Edgar Filing: Eagle Bulk Shipping Inc.

d1098026_10-q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

(Mark One)

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

	For the quarterly period ended March 31, 2010

	OR

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

	For the transition period from to

________________

Commission File Number 001–33831

EAGLE BULK SHIPPING INC.

(Exact name of Registrant as specified in its charter)

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

477 Madison Avenue

New York, New York 10022

(Address of principal executive offices)(Zip Code)

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

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

YES [X] NO [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES [_] NO [_]

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

Large accelerated Filer [_] Accelerated Filer [X] Non-accelerated Filer [_] Smaller reporting company [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [_] NO [X]

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

Common Stock, par value $0.01 per share, 62,126,665 shares outstanding as of May 7, 2010.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009	3
	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2010 and 2009	4
	Consolidated Statement of Stockholders' Equity (unaudited) for the three months ended March 31, 2010	5
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2010 and 2009	6
	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	27

Item 4.	Controls and Procedures	27

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securities	28
Item 4.	Submission of Matters to a Vote of Security Holders	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	Signatures	29

Part 1 : FINANCIAL INFORMATION

Item 1 : Financial Statements

EAGLE BULK SHIPPING INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2010			December 31, 2009
ASSETS:
Current assets:
Cash and cash equivalents	$	84,153,391		$	71,344,773
Accounts receivable		8,842,296			7,443,450
Prepaid expenses		3,240,664			4,989,446
Fair value above contract value of time charters acquired		550,213			427,359
Total current assets		96,786,564			84,205,028
Noncurrent assets:
Vessels and vessel improvements, at cost, net of accumulated depreciation of $138,461,809 and $125,439,001, respectively		1,274,757,629			1,010,609,956
Advances for vessel construction		302,583,979			464,173,887
Other fixed assets, net of accumulated amortization of $76,049 and $59,519, respectively		254,713			258,347
Restricted cash		16,776,056			13,776,056
Deferred drydock costs		5,281,565			5,266,289
Deferred financing costs		19,912,857			21,044,379
Fair value above contract value of time charters acquired		3,938,242			4,103,756
Fair value of derivative instruments		—			4,765,116
Total noncurrent assets		1,623,505,041			1,523,997,786
Total assets	$	1,720,291,605		$	1,608,202,814
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,582,920		$	2,289,333
Accrued interest		7,824,844			7,810,931
Other accrued liabilities		6,440,541			3,827,718
Deferred revenue and fair value below contract value of time charters acquired		6,385,258			7,718,902
Unearned charter hire revenue		6,821,703			4,858,133
Total current liabilities		33,055,266			26,505,017
Noncurrent liabilities:
Long-term debt		1,002,143,426			900,170,880
Deferred revenue and fair value below contract value of time charters acquired		25,801,147			26,389,796
Fair value of derivative instruments		33,026,330			35,408,049
Total noncurrent liabilities		1,060,970,903			961,968,725
Total liabilities		1,094,026,169			988,473,742
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, 62,126,665 shares issued and outstanding		621,267			621,267
Additional paid-in capital		728,596,252			724,250,125
Retained earnings (net of dividends declared of $262,118,388 as of March 31, 2010 and December 31, 2009, respectively)		(69,925,753	)		(74,499,387	)
Accumulated other comprehensive loss		(33,026,330	)		(30,642,933	)
Total stockholders' equity		626,265,436			619,729,072
Total liabilities and stockholders' equity	$	1,720,291,605		$	1,608,202,814

________________

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

EAGLE BULK SHIPPING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended
	March 31, 2010			March 31, 2009


Revenues, net of commissions	$	54,243,725		$	55,977,666
Vessel expenses		15,362,733			13,071,197
Depreciation and amortization		13,706,370			10,290,916
General and administrative expenses		9,487,423			8,903,028
Total operating expenses		38,556,526			32,265,141
Operating income		15,687,199			23,712,525
Interest expense		11,176,987			6,486,317
Interest income		(63,422	)		(10,573	)
Net interest expense		11,113,565			6,475,744
Net income	$	4,573,634		$	17,236,781
Weighted average shares outstanding :
Basic		62,126,665			47,031,300
Diluted		62,282,017			47,031,300
Per share amounts:
Basic net income	$	0.07		$	0.37
Diluted net income	$	0.07		$	0.37

________________

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

EAGLE BULK SHIPPING INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2010

	Common Shares		Common Shares Amount		Additional Paid-In Capital		Net Income		Accumulated Deficit			Other Comprehensive Income (Loss			Total Stockholders' Equity

Balance at December 31, 2009		62,126,665	$	621, 267	$	724,250,125				(74,499,387	)	$	(30,642,933	)	$	619,729,072
Comprehensive income :
Net income		—		—		—	$	4,573,634		4,573,634			—			4,573,634
Net unrealized losses on derivatives		—		—		—		—		—			(2,383,397	)		(2,383,397	)
Comprehensive income		—		—		—		—		—			—			2,190,237
Non-cash compensation		—		—		4,346,127		—		—			—			4,346,127

Balance at March 31, 2010		62,126,665	$	621, 267	$	728,596,252			$	(69,925,753	)	$	(33,026,330	)	$	626,265,436

________________

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

EAGLE BULK SHIPPING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended
	March 31, 2010			March 31, 2009
Cash flows from operating activities:
Net income	$	4,573,634		$	17,236,781
Adjustments to reconcile net income to net cash provided by operating activities:
Items included in net income not affecting cash flows:
Depreciation		13,039,338			9,694,910
Amortization of deferred drydocking costs		667,032			596,006
Amortization of deferred financing costs		584,717			240,057
Amortization of fair value below contract value of time charter acquired		(864,628	)		(649,731	)
Non-cash compensation expense		4,346,127			3,896,284
Changes in operating assets and liabilities:
Accounts receivable		(1,398,846	)		(884,324	)
Other assets		—			(3,549,732	)
Prepaid expenses		1,748,782			(79,954	)
Accounts payable		3,293,587			1,386,575
Accrued interest		2,051,673			350,812
Accrued expenses		2,612,823			1,822,404
Drydocking expenditures		(682,308	)		(86,694	)
Deferred revenue		(1,015,005	)		13,312,978
Unearned charter hire revenue		1,963,570			(262,193	)
Net cash provided by operating activities		30,920,496			43,024,179
Cash flows from investing activities:
Vessels and vessel improvements and advances for vessel construction		(117,071,528	)		(44,271,329	)
Purchase of other fixed assets		(12,896	)		—
Net cash used in investing activities		(117,084,424	)		(44,271,329	)
Cash flows from financing activities:
Bank borrowings		101,972,546			12,875,000
Changes in restricted cash		(3,000,000	)		(1,000,000	)
Deferred financing costs		—			(939,954	)
Net cash provided by financing activities		98,972,546			10,935,046
Net increase in cash		12,808,618			9,687,896
Cash at beginning of period		71,344,773			9,208,862
Cash at end of period	$	84,153,391		$	18,896,758

________________

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

EAGLE BULK SHIPPING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Basis of Presentation and General Information

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

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

As of March 31, 2010, the Company's operating fleet consisted of 33 vessels. The Company has an extensive vessel newbuilding program and as of March 31, 2010 had contracts for the construction of 14 vessels. The following tables present certain information concerning the Company's fleet as of March 31, 2010:

No. of Vessels	Dwt		Vessel Type	Delivery		Employment

Vessels in Operation
33 Vessels		1,746,953	30 Supramax			Time Charter
			3 Handymax			Time Charter
Vessels to be delivered
1 Vessels		53,100	53,100 dwt series Supramax		2010	Charter Free
13 Vessels		754,000	58,000 dwt series Supramax		2010-2011	13 Vessels on Time Charter

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

Charterer	% of Consolidated time charter revenue
	Three Months Ended March 31,
	2010			2009

Charterer A		22.0	%		20.3	%
Charterer B		12.6	%		12.0	%
Charterer C		-			16.0	%
Charterer D		13.9	%		18.2	%
Charterer E		13.0	%		-

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

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

Note 2. New Accounting Pronouncements

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

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

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

Note 3. Vessels

a. Vessel and Vessel Improvements

At March 31, 2010, the Company's operating fleet consisted of 33 dry bulk vessels. In January the Company took delivery of the Thrasher, Crane, Egret and Golden Eagle. In February the Company took delivery of the Avocet and Imperial Eagle.

Vessel and vessel improvements:

Vessels and Vessel Improvements, at December 31, 2009	$	1,010,609,956
Purchase of Vessel Improvements		797,258
Delivery of Newbuild Vessels		276,373,223
Depreciation Expense		(13,022,808	)
Vessels and Vessel Improvements, at March 31, 2010	$	1,274,757,629

b. Advances for Vessel Construction

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

As of March 31, 2010, the Company had 14 Supramax vessels under construction at the shipyard in China. The total contract cost of the construction project in China is approximately $589,226,217, of which the Company has advanced $253,188,717 in payments towards the construction of these vessels. These vessels are expected to be delivered between 2010 and 2011. The Company will incur additional costs relating to the construction of these vessels, including capitalized interest, insurance, legal, and technical supervision costs.

Advances for Vessel Construction:

Advances for Vessel Construction, at December 31, 2009	$	464,173,887
Progress Payments		102,485,611
Capitalized Interest		4,607,651
Legal and Technical Supervision Costs		7,690,053
Delivery of Newbuild Vessels		(276,373,223	)
Advances for Vessel Construction, at March 31, 2010	$	302,583,979

Note 4. Long-Term Debt

At March 31, 2010, the Company's debt consisted of $1,002,143,426 in net borrowings under the amended Revolving Credit Facility. These borrowings consisted of $730,443,547 for the 33 vessels currently in operation and $271,699,879 to fund the Company's newbuilding program.

On August 4, 2009, the Company entered into a third Amendatory Agreement to its revolving credit facility dated October 19, 2007. Among other things, the credit facility reduces the amount of the credit facility to $1,200,000,000 with maturity in July 2014. The agreement also modifies the minimum security covenant, the minimum net worth covenant, and the minimum interest coverage ratio covenant, until such time as the Company can comply with the original covenants for two consecutive accounting periods. In the interim, the measurement of the three covenants at the end of each accounting period has been amended as follows: (a) The minimum security covenant has been suspended, (b) the minimum net worth covenant has been amended to a threshold minimum of $400 million plus an amount equal to fifty percent of any equity received by the Company, with the determination of net worth to utilize book value of vessel assets as stated in the financial statements rather than the market value, and (c) until reinstatement of the original minimum security and net worth covenants, for 24 months from July 1, 2009 to June 30, 2011, at each accounting period, the Company's cumulative EBITDA (EBITDA as defined in the credit agreement) will at all times be not less than 120% of the cumulative loan interest incurred on a trailing four quarter basis, and for each accounting period after June 30, 2011, the Company's cumulative EBITDA will at all times be not less than 130% of the cumulative loan interest incurred on a trailing four quarter basis. The amendment also requires that until the Company is in compliance with the original covenants for two consecutive accounting periods, the Company will use half the net proceeds from any equity issuance to reduce the facility, including $48,645,523 from the equity raised in 2009. These payments reduced the available amount of the credit facility to $1,151,354,477. As of March 31, 2010, $149,211,051 is available for additional borrowings under the credit facility. The Company will continue to be able to borrow the undrawn portion of the facility and the amounts borrowed will bear interest at LIBOR plus 2.50%. Undrawn portions of the facility will bear a commitment fee of 0.7%. The facility is available in full until July 2012 when availability will begin to decline in four semi-annual reductions of $53,969,741 with a full repayment at maturity.

Under the terms of the third amendment of the revolving credit facility, among other things, we will maintain with the lender an amount not less than the greater of $500,000 per delivered vessel or an amount equal to any reductions in the total commitments scheduled to be effected within the next six months less the amount of the then unutilized facility. As of March 31, 2010, the Company has recorded $16,500,000 as Restricted cash in the accompanying balance sheets.

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

For the three months ended March 31, 2010, interest rates on the outstanding debt ranged from 2.75% to 7.73%, including a margin of 2.50% over LIBOR applicable under the terms of the amended revolving credit facility. The weighted average effective interest rate was 5.98%. The Company incurred a commitment fee of 0.70% on the undrawn portion of the revolving credit facility. Interest costs on borrowings used to fund the Company's newbuilding program are capitalized until the vessels are delivered.

Interest Expense, exclusive of capitalized interest, consists of:

	Three Months Ended
	March 31, 2010		March 31, 2009
Loan Interest	$	10,592,270	$	6,246,260
Amortization of Deferred Financing Costs		584,717		240,057
Total Interest Expense	$	11,176,987	$	6,486,317

Interest paid, exclusive of capitalized interest, in the three-month periods ended March 31, 2010 and 2009 amounted to $8,540,127 and $5,895,446, respectively.

Interest-Rate Swaps

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

Notional Amount Outstanding – March 31, 2010		Notional Amount Outstanding – December 31, 2009		Fixed Rate			Maturity
$	—	$	25,776,443		4.905	%		03/2010
	10,995,000		10,995,000		4.980	%		08/2010
	202,340,000		202,340,000		5.040	%		08/2010
	100,000,000		100,000,000		4.220	%		09/2010
	30,000,000		30,000,000		4.538	%		09/2010
	144,700,000		144,700,000		3.580	%		10/2011
	9,162,500		9,162,500		3.515	%		10/2011
	3,405,174		3,405,174		3.550	%		10/2011
	17,050,000		17,050,000		3.160	%		11/2011
	25,048,118		25,048,118		4.740	%		12/2011
	36,752,038		36,752,038		5.225	%		08/2012
	81,500,000		81,500,000		3.895	%		01/2013
	84,800,000		84,800,000		3.900	%		09/2013
$	745,752,830	$	771,529,273

The Company records the fair value of the interest rate swaps as an asset or liability on its balance sheet. The effective portion of the swap is recorded in accumulated other comprehensive income. Accordingly, liabilities of $33,026,330 and $35,408,049 have been recorded in Fair value of derivative instruments in the Company's balance sheets as of March 31, 2010 and December 31, 2009.

Foreign Currency swaps

At December 31, 2008, the Company had outstanding foreign currency swap contracts for notional amounts aggregating 8.6 billion Japanese yen swapped into the equivalent of $80,378,030 to hedge foreign currency risks on its capital asset transactions (vessel newbuildings). The swaps are designated and qualified as cash flow hedges.

In February 2009, the Company fixed the gain on its outstanding foreign currency swaps contracts. This gain will be recognized upon delivery of the remaining vessels as an offset to the cost of the vessels. During the year ended December 31, 2009, the Company recognized a foreign currency gain of $8,710,806 which offset the cost of the Japanese vessels upon delivery or payment incurred. During the period ended March 31, 2010, the Company recognized a foreign currency gain of $4,765,116 which offset the cost of the last two Japanese vessels upon their delivery in January, 2010, and February 2010.

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

Note 5. Fair Value Measurements

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

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

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

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

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

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

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

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

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

The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2010:

	Level 1		Level 2		Level 3
Assets:
Foreign currency contracts		—		—		—

Liabilities:
Interest rate contracts		—	$	33,026,330		—

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

The Company's policy is to recognize any transfers into fair value measurement hierarchy levels and transfers out of levels at the beginning of each reporting period. There were no transfers in or out of Level 2 measurements for the three-month period ended March 31, 2010.

Note 6. Commitments and Contingencies

Vessel Technical Management Contract

The Company has technical management agreements for certain of its vessels with independent technical managers. The Company paid average monthly technical management fees of $9,687 and $9,173 per vessel during the three months ended March 31, 2010 and 2009, respectively.

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

Note 7. Earnings Per Common Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. Diluted net income per share gives effect to stock options and restricted stock units using the treasury stock method, unless the impact is anti-dilutive. Diluted net income per share as of March 31, 2010, does not include 1,000,508 restricted stock units and 641,217 stock options as their effect was anti-dilutive.

	Three Months Ended
	March 31, 2010		March 31, 2009
Net Income	$	4,573,634	$	17,236,781
Weighted Average Shares – Basic		62,126,665		47,031,300
Dilutive effect of stock options and restricted stock units		155,352		0
Weighted Average Shares – Diluted		62,282,017		47,031,300
Basic Earnings Per Share	$	0.07	$	0.37
Diluted Earnings Per Share	$	0.07	$	0.37

Note 8. Capital Stock

Dividends

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

Note 9. Stock Incentive Plans

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

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

The Company granted restricted stock units ("RSUs") to members of its management which vest ratably between three to five years. As of March 31, 2010, RSUs covering a total of 2,144,508 of the Company's shares are outstanding. These RSUs also entitle the participant to receive a dividend equivalent payment on the unvested portion of the underlying shares granted under the award, each time the Company pays a dividend to the Company's shareholders. The dividend equivalent rights on the unvested RSU are forfeited upon termination of employment. The Company is amortizing to non-cash compensation expense the fair value of the non-vested restricted stock at the grant date. For the three months ended March 31, 2010 and 2009, the amortization charge was $3,739,103 and $3,270,064, respectively. The remaining expense for each of the years ending 2010, 2011, and 2012 will be $10,547,423, $7,326,562, and $6,680,767, respectively, and $2,276,805 thereafter.

As of December 31, 2009, options covering 813,483 of the Company's common shares were outstanding. These options were awarded to members of its management and its independent non-employee directors. On March 8, 2010, the Company granted options to purchase 200,000 of the Company's common shares to its independent non-employee directors. These options vested and became exercisable on the grant date at an exercise price of $5.91 per share and expire five years from the date of grant. For purposes of determining the non-cash compensation cost for the Company's stock option plans using the fair value method of FAS 123(R), the fair value of the options granted of $597,034 was estimated on the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used for the 2010 grant included a risk free interest rate of 1.16%, and an expected stock price volatility factor of 85%. For the three months ended March 31, 2010 and 2009, the Company has recorded a non-cash compensation charge of $607,024 and $626,220, respectively. As of March 31, 2010, options covering 1,013,483 of the Company's common shares are outstanding with exercise prices ranging from $5.00 to $21.88 per share (the market prices at dates of grants). The options granted to the independent non-employee directors vested and became exercisable on the grant dates. The options granted to members of its management vest and become exercisable over three years. All options expire between five to ten years from the date of grant.

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

	Three Months Ended March 31,
	2010		2009
Stock Option Plans	$	607,024	$	626,220
Restricted Stock Grants		3,739,103		3,270,064
Total Non-cash compensation expense	$	4,346,127	$	3,896,284

In 2006 and 2007, the Company granted Dividend Equivalent Rights Awards ("DERs") to its independent non-employee directors and members of its management. These DERs entitle the participant to receive a dividend equivalent payment each time the Company pays a dividend to the Company's shareholders. As of March 31, 2010, DERs equivalent to 574,000 of the Company's common shares are outstanding. For the three months ended March 31, 2010 and 2009, the Company has recorded in General and Administrative Expense cash compensation expenses of $0.

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

The following is a discussion of the Company's financial condition and results of operation for the three-month periods ended March 31, 2010 and 2009. This section should be read in conjunction with the consolidated financial statements included elsewhere in this report and the notes to those financial statements.

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

Overview

We are Eagle Bulk Shipping Inc., a Republic of the Marshall Islands corporation headquartered in New York City. We own one of the largest fleets of Supramax dry bulk vessels in the world. Supramax dry bulk vessels range in size from 50,000 to 60,000 dwt. We transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes. As of March 31, 2010, we owned and operated a modern fleet of 33 Handymax segment dry bulk vessels, 30 of which are of the Supramax class. We also have an on-going Supramax newbuilding program for the construction of 14 newbuilding vessels in China. Upon delivery of all newbuilding vessels by the end of 2011, our total fleet will consist of 47 vessels with a combined carrying capacity of approximately 2.55 million dwt. We also hold options for the construction of an additional eight Supramax dry bulk vessels at the same shipyard in China.

We are focused on maintaining a high quality fleet that is concentrated primarily in one vessel type – Handymax dry bulk carriers and its sub-category of Supramax vessels, which are Handymax vessels ranging in size from 50,000 to 60,000 dwt. These vessels have the cargo loading and unloading flexibility of on-board cranes while offering cargo carrying capacities approaching that of Panamax dry bulk vessels, which range in size from 60,000 to 100,000 dwt and rely on port facilities to load and offload their cargoes. We believe that the cargo handling flexibility and cargo carrying capacity of the Supramax class vessels make them attractive to cargo interests and vessel charterers. The 33 vessels in our operating fleet, with an aggregate carrying capacity of 1,746,952 deadweight tons, have an average age of only five years compared to an average age for the world Handymax dry bulk fleet of approximately 15 years.

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

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

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

(1)

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

(2)

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

(3)

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

(4)

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

We have employed all of our vessels in our operating fleet on time charters. During the three months ended March 31, 2010, we took delivery of six newbuilding vessels, Thrasher, Crane, Egret, Golden Eagle, Avocet and Imperial Eagle, which promptly entered into their respective charters. The following table represents certain information about the Company's revenue earning charters on its operating fleet:

Vessel	Year Built	Dwt	Time Charter Expiration (1)	Daily Time Charter Hire Rate
Avocet (3)	2010	53,462	May 2016 May 2016 to Dec 2018/May 2019	$18,400 $18,000 (with 50% profit share over $22,000)
Bittern (4)	2009	57,809	Jan 2015 Jan 2015 to Dec 2018/Apr 2019	$18,850 $18,000 (with 50% profit share over $22,000)
Canary (5)	2009	57,809	March 2015 Mar 2015 to Dec 2018/Apr 2019	$18,850 $18,000 (with 50% profit share over $22,000)
Cardinal	2004	55,362	Sep 2010 to November 2010	$16,250
Condor	2001	50,296	Jul 2010 to Oct 2010	$22,000
Crane (6)	2010	57,809	Apr 2015 Apr 2015 to Dec 2018/Apr 2019	$18,850 $18,000 (with 50% profit share over $22,000)
Crested Eagle (2,7)	2009	55,989	January 2011 to April 2011	$11,500 (with 50% Index share over $11,500)
Crowned Eagle	2008	55,940	March 2010 to May 2010	$25,000
Egret Bulker(8)	2010	57,809	Oct 2012 to Feb 2013	$17,650 (with 50% profit share over $20,000)
Falcon(9)	2001	51,268	April 2010 to Jun 2010	$39,500
Golden Eagle (2,10)	2010	55,989	Dec 2010 to Mar 2011	Index
Goldeneye (2)	2002	52,421	May 2010 to July 2010	Index (with minimum $8,500)
Griffon (11)	1995	46,635	February 2010 to May 2010	$14,375
Harrier	2001	50,296	April 2010 to August 2010	$13,500
Hawk I	2001	50,296	May 2010 to August 2010	$13,000
Heron (12)	2001	52,827	January 2011 to May 2011	$26,375
Imperial Eagle (2,13)	2010	55,989	Jan 2011 to Mar 2011	Index

Jaeger (14)	2004	52,248	April 2010 to July 2010	$26,000
Kestrel I	2004	50,326	March 2010 to July 2010	$11,500
Kite	1997	47,195	November 2010 to January 2011	$17,000
Kittiwake (2)	2002	53,146	August 2010 to October 2010	Index (with minimum $8,500)
Merlin (15)	2001	50,296	December 2010 to March 2011	$23,000
Osprey I (16)	2002	50,206	March 2010 to May 2010	$18,000
Peregrine (2)	2001	50,913	January 2010 Jan 2010 to Jan 2011/Mar 2011	$8,500 $10,500 (with 50% Index share over $10,500)
Redwing (2)	2007	53,411	August 2010 to October 2010	Index (with minimum $8,500)
Shrike	2003	53,343	May 2010 to August 2010	$25,600
Skua (2)	2003	53,350	Sep 2010 to November 2010	Index (with minimum $8,500)
Sparrow (17)	2000	48,225	February 2010 to May 2010	$10,000
Stellar Eagle	2009	55,989	February 2010 to May 2010	$12,000
Tern	2003	50,200	Mar 2010 to June2010/Aug 2010	$23,500
Thrasher (18)	2010	53,360	Apr 2016 Apr 2016 to Dec 2018/Apr 2019	$18,400 $18,000 (with 50% profit share over $22,000)
Woodstar (19)	2008	53,390	January 2014 Jan 2014 to Dec 2018/Apr 2019	$18,300 $18,000 (with 50% profit share over $22,000)
Wren (20)	2008	53,349	Dec 2011 Dec 2011 to Dec 2018/Apr 2019	$24,750 $18,000 (with 50% profit share over $22,000)

(1)

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

(2)

Index, an average of the trailing Baltic Supramax Index.

(3)

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

(4)

Revenue recognition for the BITTERN is based on an average daily base rate of $18,485.

(5)

Revenue recognition for the CANARY is based on an average daily base rate of $18,493.

(6)

Revenue recognition for the CRANE is based on an average daily base rate of $18,497.

(7)

The charterer of the CRESTED EAGLE has exercised an option to extend the charter period by 11 to 13 months from February 2010.

(8)

The EGRET BULKER has entered into a charter for 33 to 37 months. The charter rate is $17,650 per day with a 50% profit share for earned rates over $20,000 per day. The charterer has an option to extend the charter by 2 periods of 11 to 13 months each.

(9)

Upon completion of the previous charter in April 2010, the FALCON commenced a charter for four to six months at $25,000 per day.

(10)

The GOLDEN EAGLE commenced an index based charter for 11 to 13 months. The index rate will be an average of the trailing Baltic Supramax Index for each 15 day hire period.

(11)

The charter rate of the GRIFFON has been changed to $14,375 as a result of an arbitration settlement reached in March 2010.

(12)

The charterer of the HERON has an option to extend the charter period by 11 to 13 months at a time charter rate of $27,375 per day. The charterer has a second option for a further 11 to 13 months at a time charter rate of $28,375 per day.

(13)

The IMPERIAL EAGLE commenced an index based charter for 11 to 13 months. The index rate will be an average of the trailing Baltic Supramax Index for each 15 day hire period.

(14)

Upon completion of the previous charter in January 2010, the JAEGER commenced a charter for three to five months at $26,000 per day.

(15)

Revenue recognition for the MERLIN is based on an average daily rate of $25,000.

(16)

Upon completion of the previous charter in April 2010, the OSPREY I commenced a charter for four to six months at $25,250 per day.

(17)

Upon completion of the previous time charter in April 2010 the SPARROW commenced a charter for four to six months at $24,000 per day.

(18)

Revenue recognition for the THRASHER is based on an average daily base rate of $18,280.

(19)

Revenue recognition for the WOODSTAR is based on an average daily base rate of $18,154.

(20)

Revenue recognition for the WREN is based on an average daily base rate of $20,245.

The following table, as of March 31, 2010, represents certain information about the Company's newbuilding vessels being constructed and their expected employment upon delivery:

Vessel	Dwt	Year Built – Actual or Expected Delivery (1)	Time Charter Employment Expiration (2)	Daily Time Charter Hire Rate (3)	Profit Share
Gannet Bulker (4,7)	58,000	2010Q2	Jan 2013 to May 2013	$17,650	50% over $20,000
Grebe Bulker (4,7)	58,000	2010Q2	Jan 2013 to May 2013	$17,650	50% over $20,000
Ibis Bulker (4)	58,000	2010Q2	Mar 2013 to Jul 2013	$17,650	50% over $20,000
Jay	58,000	2010Q3	Dec 2015	$18,500	50% over $21,500
			Dec 2015 to Dec 2018/Apr 2019	$18,000	50% over $22,000
Kingfisher	58,000	2010Q3	Dec 2015	$18,500	50% over $21,500
			Dec 2015 to Dec 2018/Apr 2019	$18,000	50% over $22,000
Martin	58,000	2010Q3	Feb 2017 to Feb 2018	$18,400	—
Thrush	53,100	2010Q4	Charter Free	—	—
Nighthawk	58,000	2011Q1	Sep 2017 to Sep 2018	$18,400	—
Oriole	58,000	2011Q3	Jan 2018 to Jan 2019	$18,400	—
Owl	58,000	2011Q3	Feb 2018 to Feb 2019	$18,400	—
Petrel (4)	58,000	2011Q4	Jun 2014 to Oct 2014	$17,650	50% over $20,000
Puffin (4)	58,000	2011Q4	Jul 2014 to Nov 2014	$17,650	50% over $20,000
Roadrunner (4)	58,000	2011Q4	Aug 2014 to Dec 2014	$17,650	50% over $20,000
Sandpiper (4)	58,000	2011Q4	Sep 2014 to Jan 2015	$17,650	50% over $20,000

Vessel	Dwt	Year Built – Actual or Expected Delivery (1)	Time Charter Employment Expiration (2)	Daily Time Charter Hire Rate (3)	Profit Share

CONVERTED INTO OPTIONS
Snipe (6)	58,000	2012Q1	Charter Free	—	—
Swift (6)	58,000	2012Q1	Charter Free	—	—
Raptor (6)	58,000	2012Q2	Charter Free	—	—
Saker (6)	58,000	2012Q2	Charter Free	—	—
Besra (5,6)	58,000	2011Q4	Charter Free	—	—
Cernicalo (5,6)	58,000	2011Q1	Charter Free	—	—
Fulmar (5,6)	58,000	2011Q3	Charter Free	—	—
Goshawk (5,6)	58,000	2011Q4	Charter Free	—	—

(1)

Vessel build and delivery dates are estimates based on guidance received from shipyard.

(2)

The date range represents the earliest and latest date on which the charterer may redeliver the vessel to the Company upon the termination of the charter.

(3)

The time charter hire rate presented are gross daily charter rates before brokerage commissions ranging from 1.25% to 6.25% to third party ship brokers.

(4)

The charterer has an option to extend the charter by 2 periods of 11 to 13 months each.

(5)

Options for construction declared on December 27, 2007.

(6)

Firm contracts converted to options in December 2008.

(7)

The GANNET BULKER and GREBE BULKER were delivered Subsequent to the end of the first quarter.

Fleet Management

The management of our fleet includes the following functions:

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

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

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

Commercial and Strategic Management

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

commercial operations and technical supervision;

safety monitoring;

vessel acquisition; and

financial, accounting and information technology services.

Technical Management

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

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

Our third-party technical managers are paid a fixed management fee for each vessel in our operating fleet for the technical management services provided. For the three-month periods ended March 31, 2010 and 2009, the technical management fee averaged $9,687 and $9,173 per vessel per month, respectively. Management fees paid to our third-party technical managers are recorded under Vessel Expenses.

Value of Assets and Cash Requirements

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

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

Critical Accounting Policies

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

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

Results of Operations for the three-month periods ended March 31, 2010 and 2009:

Fleet Data

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

	Three Months Ended
	March 31, 2010			March 31, 2009

Ownership Days		2,826			2,138
Available Days		2,804			2,137
Operating Days		2,776			2,128
Fleet Utilization		99.0	%		99.6	%

• Ownership days: We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period. Ownership days for the three-month period ended March 31, 2010, increased 32% from the corresponding period in 2009 as we operated 33 vessels in the first quarter of 2010 compared to 25 vessels in the corresponding period in 2009.

• Available days: We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to vessel familiarization upon acquisition, scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues. During the three-month period ended March 31, 2010, the Company drydocked one vessel and none in the comparable quarter in 2009.

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

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

Revenues

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

Gross time charter revenues in the quarter ended March 31, 2010 were $57,362,935 compared to $58,621,700 recorded in the comparable quarter in 2009. Gross revenues declined due to lower rates on charter renewals offset by operation of a larger fleet size. Vessels with legacy time charters saw lower rates upon charter renewals. Gross revenues recorded in the quarter ended March 31, 2010 include an arbitration settlement in the amount of $1,089,759, reached in March 2010. Gross revenues recorded in the quarter ended March 31, 2010 and 2009, include an amount of $864,628 and $649,731, respectively, relating to the non-cash amortization of fair value below contract value of time charters acquired. Brokerage commissions incurred on revenues earned in the quarter ended March 31, 2010 and 2009 were $3,119,210 and $2,644,034, respectively. Net revenues during the quarter ended March 31, 2010 and 2009, were $54,243,725 and $55,977,666, respectively.

Vessel Expenses

Vessel expenses for the three-month period ended March 31, 2010, were $15,362,733 compared to $13,071,197 in the comparable quarter in 2009. The increase in vessel expense is attributable to a larger fleet size in operation, increases in insurance costs, costs relating to anti-piracy measures, and general increases in costs of stores and spares. Vessel expenses for the three-month period ended March 31, 2010, included $14,577,346 in vessel operating costs and $785,387 in technical management fees. Vessel expenses for the comparable period in 2009 included $12,428,975 in vessel operating costs and $642,222 in technical management fees.

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

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

Depreciation and Amortization

For the three-month periods ended March 31, 2010 and 2009, total depreciation and amortization expense was $13,706,370 and $10,290,916, respectively. Total depreciation and amortization expense for the three-month period ended March 31, 2010 includes $13,039,338 of vessel depreciation and other fixed assets amortization, and $667,032 relating to the amortization of deferred drydocking costs. Comparable amounts for the three-month period ended March 31, 2009 were $9,694,910 of vessel depreciation and $596,006 of amortization of deferred drydocking costs. The increase in depreciation expense is attributable to a larger fleet size in operation during the three-month period in 2010 compared to 2009.

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

Amortization of deferred financing costs which relate to the vessels on the water is included in interest expense. These financing costs relate to costs associated with our revolving credit facility and these are amortized over the life of the facility. For the three-month periods ended March 31, 2010 and 2009, the amortization of deferred financing costs allocated to the vessels on the water was $584,717 and $240,057, respectively.

General and Administrative Expenses

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

General and administrative expenses for the three-month periods ended March 31, 2010 and 2009 were $9,487,423 and $8,903,028, respectively. These general and administrative expenses include a non-cash compensation component of $4,346,127 and $3,896,284, respectively. The increase in general and administrative expenses for the three-month period ended March 31, 2010, is primarily attributable to higher administrative costs associated with operating a larger fleet, our extensive newbuilding program, amortization of restricted stock awards and stock option compensation.

Capitalized Interest

At March 31, 2010, we had contracts for the construction of 14 newbuilding vessels which are expected to be delivered in 2010 and 2011. Interest costs on borrowings used to fund the Company's newbuilding program are capitalized as part of the cost of the newbuilding vessels until the vessels are delivered.

For the three-month period ended March 31, 2010, capitalized interest amounted to $4,607,651 ($4,060,846 in interest and $546,805 in amortization of deferred financing costs) and this amount has been recorded and included in Advances for Vessel Construction in the financial statements. For the corresponding three months period in 2009, capitalized interest amounted to $6,779,318 ($6,322,705 in interest and $456,613 in amortization of deferred financing costs) and this amount has been recorded and included in Advances for Vessel Construction in the financial statements.

EBITDA

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

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

	Three Months Ended
	March 31, 2010			March 31, 2009
Net Income	$	4,573,634		$	17,236,781
Interest Expense		11,176,987			6,486,317
Depreciation and Amortization		13,706,370			10,290,916
Amortization of fair value (below) above market of time charter acquired		(864,628	)		(649,731	)
EBITDA		28,592,363			33,364,283
Adjustments for Exceptional Items:
Non-cash Compensation Expense (1)		4,346,127			3,896,284
Credit Agreement EBITDA	$	32,938,490		$	37,260,567

(1) Stock based compensation related to stock options and restricted stock units (see Notes to our financial statements).

Effects of Inflation

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

Liquidity and Capital Resources

Net cash provided by operating activities during the three-month periods ended March 31, 2010 and 2009, was $30,920,496 and $43,024,179, respectively. The decrease was primarily due to lower rates on charter renewals offset by operation of a larger fleet.

Net cash used in investing activities during the three-month period ended March 31, 2010, was $117,084,424, compared to $44,271,329 during the corresponding three-month period ended March 31, 2009. Investing activities during the three-month period ended March 31, 2010 related primarily to making progress payments and incurring related vessel construction expenses for the newbuilding vessels.

Net cash provided by financing activities during the three-month period ended March 31, 2010, was $98,972,546, compared to net cash provided by financing activities of $10,935,046 during the corresponding three-month period ended March 31, 2009. Financing activities during the three-month period ended March 31, 2010, primarily involved borrowings of $101,972,546 from our revolving credit facility. Financing activities during the three-month period ended March 31, 2009, primarily involved borrowings of $12,875,000.

As of March 31, 2010, our cash balance was $84,153,391, compared to a cash balance of $71,344,773 at December 31, 2009. In addition, $16,500,000 in cash deposits are maintained with our lender for loan compliance purposes and this amount is recorded in Restricted cash in our financial statements as of March 31, 2010. Also recorded in Restricted Cash is an amount of $276,056, which is collateralizing a letters of credit relating to our office leases.

On August 4, 2009, the Company entered into a third Amendatory Agreement to its revolving credit facility dated October 19, 2007 (See section in the Company's 2009 Annual Report on Form 10-K entitled "Revolving Credit Facility" for a description of the facility and its amendments). The facility also provides us with the ability to borrow up to $20,000,000 for working capital purposes. We were in compliance with all of the covenants contained in our amended debt agreements as of March 31, 2010. We anticipate that our current financial resources, together with cash generated from operations and, if necessary, borrowings under our revolving credit facility will be sufficient to fund the operations of our fleet, including our working capital requirements, for the next twelve months. We will rely on operating cash flows as well as our revolving credit facility and possible additional equity and debt financing alternatives to fund our long term capital requirements for vessel construction and implement future growth plans.

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

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

Dividends

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

Contractual Obligations

The following table sets forth our expected contractual obligations and their maturity dates as of March 31, 2010:

(in thousands of U.S. dollars)	Within One Year		One to Three Years		Three to Five Years		More than Five years		Total

Vessels (1)	$	194,935	$	141,103		—		—	$	336,038
Bank Loans		—		—	$	1,002,143		—		1,002,143
Interest and borrowing fees (2)		58,987		118,135		73,693		—		250,815
Office lease		649		1,670		1,670		2,645		6,634
Total	$	254,571	$	260,908	$	1,077,506	$	2,645	$	1,595,630

(1) The balance of the contract price in US dollars for the 14 newbuilding vessels which are to be constructed and delivered between 2010 and 2011.

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

Capital Expenditures

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

We make capital expenditures from time to time in connection with our vessel acquisitions. As of March 31, 2010, our fleet consists of 33 vessels which are currently operational and 14 newbuilding vessels which have been contracted for construction.

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

Drydocking costs incurred are amortized to expense on a straight-line basis over the period through the date the next drydocking for those vessels are scheduled to occur. One vessel was drydocked in the three months ended March 31, 2010. The following table represents certain information about the estimated costs for anticipated vessel drydockings in the next four quarters, along with the anticipated off-hire days:

Quarter Ending	Off-hire Days(1)		Projected Costs(2)
June 30, 2010		66	$1.65 million
September 30, 2010		66	$1.65 million
December 31, 2010		44	$1.10 million
March 31, 2011		44	$1.10 million

(1)Actual duration of drydocking will vary based on the condition of the vessel, yard schedules and other factors.

(2)Actual costs will vary based on various factors, including where the drydockings are actually performed.

Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

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

Currency and Exchange Rates

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

Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

Internal Control Over Financial Reporting

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

PART II: OTHER INFORMATION

Item 1 - Legal Proceedings

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

Item 1A – Risk Factors

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

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

None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

Item 5 - Other Information

None.

Item 6 – Exhibits

EXHIBIT INDEX

3.1	Amended and Restated Articles of Incorporation of the Company (1)
3.2	Amended and Restated Bylaws of the Company (2)
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock (3)
4.1	Form of Share Certificate of the Company (4)
4.2	Form of Senior Indenture (5)
4.3	Form of Subordinated Indenture (6)
4.4	Rights Agreement (7)
10.1	Amendatory Agreement, dated as of July 3, 2008, among the Company and certain of its subsidiaries and the banks and financial institutions party thereto and the Royal Bank of Scotland plc, as mandated lead arranger (8)
10.2	Second Amendatory Agreement, dated as of December 17, 2008, among the Company and certain of its subsidiaries and the banks and financial institutions party thereto and the Royal Bank of Scotland plc, as mandated lead arranger (9)
10.3	Third Amendatory Agreement, dated as of August 4, 2009, among the Company and certain of its subsidiaries and the banks and financial institutions party thereto and the Royal Bank of Scotland plc, as mandated lead arranger (10)
10.4	Amended and Restated Employment Agreement for Mr. Sophocles N. Zoullas (11)

10.5	Eagle Bulk Shipping Inc. 2009 Equity Incentive Plan (12)
10.6	Delphin Management Agreement (13)
31.1	Rule 13a-14(d) / 15d-14(a) Certification of CEO
31.2	Rule 13a-14(d) / 15d-14(a) Certification of CFO
32.1	Section 1350 Certification of CEO
32.2	Section 1350 Certification of CFO

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

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

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

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

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

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

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

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

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

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

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

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

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EAGLE BULK SHIPPING INC.

By:	/s/ Sophocles N. Zoullas
Sophocles N. Zoullas
Chairman of the Board and Chief Executive Officer
Date: May 7, 2010


By:	/s/ Alan S. Ginsberg
Alan S. Ginsberg
Chief Financial Officer and Principal Accounting Officer
Date: May 7, 2010