............            30.7%

 Fleet Data
 Number of Vessels ..........................................               13
 Average age of Fleet (in years).............................                6
 Fleet Ownership Days........................................            2,531
 Fleet Available Days........................................            2,507
 Fleet Operating Days........................................            2,500
 Fleet Utilization...........................................            99.7%

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

(a)  Our revolving  credit facility permits us to pay dividends in amounts up to
     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 Company's computation of EBITDA may not be comparable to similar titled
     measures of other companies. The following table is a reconciliation of net
     income, as reflected in the consolidated  statements of operations,  to the
     Credit  Agreement  EBITDA for the period from inception on January 26, 2005
     to December 31, 2005:  Period from January 26, 2005 (inception) to December
     31, 2005

Net Income........................................................ $ 6,653,400
Interest Expense..................................................   7,208,641
Depreciation and Amortization.....................................  10,412,227
Amortization of Prepaid and Deferred Revenue......................     890,500
                                                                  --------------
EBITDA............................................................  25,164,768
Adjustments for Exceptional Items:
Management and Other Fees to Affiliates (1) ......................   6,175,046
Non-cash Compensation Expense (2) ................................  11,734,812
                                                                  --------------
Credit Agreement EBITDA ..........................................$ 43,074,626
                                                                  ==============
      (1) One time charge (see Notes to the financial statements)
      (2) Management's  participation in profits interests in Eagle Ventures LLC
          (see Notes to the financial statements)

(b)  Ratio of Total Debt to Total  Capitalization was calculated as debt divided
     by capitalization (debt plus stockholders' equity).

<PAGE>
ITEM 7. 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 period  from  January  26,  2005  (inception)  to
December  31,  2005.  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 and 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 increased to
historic  highs,  and 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 dry
docking  costs);  (x) and other factors  listed from time to time in our filings
with the Securities and Exchange Commission,  including, without limitation, our
Registration  Statement  on Form S-1  filed  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 these  data
internally,  and some were obtained from independent  industry  publications and
reports  that we  believe  to be  reliable  sources.  We have not  independently
verified  these  data nor sought the  consent of any  organizations  to refer to
their  reports in this annual  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  Marshall  Islands  corporation
headquartered  in New York City. We are the largest U.S. based owner of Handymax
dry bulk vessels.  Handymax dry bulk vessels range in size from 35,000 to 60,000
deadweight  tons,  or dwt,  and  transport a broad range of major and minor bulk
cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide
shipping  routes.  As of December 31, 2005, we own and operate a modern fleet of
13  Handymax  dry bulk  vessels  that we have  purchased  from  unrelated  third
parties.

          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. Nine of the 13 vessels in our operating  fleet are classed
as Supramax dry bulk vessels. 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 must 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 potential charterers.  The 13
vessels in our operating fleet have a combined  carrying capacity of 643,980 dwt
and an average age of only 6 years,  as compared to an average age for the world
Handymax dry bulk fleet of over 15 years.

          Our financial performance in 2005 and currently,  in 2006, is based on
the following key elements of our business strategy:

        (1)    concentration in one vessel category:  Handymax dry bulk vessels,
               which 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.  Reliance on the spot
               market contributes to fluctuations in revenue, cash flow, and net
               income.  On the other  hand,  time  charters  provide a  shipping
               company with a  predictable  level of  revenues.  We have entered
               into time  charters for all of our vessels  which range in length
               from  one to three  years  and  provide  for  fixed  semi-monthly
               payments in advance.  This  strategy is  effective  in strong and
               weak dry bulk markets,  giving us security and  predictability of
               cashflows when we look at the volatility of the shipping markets,

        (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)

The following are several significant items that have occurred during 2005:


     o    We  incorporated on March 23, 2005 as a Marshall  Islands  corporation
          headquartered in New York City.

     o    In April 2005,  we  acquired  the vessels  CARDINAL,  CONDOR,  FALCON,
          HARRIER, HAWK I, and SHIKRA.

     o    In May 2005, we acquired the vessel KITE.

     o    In June 2005, we acquired the vessel GRIFFON and PEREGRINE.

     o    On June 23, 2005, we completed our initial public  offering by selling
          14,400,000 shares of common stock at $14.00 per share.

     o    In July 2005, we acquired the vessel SPARROW.

     o    In August 2005, we acquired the vessel OSPREY I.

     o    On October 28, 2005, we sold 6,000,000 shares of our common stock in a
          follow-on public offering at a price of $14.50 per share.

     o    In October 2005, we acquired the vessel MERLIN.

     o    In December 2005, we acquired the vessel HERON.

          We have  employed  all of our  vessels on time  charters  for  periods
ranging  from  one to  three  years.  The  following  table  represents  certain
information about the Company's vessel acquisition and revenue earning charters:


<TABLE>
------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                                 Daily Time
                                        Delivered to                                             Charter Hire
 Vessel           Vessel Acquired       Charterer               Time Charter Expiration (1)      Rate
 ------           ---------------       ------------            ---------------------------      -------------
<S>                <C>                  <C>                     <C>                                 <C>
 Cardinal........ April 18, 2005        April 19, 2005          March 2007 to June 2007             $26,500
 Condor.......... April 29, 2005        April 30, 2005          November 2006 to March 2007         $24,000
 Falcon.......... April 21, 2005        April 22, 2005          February 2008 to June 2008          $20,950
 Griffon (2)..... June 1, 2005          June 3, 2005            February 2006                       $28,000
 Harrier......... April 19, 2005        April 21, 2005          March 2007 to June 2007             $23,750
 Hawk I.......... April 26, 2005        April 28, 2005          March 2007 to June 2007             $23,750
 Heron........... December 1, 2005      December 11, 2005       November 2007 to February 2008      $24,000
 Kite............ May 9, 2005           May 10, 2005            March 2006 to May 2006              $25,000
 Merlin.......... October 26, 2005      October 26, 2005        October 2007 to December 2007       $24,000
 Osprey I (3)... August 31, 2005       August 31, 2005         July 2008 to November 2008          $21,000
 Peregrine....... June 30, 2005         July 1, 2005            October 2006 to January 2007        $24,000
 Shikra.......... April 29, 2005        April 30, 2005          July 2006 to November 2006          $22,000
 Sparrow......... July 19, 2005         July 20, 2005           November 2006 to Feb 2007           $22,500

------------------------------------------------------------------------------------------------------------
     (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.

     (2)  Upon  completion  of the  charter  in  March  2006,  the  GRIFFON  has
          commenced a new charter at $13,550 per day until January 2007 to March
          2007.

     (3)  The  charterer  of the  OSPREY I has an option to extend  the  charter
          period by up to 26 months at a daily time charter rate of $25,000.


</TABLE>

Market Overview
---------------

          The  international   shipping  industry  is  highly   competitive  and
fragmented with many market participants.  There are approximately 6,100 drybulk
carriers of over 10,000 dwt aggregating  approximately  350 million dwt, and the
ownership of these vessels is divided among  approximately  1,400 mainly private
independent  dry  bulk  vessel  owners  with no one  shipping  group  owning  or
controlling more than 5.0% of the world bulker fleet. We primarily  compete with
other owners of dry bulk vessels in the Handymax and Handysize class and Panamax
class sectors that are mainly privately owned fleets.

          Competition  in  virtually  all  bulk  trades  is  intense  and  based
primarily  on supply and demand.  Such  demand is a function  of world  economic
conditions  and the  consequent  requirement  for  commodities,  production  and
consumption patterns, as well as events which interrupt production, trade routes
and consumption. We compete for charters on the basis of price, vessel location,
size, age and condition of the vessel,  as well as on our reputation as an owner
and operator.  Increasingly,  major customers are demonstrating a preference for
modern vessels based on concerns about the  environmental  and operational risks
associated with older vessels. Consequently,  owners of large modern fleets have
gained a competitive advantage over owners of older fleets.

          Our strategy is to concentrate in one vessel  category of the dry bulk
segment  of the  shipping  industry - the  Handymax  sector.  Handymax  dry bulk
vessels range in size from 35,000 to 60,000 dwt. Within the Handymax sector, the
industry has migrated to a larger size of vessel class called the Surpamax class
of dry bulk vessels  which range in size from 50,000 dwt to 60,000 dwt.  vessel.
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 must 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  potential  charterers.  Nine of the 13 vessels in our
operating fleet are classed as Supramax vessels.

[GRAPHIC OMITTED][GRAPHIC OMITTED]

          The supply of dry bulk vessels  depends  primarily on the level of the
orderbook,  the fleet age profile,  and the operating efficiency of the existing
fleet. As of January 2006, 31% of the world Handymax fleet is 20 years or older.
The 13  Handymax  vessels in our  operating  fleet have an average age of only 6
years as of December 31, 2005, compared to an average age for the world Handymax
dry bulk fleet of over 15 years. The Handymax  newbuilding  orderbook  currently
stands at 16% of the world Handymax fleet.  The number of Handymax  vessels over
20 years is double the orderbook.

[GRAPHIC OMITTED][GRAPHIC OMITTED]


The Handymax Market

          The dry bulk charter market was very strong in the first half of 2005,
and the average TCE for Handymax  vessels was the highest ever. A primary driver
was  sustained  demand  in  East  Asia  led  by  continuing  strong  demand  for
commodities  in China and  increasingly  India.  Demand for  vessels was further
boosted  by port  congestion  and  shifts  in  trade  patterns  which  increased
distances or tonne-miles. However, during the second half of 2005, charter rates
eased  considerably  from their  all-time  highs as the  inventory  build-up  of
commodities  at  consuming  economies  declined  along  with an  easing  of port
congestion.

Lack of Historical Operating Data for Vessels Before their Acquisition
----------------------------------------------------------------------

          Consistent with shipping industry  practice,  other than inspection of
the physical condition of the vessels and examinations of classification society
records,  there is no historical financial due diligence process when we acquire
vessels.  Accordingly,  we do not obtain the  historical  operating data for the
vessels  from the  sellers  because  that  information  is not  material  to our
decision  to make  acquisitions,  nor do we  believe  it  would  be  helpful  to
potential   investors  in  our  common  stock  in  assessing   our  business  or
profitability.  Most  vessels are sold under a  standardized  agreement,  which,
among other things,  provides the buyer with the right to inspect the vessel and
the vessel's  classification  society records.  The standard  agreement does not
give the buyer the right to  inspect,  or  receive  copies  of,  the  historical
operating data of the vessel.  Prior to the delivery of a purchased vessel,  the
seller typically  removes from the vessel all records,  including past financial
records  and  accounts  related  to  the  vessel.  In  addition,  the  technical
management  agreement  between the seller's  technical manager and the seller is
automatically  terminated and the vessel's  trading  certificates are revoked by
its flag state following a change in ownership.

          Consistent with shipping industry  practice,  we treat the acquisition
of a vessel (whether  acquired with or without charter) as the acquisition of an
asset rather than a business.  Although  vessels are generally  acquired free of
charter, we have acquired (and may in the future acquire) some vessels with time
charters.  Where a  vessel  has been  under a  voyage  charter,  the  vessel  is
delivered to the buyer free of charter,  and it is rare in the shipping industry
for the last  charterer  of the vessel in the hands of the seller to continue as
the first charterer of the vessel in the hands of the buyer. In most cases, when
a vessel is under time charter and the buyer wishes to assume that charter,  the
vessel  cannot be  acquired  without  the  charterer's  consent  and the buyer's
entering  into a separate  direct  agreement  with the  charterer  to assume the
charter. The purchase of a vessel itself does not transfer the charter,  because
it is a separate service agreement between the vessel owner and the charterer.

Critical Accounting Policies
----------------------------

          The discussion and analysis of our financial  condition and results of
operations is based upon our consolidated financial statements,  which have been
prepared in  accordance  with U.S.  GAAP.  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. We have described below what
we believe are our most critical  accounting  policies,  because they  generally
involve a comparatively  higher degree of judgment in their  application.  For a
description  of all  our  significant  accounting  policies,  see  Note 2 to our
consolidated financial statements included herein.

Revenue Recognition

          We  currently  generate all of our revenue  from time  charters.  Time
charters are for a specific  period of time at a specific rate per day or month,
and are generally not as complex or as subjective as voyage charters.  If we had
a vessel on a voyage charter, or a charter in the spot market, we would agree to
provide a vessel for the transport of specific  goods between  specific ports in
return  for  the  payment  of an  agreed  upon  freight  per  ton of  cargo  or,
alternatively,  for a specified  total amount.  All operating costs would be for
our account.  Voyage  expenses,  such as fuel and port charges,  are  recognized
ratably over the duration of the voyage and,  therefore,  are allocated  between
reporting  periods based on the relative transit time in each period.  Estimated
losses  under a voyage  charter are provided for in full at the time such losses
become evident.

          Revenue  recognition for voyage charters may be calculated on either a
load-to-load basis or on a  discharge-to-discharge  basis. Our accounting policy
for recognition of voyage freight for vessels operating on voyage charters would
be on a  discharge-to-discharge  basis.  Under this  method,  voyage  revenue is
recognized  evenly over the period from the departure of a vessel from its prior
discharge port to departure  from the next  discharge  port. We believe that the
discharge-to-discharge   method  is  preferable   because  it   eliminates   the
uncertainty  associated  with the location of the next load port. This method is
the predominant one used by the industry.

Vessel Lives and Impairment

          The carrying value of each of our vessels represents its original cost
at the time it was delivered or purchased less  depreciation.  We depreciate our
dry bulk vessels on a  straight-line  basis over their  estimated  useful lives,
estimated to be 28 years from date of initial  delivery from the shipyard to the
original  owner.  Depreciation  is based on cost  less  the  estimated  residual
salvage value.  Salvage,  or scrap,  value is based upon a vessel's  lightweight
tonnage ("lwt") multiplied by a scrap rate. We use a scrap rate of $150 per lwt,
which we believe is common in the dry bulk  shipping  industry,  to compute each
vessel's  salvage value.  An increase in the useful life of a dry bulk vessel or
in its salvage value would have the effect of decreasing the annual depreciation
charge and extending it into later  periods.  A decrease in the useful life of a
dry bulk vessel or in its salvage value would have the effect of increasing  the
annual depreciation charge. However, when regulations place limitations over the
ability of a vessel to trade on a worldwide  basis,  the vessel's useful life is
adjusted to end at the date such  regulations  become  effective.  The estimated
scrap  value  is  used  in  the   computation   of   depreciation   expense  and
recoverability  of the  carrying  value  of  each  vessel  when  evaluating  for
impairment of vessels. Management's estimates for salvage values may differ from
actual results.

          The carrying  values of the Company's  vessels may not represent their
fair market  value at any point in time since the market  prices of  second-hand
vessels  tend to  fluctuate  with  changes  in  charter  rates  and the  cost of
newbuildings.  Historically,  both  charter  rates and vessel  values tend to be
cyclical.  We evaluate  the carrying  amounts and periods over which  long-lived
assets are  depreciated to determine if events have occurred which would require
modification  to their  carrying  values or useful lives.  In evaluating  useful
lives and carrying values of long-lived  assets, we review certain indicators of
potential  impairment,  such as  undiscounted  projected  operating  cash flows,
vessel sales and purchases,  business plans and overall  market  conditions.  We
determine  undiscounted  projected net  operating  cash flow for each vessel and
compare  it to the  vessel  carrying  value.  This  assessment  is  made  at the
individual vessel level since separately  identifiable cash flow information for
each vessel is  available.  In  developing  estimates of future cash flows,  the
Company  must make  assumptions  about  future  charter  rates,  ship  operating
expenses,  and the  estimated  remaining  useful  lives  of the  vessels.  These
assumptions  are based on  historical  trends  as well as  future  expectations.
Although  management  believes that the assumptions  used to evaluate  potential
impairment  are  reasonable  and   appropriate,   such  assumptions  are  highly
subjective.  In the event that an impairment  were to occur,  we would determine
the fair value of the related asset and record a charge to operations calculated
by comparing the asset's carrying value to the estimated fair value. We estimate
fair value primarily  through the use of third party valuations  performed on an
individual vessel basis.

Deferred Drydock Cost

          There are three  methods  that are used by the  shipping  industry  to
account for  drydockings;  first is the prepaid  method where  drydock costs are
capitalized  when incurred and amortized  over the period to the next  scheduled
drydock;  second,  is the accrual  method where the  estimated  cost of the next
scheduled drydock is accrued over the period preceding such drydock, and lastly;
expensing  drydocking  costs in the period it is  incurred.  We use the  prepaid
method of accounting for drydock  expenses.  Under the prepaid  method,  drydock
expenses are capitalized  and amortized on a straight-line  basis until the next
drydock,  which we estimate to be a period of two to three years. We believe the
prepaid method better  matches costs with revenue and minimizes any  significant
changes in estimates associated with the accrual method,  including the disposal
of vessels  before a drydock which has been accrued  before it is performed.  We
use judgment when estimating the period between  drydocks  performed,  which can
result in adjustments to the estimated  amortization of drydock expense.  If the
vessel is disposed of before the next drydock,  the remaining balance in prepaid
drydock  is  written-off  to the gain or loss upon  disposal  of  vessels in the
period  when  contracted.  We expect  that our  vessels  will be  required to be
drydocked  approximately every 30 to 60 months for major repairs and maintenance
that cannot be performed while the vessels are operating.  Costs  capitalized as
part of the  drydocking  include  actual costs  incurred at the drydock yard and
parts and supplies used in making such repairs.

Vessel Acquisitions

          Where we identify any intangible assets or liabilities associated with
the  acquisition of a vessel,  we record all identified  tangible and intangible
assets or  liabilities  at fair value.  Fair value is determined by reference to
market data and the amount of expected  future cash flows. We value any asset or
liability  arising  from the market value of the time  charters  assumed when an
acquired vessel is delivered to us.

          Where we have assumed an existing  charter  obligation or enter into a
time charter with the existing  charterer in  connection  with the purchase of a
vessel at charter  rates that are less than market  charter  rates,  we record a
liability  in  Deferred  Revenues  based on the  difference  between the assumed
charter rate and the market charter rate for an equivalent  vessel.  Conversely,
where we assume an existing charter obligation or enter into a time charter with
the existing  charterer in  connection  with the purchase of a vessel at charter
rates that are above market charter rates, we record an asset in Prepaid Charter
Revenue,  based  on the  difference  between  the  market  charter  rate and the
contracted charter rate for an equivalent vessel.  This determination is made at
the time the vessel is  delivered  to us, and such  assets and  liabilities  are
amortized to revenue over the remaining period of the charter. The determination
of the fair value of acquired assets and assumed liabilities requires us to make
significant assumptions and estimates of many variables including market charter
rates,  expected future charter rates,  future vessel  operation  expenses,  the
level of  utilization  of our vessels and our weighted  average cost of capital.
The use of different  assumptions  could result in a material change in the fair
value of these  items,  which  could  have a  material  impact on our  financial
position and results of  operations.  In the event that the market charter rates
relating to the acquired vessels are lower than the contracted  charter rates at
the  time  of  their  respective  deliveries  to us,  our net  earnings  for the
remainder of the terms of the charters  may be adversely  affected  although our
cash flows will not be so affected.

Results of  Operations  for the period  from  January 26,  2005  (inception)  to
December 31, 2005

Factors Affecting Our Results of Operations

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

                                                 Period from January
                                                 26, 2005 (inception)
                                                 to December 31, 2005
                                                 --------------------

Ownership Days.................................           2,531
Available Days.................................           2,507
Operating Days.................................           2,500
Fleet Utilization..............................           99.7%

     o    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.

     o    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.

     o    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.

     o    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.

     o    TCE rates: We define TCE rates as our voyage and time charter revenues
          less  voyage  expenses  during a period  divided  by the number of our
          available  days during the period,  which is consistent  with industry
          standards.  TCE  rate  is a  standard  shipping  industry  performance
          measure used primarily to compare daily earnings  generated by vessels
          on time  charters with daily  earnings  generated by vessels on voyage
          charters,  because  charter hire rates for vessels on voyage  charters
          are  generally  not  expressed in per day amounts  while  charter hire
          rates for vessels on time  charters  generally  are  expressed in such
          amounts.

          Voyage and Time Charter Revenue

          Shipping  revenues  are highly  sensitive  to  patterns  of supply and
demand for vessels of the size and design configurations owned and operated by a
Company and the trades in which those vessels operate.  In the drybulk sector of
the shipping  industry,  rates for the transportation of drybulk cargoes such as
ores, grains,  steel,  fertilizers,  and similar commodities,  are determined by
market forces such as the supply and demand for such  commodities,  the distance
that  cargoes  must be  transported,  and the number of vessels  expected  to be
available  at the time such  cargoes  need to be  transported.  The  demand  for
shipments then is  significantly  affected by the state of the economy  globally
and in  discrete  geographical  areas.  The  number of vessels  is  affected  by
newbuilding  deliveries  and by the removal of existing  vessels  from  service,
principally because of scrapping.

          Revenues are also affected by the mix of charters between spot (voyage
charter) and long-term  (time  charter).  Because  shipping  revenues and voyage
expenses are significantly  affected by the mix between voyage charters and time
charters,  we  manage  our  vessels  based on time  charter  equivalent  ("TCE")
revenues. TCE revenue comprises revenue from vessels operating on time charters,
or TC revenue, and voyage revenue less voyage expenses from vessels operating on
voyage charters in the spot market. TCE revenue serves as a measure of analyzing
fluctuations  between  financial  periods  and as a method of  equating  revenue
generated from a voyage charter to time charter revenue. TCE revenue also serves
as an industry  standard for  measuring  revenue and comparing  results  between
geographical regions and among competitors.

          Our  economic  decisions  are  based on  anticipated  TCE rates and we
evaluate  financial  performance  based on TCE rates achieved.  Our revenues are
driven  primarily  by the number of  vessels  in our  fleet,  the number of days
during which our vessels  operate and the amount of the daily charter hire rates
that our vessels earn under  charters,  which, in turn, are affected by a number
of factors, including:

     o    the duration of our charters;

     o    our decisions relating to vessel acquisitions and disposals;

     o    the amount of time that we spend positioning our vessels;

     o    the  amount  of time that our  vessels  spend in  dry-dock  undergoing
          repairs;

     o    maintenance and upgrade work;

     o    the age, condition and specifications of our vessels;

     o    levels of supply and demand in the dry bulk shipping industry; and

     o    other  factors  affecting  spot  market  charter  rates  for dry  bulk
          carriers.

          All our revenues for the period from  inception on January 26, 2005 to
December 31, 2005 were earned from time charters  hence our TCE revenue is equal
to the TC revenue.  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.

          Net  revenues,  for the period since  inception on January 26, 2005 to
December 31, 2005, of $56,066,058  includes time charter revenues of $59,997,448
and  deductions  for  brokerage   commissions  of  $3,040,890  and  $890,500  in
amortization of net prepaid and deferred charter revenue.

          Voyage Expenses

          To the extent that we employ our vessels on voyage  charters,  we will
incur expenses that include port and canal  charges,  bunker (fuel oil) expenses
and  commissions,  as these  expenses  are borne by the  vessel  owner on voyage
charters.  Port and canal  charges  and bunker  expenses  primarily  increase in
periods  during which  vessels are  employed on voyage  charters  because  these
expenses  are for the  account of the  vessels.  Currently  all our  vessels are
employed  under time  charters  that require the  charterer to bear all of those
expenses,  hence we expect that any port and canal charges and bunker  expenses,
if incurred,  will represent a relatively  minor portion of our vessels' overall
expenses.

          Vessel Expenses

          For the period  since  inception  on January 26, 2005 to December  31,
2005,  total vessel expenses  incurred  amounted to $11,052,429.  These expenses
included  $8,156,481  in vessel  operating  costs,  $1,678,695  in delivery  and
pre-operating  costs  associated  with the  acquisition of the 13 vessels of our
fleet,  including providing these newly acquired vessels with initial provisions
and  stores,  $692,605  in  technical  management  fees,  and  $524,648 in costs
associated with vessel onboard inventory stocks.

          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,  tonnage taxes, other miscellaneous  expenses, and
technical management fees.

          Insurance  expense varies with overall  insurance market conditions as
well as the insured's loss record, level of insurance and desired coverage.  The
main  insurance  expenses  include  Protection and Indemnity ("P & I") insurance
(i.e.  liability  insurance) costs, and hull and machinery insurance (i.e. asset
insurance)  costs.  Certain  other  insurances,  such as basic war risk premiums
based on voyages into designated war risk areas are often for the account of the
charterers.

          With  regard  to  vessel  operating  expenses,  we have  entered  into
technical management agreements for each of our vessels with V. Ships Management
Ltd, our independent  technical manager. In conjunction with our management,  V.
Ships has  established an operating  expense budget for each vessel and performs
the  technical  management  of our  vessels.  All  deviations  from the budgeted
amounts are for our account.

          For the period since  commencement of vessel  operations in April 2005
to  December  31,  2005,  we paid  our  technical  manager,  V.  Ships,  a fixed
management  fee of $8,333 per month for each  vessel in our  operating  fleet in
respect  of which it  provides  technical  management  services.  These fees are
included in Vessel Operating  Expenses.  Technical  management  services include
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 the hire of qualified
officers  and  crew,  arranging  dry-docking  and  repairs,  purchasing  stores,
supplies,  spare parts and new equipment,  appointing  supervisors and technical
consultants and providing technical support.

          Our vessel operating  expenses,  which generally represent costs under
the vessel  operating  budgets,  cost of insurance and vessel registry and other
regulatory fees, 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  insurance  and  petroleum-based  lubricants  and
supplies.

          Depreciation and Amortization

          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  which will also lead to an increase of ownership  days. For the period
since inception on January 26, 2005 to December 31, 2005, total depreciation and
amortization  expense was  $10,412,227 of which amount,  $10,384,247  relates to
depreciation  and $27,980  relates to the  amortization  of deferred  drydocking
costs.

          Amortization  of  deferred   financing  costs  for  the  period  since
inception  on January  26,  2005 to  December  31,  2005 is included in interest
expense.  These amortization costs include a write-off of $1,130,712 relating to
deferred  financing  fees  associated  with our term  loan  facility  which  was
entirely  repaid upon  refinancing  with our revolving  credit  facility in July
2005, and $98,065  relating to amortization  of financing costs  associated with
our revolving credit facility.

          General and Administrative Expenses

          General and Administrative  Expenses for the period since inception on
January 26, 2005 to December 31, 2005  amounted to  $3,491,330.  Our general and
administrative expenses include recurring administrative costs and non-recurring
formation  and  advisory  costs.  Recurring  costs  include our  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.  For the period from inception on January
26,  2005 to December  31,  2005,  recurring  administrative  costs  amounted to
$2,681,063.  Non-recurring  costs include costs relating to the formation of our
company and related advisory costs. For the period from inception on January 26,
2005 to December 31, 2005,  non-recurring costs amounted to $810,267.  We expect
general and administrative expenses to increase as our fleet is enlarged.

          Financial Advisory Fees

          For the period  since  inception  on January 26, 2005 to December  31,
2005, we have recorded an expense of $5,175,046 in connection with an investment
banking and financial  advisory fee paid to Kelso & Company,  L.P. ("Kelso") and
certain  non-management  affiliates  of  Eagle  Ventures  LLC  pursuant  to  the
financial  advisory  agreement  that we entered  into with  Kelso.  This fee was
incurred in the quarter ended June 30, 2005 and was payable in  connection  with
Kelso  assisting  us in  our  strategic  planning,  obtaining  debt  and  equity
financing and  acquiring  vessels.  In addition,  we have recorded an expense of
$1,000,000 in the quarter ended June 30, 2005 in connection  with a payment made
to Kelso in order to terminate  certain of our  obligations  under the financial
advisory  agreement  including  our  obligation  to pay an annual  $500,000  fee
thereunder.

          Non-Cash Compensation Expense

          Members  of  the  Company's   management  have  been  awarded  profits
interests (and in the future others having senior  management  and/or  strategic
planning-type  responsibilities  may be awarded  similar  profits  interests) in
Eagle  Ventures LLC that may entitle such persons to an economic  interest of up
to 16.7% on a fully diluted basis  (assuming all profits  interests were vested)
in any  appreciation in the value of the assets of Eagle Ventures LLC (including
shares of the Company's  common stock owned by Eagle Ventures LLC when sold). In
all,  one-fourth of the profits interests are  service-related and vest in equal
three-month  installments  over four years (the vesting of such  service-related
profits interests is subject to continued  employment with Eagle Ventures LLC or
its affiliates at the end of each such  three-month  period),  and the remaining
profits interests are performance-related. Pursuant to an amendment to the Eagle
Ventures LLC limited liability company agreement, 44% of the performance-related
profits  interests  became fully vested upon the  consummation  of the Company's
initial public offering (or an economic  interest in  approximately  6.2% of the
appreciation of the assets of Eagle Ventures LLC on a fully diluted basis taking
into  account the vesting of only such  profits  interests),  and the  remaining
portion  of  the  performance-related  profits  interests  will  vest  based  on
affiliates  of Kelso  achieving  certain  multiples on their  original  indirect
investment  in the  Company,  subject  to an  internal  rate of return  minimum.
Retention  of  the  non-accelerated  performance-related  profits  interests  is
subject to continued employment with Eagle Ventures LLC or its affiliates.

          The vesting of profits  interests  may be further  accelerated  in the
future by the  compensation  committee  of Eagle  Ventures  LLC.  These  profits
interests  will dilute only the  interests of owners of Eagle  Ventures LLC, and
will not dilute direct  holders of the  Company's  common  stock.  However,  the
Company's  statement of operations  reflects  non-cash  charges for compensation
related to the profits interests.

          For the period from  inception  in January  26,  2005 to December  31,
2005, the Company recorded a non-cash  compensation  charge of $11.7 million. Of
that  charge,   approximately  $9.2  million  relates  to  the  portion  of  the
performance-related  profits  interests  that  vested upon  consummation  of the
Company's   initial  public  offering.   The  remaining  $2.5  million  non-cash
compensation   charge  was  taken  as  a  result  of  the   service-related  and
non-accelerated  performance-related profits interests. The Company is recording
compensation charges relating to the service-related profits interests over four
years. The  non-accelerated  performance related profits interests vest based on
affiliates of Kelso achieving certain multiples on their original  investment in
the assets of Eagle Ventures LLC through the receipt of distributions from Eagle
Ventures LLC. The vesting  occurs  ratably upon achieving a return on investment
ranging from two times to four times the original  investment.  To calculate the
non-cash compensation charge that is reflected in the Company's income statement
for the non-accelerated  performance-related  profits interests, the Company has
assumed that these profits  interests will vest four years after their issuance.
The Company is therefore recording compensation charges relating to such profits
interests over four years.

          The non-cash  compensation  charge will be recorded as an expense over
the estimated  service period in accordance  with SFAS No. 123(R).  The non-cash
compensation  charges  will be based on the fair value of the profits  interests
which will be "marked to market" at the end of each reporting period. The impact
of any  changes in the  estimated  fair value of the profits  interests  will be
recorded as a change in estimate cumulative to the date of change. The impact on
the  amortization  of the  compensation  charge of any changes to the  estimated
vesting periods for the  performance-related  profits interests will be adjusted
prospectively as a change in estimate.

          On January 28, 2006, the limited  liability company agreement of Eagle
Ventures LLC was amended and restated (the "Third LLC Agreement"). This provided
for the award of additional  profits  interests in Eagle Ventures LLC to certain
management  employees  and  provided  for  certain  adjustments  in  the  manner
distributions  are made by Eagle Ventures in connection  with such newly awarded
profits  interests.  These profits  interests  will dilute only the interests of
owners of Eagle  Ventures  LLC,  and will not dilute  the direct  holders of the
Company's common stock.

          On March 8, 2006,  the Third LLC  Agreement  was amended and  restated
(the  "Fourth LLC  Agreement")  and is  included as Exhibit  10.6 to this annual
report.  Pursuant to the Fourth LLC  Agreement,  an  adjustment  was made in the
schedule governing the management members' retention of service-related  profits
interests upon their  termination  of employment  with Eagle Ventures LLC or its
subsidiaries  (including  the  Company).  In  addition,  under  the  Fourth  LLC
Agreement one-fourth of the service-related profits interests granted on January
28, 2006 were immediately vested and the remaining newly granted service-related
profits interests were made subject to a three-year retention schedule.

          Interest and Finance Costs

Interest Expense period from inception in January 26, 2005 to December 31, 2005
consists of:

Loan Interest.........................................           $4,855,054
Commitment Fees.......................................              516,588
Eagle Ventures Note Interest..........................              608,222
Amortization of Deferred Financing Costs..............               98,065
Write-off of Deferred Financing Costs ................            1,130,712
                                                            ----------------
Total Interest Expense................................           $7,208,641
                                                            ================

          At  the  time  of our  initial  public  offering,  we  had  term  loan
facilities with aggregate  principal  balances of $185,950,000  and a promissory
note in the amount of $58,730,434 issued to Eagle Ventures LLC.  Concurrent with
the  initial  public  offering,  we used a portion  of the net  proceeds  of the
offering to repay $125,950,000 of the outstanding  principal balance of the term
loan facility and the promissory note in full with accrued interest of $608,222.

Subsequent to the Company's  initial  public  offering in June 2005, we borrowed
$28,500,000  from the term loan  facility  to fund the  balance of the  purchase
price for its ninth vessel, PEREGRINE.

          In July 2005, the  outstanding  balance of $88,500,000  under the term
loan facility was refinanced with a new ten-year  $330,000,000  revolving credit
facility.  We paid a facility arrangement fee of $1,200,000 which is recorded in
Interest Expense.  We expect to incur interest expense and additional  financing
costs under our new credit  facility in connection with debt incurred to finance
future vessel acquisitions.

          From July 2005 to October  2005,  we  borrowed  $100,000,000  from the
revolving credit facility to fund the following vessel purchases: $30,600,000 to
fund the balance of the purchase price of our tenth vessel, SPARROW; $30,900,000
to fund the balance of the  purchase  price of our  eleventh  vessel,  OSPREY I;
$7,000,000 to fund the deposits  representing  the 10% of the purchase price for
the twelfth and thirteenth  vessels,  MERLIN and HERON;  $31,500,000 to fund the
balance of the purchase price of the MERLIN.

          In October  2005, we used a portion of the proceeds from our follow-on
equity offering to repay $48,500,000 of the principal balance under the from the
revolving credit facility.

          As of  December  31,  2005,  our debt  consisted  of  $140,000,000  in
borrowings under the revolving credit facility.

          Under the terms of the revolving credit  agreement,  the facility will
be  available  in full for five  years  and  there  are no  principal  repayment
obligations for the first five years.  Over the remaining  period of five years,
the amount  available  under the facility will reduce in semi-annual  amounts of
$20,500,000 with a final reduction of $125,000,000 occurring simultaneously with
the last semi-annual reduction. The credit facility bears interest at LIBOR plus
a margin of 0.95%.  The Company must also pay a commitment fee of 0.4% per annum
on the unused portion of the revolving credit facility on a quarterly basis.

          From the  inception of the Company's  debt through  December 31, 2005,
interest  rates  ranged  from 4.10% to 5.49%,  including  a margin of 0.95% over
LIBOR. The weighted average effective interest rate was 4.69%.

          Interest Rate Swaps

          We have  entered into  interest  rate swaps to  effectively  convert a
portion  of our debt  from a  floating  to a  fixed-rate  basis.  The  swaps are
designated and qualify as cash flow hedges.  In September  2005, we entered into
interest  rate  swap  contracts  for  notional   amounts  of  $100,000,000   and
$30,000,000.  These contracts mature in September 2010. Exclusive of a margin of
0.95%, the Company will pay fixed-rate interest of 4.22% and 4.54% respectively,
and receive  floating-rate  interest amounts based on three month LIBOR settings
(for a term equal to the swaps' reset periods).  We record the fair value of the
interest  rate swap as an asset or liability in our  financial  statements.  The
effective  portion of the swap is recorded in  accumulated  other  comprehensive
income.  Accordingly,  $2,647,077  has  been  recorded  in Other  Assets  in our
financial statements as of December 31, 2005.

          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 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 for the period from inception on
January 26, 2005 to December 31, 2005:

                                                     Period from January 26,
                                                       2005 (inception) to
                                                        December 31, 2005
                                                        -----------------

Net Income.........................................             $ 6,653,400
Interest Expense...................................               7,208,641
Depreciation and Amortization......................              10,412,227
Amortization of Prepaid and Deferred Revenue.......                 890,500
                                                    ---------------------------
EBITDA.............................................              25,164,768
Adjustments for Exceptional Items:
Management and Other Fees to Affiliates (1) .......               6,175,046
Non-cash Compensation Expense (2) .................              11,734,812
                                                    ---------------------------
Credit Agreement EBITDA ...........................            $ 43,074,626
                                                    ===========================
----------
(1)  One time charge (see Notes to our financial statements)

(2)  Management's  participation in profits interests in Eagle Ventures LLC (see
     Notes to our financial statements)

Effects of Inflation

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

Liquidity and Capital Resources

          Prior to our initial public  offering,  we funded our initial  capital
requirements  with equity  contributions,  borrowings  from Eagle  Ventures  and
borrowings  under our term loan  facility.  Eagle  Ventures had provided us with
$40,843,662 in equity  contributions,  $58,730,404 in debt financing in the form
of a promissory  note,  and we borrowed a total of  $214,450,000  under our term
loan facility in connection with vessel acquisitions.

          Our  initial  public  offering  on June  23,  2005  raised  a total of
$201,600,000,  providing us with net proceeds of  $186,529,290.  We used the net
proceeds from that offering  primarily to repay the Eagle  Ventures'  promissory
note in full along with accrued interest of $608,222,  to repay  $125,950,000 of
outstanding  principal  under  the  existing  term  loan  facility  and to pay a
$1,000,000 one time fee to Kelso to terminate certain of our obligations under a
financial  advisory  agreement  with  Kelso &  Company,  L.P.  We  paid  Kelso a
$5,000,000  financial  advisory fee and paid $175,046 to certain  non-management
affiliates of Eagle  Ventures LLC pursuant to our financial  advisory  agreement
with Kelso.

          In  connection  with our initial  public  offering,  in July 2005,  we
entered into a $330,000,000 revolving credit facility to refinance the remaining
portion  of our  outstanding  indebtedness  under the term loan  facility,  fund
vessel acquisitions and provide funds for working capital purposes.  In addition
to the refinanced portion of $88,500,000, we borrowed an additional $100,000,000
under this revolving  credit facility to finance the acquisition of four vessels
in 2005.

          In connection  with our follow-on  public offering on October 28 2005,
which  raised  a  total  of  $87,000,000  providing  us  with  net  proceeds  of
$82,045,773,  we used  $48,500,000  of the net  proceeds  to  repay  part of the
outstanding principal under the revolving credit facility and $31,500,000 to pay
the balance of the purchase  price of the vessel HERON.  As of December 31, 2005
we have a total  outstanding  debt of  $140,000,000  under the revolving  credit
facility.  As of December  31,  2005,  the  available  undrawn  amount under our
revolving credit facility was $190,000,000.

          As of  December  31,  2005,  our  cash  balance  was  $24,526,528.  In
addition,  $6,500,000 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 December 31, 2005.  Also recorded in Restricted Cash
is an amount of $124,616 which is collateralizing a letter of credit relating to
our office lease.  We anticipate  that  internally  generated  cash flow and, if
necessary,  borrowings  under our new credit facility will be sufficient to fund
the operations of our fleet, including our working capital requirements,  for at
least the next 12 months.  We have the ability to borrow up to $10,000,000 under
our credit facility for working capital purposes.

          It is our  intention to fund our future  acquisition  related  capital
requirements  initially through  borrowings under our new credit facility and to
repay  all or a  portion  of such  borrowings  from  time to time  with  the net
proceeds of equity issuances. We believe that funds will be available to support
our growth strategy,  which involves the acquisition of additional vessels,  and
will  allow us to pay  dividends  to our  stockholders  as  contemplated  by our
dividend policy.

Dividends

          Our  policy is to  declare  quarterly  dividends  to  stockholders  in
February, April, July and October in amounts that are substantially equal to our
available  cash  from  operations  during  the  previous  quarter  less any cash
reserves for drydocking and working capital.

          Our revolving credit facility permits us to pay quarterly dividends in
amounts up to our quarterly 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 drydocking for the period, provided that there is not a default or breach of
loan covenant under the credit  facility and the payment of the dividends  would
not  result in a  default  or breach  of a loan  covenant.  Depending  on market
conditions in the dry bulk shipping industry and acquisition  opportunities that
may arise,  we may be required  to obtain  additional  debt or equity  financing
which could affect our dividend policy.

          On October  31, 2005 we paid a cash  dividend  on our common  stock of
$0.54 per share for the third quarter of 2005 to all  shareholders  of record as
of October 17,  2005.  The  aggregate  amount of the cash  dividend  paid to our
shareholders was $14,661,000.

          On January 30, 2006 the Company's  Board of Directors  declared a cash
dividend  for the fourth  quarter  of 2005 of $0.57 per share  which was paid on
February 24, 2006 to all  shareholders  of record as of February  15, 2006.  The
aggregate  amount of this cash dividend was  $18,895,500.  Since the Company did
not own the two acquired ships and receive the benefit of their revenues for the
full  quarter  (the Merlin  delivered  October 26, 2005 and the Heron  delivered
December 1, 2005),  it funded  approximately  $1,500,000  of this  dividend from
excess working  capital as disclosed in the Company's  prospectus  dated October
28, 2005 in order to pay its indicated dividend of $0.57 per share.

Sale of Common Stock

          On June 23, 2005, the Company completed its initial public offering by
issuing and selling to the public  14,400,000  shares of common  stock at $14.00
per  share,   raising  gross  proceeds  of  $201,600,000   before  deduction  of
underwriting  discounts,  commissions and expenses of  $15,070,710.  The Company
used $185,288,656 of the net proceeds from the offering to repay $125,950,000 of
the indebtedness  under its existing loan facility and $59,338,656 owed to Eagle
Ventures under a promissory note, including accrued interest.

          On October 28, 2005, the Company sold  6,000,000  shares of its common
stock in a public  offering  at a price  of  $14.50  per  share,  raising  gross
proceeds of $87,000,000 before deduction of underwriting discounts,  commissions
and  expenses of  $4,954,227.  The sale  included an  over-allotment  portion of
825,000 shares of which 325,000  shares were offered by our largest  shareholder
Eagle Ventures LLC. We used $80,000,000 of the net proceeds from the offering to
repay  $48,500,000 of our outstanding  indebtedness  under the revolving  credit
facility,  which  reduced  our  outstanding  debt  to  $140,000,000,   and  used
$31,500,000 of the net proceeds to pay the balance of the purchase price for the
HERON which was acquired in December 2005.

Revolving Credit Facility

          In July 2005, we entered into a 10-year $330,000,000  revolving credit
facility.  As of December  31,  2005,  the  outstanding  indebtedness  under the
revolving credit facility amounts to $140,000,000.

          We are  permitted  to  borrow  up to  the  remaining  capacity,  as of
December 31, 2005, of  $190,000,000  including  amounts  available to borrow for
working  capital   purposes  as  described  below,  in  connection  with  future
acquisitions of dry bulk carriers between 25,000 dwt and 85,000 dwt that are not
older than 10 years.  We are  permitted to borrow up to  $10,000,000  at any one
time for working capital purposes during an initial period of 18 months from the
first draw down date, after which time our ability to borrow amounts for working
capital purposes is subject to review and reapproval on an annual basis.

          Under the terms of the revolving credit  agreement,  the facility will
be  available  in full for five  years  and  there  are no  principal  repayment
obligations for the first five years.  Over the remaining  period of five years,
the facility  will reduce in  semi-annual  amounts of  $20,500,000  with a final
reduction of $125,000,000  occurring  simultaneously  with the last  semi-annual
reduction. The facility bears interest at LIBOR plus a margin of 0.95%.

          We paid an arrangement fee of $1,200,000 in connection with the credit
facility.  We also  incur a fee of 0.4% per annum on the  unused  portion of the
revolving loan on a quarterly basis.

          Our ability to borrow amounts under the revolving credit facility will
be subject to the  satisfaction of certain  customary  conditions  precedent and
compliance  with  terms  and  conditions  included  in the  loan  documents.  In
connection with vessel acquisitions,  amounts borrowed may not exceed 60% of the
value of the vessels  securing our obligations  under the credit  facility.  Our
ability  to borrow  such  amounts,  in each case,  is  subject  to our  lender's
approval of the vessel  acquisition.  Our lender's approval will be based on the
lender's  satisfaction of our ability to raise additional capital through equity
issuances in amounts acceptable to our lender and the proposed employment of the
vessel to be acquired.

          Our obligations  under the 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.  We may grant  additional
securities from time to time in the future.

          The  revolving  credit  facility,   as  amended,   contains  financial
covenants requiring us, among other things, to ensure that:

          o    the  aggregate  market  value of the  vessels  in our fleet  that
               secure our obligations  under the revolving credit  facility,  as
               determined by an independent  shipbroker on a charter free basis,
               at all times  exceeds 130% of the aggregate  principal  amount of
               debt  outstanding  under the new credit facility and the notional
               or actual cost of terminating any related hedging arrangements;

          o    to the extent our debt during any accounting  period is less than
               $200,000,000,  our total  assets  minus our debt will not be less
               than  $100,000,000;  to the extent our debt during any accounting
               period is greater than  $200,000,000,  our total assets minus our
               debt will not be less than $150,000,000;

          o    our EBITDA, as defined in the credit agreement, will at all times
               be not less than 2x the aggregate amount of interest incurred and
               net amounts  payable  under  interest  rate hedging  arrangements
               during the relevant period; and

          o    we maintain with the lender $500,000 per vessel in addition to an
               amount adequate to meet anticipated capital  expenditures for the
               vessel over a 12 month period.

          For the purposes of the revolving credit facility,  our "total assets"
includes our tangible fixed assets and our current  assets,  as set forth in our
consolidated  financial statements,  except that the value of any vessels in our
fleet that secure our obligations  under the facility are measured by their fair
market value rather than their carrying value on our consolidated balance sheet.

          The revolving  credit facility  permits us to pay dividends in amounts
up to our earnings before extraordinary or exceptional items,  interest,  taxes,
depreciation  and amortization  (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,  provided that
there is not a default or breach of loan covenant under the credit  facility and
the payment of the  dividends  would not result in a default or breach of a loan
covenant.

Contractual Obligations

The following table sets forth our expected contractual obligations and their
maturity dates as of December 31, 2005:

<TABLE>
<CAPTION>

                                                   Within         One to      Three to       More than
                                                 One Year      Three Years    Five Years     Five years        Total
                                                 --------      -----------    ----------     ----------        -----
                                                                  (in thousands of U.S. dollars)
<S>                                               <C>            <C>            <C>            <C>            <C>
Bank Loans  ............................             $--             $--           $--        $140,000       $140,000

Interest and borrowing fees (1) ........            8,239         16,500         16,559         38,523         79,821
Office lease (2)........................              191            511            544             69          1,315
                                             -------------------------------------------------------------------------
Total...................................           $8,430        $17,011        $17,113       $178,592       $221,136
                                             =========================================================================
</TABLE>
----------
(1)  The Company is a party to  floating-to-fixed  interest rate swaps  covering
     notional  amounts of $100,000,000 and $30,000,000 at December 31, 2005 that
     effectively  convert the  Company's  interest rate exposure from a floating
     rate based on LIBOR to a fixed rate of 4.22% and 4.54% respectively, plus a
     margin  of  0.95%.   The  interest   obligations  for  floating  rate  debt
     ($10,000,000  as of December  31,  2005) have been  estimated  based on the
     fixed rates stated in related floating-to-fixed  interest rate swaps, where
     applicable, or the LIBOR rate at December 31, 2005.

(2)  We occupy office space on a 63-month lease.

          Capital Expenditures

          We make capital  expenditures from time to time in connection with our
vessel acquisitions.  Our vessel acquisitions in 2005 consist of 13 Handymax dry
bulk vessels with a total cost of  $427,144,953.  We funded the  acquisitions of
our vessels with a  combination  of equity  contributions  that we received from
Eagle Ventures,  borrowings under our credit  facilities,  debt incurred under a
promissory  note that we issued to Eagle  Ventures,  proceeds  from our  initial
public offering and proceeds from our follow-on public offering.

          In  addition  to the vessel  acquisitions,  we have spent  $820,904 on
capital improvements to some of our vessels.  These improvements are expected to
enhance the revenue earning capabilities of these vessels.

          In addition to  acquisitions  that we may undertake in future periods,
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.

          In 2005, we have spent $421,682 on vessel  drydockings and this amount
will be amortized to expense on a  straight-line  basis over the period  through
the date the next  drydocking  is scheduled to become due. The  following  table
represents certain  information about the estimated costs for anticipated vessel
drydockings in 2006 and 2007 along with the  allocation of anticipated  off-hire
days:

Quarter Ending                         Off-hire Days(1)    Projected Costs(2)
--------------                         ----------------    ------------------
March 31, 2006 .......................        60             $1.40 million
June 30, 2006.........................        --                    --
September 30, 2006....................        15             $0.35 million
December 31, 2006.....................        15             $0.35 million
March 31, 2007........................        30             $0.70 million
June 30, 2007.........................        --                    --
September 30, 2007....................        30             $0.70 million
December 31, 2007.....................        15             $0.35 million

----------
(1)  Actual length of drydocking will vary based on the condition of the vessel,
     yard schedules and other factors.
(2)  Actual costs vary based on various factors, including where the drydockings
     are actually performed.

          Contracted Time Charter Revenue

          We have time charter  contracts  currently  for all our  vessels.  The
contracted  time  charter  revenue  schedule,  as shown  below,  reduces  future
contracted revenue for any estimated off-hire days relating to dry-docks.

          The following table represents certain information about the Company's
revenue earning charters:

                                                                    Daily Time
               Delivered                                             Charter
Vessel         to Charterer        Time Charter Expiration (1)      Hire Rate
------         ------------        ---------------------------      ---------

Cardinal       April 19, 2005      March 2007 to June 2007            $26,500
Condor         April 30, 2005      November 2006 to March 2007        $24,000
Falcon         April 22, 2005      February 2008 to June 2008         $20,950
Griffon(2)     June 3, 2005        February 2006                      $28,000
Harrier        April 21, 2005      March 2007 to June 2007            $23,750
Hawk I         April 28, 2005      March 2007 to June 2007            $23,750
Kite           May 10, 2005        March 2006 to May 2006             $25,000
Osprey I(3)    September 1, 2005   May 2008 to September 2008         $21,000
Peregrine      July 1, 2005        October 2006 to January 2007       $24,000
Shikra         April 30, 2005      July 2006 to November 2006         $22,000
Sparrow        July 20, 2005       November 2006 to Feb 2007          $22,500
Merlin         October 26, 2005    October 2007 to December 2007      $24,000
Heron          December 11, 2005   December 2007 to February 2008     $24,000

----------
(1)  The date range  provided  represents  the earliest and latest date on which
     the charterer may redeliver the vessel to the Company upon the  termination
     of the charter.
(2)  Upon  completion of the charter in March 2006,  the GRIFFON has commenced a
     new charter at $13,550 per day until January 2007 to March 2007.
(3)  The charterer of the OSPREY I has an option to extend the charter period by
     up to 26 months at a daily time charter rate of $25,000.


Off-balance Sheet Arrangements

          We do not have any off-balance sheet arrangements.<PAGE>


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

          The Company is exposed to market risk from changes in interest  rates,
which could  impact its  results of  operations  and  financial  condition.  The
Company's objective is to manage the impact of interest rate changes on earnings
and cash flows of its borrowings. The Company expects to manage this exposure to
market risk through its regular  operating  and financing  activities  and, when
deemed appropriate,  through the use of derivative  financial  instruments.  The
Company  expects to use  interest  rate swaps to manage net exposure to interest
rate changes related to its borrowings and to lower its overall borrowing costs.

          As of December 31, 2005, the Company's debt consisted of  $140,000,000
in loans under bank mortgage  agreements  at a margin plus variable  rates above
the LIBOR. From the facility's inception through December 31, 2005, rates ranged
from 4.10% to 5.49% (including margins). The weighted average effective interest
rates was 4.69%.

          The Company entered into interest rate swaps to effectively  convert a
portion  of its debt  from a  floating  to a  fixed-rate  basis.  The  swaps are
designated and qualify as cash flow hedges. As of December 31, 2005, the Company
has  entered  into  interest  rate  swap  contracts  for  notional   amounts  of
$100,000,000  and $30,000,000.  These contracts  commenced in September 2005 and
mature in September 2010.  Exclusive of a margin of 0.95%,  the Company will pay
fixed-rate interest of 4.22% and 4.54% respectively,  and receive  floating-rate
interest  amounts  based on three month LIBOR  settings (for a term equal to the
swaps' reset  periods).  The Company records the fair value of the interest rate
swap as an asset or liability on the balance sheet. The effective portion of the
swap is recorded in  accumulated  other  comprehensive  income.  At December 31,
2005,  the Company  recorded an asset of  $2,647,077  which is included in Other
Assets in the accompanying balance sheet.

Currency and Exchange Rates

          The shipping  industry's  functional  currency is the U.S. dollar. The
Company  generates  all of its  revenues in U.S.  dollars.  The  majority of the
Company's  operating expenses and the entirety of its management expenses are in
U.S.  dollars.  The  Company  does not intend to use  financial  derivatives  to
mitigate the risk of exchange rate fluctuations.

Item 8. Financial Statements and Supplementary Data

The information  required by this item is contained in the financial  statements
set forth in Item 15(a) under the caption "Consolidated Financial Statements" as
part of this Annual Report on Form 10-K.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

          None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

          Our  management,  including  our  Chief  Executive  Officer  and Chief
Financial  Officer,  has  conducted an evaluation  of 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 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  our  disclosure  controls  and
procedures are effective to ensure that information  required to be disclosed by
the  Company  in the  reports  that it files or  submits  to the SEC  under  the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported within the time periods specified in SEC rules and forms.

Internal Control Over Financial Reporting

          In  addition,   we  evaluated  our  internal  control  over  financial
reporting,  (as  defined in Rules  13a-15(f)  and  15d-15(f)  of the  Securities
Exchange Act of 1934),  and there have been no changes in our  internal  control
over financial  reporting  that occurred  during the fourth quarter of 2005 that
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

Item 9B. Other Information

          On January 28, 2006, the limited  liability company agreement of Eagle
Ventures LLC was amended and restated (the "Third LLC Agreement"). This provided
for the award of additional  profits  interests in Eagle Ventures LLC to certain
management  employees  and  provided  for  certain  adjustments  in  the  manner
distributions  are made by Eagle Ventures in connection  with such newly awarded
profits  interests.  These profits  interests  will dilute only the interests of
owners of Eagle  Ventures  LLC,  and will not dilute  the direct  holders of the
Company's  common stock.

          On March 8, 2006,  the Third LLC  Agreement  was amended and  restated
(the  "Fourth LLC  Agreement")  and is  included as Exhibit  10.6 to this annual
report.  Pursuant to the Fourth LLC  Agreement,  an  adjustment  was made in the
schedule governing the management members' retention of service-related  profits
interests upon their  termination  of employment  with Eagle Ventures LLC or its
subsidiaries  (including  the  Company).  In  addition,  under  the  Fourth  LLC
Agreement one-fourth of the service-related profits interests granted on January
28, 2006 were immediately vested and the remaining newly granted service-related
profits interests were made subject to a three-year retention schedule.


<PAGE>


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Directors

          The information  concerning our directors  required under this Item is
incorporated  herein by reference from our proxy statement,  which will be filed
with the Securities and Exchange  Commission,  relating to our Annual Meeting of
Stockholders (our "2006 Proxy Statement").

Executive Officers

          The information  concerning our Executive Officers required under this
Item is incorporated herein by reference from our proxy statement, which will be
filed  with the  Securities  and  Exchange  Commission,  relating  to our Annual
Meeting of Stockholders (our "2006 Proxy Statement").

Code of Ethics

The  information  concerning  our Code of  Conduct  is  incorporated  herein  by
reference from our 2006 Proxy Statement.

Audit Committee

The  information  concerning  our  Audit  Committee  is  incorporated  herein by
reference from our 2006 Proxy Statement.

Audit Committee Financial Experts

The information concerning our Audit Committee Financial Experts is incorporated
herein by reference from our 2006 Proxy Statement.

Item 11. Executive Compensation

The  information  required under this Item is  incorporated  herein by reference
from our 2006 Proxy Statement.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters

The  information  required under this Item is  incorporated  herein by reference
from our 2006 Proxy Statement.

Item 13. Certain Relationships and Related Transactions

The  information  required under this Item is  incorporated  herein by reference
from our 2006 Proxy Statement.

Item 14. Principal Accountant Fees and Services

Information  about the fees for 2005 for professional  services  rendered by our
independent   registered  public  accounting  firm  is  incorporated  herein  by
reference  from our 2006  Proxy  Statement.  Our  Audit  Committee's  policy  on
pre-approval  of audit and  permissible  non-audit  services of our  independent
registered  public  accounting  firm is  incorporated by reference from our 2006
Proxy Statement.


<PAGE>


                                     PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Documents filed as part of this Annual Report on Form 10-K

     1.   Consolidated   Financial   Statements:   See  accompanying   Index  to
          Consolidated Financial Statements.

     2.   Consolidated   Financial  Statement   Schedule:   Financial  statement
          schedules  are omitted due to the  absence of  conditions  under which
          they are required

(b)  Exhibits

    3.1   Amended and Restated Articles of Incorporation of the Company*

    3.2   Amended and Restated Bylaws of the Company*

    4.1   Form of Share Certificate of the Company*

    10.1  Form of Registration Rights Agreement*

    10.2  Form of Management Agreement*

    10.3  Form of Credit Agreement*

    10.4  Eagle Bulk Shipping Inc. 2005 Stock Incentive Plan*

    10.5  Employment Agreement for Mr. Sophocles N. Zoullas*

    10.6  Form of Fourth Amended and Restated Limited Liability Company
          Agreement of Eagle Ventures LLC

    21.1  Subsidiaries of the Company**

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

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

    32.1  Section 1350 Certification of CEO

    32.2  Section 1350 Certification of CFO


*    Incorporated  by  reference  to the  Registration  Statement  on Form  S-1,
     Registration No. 333-123817.
**   Incorporated  by  reference  to the  Registration  Statement  on Form  S-1,
     Registration No. 333-128930.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
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 Zoullas
                                                ----------------------
                                                Name:  Sophocles Zoullas
                                                Title: Chief Executive Officer

March 14, 2006


          Pursuant to the  requirements of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated on March 14, 2006.



             Signature                                    Title

       /s/Sophocles Zoullas
-----------------------------------       Chief Executive Officer, and Director
         Sophocles Zoullas

       /s/Alan S. Ginsberg
-----------------------------------               Chief Financial Officer
         Alan S. Ginsberg                        (principal accounting Officer)

     /s/Michael B. Goldberg
-----------------------------------                      Director
        Michael B. Goldberg

       /s/Frank J. Loverro
-----------------------------------                      Director
         Frank J. Loverro

        /s/David B. Hiley
-----------------------------------                      Director
          David B. Hiley

      /s/Douglas P. Haensel
-----------------------------------                      Director
        Douglas P. Haensel

       /s/Joseph Cianciolo
-----------------------------------                      Director
         Joseph Cianciolo

       /s/Michael Mitchell
-----------------------------------                      Director
         Michael Mitchell


<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




Report of Independent Registered Public Accounting Firm .....               F-2
Consolidated Balance Sheet as of December 31, 2005...........               F-3
Consolidated Statements of Operations from January 26, 2005
  (inception) to December 31, 2005...........................               F-4
Consolidated Statement of Stockholders' Equity from
   January 26, 2005 (inception) to December 31, 2005.........               F-5
Consolidated Statement of Cash Flows from January 26, 2005
   (inception) to December 31, 2005..........................               F-6
 Notes to Consolidated Financial Statements..................               F-7


<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

          The Board of Directors and Stockholders of Eagle Bulk Shipping Inc.

          We have audited the accompanying  consolidated  balance sheet of Eagle
Bulk  Shipping  Inc.  and  subsidiaries  as of December 31, 2005 and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the period from January 26, 2005  (inception)  through  December 31, 2005. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

          We conducted our audit in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial statements are free of material  misstatement.  We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audit included  consideration of internal control over financial  reporting as a
basis for designing audit procedures that are appropriate in the  circumstances,
but not for the purpose of  expressing  an opinion on the  effectiveness  of the
Company's internal control over financial reporting.  Accordingly, we express no
such  opinion.  An audit also  includes  examining,  on a test  basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

          In our opinion,  the  financial  statements  referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company and its subsidiaries at December 31, 2005, and the consolidated  results
of their operations and their cash flows for the period from January 26, 2005 to
December  31,  2005,  in  conformity  with U.S.  generally  accepted  accounting
principles.


                                                /s/ Ernst & Young LLP


New York, New York
March 8, 2006



<PAGE>

<TABLE>

                                                            EAGLE BULK SHIPPING INC.
                                                          CONSOLIDATED BALANCE SHEET
<CAPTION>



                                                                                                December 31, 2005
                                                                                                -----------------
<S>                                                                                             <C>
 ASSETS:
 Current Assets:

    Cash ................................................................................            $24,526,528
    Accounts Receivable..................................................................                281,094
    Prepaid Charter Revenue..............................................................              8,508,000
    Prepaid Expenses.....................................................................                513,145
                                                                                                 -----------------

  Total Current Assets...................................................................             33,828,767
 Fixed Assets:
    Vessels and Vessel Improvements, at cost, net of Accumulated
          Depreciation of $10,384,247....................................................            417,581,610

 Restricted Cash.........................................................................              6,624,616
 Deferred Drydock Costs, net of Accumulated Amortization of $27,980......................                393,702
 Deferred Financing Costs, net of Accumulated Amortization of $98,065....................              1,268,209
 Other Assets ...........................................................................              2,647,077
                                                                                                 ==================

 Total Assets............................................................................           $462,343,981
                                                                                                 ==================

 LIABILITIES & STOCKHOLDERS' EQUITY
 Current Liabilities:
Accounts Payable.........................................................................             $1,861,145
Accrued Interest.........................................................................                514,631
Other Accrued Liabilities................................................................                424,669
Deferred Revenue.........................................................................              1,306,000
Unearned Charter Hire Revenue............................................................              2,444,522
                                                                                                 -----------------

  Total Current Liabilities..............................................................              6,550,967
  Long-term Debt.........................................................................            140,000,000
                                                                                                 -----------------

 Total Liabilities.......................................................................            146,550,967
 Commitment and Contingencies
 Stockholders' Equity:
Preferred Stock, $.01 par value, 25,000,000 shares authorized, none issued...............                     --
Common stock, $.01 par value, 100,000,000 shares authorized, 33,150,000 shares issued and                331,500
  outstanding............................................................................
Additional Paid-In Capital...............................................................            320,822,037
Retained Earnings (net of Dividends declared of $14,661,000).............................             (8,007,600)
Accumulated Other Comprehensive Income...................................................              2,647,077
                                                                                                 -----------------

Total Stockholders' Equity.............................................................              315,793,014
                                                                                                 -----------------

 Total Liabilities and Stockholders' Equity..............................................           $462,343,981
                                                                                                 ==================

The accompanying notes are an integral part of these Consolidated Financial Statements.
</TABLE>
<PAGE>



                            EAGLE BULK SHIPPING INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                             Period from
                                                           January 26, 2005
                                                             (inception) to
                                                           December 31, 2005
                                                           -----------------


 Revenues, net of commissions...........................     $56,066,058

 Vessel Expenses........................................      11,052,429
 Depreciation and Amortization..........................      10,412,227
 General and Administrative Expenses....................       3,491,330
 Management and Other Fees to Affiliates................       6,175,046
 Non-cash Compensation Expense..........................      11,734,812
                                                           -----------------

    Total Operating Expenses............................      42,865,844
                                                           -----------------


 Operating Income.......................................      13,200,214

 Interest Expense.......................................       7,208,641
 Interest Income........................................        (661,827)
                                                           -----------------

    Net Interest Expense................................       6,546,814
                                                           -----------------


 Net Income.............................................     $ 6,653,400
                                                           =================

 Basic and Diluted Income per Share.....................           $0.30

 Weighted Average Shares Outstanding....................      21,968,824

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


<PAGE>



                            EAGLE BULK SHIPPING INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
             FROM JANUARY 26, 2005 (INCEPTION) TO DECEMBER 31, 2005


                                                                     Retained
                                                                     Earnings

                                                        Additional
                                            Common       Paid-In
                                Shares      Shares       Capital     Net Income
                                ------      ------       -------     ----------

Balance at January 26, 2005...           -         $-            $-         $-
Comprehensive Income :
   Net Income.................           -          -             -  6,653,400
   Net Unrealized gains
    on derivatives............           -          -             -          -

Comprehensive Income .........           -          -             -          -
Issuance of Common Stock and
  Capital Contributions.......  12,750,000    127,500    40,716,162          -
Initial Public Offering, net
  of issuance costs ..........  14,400,000    144,000   186,385,290          -
Public Offering, net  of
  issuance costs .............   6,000,000     60,000    81,985,773          -
Cash Dividends................           -          -             -          -
Non-cash Compensation.........           -          -    11,734,812          -

Balance at December 31, 2005..  33,150,000   $331,500  $320,822,037


<TABLE>

                           EAGLE BULK SHIPPING INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
             FROM JANUARY 26, 2005 (INCEPTION) TO DECEMBER 31, 2005


                                                                     Retained
                                                                     Earnings


                                                                Other           Total
                                  Cash          Accumulated    Comprehensive   Stockholders'
                                Dividends        Deficit        Income          Equity
                                ---------        -------        ------          ------
<S>                             <C>             <C>            <C>            <C>
Balance at January 26, 2005...           $-            $-             $-             $-
Comprehensive Income :
   Net Income.................            -     6,653,400              -      6,653,400
   Net Unrealized gains
    on derivatives............            -             -      2,647,077      2,647,077

Comprehensive Income .........            -             -              -      9,300,477
Issuance of Common Stock and
  Capital Contributions.......            -             -              -     40,843,662
Initial Public Offering, net
  of issuance costs ..........            -             -              -    186,529,290
Public Offering, net  of
  issuance costs .............            -             -              -     82,045,773
Cash Dividends................ (14,661,000)  (14,661,000)              -    (14,661,000)
Non-cash Compensation.........            -             -              -     11,734,812

Balance at December 31, 2005..               $(8,007,600)     $2,647,077   $315,793,014
</TABLE>

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




<PAGE>


<TABLE>

                      EAGLE BULK SHIPPING INC. CONSOLIDATED STATEMENT OF CASH FLOWS
                          FROM JANUARY 26, 2005 (INCEPTION) TO DECEMBER 31, 2005
<CAPTION>

<S>                                                                                                       <C>
 Cash Flows from Operating Activities

 Net Income..................................................................................             $6,653,400
 Adjustments to Reconcile Net Income to Net Cash provided by Operating
 Activities: Items included in net income not affecting cash flows:
Depreciation and Amortization................................................................             10,412,227
Amortization of Deferred Financing Costs.....................................................                 98,065
Write-off of Deferred Financing Costs .......................................................              1,130,712
Amortization of Prepaid and Deferred Charter Revenue.........................................                890,500
Non-cash Compensation Expense................................................................             11,734,812
 Changes in Operating Assets and Liabilities:
Accounts Receivable..........................................................................              (281,094)
Prepaid Charter Revenue......................................................................           (10,149,000)
Prepaid Expenses.............................................................................              (513,145)
Accounts Payable.............................................................................              1,620,722
Accrued Interest.............................................................................                514,631
Accrued Expenses.............................................................................                424,669
Deferred Revenue.............................................................................              2,056,500
Drydocking Expenses..........................................................................              (421,682)
Unearned Charter Hire Revenue................................................................              2,444,522
                                                                                               ----------------------

 Net Cash Provided by Operating Activities...................................................             26,615,839
 Cash Flows from Investing Activities
Purchase of Vessels and Improvements.........................................................          (427,965,857)
                                                                                               ----------------------

 Net Cash Used in Investing Activities.......................................................          (427,965,857)
 Cash Flows from Financing Activities
Capital Contribution.........................................................................             40,843,662
Issuance of Common Stock in public offerings.................................................            288,600,000
Equity Issuance Costs........................................................................           (19,784,514)
Bank Borrowings..............................................................................            314,450,000
Repayment of Bank Debt.......................................................................          (174,450,000)
Increase in Restricted Cash..................................................................            (6,624,616)
Deferred Financing Costs.....................................................................            (2,496,986)
Borrowings from Eagle Ventures LLC...........................................................             58,730,434
Repayment of Eagle Ventures LLC Note.........................................................           (58,730,434)
Cash Dividend................................................................................           (14,661,000)
                                                                                               ----------------------

 Net Cash Provided by Financing Activities...................................................            425,876,546
 Net Increase in Cash........................................................................             24,526,528
 Cash at Beginning of Period.................................................................                      --
                                                                                               ----------------------

 Cash at End of Period.......................................................................            $24,526,528
                                                                                               ======================

 Supplemental Cash Flow Information:
Cash paid during the period for Interest (including Fees)....................................             $5,465,233

The  accompanying  notes are an integral  part of these  Consolidated  Financial
Statements.
</TABLE>
<PAGE>



                            EAGLE BULK SHIPPING INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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").   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 Handymax bulk carriers
and the Company operates its business in one business segment.

          The Company is a holding company incorporated on March 23, 2005, under
the laws of the Republic of the Marshall Islands.  Following incorporation,  the
Company merged with Eagle  Holdings LLC, a Marshall  Islands  limited  liability
company  formed on January 26, 2005,  and became a  wholly-owned  subsidiary  of
Eagle Ventures LLC, a Marshall Islands limited liability company. Eagle Ventures
LLC is owned by Kelso  Investments  Associates  VII,  L.P. and KEP VI, LLC, both
affiliates  of  Kelso &  Company,  L.P.  ("Kelso"),  members  of  management,  a
director,   and  outside   investors.   The  merger  was   accounted  for  as  a
reorganization  of entities under common  control.  Eagle Ventures LLC currently
owns  approximately  37.5% of the  Company's  outstanding  common  stock.  Eagle
Ventures LLC is 92.6% owned by affiliates of Kelso & Company, L.P.

          The Company is the sole owner of all of the outstanding  shares of the
Marshall Island incorporated wholly-owned subsidiaries listed below. The primary
activity of each of these subsidiaries is the ownership of a vessel.

<TABLE>

                                                       Owner
 Company                                               Vessel        dwt.     Built      Vessel Acquired
 -------                                               ------        ----     -----      ---------------
<S>                                                    <C>           <C>       <C>      <C>

 Cardinal Shipping LLC................................ Cardinal      55,362     2004     April 18, 2005
 Condor Shipping LLC.................................. Condor        50,206     2001     April 29, 2005
 Falcon Shipping LLC.................................. Falcon        50,206     2001     April 21, 2005
 Griffon Shipping LLC................................. Griffon       46,635     1995     June 1, 2005
 Harrier Shipping LLC................................. Harrier       50,206     2001     April 19, 2005
 Hawk Shipping LLC.................................... Hawk I        50,206     2001     April 26, 2005
 Heron Shipping LLC................................... Heron         52,827     2001     December 1, 2005
 Kite Shipping LLC.................................... Kite          47,195     1997     May 9, 2005
 Merlin Shipping LLC.................................. Merlin        50,296     2001     October 26, 2005
 Osprey Shipping LLC.................................. Osprey I      50,206     2002     August 31, 2005
 Peregrine Shipping LLC............................... Peregrine     50,913     2001     June 30, 2005
 Shikra Shipping LLC.................................. Shikra        41,096     1984     April 29, 2005
 Sparrow Shipping LLC................................. Sparrow       48,225     2000     July 19, 2005
</TABLE>


          The operations of the vessels are managed by a wholly-owned subsidiary
of the  Company,  Eagle  Shipping  International  (USA) LLC, a Marshall  Islands
limited liability company.

          The following table represents certain information about the Company's
revenue earning charters, as of December 31, 2005

<TABLE>

                                 Delivered to                                                   Daily Time
 Vessel                          Charterer                Time Charter Expiration (1)         Charter Hire Rate
 ------                          ---------                ---------------------------         -----------------
<S>                              <C>                      <C>                                  <C>
 Cardinal....................... April 19, 2005           March 2007 to June 2007                 $26,500
 Condor......................... April 30, 2005           November 2006 to March 2007             $24,000
 Falcon......................... April 22, 2005           February 2008 to June 2008              $20,950
 Griffon........................ June 3, 2005             February 2006                           $28,000
 Harrier........................ April 21, 2005           March 2007 to June 2007                 $23,750
 Hawk I......................... April 28, 2005           March 2007 to June 2007                 $23,750
 Heron.......................... December 11, 2005        November 2007 to February 2008          $24,000
 Kite........................... May 10, 2005             March 2006 to May 2006                  $25,000
 Merlin......................... October 26, 2005         October 2007 to December 2007           $24,000
 Osprey I....................... August 31, 2005          July 2008 to November 2008              $21,000
 Peregrine...................... July 1, 2005             October 2006 to January 2007            $24,000
 Shikra......................... April 30, 2005           July 2006 to November 2006              $22,000
 Sparrow........................ July 20, 2005            November 2006 to February 2007          $22,500
</TABLE>

(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.

          During the period from  inception  on January 26, 2005 to December 31,
2005, four charterers  individually accounted for more than 10% of the Company's
gross time charter revenue as follows:

 Charterer                                                 % of time
                                                         charter revenue
                                                         ---------------

 Charterer A..................................               19.9%
 Charterer B..................................               17.2%
 Charterer C..................................               11.3%
 Charterer D..................................               10.4%

Note 2. Significant Accounting Policies:

(a)  Principles  of  Consolidation:   The  accompanying  consolidated  financial
     statements  have been prepared in accordance with U.S.  generally  accepted
     accounting  principles and include the accounts of Eagle Bulk Shipping Inc.
     and its wholly-owned  subsidiaries.  All significant  intercompany balances
     and transactions were eliminated upon consolidation.

(b)  Use of Estimates:  The preparation of consolidated  financial statements in
     conformity with U.S.  generally  accepted  accounting  principles  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities  and disclosure of contingent  assets and
     liabilities at the date of the  consolidated  financial  statements and the
     reported  amounts of revenues and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

(c)  Other Comprehensive Income: The Company follows the provisions of Statement
     of   Financial   Accounting   Standards   ("SFAS")   No.  130,   "Reporting
     Comprehensive  Income",  which requires  separate  presentation  of certain
     transactions,  which are recorded  directly as components of  stockholders'
     equity.  The Company  records  the fair value of interest  rate swaps as an
     asset or liability on the balance sheet. The effective  portion of the swap
     is recorded in accumulated other comprehensive income. Comprehensive Income
     is composed of net income and gains or losses relating to the interest rate
     swap.

(d)  Cash, Cash  Equivalents and Restricted  Cash: The Company  considers highly
     liquid  investments  such as time deposits and certificates of deposit with
     an  original  maturity  of  three  months  or less to be cash  equivalents.
     Restricted  Cash includes  minimum cash deposits  required to be maintained
     with a bank for loan compliance purposes and an amount of $124,616 which is
     collateralizing a letter of credit.

(e)  Accounts   Receivable:   Accounts  receivable  includes   receivables  from
     charterers  for  hire.  At  each  balance  sheet  date,   all   potentially
     uncollectible  accounts  are  assessed  for  purposes  of  determining  the
     appropriate provision for doubtful accounts.

(f)  Insurance  Claims:  Insurance  claims are recorded on an accrual  basis and
     represent the claimable expenses, net of deductibles, incurred through each
     balance  sheet date,  which are  expected to be  recovered  from  insurance
     companies.  Any  remaining  costs to  complete  the claims are  included in
     accrued liabilities.

(g)  Vessels at Cost:  Vessels are stated at cost which consists of the contract
     price  and any  material  expenses  incurred  upon  acquisition  for  major
     improvements and delivery expenses.

(h)  Intangibles:   Where  the  Company  identifies  any  intangible  assets  or
     liabilities  associated  with the  acquisition  of a  vessel,  the  Company
     records all  identified  tangible and  intangible  assets or liabilities at
     fair value.  Fair value is  determined  by reference to market data and the
     amount of  expected  future cash  flows.  The  Company  values any asset or
     liability arising from the market value of the time charters assumed when a
     vessel is acquired. When the time charters assumed are above market charter
     rates,  the difference  between the market charter rate and assumed charter
     rate is recorded as Prepaid Charter Revenue. When the time charters assumed
     are below market charter rates,  the difference  between the market charter
     rate and assumed charter rate is recorded as Deferred Revenue.  Such assets
     and liabilities  are amortized to revenue over the remaining  period of the
     time charters.

(i)  Impairment of Long-Lived  Assets: The Company uses SFAS No. 144 "Accounting
     for the  Impairment  or Disposal of  Long-lived  Assets,"  which  addresses
     financial  accounting  and  reporting  for the  impairment  or  disposal of
     long-lived  assets.  The  standard  requires  that,  long-lived  assets and
     certain identifiable  intangibles held and used or disposed of by an entity
     be reviewed  for  impairment  whenever  events or changes in  circumstances
     indicate  that the  carrying  amount of the assets may not be  recoverable.
     When the estimate of undiscounted cash flows,  excluding  interest charges,
     expected to be  generated by the use of the asset is less than its carrying
     amount,  the Company  should  evaluate  the asset for an  impairment  loss.
     Measurement of the impairment  loss is based on the fair value of the asset
     as provided by third  parties or  discounted  cash flow  analyses.  In this
     respect, management regularly reviews the carrying amount of the vessels in
     connection with the estimated  recoverable amount for each of the Company's
     vessels.

(j)  Vessel  Depreciation:  Depreciation  is  computed  using the  straight-line
     method over the estimated useful life of the vessels, after considering the
     estimated  salvage  value.  Each  vessel's  salvage  value  is equal to the
     product of its  lightweight  tonnage and estimated  scrap rate.  Management
     estimates the useful life of the Company's  vessels to be 28 years from the
     date  of  initial  delivery  from  the  shipyard  to  the  original  owner.
     Management  estimates  the  scrap  rate to be  $150  per  lightweight  ton.
     Secondhand  vessels  are  depreciated  from the  date of their  acquisition
     through their remaining estimated useful life.

(k)  Accounting for Dry-Docking  Costs:  The Company follows the deferral method
     of  accounting  for  dry-docking  costs whereby  actual costs  incurred are
     deferred and are amortized on a straight-line basis over the period through
     the date the next  dry-docking  is  scheduled  to become  due.  Unamortized
     dry-docking  costs of vessels that are sold are written off and included in
     the  calculation  of the resulting gain or loss in the year of the vessels'
     sale.

(l)  Financing  Costs:  Fees  incurred for  obtaining  new loans or  refinancing
     existing ones are deferred and amortized to interest  expense over the life
     of  the  related  debt.  Unamortized  fees  relating  to  loans  repaid  or
     refinanced are expensed in the period the repayment or refinancing is made.

(m)  Accounting  for Revenues and Expenses:  Revenues are generated  from voyage
     and time charter  agreements.  Time charter  revenues are  recognized  on a
     straight-line basis over the term of the respective time charter agreements
     as service is provided.  Under a voyage charter the revenues and associated
     voyage costs are  recognized  on a pro-rata  basis over the duration of the
     voyage.  Probable  losses on voyages are  provided  for in full at the time
     such  losses  can be  estimated.  A voyage is deemed to  commence  upon the
     completion of discharge of the vessel's previous cargo and is deemed to end
     upon the  completion  of discharge of the current  cargo.  Voyage  expenses
     primarily  include only those specific costs which are borne by the Company
     in connection with voyage charters which would otherwise have been borne by
     the charterer  under time charter  agreements.  These expenses  principally
     consist of fuel and port charges.  Demurrage income represents  payments by
     the charterer to the vessel owner when loading or discharging time exceeded
     the  stipulated  time in the voyage  charter and is recognized as incurred.
     Time charter hire and voyage  charter  revenue  brokerage  Commissions  are
     recorded  in the same  period  as these  revenues  are  recognized.  Vessel
     operating expenses are accounted for on the accrual basis.

(n)  Unearned  Charter Hire Revenue:  Unearned  charter hire revenue  represents
     cash  received from  charterers  prior to the time such amounts are earned.
     These amounts are  recognized as revenue as services are provided in future
     periods.

(o)  Repairs and Maintenance:  All repair and maintenance  expenses are expensed
     as incurred and is recorded in Vessel Expenses.

(p)  Protection and Indemnity  Insurance:  The Vessel's Protection and Indemnity
     Insurance is subject to additional  premiums referred to as "back calls" or
     "supplemental  calls" which are  accounted  for on an accrual  basis and is
     recorded in Vessel Expenses.

(q)  Derivatives:  SFAS No. 133,  "Accounting  for  Derivative  Instruments  and
     Hedging  Activities"  as  amended  establishes   accounting  and  reporting
     standards  requiring that every derivative  instrument  (including  certain
     derivative  instruments  embedded  in other  contracts)  be recorded in the
     balance  sheet as either an asset or liability  measured at its fair value,
     with  changes  in the  derivatives'  fair  value  recognized  currently  in
     earnings unless specific hedge accounting criteria are met.

(r)  Earnings  Per Share:  Earnings  per share is computed  by dividing  the net
     income by the weighted average number of common shares  outstanding  during
     the period.  During  2005,  the Company  did not have  dilutive  securities
     outstanding.

(s)  Segment Reporting:  The Company reports financial information and evaluates
     its operations by charter revenues and not by the length of ship employment
     for its customers,  i.e.,  spot or time charters.  The Company does not use
     discrete  financial  information to evaluate the operating results for each
     such type of charter. Although revenue can be identified for these types of
     charters,  management cannot and does not identify expenses,  profitability
     or other financial information for these charters. As a result, management,
     including the chief operating  decision maker,  reviews  operating  results
     solely by revenue per day and  operating  results of the fleet and thus the
     Company has  determined  that it  operates  under one  reportable  segment.
     Furthermore,  when the  Company  charters  a  vessel  to a  charterer,  the
     charterer  is free to trade the  vessel  worldwide  and,  as a result,  the
     disclosure of geographic information is impracticable.

(t)  Interest  Rate Risk  Management:  The  Company  is exposed to the impact of
     interest rate changes.  The Company's  objective is to manage the impact of
     interest  rate  changes on earnings and cash flows of its  borrowings.  The
     Company may use interest rate swaps to manage net exposure to interest rate
     changes related to its borrowings.

(u)  Federal  Income  Taxes:  The  Company  is a Marshall  Islands  Corporation.
     Pursuant to various tax treaties  and the current  United  States  Internal
     Revenue  Code,  the Company does not believe its  operations  prospectively
     will be subject to federal income taxes in the United States of America.

Note 3. Recent Accounting Pronouncements:

          On December 16, 2004,  Statement of Financial Accounting Standards No.
123 (revised 2004) (SFAS No. 123(R)),  "Share-Based  Payment," was issued.  SFAS
No. 123(R) is a revision of SFAS No. 123 and supersedes APB No. 25. The approach
in SFAS No.  123(R)  is  similar  to the  approach  described  in SFAS No.  123.
However,  SFAS No.  123(R)  requires  all  share-based  payments  to  employees,
including  grants of employee  stock  options,  to be  recognized  in the income
statement  based on their fair values.  The Company  adopted  SFAS  No.123(R) at
inception.

Note 4. Vessels and Vessel Improvements

          During  the year  2005,  the  Company  through  its  subsidiaries  has
acquired 13 Handymax  dry bulk  vessels at a total cost of  $427,144,953.  These
costs consists of aggregate purchase contract price of $434,877,903, $359,550 in
additional  costs relating to the acquisition of the vessels,  and $8,092,500 in
net prepaid  charter  revenue  adjustments  relating to the  assumption  of time
charters  associated with certain of the acquired vessels.  The Company has also
capitalized $820,904 of costs relating to vessel improvements.

Note 5. Accrued Liabilities

          Accrued liabilities consist of:

                                                      December 31, 2005

 Vessel Expenses.....................................           261,496
 General and Administrative, and Other Expenses......           163,173
                                                     -------------------

 Balance, December 31, 2005..........................          $424,669
                                                     ===================

Note 6.  Long-Term Debt

          The  Company's  subsidiaries  had  initially  entered into a term loan
facility with an aggregate  principal  balance of $185,950,000.  Concurrent with
its initial  public  offering,  the Company used part of the  proceeds  from the
initial public offering to repay $125,950,000 of the principal balance under the
term loan facility.

          Subsequent to the Company's initial public offering,  in June 2005 the
Company borrowed  $28,500,000 from the term loan facility to fund the balance of
the purchase price for its ninth vessel, PEREGRINE.

          In July 2005, the Company entered into a $330,000,000 revolving credit
facility. The facility was used to refinance the existing term loan.

          From July 2005 to October 2005, the Company borrowed $100,000,000 from
the  revolving  credit  facility  to  fund  the  following   vessel   purchases:
$30,600,000  to  fund  the  balance  of  the  purchase  price  of  the  SPARROW;
$30,900,000  to fund  the  balance  of the  purchase  price  of the,  OSPREY  I;
$7,000,000 to fund the deposits  representing  the 10% of the purchase price for
the MERLIN and HERON;  $31,500,000  to fund the balance of the purchase price of
the MERLIN.

          The Company used a portion of the proceeds from its  follow-on  equity
offering  to repay  $48,500,000  of the  principal  balance  under  the from the
revolving credit facility.

          As of December 31, 2005, the Company's debt consisted of  $140,000,000
in borrowings under the revolving credit facility.

          The new credit  facility has a facility  limit of  $330,000,000  and a
term of ten years. The Company is permitted to borrow the remaining  capacity of
$190  million,  which amount  includes  amounts  available to borrow for working
capital purposes as described  below, in connection with future  acquisitions of
dry bulk carriers  between  25,000 dwt and 85,000 dwt that are not older than 10
years.  The Company is permitted to borrow up to $10,000,000 at any one time for
working  capital  purposes  during an initial period of 18 months from the first
draw down date,  after which time the  Company's  ability to borrow  amounts for
working  capital  purposes will be subject to review and reapproval on an annual
basis.

          Under the terms of the revolving credit  agreement,  the facility will
be  available  in full for five  years  and  there  are no  principal  repayment
obligations for the first five years.  Over the remaining  period of five years,
the amount  available  under the facility will reduce in semi-annual  amounts of
$20,500,000 with a final reduction of $125,000,000 occurring simultaneously with
the last semi-annual reduction. The credit facility bears interest at LIBOR plus
a margin  of  0.95%.  The  Company  must also pay a fee of 0.4% per annum on the
unused portion of the revolving credit facility on a quarterly basis.

          The Company paid an arrangement  fee of $1,200,000 in connection  with
the credit facility.

          The Company's  ability to borrow amounts under the new credit facility
is subject  to  satisfaction  of  certain  customary  conditions  precedent  and
compliance  with  terms  and  conditions  included  in the  loan  documents.  In
connection with vessel acquisitions,  amounts borrowed may not exceed 60% of the
value of the  vessels  securing  the  Company's  obligations  under  the  credit
facility. The Company's ability to borrow such amounts, in each case, is subject
to its lender's approval of the vessel  acquisition.  The lender's approval will
be  based  on the  lender's  satisfaction  of the  Company's  ability  to  raise
additional  capital through equity issuances in amounts acceptable to the lender
and the proposed employment of the vessel to be acquired.

          The Company's  obligations  under the credit  facility is secured by a
first  priority  mortgage  on each of the  vessels  in its fleet and such  other
vessels that it may from time to time include with the approval of the lender, a
first  assignment of all freights,  earnings,  issuances and  compensation.  The
Company's new credit facility will also limit its ability to create liens on its
assets in favor of other parties. The Company may grant additional security from
time to time in the future.

          The new credit  facility,  as amended,  contains  financial  covenants
requiring  the Company,  among other things,  to ensure that:  (1) the aggregate
market value of the vessels in the Company's  fleet that secure its  obligations
under the new credit facility,  as determined by an independent  shipbroker on a
charter-free  basis, at all times exceeds 130% of the aggregate principal amount
of debt  outstanding  under the new credit  facility  and the notional or actual
cost of  terminating  any related  hedging  arrangements;  (2) to the extent the
Company's  debt  during any  accounting  period is less than  $200,000,000,  the
Company's  total  assets minus debt will not be less than  $100,000,000;  to the
extent  the  Company's  debt  during  any  accounting  period  is  greater  than
$200,000,000,  the  Company's  total  assets  minus  debt  will not be less than
$150,000,000; (3) the Company's EBITDA, as defined in the credit agreement, will
at all times be not less than 2.0x the aggregate amount of interest incurred and
net amounts payable under interest rate hedging arrangements during the relevant
period;  and (4) the Company  maintains  with the lender  $500,000 per vessel in
addition to an amount adequate to meet anticipated capital  expenditures for the
vessel over a 12 month  period.  Such cash  deposits are recorded in  Restricted
Cash.

          For the purposes of the credit facility,  the Company's "total assets"
will be defined to include its tangible fixed assets and its current assets,  as
set forth in the consolidated financial statements, except that the value of any
vessels in its fleet that secure its  obligations  under the new credit facility
will be measured by their fair market value rather than their  carrying value on
its consolidated balance sheet.

          The Company's revolving credit facility permits it to pay dividends in
amounts up to its earnings before extraordinary or exceptional items,  interest,
taxes,  depreciation  and  amortization  (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,  provided
that there is not a default or breach of loan covenant under the credit facility
and the  payment of the  dividends  would not result in a default or breach of a
loan covenant.

          From the  inception of the Company's  debt through  December 31, 2005,
interest  rates  ranged  from 4.10% to 5.49%,  including  a margin of 0.95% over
LIBOR. The weighted average effective interest rate was 4.69%.

Interest Expense for the period ended December 31, 2005 consists of:

 Loan Interest.................................................      $4,855,054
 Commitment Fees...............................................         516,588
 Eagle Ventures Note Interest..................................         608,222
 Amortization of Deferred Financing Costs......................          98,065
 Write-off of Deferred Financing Costs ........................       1,130,712
                                                               -----------------

 Total Interest Expense........................................      $7,208,641
                                                               =================

 Interest-Rate Swaps

          The Company entered into interest rate swaps to effectively  convert a
portion  of its debt  from a  floating  to a  fixed-rate  basis.  The  swaps are
designated and qualify as cash flow hedges. As of December 31, 2005, the Company
had  entered  into  interest  rate  swap  contracts  for  notional   amounts  of
$100,000,000  and  $30,000,000.   These  contracts  mature  in  September  2010.
Exclusive of a margin of 0.95%,  the Company will pay 4.22% and 4.54% fixed-rate
interest,  respectively,  and receive  floating-rate  interest  amounts based on
three-month  LIBOR settings.  The Company records the fair value of the interest
rate swap as an asset or liability on the balance sheet.  The effective  portion
of the swap is recorded in accumulated other  comprehensive  income. At December
31, 2005, the Company recorded an asset of $2,647,077 which is included in Other
Assets in the accompanying balance sheet.

Note 7. Fair Value of Financial Instruments

          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 credit agreement and
the other floating rate loans 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.

Note 8.  Related Party Transactions

          The Company had borrowed  $58,730,434  from Eagle  Ventures  LLC. This
borrowing  bore  interest  at 7%.  Such  amount was repaid  along with  interest
amounting to $608,222 upon the closing of the Company's initial public offering.

          The Company had a financial  advisory agreement dated February 1, 2005
with Kelso. Under the terms of the agreement the Company was to pay Kelso annual
fees of up to $500,000.  The Company terminated certain of its obligations under
this agreement, including its obligation to pay the annual fees of $500,000, for
a one-time  payment of  $1,000,000.  The agreement also provided for Kelso to be
paid fees in connection with other services.

         In the period ended December 31, 2005, the Company paid $5,175,046 in
fees to Kelso and certain non-management affiliates of Eagle Ventures LLC for
investment banking services pursuant to the financial advisory agreement. This
fee was payable in connection with Kelso assisting the Company in its strategic
planning, obtaining debt and equity financing and acquiring vessels.

Note 9.  Commitments and Contingencies

 Vessel Technical Management Contract

          The Company entered into technical  management  agreements for each of
its vessels with V. Ships Management Ltd., an independent  technical manager. V.
Ships is paid a technical management fee of $8,333 per vessel per month.

Operating Lease

          In December 2005,  the Company  entered into a lease for office space.
The lease is secured by a Letter of Credit backed by cash collateral of $124,616
which amount is recorded  under  Restricted  Cash.  The Letter of Credit amounts
decline to zero at the conclusion of the lease.  The future minimum  commitments
under lease obligations for office space are as follows, and will be recorded:

 2006.....................................         $  190,951
 2007.....................................            250,521
 2008.....................................            260,634
 2009.....................................            270 814
 2010.....................................            273 193
 2011.....................................             68,858
                                          --------------------
 Total....................................        $ 1,314,971
                                          ====================

Note 10.  Earnings Per Common Share

          The computation of earnings per share is based on the weighted average
number of common shares outstanding during the period. The Company does not have
any potentially dilutive securities outstanding.  Accordingly, basic and diluted
income per share is the same.

Note 11.  Non-cash Compensation

          Members  of  the  Company's   management  have  been  awarded  profits
interests (and in the future others having senior  management  and/or  strategic
planning-type  responsibilities  may be awarded  similar  profits  interests) in
Eagle  Ventures LLC that may entitle such persons to an economic  interest of up
to 16.7% on a fully diluted basis  (assuming all profits  interests were vested)
in any  appreciation in the value of the assets of Eagle Ventures LLC (including
shares of the Company's  common stock owned by Eagle Ventures LLC when sold). In
all,  one-fourth of the profits interests are  service-related and vest in equal
three-month  installments  over four years (the vesting of such  service-related
profits interests is subject to continued  employment with Eagle Ventures LLC or
its affiliates at the end of each such  three-month  period),  and the remaining
profits interests are performance-related. Pursuant to an amendment to the Eagle
Ventures LLC limited liability company agreement, 44% of the performance-related
profits  interests  became fully vested upon the  consummation  of the Company's
initial public offering (or an economic  interest in  approximately  6.2% of the
appreciation of the assets of Eagle Ventures LLC on a fully diluted basis taking
into  account the vesting of only such  profits  interests),  and the  remaining
portion  of  the  performance-related  profits  interests  will  vest  based  on
affiliates  of Kelso  achieving  certain  multiples on their  original  indirect
investment  in the  Company,  subject  to an  internal  rate of return  minimum.
Retention  of  the  non-accelerated  performance-related  profits  interests  is
subject to continued employment with Eagle Ventures LLC or its affiliates.

          The vesting of profits  interests  may be further  accelerated  in the
future by the  compensation  committee  of Eagle  Ventures  LLC.  These  profits
interests  will dilute only the  interests of owners of Eagle  Ventures LLC, and
will not dilute direct  holders of the  Company's  common  stock.  However,  the
Company's income statement reflects non-cash charges for compensation related to
the profits interests.

          For the period from  inception  in January  26,  2005 to December  31,
2005, the Company recorded a non-cash  compensation  charge of $11.7 million. Of
that  charge,   approximately  $9.2  million  relates  to  the  portion  of  the
performance-related  profits  interests  that  vested upon  consummation  of the
Company's   initial  public  offering.   The  remaining  $2.5  million  non-cash
compensation   charge  was  taken  as  a  result  of  the   service-related  and
non-accelerated  performance-related profits interests. The Company is recording
compensation charges relating to the service-related profits interests over four
years. The  non-accelerated  performance related profits interests vest based on
affiliates of Kelso achieving certain multiples on their original  investment in
the assets of Eagle Ventures LLC through the receipt of distributions from Eagle
Ventures LLC. The vesting  occurs  ratably upon achieving a return on investment
ranging from two times to four times the original  investment.  To calculate the
non-cash compensation charge that is reflected in the Company's income statement
for the non-accelerated  performance-related  profits interests, the Company has
assumed that these profits  interests will vest four years after their issuance.
The Company is therefore recording compensation charges relating to such profits
interests over four years.

          The non-cash  compensation  charge will be recorded as an expense over
the estimated  service period in accordance  with SFAS No. 123(R).  The non-cash
compensation  charges  will be based on the fair value of the profits  interests
which will be "marked to market" at the end of each reporting period. The impact
of any  changes in the  estimated  fair value of the profits  interests  will be
recorded as a change in estimate cumulative to the date of change. The impact on
the  amortization  of the  compensation  charge of any changes to the  estimated
vesting periods for the  performance-related  profits interests will be adjusted
prospectively as a change in estimate.

Note 12.  Capital Stock

Common  Stock

          On March 31, 2005, in connection with its formation,  the Company sold
250 shares of its common stock to Eagle  Ventures LLC for an aggregate  purchase
price of $250.  On March  31,  2005,  in  connection  with the  merger  of Eagle
Holdings  LLC with  and into the  Company,  all of the  issued  and  outstanding
membership  interests in Eagle  Holdings LLC (which were held by Eagle  Ventures
LLC) were converted into and exchanged for, and the Company issued 250 shares of
its common stock to Eagle Ventures LLC. An additional  $21,384 was recorded as a
subscription  receivable.  On June 14, 2005 the Company  effected a 25,500 for 1
stock  split in the form of a stock  dividend.  As a result of the stock  split,
Eagle  Ventures  LLC  received,  in the  form  of a stock  dividend,  12,749,500
additional  shares of the Company's  common stock.  All share and per share data
gives  retroactive  effect  to the stock  split.  As of March  31,  2005,  Eagle
Ventures LLC had made equity contributions to the Company (as successor to Eagle
Holdings LLC) of $40,822,278.

          On June 23, 2005, the Company completed its initial public offering by
issuing and selling to the public  14,400,000  shares of common  stock at $14.00
per  share,   raising  gross  proceeds  of  $201,600,000   before  deduction  of
underwriting  discounts,  commissions and expenses of  $15,070,710.  The Company
used $185,288,656 of the net proceeds from the offering to repay $125,950,000 of
the indebtedness  under its existing loan facility and $59,338,656 owed to Eagle
Ventures under a promissory note, including accrued interest.

          On October 28, 2005, the Company sold  6,000,000  shares of its common
stock in a public  offering  at a price  of  $14.50  per  share,  raising  gross
proceeds of $87,000,000 before deduction of underwriting discounts,  commissions
and  expenses of  $4,954,227.  The sale  included an  over-allotment  portion of
825,000  shares of which 325,000  shares were offered by Eagle Ventures LLC. The
Company  used  $80,000,000  of the net  proceeds  from  the  offering  to  repay
$48,500,000 of its outstanding indebtedness under its revolving credit facility,
which reduced its outstanding debt to $140,000,000,  and used $31,500,000 of the
net  proceeds to pay the balance of the  purchase  price for the HERON which was
acquired in December 2005.

Dividends

          The  Company's  current  policy is to declare  quarterly  dividends to
stockholders  in  February,  April,  July and  October.  Payment of dividends is
limited  by the  terms of  certain  agreements  to  which  the  Company  and its
subsidiaries  are party.  The Company's  revolving credit facility permits it to
pay  quarterly  dividends  in  amounts  up  to  its  quarterly  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 there is not a default or breach of loan covenant under the credit
facility  and the  payment  of the  dividends  would not  result in a default or
breach  of a loan  covenant.  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.  However, any determination to pay dividends in the future will
be at the  discretion  of the  Board  of  Directors  and  will  depend  upon the
Company's  results of operations,  financial  condition,  capital  restrictions,
covenants and other factors deemed relevant by the Board of Directors.

          On October 5, 2005 the Company's board of directors voted to declare a
cash  dividend  for the third  quarter of 2005 on its common  stock of $0.54 per
share,  based on  27,150,000  shares of common  stock  outstanding,  payable  on
October  31, 2005 to all  shareholders  of record as of October  17,  2005.  The
aggregate  amount of the cash  dividend paid to the  Company's  shareholders  on
October 31, 2005 was $14,661,000.

Note 13.  2005 Stock Incentive Plan

          The Company  adopted the 2005 Stock  Incentive Plan for the purpose of
affording  an  incentive  to eligible  persons.  The 2005 Stock  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 stock 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 has
been  authorized for issuance under the plan. As of December 31, 2005, no grants
have been made under the plan.

Note 14.  Subsequent Events

          On January 30, 2006 the Company's  Board of Directors  declared a cash
dividend for the fourth quarter of 2005 of $0.57 per share,  based on 33,150,000
shares  of  common  stock  outstanding,  payable  on  February  24,  2006 to all
shareholders of record as of February 15, 2006. The aggregate amount of the cash
dividend  paid  to  the  Company's   shareholders   on  February  24,  2006  was
$18,895,500.

          On January 28, 2006, the limited  liability company agreement of Eagle
Ventures  LLC was  amended  and  restated.  This  provided  for the award of the
previously  unallocated  profits  interests  in Eagle  Ventures  LLC to  certain
employees and adjusted the manner  distributions  are made by Eagle  Ventures in
connection with these newly awarded profits  interests.  In most other respects,
the terms of these  newly  awarded  profits  interests  are similar in nature to
those discussed in Note 11.

On March 8, 2006, the limited  liability company agreement of Eagle Ventures LLC
was amended  and  restated  again.  This  provided  for an  acceleration  of the
retention  schedule  applicable to all service based profits interests that were
allocated  prior to  January  28,  2006.  In  addition,  this  provided  for the
immediate  vesting of 25% of the  service-related  profits  interests  that were
granted on January 28, 2006 with the remaining  amount vesting over a three-year
period.

25083 0001 652204