**Exhibit
      99.1 to Form 6-K**

















**Table
      of contents**




1.
              Summary2.
              Risk
                  factors3.
              Description
                  of the Company4.
              Financial
                  information and selected financial
                  data5.
              Operating
                  and financial review and capital
                  resources6.
              Organisation,
                  Board and
                  management7.
              Share
                  capital and shareholder matters8.
              Related
                  party agreements9.
              Legal
                  issues10.
              Definitions
                  and glossary of terms






**Appendices**




Appendix
                  1
              B+H
                  Ocean Carriers Ltd. BylawsAppendix
                  2
              Audit
                  Committee CharterAppendix
                  3
              Audited
                  Financial Statements 2004Appendix
                  4
              Audited
                  Financial Statements 2003Appendix
                  5
              Audited
                  Financial Statements 2002Appendix
                  6
              Unaudited
                  Financial Statements per June 30,
                  2005























**1**
            **Summary**




*The
      following information should be read in conjunction with, and is qualified
      in
      its entirety by, the appendices appearing elsewhere in this document and other
      public filings of the B + H Ocean Carriers Ltd. (the
“Company”).*




**2**
            **Risk
                factors**




*The
      risks discussed below are not the only risks that may affect the Company’s
      business or the value of the Company’s Shares. Additional risks not presently
      known to the Company or considered immaterial may also impair the Company’s
      business operations and prospects.*





**2.1**
            **Industry
                Specific Risk Factors**






**2.1.1**
            **The
                cyclical nature of the international shipping industry may lead to
                volatile changes in charter rates and vessel values, which may adversely
                affect its earnings**




The
      international shipping industry is cyclical with attendant volatility in
      profitability, charter rates and vessel values. In the recent past, charter
      rates and vessel values reached historically high levels in the tanker and
      dry
      bulk markets. In the past several months, however, rates for dry bulk and liquid
      cargo vessels types have declined. Because many factors influencing the supply
      of, and demand for, vessel capacity are unpredictable, the timing, direction
      and
      degree of changes in the international shipping industry are also not
      predictable.





The
      degree of charter rate volatility among different types of carriers has varied
      greatly. The Company is exposed to changes in spot rates and such changes affect
      the Company’s earnings and the value of the Company’s carriers at any given
      time.





During
      2004 the shipping industry was in a relatively unusual position. That is, each
      of its major sectors — dry cargo vessels, tankers and containerships — were
      prospering. This triggered an upsurge in newbuilding activity across each of
      these fleet sectors. In addition, newbuilding demand was and is also strong
      for
      Liquefied Natural Gas (LNG) carriers and other specialized ship categories.
      The
      significance of this is that the availability of uncommitted newbuilding berths
      for vessel delivery before the third and fourth quarter of 2008 is scarce.
      This
      has had a positive effect on the value of second hand vessels.







**2.1.2**
            **The
                international shipping industry reached a historic high in the recent
                past
                and future freight rates will depend on whether continued world economic
                growth will create tonnage demand sufficient to balance tonnage
                supply**




In
      the
      fourth quarter of 2004, charter rates for both dry bulk and liquid cargo in
      the
      international shipping industry reached historic highs. In 2005, however, rates
      for dry bulk and liquid cargo vessels declined. The reasons for such decline
      can
      be attributed to an inventory correction in China, as well as seasonal weakness
      lasting longer than anticipated, the impact of Hurricane Katrina in addition
      to
      a large number of new ships being built and delivered.





The
      Company anticipates that the future demand and charter rates for its carriers
      will be dependent upon continued economic growth in China’s, India’s and the
      rest of the world’s economy, seasonal and regional changes in demand and changes
      in the capacity of the world fleet. The capacity of the world fleet seems likely
      to increase, and there can be no assurance that economic growth will be
      sufficient to match it. Adverse economic, political, social or other
      developments could have a material adverse effect on the Company’s business and
      results of operations.





The
      factors affecting the supply and demand for vessels are outside of the Company’s
      control, and the nature, timing and degree of changes in industry conditions
      are
      unpredictable. Factors that influence demand for vessel capacity
      include:





·
            supply
                of and demand for liquid and dry bulk
                commodities;


·
            global
                and regional economic conditions;


·
            the
                distance and volumes of cargoes (ton miles) to be moved by sea;
                and


·
            changes
                in seaborne and other transportation
                patterns.





The
      factors that influence the supply of vessel capacity include:





·
            the
                capacity of shipyards and the number of newbuilding
                deliveries;


·
            the
                scrapping rate of older vessels;


·
            changes
                in environmental and other regulations that may limit the useful
                life of
                vessels;


·
            the
                number of vessels that are out of service;
                and


·
            changes
                in global economic activity and production of
                goods.







**2.1.3**
            **Operations
                outside the United States may increase the volatility of the Company’s
                business**




The
      operations of the Company are conducted primarily outside the United States
      and
      therefore may be affected by currency fluctuations and by changing economic,
      political and governmental conditions in the countries where its vessels operate
      and are registered. Future hostilities or other political instability in the
      regions in which the Company conducts its operations could affect the Company’s
      trade patterns and could adversely affect the Company’s business and results of
      operations. Although the substantial majority of the Company’s revenues and
      expenses have historically been denominated in United States dollars, there
      can
      be no assurance that the portion of the Company’s business conducted in other
      currencies will not increase in the future, which could expand the Company’s
      exposure to losses arising from currency fluctuations.







**2.1.4**
            **An
                economic slowdown in the Asia Pacific region could have a material
                adverse
                effect on its business, financial position and results of
                operations**




A
      significant number of the port calls made by its vessels involve the loading
      or
      discharging of cargoes in ports in the Asia Pacific region. As a result, a
      negative change in economic conditions in any Asia Pacific country, but
      particularly in China, India or Japan, may have an adverse effect on its
      business, financial position and results of operations, as well as its future
      prospects. In particular, in recent years, China has been one of the world’s
      fastest growing economies in terms of gross domestic product. The Company cannot
      provide assurance that such growth will be sustained or that the Chinese economy
      will not experience negative growth in the future. Moreover, any slowdown in
      the
      economies of the United States, the European Union or certain Asian countries
      may adversely effect economic growth in China and elsewhere. The Company’s
      business, financial position and results of operations, as well as its future
      prospects, will likely be materially and adversely affected by an economic
      downturn in any of these countries.







**2.1.5**
            **The
                Company is subject to regulation and liability under environmental
                laws
                that could require significant expenditures and affect its cash flows
                and
                net income**




The
      Company’s operations are subject to extensive regulation in the form of local,
      national and foreign laws, as well as international treaties and conventions
      that can subject it to material liabilities for environmental
      events.





The
      operation of its vessels is affected by the requirements set forth in the
      International Management Code for the Safe Operation of Ships and Pollution
      Prevention (the “ISM Code”). The ISM Code requires shipowners and bareboat
      charterers to develop and maintain an extensive “Safety Management System” that
      includes the adoption of a safety and environmental protection policy setting
      forth instructions and procedures for safe operation and describing procedures
      for dealing with emergencies. The failure of a shipowner or bareboat charterer
      to comply with the ISM Code may subject such party to increased liability,
      may
      decrease available insurance coverage for the affected vessels, and may result
      in a denial of access to, or detention in, certain ports. Currently, each of
      the
      vessels in its fleet is ISM Code-certified. However, there can be no assurance
      that such certification will be maintained indefinitely.





The
      United States Oil Pollution Act of 1990, or OPA, provides that owners, operators
      and bareboat charterers are strictly liable for the discharge of oil in U.S.
      waters, including the 200 nautical mile zone off the U.S. coasts. OPA provides
      for unlimited liability in some circumstances, such as a vessel operator’s gross
      negligence or willful misconduct. However, in most cases OPA limits liability
      to
      the greater of $1,200 per gross ton or $10 million per vessel. OPA also permits
      states to set their own penalty limits. Most states bordering navigable
      waterways impose unlimited liability for discharges of oil in their
      waters.





The International
      Maritime Organization, or IMO ,
      has
      adopted a similar liability scheme that imposes strict liability for oil spills,
      subject to limits that do not apply if the release is caused by the vessel
      owner’s intentional or reckless conduct.





The
      U.S.
      has established strict deadlines for phasing-out single-hull oil tankers, and
      both the IMO and the European Union have proposed or established similar
      phase-out periods. Under OPA, all oil tankers that do not have double hulls
      will
      be phased out by 2015 and will not be permitted to come to United States ports
      or trade in United States waters. Should the Company not go through with its
      plans to convert its product tankers to double hull, these seven tankers, or
      43%
      by DWT of the Company’s total fleet, will be prohibited from carrying crude oil,
      petroleum products and certain vegetable oils in U.S. waters from their
      respective 25 th year
      anniversary date, i.e. between 2006 - 2011. The Company’s Panamax product tanker
      might however, due to its double sides, be able to trade to the U.S. without
      conversion to double hull until 2015, subject to approval by flag state and
      port
      authorities.





In
      December 2003, the IMO adopted a proposed amendment to the International
      Convention for the Prevention of Pollution from Ships to accelerate the phase
      out of single-hull and non-qualifying double sided tankers from 2015 to 2010
      unless the relevant flag states extend the date to 2015. This proposed amendment
      took effect in April 2005.





The
      Company expects that should it not go forward with its plans to convert its
      six
      single-hull tankers and its double sided tanker to double hull, these vessels
      will be unable to carry crude oil, petroleum products and certain vegetable
      oils
      in many markets commencing between 2007 and 2009. Moreover, the IMO or other
      regulatory bodies may adopt further regulations in the future that could
      adversely affect the useful lives of the Company’s tankers as well as its
      ability to generate income from them.





The
      Panama Canal Authority (PCA) recently issued an Advisory announcing that it
      may
      exercise its authority to deny the transit of a single-hull oil tanker which
      has
      been granted a Flag State exemption from the phase-out provisions of MARPOL
      (the
      International Convention for the Prevention of Pollution from Ships). If it
      does
      allow such transit, all additional costs or resources provided to minimize
      the
      risk of environmental damage will be charged to the vessel. The PCA will
      evaluate each ship on a case-by-case basis.





These
      requirements can affect the resale value or useful lives of its vessels. As
      a
      result of accidents such as the November 2002 oil spill relating to the loss
      of
      the *M/T
      Prestige* ,
      a then
      26-year old single-hull tanker (not owned by the Company), the Company believes
      that regulation of the tanker industry will continue to become more stringent
      and more expensive for the Company and its competitors. Substantial violations
      of applicable requirements or a catastrophic release from one of its vessels
      could have a material adverse impact on its financial condition and results
      of
      operations as well as its reputation in the crude oil and refined petroleum
      products sectors, and could therefore negatively impact its ability to obtain
      charters for its ships.







**2.1.6**
            **The
                Company’s vessels are subject to inspection by a classification
                society**




The
      hull
      and machinery of every commercial vessel must be classed by a classification
      society authorized by its country of registry. The classification society
      certifies that a vessel is safe and seaworthy in accordance with the applicable
      rules and regulations of the country of registry of the vessel and the Safety
      of
      Life at Sea Convention. The Company’s fleet is currently classed by the American
      Bureau of Shipping, Bureau Veritas and Det Norske Veritas. American Bureau
      of
      Shipping has awarded ISM certification to eight of its vessels and Lloyds
      Register EMEA to three of its vessels.





A
      vessel
      must undergo Annual Surveys, Intermediate Surveys and Special Surveys. In lieu
      of a Special Survey, a vessel’s machinery may be on a continuous survey cycle,
      under which the machinery would be surveyed periodically over a five-year
      period. The Company’s vessels are on Special Survey cycles for hull inspection
      and continuous survey cycles for machinery inspection. Every vessel above
      fifteen years of age is also required to be drydocked every two to three years
      for inspection of the underwater parts of such vessel.





If
      any
      vessel does not maintain its class or fails any Annual Survey, Intermediate
      Survey or Special Survey, the vessel will be unable to trade between ports
      and
      will be unemployable and the Company could be in violation of certain covenants
      in its loan agreements. This would negatively impact its revenues.







**2.1.7**
            **Maritime
                claimants could arrest its vessels, which could interrupt its cash
                flow**




Crew
      members, suppliers of goods and services to a vessel, shippers of cargo and
      other parties may be entitled to a maritime lien against that vessel for
      unsatisfied debts, claims or damages. In many jurisdictions, a maritime
      lienholder may enforce its lien by arresting a vessel through foreclosure
      proceedings. The arrest or attachment of one or more of its vessels could
      interrupt its cash flow and require us to pay large sums of funds to have the
      arrest lifted.





In
      addition, in some jurisdictions, such as South Africa, under the “sister ship”
theory of liability, a claimant may arrest both the vessel which is subject
      to
      the claimant’s maritime lien and any “associated” vessel, which is any vessel
      owned or controlled by the same owner. Claimants could try to assert “sister
      ship” liability against one vessel in its fleet for claims relating to another
      of its ships.







**2.1.8**
            **Governments
                could requisition the Company’s vessels during a period of war or
                emergency, resulting in loss of
                earnings**




A
      government could requisition for title or seize the Company’s vessels.
      Requisition for title occurs when a government takes control of a vessel and
      becomes the owner. Also, a government could requisition its vessels for hire.
      Requisition for hire occurs when a government takes control of a vessel and
      effectively becomes the charterer at dictated charter rates. Generally,
      requisitions occur during a period of war or emergency. Government requisition
      of one or more of the Company’s vessels may negatively impact its
      revenues.







**2.1.9**
            **The
                shipping business is subject to the effect of world
                events**




Terrorist
      attacks such as the attacks on the United States on September 11, 2001, and
      the
      continuing response of the United States to these attacks, as well as the threat
      of future terrorist attacks, continue to cause uncertainty in the world
      financial markets and may affect the Company’s business, results of operations
      and financial condition. The recent conflict in Iraq may lead to additional
      acts
      of terrorism and armed conflict around the world, which may contribute to
      further economic instability in the global financial markets. These
      uncertainties could also adversely affect its ability to obtain additional
      financing on terms acceptable to us or at all.





Terrorist
      attacks, such as the attack on the vessel *Limburg* in
      October 2002, may in the future also negatively affect the Company’s operations
      and financial condition and directly impact the Company’s vessels or customers.
      Future terrorist attacks could result in increased volatility of the financial
      markets in the United States and globally and could result in an economic
      recession in the United States or the world. Any of these occurrences could
      have
      a material adverse impact on its operating results, revenue and
      costs.







**2.2**
            **Company
                Specific Risk Factors**






**2.2.1**
            **The
                Company’s business is dependent on the markets for product tankers and
                OBOs, which are cyclical**




The
      Company’s fleet consists of seven product tankers and five OBOs. Thus, the
      Company is dependent upon the petroleum product, vegetable oil, chemical and
      the
      dry bulk markets as its primary sources of revenue. These markets and the
      industries that affect them have historically been subject to substantial
      fluctuation as a result of, among other things, economic conditions in general
      and demand for petroleum products, steel and iron ore, coal, vegetable oil
      and
      chemicals, in particular. Any material seasonal fluctuation in the industry
      or
      any material diminution in the level of activity therein could have a material
      adverse effect on the Company’s business and operating results. The
      profitability of these vessels and their asset value varies with the changes
      in
      the supply of and demand for such vessels.





The
      factors affecting such supply and demand are described in more detail under
      “Industry Specific Risk Factors” above.







**2.2.2**
            **Single
                hull and double sided vessels are being phased
                out**




The
      Company’s seven product tankers, or 43% by DWT of its total fleet, are single
      hull or double sided vessels. Under the United States Oil Pollution Act of
      1990,
      all oil tankers that do not have double hulls will be phased out over a 20-year
      period (1995-2015) based on size, age and place of discharge, unless retrofitted
      with double-hulls, and will not be permitted to come to United States ports
      or
      trade in United States waters. The European Union has required the phase out
      of
      single hull vessels carrying “heavy oil” and as a result its single hull vessels
      are prohibited from carrying such product to European Union ports. In addition,
      due to regulations adopted by the International Maritime Organization (“IMO”)
      under Annex I (oil) of MARPOL (the International Convention for the Prevention
      of Pollution from Ships), single hull tankers must be phased out over the course
      of the period between 2005 and 2010. As a result of the MARPOL regulations,
      the
      Company expects that its seven product tankers will be unable to carry crude
      oil
      and petroleum products in many markets commencing between 2007 and 2009. Unless
      these vessels are converted to double hull vessels, they will no longer be
      marketable to charterers after such time and will be required to be scrapped.
      There is no assurance that the Company will be able to convert these vessels
      prior to the phase out time, and the cost of conversion could potentially impose
      a financial burden upon the Company.







**2.2.3**
            **The
                Company’s fleet consists of second-hand
                vessels**




The
      Company’s fleet includes seven product tankers, six of which are older than 20
      years of age and approaching the end of their useful life as product tankers
      with their current single hull or double sided hull configuration. The Company’s
      OBO fleet includes five OBOs built 1986, 1992, 1993, 1994 and 1994,
      respectively. All of the vessels were acquired second-hand. The Company intends
      to purchase additional second-hand vessels. In general, expenditures necessary
      for maintaining a vessel in good operating condition increase with the age
      of
      the vessel.





Moreover,
      second-hand vessels typically carry very limited warranties with respect to
      their condition at time of purchase, as compared to warranties available for
      newbuildings. Because of improvements in engine technology, older vessels are
      typically less fuel efficient than newer vessels. Changes in governmental
      regulations, safety or other equipment standards may require expenditures for
      alterations to existing equipment or the addition of new equipment to the
      vessels and restrict the cargoes that the vessels may transport. There can
      be no
      assurance that market conditions will justify such expenditures or enable the
      Company to generate sufficient income or cash flow to allow it to meet its
      debt
      obligations.







**2.2.4**
            **The
                Company is subject to financial risks related to the purchase of
                additional vessels**




The
      Company’s current business strategy includes the acquisition of newer,
      high-quality secondhand vessels. Such vessels will likely be purchased at what
      are now historically high vessel prices. If charter rates fall in the future,
      the Company may not be able to recover all of its investments in the new ships
      or even satisfy its payment obligations on its debt facilities that may be
      increased to finance the purchase of such new vessels. There can also be no
      assurance that such acquisitions will be available on terms favorable to the
      Company or that, if acquired, such second-hand vessels will have sufficient
      useful lives or carry adequate warranties.







**2.2.5**
            **The
                Company may be subject to loss and liability for which it may not
                be fully
                insured**




The
      operation of any ocean-going vessel carries an inherent risk, without regard
      to
      fault, of catastrophic marine disaster, mechanical failure, collision and
      property losses to the vessel. Also, the business of the Company is affected
      by
      the risk of environmental accidents, the risk of cargo loss or damage, the
      risk
      of business interruption because of political action in foreign countries,
      labor
      strikes and adverse weather conditions, all of which could result in loss of
      revenues, increased costs or loss of reputation.





The
      Company maintains, and intends to continue to maintain, insurance consistent
      with industry standards against these risks. The Company procures hull and
      machinery insurance and protection and indemnity insurance, which includes
      environmental damage and pollution insurance coverage and war risk insurance
      for
      its fleet. The Company does not maintain insurance against loss of hire for
      its
      product tankers, which covers business interruptions that result in the loss
      of
      use of a vessel. There can be no assurance that all risks will be adequately
      insured against, that any particular claim will be paid out of such insurance
      or
      that the Company will be able to procure adequate insurance coverage at
      commercially reasonable rates in the future. More stringent environmental and
      other regulations may result in increased costs for, or the lack of availability
      of, insurance against the risks of environmental damage, pollution, damages
      asserted against the Company or the loss of income resulting from a vessel
      being
      removed from operations. The Company’s insurance policies contain deductibles
      for which the Company will be responsible and limitations and exclusions which
      may increase its costs or lower its revenue.





The
      Company places a portion of its Hull and Machinery insurance with Northampton
      Assurance Ltd (“NAL”), an affiliated insurance company, the great majority of
      which NAL reinsures with market underwriters. Although the reinsurers are
      investment grade insurance companies, it is possible that they might default
      in
      the settlement of a claim. Although the Company believes that NAL is adequately
      capitalized, in the event the reinsurers default, NAL, as primary insurer,
      may
      be unable in turn to settle the Company’s claim.





Moreover,
      even if insurance proceeds are paid to the Company to cover the financial losses
      incurred following the occurrence of one of these events, there can be no
      assurance that the Company’s business reputation, and therefore its ability to
      obtain future charters, will not be materially adversely affected by such event.
      Such an impact on the Company’s business reputation could have a material
      adverse effect on the Company’s business and results of operations. The Company
      may not be able to obtain adequate insurance coverage for its fleet in the
      future. The insurers may not pay particular claims.







**2.2.6**
            **Risks
                involved with operating ocean-going vessels could affect the Company’s
                business and reputation, which would adversely affect its revenues
                and
                stock price**




The
      operation of an ocean-going vessel carries inherent risks. These risks include
      the possibility of:


·
            marine
                disaster;


·
            piracy;


·
            environmental
                accidents;


·
            cargo
                and property losses or damage; and


·
            business
                interruptions caused by mechanical failure, human error, war, terrorism,
                political action in various countries, labor strikes or adverse weather
                conditions.





Any
      of
      these circumstances or events could increase the Company’s costs or lower its
      revenues.





The
      involvement of its vessels in an oil spill or other environmental disaster
      may
      harm its reputation as a safe and reliable vessel operator and lead to a loss
      of
      customers and revenue.







**2.2.7**
            **The
                Company may suffer adverse consequences from the fluctuation in the
                market
                value of its vessels**




The
      fair
      market value of its vessels may increase and decrease significantly depending
      on
      a number of factors including:


·
            supply
                and demand for cargoes, including crude oil, petroleum products,
                vegetable
                oil, ores, coal and grain;


·
            general
                economic and market conditions affecting the shipping
                industry;


·
            competition
                from other shipping companies;


·
            types
                and sizes of vessels;


·
            other
                modes of transportation;


·
            cost
                of building new vessels;


·
            governmental
                or other regulations;


·
            prevailing
                level of charter rates; and


·
            technological
                advances.





If
      the
      Company sells vessels at a time when vessel prices have fallen and before the
      Company has recorded an impairment adjustment, based on its test for impairment,
      to its financial statements, the sale may be at less than the vessel’s carrying
      amount on its financial statements, resulting in a loss and a reduction in
      earnings.





In
      addition, the Company’s mortgage indebtedness at December 31, 2004 of $29.3
      million is secured by mortgages on the existing fleet of vessels of the Company
      and its subsidiaries. If the market value of its fleet declines, the Company
      may
      not be in compliance with certain provisions of its existing credit facilities
      and the Company may not be able to refinance its debt or obtain additional
      financing. If the Company is unable to pledge additional collateral, its lenders
      could accelerate its debt and foreclose on its fleet.







**2.2.8**
            **The
                Company’s vessels may suffer damage and the Company may face unexpected
                drydocking costs, which could affect its cash flow and financial
                condition**




If
      the
      Company’s vessels suffer damage, they may need to be repaired at a drydocking
      facility. The costs of drydock repairs are unpredictable and can be substantial.
      The Company may have to pay drydocking costs that its insurance does not cover.
      The loss of earnings while these vessels are being repaired and repositioned,
      as
      well as the actual cost of these repairs, would decrease its
      earnings.







**2.2.9**
            **Purchasing
                and operating previously owned, or secondhand, vessels may result
                in
                increased operating costs and vessels off-hire, which could adversely
                affect its earnings**




The
      Company’s inspection of secondhand vessels prior to purchase does not provide it
      with the same knowledge about their condition and cost of required (or
      anticipated) repairs that the Company would have had if these vessels had been
      built for and operated exclusively by us. Generally, the Company does not
      receive the benefit of warranties on secondhand vessels.





As
      of
      March 1, 2006, the average age of the vessels in its fleet was 18 years. Older
      vessels are typically less fuel efficient and more costly to maintain than
      more
      recently constructed vessels due to improvements in engine technology. Cargo
      insurance rates increase with the age of a vessel, making older vessels less
      desirable to charterers.





Governmental
      regulations, safety or other equipment standards related to the age of vessels
      may require expenditures for alterations or the addition of new equipment,
      to
      its vessels and may restrict the type of activities in which the vessels may
      engage. The Company cannot assure that, as its vessels age, market conditions
      will justify those expenditures or enable us to operate its vessels profitably
      during the remainder of their useful lives. If the Company sell vessels, the
      Company is not certain that the price for which the Company sells them will
      equal at least their carrying amount at that time.





The
      Company is an international company and primarily conducts its operations
      outside the United States. Changing economic, political and governmental
      conditions in the countries where the Company is engaged in business or where
      its vessels are registered affect us. In the past, political conflicts,
      particularly in the Arabian Gulf, resulted in attacks on vessels, mining of
      waterways and other efforts to disrupt shipping in the area. For example, in
      October 2002, the vessel *Limburg* was
      attacked by terrorists in Yemen. Acts of terrorism and piracy have also affected
      vessels trading in regions such as the South China Sea. Following the terrorist
      attack in New York City on September 11, 2001, and the military response of
      the
      United States, the likelihood of future acts of terrorism may increase, and
      its
      vessels may face higher risks of being attacked in the Middle East region.
      In
      addition, future hostilities or other political instability in regions where
      its
      vessels trade could affect its trade patterns and adversely affect its
      operations and performance.







**2.2.10**
            **The
                market for product tanker and OBO charters is highly
                competitive**




The
      ownership of the world’s product tanker fleet is fragmented. Competition in the
      industry among vessels accepted by major oil companies is primarily based on
      freight rates, but also vessel specification, reputation, ownership and
      age.





There
      are
      approximately 1,100 crude oil and product tankers worldwide of between 25,000
      and 50,000 DWT. Many product tankers are owned in groups or pools comprising
      up
      to about 25 vessels. The OBO industry is also fragmented and competition is
      also
      primarily based on freight rates, but also vessel specification, reputation,
      ownership and age. There are approximately 78 OBOs worldwide of between 50,000
      and 100,000 DWT. In this size range, the largest ownership group has nine
      vessels. Otherwise vessels are owned in groups of four vessels or
      less.





The
      Company competes principally with other vessel owners in the global tanker
      and
      dry bulk charter market, in which shipbrokers represent both charterers and
      ship
      owners. Charterparties are quoted on either an open or private basis. Requests
      for quotations on an open charter are usually made by major oil companies on
      a
      general basis to a large number of vessel operators.





Competition
      for open charters can be intense and involves vessels owned by operators such
      as
      other major oil companies, oil traders and independent ship owners. Requests
      for
      quotations on a private basis are made to a limited number of vessel operators
      and are greatly influenced by prior customer relationships. The Company bids
      for
      both open and private charters.





Competition
      generally intensifies during times of low market activity when several vessels
      may bid to transport the same cargo. Many of the Company’s competitors have
      greater financial strength and capital resources, as well as younger
      vessels.







**2.2.11**
            **The
                Company may be dependent on the spot market for
                charters**




As
      of
      January 31, 2006, all the Company’s vessels were operated on time charters.
      Seven terminate during 2006, one terminates in 2008, one terminates in 2009
      and
      three continue into 2010. Upon termination of the time charters, it is likely
      that the fleet will operate under a mix of time- and voyage charters. The spot
      charter market is highly competitive and spot charter rates are subject to
      greater fluctuation than time charter rates. There can be no assurance that
      the
      Company will be successful in keeping its vessels fully employed in the spot
      market or that future spot charter rates will be sufficient to enable the
      Company’s vessels to be operated profitably.







**2.2.12**
            **The
                Company is dependent upon certain significant customers**




In
      2005,
      revenues of $23.9 million from TTMI Sarl represented 32.3% of total revenues,
      revenues of $13.5 million from FR8 Singapore Pte. Ltd. represented 18.2% of
      total revenues and revenues of $9.8 million Swissmarine Services SA represented
      13.3% of total revenues. During 2004, revenues of $8.2 million from Lexington
      Shipping Corp., $7.2 million from Bunge Global Markets and $5.8 million from
      Swissmarine Services represented 15.9%, 13.9% and 11.2%, respectively of total
      revenues. Revenues in 2003 included charter hire revenues of $10.4 million
      from
      Bunge Global Markets, $6.8 million from Shell International and $6.6 million
      from Lexington Shipping representing 18.9%, 12.3% and 11.9% of total revenues,
      respectively.







**2.2.13**
            **The
                Company will depend entirely on B+H Management Ltd. (“BHM”) to manage and
                charter its fleet**




The
      Company subcontracts the commercial and most of the technical management of
      its
      fleet, including crewing, maintenance and repair to BHM, an affiliated company
      with which the Company is under common control. The loss of BHM’s services or
      its failure to perform its obligations to us could materially and adversely
      affect the results of its operations. Although the Company may have rights
      against BHM if it defaults on its obligations to the Company, holders of Shares
      will have no recourse against BHM. Further, the Company expects that it will
      need to seek approval from lenders to change its manager.







**2.2.14**
            **BHM
                is a privately held company and there is little or no publicly available
                information about it**




The
      ability of BHM to continue providing services for its benefit will depend in
      part on its own financial strength. Circumstances beyond its control could
      impair BHM’s financial strength, and because it is privately held it is unlikely
      that information about its financial strength would become public unless BHM
      began to default on its obligations. As a result, an investor in its shares
      might have little advance warning of problems affecting BHM, even though these
      problems could have a material adverse effect on the Company.







**2.2.15**
            **The
                Company’s Chairman and Chief Executive Officer has affiliations with BHM
                which could create conflicts of
                interest**




The
      Company’s majority shareholders, which are affiliated with Mr. Michael S.
      Hudner, own 48% of the Company and also own BHM. Mr. Hudner is also BHM’s
      Chairman and Chief Executive Officer. These responsibilities and relationships
      could create conflicts of interest between us, on the one hand, and BHM, on
      the
      other hand. These conflicts may arise in connection with the chartering,
      purchase, sale and operations of the vessels in its fleet versus vessels managed
      by other companies affiliated with BHM and Mr. Hudner. In particular, BHM may
      give preferential treatment to vessels that are beneficially owned by related
      parties because Mr. Hudner and members of his family may receive greater
      economic benefits.







**2.2.16**
            **If
                the Company fails to manage its planned growth properly, the Company
                may
                not be able to successfully expand its market
                share**




The
      Company intends to increase substantially the size of its fleet via
      acquisitions. This will impose significant additional responsibilities on its
      management and staff, and the management and staff of BHM, and may necessitate
      that the Company, and they, increase the number of personnel. BHM may have
      to
      increase its customer base to provide continued employment for the vessels
      to be
      acquired.





The
      Company’s growth will depend on:





·
            locating
                and acquiring suitable vessels;


·
            identifying
                and consummating acquisitions or joint
                ventures;


·
            integrating
                any acquired business successfully with its existing
                operations;


·
            enhancing
                its customer base;


·
            managing
                its expansion; and


·
            Obtaining
                required financing.





Growing
      any business by acquisition presents numerous risks such as undisclosed
      liabilities and obligations, difficulty experienced in obtaining additional
      qualified personnel and managing relationships with customers and suppliers
      and
      integrating newly acquired operations into existing infrastructures. The Company
      cannot give any assurance that the Company will be successful in executing
      its
      growth plans or that the Company will not incur significant expenses and losses
      in connection therewith.







**2.2.17**
            **There
                is no assurance that the Company will be able to pay
                dividends**




The
      Company has a policy of investment for future growth and does not anticipate
      paying cash dividends on the common stock in the foreseeable future. Declaration
      and payment of any dividend is subject to the discretion of its Board of
      Directors. The timing and amount of dividend payments will be dependent upon
      its
      earnings, financial condition, cash requirements and availability, fleet renewal
      and expansion, the provisions of Liberia law affecting the payment of
      distributions to shareholders and other factors. If there is a substantial
      decline in the petroleum product market or bulk charter market, its earnings
      would be negatively affected thus limiting its ability to pay dividends. Liberia
      law generally prohibits the payment of dividends other than from surplus or
      while a company is insolvent or would be rendered insolvent upon the payment
      of
      such dividend.







**2.2.18**
            **Servicing
                future debt would limit funds available for other purposes such as
                the
                payment of dividends**




To
      finance its future fleet expansion program, the Company expects to incur secured
      debt. The Company will need to dedicate a portion of its cash flow from
      operations to pay the principal and interest on its debt. These payments limit
      funds otherwise available for working capital, capital expenditures and other
      purposes. The need to service its debt may limit funds available for other
      purposes, including distributing cash to its shareholders, and its inability
      to
      service debt could lead to acceleration of its debt and foreclosure on its
      fleet.







**2.2.19**
            **The
                Company’s loan agreements contain restrictive covenants that may limit the
                Company’s liquidity and corporate
                activities**




The
      Company’s loan agreements impose operating and financial restrictions on us.
      These restrictions may limit its ability to:


·
            incur
                additional indebtedness;


·
            create
                liens on its assets;


·
            sell
                capital stock of its subsidiaries;


·
            engage
                in mergers or acquisitions;


·
            make
                capital expenditures;


·
            change
                the management of its vessels or terminate or materially amend the
                management agreement relating to each vessel;
                and


·
            sell
                its vessels.





Therefore,
      the Company may need to seek permission from its lender in order to engage
      in
      some corporate actions. The Company’s lender’s interests may be different from
      ours, and the Company cannot guarantee that the Company will be able to obtain
      its lender’s permission when needed. This may prevent us from taking actions
      that are in its best interest.







**2.2.20**
            **The
                Company’s loan agreements contain financial
                covenants**




The
      terms
      of its $36 million credit facility with Nordea Bank Norge ASA contain a number
      of financial covenants and general covenants that require us to, among other
      things and subject to certain qualifications, maintain vessel market values
      of
      at least 140% of the outstanding facility amount, maintain liquid assets (as
      defined) in an amount equal to the greater of $2 million and 6% of its aggregate
      indebtedness (including indebtedness of its subsidiaries) and insurance on
      the
      vessels and other property against such risks and in at least such amounts
      as
      are usually insured against by similar companies. It is also a condition that
      the Company remains under the control of Michael S. Hudner. Nordea Bank Norge
      ASA has expressed that Mr. Hudner currently is considered to have control with
      48% over the issued Shares and that he will be considered to have control at
      42%
      of the issued voting Shares of the Company.





The
      Company’s $138.1 million Revolving Reducing Term Loan facility, drawn down
      October and November 2005, imposes certain restrictive covenants on the Company,
      which among other things, requires mandatory prepayment in the event of the
      total loss or sale of a vessel acquired with the proceeds thereof. Also, while
      a
      loan to vessel value clause has been suspended for three years, the Company
      is
      required to ensure that consolidated EBITDA is always at least 1.25 times
      consolidated fixed charges. The Company is also required to maintain liquid
      assets, as defined, in an amount equal to the greater of $5.0 million and 6%
      of
      the aggregate indebtedness of the Company on a consolidated basis.







**2.2.21**
            **The
                Company is a holding company, and the Company depends on the ability
                of
                its subsidiaries to distribute funds to us in order to satisfy its
                financial obligations or to make dividend
                payments**




The
      Company is a holding company and its subsidiaries, which are all wholly-owned
      by
      us, conduct all of their operations and own all of their operating assets.
      The
      Company has no significant assets other than the equity interests in its
      wholly-owned subsidiaries. As a result, its ability to make dividend payments
      depends on its subsidiaries and their ability to distribute funds to us. If
      the
      Company is unable to obtain funds from its subsidiaries its Board of Directors
      may exercise its discretion not to pay dividends.







**2.2.22**
            **The
                Company may not generate sufficient gross revenue to operate profitably
                or
                to service its
                indebtedness**




The
      Company had net income of $22.8 million on gross revenue of $74.6 million in
      2005. Income from operations of $27.3 million is net of expenses totaling $1.0
      million for interim drydockings to maintain the vessels in class, which are
      not
      capitalized. At December 31, 2005, the Company had approximately $149.6 million
      in indebtedness. There can be no assurance that future charter rates will be
      sufficient to generate adequate revenues or that the Company will be able to
      maintain efficiency levels to permit the Company to operate profitably or to
      service its indebtedness.







**2.2.23**
            **The
                creditworthiness and performance of its time charterers may affect
                its
                financial condition and its ability to obtain additional debt financing
                and pay dividends**




The
      Company’s income is derived from the charter of its vessels. Any defaults by any
      of its charterers could adversely impact its financial condition, including
      its
      ability to service its debt and pay dividends. In addition, the actual or
      perceived credit quality of its charterers, and any defaults by them, may
      materially affect its ability to obtain the additional capital resources that
      the Company will require purchasing additional vessels or may significantly
      increase its costs of obtaining such capital. The Company’s inability to obtain
      additional financing at all or at a higher than anticipated cost, may materially
      affect its results of operation and its ability to implement its business
      strategy.







**2.2.24**
            **As
                the Company expands its business, the Company will need to improve
                its
                operations and financial systems, staff and crew; if the Company
                cannot
                improve these systems or recruit suitable employees, its performance
                may
                be adversely affected**




The
      Company’s current operating and financial systems may not be adequate as the
      Company implements its plan to expand the size of its fleet, and its attempts
      to
      improve those systems may be ineffective. In addition, as the Company expands
      its fleet, the Company will have to rely on BHM to recruit suitable additional
      seafarers and shoreside administrative and management personnel. The Company
      cannot provide assurance that BHM will be able to continue to hire suitable
      employees as the Company expands its fleet. If BHM’s unaffiliated crewing agent
      encounters business or financial difficulties, the Company may not be able
      to
      adequately staff its vessels. If the Company are unable to operate its financial
      and operations systems effectively or to recruit suitable employees as the
      Company expand its fleet, its performance may be adversely
      affected.







**2.2.25**
            **In
                the highly competitive international shipping industry, the Company
                may
                not be able to compete for charters with new entrants or established
                companies with greater
                resources**




The
      Company employs its vessels in a highly competitive market that is capital
      intensive and highly fragmented. Competition arises primarily from other vessel
      owners some of whom have substantially greater resources than the Company does.
      Competition for the transportation of dry bulk and liquid cargo can be intense
      and depends on price, location, size, age, condition and the acceptability
      of
      the vessel and its managers to the charterers. Due in part to the highly
      fragmented market, competitors with greater resources could enter and operate
      larger fleets through consolidations or acquisitions that may be able to offer
      better prices and fleets.







**2.2.26**
            **The
                Company may be unable to attract and retain key management personnel
                and
                other employees in the shipping industry, which may negatively affect
                the
                effectiveness of its management and its results of
                operations**




The
      Company’s success depends to a significant extent upon the abilities and efforts
      of its management team. The Company has no employment contract with its Chairman
      and Chief Executive Officer, Michael S. Hudner, or any other key individual;
      instead all management services are provided by BHM. The Company’s success will
      depend upon BHM’s ability to hire and retain key members of its management team.
      The loss of any of these individuals could adversely affect its business
      prospects and financial condition. Difficulty in hiring and retaining personnel
      could adversely affect its results of operations.







**2.2.27**
            **The
                Company is subject to the reporting requirements of Sarbanes
                Oxley**




Effective
      for its first fiscal year ending on or after July 15, 2006, the Company is
      subject to full compliance with all provisions of the Sarbanes Oxley Act of
      2002. As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the U.S.
      Securities and Exchange Commission adopted rules requiring public companies
      to
      include a report of management on the Company’s internal control over financial
      reporting in their annual reports on Form 20-F. Such a report is required to
      contain an assessment by management of the effectiveness of a company’s internal
      controls over financial reporting. In addition, the independent registered
      public accounting firm auditing a public company’s financial statements must
      attest to and report on management’s assessment of the effectiveness of the
      company’s internal controls over financial reporting. While the Company would
      expend significant resources in developing the necessary documentation and
      testing procedures required by Section 404, there is a risk that the Company
      would not comply with all of the requirements imposed by Section 404. If the
      Company fails to implement required new or improved controls, the Company may
      be
      unable to comply with the requirements of Section 404 in a timely manner. This
      could result in an adverse reaction in the financial markets due to a loss
      of
      confidence in the reliability of its financial statements, which could cause
      the
      market price of its common stock to decline and make it more difficult for
      us to
      finance its operations.







**2.2.28**
            **The
                Company may have to pay tax on United States source income, which
                would
                reduce its earnings**




Under
      the
      United States Internal Revenue Code of 1986, or the Code, 50% of the gross
      shipping income of a vessel owning or chartering corporation, such as the
      Company and its subsidiaries, that is attributable to transportation that begins
      or ends, but that does not begin and end, in the United States is characterized
      as United States source shipping income and as such is subject to a 4 % United
      States federal income tax without allowance for deduction, unless that
      corporation qualifies for exemption from tax under Section 883 of the Code
      and
      the Treasury Regulations promulgated thereunder in August 2003, which Treasury
      Regulations became effective on January 1, 2005, for calendar year taxpayers
      such as ourselves and its subsidiaries.





The
      Company expects that the Company will qualify for this statutory tax exemption
      and the Company will take this position for United States federal income tax
      return reporting purposes. If the Company is not entitled to this exemption
      under Section 883 for any taxable year, it would be subject for those years
      to a
      4% United States federal income tax on its U.S. source shipping income. The
      imposition of this taxation could have a negative effect on its business and
      would result in decreased earnings available for distribution to its
      shareholders.







**2.2.29**
            **U.S.
                tax authorities could treat us as a “passive foreign investment company,”
                which could have adverse U.S. federal income tax consequences to
                U.S.
                holders**




A
      foreign
      corporation will be treated as a “passive foreign investment company,” or PFIC,
      for U.S. federal income tax purposes if either (1) at least 75% of its gross
      income for any taxable year consists of certain types of “passive income” or (2)
      at least 50% of the average value of the corporation’s assets produce or are
      held for the production of those types of “passive income.” For purposes of
      these tests, “passive income” includes dividends, interest, and gains from the
      sale or exchange of investment property and rents and royalties other than
      rents
      and royalties which are received from unrelated parties in connection with
      the
      active conduct of a trade or business. For purposes of these tests, income
      derived from the performance of services does not constitute “passive income.”
U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income
      tax regime with respect to the income derived by the PFIC, the distributions
      they receive from the PFIC and the gain, if any, they derive from the sale
      or
      other disposition of their shares in the PFIC.





Based
      on
      its proposed method of operation, the Company does not believe that the Company
      will be a PFIC with respect to any taxable year. In this regard, the Company
      intends to treat the gross income the Company derive or are deemed to derive
      from its time chartering activities as services income, rather than rental
      income. Accordingly, the Company believes that its income from time chartering
      activities does not constitute “passive income,” and the assets that the Company
      owns and operates in connection with the production of that income does not
      constitute passive assets.





There
      is,
      however, no direct legal authority under the PFIC rules addressing its proposed
      method of operation. Accordingly, no assurance can be given that the U.S.
      Internal Revenue Service, or IRS, or a court of law will accept its position,
      and there is a risk that the IRS or a court of law could determine that the
      Company are a PFIC. Moreover, no assurance can be given that the Company would
      not constitute a PFIC for any future taxable year if there were to be changes
      in
      the nature and extent of its operations.





If
      the
      IRS were to find that the Company is or has been a PFIC for any taxable year,
      its U.S. shareholders will face adverse U.S. tax consequences. Under the PFIC
      rules, unless those shareholders make an election available under the Code
      (which election could itself have adverse consequences for such shareholders,
      as
      discussed below under “Tax Considerations—U.S. Federal Income Taxation of U.S.
      Holders”), such shareholders would be liable to pay U.S. federal income tax at
      the then prevailing income tax rates on ordinary income plus interest upon
      excess distributions and upon any gain from the disposition of its common
      shares, as if the excess distribution or gain had been recognized ratably over
      the shareholder’s holding period of its common shares.







**2.2.30**
            **The
                Company may not be exempt from Liberian taxation, which would materially
                reduce its net income and cash flow by the amount of the applicable
                tax**




The
      Republic of Liberia enacted a new income tax law generally effective as of
      January 1, 2001 (the “New Act”), which repealed, in its entirety, the prior
      income tax law in effect since 1977 pursuant to which the Company and its
      Liberian subsidiaries, as non-resident domestic corporations, were wholly exempt
      from Liberian tax.





In
      2004,
      the Liberian Ministry of Finance issued regulations pursuant to which a
      non-resident domestic corporation engaged in international shipping such as
      ourselves will not be subject to tax under the New Act retroactive to January
      1,
      2001 (the “New Regulations”). In addition, the Liberian Ministry of Justice
      issued an opinion that the New Regulations were a valid exercise of the
      regulatory authority of the Ministry of Finance. Therefore, assuming that the
      New Regulations are valid, the Company and its Liberian subsidiaries will be
      wholly exempt from tax as under Prior Law.





If
      the
      Company were subject to Liberian income tax under the New Act, the Company
      and
      its Liberian subsidiaries would be subject to tax at a rate of 35% on its
      worldwide income. As a result, its net income and cash flow would be materially
      reduced by the amount of the applicable tax. In addition, shareholders would
      be
      subject to Liberian withholding tax on dividends at rates ranging from 15%
      to
      20%.







**2.2.31**
            **The
                Company generates all of its revenues in U.S. dollars but incurs
                a portion
                of its expenses in other currencies, therefore exchange rate fluctuations
                could hurt its results of
                operations**




The
      Company generates all of its revenues in U.S. dollars but in the year ended
      December 31, 2004, the Company incurred a portion of its expenses in currencies
      other than U.S. dollars. This difference could lead to fluctuations in net
      income due to changes in the value of the U.S. dollar relative to the other
      currencies, in particular the Euro. Increasing expenses incurred in foreign
      currencies against which the U.S. dollar falls in value can cause decreasing
      revenues. For example, in the year ended December 31, 2005, the value of the
      U.S. dollar increased by 14.48 % as compared to the Euro, 11.5%% as compared
      to
      the Sterling pound (GBP) and 2.01% relative to the Singh dollar (SGD). The
      Company has not hedged these risks. The Company’s operating results could suffer
      as a result of subsequent changes in the value of the US Dollar.







**2.2.32**
            **The
                Company is incorporated in the Republic of the Liberia, which does
                not
                have a well-developed body of corporate
                law**




The
      Company’s corporate affairs are governed by its Articles of Incorporation and
      Bylaws and by the Liberia Business Corporations Act, or BCA. The provisions
      of
      the BCA resemble provisions of the corporation laws of a number of states in
      the
      United States. However, there have been few judicial cases in the Republic
      of
      the Liberia interpreting the BCA. The rights and fiduciary responsibilities
      of
      directors under the law of the Republic of the Liberia are not as clearly
      established as the rights and fiduciary responsibilities of directors under
      statutes or judicial precedent in existence in certain United States
      jurisdictions. Shareholder rights may differ as well. While the BCA does
      specifically incorporate the non-statutory law, or judicial case law, of the
      State of Delaware and other states with substantially similar legislative
      provisions, its public shareholders may have more difficulty in protecting
      their
      interests in the face of actions by the management, directors or controlling
      shareholders than would shareholders of a corporation incorporated in a United
      States jurisdiction.







**2.2.33**
            **Because
                most of its employees are covered by industry-wide collective bargaining
                agreements, failure of industry groups to renew those agreements
                may
                disrupt its operations and adversely affect its
                earnings**




The
      Company’s vessel owning subsidiaries employ approximately 212 seafarers. All of
      the seafarers on the ships in its fleet are covered by industry-wide collective
      bargaining agreements that set basic standards. The Company cannot provide
      assurance that these agreements will prevent labor interruptions. Any labor
      interruptions could disrupt its operations and harm its financial
      performance.







**2.3**
            **Transaction
                and Oslo Børs listing specific risk
                factors**






**2.3.1**
            **Potential
                diminished liquidity for trading Shares in Norway if the Company
                de-lists**




In
      the
      event of new legislation relating to securities or the financial market in
      Norway, the Company may determine that the obligations of a Secondary Listing
      on
      the Oslo Børs have become too burdensome or conflict with the obligations of the
      Company in its primary listing market in the US; and the Company will consider
      applying for de-listing of its shares in Norway. For instance, if the Company
      becomes subject to mandatory tender offer obligations under the Norwegian
      Securities Trading Act Chapter 4, the Company is likely to apply for de-listing
      of its shares from Oslo Børs.





The
      Company’s current voluntary practice of releasing to the public and filing with
      the S.E.C. and through the Oslo Børs information system, unaudited quarterly
      financial information, in addition to its required Annual Report on Form 20-F,
      which includes audited yearly financial information, satisfies the requirements
      of Oslo Børs; however if the Company changes its practice and ceases to release
      and file unaudited quarterly financial information, it may no longer satisfy
      the
      requirements of Oslo Børs and accordingly become subject to de-listing from Oslo
      Børs.





In
      case
      of a de-listing in Norway, the Shares may be traded in the US, subject to
      compliance with Regulation S and other applicable US laws and rules; however,
      the market for the Shares in Norway may have diminished liquidity.







**2.3.2**
            **No
                pre-emptive rights**




The
      Shareholders in the Company do not have pre-emptive rights.








**Notice
      Regarding Forward-looking Statements**


This
      document includes “forward-looking” statements (defined in Section 27A of the US
      Securities Act and Section 21E of the US Securities Exchange Act of 1934 as
      all
      statements other than statements of historical facts) including, without
      limitation, those regarding the Company’s financial position, business strategy,
      plans and objectives for future operations. Such forward-looking statements
      involve known and unknown risks, uncertainties and other factors which may
      cause
      the actual results, performance or achievements of the Company, or, as the
      case
      may be, the industry, to materially differ from any future results, performance
      or achievements expressed or implied by such forward-looking statements. Such
      forward-looking statements are based on numerous assumptions regarding the
      Company’s present and future business strategies and the environment in which
      the Company will operate. Among the important factors that could cause the
      Company’s actual results, performance or achievements to materially differ from
      those in the forward-looking statements are, among others, the Risk Factors
      in
      section 2 above, including without limitation the competitive nature of the
      markets, technological developments, government regulations, changes in
      economical conditions or political events.





These
      forward-looking statements reflect only the Company’s views and assessment as of
      the date of this document. The Company expressly disclaims any obligation or
      undertaking to release any updates or revisions of the forward-looking statement
      contained herein to reflect any change in the Company’s expectations with regard
      thereto or any change in events, conditions or circumstances on which any such
      statement is based.







**3**
            **Description
                of****the
                Company**






**3.1**
            **Introduction**




The
      legal
      name of the Company is B+H Ocean Carriers Ltd. The Company is incorporated
      under
      the laws of Liberia with registration number C51934. The registered address
      of
      the Company is 80 Broad Street, Monrovia, LIBERIA and the address of the
      principal office of the Company is 3rd floor, Par La Ville Place, 14
      Par-la-Ville Road, Hamilton HM 08, BERMUDA.





The
      Company was established on April 28, 1988 to engage in the business of
      acquiring, investing in, owning, operating and selling vessels for dry bulk
      and
      liquid cargo transportation. The operations of the Company are mainly conducted
      in Bermuda and Singapore under the laws of these countries.





As
      of
      March 1, 2006 the Company owned and operated six MR product tankers, one Panamax
      product tanker and five combination carriers. Each vessel accounts for a
      significant portion of the Company’s revenues.




**3.2**
            **History**




Below
      is
      an overview of the Company milestones:





1988:  BHO
      was
      established on April 28, 1988. In July 1988, the Company completed its IPO,
      managed by Merrill Lynch, raising $60 million. Trading of the Company’s Shares
      commenced on the American Stock Exchange, New York. The Company acquired the
      Canadian Pacific fleet of handysize bulkers and product tankers, a total of
      13
      vessels.





1999:  In
      July
      1999, the Company purchased six 40,000 DWT product tankers from Chevron
      Petroleum.





2003:  In
      June
      and July, 2003, the Company, through wholly owned subsidiaries, sold the vessels
      M/T CANSO for $2.7 million M/T CHEBUCTO for $2.7 million, M/T CASCO for $2.6
      million and M/T CATAUMET for $2.6 million, respectively to unaffiliated
      parties.





2004:  On
      April
      29, 2004, the Company, through a wholly owned subsidiary, acquired a 98,000
      DWT
      OBO built in 1986, for $19.4 million, with a two year time charter at $27,000
      per day. On May 25, 2004, the Company, through a wholly owned subsidiary, sold
      the vessel M/T SKOWHEGAN for $3.8 million to an unaffiliated party. On December
      7, 2004, the Company, through a wholly owned subsidiary, sold the vessel M/T
      ACOAXET for $5.7 million to an unaffiliated party.





2005:  In
      March
      2005, the Company acquired three 83,000 DWT OBO Combination Carriers built
      in
      1993/94 for a total of $110.2 million. The vessels have been time chartered
      for
      five years, two at an average rate of $23,600 per day per vessel and one at
      an
      average rate of $23,000 per day. In addition, the Company has a profit sharing
      arrangement with the charterer of the third vessel under which it is entitled
      to
      a 35% share of profits during the years two through five.





In
      May,
      the Company completed a Private Placement of 3,243,243 Shares for aggregate
      gross proceeds of $60 million. The shares were issued to Norwegian and European
      investors, and the Shares were registered with the OTC in Norway.





In
      September, the Company took delivery of MV ROGER M JONES, a 75,000 DWT
      1992-built combination carrier. The vessel has been time chartered for three
      years at $23,500 per day. In November, the Company took delivery of MT SAGAMORE,
      a 68,000 DWT Panamax Product Tanker built in 1991. The vessel commenced a three
      year time charter at $23,500 per day on January 6, 2006.





In
      November, the Company also completed the drawdown of a $138,000,000 Reducing
      Revolving Term Loan Facility. A portion of the funds was used to refinance
      its
      $102,000,000 Floating Rate Loan Facility and the balance was applied toward
      the
      financing of MT SAGAMORE and MV ROGER M. JONES.





2006:  In
      March,
      the Company acquired a 1993-built, 83,000 DWT Combination Carrier for $36.4
      million, effected through an existing tax lease structure. The vessel was taken
      over with a five-year timecharter which commenced in October 2005. At the same
      time the Company acquired a 50% disponent owner interest in a 1992-built 75,000
      DWT Combination Carrier. The terms of the transaction were based on a vessel
      value of $30.4 million and include a three-year charter which commenced in
      February, 2006.







**3.3**
            **Principal
                Investments**




In
      2005
      the Company had approximately $568,000 of US equity securities and mutual funds
      held for trading with a US broker, while the amount for 2004 was $198.000.
      The
      Company did not make any investments in equity securities and mutual funds
      during 2002 and 2003.







**3.4**
            **The
                Company’s operations and asset
                base**




The
      Company provides services and operates within the product tanker and combination
      segments of the shipping industry as described below. For an overview of the
      structure and organization, please refer to section 6.2 in this
      document.





The
      Company is a provider of international liquid and dry bulk seaborne
      transportation services, carrying petroleum products, crude oil, vegetable
      oils
      and dry bulk cargoes. The Company’s fleet consists of seven product tankers and
      five combination carriers.







**3.4.1**
            **The
                Product Tankers**




Product
      tankers are single-deck oceangoing vessels designed to carry simultaneously
      a
      number of segregated liquid bulk commodities, such as petroleum products and
      vegetable oils. MR Product tankers are medium range or “handy-size” vessels
      which are between 30,000 and 50,000 summer deadweight tons, and are able, by
      reason of their small size, to transport commodities to and from most ports
      in
      the world, including those located in less developed third-world countries.
      Panamax product tankers are large product tankers capable of transiting the
      Panama Canal where the maximum beam and draught allowed is approximately 106
      feet and 39 feet respectively. This is equivalent to a ship with deadweight
      of
      up to approximately 84,000 DWT.





**Name
                of tanker**
            **Ownership
                (%)/Charter**
            **DWT**
            **Built**
            **Flag**
            **Commercial**
              **management**
            **Technical**
              **management**Acquidneck
            100%
            40,454
            1981
            Bahamas
            BHM
            BHMAcushnet
            100%
            40,454
            1981
            Bahamas
            BHM
            BHMAgawam
            100%
            40,545
            1982
            Bahamas
            BHM
            BHMAlgonquin
            100%
            40,545
            1983
            Bahamas
            BHM
            BHMAnawan
            100%
            40,545
            1981
            Bahamas
            BHM
            BHMPequod
            100%
            40,632
            1982
            Liberia
            BHM
            BHMSagamore
            100%
            68,000
            1991
            Bahamas
            BHM
            BHM





The
      Company has completed a technical feasibility study on converting its six single
      hull MR product tankers to fully double hull, MARPOL compliant vessels suitable
      for trading in petroleum products and vegetable oils. Carrying out such a
      conversion would completely eliminate the present regulatory phase-out dates
      applicable to these vessels. The company plans to carry out this conversion
      work
      one vessel at a time, commencing in June 2006 and for completion of the sixth
      vessel in late 2007; however there can be no assurance the conversion projects
      can be completed on a timely basis or at reasonable cost.







**3.4.2**
            **The
                Combination Carriers**




Combination
      Carriers, also known as OBOs, are single-deck vessels without cargo gear,
      suitable for carrying in their cargo space either liquid or dry bulk cargo.
      They
      can operate as tankers or as bulk carriers. Originally conceived and built
      in
      the 1950s as Ore-Oil carriers (O/O), the design of such type of ship was
      improved in the 1960s, enabling them to carry also dry bulk commodities other
      than ore (such as coal, grain, bauxite, etc.) and thereby making them even
      more
      flexible as regards trading opportunity. These OBOs are typically used in
      geographical areas where it is possible to optimize earnings by shifting between
      employment within the wet and dry tramp segments.  OBO’s
      are
      the vessels with the lowest ballast time of all bulk vessels.





The
      Company’s combination carriers are between 74,000 DWT (Panamax) and 98,000 DWT
      (Aframax).





**Name
                of tanker**
            **Ownership
                (%)/Charter**
            **DWT**
            **Built**
            **Flag**
            **Commercial
                management**
            **Technical
                management**Sachuest
            100%
            98,000
            1986
            Bahamas
            BHM
            BHMRip
                Hudner
            100%
            83,155
            1994
            Bahamas
            BHM
            BHMBonnie
                Smithwick
            100%
            83,155
            1993
            Bahamas
            BHM
            BHMSearose
                G
            100%
            83,155
            1994
            Bahamas
            BHM
            BHMRoger
                M Jones
            100%
            75,000
            1992
            Bahamas
            BHM
            BHMSibohelle
                (tbr Sakonnet)
            100%
            83,155
            1993
            NIS
            BHM
            TESMASibotessa
            50%
            75,000
            1992
            NIS
            BHM
            TESMA





The
      trades are mainly Crude oil, fuel oil and refined petroleum products from the
      Baltic, NW Europe and the Mediterranean and coal and iron ore from the US and
      South America returning to Europe.












**3.5**
            **Charter
                and contract overview******




Below
      is
      an overview of the contract status of BHO’s asset base:





**Vessel**
            **Charterer**
            **Time**
            **Type**
            **Rate
                ($/day)****Product
                Tankers**Aquidneck
            Denholm
                Chartering
            Mar
                04 - May 06
            T/C
            11,600Acushnet
            Fairfield
                Chemical
            Feb
                05 - Aug. 06
            T/C
            16,000Agawam
            Reliance
                Industries Ltd
            Mar
                05 - Sept. 06
            T/C
            16,000Algonquin
            BP
            Mar
                06 - Apr 06
            Voy.
            Approx.
                19,000Anawan
            Wilmar
                Trading(3)
            Jun
                05 - Dec 06
            T/C
            16,000Pequod
            FR8
                Singapore Pte. Ltd.
            Mar
                05 - Oct 06
            T/C
            16,000Sagamore
            ENOC
                Supply & Trading. LLC
            Jan
                06 - Jan 09
            T/C
            23,500**OBOs**Sachuest
            CSE
                Transport(4)
            Apr.-06
                - May 06
            Voy.
            Approx.
                19,000Rip
                Hudner(1)
            Sempra
                Energy(5)
            Feb
                05 - Mar 10
            T/C
            Avg.
                23,600Bonnie
                Smithwich(1)
            Sempra
                Energy(5)
            Mar
                05 - Mar 10
            T/C
            Avg.
                23,600Searose
                G(2)
            Sempra
                Energy(5)
            Mar
                05 - Mar 10
            T/C
            Avg.
                23,000(6)Roger
                M Jones
            Clearlake
                Shipping
            Sep
                05 - Sep 08
            T/C
            23,500Sibohelle
                (tbr Sakonnet)(7)
            Sempra
                Energy(5)
            Mar-06
                - Oct-10
            T/C
            24,400Sibotessa(9)
            Glencore(8)
            Mar-06
                - Feb-09
            T/C
            Avg
                21,700(10)





(1)
      Rates
      Starting at $26,600/day in 2005, declining to $20,600/day in 2010.


(2)
      Starts at $26,000/day, declines to $20,000/day, plus 35% profit split from
      Year
      2 through Year 5.


(3)
      As
      guarantor for Raffles Shipping and Investments Pte. Ltd.


(4)
      Positioning voyage for drydocking.


(5)
      As
      guarantor for TTMI Sarl.


(6)
      Plus
      35 % profit share in years 2 through 5.


(7)
      Company is disponent owner


(8)
      As
      guarantor for ST Shipping.


(9)
      Company holds 50% in company which is disponent owner.


(10)
      $22,000pd in years 1 and 2 and $21,000pd in year 3, plus 50% profit split in
      each year.







**3.6**
            **Principal
                market****s**






**3.6.1**
            **General
                comments**




The
      shipping industry is generally known to be cyclical. Vessel values and charter
      freight rates fluctuate widely and frequently, and the Company expects they
      will
      continue to do so in the future.




Growth
      within the largest economies will normally contribute to an increase in the
      ton-mile demand in global seaborne trade.




The
      increase of raw materials imports and finished products exports in and out
      of
      China and India, the lengthening of voyage times, port congestion, and the
      political crisis in Venezuela and Nigeria, have helped to contribute to
      increased demand in transport, but there is no assurance these conditions will
      continue.







*3.6.1.1*
            *OBOs*




Six
      of
      the Company’s fleet of OBOs are between 74,000 DWT and 84,000 DWT (Panamax) and
      the seventh is 98,000 DWT (Aframax), all of which vessels are of double hull
      construction. OBOs (Oil/Bulk/Ore) are combination carriers used to transport
      crude or fuel oil, iron ore, coal and occasionally grain. This offers the owner
      (or charterer) the opportunity to switch between the tanker and dry bulk market
      when there is a rate advantage to be gained, or to reduce ballast time by
      carrying dry and liquid cargoes on alternate legs. The holds of four of the
      company’s five OBOs are partly coated and are suitable for carrying refined
      petroleum products which gives additional trading flexibility. OBOs are built
      with hatch covers designed to be oil-tight and gas-tight. OBOs are more
      expensive to build, maintain and operate as compared to comparable tankers
      or
      bulk carriers and may cost about 10-15% more to run.





The
      OBO
      shipping segment is narrow, with a world wide total fleet of only about 110
      vessels. There are no vessels on order. The average age of the fleet is 17.5
      years. Only 9 vessels have been built since 1996.





Increasing
      oil exports from loadports in the East (incl. Russia, the Baltic and the Black
      Sea) to the West combined with large quantities of dry bulk cargoes from West
      to
      East are expected to provide a solid basis for Atlantic and Mediterranean-based
      combination trades in the years to come. Due to the small size of this shipping
      segment there is very little OBO-specific research available, however the
      freight market for OBOs is closely linked to the general tanker and dry cargo
      market.







*3.6.1.2*
            *Product
                tankers*




The
      Company’s fleet of seven product tankers consists of six single hull Medium
      Range (MR) tankers of about 40,000 DWT, and one double sided Long Range (LR)
      Panamax tanker of 68,000 DWT.





The
      Company has completed a technical feasibility study on converting its six single
      hull MR product tankers to fully double hull, MARPOL compliant vessels suitable
      for trading in petroleum products and vegetable oils. Carrying out such a
      conversion would completely eliminate the present regulatory phase-out dates
      applicable to these vessels. The Company plans to carry out this conversion
      work
      one vessel at a time, commencing in June 2006 and for completion of the sixth
      vessel in late 2007; however there can be no assurance the conversion projects
      can be completed on a timely basis or at reasonable cost. Please refer to
      section 2.1.5 herein for further information.





Some
      of
      the main trade routes for product tankers are from the Singapore region to
      Japan, Arabian Gulf to Japan, Singapore region to Continent, Caribbean to the
      US, cross Mediterranean and U.K. to Continent, and Northwest Europe to the
      United States. India is also a large importer and exporter of petroleum
      products. Product tankers are single-deck ocean going vessels designed to carry
      liquid commodities, such as refined petroleum products, vegetable oils, caustic
      soda and molasses. Clean product tankers are similar to crude oil tankers but
      generally smaller. A typical 40,000 DWT MR product tanker has 12-22 cargo tanks
      with a cargo heating system for heavy oil cargoes and allows several separate
      grades of cargo to be carried simultaneously. Product tankers generally have
      coated tanks in order to facilitate tank cleaning, prevent cargo contamination
      and to preserve steel. Since many of these vessels can also be used for crude
      trading, product tankers is not a distinct category.







**3.6.2**
            **The
                product tanker market**






*3.6.2.1*
            *Introduction*




Categorizing
      the product tanker fleet presents difficulties as many vessels can be used
      in
      both the crude and product trades. Clarkson have considered all vessels from
      10,000 to 80,000 DWT - a total of 1,548 vessels. Contained within this range
      are
      481 vessels without any tank coatings to be used in the crude and dirty product
      trades, and 1,067 vessels which typically have tanks coated with epoxy or zinc
      paints, making them suitable for carrying varying grades of clean products.







The
      product fleet grew by 5 million DWT in 2005 or 10% since the end of 2004. The
      product sector was active in 2005 with respect to both deliveries and
      demolition. 139 vessels were delivered in 2005, offset by 40 vessels sent to
      the
      demolition yards. When compared with the rest of the industry this demolition
      figure is high, although it is still 22% down on the figure for 2004.





This
      fleet growth seems set to continue in the near future. The order book for
      product tankers currently stands at 27.3 million DWT, which is 39% of the
      current fleet. Should demolition continue at such a low level then the next
      2-3
      years would see a considerable growth in the size of the product fleet (source
      Clarkson). Please refer to section 2.2.2 for further information about
      regulatory phase out of product tankers.









*3.6.2.2*
            *The
                freight rates*




Along
      with the rest of the tanker markets the product fleet has experienced a falling
      market in 2005 after the 2004 highs. There have been occasional extraordinary
      spikes in rates, mainly due to busy periods on the Caribbean up-coast dirty
      product trades, but during the first half of 2005 product market freight rates
      trended downwards. In common with the rest of the market it looks as though
      August represented the bottom of the market and that a recovery was in process,
      even before the impact of Hurricane Katrina.





The
      damaging effect which Hurricane Katrina had on US refining capacity and the
      oil
      delivery network caused a rush to charter clean product vessels. This was
      especially true in the transatlantic trades as the EU tapped into strategic
      product stocks to relieve pressure on American gasoline supplies. World scale
      rates soared to above WS 450. Both the specific US East Coast/Gulf discharge
      routes and the market in general have benefited from Hurricane Katrina as
      charterers who did not want US discharge needed to pay a premium to prevent
      owners ballasting to exploit the spike (Source: Clarkson).













*3.6.2.3*
            *Demand*




Demand
      for crude oil and refined petroleum products is an inevitable result of economic
      growth and development, and the recent emergence of developing economies such
      as
      China has presented the market with a demand spike which has pushed up product
      prices as supply struggles to keep up. The rapidly growing economy and
      accompanying automobile ownership in China suggests that seaborne product
      imports (which rose by 25% in 2004 and are predicted to expand by 20% in 2005)
      will continue to grow robustly (Source: Clarkson).















**3.6.3**
            **The
                Dry Bulk market**






*3.6.3.1*
            *Introduction*




The
      drybulk market is divided between Capesize, Panamax, Handymax and
      Handysize-vessels. The larger drybulk vessels (Capesize, and Panamax) primarily
      transport three types of bulk cargoes; iron ore, coal and grain. The larger
      vessels are normally not equipped with gear (cranes) and are hence dependent
      on
      well-equipped harbors. The Capesize and Panamax vessels are to a large extent
      used in between the OECD countries. The smaller Handymax and Handysize vessels
      are usually equipped with gear (cranes) and can therefore operate more
      independently of harbor facilities. They operate globally and transport a large
      variety of bulk commodities. The vessels are well suited for servicing less
      developed geographical areas where the harbor facilities are less
      advanced.




The
      demand for dry bulk commodities is influenced by many variables. The most
      important underlying demand variable is the general economic activity in the
      world. The growth of the world economy can often be directly related to dry
      bulk
      commodity volumes transported by ocean going vessels. During low-cycle periods,
      the volumes transported are lower and the freight rates for dry bulk vessels
      are
      lower. During high-cycle periods, the demand for commodities increases and
      the
      transported volumes increases leading to higher freight rates. IMF expects
      the
      world economy to grow by 4.3% in 2005 and 2006 (source Lorentzen &
Stemoco).






*3.6.3.2*
            *Dry
                Bulk Shipments*




Tonnage
      transported for iron ore increased from 589 million tons in 2004 to 653 million
      tons in 2005. The forecast for 2006 is 696 million tons which would be a 7%
      increase. For the 5 major bulk products combined, the growth is expected to
      be
      4% in 2006:





**Dry
                Bulk Trade (million tons)**
            **2004**
            **2005E**
            **2006E**Iron
                Ore
            589
            13%
            653
            11%
            696
            7%Total
                Coal
            659
            4%
            683
            4%
            705
            3%Grains/Soybeans
            273
            3%
            275
            1%
            280
            2%Bauxite/Alumina
            66
            5%
            68
            3%
            69
            1%Phosphate
                rock
            30
            3%
            30
            0%
            30
            0%**5
                Major Bulks total**
            **1,617**
            **7%**
            **1,709**
            **6%**
            **1,780**
            **4%**


*Source:
      Clarkson Dry Bulk Trade Outlook, January 2006.*







*3.6.3.3*
            *The
                freight rates*




Following
      one of the strongest freight markets of all time early in 2005, freight rates
      began deteriorating in the second quarter 2005 due to the developing supply
      side, and continued sharply downwards in the third and fourth quarter 2005.
      The
      reasons for such decline can be attributed to an inventory correction in China,
      as well as seasonal weakness lasting longer than anticipated, as well as the
      large number of new ships being built and delivered.











The
      fundamentals in the dry bulk sector are expected to remain strong. The rapid
      industrialization that is taking place in China results in increased steel
      production and imports of raw materials which act as principal drivers for
      strong freight rates. The first half of '05 GDP growth in China was 9.5% and
      industrial production growth was 16.5%. China's rapid growth rate, together
      with
      growth in the emerging economies of South East Asia, contributes to the increase
      of seaborne trade expected to be approximately 4% on an annual basis for the
      next three years. This increase in seaborne trade is expected to result in
      quite
      firm freight levels.





Demand
      for dry bulk capacity is mostly related to core commodities necessary for
      infrastructure development and industrial activity. These imports go into
      electricity generation and steel making. Even if there is softening in Chinese
      GDP growth this does not necessarily translate into less electricity or less
      steel making, especially given China's preparation for the Olympics of 2008
      and
      the 2010 World Expo in Shanghai. There are also other projects which will
      require large quantities of steel for the next several years such as a national
      electricity grid, a national highway system, and the Yangtse-Huangpu canal
      (source Pareto Research).





***Dry
      Bulk Market Development -Time Charter rates***





**Bulk
                Carriers**
            **Average
                1 year T/C rates ($)**
            **Average
                3 year T/C rates ($)****Type**
            **DWT**
            **2002**
            **2003**
            **2004**
            **2005**
            **2002**
            **2003**
            **2004**
            **2005**Capesize
            170,000
            14,665
            31,241
            60,925
            51,036
            15,281
            22,528
            42,223
            37,833Panamax
            72,000
            8,878
            17,325
            34,253
            26,116
            9,235
            12,748
            22,257
            19,708Handymax
            52,000
            8,343
            14,673
            29,414
            22,471
            8,504
            11,259
            17,299
            16,791Handysize
            30,000
            6,743
            9,043
            17,298
            16,018
            7,198
            7,969
            11,750
            12,645


*Source:
      Clarkson January 2006*







*3.6.3.4*
            *Tonnage
                Balance and Yard Capacity*




Increasing
      freight rates will normally have an effect on the tonnage balance. Higher
      freight rates will lead to an increasing order book for newbuildings and the
      opposite when freight rates fall. During periods of increasing demand for
      transportation of commodities, freight rates increase and shipowners find it
      more attractive to order newbuildings. This situation normally last until
      newbuildings become too expensive for prevailing freight rates. During periods
      of low freight rates, shipowners find it less attractive to build new vessels.
      When freight rates approach the vessels’ operating costs, the scrapping of
      vessels start to increase, which helps to improve the market imbalance. At
      the
      same time, newbuilding prices come down and it is again attractive to order
      new
      vessels.





Yard
      orderbooks for newbuildings are currently filled up through 2008, which has
      pushed up prices. However prices are expected to fall back as interest in
      newbuilding declines. This will lead to more available capacity for ship
      deliveries in 2009 and beyond. Net supply is expected to fall from 2008 as
      delivery of newbuilding reduces and as scrapping of older vessels increases,
      especially handysize vessels of which some 30% are over 25 years old (Lorentzen
      & Stemoco).





The
      total
      order book for all bulk segments of the shipping industry was at the end of
      2005
      64.1 million DWT and this represented 19% of the total fleet at the end of
      2005.





Looking
      at demand in Panamax equivalents (total bulk trade converted into Panamax
      vessels based on 55,000t cargoes x 6 trips a year), demand growth in 2005 was
      337 Panamax vessel equivalents compared to a supply growth (net change in bulk
      fleet divided by 65,000 DWT) of 336 vessel equivalents. In 2006 demand growth
      is
      expected to be 254 vessels vs. supply growth of 321. Hence many observers expect
      weaker freight rates in 2006 (source Clarkson).







*3.6.3.5*
            *Transportation
                Patterns*




The
      freight rates will over time also be affected by changes in trade patterns
      of
      bulk commodities. Changes in industrial production between countries can result
      in a changing transportation and shipping pattern and hence, change the required
      tonnage demand. This can for example happen if a newly industrialized country
      increases its share of the world’s production of an important bulk commodity as
      a consequence of the country improving its competitive position. A country’s
      competitive position may have improved as its productivity increases as a
      consequence of improved technology or devaluating local currency versus
      competitors’ currencies. If these new countries are situated geographically far
      away from the importing nations, this situation could lead to an increased
      tonnage requirement and may lead to increasing freight rates.





China’s
      strong annual GDP growth and increasing import of commodities during the last
      few years have had a substantial influence on trading patterns for bulk
      commodity vessels. During 2005, China consumed 42% of the world iron trade.
      In
      2006 this is expected to increase to 44% according to Clarkson Research.









**3.7**
            **Management
                of the Company and vessels**




The
      shipowning activities of the Company are managed by BHM under a Management
      Services Agreement (the “Management Agreement") dated June 27, 1988 and amended
      on October 10, 1995, subject to the oversight and direction of the Company's
      Board of Directors. Mr. Hudner is a 40% direct shareholder, a director and
      President of BHM. Mr. Williams is a 20% direct shareholder and a vice president
      of BHM. The remaining 40 % of the shares of BHM are held by a general
      partnership in which both Messrs Hudner and Williams are partners. Messrs Hudner
      and Williams are considered consolidated in respect of ownership of BHM and
      are
      accordingly both considered to control 100% of BHM.





BHM
      employs Navinvest Marine Services (USA) Inc. (“NMS”), a Connecticut corporation
      affiliated with the Company through common ownership, under an agency agreement,
      to assist with the performance of certain of its financial reporting and
      administrative duties under the Management Agreement. To the extent that BHM
      acquires services from NMS under the agency agreement, payments to NMS are
      covered by the fixed fee agreed between the Company and BHM. The Management
      Agreement is indefinite and may only be terminated for cause by both parties.





As
      a
      result of BHM's possible future management of other shipowning companies and
      BHM's possible future involvement for its own account in other shipping
      ventures, BHM may be subject to conflicts of interest in connection with its
      management of the Company. To avoid any potential conflict of interest, the
      Management Agreement between BHM and the Company provides that BHM must provide
      the Company with full disclosure of any disposition of handysize bulk carriers
      by BHM or any of its affiliates on behalf of persons other than the
      Company.





The
      shipowning activities of the Company entail three separate functions, all under
      the overall control and responsibility of BHM: (1) the shipowning function,
      which is that of an investment manager and includes the purchase and sale of
      vessels and other shipping interests; (2) the marketing and operations function
      which involves the deployment and operation of the vessels; and (3) the vessel
      technical management function, which encompasses the day-to-day physical
      maintenance, operation and crewing of the vessels.





The
      Management Agreement may be terminated by the Company in the following
      circumstances: (i) certain events involving the bankruptcy or insolvency of
      BHM;
      (ii) an act of fraud, embezzlement or other serious criminal activity by Michael
      S. Hudner with respect to the Company; (iii) gross negligence or willful
      misconduct by BHM; or (iv) a change in control of BHM.







**3.7.1**
            **Marketing
                and Operations of Vessels**




Company
      vessels are time chartered to Product Transport Corporation Ltd., Bermuda
      (“Protrans”), a wholly owned subsidiary of the Company, on an open rate basis as
      described hereunder.





Protrans
      subcharters the vessels on a voyage charter or time charter basis to third
      party
      charterers. Under a voyage charter, Protrans agrees to provide a vessel for
      the
      transport of cargo between specific ports in return for the payment of an agreed
      freight per ton of cargo or an agreed lump sum amount.





Voyage
      costs, such as canal and port charges and bunker (fuel) expenses, are the
      responsibility of Protrans. A single voyage charter (generally three to ten
      weeks) is commonly referred to as a spot market charter, and a voyage charter
      involving more than one voyage is commonly referred to as a consecutive voyage
      charter. Under a time charter, Protrans places a vessel at the disposal of
      a
      subcharterer for a given period of time in return for the payment of a specified
      rate per DWT capacity per month or a specified rate of hire per day. Voyage
      costs are the responsibility of the subcharterer. In both voyage charters and
      time charters, operating costs (such as repairs and maintenance, crew wages
      and
      insurance premiums) are the responsibility of the shipowner.





Voyage
      and time charters can be for varying periods of time, ranging from a single
      trip
      to terms approximating the useful life of a vessel, depending on the evaluation
      of market trends by Protrans and by subcharterers. Long-term charters afford
      greater assurance that the Company will be able to cover their costs (including
      depreciation, debt service, and operating costs), and afford subcharterers
      greater stability of transportation costs. Operating or chartering a vessel
      in
      the spot market affords both Protrans and subcharterers greater speculative
      opportunities, which may result in high rates when ships are in demand or low
      rates (possibly insufficient to cover costs) when ship availability exceeds
      demand. Charter rates are affected by world economic conditions, international
      events, weather conditions, strikes, government policies, supply and demand,
      and
      many other factors beyond the control of Protrans and the Company.







**3.7.2**
            **Vessel
                Technical Management**




BHM
      is
      the technical manager of 12 of the Company's vessels, under technical management
      agreements. BHM employs B+H Equimar Singapore Pte Ltd (“BHES”) to assist with
      certain of its duties under the technical management agreements. BHES is a
      wholly-owned subsidiary of BHM. The vessel technical manager is responsible
      for
      all technical aspects of day-to-day vessel operations, including physical
      maintenance, provisioning and crewing. Such supervision includes the
      establishment of operating budgets and the review of actual operating expenses
      against budgeted expenses on a regular basis. The two OBOs acquired in March
      2006 are currently technically managed by TESMA Singapore Pte Ltd., Singapore
      under technical management agreements.







**3.7.3**
            **Other
                agreements concerning operation of the activities of
                BHO**




The
      Company has entered into certain other agreements in respect of conducting
      the
      activities of the Company. See also section 8 for further description of these
      related party agreements.




**4**
            **Financial
                information and****selected
                financial
                data******






**4.1**
            **Selected
                consolidated financial
                data**




The
      following selected consolidated financial data of the Company and its
      subsidiaries are derived from and should be read in conjunction with the
      unaudited Consolidated Financial Statements for the years and quarters ended
      December 31, 2005 and 2004 presented in section 4.3 and the discussion of
      financial condition presented in section 5.1 as well as the audited Consolidated
      Financial Statements for the years ended December 31, 2004, 2003 and 2002 and
      notes thereto appearing in the attached Annual Report on Form 20-F (see
      Appendices 3 to 5 to this document).




**A.
                  Selected financial information**The
                  following selected consolidated financial data of the Company and
                  its
                  subsidiaries are derived from and should be read in conjunction
                  with the
                  Consolidated Financial Statements and notes thereto appearing elsewhere
                  in
                  this annual report.**For
                  the year ended December
                  31****Income
                  Statement Data:****2005
                  (Unaudited)**
              
              
              **2004**
              
              
              **2003**
              
              
              **2002**Voyage,
                  time and bareboat charter revenues
              
              
              74,075,561
              
              
              51,362,910
              
              $
              55,156,875
              
              $
              64,537,505Other
                  operating income
              
              
              514,491
              
              
              -
              
              
              -
              
              
              27,881Voyage
                  expenses
              
              
              (6,033,470
              )
              
              (9,663,653
              )
              
              (19,373,318
              )
              
              (28,683,727
              )Vessel
                  operating expenses
              
              
              (26,369,749
              )
              
              (19,742,875
              )
              
              (25,089,187
              )
              
              (16,282,104
              )Depreciation
                  and amortization
              
              
              (11,917,359
              )
              
              (7,763,640
              )
              
              (9,024,806
              )
              
              (10,407,804
              )Gain
                  (loss) on sale of vessels
              
              
              828,115
              
              
              (4,682,965
              )
              
              (16,187,604
              )
              
              -General
                  and administrative expenses
              
              
              (3,797,613
              )
              
              (3,755,136
              )
              
              (3,897,885
              )
              
              (3,503,418
              )Income
                  (loss) from operations
              
              
              27,299,976
              
              
              5,754,641
              
              
              (18,415,925
              )
              
              5,688,333Gain
                  on retirement of 9 7/8 First PreferredShip
                  Mortgage Notes
              
              
              -
              
              
              -
              
              
              6,803,965
              
              
              797,875Minority
                  interest in net income of consolidated subsidiary
              
              
              -
              
              
              -
              
              
              23,866
              
              
              -Interest
                  expense, net
              
              
              (4,383,627
              )
              
              (1,328,896
              )
              
              (1,504,191
              )
              
              (3,405,876
              )Earn-out
                  interest
              
              
              -
              
              
              -
              
              
              -
              
              
              1,004,150Other
                  expense
              
              
              (130,704
              )
              
              (1,730
              )
              
              -
              
              
              -Net
                  income (loss)
              
              $
              22,785,645
              
              $
              4,424,015
              
              $
              (13,092,285
              )
              $
              4,084,482Basic
                  earnings (loss) per share (1)
              
              $
              3.90
              
              $
              1.15
              
              $
              (3.41
              )
              $
              1.06Diluted
                  earnings (loss) per share (2)
              
              $
              3.74
              
              $
              1.00
              
              $
              (3.41
              )
              $
              0.93Dividends
                  declared per share
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -(1)
                  Based on weighted average number of shares outstanding of 5,844,301
                  in
                  2005, 3,839,242 in 2004, 3,835,269 in 2003 and 3,869,865 in
                  2002.(2)
                  Based on the weighted average number of shares outstanding, increased
                  in
                  2005, 2004 and 2002 by the net effects of stock options using the
treasury
                  stock method and by the assumed distribution of all shares to BHM
                  under
                  the 1998 agreement
                  (See Item 7). The denominator for the diluted
                  earnings per share calculation is 6,092,522 in 2005, 4,404,757 in
                  2004, 3,835,269 in 2003 and 4,413,423
                  in 2002.**Year
                  ended December 31,**
              
              
              **Year
                  ended December 31,**
              
              
              **Year
                  ended December 31,**
              
              
              **Year
                ended December 31,****Balance
                  Sheet Data:**
              
              
              **2005
                  (Unaudited)**
              
              
              **2004**
              
              
              **2003**
              
              
              **2002**Current
                  assets
              
              
              65,719,790
              
              
              19,344,004
              
              $
              6,534,212
              
              $
              14,589,138Total
                  assets
              
              
              281,423,286
              
              
              82,902,304
              
              
              70,830,212
              
              
              117,585,093Current
                  liabilities
              
              
              43,618,700
              
              
              20,073,194
              
              
              17,024,634
              
              
              23,819,743Long-term
                  liabilities
              
              
              115,063,472
              
              
              18,465,472
              
              
              13,310,674
              
              
              40,189,750Noncontrolling
                  interest in subsidiary
              
              
              -
              
              
              -
              
              
              -
              
              
              23,866Working
                  capital (deficit)
              
              
              22,101,090
              
              
              (729,190
              )
              
              (10,490,422
              )
              
              (9,230,605
              )Shareholders'
                  equity
              
              
              122,741,114
              
              
              44,363,637
              
              
              40,494,904
              
              
              53,551,734




**4.2**
            **Audited
                consolidated financial
                statements**




Audited
      consolidated financial statements (including notes) for the period 2002-2004
      can
      be found under section 18 (pages F1 to F19) of the Company’s 2002 - 2004 Annual
      Report on Form 20-F respectively in Appendix 3-5 to this document.





o
            Consolidated
                balance sheets are included on page
                F-3




o
            Consolidated
                statements of operations are included on page
                F-4




o
            Consolidated
                statements of cash flows are included on page
                F-6




·
            Management’s
                discussion and analysis of financial condition and result of operations
                for 2004 can be found under section 5 (pages 29 to 38) of the Company’s
                2004 Annual Report on Form 20-F in Appendix
                3




The
      discussion and analysis of the financial condition and results of operations
      is
      based upon the Company’s audited and unaudited consolidated financial
      statements, which have been prepared in accordance with generally accepted
      accounting principles in the United States of America or US GAAP. The
      preparation of those financial statements requires us to make estimates and
      judgments that affect the reported amount of assets and liabilities, revenues
      and expenses and related disclosure of contingent assets and liabilities at
      the
      date of the Company’s financial statements. Actual results may differ from these
      estimates under different assumptions or conditions.







**4.3**
            **Unaudited
                financial information**




The
      Company released an unaudited interim report for the first six months of 2005
      in
      a report on Form 6-K filing with the S.E. C. and through a press-release on
      July
      12, 2005. The unaudited financial report on the first six months ending June
      30,
      2005 is attached to this document as Appendix 6.





The
      Company released the unaudited financial report on the first nine months ending
      September 30, 2005 through a press release published under the Company’s ticker
      code BHOC on the Oslo Børs information system www.newsweb.no on
      November 1, 2005. This report is also available in the Company’s press release,
      dated October 31, 2005 posted at http://www.bhocean.com/press/press1.htm and in
      the Company’s Form 6-K filed with the Securities and Exchange Commission on
      October 31, 2005 posted at
      http://www.sec.gov/cgi-bin/browse-edgar?company=b+plus+h&CIK=&filenum=&State=&SIC=&owner=include&action=getcompany.





The
      Company released the unaudited financial statements for the fourth quarter
      and
      the period ended December 31, 2005 in the Oslo Børs information system www.newsweb.no under
      the ticker code BHOC on March 22, 2006. Such financial statements are subject
      to
      normal audit adjustments. This report is also available in the Company’s press
      release, dated March 22, 2006 posted at http://www.bhocean.com/press/press1.htm and in
      the Company’s Form 6-K filed with the Securities and Exchange Commission on
      March 22, 2006 posted at
      http://www.sec.gov/cgi-bin/browse-edgar?company=b+plus+h&CIK=&filenum=&State=&SIC=&owner=include&action=getcompany.







**4.3.1**
            **Unaudited
                Consolidated Statements of Operations**




The
      table
      below shows the consolidated statements of operations for the year and for
      the
      three months ended December 31, 2005 (unaudited) and 2004
      (audited):


****
              ****
              ****
              ****
              ****
              ****
              ****
              ******B+H
                  OCEAN CARRIERS LTD.**
              ****
              ****
              **For
                  the twelve months**
              ****
              ****
              **For
                the twelve months**
              
              
              **For
                  the three months**
              
              
              **For
                  the three months****UNAUDITED
                CONSOLIDATED STATEMENT OF
                OPERATIONS**
              
              
              **ending
                  December 31,**
              
              
              **ending
                  December 31,**
              
              
              **ending
                  December 31,**
              
              
              **ending
                  December 31**,**2005
                  (unaudited)**
              
              
              **2004**
              
              
              **2005
                  (unaudited)**
              
              
              **2004**Revenues:Voyage,
                  time and bareboat charter revenues
              
              $
              74,075,561
              
              $
              51,362,910
              
              $
              22,300,193
              
              $
              16,222,466Other
                  revenues
              
              
              514,491
              
              
              -
              
              
              498,018
              
              
              -Total
                  revenues
              
              
              74,590,052
              
              
              51,362,910
              
              
              22,798,211
              
              
              16,222,466Operating
                  expenses:Voyage
                  expenses
              
              
              6,033,470
              
              
              9,663,653
              
              
              1,428,535
              
              
              3,098,479Vessel
                  operating expenses, drydocking and survey costs
              
              
              26,369,749
              
              
              19,742,875
              
              
              7,282,581
              
              
              4,377,682Depreciation
                  and amortization
              
              
              11,917,359
              
              
              7,763,640
              
              
              3,678,584
              
              
              2,029,296(Gain)
                  loss on sale of vessels
              
              
              (828,115
              )
              
              4,682,965
              
              
              -
              
              
              597,800.00General
                  and administrative:Management
                  fees to related party
              
              
              898,490
              
              
              548,653
              
              
              330,914
              
              
              238,336Consulting
                  and professional fees, and other expenses
              
              
              2,899,123
              
              
              3,206,483
              
              
              750,435
              
              
              1,114,593Total
                  operating expenses
              
              
              47,290,076
              
              
              45,608,269
              
              
              13,471,049
              
              
              11,456,186Income
                  from vessel operations
              
              
              27,299,976
              
              
              5,754,641
              
              
              9,327,162
              
              
              4,766,280Other
                  income (expense):Interest
                  expense
              
              
              (5,604,637
              )
              
              (1,361,753
              )
              
              (1,885,673
              )
              
              (434,818
              )Interest
                  income
              
              
              1,221,010
              
              
              32,857
              
              
              463,907
              
              
              29,046Other
                  expense
              
              
              (130,704
              )
              
              (1,730
              )
              
              (148,165
              )
              
              (1,730
              )Total
                  other expenses, net
              
              
              (4,514,331
              )
              
              (1,330,626
              )
              
              (1,569,931
              )
              
              (407,502
              )Net
                  income
              
              $
              22,785,645
              
              $
              4,424,015
              
              $
              7,757,231
              
              $
              4,358,778Basic
                  earnings per common share
              
              $
              3.90
              
              $
              1.15
              
              $
              1.09
              
              $
              1.14Diluted
                  earnings per common share
              
              $
              3.74
              
              $
              1.00
              
              $
              1.05
              
              $
              1.00Weighted
                  average number of common shares outstanding:Basic
              
              
              5,844,301
              
              
              3,839,242
              
              
              7,129,094
              
              
              3,839,242Diluted
              
              
              6,092,522
              
              
              4,404,758
              
              
              7,364,490
              
              
              4,378,006






**4.3.2**
            **Unaudited
                Consolidated Balance
                Sheets**




The
      table
      below shows the unaudited and audited consolidated balance sheets for the year
      ended December 31, 2005 and 2004 respectively:


**B+H
                    OCEAN CARRIERS LTD.****UNAUDITED
                    CONSOLIDATED BALANCE SHEETS****December
                    31,**
                
                
                **December
                    31,**ASSETS
                
                
                **2005
                    (unaudited)**
                
                
                **2004**CURRENT
                    ASSETS:Cash
                    and cash equivalents
                
                $
                60,827,651
                
                $
                12,063,022Marketable
                    securities
                
                
                567,566
                
                
                198,270Trade
                    accounts receivable, less allowance for doubtful accountsof
                    $229,000 and $137,000 in 2005 and 2004, repectively.
                
                
                2,258,572
                
                
                5,545,504Inventories
                
                
                855,086
                
                
                770,381Prepaid
                    expenses and other current assets
                
                
                1,210,915
                
                
                766,827Total
                    current assets
                
                
                65,719,790
                
                
                19,344,004Vessels,
                    at cost:Vessels
                
                
                249,067,385
                
                
                94,705,496Less
                    - Accumulated depreciation
                
                
                (34,900,653
                )
                
                (31,608,510
                )214,166,732
                
                
                63,096,986Investments
                    and other assets
                
                
                1,536,764
                
                
                461,313Total
                    assets
                
                $
                281,423,286
                
                $
                82,902,303LIABILITIES
                    AND SHAREHOLDERS' EQUITYCURRENT
                    LIABILITIES:Accounts
                    payable
                
                $
                4,025,919
                
                $
                5,331,028Accrued
                    liabilities
                
                
                1,747,909
                
                
                2,298,824Accrued
                    interest
                
                
                454,620
                
                
                267,842Current
                    portion of mortgage payable
                
                
                34,602,000
                
                
                10,800,000Deferred
                    income
                
                
                2,728,416
                
                
                1,299,414Other
                    liabilities
                
                
                59,836
                
                
                76,086Total
                    current liabilities
                
                
                43,618,700
                
                
                20,073,194Mortgage
                    payable
                
                
                115,063,472
                
                
                18,465,472Total
                    liabilities
                
                
                158,682,172
                
                
                38,538,666Commitments
                    and contingenciesSHAREHOLDERS'
                    EQUITY:Preferred
                    stock, $0.01 par value; 20,000,000 shares authorized;no
                    shares issued and outstanding
                
                
                -
                
                
                -Common
                    stock, $0.01 par value; 30,000,000 shares authorized;7,557,268
                    shares issued, 7,081,920 and 3,839,242 sharesoutstanding
                    as of December 31, 2005 and 2004, respectively
                
                
                75,572
                
                
                43,140Paid-in
                    capital
                
                
                94,235,547
                
                
                37,538,669Retained
                    earnings
                
                
                32,592,939
                
                
                9,807,294126,904,058
                
                
                47,389,103Less
                    - Treasury stock
                
                
                4,162,944
                
                
                3,025,466Total
                    shareholders' equity
                
                
                122,741,114
                
                
                44,363,637Total
                    liabilities and shareholders' equity
                
                $
                281,423,286
                
                $
                82,902,303




**4.3.3**
            **Unaudited
                Consolidated Statements of Cash
                Flows**




The
      table
      below shows the consolidated statements of cash flows for the year and for
      the
      three months ended December 31, 2005 (unaudited) and 2004
      (audited):


**B+H
                  OCEAN CARRIERS LTD.****UNAUDITED
                  CONSOLIDATED STATEMENT OF CASH FLOWS****For
                the twelve months**
              ****
              ****
              **For
                the twelve months**
              ****
              ****
              **For
                  the three months**
              ****
              ****
              **For
                the three months**
              ********
              ****
              **ending
                December 31**,
              
              
              **ending
                December 31,**
              
              
              **ending
                  December 31,**
              
              
              **ending
                December 31**,**2005
                  (unaudited)**
              
              
              **2004**
              
              
              **2005
                  (unaudited)**
              
              
              **2004**CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              22,785,645
              
              $
              4,424,015
              
              $
              7,757,231
              
              $
              4,358,778Adjustments
                  to reconcile net income to net cash provided by operating activities:Depreciation
                  and amortization
              
              
              11,917,359
              
              
              7,763,640
              
              
              3,678,584
              
              
              2,029,296(Gain)
                  loss on sale of vessels
              
              
              (828,115
              )
              
              4,682,965
              
              
              -
              
              
              597,800Provision
                  for bad debts
              
              
              92,077
              
              
              29,394
              
              
              92,077
              
              
              29,394Changes
                  in assets and liabilities:Decrease
                  (increase) in trade accounts receivable
              
              
              3,194,855
              
              
              (3,750,890
              )
              
              (1,942,325
              )
              
              (4,028,877
              )(Increase)
                  decrease in inventories
              
              
              (84,705
              )
              
              137,566
              
              
              (327,162
              )
              
              (165,481
              )Decrease
                  in cash on deposit for vessel acquisition
              
              
              -
              
              
              -
              
              
              2,430,000
              
              
              -(Increase)
                  decrease in prepaid expenses and other assets
              
              
              (444,088
              )
              
              126,606
              
              
              (452,037
              )
              
              357,819(Decrease)
                  increase in accounts payable
              
              
              (1,305,109
              )
              
              (2,115,851
              )
              
              1,227,796
              
              
              1,981,719(Decrease)
                  increase in accrued liabilities
              
              
              (550,915
              )
              
              533,947
              
              
              (893,644
              )
              
              (1,181,774
              )Increase
                  (decrease) in accrued interest
              
              
              186,778
              
              
              78,973
              
              
              (120
              )
              
              (36,216
              )Increase
                  (decrease) in deferred income
              
              
              1,429,002
              
              
              569,159
              
              
              (757,830
              )
              
              155,758(Decrease)
                  increase in other liabilities
              
              
              (16,250
              )
              
              (18,356
              )
              
              51,491
              
              
              30,498Net
                  cash provided by operating activities
              
              
              36,376,534
              
              
              12,461,168
              
              
              10,864,061
              
              
              4,128,714CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  and investment in vessels
              
              
              (169,834,866
              )
              
              (20,589,234
              )
              
              (24,305,017
              )
              
              (1,239,236
              )Proceeds
                  from sale of vessel
              
              
              7,918,810
              
              
              9,239,985
              
              
              -
              
              
              5,526,484Purchase
                  of marketable securities
              
              
              (500,000
              )
              
              (200,000
              )
              
              (500,000
              )
              
              (200,000
              )Loss
                  on trading of marketable securities
              
              
              130,704
              
              
              1,730
              
              
              148,165
              
              
              1,730Net
                  cash (used in) provided by investing activities
              
              
              (162,285,352
              )
              
              (11,547,519
              )
              
              (24,656,852
              )
              
              4,088,978CASH
                  FLOWS FROM FINANCING ACTIVITIES:Payments
                  for debt issuance costs
              
              
              (1,318,385
              )
              
              (359,655
              )
              
              (315,861
              )
              
              (359,655
              )Issuance
                  of common stock, net of issuance costs
              
              
              56,728,568
              
              
              -
              
              
              (100,000
              )
              
              -Repurchase
                  of options
              
              
              -
              
              
              (644,000
              )
              
              -
              
              
              (644,000
              )Purchase
                  of treasury stock
              
              
              (1,299,898
              )
              
              -
              
              
              (1,299,898
              )
              
              -Issuance
                  of treasury shares
              
              
              163,162
              
              
              88,718
              
              
              101,622
              
              
              88,718Proceeds
                  from vessel financing
              
              
              145,000,000
              
              
              19,000,000
              
              
              43,000,000
              
              
              -Related
                  party loan
              
              
              -
              
              
              (944,686
              )
              
              -
              
              
              (566,519
              )Payments
                  of mortgage principal
              
              
              (24,600,000
              )
              
              (8,899,828
              )
              
              (9,600,000
              )
              
              (4,000,000
              )Net
                  cash provided by (used in) financing activities
              
              
              174,673,447
              
              
              8,240,549
              
              
              31,785,863
              
              
              (5,481,456
              )Net
                  increase in cash and cash equivalents
              
              
              48,764,629
              
              
              9,154,198
              
              
              17,993,072
              
              
              2,736,236Cash
                  and cash equivalents, beginning of period
              
              
              12,063,022
              
              
              2,908,824
              
              
              42,834,579
              
              
              9,326,786Cash
                  and cash equivalents, end of period
              
              $
              60,827,651
              
              $
              12,063,022
              
              $
              60,827,651
              
              $
              12,063,022




**5**
            **Operating
                and financial review and capital
                resources**






**5.1**
            **Financial
                Condition**




The
      following is a discussion of the Company’s financial condition and results of
      operations for the years ended December 31, 2005 (unaudited), 2004 and 2003.
      Prospective purchasers should read this section together with the unaudited
      Consolidated Financial Statements for the year ended December 31, 2005 appearing
      in section 4.3 and the Consolidated Financial Statements including the notes
      thereto included as Appendices 3-5 to this document.




BHO
      is a
      provider of international liquid and dry bulk seaborne transportation services,
      carrying petroleum products, crude oil, vegetable oils and dry bulk cargoes.
      The
      Company’s fleet consists of six product tankers, one Panamax product tanker and
      five combination carriers. The MR product tankers are all medium range or
“handy-size” vessels which are between 30,000 and 50,000 summer DWT, and are
      able, by reason of their small size, to transport commodities to and from most
      ports in the world, including those located in less developed third-world
      countries. The Panamax product tanker is 68,500 DWT. Product
      tankers are single-deck oceangoing vessels designed to carry simultaneously
      a
      number of segregated liquid bulk commodities, such as petroleum products and
      vegetable oils. The combination carriers, known as an OBOs (oil-bulk-ore
      carrier), are between 74,000 and 98,000 DWT (Aframax). Combination carriers
      can
      operate as tankers or as bulk carriers. They can be used to transport liquid
      cargo including crude and fuel oils (CPP), and they can also be used to
      transport dry bulk commodities, such as iron ore, coal, and grain.




As
      of
      December 31, 2005, all of the vessels were time chartered for periods originally
      ranging from one year to five years duration. Two of
      these time charters terminated in the first quarter of 2006, three are to
      terminate in the second and third quarters of 2006, two are to terminate in
      the
      fourth quarter of 2006, one terminates in each of 2008 and 2009 and three
      continue into 2010. The two vessels acquired in March 2006 are employed on
      time
      charters extending to 2009 and 2010 respectively. Upon termination of the time
      charters, it is likely that the fleet will operate under a mix of time and
      voyage charters. Currently, the product tankers are carrying primarily petroleum
      products and vegetable oils and the Company’s OBOs are carrying crude oil,
      petroleum products and iron ore and coal. Historically, the Company deploys
      the
      fleet on both time charters, which can last from a few months to several years,
      and spot market charters, which generally last from several days to several
      weeks. Under spot market voyage charters, the Company pays voyage expenses
      such
      as port, canal and fuel costs. A time charter is generally a contract to charter
      a vessel for a fixed period of time at a specified daily rate. Under time
      charters, the charterer pays voyage expenses such as port, canal and fuel costs.
      Under both types of charters, the Company pays for vessel operating expenses,
      which include crew costs, provisions, deck and engine stores, lubricating oil,
      insurance, maintenance and repairs. The Company is also responsible for the
      vessel's intermediate and special survey costs.




Vessels
      operating on time charters provide more predictable cash flows, but can, in
      a
      strong market, yield lower profit margins than vessels operating in the spot
      market. Vessels operating in the spot market generate revenues that are less
      predictable but may enable the Company to capture increased profit margins
      during periods of improvements in tanker rates although the Company would be
      exposed to the risk of declining tanker rates, which may have a materially
      adverse impact on the financial performance. The Company is constantly
      evaluating the appropriate balance between the number of the vessels deployed
      on
      time charter and the number employed on the spot market.




For
      discussion and analysis purposes only, the Company evaluates performance using
      time charter equivalent, or “TCE” revenues. TCE revenues are voyage revenues
      minus direct voyage expenses. Direct voyage expenses primarily consist of port,
      canal and fuel costs that are unique to a particular voyage, which would
      otherwise be paid by a charterer under a time charter, as well as commissions.
      The Company believes that presenting voyage revenues on a TCE basis enables
      a
      proper comparison to be made between vessels deployed on time charter or those
      deployed on the spot market.




The
      voyage revenues and voyage expenses are recognized ratably over the duration
      of
      the voyages and the lives of the charters, while vessel operating expenses
      are
      recognized on the accrual basis. The Company calculates daily TCE rates by
      dividing TCE revenues by voyage days for the relevant time period. The Company
      also generates demurrage revenue, which an owner charges a charterer for
      exceeding the agreed upon time to load or discharge a cargo. The Company
      calculates daily direct vessel operating expenses and daily general and
      administrative expenses for the relevant period by dividing the total expenses
      by the aggregate number of calendar days in the period.




The
      Company depreciates the vessels on a straight-line basis over their estimated
      useful lives determined to be 30 years from the date of their initial delivery
      from the shipyard. Depreciation is based on cost less the estimated residual
      value. The Company capitalizes the total costs associated with special surveys,
      which take place every five years, and amortizes them on a straight-line basis
      over 60 months. Regulations and/or incidents may change the estimated dates
      of
      next drydockings.










**5.2**
            **Operating
                Results**




***Year
      ended December 31, 2005 (unaudited) versus December 31,
      2004***




*Revenues*




Revenues
      from voyage and time charters increased $22.7 million or 44% from 2004. The
      increase is due to the Company’s ongoing vessel acquisition program, the
      composition of the fleet in terms of size and type of vessel and to higher
      time
      charter equivalent rates.





*Voyage
      expenses*





Voyage
      expenses consist of port, canal and fuel costs that are unique to a particular
      voyage and commercial overhead costs, including commercial management fees
      paid
      to BHM. Under a time charter, the Company does not incur port, canal or fuel
      costs. Voyage expenses decreased $3.6 million, or 38%, to $6.0 million for
      the
      twelve month period ended December 31, 2005 compared to $9.6 million for the
      comparable period of 2004. This is due to the significant decrease in voyage
      days from 946 in 2004 to 201 in 2005 as all of the Company’s MR product tankers
      and OBOs have been employed on long term time charters since March 2005. The
      newly acquired Panamax product tanker was employed on a voyage from the date
      of
      delivery to December 31, 2005 when it commenced on a three year time charter.
      All of the Company’s vessels are currently on time charters, two of which will
      terminate in each of the first, second and third quarters of 2006, and one
      of
      which terminates in the fourth quarter. One of the remaining time charters
      terminates in September 2008, one in January 2009 and three terminate in March
      2010. The Company may operate the vessels in the spot marker after the current
      time charters terminate, with greater risk of volatility in rates and an
      increase in voyage expenses, or operate on new short to long term time charters.
      The Company also expects that three of the MR product tankers will cease to
      generate revenue for periods of up to two and one-half months each in 2006
      if
      converted, as planned, to double hull tankers.





*Vessel
      operating expenses*





The
      increase in vessel operating expenses is due to the increase in the number
      of
      vessels, as noted above. Vessel operating expenses increased $6.6 million (34%)
      which is comprised of $7.8 million for five vessels acquired in 2005 and $1.5
      million for a vessel owned less than nine months in 2004. This is offset by
      a
      $2.7 million decrease relating to the sale of one vessel in each of the second
      and fourth quarters of 2004 and one vessel sold in the third quarter of 2005.





*Depreciation
      and amortization*





Depreciation
      and amortization, which includes depreciation of vessels as well as amortization
      of special surveys and debt issuance costs, increased by $4.2 million, or 54%,
      to $11.9 million for the twelve months ended December 31, 2005 compared to
      $7.8
      million for the prior period. This increase is predominantly due to changes
      in
      the fleet, as noted above.





*General
      and administrative expenses*





General
      and administrative expenses include all of the Company’s onshore expenses and
      the fees that BHM charges for administration of the Company’s vessels and
      shipowning companies. Management fees increased by $0.35 million, or 64%, to
      $0.89 million for the twelve month period ended December 31, 2005 compared
      to
      $0.55 million for the prior period. The increase is due to the increase in
      the
      number of vessels and therefore the number of months during which fees were
      incurred.








*Gain
      on Sale of Vessels*





The
      Company had a gain on the sale of the vessel M/T COMMUTER of $0.8 million for
      the twelve month period ended December 31, 2005 compared to losses of $4.6
      million on the M/T SKOWHEGAN and M/T ACOAXET during the prior twelve month
      period. The current market conditions were responsible for the dramatic shift
      in
      the value of MR product tankers in the course of the year.





*Interest
      Expense and Interest Income*





The
      $4.2
      million (312%) increase in interest expense is due to the increase of $102
      million in debt for the acquisition of three vessels in March 2005 and the
      additional drawdown of $43.1 million in the fourth quarter to finance the
      acquisition of two vessels. The increase in interest income of $1.2 million
      is
      due to the fact that the Company issued 3,243,243 shares of its common stock
      for
      net cash proceeds of $57 million in May 2005.





***Quarter
      Ended December 31, 2005 (unaudited) versus December 31,
      2004***





*Revenues*





Revenues
      from voyage, time and bareboat charters increased $6.1 million or 37% from
      the
      fourth quarter of 2004 to that of 2005. The increase is due to the vessel
      acquisitions discussed above. This increase was offset by decreases in voyage
      charter revenue over time charter revenue, which generated greater gross
      revenues per charter.





*Voyage
      Expenses*





Voyage
      expenses decreased $1.7 million or 54% from 2004. The decrease is due to the
      fact that there was only one voyage during the three month period ended December
      31, 2005 whereas there were twelve during this period in 2004. The ship owner
      is
      responsible for the port, canal and fuel charges of a voyage charter but is
      not
      responsible for these costs when on either a time or bareboat
      charter.





*Vessel
      Operating Expenses*





Vessel
      operating expenses increased $2.9 million or 66% for the three month period
      ended December 31, 2005 versus the comparable period in 2004. This increase
      is
      the result of the increase in the size and number of vessels comprising the
      Company’s fleet.





*Depreciation
      and Amortization*





The
      increase in depreciation and amortization of $1.6 million or 81% is due to
      the
      increase in the size and number of vessels comprising the Company’s fleet. The
      five vessels were acquired during 2005 are considerably larger than other
      vessels in the fleet and were acquired at prices that are significantly higher
      than previous acquisitions. Therefore, the increase in depreciation is higher
      relative to the percentage increase in the number of vessels.




*General
      and administrative expenses*





Management
      fees increased by $0.1 million, or 28%, to $0.3 million for the three month
      period ended December 31, 2005 compared to $0.2 million for the prior period.
      The increase is due to the increase in the number of vessels and therefore
      the
      number of months during which fees were incurred. Consulting, professional
      and
      other expenses decreased $0.4 million or 49% due predominantly to a change
      in
      the consulting arrangement with JV Equities.





*Interest
      Expense and Interest Income*





The
      $1.5
      million (334%) increase in interest expense is due to the increase of $102
      million in debt for the acquisition of three vessels in March 2005 and the
      additional drawdown of $43.1 million in the fourth quarter to finance the
      acquisition of two vessels. The increase in interest income is due to the fact
      that the Company issued 3,243,243 shares of its common stock for net cash
      proceeds of $57 million in May 2005.





*Loss
      on Sale of Vessels*





The
      Company had a loss on the sale of the vessel M/T ACOAXET of $0.6 million for
      the
      three month period ended December 31, 2004. There were no vessel sales in the
      same period of 2005.




***Year
      Ended December 31, 2004 versus December 31, 2003***





*Revenues*




Revenues
      from voyage and time charters decreased $3.8 million or 6.8% from 2003. The
      decrease is due to the fact that there was a 17% decrease in total revenue
      days
      in 2004. This decrease was offset by a $4,914 (45%) increase in the average
      voyage TCE rate from $10,869 in 2003 to $15,783 in 2004 and an increase in
      time
      charter rates of $2,759 (27%) from $10,306 in 2003 to $13,066 in
      2004.





The
      difference in revenue days of 650 is made up of 687 days lost from four vessels
      sold during 2003 and to the loss of 225 days due to the sale of two additional
      ships during 2004. This was offset by the acquisition of the OBO SACHUEST in
      April for an addition of 213 days, 41 fewer offhire days in 2004 than in 2003
      and an additional 8 days attributable to leap year.





Voyage
      TCE revenue decreased $6.5 million or 30% from 2003. Revenue from time charters
      increased by $10.3 million or 54%. Bareboat revenue decreased by the 2003 with
      a
      total of $0.1 million. In 2003, revenue was reduced by bareboat charter losses
      on the Alliance Trader and other miscellaneous charges of $1.4
      million.





*Voyage
      expenses*





Total
      voyage expenses consist of port, canal and fuel costs that are unique to a
      particular voyage and commercial overhead costs, including commercial management
      fees paid to BHM. Voyage expenses decreased $9.7 million, or 50%, to $9.7
      million for the year ended December 31, 2004 compared to $19.4 million for
      the
      prior period, due to the decrease in voyage days, as noted above and the
      decrease in the number of vessels in the fleet. Voyage
      expenses decreased at a greater percentage rate than voyage revenue due to
      favorable market conditions which increase profit margins. For example, bunker
      costs as a percentage of gross voyage revenues deceased 10% from 28% to 18%
      and
      port costs as a percentage of gross voyage revenue decreased 4%.





*Vessel
      operating expenses*





The
      decrease in vessel operating expenses is predominantly due to the decrease
      in
      the number of vessels, as noted above. Vessel operating expenses decreased
      $5.3
      million (16.4%) which is comprised of $3.1 million relating to a 15% net
      reduction in operating days, $2.0 million reduction in expenses for drydocking
      and by a decrease in the fleet average daily operating cost of approximately
      $73
      per day for a total of $0.2 million.





*Depreciation
      and amortization*





Depreciation
      and amortization, which includes depreciation of vessels as well as amortization
      of special surveys, decreased by $1.3 million, or 14.0%, to $7.8 million for
      the
      year ended December 31, 2004 compared to $9.0 million for the prior period.





Depreciation
      of vessels decreased by $1.1 million, or 17%, to $5.5 million for the year
      ended
      December 31, 2004 compared to $6.6 million for the prior period. This decrease
      is due to the decrease in the number of vessels in the fleet after four were
      sold in the second
      and third quarters of 2003, one was sold in May 2004 and another was sold in
      December 2004. This reduction was offset by depreciation of the OBO acquired
      in
      April 2004 .





Amortization
      of special survey costs decreased by $0.2 million, or 12%, to $1.9 million
      for
      the year ended December 31, 2004 compared to $2.1 million for the prior period.
      This decrease is due to the fact that the vessel sold in May 2004 had
      significant capitalized special survey expenses which were amortized for a
      full
      year in 2003 but for only 5 months in 2004. The Company anticipates that the
      amortization associated with drydockings will begin to increase in 2005 due
      to
      the fact that there are two special surveys scheduled for the first quarter
      of
      the year.





*General
      and administrative expenses*





General
      and administrative expenses include all of the Company’s onshore expenses and
      the fees that BHM charges for administration of the vessels and shipowning
      companies. Management fees decreased by $0.3 million, or 38.5%, to $0.5 million
      for the year ended December 31, 2004 compared to $0.8 million for the prior
      period. The decrease is due to the decrease in the number of vessels from 2003
      and therefore the number of months during which fees was incurred. The increase
      of $0.2 million in other general and administrative expense is due
      to an
      increase in charitable contributions of $0.1 million and to additional IT
      expenses and expenses to inspect vessels for possible acquisition totaling
      $0.1
      million .
      General
      and administrative expenses are typically incurred prior to the acquisition
      of a
      vessel and remain for a period of time after the disposition of a vessel;
      therefore, during periods of changes in the average number of vessels in the
      fleet these daily expenses increase relative to the number of days that vessels
      are owned.





*Loss
      on sale of vessels*





The
      Company incurred a loss on sale of vessels of $4.7 million for the year ended
      December 31, 2004 compared to a loss of $16.2 million for the prior period.
      The
      loss in 2004 was due to the sale of two vessels, one of which was
      acquired at a relatively high price during 1997 when the market for such ships
      was at a peak. The
      decision to sell the first vessel was made in light of a review of commercial
      considerations, the expected cost to overhaul the ship and the high maintenance
      Pielstick engine, which had been problem prone. The second vessel sold was
      acquired at a much lower cost in 1999, but was fit with uncoated tanks and
      Alubrass coils which resulted in trading restrictions.







**5.3**
            **Capital
                Resources**




The
      following discussion of capital resources of the Company and its subsidiaries
      are derived from and should be read in conjunction with the unaudited
      Consolidated Financial Statements for the year ended December 31, 2005 and
      2004
      presented in section 4.3 and the discussion of financial condition presented
      in
      section 5.1.





The
      Company requires cash to service its debt, fund the equity portion of
      investments in vessels, fund working capital and maintain cash reserves against
      fluctuations in operating cash flow. Net cash flow generated by continuing
      operations has historically been the main source of liquidity for the Company.
      Additional sources of liquidity have also included proceeds from asset sales
      and
      refinancing.







The
      Company’s ability to generate cash flow from operations will depend upon the
      Company’s future performance, which will be subject to general economic
      conditions and to financial, business and other factors affecting the operations
      of the Company, many of which are beyond its control. In the opinion of the
      Company the working capital is sufficient for the next 12 months of
      operations.






Disclosure
      of capitalization and indebtedness in accordance with the unaudited financial
      statement for 2005:




**Total
                Current debt**
            **$43,618,700**-Guaranteed
            $34,602,000-Secured
            $34,602,000-Unguaranteed/Unsecured
            $9,016,700**Total
                Non-Current debt**
            **$115,063,472**-Guaranteed
            $115,063,472-Secured
            $115,063,472-Unguaranteed/Unsecured
            0**Shareholders
                Equity**AShare
                capital
            $75,572BLegal
                Reserve
            0COther
                reserve
            $122,665,542**TOTAL**
            **$281,423,286**











The
      Company’s fleet consists of product tankers and OBOs; thus, the Company is
      dependent upon the petroleum product industry, the vegetable oil, chemical
      industries and bulk products market as its primary sources of revenue. These
      industries have historically been subject to substantial fluctuation as a result
      of, among other things, economic conditions in general and demand for petroleum
      products, vegetable oil, ore, bulk, and chemicals in particular. Any material
      seasonal fluctuation in the industry or any material diminution in the level
      of
      activity therein could have a material adverse effect on the Company’s business
      and operating results. The profitability of product tankers and their asset
      value results from changes in the supply of and demand for such capacity. The
      supply of such capacity is a function of the number of new vessels being
      constructed and the number of older vessels that are laid-up or scrapped. The
      demand for product tanker capacity is influenced by global and regional economic
      conditions, increases and decreases in industrial production and demand for
      petroleum products, vegetable oils and chemicals, developments in international
      trade and changes in seaborne and other transportation patterns. The nature,
      timing and degree of change in these industry conditions are unpredictable
      as a
      result of the many factors affecting the supply of and demand for capacity.
      Although there can be no assurance that the Company’s business will continue to
      generate cash flow at or above current levels, the Company believes that the
      current market rates are sustainable which increases the likelihood that it
      will
      generate cash flow at levels sufficient to service its liquidity requirements
      in
      the future.







Cash
      at
      December 31, 2005, amounted to $60.8 million, an increase of $48.8 million
      as
      compared to December 31, 2004. The increase in the cash balance is
      attributable to net inflows from operations of $36.4 million and inflows from
      financing activities of $162.3 million. These inflows were offset by outflows
      for investing activities of $174.7 million.





The
      inflow for financing activities is primarily attributable to mortgage proceeds
      of $145.0 million to finance the acquisition of three combination carriers
      in
      the first quarter, a panamax product tanker and a combination carrier in the
      fourth quarter, to the issuance of common stock for net proceeds of $56.7
      million and the issuance of treasury stock for $0.2 million. This was offset
      by
      the payment of mortgage principal of $24.6 million, payments for debt issuance
      costs of $1.3 million and investment in treasury stock of $1.3
      million.





The
      outflow for investing activities is attributable to the purchase of four
      combination carriers and a panamax product tanker for $167.7 million and capital
      improvements of $2.1 million, a net investment in marketable securities of
      $0.4
      million and. This was offset by proceeds from the sale of one vessel of $7.9
      million.





The
      Company had a working capital totaling $22.1 million at December 31, 2005 as
      compared to a deficit of $0.7 million at December 31, 2004. This increase in
      working capital is due to the issuance of 3,243,243 shares of common stock
      in a
      private placement, which raised $57.0 million after issuance costs. It is
      important to note that it is customary for shipping companies and their lenders
      to exclude the current portion of long-term debt in any working capital analysis
      for this reason. Excluding the current portion of long-term debt, the Company
      had working capital of $56.7 million at December 31, 200 as compared to $10.1
      million at December 31, 2004. The
      Company believes that its working capital is sufficient for its present
      requirements.




Trade
      accounts receivable decreased $3.2 million due predominantly to the fact that
      there were three voyages in progress at December 31, 2004 two of which were
      substantially complete and all at relatively high rates as compared to December
      31, 2005, when only one voyage was in progress. In addition, the only voyage
      in
      progress at December 31, 2005 was the first voyage since the completion of
      one
      on March 21, 2005. At
      December 31, 2005, the Company’s largest accounts receivable balance represented
      81% of total accounts receivable. At December 31, 2004, the Company’s three
      largest accounts receivable balances represented 82% of total accounts
      receivable. At
      December 31, 2003, the Company’s three largest accounts receivable balances
      amounted to 73% of the total. The
      allowance for doubtful accounts was $137,000 at December 31, 2004 and $108,000
      at December 31, 2003 and 2002.




In
      2005,
      revenues of $23.9 million from TTMI Sarl represented 32.3% of total revenues,
      revenues of $13.5 million from FR8 Singapore Pte. Ltd. represented 18.2% of
      total revenues and revenues of $9.8 million Swissmarine Services SA represented
      13.3% of total revenues. During 2004, revenues of $8.2 million from Lexington
      Shipping Corp., $7.2 million from Bunge Global Markets and $5.8 million from
      Swissmarine Services represented 15.9%, 13.9% and 11.2%, respectively of total
      revenues. Revenues in 2003 included charter hire revenues of $10.4 million
      from
      Bunge Global Markets, $6.8 million from Shell International and $6.6 million
      from Lexington Shipping representing 18.9%, 12.3% and 11.9% of total revenues,
      respectively.





Vessels
      and capital improvements, net of accumulated depreciation, amounted to
      approximately $214.2 million at December 31, 2005, an increase of $151.2 million
      as compared with December 31, 2004. The increase is primarily attributable
      to
      the purchase of five OBOs and one Panamax product tanker for a total of $167.75
      million and to the investment in capital improvements of $2.1 million. This
      was
      offset by the sale of one vessel with an aggregate net book value of $7.1
      million and to depreciation of $11.6 million.





Accounts
      payable decreased $1.3 million and accrued liabilities decreased $0.5 million
      from December 31, 2004 to December 31, 2005. The decrease in accounts payable
      is
      due to the improved cash position of the Company. The decrease in accrued
      liabilities is due to a decrease in the.




Accrued
      interest represents interest payable on the Cliaship facility, the increase
      in
      which is due to the additional borrowing of $19.0 million during 2004. The
      outstanding mortgage payable at December 31, 2004 was $29.3 million as compared
      to $19.2 million at December 31, 2003.





In
      October 2005 the Company entered into a $138,100,000 Reducing Revolving and
      Term
      Loan Facilities Agreement which
      amended the agreement entered into on February 23, 2005. The amendment made
      available an additional $43.0 million for the purpose of acquiring the OBO
      ROGER
      M JONES and the M/T SAGAMORE.





On
      February 23, 2005, the Company, through a wholly owned subsidiary, entered
      into
      a $102,000,000 floating rate loan facility (the “facility”). The agreement was
      entered into for the purpose of acquiring three OBOs.





The
      facility is apportioned into two tranches, being a Senior and a Junior portion.
      The Senior tranche is payable in twenty-one quarterly installments as
      follows:







a.
            Installment
              1
            $
            2,900,000b.
            Installments
              2 through 5
            
            4,463,000c.
            Installments
              6 through 13
            
            4,775,000d.
            Installments
              14 through 20
            
            4,275,000e.
            Balloon
              payment due September 15, 2010
            
            21,000,000f.
            Balloon
              payment due December 15, 2010
            
            10,748,000





The
      Junior tranche is payable in sixteen quarterly installments beginning on June
      14, 2005 as follows:





a.
              Installment
                1 through 4
              $
              2,000,000b.
              Installments 5
                through 8
              
              1,250,000c.
              Installments
                9 through 12
              
              1,000,000d.
              Installments
                13 through 16
              
              750,000







Interest
      on the Senior tranche of the facility is equal to LIBOR plus 1.0%. The Junior
      tranche carries interest of LIBOR plus 2.25%. Expenses associated with the
      loan
      will be capitalized and expensed over the 5 year term of the loan.





The
      facility contains certain restrictive covenants on the Company, which among
      other things, restrict the payment of dividends and restrict leverage,
      investment and capital expenditure without consent of the lender. In addition,
      the agreement requires mandatory prepayment in the event of the total loss
      or
      sale of a vessel. The loan to vessel value clause described below has been
      suspended for three years, however, the Company is required to ensure that
      consolidated EBITDA is always at least 1.25 times consolidated fixed charges.
      The Company is also required to maintain liquid assets, as defined, in an amount
      equal to the greater of $5.0 million and 6% of the aggregate indebtedness of
      the
      Company on a consolidated basis. At the end of three years, and in the event
      that the fair market value of the vessels acquired in March 2005 falls below
      110% of the Senior tranche in years 1 through 3, 120% of the Senior tranche
      thereafter and 100% of the total outstanding at any time, the agreement requires
      mandatory prepayment.





On
      April
      29, 2004, the Company entered into an amended and restated $36,000,000 floating
      rate loan facility. The amendment made available an additional $19.0 million
      for
      the purpose of acquiring the OBO SACHUEST.





The
      facility is apportioned into two tranches with Tranche 1 attributable to the
      Existing Vessel fleet and Tranche 2 attributable to the new acquisition. Tranche
      1 is payable in twelve quarterly installments of $1.2 million commencing on
      July
      29, 2004, the twelfth installment being a balloon payment in an amount necessary
      to repay the tranche in full. Interest on the facility is equal to LIBOR plus
      2.5%. Tranche 2 is payable in twenty quarterly installments. The first eight
      installments of $1.5 million are followed by eleven installments of $0.6 million
      and a final installment of $0.4 million is due on the maturity date.





Expenses
      associated with the floating rate loan facility include arrangement fees of
      $360,000, which are capitalized and are being expensed over the five-year period
      of the loan.





The floating
      rate loan facility contains
      certain restrictive covenants on the Company, which among other things, require
      minimum collateral coverage, restrict the payment of dividends and restrict
      leverage, investment and capital expenditure without consent of the lender.
      In
      addition, the agreement requires mandatory prepayment in the event of the total
      loss or sale of a vessel and in the event that the fair market value of the
      vessels acquired falls below 140% of the Tranche 1 balance outstanding or the
      fair market value of the Sachuest falls below 110% of the Tranche 2 balance
      outstanding. The Company is also required to maintain liquid assets, as defined,
      in an amount equal to the greater of (a) $2.0 million and (b) six percent (6%)
      of the aggregate amount of indebtedness of the Company on a consolidated basis.
      At December 31, 2004 and 2003, the Company was in compliance with these
      covenants.





Further
      descriptions of the loan agreements are provided in section 9.2.1 of the
      document.







Since
      January 1994, the Company has placed part of its Hull and Machinery ("H&M")
      insurance with Northampton
      Assurance Ltd. (“NAL”), a
      captive
      insurance company owned by NHL. NAL was established to provide a convenient
      vehicle for the mutualization of risk and to gain access to reinsurance markets,
      which can be more competitive than direct insurance markets. The risk associated
      with this program is that to the extent premiums do not cover claims payable,
      the shipowners must pay additional premiums to make the captive insurance
      company whole.







For
      the
      policy period ending February 20, 2006, the Company placed 100% of its Hull
      and
      Machinery (“H&M”) insurance in excess of claims of $125,000 each
      incident with NAL up to a maximum of an average of $64,750 each incident on
      one
      vessel, up to an average of $42,500 each incident on six vessels and up to
      an
      average of $61,250 each incident on one vessel. In addition, the Company placed
      (a) 75% of its H&M insurance in excess of between $125,000 and
      $220,000 each incident and (b) 100% of its Loss of Hire insurance in excess
      of 14 or 21 days deductible with NAL, which risks NAL fully
      reinsured with third party carriers.





For
      the
      policy period ending February 20, 2005, the Company placed 100% of its H&M
      insurance in excess of claims of $125,000 each incident with NAL up to a maximum
      of an average of $76,250 each incident on two vessels, up to an average of
      $47,500 each incident on seven vessels and up to an average of $55,000 each
      incident on one vessel. In addition, the Company placed 70% of its H&M
      insurance in excess of between $125,000 and $175,000 each incident with NAL,
      which risk NAL fully reinsured with third party carriers.





For
      the
      policy period ending February 20, 2004, the Company placed 35% of its H&M
      insurance in excess of claims of $125,000 each incident with NAL up to a maximum
      of $125,000 each incident on three vessels and up to a maximum of $50,000 each
      incident on four vessels. In addition, the Company placed 55% of its H&M
      insurance in excess of $125,000 each incident with NAL, which risk NAL fully
      reinsured. Further it placed 100% of its Increased Value insurance with NAL,
      which risk NAL also fully reinsured with third party carriers.





For
      the
      periods ending December 31, 2005, 2004 and 2003, vessel operating expenses
      on
      the Consolidated Statements of Operations include approximately $496,000,
      $780,000 and $357,000, respectively, of insurance premiums paid to NAL (of
      which
      $336,000, $637,000 and $207,000, respectively, was ceded to reinsurers) and
      approximately $194,000, $157,000 and $87,000, respectively, of brokerage
      commissions paid to NAL. NAL paid consulting fees of $174,000 during each of
      the
      three years ending December 31, 2005 to R. Anthony Dalzell and a company
      controlled by Mr. Dalzell.





Management
      expects that the total expense for drydock and related repair work performed
      during 2006 will be approximately $1.6 million for two vessels. The expenses
      for
      drydock and related repair work totaled $0.9 million for one vessel in 2005
      and
      $1.6 million in 2004 for two vessels. The capitalized costs for scheduled
      classification survey and related vessel upgrades were $2.1 million in 2005
      for
      two vessels.





Management
      does not believe that inflation has had any material impact on the Company's
      operations although certain of the Company's operating expenses (e.g., crewing,
      insurance and docking costs) are subject to fluctuation as a result of market
      forces. Inflationary pressures on bunker (fuel) costs are not expected to have
      a
      material effect on the Company's future operations since such costs are paid
      by
      the subcharterers in the case of time charters and all the vessels in the fleet
      are time charter through the end of 2005. In the case of voyage charters,
      charter rates are generally sensitive to the price of bunkers. However, a
      short-term fluctuation in bunker costs can impact the profitability of a voyage
      charter, which commenced prior to such fluctuation. Also, the Company is
      responsible for the bunker costs of its vessels while they are off
      hire.






**6**
            **Organisation,
                Board and****management******






**6.1**
            **Organisational
                structure**






Below
      is
      an overview of the Company’s corporate structure and asset base:
















**6.2**
            **Board
                of Directors******




Pursuant
      to the Company's Articles of Incorporation, the Board of Directors is divided
      into two classes of at least three persons each. Each class is elected for
      a
      two-year term. The current terms of the Class A Directors expire on the date
      of
      the 2007 Annual Meeting of Stockholders and the current terms of the Class
      B
      directors expire on the date of the 2006 Annual Meeting of Stockholders.
      Officers are appointed by the Board of Directors and serve until their
      successors are appointed and qualified. All directors and executive officers
      of
      the Company were first elected in June 1988 except Mr. LeFrere, who was elected
      as director in December 1995, Mr. Dalzell, who was appointed to his position
      as
      Treasurer and Chief Financial Officer in March 1997 and elected as Class B
      Director in June 1997, and Messrs. Hardy and Ditlev-Simonsen were elected
      directors in February 1998. Mr. Lewis was appointed director in November 2005
      and will be designated as a Class B Director if elected at the 2006 Annual
      Meeting of Stockholders.





The
      non-executive members of the Board are elected by the shareholders. The amount
      of the annual remuneration is set out in Paragraph 10.5 below. The executive
      directors are employed by BHM and do not receive compensation in the capacity
      of
      being directors from the Company.







**6.2.1**
            **Members
                of the Board**




The
      following provides a profile of the Company’s Board of Directors:





**Michael
      S. Hudner (59), Chairman and Class A Director** .
      Michael
      S. Hudner has been President and Chief Executive Officer and a director of
      the
      Company since 1988 and Chairman of the Board of the Company since October 1993.
      He is also President and a director of BHM, a director of Protrans and has
      a
      controlling ownership interest, and is President and a director of NMS. Since
      1978, Mr. Hudner, in his capacity as a partner in B+H Company ("BHC"), and
      its
      predecessor, was primarily responsible for the acquisition and financing of
      over
      100 bulk carriers, product tankers and crude oil tankers for BHC and its
      affiliates and joint ventures (including all the vessels owned by the Company).
      Mr. Hudner is a member of the New York Bar, and is a member of the Council
      of
      the American Bureau of Shipping. Mr. Hudner is a US citizen and resides in
      Rhode
      Island, United States.





**Trevor
      J. Williams (63), Class A Director.** Mr.
      Williams has been principally engaged since 1985 as President and Director
      of
      Consolidated Services Limited, a Bermuda-based firm providing management
      services to the shipping industry. He is a director of PROTRANS and has been
      for
      more than five years a director and Vice President of the Company and BHM.
      Mr.
      Williams is a British citizen and resides in Bermuda.





**R.
      Anthony Dalzell (61), Class B Director.** Mr.
      Dalzell has been affiliated with BHM since October 1995. He was appointed
      Treasurer and Chief Financial Officer of the Company in March 1997. Mr. Dalzell
      was Managing Director of Ugland Brothers Ltd., a U.K. based shipowner and
      shipmanager from March 1982 until March 1988. From April 1988 until December
      1992, he was General Manager of NMS and Secretary and a Vice President of the
      Company. From June 1993 until October 1995, Mr. Dalzell was affiliated with
      B+H
      Bulk Carriers Ltd. Mr. Dalzell is a British citizen and resides in the United
      Kingdom.





**Charles
      L. Brock (62), Class B Director.** Mr.
      Brock
      has been a member of the law firm of Brock Partners since April 1995 which
      firm
      acted as United States counsel for the Company from 1995 to 2000 and since
      June
      2002, a member of the investment banking firm of Brock Capital Group. Mr. Brock
      is a US citizen and resides in East Hampton, New York, United
      States.





**John
      M. LeFrere (60), Class A Director.** Mr.
      LeFrere has been a private investor and consultant to several major corporations
      since March 1996. From February 1993 to March 1996, he was a Managing Director
      of Bankers Trust Company of New York in charge of equity research for the
      Capital Markets Division. Mr. LeFrere is President of J. V. Equities Corp.,
      an
      investment banking firm and a partner in several research and investment banking
      firms. Mr. LeFrere is a US citizen and resides in Florida, United States.





**Anthony
      J. Hardy (66), Class A Director.** Mr.
      Hardy has been Chairman since 1986 of A.J. Hardy Limited of Hong Kong, a
      consulting firm to shipping and industry. Prior thereto, he was Chairman
      (1972-1986) and Managing Director (1965-1981) of the Wallem Group of Companies,
      a major international shipping group headquartered in Hong Kong. Mr. Hardy
      has
      devoted 40 years to many aspects of the shipping industry, such as shipbroking,
      ship management, offshore oil rigs, and marine insurance. He was Chairman of
      the
      Hong Kong Shipowners Association (1970-1973). Mr. Hardy is a British citizen
      and
      resides in Hong Kong.





**Per
      Ditlev-Simonsen (73), Class B Director.** Mr.
      Ditlev-Simonsen is Chairman of the Board of Eidsiva Rederi ASA, an Oslo Stock
      Exchange listed shipping company with its main interests in bulk, car and ro-ro
      carriers. Mr. Ditlev-Simonsen has more than 35 years experience in international
      shipping and offshore drilling. In the years 1991-1996, he was Chairman of
      the
      Board of Christiana Bank og Kreditkasse, Norway’s second largest commercial bank
      and one of the world’s largest shipping banks. Mr. Ditlev-Simonsen, the Mayor of
      Oslo since 1995, has served as a member of the Norwegian Parliament and the
      Oslo
      City Council, and as Chairman of the Conservative Party in Oslo. He was also
      Minister of Defense in the Norwegian Government from October 1989 to November
      1990. Mr. Ditlev-Simonsen is a Norwegian citizen and resides in Oslo,
      Norway.





**O.
      Michael Lewis (56), Director** **1** **.** Mr.
      Lewis was the Senior Partner of London law firm Peachey & Co from 1997 to
      2005 having been a partner since 1979. Mr. Lewis specialised in advising
      international shipping groups. Mr. Lewis is a trustee of the Boris Karloff
      Charitable Foundation.




1
        Class
        not designated until the next annual meeting


**6.3**
            **Audit
                Committee******




The
      Audit
      Committee was formed on the basis of the Audit Committee Charter and consists
      of
      three independent directors from the Board of the Company, Charles Brock,
      O. Michael Lewis and Per Ditlev-Simonsen. The current Audit Committee
      Charter is attached to this document as Appendix 2.





The
      Bylaws of the Company provide for an Audit Committee of the Board of Directors
      consisting of two or more directors of the Company designated by a majority
      vote
      of the entire Board. The rules of the Amex require the Company to have an Audit
      Committee. The Audit Committee consists of directors who are not officers of
      the
      Company and who are not and have not been employed by BHM or by any person
      or
      entity under the control of, controlled by, or under common control with, BHM.





The
      Audit
      Committee is currently charged under the bylaws with reviewing the following
      matters and advising and consulting with the entire Board of Directors with
      respect thereto: (a) the preparation of the Company’s annual financial
      statements in collaboration with the Company’s independent accountants; (b) the
      performance by BHM of its obligations under the Management Services Agreement
      with the Company; and (c) all agreements between the Company and BHM, any
      officer of the Company, or affiliates of BHM or any such officer. (section
      8
      gives an overview of related party agreements subject to the obligations of
      the
      Audit Committee). Other than in connection with the retention of auditors and
      review of audit and financial control matters the Audit Committee does not
      have
      independent powers. It is believed that should the board oppose the
      recommendations of the Audit Committee the members of the audit committee would
      feel obliged to disclose such opposition.







**6.4**
            **Corporate
                Governance**




The
      Company is subject to and in compliance with the Corporate Governance regulation
      of Amex, the primary listing exchange.





In
      connection with the Secondary Listing on Oslo Børs the Company has provided a
      statement concerning the independence of its board of directors in accordance
      with the Norwegian Corporate Governance Code Section 7 (Appendix 7 to the
      document.)







**6.5**
            **Compensation
                to the Board of Directors and Directors of the Audit
                Committee**




Directors
      who are not officers of the Company are entitled to receive annual fees of
      $15,000. Members of the Audit Committee are entitled to receive annual fees
      of
      $12,000, except for the Chairman of the Audit Committee who is entitled to
      receive an annual fee of $24,000. Certain directors and executive officers
      of
      the Company earn compensation indirectly through entities which provide services
      to the Company. For further information see section 8 “Related Party
      Transactions”.





None
      of
      the members of the executive management or the board has entered into agreements
      with the Company providing for benefits upon termination of
      employment.







**6.6**
            **Management******




The
      members of the executive management are appointed by the Company but are
      employed by BHM. Officers are appointed by the Board of Directors and serve
      until their successors are appointed and qualified.







**6.6.1**
            **Members
                of the executive management of BHO**




The
      executive management which will manage BHO consists of the following members:





**Michael
      S. Hudner (59), Chief Executive Officer.** See
      description under section 6.3.1 above.





**Trevor
      J. Williams (63), Vice President and Director of Protrans.** See
      description under section 6.3.1 above.





**R.
      Anthony Dalzell (61), Treasurer and Chief Financial
      Officer.** See
      description under section 6.3.1 above.







**6.6.2**
            **Additional
                information concerning Board and
                Management**




**Name
                of Director/member of executive management**
            **Names
                of all companies and partnerships the director/member of executive
                management has been a member of the administrative, management or
                supervisory bodies or partner at any time during the last five years,
                indicating if the position is continuing**Michael
                S. Hudner
            Navinvest
                Marine Services (USA) Inc - Director (Continuing)
              B
                +
                H Management Ltd - President (Continuing)
              Council
                of American Bureau of Shipping - Member (Continuing)
              Harbor
                Commission, Town of Little Compton, RI - Member (Continuing)
              Pheonix
                House of New England - Director (Continuing)
              Mystic
                Seaport & Museum - Trustee (Continuing)
              Grow
                Smart, RI - Director (Continuing)
              Board
                of Battleship Cove, Fall River, MA - Corporate Member
                (Continuing)
              Sea
                Education Association - Trustee (Continuing)Trevor
                J. Williams
            B
                +
                H Management Ltd & Associated Companies - Director
                (Continuing)
              Excel
                Maritime Carriers Ltd - Director & Member Nomination Committee
                (Continuing)
              Consolidated
                Services Ltd & Associated Companies - Director
                (Continuing)
              Clients
                of Consolidated Services Ltd & Associated Companies - Director
                (Continuing)R.
                Anthony Dalzell
            NoneCharles
                L. Brock
            Brock
                Partners LLP - Managing Member (Continuing)
              Brock
                Capital Group LLC - Charles Brock LLC - Managing Member
                (Continuing)
              
              Charles
                Brock LLC - Member (Continuing)
              Private
                Trusts & Not-for-Profit Organizations - Trustee and/or Director
                (Continuing)John
                M. LeFrere
            New
                York Society of Securities Analysts - Senior Analyst (Continuing)
              Shippers
                Member Corp - Director (Continuing)
              ARI
                Members Corp - Director (Continuing)
              J
                V
                Equities Inc - Director (Continuing)Anthony
                J. Hardy
            Wallem
                Group - Partner & Director (Continuing)
              Heath
                Lambert (Hong Kong) Ltd - Non exec. Chairman (not Continuing)
              A
                J
                Hardy Ltd - Director (Continuing)
              Hong
                Kong Maritime Museum Ltd - Chairman (Continuing)Per
                Ditlev-Simonsen
            Eidsiva
                Rederi ASA - Chairman of the Board (Continuing)O.
                Michael Lewis
            Peachey
                & Co - Senior Partner (Not Continuing)
              Arunlex
                Ltd - Director (Not Continuing)
              Finalacre
                Ltd - Director (Not Continuing)
              Linwos
                Ltd - Director (Not Continuing)
              Tansho
                Ltd - Director (Not Continuing)
              Boris
                Karloff Charitable Foundation - Trustee
                (Continuing)





None
      of
      the members of the Board or the executive management has:





(a)
            any
                convictions in relation to fraudulent offences for at least the previous
                five years;


(b)
            in
                the capacity mentioned in the chart above been associated with any
                bankruptcies, receiverships or liquidations for at least the previous
                five
                years;


(c)
            been
                publicly incriminated and/or sanctioned by statutory or regulatory
                authorities (including designated professional bodies), nor been
                disqualified by a court from acting as a member of the administrative,
                management or supervisory bodies of an issuer or from acting in the
                management or conduct of the affairs of any issuer for at least the
                previous five years.







**6.7**
            **Board
                and management ownership******




The
      following tables show the beneficial share ownership of the Board and management
      (including related parties)  at
      March
      1, 2006:





**Name
                of beneficial owner**
            **Position
                in management/board**
            **Number
                of Shares Beneficially Owned1**
            **Percent
                of Common Stock**Northampton
                Holdings Ltd.
            
            2,011,926
            28.38%Michael
                S. Hudner2
            CEO/Chairman
            3,509,183
            47,83%Fundamental
                Securities International Ltd.
            
            1,258,797
            17.77%Devonport
                Holdings Ltd3
            
            1,258,797
            17.77%B+H
                Management Ltd.
            
            231,460
            3.16%R.
                Anthony Dalzell
            CFO/Board
                Member
            81,765
            1.15%Charles
                L. Brock
            Board
                Member
            0
            0John
                M. LeFrere
            Board
                Member
            0
            0Anthony
                J. Hardy
            Board
                Member
            0
            0Per
                Ditlev-Simonsen
            Board
                Member
            0
            0O.
                Michael Lewis
            Board
                Member
            0
            0Trevor
                J. Williams4
            Board
                Member
            3,509,683
            47.83%**All
                executive officers and Directors as a group**
            
            **3,583,948**
            **48.95%**








1. As
          used
          herein, the term beneficial ownership with respect to a security is defined
          by
          Rule 13d-3 under the US Securities Exchange Act of 1934 (“the Exchange Act”)
          as consisting of sole or shared voting power (including the power to vote
          or
          direct the vote) and/or sole or shared investment power (including the
          power
          to dispose or direct the disposition) with respect to the security through
          any
          contract, arrangement, understanding, relationship, or otherwise, including
          the right to acquire such powers during the next 60 days. Unless otherwise
          noted, beneficial ownership consists of sole ownership, voting and investment
          power with respect to all shares of common stock shown as beneficially
          owned
          by them.
2. Comprised
          of shares held by Northampton Holdings Ltd. (“NHL”), Fundamental Securities
          International Ltd. (“Fundamental”) and BHM. Mr. Hudner is a general partner in
          the partnership which is the ultimate parent of Fundamental and a general
          partner in the ultimate owner of the general partner of B+H/Equimar 95
          Associates, L.P (“95 Associates”), which is the 60.6% owner of NHL.
          Fundamental is a 30.3% shareholder of NHL. Mr. Hudner is a 40% direct
          shareholder, a director and President of BHM. Accordingly, Mr. Hudner may
          be
          deemed to share voting and dispositive power as an indirect beneficial
          owner
          of the shares held by NHL, Fundamental and BHM.
3. Devonport
          Holdings Ltd. is a general partner of the partnership that is the ultimate
          parent of Fundamental and is also a general partner in the ultimate owner
          of
          the general partner of 95 Associates.
4. Comprised
          of shares held NHL plus the shares held by Fundamental. Mr. Williams is
          president and a director of Fundamental and the president and a director
          of 95
          Associates. Mr. Williams is a 20% direct shareholder and a Vice President
          of
          BHM. Accordingly, Mr. Williams may be deemed to share voting and dispositive
          power as an indirect beneficial owner of the shares held by NHL, Fundamental
          and BHM.



**6.8**
            **Auditor**




Ernst
      & Young, LLP, 40 Westminister Street, Providence, Rhode Island 02903, USA,
      was engaged as auditor for the Company’s 2005 fiscal year on January 18, 2006.
      PricewaterhouseCoopers LLP was the auditor for the Company’s prior fiscal years.
      The decision to change auditor was a business decision and the reports of
      PricewaterhouseCoopers LLP on the financial statements as of and for the fiscal
      years ended December 31, 2004 and 2003 contained no adverse opinion or
      disclaimer of opinion and were not qualified or modified as to uncertainty,
      audit scope or accounting principle.




**7**
            **Share****capital
                and shareholder
                matters******






**7.1**
            **The
                Shares to be Secondary
                Listed**




The
      Company’s Shares are registered with VPS under the International Securities
      Identification Number (ISIN) LR 000 AOD81P7. DnB, Verdipapirservice is, in
      accordance with a Registrar Agreement, the registrar for the Shares. In the
      United States the Shares are identified with the following CUSIP number:
      055090104.







**7.2**
            **Issued
                share capital**




At
      March
      20, 2006 the Company’s issued and outstanding share capital is $70,899.89
      comprising 7,089,986 Shares with par value $0.01. The Company has applied for
      Secondary Listing on Oslo Børs for the issued and outstanding Shares. In
      addition to the issued and outstanding shares, the Company holds 467,283
      Treasury Shares with par value of $0.01. Treasury Shares are Shares held by
      the
      Company which do not carry votes at the general meetings. The issued share
      capital is fully paid. The American Stock Transfer and Trust Company, New York,
      NY, USA is the Company’s transfer agent.





At
      March
      20, 2006 in total 1,791,130 Shares are
      registered in the Norwegian Central Securities Depository (“VPS”), with ISIN LR000A0D81P7 .
      DnB NOR
      Bank ASA is, in accordance with a Registrar Agreement, the registrar for shares
      registered in the VPS.





The
      Company has only one class of Shares issued, but the Authorised Share Capital
      also comprises a class of preferred stock, see 11.3 below. All issued and
      outstanding Shares, excluding Treasury Shares, are vested with equal rights
      in
      all respects, and each Share carries one vote at general meetings.





In
      order
      for a shareholder registered in the VPS to be entitled to participate in a
      general meeting of the Company, shareholders must give notice to the registrar,
      being DnB NOR Bank ASA, either to give a proxy to DnB NOR Bank ASA to vote
      on
      their behalf, or request the registrar to issue a proxy to the respective
      shareholder in order to vote at the Company’s general meeting. The shareholder
      must, well before the stipulated date, request that DnB NOR Bank ASA carries
      out
      the request from the shareholder. A shareholder whose Shares are registered
      in
      the name of a nominee shall make such request to the nominee. Furthermore,
      the
      shareholders must give notice to the Company of their intent to participate
      in
      the general meeting as stipulated in the notice to the general meeting.




**7.3**
            **Authorised
                share capital**




The
      Company has an authorised share capital of $500,000, divided into $300,000
      comprising 30,000,000 Common Shares, and $200,000 comprising 20,000,000 serial
      preferred stock of par value $0.01, none of which has been designated or
      issued.







**7.4**
            **Treasury
                Shares**




As
      of
      March 20, 2006, the Company holds 467,283 Shares with in Treasury. The par
      value
      of the Treasury Shares are $0.01. On December 31, 2005 the book value per share
      was $8.91. A portion of the Treasury Shares was acquired to satisfy the
      requirements of a Stock Compensation plan and a Stock Option plan as noted
      below. 72,370 Shares of the remainder were recently repurchased by the Company
      pursuant to its authorisation to repurchase up to 10% of its common Shares
      in
      the open market announced on October 17, 2005.







**7.5**
            **Stock
                option agreements**




Effective
      December 31, 2000, the Company granted 600,000 ten year stock options,
      exercisable at $1.00 per shares, the fair market value at the date of grant,
      with a value of $78,000 to BHM as payment for services. Information regarding
      these stock options is as follows:





**Shares**
            **Option
                price per share ($)****Outstanding
                at January 1, 2004**
            **600,000**
            **1.00**Granted
            0Exercised
            0
            1.00Cancelled
            307,000**Outstanding
                at December 31, 2004**
            **293,000**
            **1.00**Granted
            0Exercised
            61,540**Outstanding
                at February 22, 2006**
            **231,460**
            **1.00**







**7.6**
            **Incentive
                compensation plan******




During
      1998, the Company's Board of Directors entered into an agreement with BHM
      whereby up to 110,022 Shares will be issued to BHM contingent upon certain
      performance criteria, for distribution to individual members of management
      at
      BHM’s discretion. According to the agreement the Company will issue the Shares
      to BHM at such time as the specific requirements of the agreement are met.
      The
      Company issued 8,065 shares from treasury stock on January 1, 2006 bringing
      the
      total to 56,457 Shares have been issued from treasury stock being held for
      this
      purpose, and compensation cost of $151,000 will be included as management fees
      to related parties in 2006. The Shares under this stock compensation agreement
      are issued without cost to BHM. During 2005, 8,065 Shares were issued.
      Compensation cost for 2005 of $102,000, for 2004 of $89,000 and for 2003 of
      $35,000 was based on the market price of the Shares at the date of issue and
      was
      included as management fees to related parties in the Consolidated Statement
      of
      Operations as of December 31, 2005, 2004 and 2003 respectively. The Company
      expects to issue an additional 8,065 shares on January 1, 2007.







**7.7**
            **Historical
                development in share capital and number of
                shares**




The
      table
      below shows the historical development of share capital and the number of
      outstanding shares in the Company for the period covered by the historical
      financial information in this document:





**Year**
            **Change
                in number of Shares issued and outstanding**
            **Nominal
                value per Share ($)**
            **No.
                Shares following change**
            **Total**
              **issued
                and outstanding share capital**2002
            (97,900)
            0.01
            3,839,522
            38,395.222003
            (8,375)
            0.01
            3,831,177
            38,311.772004
            8,065
            0.01
            3,839,242
            38,392.422005
            3,242,678
            0.01
            7,081,920
            70,819.20March
                20, 2006
            8,065
            0.01
            7,089,985
            70,899.85




**7.8**
            **Share
                price****development**




Since
      May
      30, 2005, the Shares have been publicly traded on the OTC market in Oslo under
      the ticker BHOC. The Share price performance is shown in the graph
      below.








The
      graph
      below set forth price and trading volume for the shares, as reported on the
      OTC
      market, during the periods indicated. The closing price of the shares as
      reported on the OTC market on March 23, 2006 was NOK 125.00.








*Source:
      The Norwegian Securities Dealers Association* *(Norges
      Fondsmeglerforbund)*







**7.9**
            **Major
                shareholders******




The
      table
      set forth in section 6.7 above shows the holdings of board and management
      shareholders affiliated with the board and/or management. In addition to the
      shareholders mentioned in section 6.7 the Company is aware that Orkla Finans
      (Kapitalforvaltning) ASA as the investment manager to Nordic Alpha plc
      beneficially owns 416,870 Shares equaling to 5.88% of the share capital, as
      set
      forth in a Schedule 13G filed with the US Securities and Exchange Commission
      on
      February 6, 2006. Other than these shareholders the Company is not aware of
      shareholders holding in excess of 5% of the share capital of the
      Company.





BHO
      is
      indirectly under the control of Michael S. Hudner and Trevor J. Williams.
      Jointly they control approximately 48% of the votes. Accordingly other
      shareholders have majority in the general meeting of shareholders if they wish
      to use their voting rights.





The
      major
      shareholders have the same voting rights as other holders of
      Shares.






**7.10**
            **Dividend
                policy**




The
      Company aims to make the Shares in the Company an attractive investment and
      to
      provide its shareholders with a competitive return on investment over time,
      in
      terms of dividend and development in the share price. The amount of any
      dividends to be distributed will be dependent on, inter alia, the Company’s
      investment requirements, amount of debt and rate of growth. The Company's target
      is that the underlying values shall be reflected in the Share price. The Company
      has not paid dividends in recent years, and has no current plans to commence
      paying dividends.







**7.11**
            **Shareholder
                policy**




BHO
      has
      continuously provided shareholders, Amex, OTC and the market as a whole with
      financial and other information. Such information currently takes the form
      of
      press releases and investor presentations. Furthermore, the Company seeks to
      treat all shareholders equally in line with applicable regulations.







**7.12**
            **Shareholder
                agreements**




The
      Board
      is not aware of any shareholder agreements among its shareholders.







**7.13**
            **Bylaws
                and Articles of
                Association**




The
      Company’s corporate affairs are governed by its articles of incorporation, as
      amended (the “Articles of Incorporation”), bylaws, as amended (“Bylaws”), and
      the Business Corporation Act of the Republic of Liberia as in effect from time
      to time (the “BCA”).





Under
      Article THREE of the Articles of Incorporation, the Company can engage in the
      shipping business and any other business, except banking or
      insurance.





Pursuant
      to the Articles of Incorporation, the Board of Directors is divided into two
      classes of at least three persons each. Each class is elected for a two-year
      term. The current terms of the Class A Directors expire on the date of the
      2007
      Annual Meeting of Stockholders and the current terms of the Class B directors
      expire on the date of the 2006 Annual Meeting of Stockholders.





Pursuant
      to the Bylaws, the Company’s Audit Committee Charter and the rules of the Amex,
      the Company has an Audit Committee composed of three independent directors,
      which is responsible for review of transactions with BHM, relations with the
      Company’s auditors and review of the Company’s financial controls and disclosure
      procedures.





The
      Articles of Incorporation provide that the Company is authorized to issue up
      to
      50,000,000 shares of stock, of which 30,000,000 shares have been designated
      as
      common stock, par value $.01 per share, and 20,000,000 shares have been
      designated as preferred stock, par value $.01 per share. The Company’s Board of
      Directors may issue shares of common stock and preferred stock up to the total
      amount of authorized shares without obtaining the prior approval of
      stockholders.







**7.13.1**
            **Common
                Stock**




Holders
      of the Company’s outstanding common stock have the following rights and
      privileges:





·
            the
                right to one vote for each Share held of record on all matters submitted
                to a vote of the stockholders, including the election of
                directors,


·
            the
                right to at least 15 days (and not more than 60 days) notice of all
                meetings of stockholders,


·
            no
                cumulative voting rights, which means that holders of a majority
                of Shares
                outstanding can elect all of the Company’s
                directors,


·
            the
                right to receive ratably dividends when, if and as may be declared
                by the
                Board of Directors out of funds legally available for such purposes,
                subject to the senior rights of any holders of preferred stock then
                outstanding (if any),


·
            the
                right to share ratably in the net assets legally available for
                distribution to common stockholders after the payment of the Company’s
                liabilities and preferred stock liquidation preferences on the Company’s
                liquidation, dissolution and winding-up,


·
            the
                right to vote on any amendment to the Management Services Agreement
                with
                BHM, and


·
            no
                preemptive or conversion rights or other subscription rights, and
                no
                redemption privileges.





All
      outstanding Shares are fully paid and nonassessable.







**7.13.2**
            **Preferred
                Stock**




The
      Company’s preferred stock may be issued from time to time by the Board of
      Directors, without further action by the Company’s stockholders, in one or more
      series. The Board can fix the relative designations, preferences, priorities,
      powers and other special rights for each series of preferred stock.








Although
      the Company currently has no outstanding preferred stock and no current
      intention to issue preferred stock, in the event of any issuance, common
      stockholders will not have any preemptive or similar rights to acquire any
      of
      the preferred stock. Issuances of preferred stock could:





·
            dilute
                the voting power of common
                stockholders,


·
            adversely
                affect the likelihood that common stockholders will receive dividend
                payments and payments on liquidation,
                and


·
            have
                the effect of delaying or preventing a change in stockholder and
                management control.







**7.13.3**
            **Voting
                of Shares**




Under
      the
      Bylaws, the affirmative vote of the holders of a majority of the Shares
      represented at a meeting at which a quorum is present is sufficient to
      authorize, ratify or consent to any action required by the common stockholders,
      except as otherwise provided by the BCA. Under the BCA, the Company’s
      stockholders may also take actions without holding a meeting only by unanimous
      written consent.







**7.13.4**
            **Antitakeover
                Provisions**




The
      Articles of Incorporation and the BCA include provisions that may have the
      effect of encouraging persons considering unsolicited tender offers or other
      unilateral takeover proposals to negotiate with the Board rather than pursue
      non-negotiated takeover attempts. The Company believes that the benefits of
      these provisions outweigh the potential disadvantages of discouraging these
      proposals because, among other things, negotiation of the proposals might result
      in an improvement of their terms. These provisions include:





·
            the
                division of the Board into two classes of directors with overlapping
                terms
                of two years each, which could have the effect of delaying by a year
                the
                action of a majority of holders of Shares who wish to replace all
                the
                directors, and


·
            the
                authority of the Board to issue series of preferred stock, all as
                described above.







**7.13.5**
            **Disclosure
                of ownership**




Under
      U.S. securities laws, persons who acquire beneficial ownership of 5% or more
      of
      the Shares are required to file a report on Schedule 13D or 13G concerning
      their
      ownership, and certain investment advisers are required to report ownership
      on a
      quarterly basis on Form 13F.




**8**
            **Related****party
                agreements**






**8.1**
            **Management
                Agreement with BHM**




BHM
      is
      the manager of the Company and its subsidiaries under a management agreement
      entered into in 1988 (the “Management Agreement”). In accordance with the
      Management Agreement BHM is responsible for commercial, market and operational
      management. The Management Agreement is indefinite and may only be terminated
      for cause by both parties.





Mr.
      Hudner is a 40% direct shareholder, a director and President of BHM. Mr.
      Williams is a 20% direct shareholder and a vice president of BHM. The remaining
      40% of BHM is indirectly controlled by Messrs Hudner and Williams through
      participation in a general partnership. As Mr. Hudner and Mr. Williams are
      considered consolidated parties in respect of ownership of BHM they are both
      considered as controlling 100% of the shares of BHM.





BHM
      employs NMS under an agency agreement to assist with certain financial reporting
      and administrative duties. Mr. Hudner is the controlling shareholder of
      NMS.





From
      January 1, 2006, the Company pays BHM a monthly rate of $6,251 per vessel for
      general, administrative and accounting services, which may be adjusted annually
      for any increases in the Consumer Price Index. These services include general,
      administrative and accounting services. To the extent that BHM acquires services
      from NMS under the agency agreement, payment to NMS are covered by the fixed
      fee
      agreed between the Company and BHM. During the years ended December 31, 2005,
      2004 and 2003, the Company paid BHM fees of approximately $797,000, $460,000
      and
      $860,000, respectively. The total fees vary due to the change in the number
      of
      fee months resulting from changes in the number of vessels owned during each
      period.





As
      a
      result of BHM's possible future management of other shipowning companies and
      BHM's possible future involvement for its own account in other shipping
      ventures, BHM may be subject to conflicts of interest in connection with its
      management of the Company. The Management Agreement provides that BHM must
      provide the Company with full disclosure of any disposition of handysize bulk
      carriers by BHM or any of its affiliates on behalf of persons other than the
      Company.







**8.2**
            **Commercial
                management provided by BHM**




The
      Company engages
      BHM to provide commercial management services at a monthly rate which from
      January 1, 2006 is $10,179 per vessel, which may be adjusted annually for any
      increases in the Consumer Price Index. BHM obtains support services from
      Protrans (Singapore) Pte. Ltd., which is owned by BHM. Commercial managers
      provide marketing and operations services. During the years ended December
      31,
      2005, 2004 and 2003, the
      Company paid
      BHM
      fees of approximately $1,238,000, $993,000 and $1,327,000, respectively for
      these services. The total fees increased in 2005 due to the increase in the
      number of fee months resulting from the increase in the number of vessels
      owned.







**8.3**
            **Technical
                Management Agreements with
                BHM**




From
      January 1, 2006 the Company pays BHM a monthly rate of $12,824 per MR product
      tanker and $15,000 per Panamax product tanker or OBO for technical management
      services, which may be adjusted annually for any increases in the Consumer
      Price
      Index. Vessel technical managers coordinate all technical aspects of day to
      day
      vessel operations including physical maintenance, provisioning and crewing
      of
      the vessels. During the years ended December 31, 2005, 2004 and 2003, the
      Company paid BHM fees of approximately $2,040,000, $1,274,000 and $1,673,000,
      respectively for these services. The total fees increased in 2005 due to the
      acquisition of 5 new vessels, all of which are charged at the higher rates
      noted
      above.







**8.4**
            **Time
                Charters with
                Protrans**




Company
      vessels are time chartered to Protrans. BHM is the manager of Protrans and
      has
      delegated certain of its duties to NMS and Product Transport Corporation (S)
      Pte. Ltd.







**8.5**
            **Manning
                Agreement with Centennial**




The
      Company engaged Centennial Maritime Services Corp. (“Centennial”), a
      company
      affiliated with the Company through common ownership, to
      provide manning services at a monthly rate of $1,995 per vessel and agency
      services at variable rates, based on the number of crew members placed on board.
      During the years ended December 31, 2005, 2004 and 2003, the Company paid
      Centennial manning fees of approximately $370,000, $215,000 and $329,000,
      respectively.







**8.6**
            **Brokerage
                Commission**




BHM
      received brokerage commissions of $85,000 in connection with the sale of the
      M/T
      COMMUTER in August, 2005. BHM received brokerage commissions of $194,000 in
      connection with the purchase of the OBO SACHUEST in April 2004. The Company
      also
      paid BHM standard industry chartering commissions of $333,000 in 2005, $302,000
      in 2004 and $326,000 in 2003 in respect of certain time charters in effect
      during those periods. Clearwater Chartering Corporation, a company affiliated
      through common ownership, was paid $1,194,000 standard industry chartering
      commissions in 2005.







**8.7**
            **Consultancy
                services from J. V. Equities,
                Inc**




During
      2005, 2004 and 2003, the Company paid fees of $60,000, $205,000 and $240,000
      to
      J.V. Equities, Inc. for consulting services rendered. J.V. Equities is
      controlled by John LeFrere, a director of the Company. In December, 2004, in
      a
      restructuring of the Company’s consulting arrangement with J.V. Equities, who
      terminated a consulting arrangement providing for payments of $240,000 per
      year,
      received and surrendered an option to purchase 307,000 shares of Company common
      stock exercisable at $1.00 per share, and received an additional fee of $644,000
      as consideration for canceling the options, which was recorded as a charge
      to
      paid in capital in the Company’s Consolidated Balance Sheets at December 31,
      2004. J. V. Equities will receive additional payments aggregating $1,396,000
      consisting of $5,000 per month payable in 2005, and $41,750 per month from
      January 2006 through August 2008.







**8.8**
            **Consultancy
                services from Dean
                Investments**




During
      2005, 2004 and 2003, the Company paid fees of $49,334, $27,000 and $58,000,
      respectively, to Dean Investments for consulting services rendered. Dean
      Investments is controlled by R. Anthony Dalzell, the Chief Financial Officer,
      Vice President and a director of the Company.







**8.9**
            **Stock
                compensation**






During
      1998, the Company’s Board of Directors approved an agreement with BHM whereby up
      to 110,022 Shares would be issued to BHM for distribution to individual members
      of management, contingent upon certain performance criteria. The Company will
      issue the Shares to BHM at such time as the specific requirements of the
      agreement are met. During 2005, an additional 8,065 shares, bringing the total
      to 48,391 shares, have been issued from Treasury Shares being held for this
      purpose. Compensation cost of $102,000, $89,000 and $35,000 based on the
      market price of the Shares at the date of issue was included as management
      fees
      to related parties in the Consolidated Statement of Operations as of December
      31, 2005, 2004 and 2003 respectively.




The
      Company issued 8,065 Shares from Treasury Shares under this agreement on January
      1, 2006 and expects to issue 8,065 Shares from Treasury Shares being held for
      this purpose on January 1, 2007, and no more Shares will be issued under the
      agreement after such date.







**8.10**
            **Stock
                option agreement with
                BHM**




Effective
      December 31, 2000, the Company granted stock options exercisable to purchase
      600,000 Shares, with a value of $78,000 to BHM as payment for services. The
      exercise price, $1.00 per Share, was the fair market value at the date of grant,
      and the options are exercisable over a ten-year period. As at March 23, 2006,
      231,460 additional Shares may be issued according to these stock
      options.







**8.11**
            **Insurance
                - Northampton Assurance Ltd
                (“NAL”)**




The
      Company has entered into insurance agreements in respect of Hull & Machinery
      and increased value insurance with NAL an affiliate of Mr. Hudner’s, for the
      last three years. NAL has during the same period paid consulting fees to R.
      Anthony Dalzell and a company controlled by Mr. Dalzell.







**8.12**
            **Arms-length
                principles**




The
      Company believes that the terms of all transactions between the Company and
      the
      existing officers, directors, shareholders and any of their affiliates described
      above are no less favorable to the Company than terms that could have been
      obtained from third parties, and hence that the principle of arms-length
      commercial terms applies in all respects.







**9**
            **Legal****issues******






**9.1**
            **Disputes**




Neither
      BHO nor any other entity in the BHO Group are, at present, involved in any
      dispute which may have a material adverse effect on its financial
      position.







**9.2**
            **Material
                contracts**




The
      relevant contracts in respect of the Company’s activities are described in
      section 8 “Related party agreements”.







**9.2.1**
            **Loan
                Agreements with Nordea**




The
      Company’s activities are financed through two long term loan facility agreements
      with Nordea Bank Norge ASA (“Nordea”). The first (the “Cliaship Loan”) was dated
      April 29, 2004 and was amended in August 2005. The second (the “OBO Loan”) was
      dated February 23, 2005 and was replaced by a Reducing Revolving and Term Loan
      Facility on October 18, 2005 (the “Amended OBO Loan”).





The
      Cliaship Loan was entered into by Cliaship Holdings Ltd (a subsidiary of the
      Company), providing for a $36,000,000 secured term loan facility with Nordea
      as
      arranger and administrative/security agent and the banks, financial institutions
      and persons listed in schedule 1 of the loan agreement as lenders. The purpose
      of the Cliaship Loan was to refinance an earlier loan agreement and finance
      the
      purchase of M/V “Sachuest”. The Cliaship Loan was divided into two tranches -
      one of $19,000,000 and another of $17,000,000, which are repayable in 12 and
      20
      quarterly installments respectively. The interest rate under the Cliaship Loan
      (as amended) is LIBOR + 1.25 % p.a.





The
      Cliaship Loan (as amended) contains extensive covenants and representations
      and
      warranties applicable to Cliaship Holdings Ltd and each of its shipowning
      subsidiaries, as well as the Company as guarantor. Inter alia, Cliaship Holdings
      Ltd and each of its shipowning subsidiaries may not, without the prior written
      consent of Nordea, enter into any charter or vessel pool arrangement with a
      duration of more than 12 months, or any transactions with any
      affiliate.





The
      OBO
      Loan, a secured term loan facility amounting to $102,000,000 was entered into
      by
      OBO Holdings Ltd. (a subsidiary of the Company) and its subsidiaries BHOBO
      One
      Ltd., BHOBO Two Ltd. BHOBO Three Ltd. (the “Borrowers”) with the banks,
      financial institutions and persons listed in schedule 1 of the loan agreement
      as
      lenders and Nordea as arranger and administrative/security agent and Nordea
      Bank
      Finland plc as swap bank, Nordea as agent and Nordea as mandated lead arranger.
      The Company counter-signed the agreement as guarantor. The purpose of the loan
      was to finance in part the purchase of the vessels MV “Bonnie Smithwick”, MV
“Rip Hudner”, and MV “Searose G”.





The
      OBO
      Loan was divided into a $82,000,000 senior tranche and a $20,000,000 junior
      tranche. The senior tranche was repayable in 20 quarterly installments, each
      in
      the amount of $2,900,000 and a balloon payment of $24,000,000 payable together
      with the final installment. The junior tranche was repayable in 16 quarterly
      gradually decreasing installments, the first being $2,000,000 and the last
      $750,000.





On
      October 18, 2005, the Company agreed to refinance the OBO Loan and replace
      it
      with the amended OBO Loan, amounting to $138,100,000. An amount of $95,100,000
      was drawn down on October 21, 2005 and applied toward the refinancing of the
      OBO
      Loan and the balance of funds was drawn down on November 16, 2005 and applied
      toward the financing in part of the Company’s acquisition of M/V “Roger M Jones”
($25,000,000) and M/T “Sagamore” ($18,000,000). The final maturity date of the
      new term loan facility is December 15, 2010.





The
      borrowers under the Amended OBO Loan are the same as those under the OBO Loan
      except that RMJ OBO Shipping Ltd (owner of “Roger M. Jones”) and Sagamore
      Shipping Ltd (owner of “Sagamore”) have been added. The Amended OBO Loan is
      divided into two facilities:





Facility
      A ($122,100,000) is repayable in 21 quarterly installments, the first in the
      amount of $2,900,000, followed by four in the amount of $4,463,000, followed
      by
      eight in the amount of $4,775,000, followed by seven in the amount of $4,275,000
      and one final installment in the amount of $1,375,000. In addition a balloon
      payment of $21,100,000 is due on 15 September 2010 and another of $10,748,000
      is
      due on December 15, 2010.





Facility
      B of the loan agreement dated October 18, 2005 is repayable in 14 quarterly
      installments, the first two in the amount of $2,000,000, followed by four in
      the
      amount of $1,250,000, followed by four in the amount of $1,000,000 and finally
      four in the amount of $750,000.





The
      interest rate for the senior tranche of the OBO Loan was LIBOR + 1.25%. The
      interest rate for the junior tranche of the OBO Loan was LIBOR + 2.25% the
      first
      year, +2.50% the second year and +3.00% in year three and thereafter. The
      interest rate for Facility A of the Amended OBO Loan is LIBOR +1% p.a. and
      the
      interest rate for Facility B of the Amended OBO Loan is LIBOR + 2.25%
      p.a.





The
      OBO
      Loan contained extensive covenants and representations and warranties applicable
      to Borrowers and to the Company as guarantor. Inter alia, the Borrowers were
      required to procure that the Company at all times is controlled by Mr. Michael
      S. Hudner. Nordea has confirmed to the Company that the current direct and
      indirect control of approximately 48% of the Shares by Michael S. Hudner is
      considered to be in compliance with the conditions of the loan agreement.
      Furthermore Nordea Bank Norge ASA has confirmed to the Company that a future
      reduced ownership to 42% would also be considered to be in compliance. Further,
      Borrowers shall not, without the prior written consent of Nordea, enter into
      any
      agreement related to chartering and operation of any of the vessels exceeding
      12
      months or any pooling arrangements related to the earnings of the
      vessels.





Borrowers
      must also procure that the Company shall at all times during the loan period
      maintain a minimum value adjusted equity ratio of minimum 30% and procure that
      the Company at all times maintains a minimum value adjusted equity of
      $30,000,000. Further, Borrowers shall procure that the Company at all times
      ensures that its current assets exceed its current liabilities and of which
      an
      amount of the higher of 6% of the long-term debt and $5,000,000 is denominated
      in cash or money market investments.





The
      covenants in the Amended OBO Loan are largely the same as those in the OBO
      Loan.
      However, the main changes are (i) distributions (dividends) from the Guarantor
      and /or the Borrower and investments will not require the consent of the Agent
      provided Borrowers and the Guarantor are in compliance with the provisions
      of
      the facility documents and (ii) the loan/value covenant in the OBO Loan is
      suspended for three years and replaced by a consolidated EBITDA/fixed charges
      covenant under which consolidated EBITDA must be at least 1.25 times
      consolidated fixed charges.





The
      Company also refers to the information given through the Oslo Børs information
      system on October 18 and November 18, 2005 in this respect.







**10**
            **Definitions
                and glossary of
                terms**






**10.1**
            **Definitions**







Amex:
            The
                American Stock Exchange, the primary market for the Company’s
                shares.BHO
                Group:
            B+H
                Ocean Carriers Ltd. and its subsidiaries.BHM:
            B+H
                Management Ltd., manager of the Company.Board
                or Board of Directors:
            The
                Board of Directors of B+H Ocean Carriers Ltd.BHO
                Ocean Carriers:
            B+H
                Ocean Carriers Ltd., a public limited liability company incorporated
                in
                Liberia on April 28, 1988 with Reg. No. C 51934 and with registered
                address at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM
                08,
                Bermuda.Company:
            B+H
                Ocean Carriers Ltd., with or without subsidiaries as the case may
                be.Money
                Laundering Act:
            The
                Money Laundering Act of June 20, 2003 no. 41 (In Norwegian:
                “Hvitvaskingsloven”)NOK:
            Norwegian
                Kroner, the lawful currency of the Kingdom of Norway.Norwegian
                Securities Trading Act:
            The
                Securities Trading Act of June 19, 1997 no 79 (In Norwegian:
                “Verdipapirhandelloven”).NMS:
            Navinvest
                Marine Services (USA) Inc., agent of BHM, assisting with certain
                financial
                reporting and administrative duties.Oslo
                Børs:
            Oslo
                Børs ASA (translated Oslo Stock Exchange).OTC:
            The
                Norwegian “Over the Counter Market”, where trading of the Shares currently
                takes place.Protrans:
            Product
                Transportation Corporation Ltd., a Bermudan corporation wholly owned
                by
                the Company.Shares:
            Issued
                and outstanding Shares of common stock, par value $0.01 per share
                in B+H
                Ocean Carriers Ltd. excluding the Treasury Shares (see below for
                definition).SMB-List:
            The
                list for Small and Medium Sized Enterprises on Oslo Børs.Stock
                Exchange Regulations:
            Regulation
                of January 17, 1994 No. 30 as amended





Treasury
                Shares:
            Treasury
                Shares are shares held directly by the Company. These shares do not
                carry
                any votes or have the right to any potential dividends in the Company.
                The
                treasury shares are included in the Company’s issued share capital, but
                are not outstanding.$:
            United
                States Dollar, the lawful currency of the United States of
                America.VPS:
            The
                Norwegian Central Securities Depository
                (“Verdipapirsentralen”).VPS
                account:
            An
                account with VPS for the registration of holdings of
                securities.







**10.2**
            **Glossary**







Bare
                Boat Charter:
            Charter,
                under which the charterer is responsible for provision of marine
                crew,
                technical and operational management of the vessel.Cbft
            Cubic
                Feet.Cbm
            Cubic
                meters.Combination
                Carrier
            An
                OBO, see definition above. Ships built to be able to alternate between
                performing voyages with either oil- or dry bulk cargoes.DWT
                or deadweight tonnes
            The
                cargo carrying capacity of a vessel, in metric tonnes, plus the weight
                of
                bunkers, stores, fresh water etc. This is the main standard unit
                of
                measurement by which vessels are known within the industry.IMO
            International
                Maritime Organization.MR
                or Medium Range Product Tanker
            Vessel
                of about 35-50,000 DWT.Mt
            Metric
                tonnes.OBO
                or Ore-Bulk-Oil carrier
            Vessel
                capable of carrying different types of cargo, including oil, bulk
                and ore,
                which mean that the vessel is designed for cargoes of these and other
                bulk
                products.OPA
                90
            United
                States Oil Pollution Act of 1990.Panamax
                Product Tanker
            A
                size of vessel around 60-70,000 Mt DWT, whose dimensions are the
                biggest
                able to transit the Panama Canal (especially a maximum beam of
                32.24m).T/C
                or Time Charter:
            Charter,
                under which the owner is responsible for provision of marine crew,
                technical and operational management of the vessel.











**Appendix
      1:** **B+H
      Ocean Carriers Ltd. Bylaws -**




Incorporated
      by reference to Exhibit 3.2 to the Registration Statement, Exhibit 1.2(i) to
      the
      Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 1995
      and Exhibit 1.2(iii) to the Company’s Annual Report on Form 20F for the fiscal
      year ended December 31, 1998.














**Appendix
      2: Audit Committee Charter**





**B+H
      OCEAN CARRIERS LTD.**


**AUDIT
      COMMITTEE CHARTER**





PURPOSE




The
      purposes of the Audit Committee are:





(1)  to
      oversee the accounting and financial reporting policies and practices and the
      internal  controls
      of the Company;





(2)  to
      oversee the quality and objectivity of financial statements and the independent
      audit thereof; and





(3)  to
      act as
      a liaison between the independent auditors and the full Board of
      Directors.





COMPOSITION





The
      Audit
      Committee shall consist of at least three members and shall be composed of
      directors who meet the independence requirements of the American Stock Exchange,
      Nasdaq and the Sarbanes-Oxley Act of 2002. Each member of the Audit Committee
      shall be financially literate and at least one member of the Audit Committee
      shall have past employment experience in finance or accounting, requisite
      professional certification in accounting or any other comparable experience
      or
      background which results in the individual’s financial sophistication, including
      being or having been a chief executive officer, chief financial officer or
      other
      senior officer with financial oversight responsibilities, as each such
      qualification is determined by the Board of Directors in its business judgment.
      In addition, to the extent practicable, at least one member of the Audit
      Committee shall be a “financial expert” as such term is defined by the
      Securities and Exchange Commission.




RESPONSIBILITIES





A.  The
      function of the Audit Committee is oversight. Management's responsibility is
      to
      maintain appropriate systems for accounting and internal control; and the
      auditors' responsibility is to plan and carry out a proper audit. Although
      the
      auditors are ultimately accountable to the Audit Committee and the Board of
      Directors, the Audit Committee is vested with the following powers and
      responsibilities:





(1)  to
      evaluate the performance of the independent auditors and recommend the
      selection, retention, or termination of auditors;





(2)  to
      ensure
      that the auditors submit a formal written statement delineating all
      relationships between the auditors and the Company, consistent with Independence
      Standards Board Standard 1, such written statement to be submitted to the Audit
      Committee on a periodic basis;





(3)  to
      evaluate the independence of the auditors; to receive the auditors' specific
      representation as  to
      their
      independence, to otherwise engage in a dialogue with the auditors with respect
      to any disclosed relationships or services that may impact the objectivity
      and
      independence of the auditors; and to make recommendations to the Board of
      Directors based on such evaluations;





(4)  to
      meet
      with the independent auditors, including private meetings, as
      necessary:





(a)  to
      review
      the arrangements for and scope of the annual audit and any special
      audits;





(b)  to
      discuss any matters of concern relating to the financial statements, including
      any adjustments to such statements recommended by the auditors;





(c)  to
      consider the auditors' comments with respect to the financial policies,
      procedures and internal accounting controls of the Company and management's
      responses thereto;





(d)  to
      discuss with the auditors the matters required to be discussed by Statement
      on
      Accounting Standards No. 61 as modified or supplemented; and





(e)  to
      review
      the form of opinion the auditors propose to render to the Board of Directors
      and
      stockholders.





(5)  to
      review
      with management and the independent auditors the annual audited financial
      statements of the Company to be filed in the Form 20-F prior to its
      filing;





(6)  to
      consider the effect upon the Company of any changes in accounting principles
      or
      practices proposed by management or the auditors;





(7)  to
      determine appropriate funding for (a) compensation to the auditors for audit
      and
      non-audit services, (b) compensation to any advisors employed by the Audit
      Committee, and (c) ordinary administrative expenses of the Audit Committee
      that
      are necessary or appropriate in carrying out its duties;





(8)  to
      establish procedures for (a) receipt, retention and treatment of complaints
      received by the Company regarding accounting, internal accounting controls
      or
      auditing matters and (b) the confidential, anonymous submission by employees
      of
      concerns regarding questionable accounting or auditing matters; and





(9)  to
      report
      its activities to the full Board of Directors on a regular basis and to make
      such recommendations with respect to the above matters and other matters as
      the
      Audit Committee may deem necessary or appropriate, including the preparation
      of
      the report required by the rules of the Securities and Exchange Commission
      to be
      included in the Company's annual proxy statement.








B.  The
      Audit
      Committee shall meet on a regular basis and is empowered to hold special
      meetings as circumstances require.





C.  The
      Audit
      Committee shall meet regularly on a private basis with the internal auditors
      and
      accountants of the Company.





D.  The
      Audit
      Committee shall have the resources and authority appropriate to discharge its
      responsibilities, including the authority to retain special counsel, experts,
      consultants or other advisors at the expense of  the
      Company.





E.  All
      permissible non-audit related services provided by the Company’s independent
      auditor must be pre-approved by the Audit Committee. Pre-approval may be
      provided for up to one year and any pre-  approval
      must be detailed as to the particular service or category of services and,
      generally, must be  subject
      to a specific fee. The Audit Committee may delegate to a Committee member or
      members the authority to pre-approve certain permissible non-audit services.
      Any
      decisions by the member or members under this delegated authority will be
      reported at the next meeting of the Audit Committee.





F.  The
      Audit
      Committee shall review this Charter at least annually and recommend any changes
      to the full Board of Directors.





While
      the
      Audit Committee has the responsibilities and powers set forth in this Charter,
      it is not the duty of the Audit Committee to plan or conduct audits or to
      determine that the Company's financial statements are complete and accurate
      and
      are in accordance with generally accepted accounting principles. This is the
      responsibility of management and the independent auditors.


















**Appendix
      3: Audited Financial Statements
      2004**




Incorporated
      by reference to the Company’s Form 20-F for the year ended December 31,
      2004.













**Appendix
      4: Audited Financial Statements
      2003**




Incorporated
      by reference to the Company’s Form 20-F for the year ended December 31,
      2003.













**Appendix
      5: Audited Financial Statements
      2002**




Incorporated
      by reference to the Company’s Form 20-F for the year ended December 31,
      2002.













**Appendix
      6: Unaudited Financial Statements per June 30,
      2005**




Incorporated
      by reference to the Company’s Form 6-K dated July 13, 2005.