##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 000-51559
 STEALTHGAS INC.
  Republic of the Marshall Islands
 331 Kifissias Avenue, Erithrea 14561 Athens, Greece
 Andrew J. Simmons
331 Kifissias Avenue, Erithrea 14561, Athens, Greece
Telephone: (011) (30) (210) 625 0001
Facsimile: (011) (30) (210) 625 0018
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value
$0.01 per share
    
    The Nasdaq Stock Market LLC
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
  SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
PURSUANT TO SECTION 15(d) OF THE ACT:
    o þ
 o þ
 þ o
 o o
  o þ o
  þ o o
  o o
 o þ




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##### 



TABLE OF CONTENTS
 FORWARD-LOOKING INFORMATION
    
    iiPART I
    
    
    1Item 1. Identity of Directors, Senior Management and Advisers
    
    
    1Item 2. Offer Statistics and Expected Timetable
    
    
    1Item 3. Key Information
    
    
    1Item 4. Information on the Company
    
    
    26Item 4A. Unresolved Staff Comments
    
    
    39Item 5. Operating and Financial Review and Prospects
    
    
    39Item 6. Directors, Senior Management and Employees
    
    
    62Item 7. Major Shareholders and Related Party Transactions
    
    
    67Item 8. Financial Information
    
    
    72Item 9. The Offer and Listing
    
    
    73Item 10. Additional Information
    
    
    74Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    89Item 12. Description of Securities Other than Equity Securities
    
    
    91PART II
    
    
    92Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    92Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    92Item 15. Controls and Procedures
    
    
    92Item 16A. Audit Committee Financial Expert
    
    
    95Item 16B. Code of Ethics
    
    
    95Item 16C. Principal Accountant Fees and Services
    
    
    95Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    96Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    96PART III
    
    
    97Item 17. Financial Statements
    
    
    97Item 18. Financial Statements
    
    
    97Item 19. Exhibits
    
    
    97EX-4.21EX-4.22EX-4.23EX-4.24EX-4.25EX-4.26EX-4.27EX-8EX-12.1EX-12.2EX-13.1EX-13.2EX-15.1
  i




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FORWARD-LOOKING INFORMATION
   
    
    future operating or financial results;
    
    global and regional economic and political conditions;
    
    pending or recent acquisitions, business strategy and expected capital spending or
operating expenses;
    
    competition in the marine transportation industry;
    
    shipping market trends, including charter rates, factors affecting supply and demand and
world fleet composition;
    
    ability to employ our vessels profitably;
    
    performance by the counterparties to our charter agreements;
    
    future liquefied petroleum gas (LPG) and refined petroleum product prices and
production;
    
    future supply and demand for refined petroleum products and natural gas of which LPG is
a byproduct;
    
    our financial condition and liquidity, including our ability to obtain financing in the
future to fund capital expenditures, acquisitions and other general corporate activities,
the terms of such financing and our ability to comply with covenants set forth in our
existing and future financing arrangements; and
    
    expectations regarding vessel acquisitions.
  ii




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PART I
   
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 Selected Consolidated Financial Data
   Period fromOctober 12,2004 throughDecember
    
    
    Year ended December 31,31, 2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008INCOME STATEMENT DATARevenues:Voyage revenues
    
    $
    2,048,006
    
    
    $
    36,644,591
    
    
    $
    73,259,369
    
    
    $
    89,995,123
    
    
    $
    112,551,901Operating expenses:Voyage expenses
    
    
    341,203
    
    
    
    2,688,155
    
    
    
    6,213,804
    
    
    
    5,369,546
    
    
    
    6,180,754Vessels
operating expenses
    
    
    759,010
    
    
    
    9,095,576
    
    
    
    19,474,344
    
    
    
    25,435,578
    
    
    
    32,178,385Dry-docking costs
    
    
    
    
    
    
    470,384
    
    
    
    2,243,395
    
    
    
    314,181
    
    
    
    1,112,992Management fees
    
    
    111,540
    
    
    
    1,473,080
    
    
    
    3,068,609
    
    
    
    4,126,610
    
    
    
    4,618,025General and administrative
expenses
    
    
    35,100
    
    
    
    779,539
    
    
    
    3,457,688
    
    
    
    5,024,912
    
    
    
    4,772,615Depreciation
    
    
    264,458
    
    
    
    5,611,942
    
    
    
    13,058,316
    
    
    
    16,546,692
    
    
    
    23,283,393
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Period fromOctober 12,2004 throughDecember
    
    
    Year ended December 31,31, 2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Net gain (loss) on sale of vessels
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,673,321
    )Total expenses
    
    
    1,511,311
    
    
    
    20,118,676
    
    
    
    47,516,156
    
    
    
    56,817,519
    
    
    
    70,472,843Income from operations
    
    
    536,695
    
    
    
    16,525,915
    
    
    
    25,743,213
    
    
    
    33,177,604
    
    
    
    42,079,058Interest and finance costs
    
    
    
    
    
    
    (2,685,207
    )
    
    
    (7,705,602
    )
    
    
    (9,831,404
    )
    
    
    (9,962,504
    )Change in fair value of
derivatives
    
    
    
    
    
    
    (67,000
    )
    
    
    (192,664
    )
    
    
    (2,573,992
    )
    
    
    (2,713,055
    )Interest income
    
    
    47
    
    
    
    780,434
    
    
    
    735,090
    
    
    
    1,888,070
    
    
    
    743,193Foreign exchange loss
    
    
    (5,534
    )
    
    
    (18,091
    )
    
    
    (87,528
    )
    
    
    (122,171
    )
    
    
    (159,208
    )Other expenses, net
    
    
    (5,487
    )
    
    
    (1,989,864
    )
    
    
    (7,250,704
    )
    
    
    (10,639,497
    )
    
    
    (12,091,574
    )Net income
    
    $
    531,208
    
    
    $
    14,536,051
    
    
    $
    18,492,509
    
    
    $
    22,538,107
    
    
    $
    29,987,484Earnings per share, basic
(retroactively adjusted for
60,000-to-1 stock split
effected on August 26, 2005)
    
    $
    0.09
    
    
    $
    1.84
    
    
    $
    1.31
    
    
    $
    1.26
    
    
    $
    1.36Earnings per share, diluted
(retroactively adjusted for
60,000-to-1 stock split
effected on August 26, 2005)
    
    $
    0.09
    
    
    $
    1.84
    
    
    $
    1.31
    
    
    $
    1.26
    
    
    $
    1.35Weighted (and diluted) average
number of shares outstanding
(retroactively adjusted for
60,000-to-1 stock split
effected on August 26, 2005)
    
    
    6,000,000
    
    
    
    7,906,849
    
    
    
    14,161,096
    
    
    
    17,943,346
    
    
    
    22,182,118Dividends declared per share,
basic and diluted
(retroactively adjusted for
60,000-to-1 stock split
effected on August 26, 2005)*
    
    $
    
    
    
    $
    1.67
    
    
    $
    0.75
    
    
    $
    0.75
    
    
    $
    0.75
 As of December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008BALANCE SHEET DATACurrent assets, including cash
    
    $
    1,316,069
    
    
    $
    26,016,248
    
    
    $
    17,891,738
    
    
    $
    69,497,341
    
    
    $
    52,458,518Total assets
    
    
    40,617,369
    
    
    
    256,978,768
    
    
    
    319,605,321
    
    
    
    477,593,326
    
    
    
    634,347,123Current liabilities
    
    
    3,234,013
    
    
    
    20,725,441
    
    
    
    28,628,998
    
    
    
    37,372,666
    
    
    
    40,774,931Derivative liability
    
    
    
    
    
    
    67,000
    
    
    
    35,902
    
    
    
    3,288,989
    
    
    
    12,762,979Total long-term debt,
including current portion
    
    
    
    
    
    
    97,706,000
    
    
    
    140,948,240
    
    
    
    145,758,529
    
    
    
    283,693,873Total stockholders equity
    
    
    37,383,356
    
    
    
    151,107,327
    
    
    
    163,802,228
    
    
    
    303,030,788
    
    
    
    317,847,325Capital stock (retroactively
adjusted for 60,000-to-1
stock split effected on
August 26, 2005)
    
    
    60,000
    
    
    
    140,000
    
    
    
    144,000
    
    
    
    222,841
    
    
    
    223,101
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As of December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008Common shares outstanding
(retroactively adjusted for
60,000-to-1 split effected on
August 26, 2005)
    
    
    6,000,000
    
    
    
    14,000,000
    
    
    
    14,400,000
    
    
    
    22,284,105
    
    
    
    22,310,110
 Period fromOctober 12,2004 throughDecember 31,
    
    Year ended December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008OTHER FINANCIAL DATANet cash provided by operating activities
    
    $
    598,710
    
    
    $
    24,414,729
    
    
    $
    33,224,984
    
    
    $
    47,704,497
    
    
    $
    48,080,792Net cash used in investing activities
    
    
    (37,415,758
    )
    
    
    (197,780,709
    )
    
    
    (84,282,368
    )
    
    
    (149,636,615
    )
    
    
    (159,979,986
    )Net cash provided by financing activities
    
    
    36,817,048
    
    
    
    196,576,223
    
    
    
    38,994,012
    
    
    
    123,900,119
    
    
    
    120,632,381FLEET DATAAverage number of vessels(1)
    
    
    2.3
    
    
    
    11.9
    
    
    
    25.9
    
    
    
    32.8
    
    
    
    38.6Total voyage days for fleet(2)
    
    
    286
    
    
    
    4,288
    
    
    
    9,346
    
    
    
    11,871
    
    
    
    14,018Total time and bareboat charter days for
fleet(3)
    
    
    174
    
    
    
    4,105
    
    
    
    8,209
    
    
    
    11,170
    
    
    
    13,318Total spot market days for
fleet(4)
    
    
    112
    
    
    
    183
    
    
    
    1,137
    
    
    
    701
    
    
    
    700Total calendar days for fleet(5)
    
    
    286
    
    
    
    4,334
    
    
    
    9,451
    
    
    
    11,986
    
    
    
    14,113Fleet utilization(6)
    
    
    100
    %
    
    
    98.9
    %
    
    
    98.9
    %
    
    
    99.0
    %
    
    
    99.3
    %AVERAGE DAILY RESULTSTime charter equivalent(7)
    
    $
    5,968
    
    
    $
    7,919
    
    
    $
    7,174
    
    
    $
    7,129
    
    
    $
    7,588Vessel operating expenses(8)
    
    
    2,654
    
    
    
    2,099
    
    
    
    2,061
    
    
    
    2,122
    
    
    
    2,280General and administrative expenses
    
    
    123
    
    
    
    180
    
    
    
    366
    
    
    
    419
    
    
    
    338Management fees
    
    
    390
    
    
    
    340
    
    
    
    325
    
    
    
    344
    
    
    
    327Total operating expenses(9)
    
    
    3,167
    
    
    
    2,279
    
    
    
    2,426
    
    
    
    2,541
    
    
    
    2,618
 
 *
    
    As a privately held company, we paid no dividends in 2004 and an aggregate dividend of $10.0
million in July 2005. We paid no dividends in 2005 after becoming a public company in October
2005. We paid our first quarterly dividend since becoming a public company in October 2005, of
$0.1875 per share, in January 2006. Our payment of dividends is subject to the discretion of
our Board of Directors. Our loan agreements and the provisions of Marshall Islands law also
restrict our ability to pay dividends. See Item 3. Risk Factors  Risks Related To Our
Common Stock  Our Board of Directors has determined to suspend the payment of cash dividends as a result
of market conditions in the international shipping industry, and until such market conditions improve, it is
 unlikely we will reinstate the payment of dividends and
Item 8. Financial Information  Dividend Policy.(1)
    
    Average number of vessels is the number of vessels that constituted our fleet for the
relevant period, as measured by the sum of the number of days each vessel was a part of our
fleet during the period divided by the number of calendar days in that period.(2)
    
    Our total voyage days for our fleet reflect the total days the vessels were in our possession
for the relevant periods, net of off-hire days associated with major repairs, drydockings or
special or intermediate surveys.(3)
    
    Total time and bareboat charter days for fleet are the number of voyage days the vessels in
our fleet operated on time or bareboat charters for the relevant period. 3




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(4)
    
    Total spot market charter days for fleet are the number of voyage days the vessels in our
fleet operated on spot market charters for the relevant period.(5)
    
    Total calendar days are the total days the vessels were in our possession for the relevant
period including off-hire days associated with major repairs, drydockings or special or
intermediate surveys.(6)
    
    Fleet utilization is the percentage of time that our vessels were available for revenue
generating voyage days, and is determined by dividing voyage days by fleet calendar days for
the relevant period.(7)
    
    Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue
performance of a vessel on a per voyage basis. Our method of calculating TCE rate is
consistent with industry standards and is determined by dividing voyage revenues (net of
voyage expenses) or time charter equivalent revenues or TCE revenues by voyage days for the
relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are
unique to a particular voyage, which would otherwise be paid by the charterer under a time
charter contract, as well as commissions. TCE revenues, a non-GAAP measure, provides
additional meaningful information in conjunction with shipping revenues, the most directly
comparable GAAP measure, because it assists Company management in making decisions regarding
the deployment and use of its vessels and in evaluating their financial performance. It is
also a standard shipping industry performance measure used primarily to compare
period-to-period changes in a shipping companys performance despite changes in the mix of
charter types (i.e., spot charters, time charters and bareboat charters) under which the
vessels may be employed between the periods.Reconciliation of TCE revenues as reflected in the consolidated statement of income and
calculation of TCE rate follow: Period fromOctober 12, 2004throughDecember 31,
    
    
    Year ended December 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Voyage revenues
    
    $
    2,048,006
    
    
    $
    36,644,591
    
    
    $
    73,259,369
    
    
    $
    89,995,123
    
    
    $
    112,551,901Voyage expenses
    
    
    (341,203
    )
    
    
    (2,688,155
    )
    
    
    (6,213,804
    )
    
    
    (5,369,546
    )
    
    
    (6,180,754
    )Time charter equivalent revenues
    
    $
    1,706,803
    
    
    $
    33,956,436
    
    
    $
    67,045,565
    
    
    $
    84,625,577
    
    
    $
    106,371,147Total voyage days for fleet
    
    
    286
    
    
    
    4,288
    
    
    
    9,346
    
    
    
    11,871
    
    
    
    14,018Time charter equivalent (TCE) rate
    
    $
    5,968
    
    
    $
    7,919
    
    
    $
    7,174
    
    
    $
    7,129
    
    
    $
    7,588
 
 (8)
    
    Vessel operating expenses, which include crew costs, provisions, deck and engine stores,
lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating
expenses by fleet calendar days for the relevant time period.(9)
    
    Total operating expenses, or TOE, is a measurement of our total expenses associated with
operating our vessels. TOE is the sum of vessel operating expenses and general and
administrative expenses. Daily TOE is calculated by dividing TOE by fleet calendar days for
the relevant time period. 4




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Capitalization and Indebtedness
   As of December 31, 2008Actual
    
    
    As AdjustedIn thousands of U.S. DollarsLong-term debt obligations (including current portion)*
    
    $
    283,693,873
    
    
    $
    292,468,552Stockholders equity:Common stock, $0.01 par value per share,
100,000,000 shares authorized and 22,310,110 issued
and outstanding, actual and as
adjusted(1)
    
    $
    223,101
    
    
    $
    223,101Additional paid-in capital
    
    $
    283,526,241
    
    
    $
    283,526,241Retained earnings
    
    $
    34,097,983
    
    
    $
    29,914,837Total stockholders equity
    
    $
    317,847,325
    
    
    $
    313,664,179Total capitalization
    
    $
    601,541,198
    
    
    $
    606,132,731
 
 *
    
    All of our indebtedness is secured.(1)
    
    Includes 113,005 unvested restricted shares as of December 31, 2008, of which 13,003 shares
vested on March 18, 2009. Reasons For the Offer and Use of Proceeds
  Risk Factors
 Risks Related To Our Industry
 The cyclical nature of the demand for LPG transportation, which has recently declined, may lead to
significant changes in our chartering and vessel utilization, which may adversely affect our
revenues, profitability and financial position.
   5




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
    
    supply and demand for LPG products;
    
    global and regional economic conditions;
    
    the distance LPG products are to be moved by sea;
    
    availability of alternative transportation means; and
    
    changes in seaborne and other transportation patterns.
  
    
    the number of newbuilding deliveries;
    
    the scrapping rate of older vessels;
    
    LPG carrier prices;
    
    changes in environmental and other regulations that may limit the useful lives of
vessels; and
    
    the number of vessels that are out of service.
  Various economic factors could materially adversely affect our business, financial position and
results of operations, as well as our future prospects.
  6




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If the demand for LPG products and LPG shipping does not grow, or decreases, our business, results
of operations and financial condition could be adversely affected.
  
    
    adverse global or regional economic or political conditions, particularly in LPG
consuming regions, which could reduce energy consumption;
    
    a reduction in global or general industrial activity specifically in the plastics and
chemical industry;
    
    increases in the cost of petroleum and natural gas from which LPG is derived;
    
    decreases in the consumption of LPG or natural gas due to availability of new,
alternative energy sources or increases in the price of LPG or natural gas relative to
other energy sources or other factors making consumption of LPG or natural gas less
attractive; and
    
    increases in pipelines for LPG, which are currently few in number, linking production
areas and industrial and residential areas consuming LPG, or the conversion of existing
non-petroleum gas pipelines to petroleum gas pipelines in those markets.
  Our operating results are subject to seasonal fluctuations, which could affect our operating
results and the amount of available cash with which we can pay dividends.
  Our revenues, operations and future growth could be adversely affected by a decrease in supply of
liquefied natural gas, or natural gas
  7




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The product carrier shipping sector is cyclical, which may lead to lower charter rates and lower
vessel values.
  The market values of our vessels, which have recently declined, may remain at current low, or
lower, levels for a prolonged period and, over time, may fluctuate significantly. If the market
values of our vessels are low, we may incur a loss on sale of a vessel or record an impairment
charge, which may adversely affect our earnings and possibly lead to defaults under our loan
agreements.
  
    
    general economic and market conditions affecting the shipping industry;
    
    age, sophistication and condition of our vessels;
    
    types and sizes of vessels;
    
    availability of other modes of transportation;
    
    cost and delivery of schedules for newbuildings;
    
    governmental and other regulations;
    
    supply and demand for LPG products and, with respect to our product carriers, refined
petroleum products;
    
    prevailing level of LPG charter rates and, with respect to our product carriers, the
prevailing level of product carrier charter rates; and
    
    technological advances.
  8




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We are subject to regulation and liability under environmental laws that could require significant
expenditures and affect our financial conditions and results of operations.
      9




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Our vessels are subject to periodic inspections by a classification society.
    Maritime claimants could arrest our vessels, which could interrupt our cash flow.
 Gas Shanghai Gas Shanghai
  Governments could requisition our vessels during a period of war or emergency, resulting in loss of
revenues.
  10




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Risks involved with operating ocean-going vessels could affect our business and reputation, which
would adversely affect our revenues and stock price.
  
    
    marine accident or disaster;
    
    piracy and terrorism;
    
    explosions;
    
    environmental accidents;
    
    pollution;
    
    loss of life;
    
    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.
  Our vessels may suffer damage and we may face unexpected repair costs, which could affect our cash
flow and financial condition.
  Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely
affect our business.
 M/V Sirius Star Longchamp
 11




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Our operations outside the United States expose us to global risks, such as terrorism, that may
interfere with the operation of our vessels.
 Limburg
  Risks Related To Our Business
 We are dependent on the ability and willingness of our charterers to honor their commitments to us
for all our revenues.
 Gas Ice , .
 12




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Charters at attractive rates may not be available when we attempt to secure charters for five of
our newbuilding LPG carriers scheduled to be delivered to us from February 2011 to May 2012 and as
the charters for our current vessels expire, which would have an adverse impact on our revenues and
financial condition.
 Gas Exelero Gas Ice
 We depend upon a few significant customers for a large part of our revenues. The loss of one or
more of these customers could adversely affect our financial performance.
  Our loan agreements or other financing arrangements contain restrictive covenants that may limit
our liquidity and corporate activities.
  
    
    incur additional indebtedness;
    
    create liens on our assets;
    
    sell capital stock of our subsidiaries;
    
    make investments;
    
    engage in mergers or acquisitions;
    
    pay dividends; and
 13




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
    
    make capital expenditures.
  
    
    maintain minimum cash balances in a pledged account with the lender at all times;
    
    ensure that our leverage, which is defined as total debt net of cash/total market
adjusted assets, does not at any time exceed 80%;
    
    maintain a ratio of the aggregate market value of the vessels securing the loan to
the principal amount outstanding under such loan at all times in excess of (i) 130% under
our loan agreement with Fortis Bank-Athens Branch and (ii) 125% under our loan agreements
with Deutsche Bank, DnB NOR Bank ASA, DVB Bank S.E. Nordic Branch, EFG Eurobank Ergasias
S.A., Emporiki Bank, National Bank of Greece and Scotiabank; and
    
    ensure that our ratio of EBITDA to interest expense over the preceding six months is
at all times more than 2.5 times.
     The current lower charter rates in the LPG carrier and product carrier charter markets and decrease
in LPG carrier and product carrier values and any future declines in these rates and values may
affect our ability to comply with various covenants in our loan agreements.
 Navig8 Faith
 14




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##### Table of Contents



The current state of global financial markets and current economic conditions may adversely impact
our ability to obtain financing on acceptable terms which may hinder or prevent us from fulfilling
our obligations under our agreements to complete contracted vessel acquisitions.
   We may be unable to draw down the full amount of our credit facilities if the market values of our
vessels further decline.
  15




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##### Table of Contents



Our ability to obtain additional debt financing may be dependent on the performance of our then
existing charters and the creditworthiness of our charterers.
  A significant increase in our debt levels may adversely affect us and our cash flows.
    The derivative contracts we have entered into to hedge our exposure to fluctuations in interest
rates could result in higher than market interest rates and reductions in our stockholders equity,
as well as charges against our income.
    Because we generate all of our revenues in U.S. dollars but incur a portion of our expenses in
other currencies, exchange rate fluctuations could hurt our results of operations.
  16




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##### Table of Contents



Dependence on our relationship with the Vafias Group and Stealth Maritime.
  
    
    our recognition and acceptance in the LPG carrier sector and, to a lesser extent,
product carrier sector, including our ability to attract charterers;
    
    relations with charterers and charter brokers;
    
    operational expertise; and
    
    management experience.
  We depend on third party managers to manage part of our fleet.
  We may enter into certain significant transactions with companies affiliated with the Vafias Group
which may result in conflicts of interests.
  17




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##### Table of Contents



Our directors and officers may in the future hold direct or indirect interests in companies that
compete with us.
  Stealth Maritime and companies affiliated with Stealth Maritime, including Brave Maritime, may
acquire vessels that compete with our fleet.
  As our fleet has grown in size, we have needed to improve our operations and financial systems,
staff and crew; if we cannot maintain these systems or continues to recruit suitable employees, our
business and results of operations may be adversely affected.
  Delays in deliveries of our additional five newbuilding LPG carriers, one resale newbuilding LPG
carrier and two resale product carriers could harm our operating results.
  18




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##### Table of Contents




    
    work stoppages or other labor disturbances or other events that disrupt the operations
of the shipyard building the vessels;
    
    quality or engineering problems;
    
    changes in governmental regulations or maritime self-regulatory organization standards;
    
    lack of raw materials;
    
    bankruptcy or other financial crisis of the shipyard building the vessel;
    
    our inability to obtain requisite financing or make timely payments;
    
    a backlog of orders at the shipyard building the vessel;
    
    hostilities, political or economic disturbances in the countries where the vessels are
being built;
    
    weather interference or catastrophic event, such as a major earthquake or fire;
    
    our requests for changes to the original vessel specifications;
    
    requests from our customers, with which we have arranged charters for such vessels, to
delay construction and delivery of such vessels due to weak economic conditions and
shipping demand,;
    
    shortages of or delays in the receipt of necessary construction materials, such as
steel;
    
    our inability to obtain requisite permits or approvals; or
    
    a dispute with the shipyard building the vessel.
   If we fail to manage our growth properly, we may not be able to successfully expand our market
share.
  
    
    locating and acquiring suitable vessels;
    
    identifying and completing acquisitions or joint ventures;
 19




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##### Table of Contents




    
    integrating any acquired business successfully with our existing operations;
    
    expanding our customer base;
    
    managing our expansion; and
    
    obtaining required financing.
  We may be unable to attract and retain key management personnel and other employees in the LPG
carrier and product carrier sectors, which may negatively affect the effectiveness of our
management and our results of operation.
  In the highly competitive international LPG carrier and product carrier markets, we may not be able
to compete for charters with new entrants or established companies with greater resources.
  We have acquired two medium range product carriers and agreed to acquire two others, however, we
principally operate in one sector of the shipping industry, the seaborne transport of LPG, and our
lack of a diversified business could adversely affect us.
  20




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##### Table of Contents



We have expanded into the product carrier sector and we may not be able to successfully execute
this expansion, or any further expansion, in such sector or any other sectors, such as dry or other
wet or gas shipping sectors we choose to expand into, which could have an adverse effect on our
business, results of operation and financial condition.
  
    
    be costly;
    
    distract us from our core LPG carrier business; and
    
    divert management resources,
  Purchasing and operating previously owned, or secondhand, vessels may result in increased operating
costs and vessels off-hire, which could adversely affect our revenues.
    The shipping industry has inherent operational risks that may not be adequately covered by our
insurance.
  21




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##### Table of Contents



Our major stockholder exerts considerable influence on the outcome of matters on which our
stockholders are entitled to vote and his interests may be different from yours.
  We may have to pay tax on United States-source income, which would reduce our earnings.
    22




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##### Table of Contents



United States tax authorities could treat us as a passive foreign investment company, which could
have adverse United States federal income tax consequences to United States holders.
    23




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##### Table of Contents



Our corporate governance practices are in compliance with the NASDAQ corporate governance
standards, however, as a foreign private issuer, we are entitled to claim an exemption from certain
NASDAQ corporate governance standards, and if we elected to rely on this exemption, you may not
have the same protections afforded to stockholders of companies that are subject to all of the
NASDAQ corporate governance requirements.
  We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed
body of corporate law.
  It may be difficult to enforce service of process and enforcement of judgments against us and our
officers and directors.
  24




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##### Table of Contents



Risks Related To Our Common Stock
 The market price of our common stock has fluctuated widely and the market price of our common stock
may fluctuate in the future.
    Our Board of Directors has determined to suspend the payment of cash dividends as a result of market conditions in the international
shipping industry, and until such market conditions improve, it is unlikely that we will reinstate the payment of dividends.
   25




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##### Table of Contents



Anti-takeover provisions in our organizational documents could make it difficult for our
stockholders to replace or remove our current Board of Directors or have the effect of
discouraging, delaying or preventing a merger or acquisition, which could adversely affect the
market price of our common stock.
   
    
    authorizing our Board of Directors to issue blank check preferred stock without
stockholder approval;
    
    providing for a classified Board of Directors with staggered three-year terms;
    
    prohibiting cumulative voting in the election of directors;
    
    authorizing the removal of directors only for cause and only upon the affirmative
vote of the holders of 80% of the outstanding shares of our common stock entitled to vote
for the directors;
    
    limiting the persons who may call special meetings of stockholders;
    
    establishing advance notice requirements for nominations for election to our Board of
Directors or for proposing matters that can be acted on by stockholders at stockholder
meetings; and
    
    prohibiting certain transactions with interested stockholders.
  
 Item 4. Information on the Company
 History and Development of the Company
  Gas Exelero Gas Sophie
 26




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##### Table of Contents



Business Overview
   27




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##### Table of Contents



LPG Carriers
 VesselYear
    
    Size
    
    Vessel
    
    Delivery
    
    Employment
    
    Expiration ofName
    
    Built
    
    (cbm)
    
    Type
    
    Date
    
    Status
    
    Charter(1)Gas Cathar
    
    
    2001
    
    
    
    7,517
    
    
    fully-pressurized
    
    October 2005
    
    Time Charter
    
    September 2009Gas Premiership
    
    
    2001
    
    
    
    7,200
    
    
    fully-pressurized
    
    March 2008
    
    Time Charter
    
    January 2012Gas Haralambos
    
    
    2007
    
    
    
    7,000
    
    
    fully-pressurized
    
    October 2007
    
    Time Charter
    
    October 2009Gas Marathon
    
    
    1995
    
    
    
    6,572
    
    
    fully-pressurized
    
    November 2005
    
    Bareboat Charter
    
    October 2009Gas Chios
    
    
    1991
    
    
    
    6,562
    
    
    fully-pressurized
    
    October 2005
    
    Time Charter
    
    March 2010Gas Amazon
    
    
    1992
    
    
    
    6,526
    
    
    fully-pressurized
    
    May 2005
    
    Spot Charter
    
    
    Gas Flawless
    
    
    2007
    
    
    
    6,300
    
    
    fully-pressurized
    
    February 2007
    
    Time Charter
    
    February 2011Gas Monarch
    
    
    1997
    
    
    
    5,018
    
    
    fully-pressurized
    
    December 2005
    
    Bareboat Charter
    
    November 2010Lyne
    
    
    1996
    
    
    
    5,014
    
    
    fully-pressurized
    
    May 2006
    
    Bareboat Charter
    
    December 2009Gas Emperor(2)
    
    
    1995
    
    
    
    5,013
    
    
    fully-pressurized
    
    February 2005
    
    Bareboat Charter
    
    August 2012Birgit Kosan(3)
    
    
    1995
    
    
    
    5,012
    
    
    fully-pressurized
    
    April 2005
    
    Bareboat Charter
    
    October 2011Catterick
    
    
    1995
    
    
    
    5,001
    
    
    fully-pressurized
    
    November 2005
    
    Spot Charter
    
    
    Sir Ivor
    
    
    2003
    
    
    
    5,000
    
    
    fully-pressurized
    
    May 2006
    
    Bareboat Charter
    
    December 2009Gas Icon
    
    
    1994
    
    
    
    5,000
    
    
    fully-pressurized
    
    June 2007
    
    Time Charter
    
    July 2010Gas Kalogeros
    
    
    2007
    
    
    
    5,000
    
    
    fully-pressurized
    
    July 2007
    
    Time Charter
    
    May 2010Gas Defiance
    
    
    2008
    
    
    
    5,000
    
    
    fully-pressurized
    
    August 2008
    
    Time Charter
    
    July 2009Gas Shuriken
    
    
    2008
    
    
    
    5,000
    
    
    fully-pressurized
    
    October 2008
    
    Time Charter
    
    November 2010Gas Sincerity
    
    
    2000
    
    
    
    4,123
    
    
    fully-pressurized
    
    November 2005
    
    Time Charter
    
    July 2009Gas Spirit
    
    
    2001
    
    
    
    4,112
    
    
    fully-pressurized
    
    December 2005
    
    Time Charter
    
    June 2010Gas Zael
    
    
    2001
    
    
    
    4,111
    
    
    fully-pressurized
    
    December 2005
    
    Spot Charter
    
    
    Gas Courchevel
    
    
    1991
    
    
    
    4,109
    
    
    semi-refrigerated
    
    November 2004
    
    Spot Charter
    
    
    Gas Prophet(4)
    
    
    1996
    
    
    
    3,556
    
    
    fully-pressurized
    
    October 2004
    
    Bareboat Charter
    
    September 2009Gas Shanghai
    
    
    1999
    
    
    
    3,526
    
    
    fully-pressurized
    
    December 2004
    
    Time Charter
    
    September 2009Sea Bird II
    
    
    1996
    
    
    
    3,518
    
    
    fully-pressurized
    
    May 2007
    
    Bareboat Charter
    
    May 2010Gas Evoluzione
    
    
    1996
    
    
    
    3,517
    
    
    fully-pressurized
    
    July 2007
    
    Time Charter
    
    July 2009Gas Czar
    
    
    1995
    
    
    
    3,510
    
    
    fully-pressurized
    
    February 2006
    
    Time Charter
    
    July 2009Gas Legacy
    
    
    1998
    
    
    
    3,500
    
    
    fully-pressurized
    
    October 2005
    
    Time Charter
    
    April 2010Gas Fortune
    
    
    1995
    
    
    
    3,500
    
    
    fully-pressurized
    
    February 2006
    
    Time Charter
    
    July 2009Gas Eternity(5)
    
    
    1998
    
    
    
    3,500
    
    
    fully-pressurized
    
    March 2006
    
    Bareboat Charter
    
    April 2010Gas Sikousis
    
    
    2006
    
    
    
    3,500
    
    
    fully-pressurized
    
    August 2007
    
    Time Charter
    
    May 2010Gas Artic
    
    
    1992
    
    
    
    3,434
    
    
    semi-refrigerated
    
    April 2005
    
    Spot Charter
    
    
    Gas Ice
    
    
    1991
    
    
    
    3,434
    
    
    semi-refrigerated
    
    April 2005
    
    Spot Charter
    
    
    Chiltern
    
    
    1997
    
    
    
    3,312
    
    
    fully-pressurized
    
    June 2007
    
    Bareboat Charter
    
    March 2013Gas Pasha
    
    
    1995
    
    
    
    3,244
    
    
    fully-pressurized
    
    June 2006
    
    Time Charter
    
    September 2010Gas Natalie(7)
    
    
    1997
    
    
    
    3,213
    
    
    fully-pressurized
    
    October 2008
    
    Bareboat Charter
    
    October 2011Gas Crystal
    
    
    1990
    
    
    
    3,211
    
    
    semi-refrigerated
    
    November 2005
    
    Spot Charter
    
    
    Gas Prodigy
    
    
    1995
    
    
    
    3,014
    
    
    fully-pressurized
    
    October 2005
    
    Spot Charter
    
    
    Gas Tiny
    
    
    1991
    
    
    
    1,320
    
    
    semi-refrigerated
    
    October 2004
    
    Time Charter
    
    October 2010Gas Astrid
    
    
    2009
    
    
    
    3,500
    
    
    fully-pressurized
    
    April 2009
    
    Time Charter
    
    April 2010Total: 39 vessels(8)
    
    
                    173,499
    cbm
 Product Carriers
 VesselYear
    
    Size
    
    Vessel
    
    Delivery
    
    Employment
    
    Expiration ofName
    
    Built
    
    (dwt)
    
    Type
    
    Date
    
    Status
    
    Charter(1)Navig8 Fidelity
    
    
    2008
    
    
    
    47,000
    
    
    medium range
    
    January 2008
    
    Bareboat Charter
    
    January 2015product carrierNavig8 Faith
    
    
    2008
    
    
    
    47,000
    
    
    medium range
    
    February 2008
    
    Bareboat Charter
    
    February 2015product carrierTotal: 2 vessels
    
    
    
    
    
    
    94,000
    dwtTotal Current Fleet: 42 Vessels
 28




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##### Table of Contents



(1)
    
    Earliest date charters could expire. Most charters include options to shorten or extend
their term.(2)
    
    Gas Emperoris currently employed under a bareboat charter to a major international LPG
operator that expires in August 2012. The charterer has the option in August 2010 and August
2011 to cancel the existing charter upon the payment of a cancellation fee in the amount of
$228,000, if exercised in 2010, or $180,000, if exercised in 2011.(3)
    
    Birgit Kosanis currently employed under a bareboat charter to a major international LPG
operator that expires in October 2011. The charterer has the option in October 2009 and
October 2010 to cancel the existing charter upon the payment of a cancellation fee in the
amount of $192,000, if exercised in 2009, or $108,000 if exercised in 2010.(4)
    
    Gas Prophethas for the three-year duration of bareboat charter been renamed the M.T.
Ming Long.(5)
    
    Gas Eternityhas for the duration of its bareboat charter been renamed the M.T. Yu Tian 9.(6)
    
    Gas Sikousisis currently employed under a time charter until May 2010. Thereafter, at the
charterers option, the time charter can be extended for an additional one-year period, or; if
not exercised, we would have the option to charter the vessel for an additional one-year
period to the charterer at the then-prevailing market rate.(7)
    
    Gas Natalie, upon her delivery, continued to be deployed under an existing bareboat charter
to a major international LPG operator that expires in September 2011. The charterer has an
option in September 2009 and 2010 to cancel the existing charter upon the payment of a
cancellation fee in the amount of $336,000, if exercised in 2009, or $180,000, if exercised in
2010.(8)
    
    On June 10, 2009, we concluded the sale of the Gas Sophieto an unaffiliated third party
for $6.5 million. The Company realized a loss from the sale of the above vessel of $791,498,
which will be included in the Companys consolidated statement of income in the second quarter
2009.  LPG Carriers
 VesselYear
    
    Size
    
    Vessel
    
    Delivery
    
    Employment
    
    Expiration ofName
    
    Built
    
    (cbm)
    
    Type
    
    Date
    
    Status
    
    Charter(1)Gas Exelero
    
    
    2009
    
    
    
    3,500
    
    
    fully-pressurized
    
    June 2009
    
    Time Charter
    
    June 2010TBN
    
    
    2010
    
    
    
    5,000
    
    
    fully-pressurized
    
    February 2011TBN
    
    
    2010
    
    
    
    5,000
    
    
    fully-pressurized
    
    March 2011TBN
    
    
    2011
    
    
    
    5,000
    
    
    fully-pressurized
    
    July 2011TBN
    
    
    2011
    
    
    
    7,500
    
    
    fully-pressurized
    
    November 2011TBN
    
    
    2011
    
    
    
    7,500
    
    
    fully-pressurized
    
    May 2012Total contracted
LPG carriers: 7
vessels
    
    
    
    
    
    
    57,413
    cbm
 Product carrier s
 VesselYear

    
    Size

    
    Vessel

    
    Delivery

    
    
    
    
    
    Expiration ofName
    
    Built

    
    (dwt)

    
    Type

    
    Date

    
    Employment Status

    
    Charter(1)medium rangeStealth S.V
    
    
    2009
    
    
    
    46,000
    
    
    product carrier
    
    June 2009
    
    Time Charter
    
    May 2012medium rangeStealth Argentina
    
    
    2009
    
    
    
    50,500
    
    
    product carrier
    
    November 2009
    
    Bareboat
    
    November 2012Total contracted
product carriers: 2 Vessels
    
    
    
    
    
    
    96,500
    dwt
 
 (1)
    
    Earliest date charters could expire. Most charters include options to shorten or extend
their term. 29




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##### Table of Contents



Commercial and Technical Management of Our Fleet
     
 Gas
Amazon, Gas Evoluzione, Gas Courcheval Gas Fortune, Gas Crystal Gas Cathar, Gas Flawless Gas Haralambos Gas Kalogeros, Gas Premiership, Gas Shuriken, Gas Defiance, Gas Ice Gas Astrid.
 30




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##### Table of Contents



Crewing and Employees
   Chartering of the Fleet
   Customers
  Year EndedCustomer
    
    December 31, 2008Shell
    
    
    22.0
    %Petredec
    
    
    21.0
    %Vitol
    
    
    20.0
    %
  31




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##### Table of Contents



Environmental and other Regulations
    Environmental Regulations  International Maritime Organization (IMO)
    32




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33




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##### Table of Contents



Environmental Regulations  The United States Oil Pollution Act of 1990 (OPA).
    
    
    natural resources damage and the costs of assessment thereof;
    
    real and personal property damage;
    
    net loss of taxes, royalties, rents, fees and other lost revenues;
    
    lost profits or impairment of earning capacity due to property or natural resources
damage; and
    
    net cost of public services necessitated by a spill response, such as protection from
fire, safety or health hazards, and loss of subsistence use of natural resources.
    34




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##### Table of Contents



Environmental Regulations  Other Environmental Initiatives
  Climate Control Initiatives
  35




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##### Table of Contents



Vessel Security Regulations
  
    
    on-board installation of automatic information systems, or AIS, to enhance
vessel-to-vessel and vessel-to-shore communications;
    
    on-board installation of ship security alert systems;
    
    the development of vessel security plans; and
    
    compliance with flag state security certification requirements.
  Classification and Inspection
    36




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##### Table of Contents



Risk of Loss and Liability Insurance
 General
  Hull and Machinery Insurance
   Protection and Indemnity Insurance
   37




---



##### Table of Contents



Competition
 .
  Employees
  Seasonality
  Properties
  
 38




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##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  Overview
   Gas Exelero Gas Sophie
  39




---



##### Table of Contents




    
    Charters and revenues.Under a time charter, the charterer pays a fixed rate per day
over the term of the charter; a time charter, including a short term time charter, may
provide for rate adjustments and profit sharing. Under a bareboat charter, the charterer
pays us a fixed rate for its use of our ship for the term of the charter. Under a voyage
charter, we agree to transport a specified cargo from a loading port to a discharging port
for a fixed amount.
    
    Charters and expenses.Under a time charter, we are responsible for the vessels
operating costs (crew, provisions, stores, lubricants, insurance, maintenance and repairs)
incurred during the term of the charter, while the charterer pays voyage expenses (port,
canal and fuel costs) that are unique to each particular voyage. Under a bareboat charter,
the charterer is responsible for all vessel operating expenses and voyage expenses
incurred during the term of the charter. Under a voyage or spot charter, we are
responsible for both the vessel operating expenses and the voyage expenses incurred in
performing the charter.
   Factors Affecting Our Results of Operations
  
    
    Calendar days.We define calendar days as the total number of days in a period during
which each vessel in our fleet was in our possession including off-hire days associated
with major repairs, drydockings or special or intermediate surveys. Calendar days are an
indicator of the size of our fleet over a period and affect both the amount of revenue and
the amount of expense that we record during that period.
    
    Voyage days.We define voyage days as the total number of days in a period during
which each vessel in our fleet was in our possession net of off-hire days associated with
major repairs, drydockings or special or intermediate surveys. The shipping industry uses
voyage days (also
 40




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##### Table of Contents



referred to as available days) to measure the number of days in a period during which
vessels are available to generate revenues.
    
    Fleet utilization.We calculate fleet utilization by dividing the number of our
voyage days during a period by the number of our calendar days during that period. The
shipping industry uses fleet utilization to measure a companys efficiency in finding
suitable employment for its vessels and minimizing the amount of days that its vessels are
off-hire for reasons such as scheduled repairs, vessel upgrades or drydockings and other
surveys.
    
    Cyclicality.The international gas carrier market, including the transport of LPG, is
cyclical with attendant volatility in profitability, charter rates and vessel values,
resulting from changes in the supply of, and demand for, LPG carrier capacity. Due to the
current downturn in market conditions, there has been a decrease in the number of vessels
being contracted under time or bareboat charters as charterers seek to keep their
commitments on a shorter term basis, and as of April 30, 2009, we had nine vessels trading
in the spot market. However, in comparing the prevailing one year time charter rate at
April 30, 2009 against the prevailing one year time charter rate at April 30, 2008, rates,
as well as vessel values, continue to remain relatively stable in the LPG sector of the
shipping industry. On a fleet wide basis, in April 2008, we had 41 vessels in our fleet,
39 LPG carriers and two product carriers, of these vessels, 14 were employed on bareboat
charter and 27 were employed either on time charter or in the spot market. In April 2009,
we had 42 vessels in our fleet, 40 LPG carriers and two product carriers, of these 13 were
employed on bareboat charters and 29 were employed either on time charter or in the spot
market. The average rate per day per vessel earned in April 2008 was $7,336 compared to
$7,367 in April 2009.To the extent we have vessels in the spot market, we are exposed to changes in
spot rates for LPG carriers and such changes affect our earnings and the value of our
LPG carriers at any given time. When LPG vessel prices are considered to be low,
companies not usually involved in shipping may make speculative vessel orders, thereby
increasing the LPG shipping supply, satisfying demand sooner and potentially
suppressing charter rates. Each of the two product carriers in our fleet as of April
30, 2009 are deployed on a fixed rate bareboat charter expiring in the first quarter
of 2015, which will limit our exposure to fluctuations in charter rates in the product
carrier sector. The third product carrier we have agreed to acquire is scheduled to
be deployed on a three-year time charter upon its delivery to us, which is expected in
June 2009, and the fourth product carrier we have agreed to acquire is scheduled to be
deployed on a three-year bareboat charter upon its delivery to us, which is expected
in November 2009. These charters are similarly expected to limit our exposure to
fluctuations in product carrier charter rates.
    
    Seasonality.The LPG carrier market is typically stronger in the fall and winter
months in anticipation of increased consumption of propane and butane for heating during
the winter months. In addition, unpredictable weather patterns in these months tend to
disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues
may be stronger in fiscal quarters ended December 31 and March 31 and relatively weaker
during the fiscal quarters ended June 30 and September 30, as was the case in 2007 and
2008. We have limited exposure to seasonality with respect to our product carriers as the
two product carriers in our current fleet are deployed on fixed rate bareboat charters
until the first quarter of 2015, the two product carriers we have contracted to acquire
will be deployed on a three-year time and bareboat charter from their expected delivery to
us in June 2009 and November 2009, respectively.
 Basis of Presentation and General Information
 Voyage Revenues
  41




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##### Table of Contents



Voyage Expenses
  Time Charter Equivalent
  Vessel Operating Expenses
  42




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##### Table of Contents



Management Fees
  General and Administrative Expenses
  
 Depreciation
  Interest Expense
  Results of operations
 Year ended December 31, 2008 and the year ended December 31, 2007
   43




---



##### Table of Contents



Gas Nemesis
   44




---



##### Table of Contents



Gas Oracle Gas
Nemesis Gas Renovatio
      Year ended December 31, 2007 and the year ended December 31, 2006
   45




---



##### Table of Contents



46




---



##### Table of Contents



Liquidity and Capital Resources
  47




---



##### Table of Contents



Gas Premiership Navig8 Faith Navig8 Fidelity Gas Defiance Gas
Shuriken Gas Natalie Gas Astrid
 Gas Prodigy Gas Chios Gas Crystal Gas Fortune Seabird II Gas Evoluzione Gas Haralambos Gas Zael Gas Spirit Chiltern Gas Sophie Gas Natalie
   48




---



##### Table of Contents



Gas Sophie
 Cash Flows
   Gas Renovatio Gas Oracle Gas Nemesis Navig8 Fidelity Navig8 Faith Gas Premiership Gas
Defiance Gas Shuriken
 Gas Haralambos Gas Flawless Gas Icon Gas Kalogeros Sea Bird II Gas Evoluzione Gas Sophie Gas Sikousis Gas
Renovatio Chiltern Gas Premiership Navig8 Faith, Navig8
Fidelity Gas Flawless Gas
Haralambos
  49




---



##### Table of Contents



.
 Credit Facilities
  RemainingAvailable
    
    Outstanding
    
    
    
    
    
    RemainingPrincipal
    
    Principal
    
    
    
    
    
    RepaymentLender(1)
    
    Amount
    
    Amount
    
    Interest Rate
    
    Maturity
    
    InstallmentsFORTIS BANK ATHENS 
BRANCH(2)(3)
    
    
    
    $56.6 million
    
    The interest rate
margin over LIBOR
varies with the
ratio of the
outstanding balance
of the loan to the
aggregate market
value of the
vessels mortgaged
thereunder as
follows: if the
ratio is less than
67% the interest
rate is 0.75% over
LIBOR; if the ratio
is more than 67%
but less than 77%
the interest rate
is 0.80% over LIBOR
and if the ratio
exceeds 77% the
interest rate is
0.90% over LIBOR.
The facility bore
an average interest
rate, including
margin, of 3.91%
during 2008, which
represented an
average LIBOR rate
of 3.16% plus the
prevailing margin
of 0.75%.
    
    Due June 2016
    
    Two quarterly
installments of
$1.5 million, eight
quarterly
installments of
$1.6 million and
twenty eight
quarterly
installments of
$1.44 million plus a
balloon payment of
$13.3 million
payable together
with the last
installment.DNB NOR BANK 
ASA(4)
    
    
    
    $60.4 million
    
    The interest rate
margin over LIBOR
varies with the
ratio of the
aggregate market
value of the
vessels mortgaged
under the loan to
the amount
outstanding
thereunder. If the
ratio is equal to
or lower than 130%,
the interest rate
will be 0.85% over
LIBOR; if the ratio
is between 130% and
150%, the interest
rate is 0.75% over
LIBOR and if the
ratio is equal to
or higher than
150%, the interest
rate is 0.70% over
LIBOR. The facility
bore an average
interest rate,
including margin,
of 4.22% during
2008, which
represented an
    
    Due March 2016
    
    One semi-annual
payment of $3.7
million and 13
semi-annual
payments of $2.9
million, plus a
balloon payment of
$19.0 million
payable together
with the final
installment.
 50




---



##### Table of Contents



RemainingAvailable
    
    Outstanding
    
    
    
    
    
    RemainingPrincipal
    
    Principal
    
    
    
    
    
    RepaymentLender(1)
    
    Amount
    
    Amount
    
    Interest Rate
    
    Maturity
    
    Installmentsaverage LIBOR rate
of
3.47% plus the
prevailing margin
of 0.75%.DNB NOR BANK 
ASA(5)
    
    
    
    $4.68 million
    
    The interest rate
margin over LIBOR
varies with the
ratio of the
aggregate market
value of the
vessels mortgaged
under the loan to
the amount
outstanding
thereunder. If the
ratio is equal to
or lower than 130%,
the interest rate
will be 0.85% over
LIBOR; if the ratio
is between 130% and
150%, the interest
rate is 0.75% over
LIBOR and if the
ratio is equal to
or higher than
150%, the interest
rate is 0.70% over
LIBOR. The
prevailing interest
rate during the
years ended
December 2005, 2006
and 2007 has been
0.70% over LIBOR.
The facility bore
an average interest
rate, including
margin, of 3.93%
during 2008, which
represented an
average LIBOR rate
of 3.23% plus the
prevailing margin
of 0.70%.
    
    Due June 2016
    
    One semi-annual installment of $0.32 million and fourteen semi-annual installments of $0.24 million
plus a balloon payment of $1.0 million payable together with the last installment.SCOTIABANK(6)
    
    
    
    $45.9 million
    
    LIBOR plus 0.70%
    
    Due June 2015
Due January 2018
    
    $5.82 million is repayable in thirteen consecutive, semi-annual installments of $0.34 million each,  plus a
balloon payment of $1.4 million payable together with the last installment. $40.08 million is repayable,  in eighteen consecutive semi-annual installments of $1.54 million each,
plus a balloon
payment of $12.3
million payable
together with the
last installment.NATIONAL BANK OF 
GREECE(7)
    
    
    
    $33.3 million
    
    LIBOR plus 0.95%
until the repayment
of the third
installment and
LIBOR plus 0.80%
thereafter.
    
    Due Aug 2020
    
    Twenty-four
consecutive
semi-annual
installments of
$0.97 million each
six months after
the final drawdown
and in no case
later than nine
months after the
first drawdown,
plus a balloon
payment of
 51




---



##### Table of Contents



RemainingAvailable
    
    Outstanding
    
    
    
    
    
    RemainingPrincipal
    
    Principal
    
    
    
    
    
    RepaymentLender(1)
    
    Amount
    
    Amount
    
    Interest Rate
    
    Maturity
    
    Installments$10.0
million payable
together with the
last installment.DNB NOR BANK 
ASA(8)
    
    
    
    $15.0 million
    
    LIBOR plus 0.85%.
    
    Due March 2016
    
    Fifteen semi-annual
installments of
$0.7 million, plus
a balloon payment
of $4.71 million,
payable together
with the last
installment.DEUTSCHE BANK(9)
    
    
    
    $38.38 million
    
    LIBOR plus 0.70%.
    
    Due Feb 2020
    
    Forty-four consecutive quarterly installments of $0.625 million,  plus a
balloon payment of
$10.88 million
payable together
with the last
installment.EMPORIKI BANK(10)
    
    
    
    $29.44 million
    
    LIBOR plus 0.90%.
    
    Due Nov 2020
    
    Twenty four
semi-annual
installments of
$0.86 million, plus
a balloon payment
of $8.8 million,
payable together
with the last
installment.
 
 (1)
    
    As of December 31, 2008. Following December 31, 2008, we entered into new credit facilities
with DnB NOR Bank ASA, DVB Bank S.E. Nordic Branch and EFG Eurobank Ergasias S.A., which are
described further below. The DnB NOR Bank ASA credit facility will be collateralized by
mortgages and other security relating to the Stealth Argentinaupon its delivery; the DVB Bank
S.E. Nordic Branch credit facility is collateralized by mortgages and other security relating
to the Gas Astridand will be collateralized by mortgages and other security relating to the
Gas Exeleroupon its delivery; and the EFG Eurobank Ergasias S.A. credit facility will be
collateralized by mortgages and other security relating to the Stealth S.V. upon its delivery.(2)
    
    Our credit facility with Fortis Bank Athens Branch was, as of December 31, 2008,
collateralized by mortgages and other security relating to eleven LPG vessels, the Sir Ivor,
the Lyne, the Gas Prophet,the Gas Tiny, the Gas Courcheval, the Gas Shanghai, the Gas
Emperor, the Gas Ice, the Gas Arctic, the Birgit Kosanand the Gas Amazon.(3)
    
    Borrowings under our credit facility with Fortis Bank Athens Branch repaid the outstanding
balance of our credit facility with Fortis Bank for up to $54.0 million, which was fully drawn
in May 2005.(4)
    
    Our 2005 credit facility with DnB NOR Bank ASA was, as of December 31, 2008, collateralized
by mortgages and other security relating to the Gas Marathon, the Gas Sincerity, the Gas
Cathar, the Gas Legacy, the Sweet Dream(renamed in February 2006 as the Gas Monarch), the
Gas Czar, the Gas Eternity, the Gas Flawlessand the Gas Premiership(5)
    
    Our 2006 credit facility with DnB NOR Bank ASA was, as of December 31, 2008, collateralized
by mortgages and other security relating to the Batangas.(6)
    
    Our credit facility agreement is with the Scotiabank (Ireland) Limited, as lender, Scotiabank
Europe plc, as security trustee, and The Bank of Nova Scotia, as swap bank. Our Scotiabank
credit facility was, as of December 31, 2008, collateralized by mortgages and other security
relating to the Gas Iconand the Navig8 Fidelity.(7)
    
    Our 2006 credit facility with National Bank of Greece was, as of December 31, 2008,
collateralized by mortgages and other security relating to the Gas Defianceand the Gas
Shuriken. 52




---



##### Table of Contents



(8)
    
    Our 2008 credit facility with DnB NOR Bank was, as of December 31, 2008, collateralized by
mortgages and other security relating to the Gas Premiershipand cross-collateralized with
vessels mortgaged under other loan agreements we previously entered into with DnB NOR Bank.(9)
    
    Our 2008 credit facility with Deutsche Bank was, as of December 31, 2008, collateralized by
mortgages and other security relating to the Navig8 Faith.(10)
    
    Our 2008 credit facility with Emporiki Bank was, as of December 31, 2008, collateralized by
mortgages and other security relating to the Gas Sikousisand the Gas Kalogeros. Gas
Prodigy Gas Chios Gas Crystal Gas Fortune, Seabird II, Gas Evoluzione, Gas Haralambos Gas Zael, Gas
Spirit Chiltern Gas Natalie
 New DnB NOR Bank ASA Credit Facility
 Stealth Argentina
 New DVB Bank S.E. Nordic Branch Credit Facility
 Gas Astrid Gas Exelero Chiltern Gas Astrid Chiltern Gas Exelero
   New EFG Eurobank Ergasias S.A. Credit Facility
 Stealth S.V.
 53




---



##### Table of Contents



New NIBC Credit Facility
 Gas Haralambos, Gas Spirit Gas Natalie Gas
Haralambos, Gas Spirit Gas Natalie
 Financial Covenants
  
    
    ensure that our leverage, which is defined as total debt net of cash/total market
adjusted assets, does not at any time exceed 80%;
    
    maintain a ratio of the aggregate market value of the vessels securing the loan to
the principal amount outstanding under such loan at all times in excess of (i) 130%
under our loan agreement with Fortis Bank-Athens Branch and (ii) 125% under our loan
agreements with Deutsche Bank, DnB NOR Bank ASA, DVB Bank S.E., Nordic Branch, EFG
Eurobank Ergasias S.A., Emporiki Bank, National Bank of Greece and Scotiabank;
    
    ensure that our ratio of EBITDA to interest expense over the preceding six months is
at all times more than 2.5 times; and
    
    ensure that members of the Vafias family at all times own at least 15% of our
outstanding capital stock.
 th th
   54




---



##### Table of Contents



Navig8 Faith
   Capital Expenditures
  Navig8 Fidelity Navig8 Faith Gas Premiership Gas Defiance Gas
Shuriken Stealth Argentina, Stealth S.V. . Gas Natalie
 Gas Astrid Gas Exelero Stealth S.V Stealth Argentina Gas Astrid
 Gas
Premiership Navig8 Faith Navig8 Fidelity
 Gas Flawless Gas Haralambos Gas Flawless
 Off Balance Sheet Arrangements
  55




---



##### Table of Contents



Contractual Obligations
  Payments due by period (in thousands)More thanLess than
    
    
    
    
    
    
    
    
    
    
    5 years1
    
    
    1-3 years
    
    
    3-5 years
    
    
    (Afteryear
    
    
    (2010-
    
    
    (2012-
    
    
    January 1,Total
    
    
    (2009)
    
    
    2011)
    
    
    2013)
    
    
    2014)Long-term debt obligation(1)
    
    $
    283,695
    
    
    $
    24,381
    
    
    $
    46,847
    
    
    $
    46,847
    
    
    $
    165,620Interest on principal amounts outstanding(2)
    
    
    69,087
    
    
    
    7,104
    
    
    
    16,902
    
    
    
    15,856
    
    
    
    29,225Management fees(3)
    
    
    16,192
    
    
    
    5,397
    
    
    
    10,795
    
    
    
    
    
    
    
    Office lease(4)
    
    
    49
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    Operating lease(5)
    
    
    136
    
    
    
    48
    
    
    
    88
    
    
    
    
    
    
    
    Vessel purchase agreements(6)
    
    
    263,946
    
    
    
    163.176
    
    
    
    80,254
    
    
    
    20,516
    
    
    
    Total
    
    $
    633,105
    
    
    $
    200,155
    
    
    $
    154,886
    
    
    $
    83,219
    
    
    $
    194,845
 
 (1)
    
    The $283.7 million of long term debt obligations set forth in the above table consists of
$56.6 principal amount outstanding under the Fortis-Athens loan as of December 31, 2008, $75.5
million and $4.7 million principal amount, respectively, outstanding as of December 31, 2008
under our loans with DnB NOR Bank, $45.9 million principal amount outstanding under the
Scotiabank loan as of December 31, 2008, $33.2 million principal amount outstanding under the
National Bank of Greece loan, $38.4 million under the Deutsche Bank loan and $29.4 million
under the Emporiki Bank loan. On January 16, 2009, we borrowed $19.3 million under our new
DVB Bank S.E. Nordic Branch credit facility to partially finance the acquisition of the Gas
Astridand to partially refinance the Chiltern.(2)
    
    On March 31, 2005, we entered into an interest rate swap agreement with Fortis Bank with the
initial nominal amount of the swap at $22.5 million amortizing to $4.8 million over its
six-year life commencing May 30, 2007. The swap will hedge our risk of increases in three
month LIBOR over 4.55% and up to 7.5%, but will not hedge our risk if three month LIBOR equals
or exceeds 7.5%.On January 23, 2006, we entered into an interest rate swap agreement with DnB NOR Bank with an
initial amount of $22.5 million amortizing to $4.4 million over its ten year life commencing
March 9, 2006. If the six month LIBOR is less than or equal to 5.75% the fixed rate is 4.52%.
If the six month LIBOR is higher than 5.75% then the fixed rate would be the six month LIBOR
less 1.23%.On May 22, 2006, we entered into an interest rate swap agreement with DnB NOR Bank. The amount
of the swap will be $25.0 million over its five year life commencing on September 11, 2006. The
rate is fixed throughout the period at 5.42%.On June 22, 2007, we entered into a $25 million unamortizing interest rate swap arrangement
with DnB NOR Bank ASA London whereby from September 11, 2007 until September 11, 2012 we will
pay on a semi-annual basis to DnB Nor Bank 5.58% and receive from DnB NOR Bank six-month
floating LIBOR.On January 15, 2008, we entered into an interest rate swap agreement with Fortis Bank. The
amount of the swap was $41.7 million amortizing to $27.8 million over its five year term
commencing on January 17, 2008 whereby we will pay on a three monthly basis 3.66% and receive
from Fortis Bank three-month floating LIBOR.On March 18, 2008, we entered into an interest rate swap agreement with Deutsche Bank. The
amount of the swap was $40.3 million amortizing to $27.8 million over its five year commencing
March 20, 2008 whereby we will pay on a three monthly basis 3.09% and receive from Deutsche
Bank three-month floating LIBOR.The interest rates payable reflected in the above table assumes a LIBOR of 1.50% for 2009,
2.50% for 2010 to 2011, 3.50% for 2012 to 2013 and 4.50% for each subsequent period through the
maturity of the loan and with respect to the Fortis Bank loan, after taking into account our
interest rate swap agreement with respect to the $56.6 million outstanding under the Fortis
Bank loan, effective interest rates are 4.57% for 2009, 4.77% for 2010 and 2011, 4.58% for 2012
and 2013 and 5.25% for each subsequent period through the maturity of the loan. Based on the
above assumptions, the following interest payments are payable by us during the periods
indicated: $2.56 million payable within one year of December 31, 2008, $4.2 million payable
between one and three years of December 31, 2008, $3.1 million payable between three and five
years of December 31, 2008 and $2.6 million payable more than five years after December 31,
2008.With respect to the $75.5 million outstanding under the DnB NOR loan, effective interest rates
are 4.70% for 2009, 5.15% for 2010 and 2011, 4.91% for 2012 and 2013 and 5.22% for each
subsequent period through to the maturity of the loan. Based on the above assumptions the
following interest payments are payable by us during the periods indicated: $4.1 million
payable within one year of 56




---



##### Table of Contents



December 31, 2008, $9.1 million payable between one and three years of December 31, 2008, $4.3
million payable between three and five years of December 31, 2008 and $4.6 million payable more
than five years after December 31, 2008.With respect to the $4.7 million outstanding under the DnB NOR loan, effective interest rates
are 2.20% for 2009, 3.20% for 2010 and 2011, 4.20% for 2012 and 2013 and 5.20% for each
subsequent period through to the maturity of the loan. Based on the above assumptions the
following interest payments are payable by us during the periods indicated: $0.1 million
payable within one year of December 31, 2008, $0.2 million payable between one and three years
of December 31, 2008, $0.2 million payable between three and five years of December 31, 2008
and $0.2 million payable more than five years after December 31, 2008.With respect to the $38.4 million outstanding under the Deutsche Bank loan, effective interest
rates are 3.66% for 2009, 3.88% for 2010 and 2011, 4.03% for 2012 and 2013 and 5.20% for each
subsequent period through to the maturity of the loan. Based on the above assumptions the
following interest payments are payable by us during the periods indicated: $1.4 million
payable within one year of December 31, 2008, $2.6 million payable between one and three years
of December 31, 2008, $2.3 million payable between three and five years of December 31, 2008
and $5.7 million payable more than five years after December 31, 2008.With respect to the $45.9 million outstanding under the Scotiabank loan, effective interest
rates are 2.20% for 2009, 3.20% for 2010 and 2011, 4.20% for 2012 and 2013 and 5.20% for each
subsequent period through to the maturity of the loan. Based on the above assumptions the
following interest payments are payable by us during the periods indicated: $1.1 million
payable within one year of December 31, 2008, $2.3 million payable between one and three years
of December 31, 2008, $2.5 million payable between three and five years of December 31, 2008
and $4.1 million payable more than five years after December 31, 2008.With respect to the $29.4 million outstanding under the Emporiki Bank loan, effective interest
rates are 2.40% for 2009, 3.40% for 2010 and 2011, 4.40% for 2012 and 2013 and 5.40% for each
subsequent period through to the maturity of the loan. Based on the above assumptions the
following interest payments are payable by us during the periods indicated: $0.9 million
payable within one year of December 31, 2008, $1.7 million payable between one and three years
of December 31, 2008, $1.9 million payable between three and five years of December 31, 2008
and $5.5 million payable more than five years after December 31, 2008.With respect to the $33.2 million outstanding under the National Bank of Greece loan, effective
interest rates are 2.45% for 2009, 3.45% for 2010 and 2011, 4.45% for 2012 and 2013 and 5.45%
for each subsequent period through to the maturity of the loan. Based on the above assumptions
the following interest payments are payable by us during the periods indicated: $1.0 million
payable within one year of December 31, 2008, $2.0 million payable between one and three years
of December 31, 2008, $2.2 million payable between three and five years of December 31, 2008
and $6.4 million payable more than five years after December 31, 2008.(3)
    
    Under our management agreement with Stealth Maritime, we pay it $125 per vessel per day for
vessels on bareboat charter and $440 per vessel per day for vessels not on bareboat charter.
Based on the payment of a management fee of $440 per vessel per day for vessels not on
bareboat charter and $125 per day for vessels on bareboat charter and our currently contracted
vessel acquisitions, we expect to pay at least $4.8 million per year to Stealth Maritime as
management fees under the management agreement. We also will pay 1.25% of the gross freight,
demurrage and charter hire collected from employment of our ships and 1% of the contract price
of any vessels bought or sold on our behalf. In addition, we will reimburse Stealth Maritime
for its payment of the compensation to our Chief Executive Officer and Chief Financial
Officer. Such compensation was in the aggregate amount of 878,857 (US $1,295,739 based on the
average exchange rate of 1.00: US $1.474 in effect throughout 2008).(4)
    
    We lease office space from the Vafias Group. The initial lease term was for three years
beginning January 3, 2005 with an annual rate was 24,000. This lease was renewed effective
January 3, 2008 for two years at a rate of 32,000 per year.(5)
    
    In October 2005, we entered into a three year cancelable operating lease for a motor vehicle.
The initial term of the lease terminated in October 2008. The lease was renewed effective
October 2008 for a further three years. The cost is Euro 34,200 per year.(6)
    
    Of the $263.95 million set forth in the above table, (i) $10.7 million represents the unpaid
balance outstanding as of December 31, 2008 of the total purchase price of $10.8 million for
the Gas Natalie, which we paid upon its delivery to us on January 22, 2009, (ii) $18.8 million
represents the aggregate unpaid balance outstanding as of December 31, 2008 of the total
purchase price of $18.8 million for the Gas Astrid, which we paid upon its delivery to us in
April 2009, (iii) $18.8 million represents the aggregate unpaid balance outstanding as of
December 31, 2008 of the total purchase price of $18.8 million for the Gas Exelero, which is
payable upon its respective delivery to us scheduled for June 2009, (iv) $103.5 million
represents the aggregate unpaid balance outstanding as of December 31, 2008 of the total
purchase price of $115.0 million for the Stealth S.V.and the Stealth Argentina, which is
payable upon their respective delivery to us scheduled for June 2009 and November 2009,
respectively, and (v) an aggregate of $112.1 million (converted from our contractual
obligation for Yen 10,807,200,000 at the exchange rate on December 31, 2008, representing the
remaining balance, as of December 31, 2008, for five newbuilding handy size LPG carriers which
is due upon the respective delivery of these vessels to us scheduled from February 2011 and
May 2012. Critical Accounting Policies
  57




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##### Table of Contents



Revenue and Expenses.
    Impairment of long-lived assets
   58




---



##### Table of Contents



Depreciation
 Vessels
Acquisitions
  59




---



##### Table of Contents



Derivative Financial Instruments
   Stock Incentive Plan
 Recent Accounting Pronouncements
  60




---



##### Table of Contents



61




---



##### Table of Contents



Item 6. Directors, Senior Management and Employees
  YearDirectorsYear
    
    
    CurrentBecame
    
    
    TermName
    
    Age(1)
    
    
    Positions
    
    
    Director
    
    
    ExpiresHarry N. Vafias
    
    
    31
    
    
    President, Chief Executive Officer andClass III Director
    
    
    2004
    
    
    
    2009Andrew J. Simmons
    
    
    53
    
    
    Chief Financial Officer
    
    
    
    
    
    
    Michael G. Jolliffe
    
    
    59
    
    
    Chairman of the Board, Class II Director
    
    
    2004
    
    
    
    2010Lambros Babilis
    
    
    41
    
    
    Deputy Chairman and Class I Director
    
    
    2007
    
    
    
    2011Markos Drakos
    
    
    49
    
    
    Class III Director
    
    
    2006
    
    
    
    2009Thanassis J. Martinos
    
    
    59
    
    
    Class I Director
    
    
    2004
    
    
    
    2011
 
 (1)
    
    As of December 31, 2008.  Harry N. Vafias
 Andrew J. Simmons
 62




---



##### Table of Contents



Michael G. Jolliffe
 Lambros Babilis
 Markos Drakos
 Thanassis J. Martinos
 63




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##### Table of Contents



Board Practices
      Corporate Governance
   
    
    a Code of Business Conduct and Ethics;
    
    a Nominating and Corporate Governance Committee Charter;
    
    a Compensation Committee Charter; and
    
    an Audit Committee Charter.
 64




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##### Table of Contents



Committees of the Board of Directors
  Audit Committee
   
    
    integrity of the Companys financial statements, including its system of internal
controls;
    
    the Companys compliance with legal and regulatory requirements;
    
    the independent auditors qualifications and independence; and
    
    the performance of the Companys independent audit function and independent auditors,
  Nominating and Corporate Governance Committee
  
    
    reviewing the Board structure, size and composition and making recommendations to the
Board with regard to any adjustments that are deemed necessary;
    
    identifying candidates for the approval of the Board to fill Board vacancies as and
when they arise as well as developing plans for succession, in particular, of the chairman
and executive officers;
    
    overseeing the Boards annual evaluation of its own performance and the performance
of other Board committees; and
    
    developing and recommending to the Board for adoption a set of Corporate Governance
Guidelines applicable to the Company and to periodically review the same.
 Compensation Committee
  
    
    establishing and periodically reviewing the Companys compensation programs;
    
    reviewing the performance of directors, officers and employees of the Company who are
eligible for awards and benefits under any plan or program and adjust compensation
arrangements as appropriate based on performance;
    
    reviewing and monitoring management development and succession plans and activities;
 65




---



##### Table of Contents




    
    reporting on compensation arrangements and incentive grants to the Board; and
    
    preparing a Compensation Committee report to be included in our annual proxy
statement.
 Compensation of Directors and Senior Management
  
     66




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##### Table of Contents



Employees
  Share Ownership
  Equity Compensation Plan
    
 Item 7. Major Shareholders and Related Party Transactions
 Major Shareholders
  
    
    each person or entity that we know beneficially owns 5% or more of our shares of
common stock;
    
    our chief executive officer and our other members of senior management;
    
    each of our directors; and
 67




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##### Table of Contents




    
    all of our current directors and executive officers as a group.
  Shares Beneficially OwnedName of Beneficial Owner
    
    Number
    
    PercentagePrincipal StockholdersFlawless Management Inc.(1)
    
    
    6,000,000
    
    
    
    26.9
    %331 Kifissias Avenue
Erithrea 14561
Athens, GreeceWellington Management Company, LLP(2)
    
    
    2,232,775
    
    
    
    10.0
    %75 State Street
Boston, MA 02109The Bessemer Group, Incorporated(3)
    
    
    2,194,200
    
    
    
    9.84
    %100 Woodbridge Center Drive
Woodbridge, New Jersey 07095-0980Zesiger Capital Group LLC(4)
    
    
    1,234,353
    
    
    
    5.5
    %320 Park Avenue, 30th Floor
New York, New York 10022Executive Officers and DirectorsHarry N. Vafias(5)
    
    
    6,200,000
    
    
    
    27.8
    %Andrew J. Simmons
    
    
    
    
    
    
    Michael G. Jolliffe(6)
    
    
    12,000
    
    
    
    *Lambros Babilis(7)
    
    
    9,396
    
    
    
    *Markos Drakos(8)
    
    
    8,000
    
    
    
    *Thanassis J. Martinos(9)
    
    
    404,000
    
    
    
    1.8
    %All executive officers and directors as a group (6 persons)
    
    
    6,633,396
    
    
    
    29.7
    %
 
 *
    
    Less than 1%.(1)
    
    According to Amendment No. 1 to a Schedule 13G filed with the SEC on February 14, 2008
jointly filed by Flawless Management Inc. and Harry N. Vafias, Flawless Management Inc.
beneficially owns 6,000,000 shares of common stock and has sole voting power and sole
dispositive power with respect to all such shares. Harry N. Vafias, our Chief Executive
Officer, President and Director, is the sole stockholder of Flawless Management Inc.(2)
    
    According to Amendment No. 4 to Schedule 13G filed with the SEC on February 17, 2009,
Wellington Management Company, LLP beneficially owns 2,232,775 shares of common stock and has
shared voting power with respect to 1,610,575 such shares and shared dispositive power with
respect to all such shares. The shares of common stock are owned of record by clients of
Wellington Management Company, LLP, an investment advisor.(3)
    
    According to a Schedule 13G filed with the SEC on February 17, 2009, The Bessemer Group,
Incorporated (BGI), as a parent holding company, and Bessemer Trust Company, N.A. (BTNA),
Bessemer Investment management LLC (BIM) and Old Westbury Real Return Fund (the Old
Westbury Fund) beneficially own an aggregate of 2,194,200 shares of our common stock. The
filing indicates that BTNA is wholly owned by BGI, BIM is a wholly owned subsidiary of BTNA
and is the investment advisor to the Old Westbury Fund, BTNA is a trust company that manages
accounts for the benefit of others and BIM is a registered investment advisor that furnishes
investment advisory services to the Old Westbury Fund. The filing also indicates that the
shares are held by the Old Westbury Fund and that BGI, BTNA, BIM and the Old Westbury Fund
have shared voting and shared dispositive power with respect to 68




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##### Table of Contents



the 2,194,200 shares. The address of BGI is 100 Woodbridge Center Drive, Woodbridge, NJ
07095-01980. The address of BTNA and BIM is 630 Fifth Avenue, New York, NY 10111. The address
of Old Westbury Fund is 3435 Steltzer Road, Columbus, OH 43219.(4)
    
    According to Amendment No. 2 to Schedule 13G filed with the SEC on February 10, 2009, Zesiger
Capital Group LLC beneficially owns 1,234,353 shares of common stock and has sole voting power
with respect to 1,025,453 such shares and sole dispositive power with respect to all such
shares. The shares of common stock are owned of record by clients of Zesiger Capital Group
LLC, an investment advisor.(5)
    
    According to Amendment No. 1 to a Schedule 13G filed with the SEC on February 14, 2008
jointly filed by Flawless Management Inc. and Harry N. Vafias, Harry N. Vafias beneficially
owns 6,200,000 shares of common stock, which includes (i) 6,125,000 shares of common stock,
6,000,000 of which by virtue of the shares owned indirectly through Flawless Management Inc.,
and (ii) 75,000 restricted shares, 25,000 shares of which will vest on October 1, 2009, 25,000
shares of which will vest on October 31, 2009 and 25,000 shares of which will vest on October
31, 2010. Harry N. Vafias has sole voting power and sole dispositive power with respect to
all such shares.(6)
    
    Mr. Michael G. Jolliffe beneficially owns (i) 6,000 shares of common stock and (ii) 6,000
restricted shares, of which 2,000 restricted shares will vest on October 1, 2009, 2,000
restricted shares will vest on October 31, 2009 and 2,000 restricted shares will vest on
October 31, 2010.(7)
    
    Mr. Lambros Babilis beneficially owns (i) 4,698 shares of common stock and (ii) 4,698
restricted shares, of which 2,349 restricted shares will vest on March 18, 2010 and 2,349
restricted shares will vest on March 18, 2011.(8)
    
    Mr. Markos Drakos beneficially owns (i) 3,999 shares of common stock and (ii) 4,001
restricted shares, of which 1,334 restricted shares will vest on October 1, 2009, 1,333
restricted shares will vest on October 31, 2009 and 1,334 restricted shares will vest on
October 31, 2010.(9)
    
    Mr. Thanassis Martinos beneficially owns 400,000 shares of common stock by virtue of shares
owned indirectly through Nike Investments Corporation, the beneficial owner being Mr.
Thanassis Martinos, a director of the Company. The address of Nike Investments Corporation is
80 Broad Street, Monrovia, Liberia. In addition, Mr. Thanassis G. Martinos beneficially owns
(i) 1,998 shares of common stock and (ii) 2,002 restricted shares, of which 667 restricted
shares will vest on October 1, 2009, 666 restricted shares will vest on October 31, 2009 and
667 restricted shares will vest on October 31, 2010.   Related Party Transactions
   Management Affiliations
  69




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Management and Other Fees
        
   Deemed Dividend
 Gas
Eternity
 Office Space
 
 70




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##### Table of Contents




 Nike Investments Corporation
  Brave Maritime Corp. Bridge Loan
 Chiltern Gas Evoluzione Gas Renovatio Gas Renovatio Chiltern Evoluzione
  Vessel Acquisitions
 Gas Kalogeros, 7 Gas Sikousis
 Gas Defiance Gas Shuriken Gas Astrid Gas Exelero Gas Defiance Gas Shuriken Gas Astrid Gas Exelero
 Gas Natalie
  71




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Item 8. Financial Information
  Significant Changes.
 Legal Proceedings.
 Dividend Policy.
   72




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##### Table of Contents



Item 9. The Offer and Listing
 Trading on the NASDAQ Stock Market
  High
    
    LowYear Ended December 31, 2005 (October 6, 2005 through
December 31, 2005)
    
    $
    14.59
    
    
    $
    10.80Year Ended December 31, 2006
    
    
    14.79
    
    
    
    10.902007Year Ended December 31, 2007
    
    
    20.00
    
    
    
    11.40First Quarter
    
    
    13.97
    
    
    
    11.40Second Quarter
    
    
    18.38
    
    
    
    13.74Third Quarter
    
    
    20.00
    
    
    
    15.16Fourth Quarter
    
    
    18.22
    
    
    
    13.35November 2007
    
    
    18.22
    
    
    
    14.87December 2007
    
    
    17.67
    
    
    
    13.352008Year Ended December 31, 2008
    
    
    17.91
    
    
    
    2.51First Quarter
    
    
    16.30
    
    
    
    12.34Second Quarter
    
    
    17.91
    
    
    
    13.75Third Quarter
    
    
    17.09
    
    
    
    12.55Fourth Quarter
    
    
    13.41
    
    
    
    2.51November 2008
    
    
    7.19
    
    
    
    2.60December 2008
    
    
    4.90
    
    
    
    2.512009First Quarter
    
    
    6.73
    
    
    
    3.93January 2009
    
    
    5.72
    
    
    
    3.93February 2009
    
    
    6.73
    
    
    
    4.75March 2009
    
    
    5.47
    
    
    
    4.18Second Quarter (through June 15, 2009)
    
    
    6.38
    
    
    
    4.05April 2009
    
    
    5.58
    
    
    
    4.59May 2009
    
    
    6.38
    
    
    
    4.05June 2009 (through June 15, 2009)
    
    
    5.93
    
    
    
    4.80
 Comparison of Cumulative Total Shareholder Return
  73




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Item 10. Additional Information
 Share Capital
  Common Stock
  Blank Check Preferred Stock
  74




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Dividends
   Articles of Incorporation and Bylaws
   Directors.
  Dissenters
Rights of Appraisal and Payment.
 75




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Stockholders
Derivative Actions.
 Anti-takeover
Provisions of our Charter Documents.
 Blank Check Preferred Stock.
 Classified Board of Directors.
 Election and Removal of Directors.
 Calling of Special Meetings of Stockholders.
 Advance Notice Requirements for Stockholder Proposals and Director Nominations.
  Business Combinations.
 
    
    persons who are the beneficial owners of 15% or more of the outstanding voting stock
of the corporation; and
 76




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##### Table of Contents




    
    persons who are affiliates or associates of the corporation and who hold 15% or more
of the corporations outstanding voting stock at any time within three years before the
date on which the persons status as an interested stockholder is determined.
  
    
    certain mergers or consolidations of the corporation or any direct or indirect
majority-owned subsidiary of the company;
    
    the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets
having an aggregate market value equal to 10% or more of either the aggregate market value
of all assets of the corporation, determined on a consolidated basis, or the aggregate
value of all the outstanding stock of the corporation;
    
    certain transactions that result in the issuance or transfer by the corporation of
any stock of the corporation to the interested stockholder;
    
    any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series, or securities convertible into
the stock of any class or series, of the corporation that is owned directly or indirectly
by the interested stockholder; and
    
    any receipt by the interested stockholder of the benefit (except as a stockholder) of
any loans, advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
  
    
    before a person becomes an interested stockholder, the board of directors of the
corporation approves the business combination or transaction in which the stockholder
became an interested stockholder;
    
    upon consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction commenced, other
than certain excluded shares;
    
    following a transaction in which the person became an interested stockholder, the
business combination is (a) approved by the board of directors of the corporation and (b)
authorized at a regular or special meeting of stockholders, and not by written consent, by
the vote of the holders of at least two-thirds of the voting stock of the corporation not
owned by the stockholder; or
    
    a transaction with a stockholder that was or became an interested stockholder prior
to the consummation of our initial public offering.
 Material Contracts
  (a) Amended and Restated Management Agreement
  77




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##### Table of Contents



(b) Right of First Refusal Agreement
  (c) Nike Investments Corporation
  (d) Fortis Bank
  (e) DnB NOR Bank ASA
   78




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##### Table of Contents



(f) Brave Maritime Corp.
  (g) Scotiabank Credit Facility
  (h) Deutsche Bank
  (i) Emporiki Bank
  (j) National Bank of Greece
  (k) EFG Eurobank Ergasias S.A.
  (l) DVB Bank S.E. Nordic Branch
  (m) Vessel Acquisition Agreements.
 Gas Kalogeros, 7 Gas Sikousis Gas Kalogeros Gas Sikousis
 Gas Defiance Gas Shuriken Gas Astrid Gas Exelero Gas Defiance Gas Shuriken Gas Astrid Gas Exelero
 79




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##### Table of Contents



Gas Natalie
  Exchange Controls and Other Limitations Affecting Stockholders
   Tax Considerations
 Marshall Islands Tax Consequences
  United States Federal Income Tax Consequences
  United States Federal Income Taxation of Our Company
 Taxation of Operating Income: In General
    80




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Exemption of Operating Income from United States Federal Income Taxation
         81




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##### Table of Contents



82




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##### Table of Contents




    
    we or our subsidiaries have, or are considered to have, a fixed place of business in
the United States involved in the earning of shipping income; and
    
    substantially all (at least 90%) of our United States-source shipping income, other
than leasing income or that of a subsidiary, is attributable to regularly scheduled
transportation, such as the operation of a vessel that follows a published schedule with
repeated sailings at regular intervals between the same points for voyages that begin or
end in the United States.
   
    
    we or our subsidiaries have, or are considered to have a fixed place of business in
the United States that is involved in the meaning of such leasing income; and
    
    substantially all (at least 90%) of our United States-source shipping income from
leasing or that of a subsidiary is attributable to such fixed place of business.
  United States Taxation of Gain on Sale of Vessels
  United States Federal Income Taxation of United States Holders
   Distributions
  83




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##### Table of Contents



Sale, Exchange or other Disposition of Common Stock
  PFIC Status and Significant Tax Consequences
  
    
    at least 75% of our gross income for such taxable year consists of passive income
(e.g., dividends, interest, capital gains and rents derived other than in the active
conduct of a rental business); or
    
    at least 50% of the average value of our assets during such taxable year produce, or
are held for the production of, passive income.
 84




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##### Table of Contents



Taxation of United States Holders Making a Timely QEF Election
  85




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##### Table of Contents



Taxation of United States Holders Making a Mark-to-Market Election
  Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election
  
    
    the excess distribution or gain would be allocated ratably over the Non-Electing
Holders aggregate holding period for the common stock;
    
    the amount allocated to the current taxable year or to any portion of the United
States Holders holding period prior to the first taxable year for which we were a PFIC
would be taxed as ordinary income; and
    
    the amount allocated to each of the other taxable years would be subject to tax at
the highest rate of tax in effect for the applicable class of taxpayer for that year, and
an interest charge for the deemed deferral benefit would be imposed with respect to the
resulting tax attributable to each such other taxable year.
  86




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##### Table of Contents



Other PFIC Elections.
    United States Federal Income Taxation of Non-United States Holders
  Dividends on Common Stock
  87




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##### Table of Contents



Sale, Exchange or Other Disposition of Common Stock
  
    
    the gain is effectively connected with the Non-United States Holders conduct of a
trade or business in the United States. If the Non-United States Holder is entitled to the
benefits of an income tax treaty with respect to that gain, that gain generally is taxable
only if it is attributable to a permanent establishment maintained by the Non-United
States Holder in the United States; or
    
    the Non-United States Holder is an individual who is present in the United States for
183 days or more during the taxable year of disposition and other conditions are met.
  Backup Withholding and Information Reporting
  
    
    fails to provide an accurate taxpayer identification number;
    
    is notified by the Internal Revenue Service that you have failed to report all
interest or dividends required to be shown on your federal income tax returns; or
    
    in certain circumstances, fails to comply with applicable certification requirements.
    Dividends and Paying Agents
  88




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##### Table of Contents



Statement by Experts
  Documents on Display
  Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 Our risk management policy
  Interest rate risk
  NotionalAmount on
    
    Fixed Rate
    
    Floating Rate
    
    Fair Value
    
    Fair Value
    
    Fair ValueContract
    
    Effective
    
    Termination
    
    Effective
    
    (StealthGas
    
    (StealthGas
    
    December
    
    December
    
    DecemberCounterparty
    
    Trade Date
    
    Date
    
    Date
    
    Date
    
    pays)
    
    Receives)
    
    31, 2006
    
    31, 2007
    
    31, 2008FORTIS
    
    March 31, 2005
    
    May 30, 2007
    
    May 30, 2016
    
    $22.5 million
    
    
    4.55
    %(1)
    
    3 month U.S. dollar LIBOR
    
    $0.2 million
    
    $(0.3) million
    
    $(1.0) millionDNB
NOR BANK ASA
    
    January 23, 2006
    
    March 9, 2006
    
    March 9, 2016
    
    $22.5 million
    
    
    4.52
    %(2)
    
    6 month U.S. dollar LIBOR
    
    $0.2 million
    
    $(0.3) million
    
    $(1.7) millionDNB NOR BANK ASA
    
    May 22, 2006
    
    September 11, 2006
    
    September 11, 2011
    
    $25.0 million
    
    
    5.42
    %
    
    6 month U.S. dollar LIBOR
    
    $(0.4) million
    
    $(1.2) million
    
    $(2.6) millionDNB NOR BANK ASA
    
    June 22, 2007
    
    September 11, 2007
    
    September 11, 2012
    
    $25.0 million
    
    
    5.58
    %
    
    6 month U.S. dollar LIBOR
    
    
    
    
    
    $(1.5) million
    
    $3.5) millionFORTIS
    
    January 15, 2008
    
    January 17, 2008
    
    January 17, 2013
    
    $41.7 million
    
    
    3.66
    %
    
    3 month U.S. dollar LIBOR
    
    
    
    
    
    
    
    
    
    $(2.4) millionDEUTSCHE BANK
    
    March 18, 2008
    
    March 20, 2008
    
    March 20, 2013
    
    $40.3 million
    
    
    3.09
    %
    
    6 month U.S. dollar LIBOR
    
    
    
    
    
    
    
    
    
    $(1.5) million
 
 (1)
    
    If the United States dollar three month LIBOR is less than 7.5%, the fixed rate is 4.55%. If
the United States dollar three month LIBOR is equal to or higher than 7.5%, then the fixed
rate would be the United States dollar three month LIBOR. 89




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##### Table of Contents



(2)
    
    If the United States dollar six month LIBOR is less than or equal to 5.75%, the fixed rate is
4.52%. If the United States dollar six month LIBOR is higher than 5.75%, then the fixed rate
would be the United States dollar six month LIBOR less 123 basis points. ,
  Foreign exchange rate fluctuation
    90




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##### Table of Contents



Item 12. Description of Securities Other than Equity Securities
  91




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##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
     92




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##### Table of Contents



Attestation Report of the Registered Public Accounting Firm
  Changes in Internal Control Over Financial Reporting
  93




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control 
Integrated Framework
    Internal Control
 Integrated Framework
  / s/ Deloitte Hadjipavlou, Sofianos & Cambanis S.A.Athens, Greece 
June 17, 2009 94




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##### Table of Contents



Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  
 Item 16C. Principal Accountant Fees and Services
  2008
    
    
    2007Audit fees
    
    $
    661
    
    
    $
    607Further assurance/audit related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    Other fees
    
    
    
    
    
    
    Total
    
    $
    661
    
    
    $
    607
 (1) Audit fees
  (2) Further Assurance /Audit Related Fees
  (3) Tax Fees
  (4) Other Fees
  Non-audit services
     95




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##### Table of Contents



Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  96




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##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 Number
    
    Description1.1
    
    
    Amended and Restated Articles of Incorporation of the Company*1.2
    
    
    Amended and Restated Bylaws of the Company*4.1
    
    
    Amended and Restated Management Agreement between the Company and Stealth
Maritime S.A., as amended***4.2
    
    
    Form of Right of First Refusal among the Company, Harry Vafias and Stealth
Maritime S.A.*4.3
    
    
    StealthGas Inc.s 2005 Equity Compensation Plan, amended and restated*****4.4
    
    
    Loan Agreement with Fortis Bank (Nederland) N.V. and Deed of Release of
Security and Obligations*4.5
    
    
    Loan Agreement, dated December 5, 2005 with DnB Nor Bank ASA**4.6
    
    
    Supplemental Agreement, dated February 27, 2006, with DnB Nor Bank ASA**4.7
    
    
    Loan Agreement, dated May 17, 2006, with Fortis Bank-Athens Branch***4.8
    
    
    Loan Agreement, dated June 28, 2006, with DnB Nor Bank ASA***4.9
    
    
    Letter Agreement, dated August 2, 2006, with Nike Investments Corporation,
as amended***4.10
    
    
    Memorandum of Agreement, dated March 30, 2007, for the Gas Kalogeros***4.11
    
    
    Memorandum of Agreement, dated March 30, 2007, for the Gas Sikousis***4.12
    
    
    Promissory Note dated May 16, 2007 issued in favor of Brave Maritime Corp.***4.13
    
    
    Second Supplemental Agreement, between Empire Spirit Ltd., Independent
Trader Ltd., Triathlon Inc., Soleil Trust Inc., Jungle Investment Limited
and Northern Yield Shipping Limited and DnB NOR Bank ASA, dated January 30,
2007****4.14
    
    
    Loan Agreement, dated as of June 21, 2007, between StealthGas Inc., as
borrower, Scotiabank (Ireland) Limited, as lender, Scotiabank Europe plc, as
security trustee, and The Bank of Nova Scotia, as swap bank*****4.15
    
    
    Supplemental Agreement, dated January 8, 2008, between StealthGas Inc., as
borrower, Scotiabank (Ireland) Limited, as lender, Scotiabank Europe plc, as
security trustee, and The Bank of Nova Scotia, as swap bank*****4.16
    
    
    Memorandum of Agreement, dated February 29, 2008, for the Gas Defiance*****4.17
    
    
    Memorandum of Agreement, dated February 29, 2008, for the Gas Shuriken*****4.18
    
    
    Memorandum of Agreement, dated February 29, 2008, for the Gas Astrid*****4.19
    
    
    Memorandum of Agreement, dated February 29, 2008, for the Gas Exelero*****4.20
    
    
    Memorandum of Agreement, dated February 29, 2008, for the Gas Natalie****4.21
    
    
    Loan Agreement, dated July 30, 2008, between StealthGas Inc., as borrower,
and National Bank of Greece, as lender4.22
    
    
    Loan Agreement, dated August 28, 2008, between StealthGas Inc., as borrower,
and Emporiki Bank of Greece, S.A., as lender4.23
    
    
    Third Supplemental Agreement, dated March 14, 2008, Empire Spirit Ltd.,
Independent Trader Ltd., Triathlon Inc., Soleil Trust Inc., Jungle
Investment Limited and Northern Yield Shipping Limited, as joint and several
borrowers, and DnB NOR Bank ASA, as lender4.24
    
    
    Loan Agreement, dated January 30, 2009, between Casteli Castle Inc., as
borrower, DnB NOR Bank ASA, as lender, DnB NOR Bank ASA, as Agent, Account
Bank and Security Trustee, and DnB NOR Bank ASA as Swap Bank
 97




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##### Table of Contents



Number
    
    Description4.25
    
    
    Loan Agreement, dated February 12, 2008, between StealthGas Inc., as
borrower, and Deutsche Bank AG Filiale Deutschlandgeschaft, as lender4.26
    
    
    Loan Agreement, dated February 19, 2009, between EFG Eurobank Ergasias S.A.,
as lender, and StealthGas Inc., as borrower4.27
    
    
    Loan Agreement, dated February 18, 2009, between StealthGas Inc., as
borrower, DVB Bank S.E., Nordic Branch, as lender, and DVB BANK S.E., Nordic
Branch as Arranger, Agent, Security Trustee and Swap Bank8
    
    
    Subsidiaries11.1
    
    
    Code of Business Conduct and Ethics***12.1
    
    
    Certification of the Chief Executive Officer12.2
    
    
    Certification of the Chief Financial Officer13.1
    
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section
1350 as added by Section 906 of the Sarbanes-Oxley Act of 200213.2
    
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section
1350 as added by Section 906 of the Sarbanes-Oxley Act of 200215.1
    
    
    Consent of Independent Registered Public Accounting Firm
 
 *
    
    Previously filed as an exhibit to the Companys Registration Statement on Form F-1 (File No.
333-127905) filed with the SEC and hereby incorporated by reference to such Registration
Statement.**
    
    Previously filed as an exhibit to the Companys Annual Report on Form 20-F for the year ended
December 31, 2005 filed with the SEC on April 20, 2006.***
    
    Previously filed as an exhibit to the Companys Annual Report on Form 20-F for the year ended
December 31, 2006 filed with the SEC on June 5, 2007.****
    
    Previously filed as an exhibit to the Companys Report on Form 6-K filed with the SEC on July
17, 2007.*****
    
    Previously filed as an exhibit to the Companys Annual Report on Form 20-F for the year
ended December 31, 2007 filed with the SEC on June 11, 2008. 98




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SIGNATURES
  STEALTHGAS INC.By:
    /s/ Harry N. VafiasName:
    Harry N. VafiasTitle:
    President and Chief Executive Officer  99




---



##### 



StealthGas
    Inc.
    Consolidated Financial Statements
   Index to
    consolidated financial statements
   
 PagesConsolidated Balance Sheets 
    December 31, 2007 and December 31, 2008

F-3Consolidated Statements of Income for the years
    ended December 31, 2006, 2007 and 2008

F-4Consolidated Statements of Cash Flows for the
    years ended December 31, 2006, 2007 and 2008

F-5Consolidated Statement of Changes in
    Stockholders Equity for the years ended December 31,
    2006, 2007 and 2008

F-6Notes to the Consolidated Financial Statements

F-7  F-34   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          Internal Control  Integrated Framework
     F-2




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##### Table of Contents



StealthGas
    Inc.Consolidated Balance Sheets
 December 31, 2007 and 2008 (Expressed in United
    States Dollars, except for share data)
   December 31,Note

2007


2008AssetsCurrent assetsCash and cash equivalents






33,114,872



41,848,059Trade and other receivables






2,349,275



2,325,438Claims receivable






46,070



607,306Inventories


4



836,365



1,254,142Advances and prepayments






212,919



812,654Restricted cash






7,727,272



3,672,439Vessels held for sale






25,210,568



Fair value of derivatives


13







1,938,480Total current assets






69,497,341



52,458,518Non current assetsAdvances for vessel under construction and acquisitions


5



12,450,000



23,009,597Vessels, net


6



395,095,322



551,771,040Other receivables










246,219Restricted cash






200,000



600,000Deferred finance charges, net of accumulated amortization of
    $162,132 and $267,118


7



350,663



550,226Fair value of derivatives


13







5,711,523Total non current assets






408,095,985



581,888,605Total assets






477,593,326



634,347,123Liabilities and Stockholders EquityCurrent liabilitiesPayable to related party


3



7,846,691



2,407,377Trade accounts payable






3,406,421



3,256,175Other accrued liabilities


8



3,928,028



4,518,097Customer deposits


11







1,436,369Deferred income


10



3,972,370



4,776,359Current portion of long-term debt


12



14,719,156



24,380,554Current portion of long-term debt associated with vessel held
    for sale


12



3,500,000



Total current liabilities






37,372,666



40,774,931Non current liabilitiesFair value of derivatives


13



3,288,989



12,762,979Customer deposits


11



5,174,093



3,467,017Fair value of below market acquired time charter


9



1,187,417



181,552Long-term debt


12



127,539,373



259,313,319Total non current liabilities






137,189,872



275,724,867Total liabilities






174,562,538



316,499,798Commitments and contingencies


21







Stockholders equityCapital stock5,000,000 preferred shares authorized and zero outstanding with
    a par value of $0.01 per share 100,000,000 common shares
    authorized 22,284,105 and 22,310,110 shares issued and
    outstanding with a par value of $0.01 per share


14



222,841



223,101Additional paid-in capital


14



281,612,867



283,526,241Retained earnings






21,650,412



34,910,189Accumulated other comprehensive (loss)






(455,332
)


(812,206
)Total stockholders equity






303,030,788



317,847,325Total liabilities and stockholders equity






477,593,326



634,347,123    F-3




---



##### Table of Contents



StealthGas
    Inc.Consolidated Statements of Income
 (Expressed in United States Dollars, except for share
    data)
   December 31,Note

2006


2007


2008RevenuesVoyage revenues






73,259,369



89,995,123



112,551,901ExpensesVoyage expenses


18



6,213,804



5,369,546



6,180,754Vessels operating expenses


18



19,474,344



25,435,578



32,178,385Dry-docking costs






2,243,395



314,181



1,112,992Management fees


3



3,068,609



4,126,610



4,618,025General and administrative expenses






3,457,688



5,024,912



4,772,615Depreciation


6



13,058,316



16,546,692



23,283,393Net gain on sale of vessels














(1,673,321
)Total expenses






47,516,156



56,817,519



70,472,843Income from operations






25,743,213



33,177,604



42,079,058Other income and (expenses)Interest and finance costs






(7,705,602
)


(9,831,404
)


(9,962,504
)Change in fair value of derivatives






(192,664
)


(2,573,992
)


(2,713,055
)Interest income






735,090



1,888,070



743,193Foreign exchange loss






(87,528
)


(122,171
)


(159,208
)Other expenses, net






(7,250,704
)


(10,639,497
)


(12,091,574
)Net income






18,492,509



22,538,107



29,987,484Earnings per share Basic






1.31



1.26



1.36 Diluted






1.31



1.26



1.35Weighted average number of shares Basic






14,161,096



17,900,576



22,130,542 Diluted






14,161,096



17,943,346



22,182,118    F-4




---



##### Table of Contents



StealthGas
    Inc.Consolidated Statements of Cash Flows
 (Expressed in United States Dollars)
   December 31,2006


2007


2008Cash flows from operating activitiesNet income


18,492,509



22,538,107



29,987,484Items included in net income not affecting cash flows:Depreciation and amortization of finance charges


13,104,396



16,621,400



23,388,379Amortization of fair value of time charter


(1,835,672
)


(1,377,146
)


(1,005,865
)Net (income) of vessel acquired from the Vafias Group


(99,870
)






Stock based compensation






1,324,743



1,913,634Change in fair value of derivatives


192,664



2,573,992



1,467,113Gain on sale of vessels










(1,673,321
)Changes in operating assets and liabilities:(Increase)/decrease inTrade and other receivables


(1,083,315
)


(1,252,630
)


(222,382
)Claims receivable


(454,148
)


(26,041
)


(561,236
)Inventories


(347,250
)


(89,491
)


(417,777
)Advances and prepayments


(109,276
)


57,451



(599,735
)Increase/(decrease) inPayable to related party


648,619



5,648,235



(5,439,314
)Trade accounts payable


1,064,459



1,356,965



(150,246
)Other accrued liabilities


3,046,448



(753,460
)


590,069Deferred income


605,420



1,082,372



803,989Net cash provided by operating activities


33,224,984



47,704,497



48,080,792Cash flows from investing activitiesInsurance proceeds


164,226



269,893



Advances for vessel under construction and acquisitions


(3,483,750
)


(12,450,000
)


(23,009,597
)Proceeds from sale of vessels










26,883,889Acquisition of vessels


(78,279,709
)


(133,846,574
)


(167,509,111
)(Increase)/decrease in restricted cash account


(2,683,135
)


(3,609,934
)


3,654,833Net cash (used in) investing activities


(84,282,368
)


(149,636,615
)


(159,979,986
)Cash flows from financing activitiesCapital stock


4,000



76,601



Additional paid-in capital


5,012,000







Follow-on offering






129,528,000



Underwriters over allotment option exercised






8,277,289



Stock issuance costs






(8,122,546
)


Deemed dividends


(287,500
)






Dividends paid


(10,650,000
)


(13,714,540
)


(16,727,707
)Deferred finance charges


(110,000
)


(145,795
)


(304,549
)Overdraft facility


(200,000
)






Customer deposits


1,983,272



3,190,821



(270,707
)Loan repayment


(57,187,760
)


(48,757,211
)


(23,866,656
)Proceeds from short-term bridge facility






26,500,000



Proceeds from long-term debt


100,430,000



27,067,500



161,802,000Net cash provided by financing activities


38,994,012



123,900,119



120,632,381Net (decrease)/increase in cash and cash equivalents


(12,063,372
)


21,968,001



8,733,187Cash and cash equivalents at beginning of year


23,210,243



11,146,871



33,114,872Cash and cash equivalents at end of year


11,146,871



33,114,872



41,848,059Supplemental Cash Flow Information:Cash paid during the period for interest, net of amounts
    capitalized


5,968,892



9,329,123



10,744,000Non cash items:Fair value of below market acquired time charter


1,982,000



1,572,000



    F-5




---



##### Table of Contents



StealthGas
    Inc.Consolidated Statement of Changes in
    Stockholders Equity
 For the years ended December 31, 2006, 2007 and
    2008
 (Expressed in United States Dollars, except share data)
   CapitalstockNumber





Additional





Accumulatedof





Paid-in





OtherComprehensive


Shares


Amount


Capital


Retained


ComprehensiveIncome


(Note 14)


(Note 14)


(Note 14)


Earnings


Income/(Loss)


TotalBalance as of January 1, 2006






14,000,000



140,000



145,883,121



5,084,206







151,107,327Additional Paid-in Capital






400,000



4,000



5,012,000











5,016,000Deemed dividends














(287,500
)










(287,500
)Dividends paid ($0.75 per share per year)


















(10,650,000
)






(10,650,000
)Less: Vafias Group of LPG carrier acquisition


















(99,870
)






(99,870
)Net income for the year


18,492,509















18,492,509







18,492,509Other comprehensive income Cash flow hedges:Swap contract


245,434



















245,434



245,434Reclassification adjustment


(21,672
)


















(21,672
)


(21,672
)Comprehensive income


18,716,271























Balance, December 31, 2006






14,400,000



144,000



150,607,621



12,826,845



223,762



163,802,228Follow-on public offering net of issuance cost






7,200,000



72,000



121,860,958











121,932,958Underwriters over-allotment option exercised net of
    issuance cost






460,105



4,601



7,821,785











7,826,386Issuance of restricted shares and and related stock based
    compensation






224,000



2,240



1,322,503











1,324,743Dividends paid ($0.75 per share per year)


















(13,714,540
)






(13,714,540
)Net income for the year


22,538,107















22,538,107







22,538,107Other comprehensive income Cash flow hedges:Swap contract


(628,334
)


















(628,334
)


(628,334
)Reclassification adjustment


(50,760
)


















(50,760
)


(50,760
)Comprehensive income


21,859,013























Balance, December 31, 2007






22,284,105



222,841



281,612,867



21,650,412



(455,332
)


303,030,788Issuance of restricted shares and and related stock based
    compensation






26,005



260



1,913,374











1,913,634Dividends paid ($0.75 per share per year)


















(16,727,707
)






(16,727,707
)Net income for the year


29, 987,484















29, 987,484







29, 987,484Other comprehensive income Cash flow hedges:Swap contract


(347,162
)


















(347,162
)


(347,162
)Reclassification adjustment


(9,712
)


















(9,712
)


(9,712
)Comprehensive income


29,630,610























Balance, December 31, 2008






22,310,110



223,101



283,526,241



34,910,189



(812,206
)


317,847,325    F-6




---



##### Table of Contents



StealthGas
    Inc.Notes to the consolidated financial
    statements
    (Expressed in United States Dollars)
   1.
    Basis of
    Presentation and General Information      LPG
    carriers
  Acquisition /Name of Company

Vessel Name

Disposition Date

cbmVCM Trading Ltd.

Ming Long

October 12, 2004


3,515.55Gaz De Brazil Inc.

Gas Prodigy

October 15, 2004


3,014.59LPGONE Ltd.

Gas Tiny

October 29, 2004


1,319.96Geneve Butane Inc.

Gas Courchevel

November 24, 2004


4,102.00Matrix Gas Trading Ltd.

Gas Shanghai

December 7, 2004


3,525.92Pacific Gases Ltd.

Gas Emperor

February 2, 2005


5,009.07Semichlaus Exports Ltd.

Gas Ice

April 7, 2005


3,434.08Ventspils Gases Ltd.

Gas Arctic

April 7, 2005


3,434.08Industrial Materials Inc.

Birgit Kosan

April 11, 2005


5,013.33Independent Trader Ltd.

Gas Oracle

April 26, 2005
    (sold on January 28, 2008)


3,014.59Aracruz Trading Ltd.

Gas Amazon

May 19, 2005


6,562.41Continent Gas Inc.

Gas Chios

May 20, 2005


6,562.09Empire Spirit Ltd.

Sweet Dream

May 31, 2005


5,018.35Jungle Investment Limited

Gas Cathar

July 27, 2005


7,517.18Northern Yield Shipping Ltd.

Gas Legacy

October 27, 2005


3,500.00Triathlon Inc.

Gas Marathon

November 2, 2005


6,572.20Iceland Ltd.

Gas Crystal

November 11, 2005


3,211.04Soleil Trust Inc.

Gas Sincerity

November 14, 2005


4,128.98East Propane Inc.

Catterick

November 24, 2005


5,001.41Petchem Trading Inc.

Gas Spirit

December 16, 2005


4,112.18Malibu Gas Inc.

Feisty Gas*

December 16, 2005


4,111.24Balkan Holding Inc.

Gas Czar

February 14, 2006


3,509.65Transgalaxy Inc.

Gas Fortune

February 24, 2006


3,512.78International Gases Inc

Gas Zael*

April 03, 2006


4,111.24Balkan Profit Ltd

Gas Eternity

March 09, 2006


3,528.21Oxfordgas Inc.

Lyne

May 19, 2006


5,013.90Energetic Peninsula Limited

Sir Ivor

May 26, 2006


5,000.00 F-7




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    1.
    Basis of
    Presentation and General
    Information  Continued  Acquisition /Name of Company

Vessel Name

Disposition Date

cbmOcean Blue Limited

Gas Nemesis

June 15, 2006
    (sold on January 29, 2008)


5,016.05Baroness Holdings Inc.

Batangas

June 30, 2006


3,244.04Evolution Crude Inc.

Gas Flawless

February 1, 2007


6,300.00Aura Gas Inc.

Sea Bird

May 18, 2007


3,518.00European Energy Inc.

Gas Renovatio

May 29, 2007
    (sold on March 19, 2008)


3,312.50Fighter Gas Inc.

Gas Icon

June 27, 2007


5,000.00Luckyboy Inc.

Chiltern

June 28, 2007


3,312.00Italia Trades Inc.

Gas Evoluzione

July 23, 2007


3,517.00Studio City Inc.

Gas Kalogeros

July 27, 2007


5,000.00Gastech Inc.

Gas Sikousis

August 03, 2007


3,500.00Espace Inc.

Gas Sophie

October 15, 2007


3,500.00Cannes View Inc.

Gas Haralambos

October 30, 2007


7,000.00Ecstasea Inc.

Gas Premiership

March 19, 2008


7,200.00Spacegas Inc.

Gas Defiance

August 1, 2008


5,000.00Financial Power Inc.

Gas Shuriken

November 3, 2008


5,000.00   Name of Company

Vessel Name

To be delivered on

cbmTankpunk Inc.

Gas Natalie

January 2009


3,213.92Sound Effex Inc.

Gas Astrid

April 2009


3,500.00Revolution Inc.

Gas Exelero

June 2009


3,500.00Pelorus Inc.

Hull K 421**

September 2010


5,000.00Rising Sun Inc.

Hull K 422**

November 2010


5,000.00Carinthia Inc.

Hull K 423

March 2011


5,000.00Tatoosh Beauty Inc.

Hull K 424**

July 2011


7,500.00Octopus Gas Inc.

Hull K 425**

December 2011


7,500.00   M.R.
    type product carriers
  Name of Company

Vessel Name

Acquisition Date

dwtClean Power Inc.

Navig8 Fidelity

January 9, 2008


46,754.29MR Roi Inc.

Navig8 Faith

February 27, 2008


46,754.29   Name of Company

Vessel Name

To be delivered on

dwtKing of Hearts Inc.

Stealth SV

June 2009


47,000.00Castell Castle Inc.

Stealth Argentina

November 2009


50,500.00     *
    
    On April 3, 2006, the
    Feisty Gas was delivered to International Gases
    Inc., subsidiary of StealthGas Inc., and renamed to Gas
    Zael.**
    
    The deliveries dates have been
    subsequently changed. See note 22f. F-8




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    1.
    Basis of
    Presentation and General
    Information  Continued       Year ended December 31,Charterer

2006


2007


2008A


23
%


27
%


22
%B


27
%


21
%


21
%C


10
%


20
%


20
%    2.
    Significant
    Accounting Policies  Principles of Consolidation:
  Use of Estimates:
  Other Comprehensive Income:
  Foreign Currency Translation:
  Cash and Cash Equivalents:
  Restricted Cash:
 F-9




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued  Trade Receivables:
  Claims Receivable:
  Trade Accounts Payable:
  Segmented Reporting:
  Inventories: first-in,
  Vessels Acquisitions:
    Impairment of Long-lived Assets:
 F-10




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued          Vessels Depreciation:
  Assets held for sale:
  Accounting for Special Survey and Dry-docking
    Costs:
  Deferred Finance Charges:
 F-11




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued  Pension and Retirement Benefit Obligations 
    Crew:
  Accounting for Revenue and Related
    Expenses:
        Leasing:
  Stock Incentive Plan: time-based
  Earnings per Share:
 F-12




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued  Income Taxes:
  Derivatives:
      Fair Value Measurements:
 F-13




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued    157-2,
  Recent Accounting Pronouncements:
       F-14




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    2.
    Significant
    Accounting Policies  Continued  structure-one
    EITF 03-6-1 EITF 03-6-1). EITF 03-6-1
  3.
    Transactions
    with Related Party   F-15




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    3.
    Transactions
    with Related Party  Continued      ship-management
        60-day
     F-16




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    3.
    Transactions
    with Related Party  Continued    4.
    Inventories    December 31,2007


2008Bunkers


101,050



384,481Lubricants


735,315



869,661Total


836,365



1,254,142    5.
    Advances
    for Vessels Under Construction and Acquisitions    Balance, December 31, 2007


12,450,000Advances for vessels acquisitions


11,500,000Advances for vessels under construction


11,120,002Capitalized interest


389,595Vessels delivered


(12,450,000
)Balance, December 31, 2008


23,009,597          F-17




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    5.
    Advances
    for Vessels Under Construction and
    Acquisitions  Continued    6.
    Vessels,
    net  AccumulatedVessel cost


Depreciation


Net Book ValueBalance, December 31, 2007


428,842,324



(33,747,002
)


395,095,322Acquisitions


179,959,111







179,959,111Depreciation for the period






(23,283,393
)


(23,283,393
)Balance, December 31, 2008


608,801,435



(57,030,395
)


551,771,040       7.
    Deferred
    Finance Charges    8.
    Accrued
    Liabilities    December 31,2007


2008Interest on long-term debt


1,745,707



1,875,515Administrating expenses


540,503



202,904Vessels operating and voyage expenses


1,641,818



2,439,678Total


3,928,028



4,518,097   F-18




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
   9.
    Fair
    Value of Acquired Time Charter    TotalFair value


accumulated





Amortizationof


amortization


Unamortized


for the period


UnamortizedAcquired


as at


balance as at


ended


balance as atEnd of Time

Time


December 31,


December 31,


December 31,


December 31,Vessel

Charter

Charter


2007


2007


2008


2008Fair value of acquired time charter  LiabilitySir Ivor

April 2009


479,000



(262,417
)


216,584



(164,460
)


52,125Lyne

April 2009


483,000



(266,035
)


216,965



(164,751
)


52,214Gas Pasha

June 2008


340,000



(255,349
)


84,651



(84,651
)


Sea Bird II

May 2009


409,000



(127,007
)


281,992



(204,779
)


77,213Gas Renovatio

January 2008


310,000



(271,093
)


38,907



(38,907
)


Chiltern

March 2008


300,000



(201,444
)


98,556



(98,556
)


Gas Kalogeros

May 2008


411,000



(231,280
)


179,720



(179,720
)


Gas Sikousis

May 2008


142,000



(71,959
)


70,041



(70,041
)


Total




2,874,000



(1,686,583
)


1,187,417



(1,005,865
)


181,552    10.
    Deferred
    Income    11.
    Customer
    Deposits         F-19




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
   12.
    Long-term
    Debt  December 31,


Movement in 2008


December 31,2007


Additions


Repayments


2008Fortis Bank


62,705,000







(6,069,720
)


56,635,280DnB Nor Bank


76,556,015



15,750,000



(12,166,436
)


80,139,579Scotia Bank


6,497,514



43,125,000



(3,755,500
)


45,867,014Deutsche Bank






40,250,000



(1,875,000
)


38,375,000National Bank of Greece






33,240,000







33,240,000Emporiki Bank






29,437,000







29,437,000Total


145,758,529



161,802,000



(23,866,656
)


283,693,873   (a)
         F-20




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    12.
    Long-term
    Debt  Continued  (b)
            (c)
   F-21




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    12.
    Long-term
    Debt  Continued      (d)
        (e)
 F-22




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    12.
    Long-term
    Debt  Continued  forty-seven
      (f)
      (g)
 F-23




---



##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    12.
    Long-term
    Debt  Continued              Year ended

Amount2009


24,380,5542010


23,423,2862011


23,423,2862012


23,423,2862013


23,423,286Thereafter


165,620,175Total


283,693,873   F-24




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
   13.
    Interest
    Rate Swap Agreements  Foreign Currency
    Contract  Fair Value - Asset(Liability)Counter

Notional






Fixed Rate


December 31,Swap

party

Amount


Effective Date

Maturity Date

Payable


2007


2008(i)

Fortis


19,456,000


May 30, 2007

May 31, 2013


4.55
%


(311,570
)


(977,507
)(ii)

Fortis


38,725,780


January 17, 2008

February 18, 2013


3.66
%






(2,411,925
)(iii)

DnB


16,020,000


March 9, 2006

March 9, 2016


4.52
%


(262,000
)


(1,714,432
)(iv)

DnB


25,000,000


September 11, 2006

September 9, 2011


5.42
%


(1,185,670
)


(2,629,047
)(v)

DnB


25,000,000


September 11, 2007

September 11, 2012


5.58
%


(1,529,749
)


(3,496,242
)(vi)

Deutsche


38,375,000


March 20, 2008

February 19, 2013


3.09
%






(1,533,826
)(3,288,989
)


(12,762,979
)Foreign
    Currency
    Contract

Deutsche


















7,650,003(3,288,989
)


(5,112,976
)       floating-to-fixed
     F-25




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    13.
    Interest
    Rate Swap Agreements  Foreign Currency
    Contract  Continued  Fair Value Disclosures:
              Fair Value Measurements UsingQuoted PricesFair Value


in Active


Significant


Significantas of


Markets for


Other


UnobservableDecember 31,


Identical Assets


Observable


InputsDescription

2008


(Level 1)


Inputs (Level 2)


(Level 3)Assets/(Liabilities):Foreign Currency Contract


7,650,003







1,135,480



6,514,523Interest Rate Swap Agreements


(12,762,979
)






(12,762,979
)


Total


(5,112,976
)






(11,627,499
)


6,514,523      F-26




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    13.
    Interest
    Rate Swap Agreements  Foreign Currency
    Contract  Continued      Fair Value Measurements UsingSignificant Unobservable Inputs(Level 3)Foreign Currency ContractsBeginning balance, August 6, 2008


Total unrealized gainIncluded in earnings


6,514,523Balance, December 31, 2008


6,514,523The amount of total gains for the period included in earnings
    attributable to the change in unrealized gains relating to
    assets Still held at the reporting date


6,514,523    14.
    Common
    Stock and Additional Paid-in Capital           F-27




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
   15.
    Equity
    Compensation Plan                 F-28




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    15.
    Equity
    Compensation Plan  Continued  Share-Based Payment
      Weighted average grantNumber of


date fair value perrestricted shares


non-vested shareNon-vested, January 1, 2008


170,000



16.34Granted


26,005



13.52Vested


(83,000
)


16.34Forfeited






Non-vested, December 31, 2008


113,005



15.69     16.
    Earnings
    per share   F-29




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    16.
    Earnings
    per share  Continued    Year ended December 31,2006


2007


2008Net income


18,492,509



22,538,107



29,987,484Basic Weighted average shares  outstanding


14,161,096



17,900,576



22,130,542Effect on dilutive securities:Non-vested restricted shares






42,770



51,576Diluted Weighted average shares  outstanding


14,161,096



17,943,346



22,182,118Basic earnings per share


1.31



1.26



1.36Diluted earnings per share


1.31



1.26



1.35    17.
    Dividends
    Paid          18.
    Voyage
    Expenses and Vessel Operating Expenses    Year ended December 31,Voyage Expenses

2006


2007


2008Port expenses


1,330,146



1,227,235



773,058Bunkers


2,631,535



1,546,050



2,265,062Commissions charged by third parties


1,266,939



1,397,945



1,598,447Commissions charged by related party


882,589



1,096,426



1,385,767Other voyage expenses


102,595



101,890



158,420Total


6,213,804



5,369,546



6,180,754   F-30




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    18.
    Voyage
    Expenses and Vessel Operating
    Expenses  Continued  Year ended December 31,Vessels Operating Expenses

2006


2007


2008Crew wages and related costs


10,552,858



14,009,471



19,227,571Insurance


1,611,013



1,561,173



1,497,568Repairs and maintenance


2,125,502



3,386,081



4,104,822Spares and consumable stores


3,596,043



4,185,461



4,967,128Miscellaneous expenses


1,588,928



2,293,392



2,381,296Total


19,474,344



25,435,578



32,178,385    19.
    Income
    Taxes  and/or
      20.
    Financial
    Instruments   F-31




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
   21.
    Commitments
    and Contingencies  
    From time to time the Company expects to be subject to legal
    proceedings and claims in the ordinary course of its business,
    principally personal injury and property casualty claims. Such
    claims, even if lacking merit, could result in the expenditure
    of significant financial and managerial resources. The Company
    is not aware of any current legal proceedings or claims.  
    In January 2005, the Company entered into a three-year
    cancelable operating lease for its office facilities that
    terminates in January 2008. In January 2008, the Company entered
    into a new two-year cancelable operating lease for its office
    facilities that terminates in January 2010. Rental expense for
    the years ended December 31, 2006, 2007 and 2008 was
    $30,022, $33,388 and $48,201, respectively. In October 2005, the
    Company entered into a three-year cancelable operating lease for
    an armored car that terminates in October 2008. In October 2008
    the Company entered into a new three-year cancelable operating
    lease for an armored car that terminates in October 2011. Rental
    expense for the years ended December 31, 2006, 2007 and
    2008 was $43,049, $46,642 and $50,016, respectively.    December 31,

Office Lease


Car Rent


Total2009


45,075



48,174



93,2492010






48,174



51,9302011






40,145



40,14545,075



136,493



185,324   
    As described in Note 5, as of December 31, 2008 the
    Company has long-term outstandings commitments for installment
    payments for five vessels under construction, as follows:  Year ended

Shipbuilding Contracts2009


12,596,2242010


43,337,8072011


57,431,984Total


113,366,015   As of December 31, 2008, the Companys long term
    obligations due under the shipbuilding contracts with Mitsubishi
    Corporation of Japan totaled to JPY10,807,200,000 were converted
    to US Dollars based upon the foreign currency forward
    contracts entered into by the Company and the prevailing USD/JPY
    exchange rate as at December 31, 2008. The total obligation
    under these contracts was $113,366,015.Based upon the above the average prevailing USD/JPY exchange
    rate used for the calculation of the total obligation was 95.33
    JPY to $1.  
    Future minimum contractual charter revenue, based on vessels
    committed to noncancelable, long-term time and bareboat charter
    contracts as of December 31, 2008, will be $62,643,000
    during 2009, $56,657,750 during 2010, $36,559,000 during 2011,
    $21,456,150 during 2012 and $11,608,800 during 2013. These
    amounts do not include any assumed off-hire. F-32




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    22.
    Subsequent
    Events  (a)
    On January 22, 2009, the Company took delivery of the
    Gas Natalie.(b)
    On January 30, 2009, the Company entered into a $43,000,000
    facility agreement with DnB NOR Bank. to partially finance the
    acquisition of one under construction M.R. type product carrier
    named Stealth Argentina (formerly Hull No
    061) to be constructed in Korea for delivery in the fourth
    quarter of 2009. The senior secured term loan facility will be
    the lesser of the amount of $43,000,000 and the 75% of the
    vessels charter free market value at the time of delivery.
    The term loan will be drawn down in one tranche upon the
    delivery of the vessel, which is expected in November 2009, and
    will be repayable, with the first installment commencing six
    months after the drawdown in eight consecutive semi-annual
    installments of $1,700,000 each and eight consecutive
    semi-annual installments of $1,300,000 each plus a balloon
    payment of $19,000,000 payable together with the last
    installment. The term loans interest rate is LIBOR plus
    2.0%. In addition to a first priority mortgage over the vessel,
    the term loan is secured by the assignment of the vessels
    insurances, earnings, operating and retention accounts and the
    guarantee of the ship owning subsidiary.(c)
    On February 18, 2009, the Company entered into an up to
    $33,880,000 facility agreement with DVB Bank SE Nordic Branch to
    partially finance the acquisition of a second-hand and two under
    construction LPG carriers, named Chiltern, Gas
    Astrid (formerly Hull K411) and Gas
    Exelero (formerly Hull K412), respectively, by
    three of the Companys wholly owned subsidiaries. The
    senior secured term loan facility will be the lesser of the
    amount of $33,880,000 and the 70% of the vessels charter
    free market value at the time of delivery. The term loan will be
    drawn down in two tranches upon the delivery of each vessel. The
    first tranche amounted to $19,250,000 was drawn down on
    April 16, 2009 and the second tranche of $12,950,000 is
    expected in June 2009. The total facility of $32,200,00 will be
    repayable, with the first installment commencing three months
    after the drawdown, in twenty consecutive quarterly installments
    of $628,541 each plus a balloon payment of $19,629,180 payable
    together with the last installment. The term loans
    interest rate is LIBOR plus 2.85%. In addition to a first
    priority mortgage over the vessels, the term loan is secured by
    the assignment of the vessels insurances, earnings,
    operating and retention accounts and the guarantee of the ship
    owning subsidiary.(d)
    On February 19, 2009, the Company entered into a
    $37,500,000 facility agreement with EFG Eurobank Ergasias S.A.
    to partially finance the acquisition of the under construction
    M.R. type product carrier named Stealth SV (formerly
    Hull No. 2139). Following a revaluation of the
    vessel on April 13, 2009, the senior secured term loan
    facility will be the lesser of the amount of $31,500,000 and the
    75% of the vessels charter free market value at the time
    of delivery. The term loan will be drawn down in one tranche
    upon the delivery of the vessel, which is expected in June 2009,
    and will be repayable, with the first installment commencing
    three months after the drawdown in ten consecutive quarterly
    installments of $650,000 each and thirty consecutive quarterly
    installments of $420,000 each plus a balloon payment of
    $12,400,000 payable together with the last installment. The term
    loans interest rate is LIBOR plus 2.50%. In addition to
    first priority mortgage over the vessel, the term loan is
    secured by the assignment of this vessels insurances,
    earnings, operating and retention accounts and the guarantee of
    the ship owning subsidiary.(e)
    On February 19, 2009 the Companys Board of Directors
    declared a cash dividend of $0.1875 per common share, payable on
    March 9, 2009 to stockholders of record on March 2,
    2009. The total amount of $4,183,146 was paid on March 6,
    2009. F-33




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##### Table of Contents



StealthGas
    Inc.
    Notes to the consolidated financial statements
    (Expressed in United States Dollars)
    22.
    Subsequent
    Events  Continued   (f)
    On February 27, 2009 the Company signed an agreement with
    the shipyard Mitsubishi Corporation of Japan which extends some
    installment payments and amends the initial deliveries of the
    under construction vessels. The new delivery dates are for Hull
    K421 between June and July, 2011, for Hull K422 in February,
    2011, for Hull K424 between April and May, 2012 and for Hull
    K425 between October and November, 2011.(g)
    On March 9, 2009, the bareboat charterer of the Gas Ice,
    Societa Cooperative di Navigazione a.r.l.
    G.Giulietti of Genoa Italy, improperly terminated
    the bareboat charter signed with them on September 13,
    2007. The Company is currently exploring all legal means at its
    disposal with respect to such actions by G. Giulietti, and the
    Company has already had vessels owned or controlled by G.
    Giulietti arrested as a means of securing monies owed to the
    Company as a consequence of the improper termination of the
    bareboat charter. As of December 31, 2008 all outstanding
    bareboat charter payments have been received in full from G.
    Giulietti.(h)
    On April 16, 2009, the Company took delivery of the
    Gas Astrid.(i)
    On May 19, 2009 the Company concluded a memorandum of
    agreement for the disposal of the vessel Gas Sophie
    to an unaffiliated third party for $6,500,000. The vessel was
    delivered to her new owners on June 10, 2009 and the
    Company realized a loss from the sale of the above vessel of
    $791,498 which will be included in the Companys
    consolidated statement of income in the second quarter of 2009.(j)
    On May 25, 2009, the Company signed a commitment letter
    with NIBC, secured by the Gas Haralambos, Gas Spirit and the Gas
    Natalie, three vessels already owned by three of the
    Companys wholly-owned subsidiaries. The senior secured
    term loan facility will be the lesser of the amount of
    $26,700,000 or 65% of the vessels market value at the time
    of delivery and will be drawn down in three tranches up to July
    2009 in connection with the part funding of deposits required
    for vessels under construction as ordered by the Company. The
    term loan is repayable in five semi-annual installments of
    $1,637,634 each and five semi-annual installments of $1,077,634
    each plus a balloon payment of $13,123,660 payable together with
    the last installment. The term loans interest rate is
    LIBOR plus 3.00%. In addition to first priority mortgages over
    the Gas Haralambos, Gas Spirit and the Gas Natalie, the term
    loan is secured by the assignment of these vessels
    insurances, earnings and operating and retention accounts and
    the guarantee of the ship owning subsidiaries. F-34