Note

19.

Condensed Financial Information for Eagle Bulk Shipping Inc. (Parent Company Only)

Condensed Balance Sheets (Parent Company Only)

	December 31, 2016			December 31, 2015
ASSETS:
Current assets:
Cash and cash equivalents	$	62,326,786		$	22,104,462
Prepaid expenses		376,215			411,214
Total current assets		62,703,001			22,515,676
Noncurrent assets:
Investment in subsidiaries*		338,340,211			737,821,862
Other assets		310,000			-
Total noncurrent assets		338,650,211			737,821,862
Total assets	$	401,353,212		$	760,337,538
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	189,039		$	366,603
Accrued interest		-			401,232
Current portion of long-term debt		-			15,625,000
Other accrued liabilities		681,534			22,750
Total current liabilities		870,573			16,415,585
Noncurrent liabilities :
Exit Financing Facility, net of debt discount and debt issuance costs		-			225,577,491
Total noncurrent liabilities		-			225,577,491
Total liabilities		870,573			241,993,076
Commitment and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued as of December 31, 2016		-			-
Common stock, $0.01 par value, 700,000,000 shares authorized, 48,106,827 and 1,883,303 shares issued and outstanding as of December 31, 2016 and 2015, respectively		481,069			18,833
Additional paid-in capital		783,369,698			678,171,322
Accumulated deficit		(383,368,128	)		(159,845,693	)
Total stockholders' equity		400,482,639			518,344,462
Total liabilities and stockholders' equity	$	401,353,212		$	760,337,538

Eliminated in the consolidated financial statements.

Condensed

Statement

of Operations (Parent Company Only)

	Successor
	For the year ended			For the year ended			Period from October 16, 2014 To
	December 31, 2016			December 31, 2015			December 31, 2014


General and administrative expenses	$	2,101,094		$	2,554,795		$	313,877
Total operating expenses		2,101,094			2,554,795			313,877
Operating loss		(2,101,094	)		(2,554,795	)		(313,877	)

Interest expense		2,817,646			11,927,422			2,359,326
Interest income		(215,433	)		(6,222	)		(2,238	)
Other expense		125,255			-			-
Reorganization items, net		-			-			45,542
Total other expense (income), net		2,727,468			11,921,200			2,402,630

Equity in net loss of subsidiaries**		(218,693,873	)		(133,820,970	)		(8,832,221	)
Net loss	$	(223,522,435	)	$	(148,296,965	)	$	(11,548,728	)

Weighted average shares outstanding:

Basic*		20,565,652			1,880,116			1,875,227
Diluted*		20,565,652			1,880,116			1,875,227

Per share amounts:
Basic net loss	$	(10.87	)	$	(78.88	)	$	(6.16	)
Diluted net loss	$	(10.87	)	$	(78.88	)	$	(6.16	)

*Adjusted to give effect for the

for

reverse stock split for the Successor that became effective as of the opening of trading on

August

2016.

Eliminated in the consolidated financial statements.

Condensed

Statement

Cash Flows

(Parent Company Only)

	Successor
	Year ended December 31, 2016			Year ended December 31, 2015			Period from October 16, 2014 To December 31, 2014
Net cash (used in) / provided by operating activities	$	(4,715,072	)		(18,496,422	)	$	(5,013,295	)
Cash flows from investing activities:
Cash distributed to wholly-owned subsidiaries		(36,853,951	)		(4,762,134	)		(2,797,401	)
Net cash used in investing activities		(36,853,951	)		(4,762,134	)		(2,797,401	)

Cash flows from financing activities:
Repayment of Term Loan		(3,906,250	)		(19,625,000	)		-
Proceeds from Revolver Loan facility under Exit Financing Facility		-			40,000,000			-
Proceeds from common stock placement, net of issuance costs		85,700,535			-			-
Deferred financing costs		-			(500,000	)
Cash used to settle net share equity awards		(2,938	)		(1,419,229	)		-

Net cash provided by financing activities		81,791,347			18,455,771			-
Net increase/(decrease) in cash and cash equivalents		40,222,324			(4,802,785	)		(7,810,696	)
Cash and cash equivalents at beginning of period		22,104,462			26,907,247			34,717,943
Cash and cash equivalents at end of period	$	62,326,786		$	22,104,462		$	26,907,247

Supplemental cash flow information:
Cash paid during the period for interest	$	2,529,674		$	9,911,793		$	1,586,303

Notes to

the Condensed

Financial Statements

Basis of Presentation

In the parent-company-only condensed financial statements, Eagle Bulk Shipping Inc. (the “Parent Company”) investment in subsidiaries is accounted for under the equity method of accounting. The Parent Company did not receive cash dividends from its subsidiaries for the years ended

December

31,

2016

and

2015

and for the period between

October

16,

2014

and

December

31,

2014.

The parent-company-only condensed financial statements should be read in conjunction with the Company's consolidated financial statements. The condensed financial statements for the Predecessor for the period between

January

2014

and

October

15,

2014

are not presented in the parent-company-only condensed financial statements because such information is not comparable due to the adoption of fresh-start accounting in accordance with the provisions of ASC

852,

Reorganizations

(“ASC

852”).

Upon adoption of fresh-start accounting, the Parent Company’s assets and liabilities were recorded at their fair value as of

October

15,

2014,

the fresh-start reporting date. The Parent Company’s adoption of fresh-start accounting materially affected its results of operations following the fresh-start reporting date, as the Parent Company has a new basis in its assets and liabilities. Consequently, the Parent Company’s historical financial statements prior to

October

15,

2014

are not considered to be reliable indicators of its results of operations for periods after it adopted fresh-start accounting and not relevant to the assessment of the trends in financial performance. Based upon the above, the omission of the Predecessor information is not considered material to the consolidated financial statements.

There are legal or regulatory restrictions on the Parent Company's ability to obtain funds from its subsidiaries through dividends, loans or advances sufficient to satisfy the obligations that

may

come due.

Equity Offerings

Preferred Stock Private Placement

May

26,

2016,

the Parent Company entered into a Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”) with certain investors named therein, including certain of our existing shareholders and our Chairman and Chief Executive Officer (the “Purchasers”), pursuant to which the Parent Company agreed to issue to the Purchasers in a private placement (the “Private Placement”) pursuant to the private placement exemption from registration under Section

4(a)(2)

of the Securities Act and Rule

506

of Regulation D promulgated under the Securities Act, shares of the Parent Company’s

15%

Cumulative Nonparticipating Redeemable Series A Preferred Stock, par value

$0.01

per share (the “Series A Preferred Stock”), at a purchase price of

$1,000.00

per share with a

1.0%

original issue discount, for aggregate gross proceeds expected to amount to approximately

$6.3

million.

September

2016,

the Parent Company and each of the Investors executed the Termination Agreement, terminating the Preferred Stock Purchase Agreement. The Parent Company agreed to make an aggregate termination payment to the Purchasers of

$125,255,

which is allocated among the Purchasers in proportion to the percentage of the shares of Series A Preferred Stock each Purchaser had previously agreed to purchase. The fees paid to the shareholders were recorded as other expense in the condensed statement of operations for the year ended

December

31,

2016.

Common Stock Offerings

July

2016

and

July

10,

2016,

respectively, the Parent Company entered into Common Stock Purchase Agreements (collectively, the “Common Stock Purchase Agreements”), with certain purchasers (the “Common Stock Purchasers”). The Common Stock Purchasers include certain of our existing shareholders, who held approximately

70%

of our outstanding equity prior to entry into the Common Stock Purchase Agreements and prior to giving effect to the delivery of all of the shares of common stock issued in connection with the Second Lien Loan Agreement, as well as our Chairman and Chief Executive Officer. The Common Stock Purchase Agreements provided for the issuance and sale by the Parent Company to the Common Stock Purchasers of an aggregate amount of

$88

million of common stock, at an initial price per share of

$0.15,

which amount per share was increased to

$3.00

per share based on the reverse stock split ratio of

-for-

that became effective as of the opening of trading on

August

2016.

August

10,

2016,

the Parent Company closed the transactions contemplated by the Common Stock Purchase Agreements for aggregate proceeds of

$85

million net of fees and legal expenses. After giving effect to the Parent Company’s previously announced reverse stock split of its issued and outstanding shares of common stock, including the rounding down of fractional shares pursuant to such split, the private placement included the issuance of

29,333,318

shares of the Parent Company’s common stock. The Parent Company intends to use the proceeds of the private placement for the acquisition of dry bulk vessels and general corporate purposes by its susbsidiaries

December

13,

2016,

the Parent Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), pursuant to which the Parent Company agreed to issue to the Investors in a private placement (the

“December

Private Placement”) approximately

22.2

million shares of the Parent Company’s common stock, par value

$0.01

per share, at an initial purchase price of

$4.50

per share, for aggregate gross proceeds of

$100.0

million. On

January

20,

2017,

the Parent Company closed its previously announced

December

Private Placement for aggregate net proceeds of

$95

million. The Parent Company plans to use the proceeds from the

December

Private Placement for the acquisition of dry bulk tonnage and general corporate purposes

by its subsidiaries.

Corporate Reorganization and Refinancing

March

30,

2016,

we entered into the Contribution Agreement with Eagle Shipping, pursuant to which the Parent Company and Eagle Shipping consummated the Contribution. Immediately following the Contribution, Eagle Shipping became the direct parent company of each of the Parent Company’s previously directly-owned subsidiaries and the indirect parent company of each of the Parent Company’s previously indirectly-owned subsidiaries. The Contribution was part of a series of transactions contemplated by the agreements also entered into on

March

30,

2016

and described below, which transactions were consummated on

March

30,

2016,

after the fulfillment of certain conditions precedent. See “Note

Corporate Reorganization” to the consolidated financial statements.

Non Cash Investing and Financing Activities

For the year ended

December

31,

2016,

a subsidiary of the Parent Company assumed approximately

$237

million of debt obligations of the Parent Company, which reduced the Parent Company’s investment in subsidiaries. The Parent Company also issued equity instruments to the employees of the subsidiary companies and to the subsidiary companies’ Second Lien Lenders, increasing its investment in subsidiaries by approximately

$20

million. For the year ended

December

31,

2015,

there was approximately

million of equity issued by the Parent Company granted to employees of the wholly-owned subsidiaries of the Parent Company, which increased the Parent Company’s investment in subsidiaries. For the period from

October

16,

2014

December

31,

2014,

there were approximately

million of equity compensation issued by the Parent Company which was granted to employees of the wholly-owned subsidiaries of the Parent Company, which increased the Parent Company’s investment in subsidiaries.