EAGLE BULK SHIPPING INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

The following is a discussion of the Company's financial condition and results
of operations for the three and six months ended June 30, 2022 and 2021. This
section should be read in conjunction with the condensed consolidated financial
statements included elsewhere in this report and the notes to those financial
statements and the audited consolidated financial statements and the notes to
those financial statements for the fiscal year ended December 31, 2021, which
were included in our Form 10-K, filed with the SEC on March 14, 2022 (the "Form
10-K"). For further discussion regarding our results of operations for the three
and six months ended June 30, 2021 as compared to the three and six months ended
June 30, 2020 please refer to Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations in our Quarterly Report on Form
10-Q for the three and six months ended June 30, 2021. The following discussion
contains "forward-looking statements" that reflect our future plans, estimates,
beliefs and expected performance. We caution that assumptions, expectations,
projections, intentions or beliefs about future events may, and often do, vary
from actual results and the differences can be material. Please see "Cautionary
Statement Regarding Forward-Looking Statements."

Company overview

Eagle Bulk Shipping Inc. ("Eagle" or the "Company") is a U.S. based fully
integrated shipowner-operator providing global transportation solutions to a
diverse group of customers including miners, producers, traders, and end users.
Headquartered in Stamford, Connecticut, with offices in Singapore and
Copenhagen, Eagle focuses exclusively on the versatile mid-size drybulk vessel
segment and owns one of the largest fleets of Supramax/Ultramax vessels in the
world. The Company performs all management services in-house such as strategic,
commercial, operational, technical, and administrative services, and employs an
active management approach to fleet trading with the objective of optimizing
revenue performance and maximizing earnings on a risk-managed basis. Typical
cargoes we transport include both major bulk cargoes, such as iron ore, coal and
grain, and minor bulk cargoes such as fertilizer, steel products, petcoke,
cement, and forest products. As of June 30, 2022, we owned and operated a modern
fleet of 53 Supramax/Ultramax dry bulk vessels. We chartered-in five Ultramax
vessels which have a remaining lease term of approximately one year each. In
addition, the Company charters in third-party vessels on a short to medium term
basis.

Our owned fleet consists of 53 vessels, with a total carrying capacity of 3.19 million dwt and an average age of 9.8 years at June 30, 2022.

We carry out the commercial and strategic management of our fleet through our
indirectly wholly-owned subsidiary, Eagle Bulk Management LLC, a Marshall
Islands limited liability company, which maintains its principal executive
offices in Stamford, Connecticut. We own each of our vessels through a separate
wholly-owned Marshall Islands limited liability company.

Company Information

We maintain our principal executive offices at 300 First Stamford Place, 5th
Floor, Stamford, Connecticut 06902. Our telephone number at that address is
(203) 276-8100. Our website address is www.eagleships.com. Information contained
on or accessible through our website does not constitute part of this Quarterly
Report on Form 10-Q.

Business Strategy

We believe our balance sheet allows us the flexibility to opportunistically make
investments in the drybulk segment that will drive shareholder growth. In order
to accomplish this, we intend to:

•Maintain a highly efficient and quality fleet in the drybulk segment.
•Maintain a revenue strategy that takes advantage of a rising rate environment
and at the same time mitigate risk in a declining rate environment.
•Maintain a cost structure that allows us to be competitive in all economic
cycles without sacrificing safety or maintenance.
•Continue to grow our relationships with our charterers and vendors.
•Continue to invest in our on-shore operations and development of processes.



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

(1) Concentration in a single category of vessels: Supramax/Ultramax bulk carriers, which we believe offer certain advantages in terms of size, operation and geography compared to other classes of bulk carriers, such as Handysize, Panamax and Capesize.

(2)An active owner-operator model where we seek to operate our own fleet and
develop contractual relationships directly with cargo interests. These
relationships and the related cargo contracts have the dual benefit of providing
greater operational efficiencies and act as a balance to the Company's naturally
long position to the market. Notwithstanding the focus on voyage chartering, we
consistently monitor the drybulk shipping market and, based on market
conditions, will consider taking advantage of long-term time charters at higher
rates when appropriate.

(3) Maintain high quality vessels and improve operating standards through improved standards and procedures, crew training, and repair and maintenance procedures.

We continually evaluate potential transactions that we believe will be earnings accretive, enhance shareholder value, or are in the best interests of the Company, including, but not limited to, business combinations, acquisition of vessels or related businesses, repayment or refinancing of existing debt, issuance of new securities, share buybacks or other operations.

Business Outlook

COVID-19

In March 2020, the World Health Organization (the "WHO") declared COVID-19, to
be a pandemic. The COVID-19 pandemic has had, and continues to have, widespread,
rapidly evolving, and unpredictable impacts on global society, economies,
financial markets, and business practices. Governments have implemented measures
such as social distancing, mask and vaccine mandates, travel restrictions, COVID
testing guidelines and quarantine regulations.

The gross BSI continued to increase in the second quarter of 2022 and averaged
$28,901/day, up 13% as compared to the second quarter of 2021. Although rates
were higher resulting in an improvement in profitability, some of our vessels
experienced delays in drydocking as well as an increase in related drydocking
costs as a result of protocols regarding COVID-19, as well as limitations in
labor. We also experienced loss of revenues due to a number of off-hire days
relating to crew changes and quarantine restrictions as a number of our crew
members tested positive for COVID-19. Our vessel operating expenses specifically
crew change costs, COVID testing and quarantine related costs continue to be
negatively impacted by COVID-19.

While the BSI is at $19,213 per day as of August 4, 2022, the economic activity
levels as well as the demand for dry bulk cargoes may be negatively impacted by
COVID-19. We have instituted measures to reduce the risk of spread of COVID-19
for our crew members on our vessels as well as our onshore offices in Stamford,
Connecticut, Singapore, and Copenhagen. However, if the COVID-19 pandemic
continues to impact the global economy on a prolonged basis, or if the vaccine
is not available on a widespread basis, the rate environment in the drybulk
market and our vessel values may deteriorate and our operations and cash flows
may be negatively impacted.

The impact of recent developments in Ukraine

In February 2022, as a result of the invasion of Ukraine by Russia, economic
sanctions were imposed by the United States, the European Union, the United
Kingdom and a number of other countries on Russian financial institutions,
businesses and individuals, as well as certain regions within the Donbas region
of Ukraine. While it is difficult to estimate the impact of current or future
sanctions on the Company's business and financial position, these sanctions
could adversely impact the Company's operations. In the near term, we have seen,
and expect to continue to see, increased volatility in the region due to these
geopolitical events. The Black Sea region is a major export market for grains
with the Ukraine and Russia exporting a combined 15% of the global seaborne
grain trade. While uncertainty remains with respect to the ultimate impact of
the invasion of Ukraine by Russia, we have seen, and anticipate continuing to
see, significant changes in trade flows. A reduction or stoppage of grain out of
the Black Sea or cargoes from Russia has, and will continue to, negatively
impact the markets in those areas. At the same time, it is possible for us to
see an increase in ton miles as end users find alternative sources for cargo.
For more information regarding the risks relating to economic sanctions as a
result of Russia's invasion of Ukraine as well as the impact on retaining and
sourcing our crew, see Part I, Item 1A, "Risk Factors" of our Form 10-K.



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Fleet management

The management of our fleet includes the following functions:

•Strategic management. We locate and obtain financing and insurance for the
purchase and sale of vessels.
•Commercial management. We obtain employment for our vessels and manage our
relationships with charterers.
•Technical management. We have established an in-house technical management
function to perform 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
indirectly wholly-owned subsidiary, Eagle Bulk Management LLC, a Marshall
Islands limited liability company, which maintains its principal executive
offices in Stamford, Connecticut. We also have offices in Singapore and
Copenhagen, Denmark, through which we provide round the clock management
services to our owned and chartered-in fleet. We currently have 93 shore-based
personnel, including our senior management team and our office staff, who either
directly or through these subsidiaries, provide the following services:

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

Technical management

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.

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 condensed consolidated financial statements,
which have been prepared in accordance with U.S. GAAP 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,
expenses and warrants 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 are based upon our interim
unaudited condensed 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 Report
on Form 10-K for the year ended December 31, 2021, filed with the SEC on March
14, 2022. There have been no material changes from the "Critical Accounting
Policies" previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2021.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at

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the date of the condensed consolidated financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The significant estimates and assumptions of
the Company are the residual value of vessels, the useful lives of vessels, the
value of stock-based compensation, the fair value of operating lease
right-of-use assets, and the fair value of derivatives. Actual results could
differ from those estimates.


Results of operations for the three and six months ended June 30, 2022:

Fleet data

We believe that measures for analyzing future trends in our operating results include the following:


                                  Three Months Ended                        

Semester completed

                           June 30, 2022        June 30, 2021       June 30, 2022       June 30, 2021
Ownership Days                     4,823              4,511                9,593              8,710
Chartered-in Days                  1,142                497                2,102              1,155
Available Days                     5,716              4,824               11,113              9,472
Operating Days                     5,707              4,778               11,088              9,400
Fleet Utilization (%)               99.8  %            99.0  %              99.8  %            99.2  %

In order to understand our analysis of our results of operations, it is important to understand the meaning of the following terms used in our analysis and the factors that affect our results of operations.

•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.

• Charter days: We define charter days as the total number of days in a period in which the company has chartered vessels.

•Available days: We define available days as the number of our ownership days
and chartered-in days less the aggregate number of days that our vessels are
off-hire due to vessel familiarization upon acquisition, repairs, vessel
upgrades or special surveys and other reasons which prevent the vessel from
performing under the relevant charter party such as surveys, medical events,
stowaway disembarkation, etc. 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 six months ended June 30, 2022, the Company
completed drydock for seven vessels.

•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 very high utilization rates.

Time charter and travel revenue

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

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The mix of charters between spot or voyage charters and mid-term time charters
also affects revenues. Because the mix between voyage charters and time charters
significantly affects shipping revenues and voyage expenses, vessel revenues are
benchmarked based on net charter hire income. Net charter hire income comprises
revenue from vessels operating on time charters, and voyage revenue less voyage
expenses from vessels operating on voyage charters in the spot market and
charter hire expenses. Net charter hire income serves as a measure of analyzing
fluctuations between financial periods and as a method of equating revenue
generated from a voyage charter to time charter revenue.

The following table represents net charter rental income (a non-GAAP measure) for the three and six months ended June 30, 2022 and 2021.

                                                 For the Three Months Ended                        For the Six Months Ended
(In thousands)                            June 30, 2022               June 30, 2021          June 30, 2022          June 30, 2021
Revenues, net                           $     198,695                $     129,851          $    383,093           $     226,423
Less: Voyage expenses                          36,290                       24,523                79,917                  51,138
Less: Charter hire expenses                    21,285                        6,170                43,996                  14,650
Net charter hire income                 $     141,120                $      99,158          $    259,180           $     160,635

% Net charter hire income from
Time charters                                      66   %                       55  %                 60   %                  51  %
Voyage charters                                    34   %                       45  %                 40   %                  49  %



Net income

For the three months ended June 30, 2022, the Company reported net income of
$94.5 million, or basic and diluted income of $7.27 per share and $5.77 per
share, respectively. In the comparable quarter of 2021, the Company reported net
income of $9.2 million, or basic and diluted income of $0.76 per share and $0.74
per share, respectively.

For the six months ended June 30, 2022, the Company reported net income of
$147.5 million, or basic and diluted income of $11.36 per share and $9.01 per
share, respectively. In the comparable period of 2021, the Company reported net
income of $19.1 million, or basic and diluted income of $1.60 per share and
$1.58 per share, respectively.

Revenue

Our revenues are derived from time and voyage charters. Net time and voyage
charter revenues for the three months ended June 30, 2022 were $198.7 million
compared with $129.9 million recorded in the comparable quarter in 2021. The
increase in revenues was primarily attributable to higher charter rates as a
result of the market recovery with increase in demand for drybulk products and
an increase in available days due to an increase in owned days and chartered-in
days.

Net time and voyage charter revenues for the six months ended June 30, 2022 and
2021 were $383.1 million and $226.4 million, respectively. The increase in
revenues was primarily due to higher charter rates and an increase in available
days due to an increase in owned days and chartered-in days.

Trip costs

To the extent that we employ our vessels on voyage charters, we will incur
expenses that include bunkers, port charges, canal tolls and cargo handling
operations, as these expenses are borne by the vessel owner on voyage charters.
As is common in the shipping industry, we pay commissions ranging from 1.25% to
5.50% to unaffiliated ship brokers associated with the charterers, depending on
the number of brokers involved with arranging the charter. Bunkers, port
charges, and canal tolls primarily increase in periods during which vessels are
employed on voyage charters because these expenses are for the vessel owner's
account. Voyage expenses for the three months ended June 30, 2022 and 2021 were
$36.3 million and $24.5 million, respectively. The increase in voyage expenses
was primarily due to an increase in bunker consumption expense as bunker fuel
prices increased in the second quarter, an increase in port expenses and an
increase in broker commission expense.

Voyage expenses for the six months ended June 30, 2022 and 2021 were $79.9
million and $51.1 million, respectively. The increase in voyage expenses was
primarily due to an increase in bunker consumption expense as bunker fuel prices
increased in

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the current year compared to the previous year, an increase in port expenses and an increase in brokers’ commission expenses.

Vessel operating expenses

Vessel operating expenses for the three months ended June 30, 2022 were $27.2
million compared to $23.7 million in the comparable quarter in 2021. The
increase in vessel operating expenses was primarily attributable to higher owned
days as well as an increase in crew expenses due to an increase in crewing
costs, crew changes and expenses related to COVID-19 and the war in Ukraine. The
Company also continues to face general inflationary pressures particularly
impacting the cost of lubes, stores and spares. The ownership days for the three
months ended June 30, 2022 and 2021 were 4,823 and 4,511, respectively.

Vessel operating expenses for the six months ended June 30, 2022 and 2021 were
$55.1 million and $45.2 million, respectively. The increase in vessel operating
expenses was primarily attributable to higher owned days as well as an increase
in crew expenses due to an increase in crewing costs, crew changes and expenses
related to COVID-19 and the war in Ukraine. The Company also continues to face
general inflationary pressures particularly impacting the cost of lubes, stores
and spares. The ownership days for the six months ended June 30, 2022 and 2021
were 9,593 and 8,710, respectively.

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, and other miscellaneous
expenses.

Other factors beyond our control, some of which may affect the shipping industry generally, may cause an increase in the operating expenses of our vessels, including, for example, changes in market prices for crew, insurance and petroleum-based lubricants and supplies.

Charter rental fees

The charter hire expenses for the three months ended June 30, 2022 were $21.3
million compared to $6.2 million in the comparable quarter in 2021. The increase
in charter hire expenses was principally due to an increase in chartered-in days
as the Company took delivery of its fifth long term chartered-in vessel during
the second quarter, and an increase in charter hire rates due to improvement in
the charter hire market. The total chartered-in days for the three months ended
June 30, 2022 were 1,142 compared to 497 for the comparable quarter in the prior
year. Between 2017 and 2021, the Company entered into a series of agreements to
charter five Ultramax vessels on a long term basis. The minimum chartered-in
periods ranged between one and four years with an option to extend the duration
between three and 24 months. All five vessels were chartered-in as of June 30,
2022.

The charter hire expenses for the six months ended June 30, 2022 and 2021 were
$44.0 million and $14.6 million, respectively. The increase in charter hire
expenses was primarily due to an increase in charter hire rates due to
improvement in the charter hire market and an increase in the number of
chartered-in days. The total chartered-in days for the six months ended June 30,
2022 and 2021 were 2,102 and 1,155, respectively.

Depreciation and amortization

For the three months ended June 30, 2022 and 2021, total depreciation and
amortization expense was $15.3 million and $13.1 million, respectively. Total
depreciation and amortization expense for the three months ended June 30, 2022
includes $11.9 million of vessel and other fixed assets depreciation and
$3.4 million relating to the amortization of deferred drydocking costs.
Comparable amounts for the three months ended June 30, 2021 were $11.0 million
of vessel and other fixed assets depreciation and $2.1 million of amortization
of deferred drydocking costs. The increase in depreciation expense is due to the
acquisition of nine vessels in 2021, offset by the sale of one vessel in the
third quarter of 2021. The increase in amortization of deferred drydock costs is
related to completing fourteen drydocks since the second quarter of 2021.

For the six months ended June 30, 2022 and 2021, total depreciation and
amortization expense was $29.8 million and $25.6 million, respectively. Total
depreciation and amortization expense for the six months ended June 30, 2022
includes $23.6 million of vessel and other fixed asset depreciation and $6.3
million relating to the amortization of deferred drydocking costs. Comparable
amounts for the six months ended June 30, 2021 were $21.5 million of vessel and
other fixed asset depreciation and $4.1 million of amortization of deferred
drydocking costs. The increase in depreciation expense is due to the acquisition
of nine vessels in 2021, offset by the sale of one vessel in the third quarter
of 2021. The increase in amortization of deferred drydock costs is related to
completing fourteen drydocks since the second quarter of 2021.

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Depreciation is based on the cost of the vessel less its estimated residual
value. We estimate the useful life of our vessels to be 25 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 $300 per lightweight ton,
which we believe is common in the drybulk shipping industry. 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 for vessels older than 15 years and
every five years for vessels younger than 15 years, accordingly, these expenses
are deferred and amortized over these respective periods.

General and administrative expenses

Our general and administrative expenses include onshore vessel administration
related expenses, such as legal and professional expenses, 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 stock-based
compensation expenses.

General and administrative expenses for the three months ended June 30, 2022 and
2021 were $9.9 million and $7.9 million, respectively. General and
administrative expenses include stock-based compensation of $1.6 million and
$0.6 million for the three months ended June 30, 2022 and 2021, respectively.
The increase in general and administrative expenses was mainly attributable to
an increase in consulting expenses, compensation and benefits, and stock-based
compensation expense.

General and administrative expenses for the six months ended June 30, 2022 and
2021 were $19.9 million and $15.6 million, respectively. These general and
administrative expenses include stock-based compensation of $3.1 million and
$1.5 million for the six months ended June 30, 2022 and 2021, respectively. The
increase in general and administrative expenses was primarily attributable to an
increase in consulting expenses, compensation and benefits, and stock-based
compensation expense.

Other operating expenses

Other operating expense for the three months ended June 30, 2022 and 2021 was
$0.04 million and $0.6 million, respectively. In March 2021, the U.S. government
began investigating an allegation that one of our vessels may have improperly
disposed of ballast water that entered the engine room bilges during a repair.
The Company posted a surety bond as security for any fines and penalties. Other
operating expense consists of expenses incurred relating to this incident, which
include legal fees, surety bond expenses, vessel offhire, crew changes and
travel costs.

Other operating expenses for the six months ended June 30, 2022 and 2021 was $0.2 million and $1.5 millionrespectively.

Interest expense

Our interest expense for the three months ended June 30, 2022 and 2021 was $4.3
million and $8.8 million, respectively. The decrease in interest expense is
primarily due to a decrease in outstanding debt and lower interest rates due to
the refinancing of the Company's debt in the fourth quarter of 2021.

Interest expense for the six months ended June 30, 2022 and 2021 was $8.8
million and $17.1 million, respectively. The decrease in interest expense was
primarily due to a decrease in outstanding debt and lower interest rates due to
the refinancing of the Company's debt in the fourth quarter of 2021.

The Company entered into interest rate swaps in October 2021 to fix the interest
rate exposure on the Global Ultraco Debt Facility term loan. As a result of
these swaps, which average 87 basis points, the Company's interest rate exposure
is fully fixed insulating the Company from the rising interest rate environment.

Amortization of debt issuance costs is included in interest expense. These
financing costs relate to costs associated with our various outstanding debt
facilities. For the three months ended June 30, 2022 and 2021, the amortization
of debt issuance costs was $0.5 million and $1.8 million, respectively. For the
six months ended June 30, 2022 and 2021, the amortization of debt issuance costs
was $1.1 million and $3.5 million, respectively. The interest expense for the
three and six months ended June 30, 2021 includes $1.1 million and $2.1 million,
respectively, of interest expense representing the amortization of the equity
component of the Convertible Bond Debt. The Company adopted ASU 2020-06 as of
January 1, 2022 under the modified retrospective approach. The Convertible Bond
Debt will no longer require bifurcation and separate accounting of the equity
component. Refer to Note 2, Recent Accounting Pronouncements, to the condensed
consolidated financial statements for further information.
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Realized and unrealized (gain)/loss on derivative instruments, net

Realized and unrealized gain on derivative instruments, net for the three months
ended June 30, 2022 was $9.9 million compared to a realized and unrealized loss
on derivative instruments, net of $35.9 million for the three months ended
June 30, 2021. The $9.9 million gain is primarily related to $7.6 million in
gains earned on our freight forward agreements as a result of the decrease in
charter hire rates during the second quarter and $2.3 million in bunker swap
gains for the three months ended June 30, 2022. For the three months ended June
30, 2021, the Company had $37.2 million in losses on our freight forward
agreements due to the sharp increase in charter hire rates during the second
quarter of 2021, and $1.3 million in bunker swap gains.

Realized and unrealized gain on derivative instruments, net for the six months
ended June 30, 2022 was $2.0 million compared to a realized and unrealized loss
on derivative instruments, net of $36.6 million for the six months ended
June 30, 2021. The $2.0 million gain is primarily attributable to $6.9 million
in bunker swap gains, offset by $4.9 million in losses incurred on our freight
forward agreements as a result of the increase in charter hire rates in the
current year. For the comparable period in the prior year, the Company had $38.9
million in losses on our freight forward agreements due to the sharp increase in
charter hire rates in 2021, and $2.3 million in bunker swap gains. Refer to Note
5, Derivative Instruments, to the condensed consolidated financial statements
for further information.

Effects of Inflation

The Company believes that its business advantages during periods of high inflation and positive demand growth, as higher charter rates and net revenues, have more than offset cost increases related to operating expenses of vessels, dry-docking and general and administrative costs.

Cash and capital resources

                                                                             Six Months Ended
(In thousands)                                                     June 30, 2022           June 30, 2021
Net cash provided by operating activities                        $      140,214          $       30,585
Net cash used in investing activities                                    (5,543)                (86,503)
Net cash (used in)/provided by financing activities                     (79,363)                 50,868

Net increase/(decrease) in cash, cash equivalents and restricted cash

                                                                     55,308                  (5,050)

Cash, cash equivalents and restricted cash at the beginning of the period

                                                                   86,222                  88,849

Cash, cash equivalents and restricted cash, end of period $141,530 $83,799


Net cash provided by operating activities during the six months ended June 30,
2022 and 2021 was $140.2 million and $30.6 million, respectively. The increase
in cash flows provided by operating activities resulted primarily from the
increase in revenues due to higher charter hire rates.

Net cash used in investing activities during the six months ended June 30, 2022
and 2021 was $5.5 million and $86.5 million, respectively. During the six months
ended June 30, 2022, the Company paid $4.8 million for the purchase of ballast
water treatment systems on our fleet. Additionally, the Company paid $0.5
million for vessel improvements and $0.2 million for other fixed assets. Refer
to Note 3, Vessels, to the condensed consolidated financial statements for
further information.

Net cash used in financing activities during the six months ended June 30, 2022
was $79.4 million compared to net cash provided by financing activities of $50.9
million for the six months ended June 30, 2021. During the six months ended
June 30, 2022, the Company repaid $24.9 million of the Global Ultraco Debt
Facility. The Company also paid $52.8 million in dividends and $1.9 million to
settle net share equity awards.

Our principal sources of funds are operating cash flows, long-term bank
borrowings and borrowings under our revolving credit facility. Our principal use
of funds is capital expenditures to establish and grow our fleet, maintain the
quality of our vessels, comply with international shipping standards and
environmental laws and regulations, fund working capital requirements and repay
interest and principal on our outstanding loan facilities.


                                       8

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Liquidity and Capital Resources Summary

As of June 30, 2022, our cash and cash equivalents including restricted cash was
$141.5 million, compared to $86.2 million at December 31, 2021. The Company had
restricted cash of $2.6 million and $0.1 million as of June 30, 2022 and
December 31, 2021, respectively.

Moreover, from June 30, 2022we have had $100.0 million in an undrawn revolver facility available under the Global Ultraco credit facility.

As of June 30, 2022, the Company's debt consisted of the Global Ultraco Debt
Facility of $262.7 million, net of $7.6 million of debt issuance costs, and the
Convertible Bond Debt of $114.1 million, net of $0.9 million of debt discount
and issuance costs.

We believe that our current financial resources, improved charter hire rates for
the balance of the year and cash generated from operations will be sufficient to
meet our ongoing business needs and other obligations over the next twelve
months. However, our ability to generate sufficient cash depends on many factors
beyond our control including, among other things, the general charter rate
environment.

Capital expenditure

Our capital expenditures relate to vessel purchases and capital improvements to our vessels, which are expected to improve revenue generation capabilities and vessel safety.

In addition to acquisitions that we may undertake in future periods, the other
major capital expenditures include funding the Company's program of regularly
scheduled drydocking, which is necessary to comply with international shipping
standards and environmental laws and regulations. Although the Company has some
flexibility regarding the timing of its drydocking, the costs are relatively
predictable. The Company anticipates that vessels will be drydocked every five
years for vessels younger than 15 years and every two and a half years for
vessels older than 15 years. We anticipate that we will fund these costs with
cash from operations and that these drydocks 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 deferred and amortized on a straight-line basis over the period up to the date of the next scheduled drydocking for these vessels. In the six months ended June 30, 2022seven of our vessels have completed dry docking and we have incurred dry docking expenses of
$16.1 million. In the six months ended June 30, 2021four of our vessels have completed dry docking and we have incurred dry docking expenses of $6.4 million.

The following table represents certain information about the estimated costs for
anticipated vessel drydockings, ballast water treatment systems, and scrubber
installations in the next four quarters, along with the anticipated off-hire
days:

                                                                                  Projected Costs (1) (in millions)
Quarter Ending                                  Off-hire Days(2)            BWTS            Drydocks       Vessel Upgrades(3)
September 30, 2022                                        232         $          0.6    $         1.4    $               0.2
December 31, 2022                                         169         $          0.3    $         1.0    $                 -
March 31, 2023                                            158         $          0.7    $         4.4    $               0.6
June 30, 2023                                             113         $            -    $         3.8    $               0.4


(1) Actual costs will vary based on various factors, including where the drydockings are
performed.
(2) Actual duration of off-hire days will vary based on the age and condition of the
vessel, yard schedules and other factors.
(3) Vessel upgrades represents capex relating to items such as high-spec low friction
hull paint which improves fuel efficiency and reduces fuel costs, NeoPanama Canal chock
fittings enabling vessels to carry additional cargo through the new Panama Canal locks,
as well as other retrofitted fuel-saving devices. Vessel upgrades are discretionary in
nature and evaluated on a business case-by-case basis.


Off-balance sheet arrangements

We have no off-balance sheet arrangements.

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Other eventualities

We refer you to Note 7, Commitments and Contingencies, to our condensed
consolidated financial statements for a discussion of our contingencies. If an
unfavorable ruling were to occur in these matters, there exists the possibility
of a material adverse impact on our business, liquidity, results of operations,
financial position and cash flows in the period in which the ruling occurs. The
potential impact from legal proceedings on our business, liquidity, results of
operations, financial position and cash flows could change in the future.

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