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

There are significant restrictions over the Company’s ability to obtain funds from its subsidiaries through dividends, loans or advances as contained in our debt facilities. For a discussion of some of these restrictions, see “Note 8 - Debt.” These condensed parent company financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, as the restricted net assets of the Company’s subsidiaries under each of the debt arrangements previously noted exceeds 25 percent of the consolidated net assets of the Company.

Condensed Balance Sheets (Parent Company Only)



	December 31, 2017			December 31, 2016
ASSETS:
Current assets:
Cash and cash equivalents	$	17,583,085		$	62,326,786
Prepaid expenses	13,758			376,215
Total current assets	17,596,843			62,703,001
Noncurrent assets:
Investment in subsidiaries*	444,908,264			338,340,211
Other assets	—			310,000
Total noncurrent assets	444,908,264			338,650,211
Total assets	$	462,505,107		$	401,353,212
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	50,894		$	189,039
Other accrued liabilities	1,289,180			681,534
Total current liabilities	1,340,074			870,573
Noncurrent liabilities :
Total liabilities	1,340,074			870,573
Commitment and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued as of December 31, 2017 and 2016	—			—
Common stock, $.01 par value, 700,000,000 shares authorized, 70,394,307 and 48,106,827 shares issued and outstanding as of December 31, 2017 and 2016, respectively	703,944			481,069
Additional paid-in capital	887,625,902			783,369,698
Accumulated deficit	(427,164,813		)	(383,368,128		)
Total stockholders' equity	461,165,033			400,482,639
Total liabilities and stockholders' equity	$	462,505,107		$	401,353,212

* Eliminated in the consolidated financial statements.

Condensed Statements of Operations (Parent Company Only)



	For the Years Ended
	December 31, 2017			December 31, 2016			December 31, 2015
General and administrative expenses	$	2,693,520		$	2,101,094		$	2,554,795
Total operating expenses	2,693,520			2,101,094			2,554,795
Operating loss	(2,693,520		)	(2,101,094		)	(2,554,795		)

Interest expense	—			2,817,646			11,927,422
Interest income	(379,374		)	(215,433		)	(6,222		)
Other expense	—			125,255			—
Total other expense (income), net	(379,374		)	2,727,468			11,921,200

Equity in net loss of subsidiaries*	(41,482,539		)	(218,693,873		)	(133,820,970		)
Net loss	$	(43,796,685	)	$	(223,522,435	)	$	(148,296,965	)

Weighted average shares outstanding:

Basic	69,182,302			20,565,652			1,880,116
Diluted	69,182,302			20,565,652			1,880,116

Per share amounts:
Basic net loss	$	(0.63	)	$	(10.87	)	$	(78.88	)
Diluted net loss	$	(0.63	)	$	(10.87	)	$	(78.88	)

*Eliminated in the consolidated financial statements.

Condensed Statements of Cash Flows (Parent Company Only)



	For the Years Ended
	December 31, 2017			December 31, 2016			December 31, 2015
Net cash used in operating activities	$	(2,245,856	)	(4,715,072		)	$	(18,496,422	)
Cash flows from investing activities:
Cash distributed to wholly-owned subsidiaries	(138,238,309		)	(36,853,951		)	(4,762,134		)
Net cash used in investing activities	(138,238,309		)	(36,853,951		)	(4,762,134		)

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	96,030,003			85,700,535			—
Financing costs paid to lenders	—			—			(500,000		)
Cash used to settle net share equity awards	(289,539		)	(2,938		)	(1,419,229		)

Net cash provided by financing activities	95,740,464			81,791,347			18,455,771
Net increase/(decrease) in cash and cash equivalents	(44,743,701		)	40,222,324			(4,802,785		)
Cash and cash equivalents at beginning of year	62,326,786			22,104,462			26,907,247
Cash and cash equivalents at end of year	$	17,583,085		$	62,326,786		$	22,104,462

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

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, 2017, 2016 and 2015.

The parent-company-only condensed financial statements should be read in conjunction with the Company's 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

On 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 $96 million. The Parent Company used the proceeds from the December Private Placement for the acquisition of Greenship Vessels by Ultraco.

Non Cash Investing and Financing Activities

The Parent Company issued equity instruments to the employees of the subsidiary companies increasing its investment in subsidiaries by approximately $8.7 million. For the year ended December 31, 2016, there was approximately $2 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.