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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 September 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
 September 30, 2004
Common stock,
  
par value $.01
8,765,974
  
  1  
 

MC SHIPPING INC. AND SUBSIDIARIES



I N D E X


   
Page
     
PART 1 :
FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements
  
     
 
Consolidated Balance Sheets - September 30, 2004
and December 31, 2003
3
     
 
Consolidated Statements of Income for the Quarters
ended September 30, 2004 and September 30, 2003.
5
     
 
Consolidated Statements of Income for the 9 months
ended September 30, 2004 and September 30, 2003
6
     
     
 
Consolidated Statements of Cash Flows for the 9 months
ended September 30, 2004 and September 30, 2003.
7
     
     
 
Notes to Consolidated Financial Statements
8
     
Item 2.
Management's Discussion and Analysis of
 
 
Financial Condition and Results of Operation
14
     
Item 3.  Market Risk
17
     
Item 4.
Controls and Procedures
17
     
     
PART II:
OTHER INFORMATION
19
     
 
Signatures
20
     
 
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
21
  
  2  
 

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

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

ASSETS
   
SEPTEMBER 30
  
DECEMBER 31
  
 
2004
  
2003
  
CURRENT ASSETS
          
Cash and cash equivalents
  
$
10,957,780
  
$
16,446,582
  
Restricted cash
    
148,597
    
615,455
 
Hire receivables
   
7,426
    
13,111
 
Recoverable from insurers
    
609,821
   
807,530
 
Inventories
    
623,487
    
582,388
 
Receivables from affiliates
   
61,659
    
76,094
 
Prepaid expenses and other current assets
    
1,139,966
    
1,186,015
 
TOTAL CURRENT ASSETS
    
13,548,736
    
19,727,175
 
               
VESSELS, AT COST
   
109,303,246
   
109,303,246
 
Less - Accumulated depreciation
    
(50,639,413
)
  
(47,114,005
)
     
58,663,833
   
62,189,241
 
               
FURNITURE & EQUIPMENT, AT COST
    
27,793
    
24,304
 
Less - Accumulated depreciation
    
(27,685
)
  
(21,737
)
     
108
    
2,567
 
               
OTHER ASSETS
              
Dry-docking costs (net of accumulated amortisation of
$3,050,966 at September 30, 2004 and $2,006,533 at
December 31, 2003)
    
3,934,656
    
4,894,163
 
Debt issuance cost (net of accumulated amortisation of
$1,580,048 at September 30, 2004 and $1,472,654 at
December 31, 2003)
    
326,495
    
502,870
 
TOTAL ASSETS
  
$
76,473,828
  
$
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

   
SEPTEMBER 30
  
DECEMBER 31
  
 
2004
  
2003
  
           
CURRENT LIABILITIES
          
Accounts payable
    
251,365
  
$
612,759
  
Hire received in advance
    
584,843
    
584,843
 
Accrued expenses
    
2,608,539
    
4,435,166
 
Accrued interest
    
254,649
    
1,193,420
 
Current portion of long term debt
    
4,179,553
   
4,179,553
 
11.25% Senior Notes called as of Nov 1, 2004
    
21,100,000
    
-
  
               
TOTAL CURRENT LIABILITIES
    
28,978,949
    
11,005,741
 
               
LONG TERM DEBT
              
11.25% Senior Notes due 2008
    
-
    
27,640,000
 
Secured Loans
    
15,935,262
   
19,441,690
 
               
TOTAL LONG TERM DEBT
    
15,935,262
   
47,081,690
 
               
TOTAL LIABILITIES
    
44,914,211
    
58,087,431
 
               
SHAREHOLDERS' EQUITY
              
Common stock, $.01 par value - 20,000,000 shares authorised
              
8,765,974 shares issued at September 30, 2004 (8,530,238 at
             
December 31, 2003)
    
87,660
   
85,302
 
Additional paid-in capital
    
51,280,010
   
52,135,576
 
Less : Treasury stock, at cost - None at September 30, 2004 (221,730 shares at December 31, 2003)
    
-
   
(891,806
)
Accumulated deficit
    
(19,880,775
)
  
(21,905,096
)
Accumulated comprehensive income
    
72,722
    
(195,391
)
     
       
     
31,559,617
    
29,228,585
 
               
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
76,473,828
  
$
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 September 30, 2004 and September 30, 2003
(UNAUDITED)

   
SEPTEMBER 30
  
SEPTEMBER 30
  
   
2004
  
2003
  
           
CHARTERHIRE AND OTHER INCOME
  
$
8,127,173
  
$
7,911,048
  
               
COSTS AND EXPENSES
              
Commission on Charterhire
    
(186,890
)
  
(210,544
)
Vessel Operating Expenses
    
(4,129,633
)
  
(4,899,586
)
Amortisation of Dry-docking Costs
    
(334,111
)
  
(359,701
)
Depreciation
    
(1,150,659
)
  
(1,549,717
)
General and Administrative Expenses
    
(857,011
)
  
(253,775
)
OPERATING INCOME
    
1,468,869
    
(637,725
)
               
OTHER INCOME/(EXPENSES)
              
Interest Expense
    
(965,152
)