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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________
FORM 10-Q
______________
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
______________

Quarter ended June 30, 2004
  
Commission File Number:
   
1-10231


MC SHIPPING INC.
(Exact name of the registrant as specified in its charter)
______________

LIBERIA
  
98-0101881
(State or other jurisdiction
  
(I.R.S. Employer
of incorporation or organization)
  
Identification No.)

______________

Richmond House, 12 Par-la-ville Road, Hamilton HM CX. Bermuda
(Address of principal executive offices)
______________

441-295-7933
(Registrant's telephone number, including area code)
______________

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 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

 ü 
NO

______________

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

Class
Shares outstanding at
June 30, 2004
 
Common stock,
    
par value $.01
8,724,021
  

 
  1  
 

MC SHIPPING INC. AND SUBSIDIARIES

I N D E X

   
Page
     
PART 1:
FINANCIAL INFORMATION
  
     
Item 1. Financial Statements
  
     
 
Consolidated Balance Sheets - June 30, 2004 and December 31, 2003.
3
     
 
Consolidated Statements of Operations for the Quarters ended June 30, 2004 and June 30, 2003.
5
     
 
Consolidated Statements of Operations for the 6 months ended June 30, 2004 and June 30, 2003
6
     
 
Consolidated Statements of Cash Flows for the 6 months ended June 30, 2004 and June 30, 2003.
7
     
 
Notes to Consolidated Financial Statements
8
 
    
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
13
     
Item 3. Market Risk
16
     
Item 4. Controls and Procedures
17
     
PART II:
OTHER INFORMATION
18
     
 
Signatures
19
     
 
Certifications provided by the Chief Executive Officer and the Chief Financial Officer of the company pursuant to section 302 of the Sarbanes-Oxley Act of 2004
20

 
  2  

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

MC SHIPPING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

ASSETS

   
JUNE 30
  
DECEMBER 31
  
   
2004
  
2003
  
CURRENT ASSETS
              
Cash and cash equivalents
  
$
13,203,696
 
$
16,446,582
 
Restricted cash
    
610,509
   
615,455
 
Hire receivables
   
4,622
   
13,111
 
Recoverable from insurers
    
955,223
   
807,530
 
Inventories
    
766,605
   
582,388
 
Receivables from affiliates
   
(11,329
)
  
76,094
 
Prepaid expenses and other current assets
    
1,188,128
   
1,186,015
 
TOTAL CURRENT ASSETS
    
16,717,454
   
19,727,175
 
               
VESSELS, AT COST
   
109,303,246
   
109,303,246
 
Less - Accumulated depreciation
    
(49,489,299
)
  
(47,114,005
)
     
59,813,947
   
62,189,241
 
               
FURNITURE & EQUIPMENT, AT COST
    
27,403
   
24,304
 
Less - Accumulated depreciation
    
(26,783
)
  
(21,737
)
     
620
   
2,567
 
               
OTHER ASSETS
              
Dry-docking costs (net of accumulated amortisation of $2,716,852 at June 30, 2004 and $2,006,533 at December 31, 2003)
    
4,290,629
   
4,894,163
 
Debt issuance cost (net of accumulated amortisation of $1,545,304 at June 30, 2004 and $1,472,654 at December 31, 2003)
    
380,961
   
502,870
 
TOTAL ASSETS
  
$
81,203,611
 
$
87,316,016
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

 
  3  
 

MC SHIPPING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

LIABILITIES AND SHAREHOLDERS' EQUITY

   
JUNE 30
  
DECEMBER 31
  
   
2004
  
2003
  
           
CURRENT LIABILITIES
          
Accounts payable
  
$
735,451
 
$
612,759
 
Hire received in advance
    
584,843
   
584,843
 
Accrued expenses
    
3,313,477
   
4,435,166
 
Accrued interest
    
1,013,680
   
1,193,420
 
Current portion of long term debt
    
4,179,553
   
4,179,553
 
               
TOTAL CURRENT LIABILITIES
    
9,827,004
   
11,005,741
 
               
LONG TERM DEBT
              
11.25% Senior Notes due 2008
    
23,140,000
   
27,640,000
 
Secured Loans
    
17,351,913
   
19,441,690
 
               
TOTAL LONG TERM DEBT
    
40,491,913
   
47,081,690
 
               
TOTAL LIABILITIES
    
50,318,917
   
58,087,431
 
               
SHAREHOLDERS’ EQUITY
              
Common stock, $.01 par value - 20,000,000 shares authorised 8,724,021 shares issued at June 30, 2004 (8,308,508 at December 31, 2003)
     87,240    
85,302
 
Additional paid-in capital
    
51,241,832
   
52,135,576
 
Less : Treasury stock, at cost - None at June 30, 2004 (221,730 shares at December 31, 2003)
    
-
   
(891,806
)
Accumulated deficit
    
(20,374,612
)
  
(21,905,096
)
Accumulated comprehensive income
    
(69,766
)
  
(195,391
)
     
 
        
     
30,884,694
   
29,228,585
 
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  
$
81,203,611
 
$
87,316,016
 

THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

 
  4  
 

MC SHIPPING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

For the Quarters ended June 30, 2004 and June 30, 2003
(UNAUDITED)

   
JUNE 30
  
JUNE 30
  
   
2004
  
2003
  
           
CHARTERHIRE AND OTHER INCOME
  
$
7,881,660
 
$
9,882,431
 
               
COSTS AND EXPENSES
              
Commission on Charterhire
    
(196,756
)
  
(257,321
)
Vessel Operating Expenses
    
(3,866,093
)
  
(4,735,976
)
Amortisation of Drydocking Costs
    
(355,160
)
  
(259,160
)
Depreciation
    
(1,150,848
)
  
(2,654,142
)
General and Administrative Expenses
    
(734,925
)
  
(240,642
)
OPERATING INCOME
    
1,577,878
    
1,735,190
  
               
OTHER INCOME/(EXPENSES)
              
Interest Expense
    
(913,270
)
  
(1,268,778
)
Interest Income
    
26,547
    
15,954
  
Loss on Repurchases of Notes
    
(20,355
)
  
-
  
Provision for impairment Loss on vessels
    
-
    
32,865
  
               
NET INCOME
  
$
670,800
 
$
515,231
 
               
BASIC AND DILUTED PER SHARE AMOUNTS
              
Net Income
  
$
0.08
 
$
0.06
 
WEIGHTED AVERAGE NUMBER OF
              
SHARES OUTSTANDING