Vessels and vessel improvements

As of December 31, 2017, the Company’s operating fleet consisted of 47 dry bulk vessels.

As of December 31, 2015, the Company identified six vessels which it was probable that the Company was going to sell, and recognized an impairment charge in 2015 of $50,872,734. The carrying value of these vessels prior to impairment in 2015 was $76,332,734. As the value of such vessels further declined in the first quarter of 2016, the Company recorded an additional impairment charge of $6,167,262 in that quarter. Out of the six vessels initially identified in 2015, all vessels have been sold as of December 31, 2017.

As of December 31, 2016, as part of our fleet renewal program, management considered it probable that we would divest some of our older vessels as well as certain less efficient vessels from its fleet to achieve operating cost savings. The Company identified two groups of vessels. Group 1 vessels were selected based on the shipyard they were built and their technical specifications. The group consisted of five sister ships constructed in Dayang shipyard with 53,000 dwt. These vessels were identified by management as having poorer fuel efficiency, among other reasons, compared to their peers. The second group of 11 vessels were older than 13 years and less than 53,000 dwt. As vessels get older, they become more expensive to maintain and drydock. Additionally, management’s strategy entails moving to larger Ultramax vessels as the Company renews its fleet. For those sixteen vessels, management believed that it is probable that such vessels will be sold within the next two years. Based on management’s projected undiscounted cash flows prior to sale, factoring the probability of sale, such vessels were determined to be impaired, and written down to their current fair value as of December 31, 2016, which was determined by obtaining broker quotes from two unaffiliated shipbrokers. As a result, the Company recorded an impairment charge of $122,860,600 in the fourth quarter of 2016. The carrying value of these vessels prior to impairment was $234,860,600. Out of the vessels impaired as of December 31, 2016, the Company sold two vessels during 2017 and signed a memorandum of sale on the third vessel. For non recurring fair value disclosure, please refer to "Note. 9 Derivative instruments and Fair value measurements" to the consolidated financial statements.

On November 14, 2016, the Company, through its subsidiary Eagle Bulk Shipco LLC, signed a memorandum of agreement to acquire a 2017 built 64,000 dwt SDARI-64 Ultramax dry bulk vessel constructed at Chengxi Shipyard Co., Ltd for $17.9 million. The Company took delivery of the vessel, the Singapore Eagle, on January 11, 2017.

On February 28, 2017, Ultraco, a wholly-owned subsidiary of the Company, entered into a framework agreement with Greenship Bulk Manager Pte. Ltd., as Trustee-Manager of Greenship Bulk Trust, a Norwegian OTC-listed entity (the "Greenship Sellers"), for the purchase of nine modern sister vessels (the "Greenship Vessels") built between 2012 and 2015, (the "Greenship Purchase Agreement"). The aggregate purchase price for the nine Greenship Vessels is $153.0 million. The allocated purchase price for each Greenship Vessel is $17.0 million. The Company took delivery of all nine Greenship Vessels prior to December 31, 2017.

For the year ended December 31, 2017, the Company sold four vessels (Redwing, Sparrow, Woodstar and Wren) for total net proceeds of $26.0 million after brokerage commissions and associated selling expenses and recorded a net gain of $2.1 million. A portion of the proceeds was used toward repayment of the term loan under the First Lien Facility. Please refer to "Note 8 Debt - First Lien Facility" to the consolidated financial statements.

On August 30, 2017, the Company signed a memorandum of agreement to sell the vessel Avocet for $9.6 million after brokerage commissions and associated selling expenses. The vessel is expected to be delivered to the buyers in the second quarter of 2018. The Company expects to recognize a gain of $0.3 million. As of December 31, 2017, the Company reported the carrying amount of the vessel as a vessel held for sale in its Consolidated Balance Sheet.

On December 19, 2017, the Company signed a memorandum of agreement to purchase a 2015 built Ultramax vessel for $21.275 million. As of December 31, 2017, the Company paid a deposit of $2.2 million. The Company took delivery of the vessel in the first quarter of 2018.



	December 31, 2017			December 31, 2016

Vessel and vessel improvements at the beginning of the year	$	567,592,950		$	733,960,731
Advance paid for purchase of Singapore Eagle at December 31, 2016	1,926,886			—
Purchase of Vessels and vessel improvements	174,400,746			19,860,401
Disposal of Vessels	(15,218,633		)	(13,102,860		)
Reclassification to vessels held for sale	(9,316,095		)	(8,688,601		)
Depreciation Expense	(29,149,435		)	(35,408,859		)
Vessel impairment charge	$	—		$	(129,027,862	)
Vessels and Vessel Improvements, at December 31, 2017	$	690,236,419		$	567,592,950