Table of Contents

|  |
|--|
|  |
|  |
|  |
|  |

UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM20-F

|        |                                                                                             |
|--------|---------------------------------------------------------------------------------------------|
|   | REGISTRATIONSTATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THESECURITIESEXCHANGE ACT OF 1934 |

OR

|        |                                                                                    |
|--------|------------------------------------------------------------------------------------|
|   | ANNUAL REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December31,  2005

OR

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |

OR

|        |                                                                                            |
|--------|--------------------------------------------------------------------------------------------|
|   | SHELLCOMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIESEXCHANGE ACT OF 1934. |

Commission file number000-51559

STEALTHGAS INC.

(Exact name of Registrant as specified inits charter)

Republic of the Marshall Islands

(Jurisdiction of incorporation ororganization)

331 Kifissias Avenue, Erithrea 14561Athens, Greece

(Address of principalexecutive offices)

SECURITIES REGISTEREDPURSUANT TO SECTION 12(b) OF THE ACT:

|                    |  |                                          |  |  |  |  |
|--------------------|--|------------------------------------------|--|--|--|--|
| Titleof each class |  | Name of each exchange on whichregistered |
| N/A                |  | N/A                                      |
|                    |

SECURITIES REGISTEREDPURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock,par value $0.01 per share

SECURITIES FOR WHICHTHERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d) OF THEACT:None

(Title of Class)

The number of outstanding shares of each of theissuer’s classes of capital or common stock as ofDecember  31,  2005 was:

|                                        |  |                                                            |  |  |  |  |
|----------------------------------------|--|------------------------------------------------------------|--|--|--|--|
| Common Stock, par value $0.01 pershare |  | 14,000,000         |
|                                        |

Indicateby check mark if the registrant is a well-known seasoned issuer, asdefined in Rule 405 of the Securities Act.  Yes  No

If this report is an annual or transitionreport, indicate by check mark if the registrant is not required tofile reports pursuant to Section 13 or 15(d) of the Securities ExchangeAct of 1934.  Yes  No

Note– Checking the box above will not relieve any registrant requiredto file reports pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90  days.

    Yes        No

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of ‘‘acceleratedfiler and large accelerated filer’’ in Rule 12b-2 of theExchange Act. (Check  one):

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |
|     Large acceleratedfiler |  |     Accelerated filer |  |     Non-acceleratedfiler |
|                                                |

Indicate by checkmark which financial statement item the registrant has elected tofollow.

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |
|     Item 17 |  |     Item18 |
|                                 |

If this is an annualreport, indicate by check mark whether the registrant is a shellcompany (as defined in Rule  12b-2 of the Exchange Act). Yes  No

|  |
|--|
|  |
|  |
|  |
|  |

----

TABLE OFCONTENTS

|                                                                                     |  |      |  |  |  |  |
|-------------------------------------------------------------------------------------|--|------|--|--|--|--|
|                                                                                |  | Page |
| FORWARD-LOOKING INFORMATION                                                         |  | 1    |
| PART I                                                                              |  | 2    |
| ITEM 1. IDENTITY OFDIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  | 2    |
| ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                     |  | 2    |
| ITEM 3. KEY INFORMATION                                                             |  | 2    |
| ITEM 4. INFORMATION ON THE COMPANY                                                  |  | 19   |
| ITEM 4A. UNRESOLVED STAFF COMMENTS                                                  |  | 28   |
| ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                |  | 28   |
| ITEM 6. DIRECTORS, SENIOR MANAGEMENT ANDEMPLOYEES                                   |  | 38   |
| ITEM 7. MAJOR SHAREHOLDERS ANDRELATED PARTY TRANSACTIONS                            |  | 42   |
| ITEM 8.FINANCIAL INFORMATION                                                        |  | 44   |
| ITEM 9. THE OFFERAND LISTING                                                        |  | 45   |
| ITEM 10. ADDITIONALINFORMATION                                                      |  | 46   |
| ITEM 11. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUTMARKET RISK                   |  | 59   |
| ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITYSECURITIES                      |  | 59   |
| PART II                                                                             |  | 60   |
| ITEM 13. DEFAULTS, DIVIDEND ARREARAGES ANDDELINQUENCIES                             |  | 60   |
| ITEM 14. MATERIALMODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OFPROCEEDS |  | 60   |
| ITEM 15. CONTROLS ANDPROCEDURES                                                     |  | 60   |
| ITEM 16A. AUDIT COMMITTEEFINANCIAL EXPERT                                           |  | 60   |
| ITEM 16B. CODE OFETHICS                                                             |  | 60   |
| ITEM 16C. PRINCIPAL ACCOUNTANTFEES AND SERVICES                                     |  | 61   |
| ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDITCOMMITTEES                  |  | 61   |
| ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATEDPURCHASERS      |  | 61   |
| PART III                                                                            |  | 62   |
| ITEM 17. FINANCIAL STATEMENTS                                                       |  | 62   |
| ITEM 18. FINANCIAL STATEMENTS                                                       |  | 62   |
| ITEM 19. EXHIBITS                                                                   |  | 62   |
|                                                                                     |

i

----

Table of Contents

FORWARD-LOOKINGINFORMATION

This Annual Report on Form 20-F includesassumptions, expectations, projections, intentions and beliefs aboutfuture events. These statements are intended as‘‘forward-looking statements.’’ We caution thatassumptions, expectations, projections, intentions and beliefs aboutfuture events may and often do vary from actual results and thedifferences can be material.

All statements in this documentthat are not statements of historical fact are forward-lookingstatements. Forward-looking statements include, but are not limited to,such matters as:

|  |              |                                       |
|--|--------------|---------------------------------------|
|  | •  | futureoperating or financial results; |

|  |              |                                          |
|--|--------------|------------------------------------------|
|  | •  | global and regional politicalconditions; |

|  |              |                                                                                                                       |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------|
|  | •  | statementsabout pending or recent acquisitions, business strategy and expectedcapital spending or operating expenses; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | competition in the marinetransportation industry; |

|  |              |                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | statements about shippingmarket trends, including charter rates, factors affecting supply anddemand and world fleet composition; |

|  |              |                                  |
|--|--------------|----------------------------------|
|  | •  | future LPG prices andproduction; |

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | future supplyand demand for LNG gas of which LPG is a byproduct; |

|  |              |                                                |
|--|--------------|------------------------------------------------|
|  | •  | our ability to obtainadditional financing; and |

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | expectations regarding vesselacquisitions. |

When used in this document, the words‘‘anticipate,’’‘‘believe,’’‘‘intend,’’‘‘estimate,’’‘‘project,’’‘‘forecast,’’ ‘‘plan,’’‘‘potential,’’‘‘will,’’ ‘‘may,’’‘‘should’’ and‘‘expect’’ reflect forward-looking statements.Such statements reflect our current views and assumptions and allforward-looking statements are subject to various risks anduncertainties that could cause actual results to differ materially fromexpectations. The factors that could affect our future financialresults are discussed more fully under Item 3 ‘‘KeyInformation — Risk Factors,’’ as well as elsewhere inthis Annual Report on Form 20-F and in our other filings with the U.S.Securities and Exchange Commission (‘‘SEC’’).We caution readers of this Annual Report not to place undue reliance onthese forward-looking statements, which speak only as of their dates.We undertake no obligation to publicly update or revise anyforward-looking statements.

1

----

Table of Contents

PART I

StealthGas Inc. is aMarshall Islands company that is referred to in this Annual Report onForm  20-F, together with its subsidiaries, as‘‘StealthGas,’’ ‘‘theCompany,’’ ‘‘we,’’‘‘us,’’ or ‘‘our.’’This report should be read in conjunction with our consolidatedfinancial statements and the accompanying notes thereto, which areincluded in Item 18 to this report.

|              |                                                      |
|--------------|------------------------------------------------------|
| Item1.  | Identity of Directors, Senior Management andAdvisers |

Not Applicable.

|              |                                         |
|--------------|-----------------------------------------|
| Item2.  | Offer Statistics and Expected Timetable |

Not Applicable.

|               |                |
|---------------|----------------|
| Item 3.  | KeyInformation |

Selected Consolidated Financial Data

Thefollowing table sets forth our selected consolidated financial data andother operating data. The table should be read together with‘‘Item 5. Operating and Financial Review andProspects.’’ The selected consolidated financial data ofStealthGas is a summary of, is derived from and is qualified byreference to, our consolidated financial statements and notes theretowhich have been prepared in accordance with U.S. generally acceptedaccounting principles, or US GAAP, and have been audited for the fiscalyears ended December  31,  2004 and December31,  2005 by Deloitte Hadjipavlou, Sofianos & Cambanis S.A.,or Deloitte.

During the course of 2005, we acquired a number ofship-owning companies from affiliated entities of the Vafias Group(‘‘The Vafias Group of LPG Carriers’’), whichis controlled by the Vafias family. Because the Company and the VafiasGroup are entities under common control, in accordance with US GAAP,the consolidated financial statements of the Company must be presentedas if the ship-owning companies acquired were consolidated subsidiariesof the Company as of the dates indicated in the notes in the financialstatements. Such accounting resulted in the retroactive restatement ofthe historical financial statements of the Company as if‘‘The Vafias Group of LPG Carriers’’ wereconsolidated subsidiaries of the Company for all periods presented.

Our audited consolidated statements of income, consolidatedstatements of cash flows and consolidated statements of changes inshareholders’ equity for the years ended December31,  2004 and 2005 and the consolidated balance sheets as ofDecember  31,  2004 and 2005, together with the notesthereto, are included in ‘‘Item 18. FinancialStatements’’ and should be read in their entirety.

2

----

Table of Contents

Selected Consolidated Financial and OtherData

|                                               |  |                                                              |           |                            |  |        |            |         |  |  |
|-----------------------------------------------|--|--------------------------------------------------------------|-----------|----------------------------|--|--------|------------|---------|--|--|
|                                          |  | Periodfrom October12, 2004 throughDecember 31,2004(restated) |           | Year endedDecember 31,2005 |
| INCOMESTATEMENTDATA                           |  |                                                         |      |                       |  |   |       |    |
| Revenues:                                     |  |                                                         |      |                       |  |   |       |    |
| Voyagerevenues                                |  | $                                                            | 2,048,006 |                       |  | $      | 36,644,591 |    |
| Operatingexpenses:                            |  |                                                         |      |                       |  |   |       |    |
| Voyage expenses                               |  |                                                         | 341,203   |                       |  |   | 2,688,155  |    |
| Vesselsoperating expenses                     |  |                                                         | 759,010   |                       |  |   | 9,095,576  |    |
| Dry-docking costs                             |  |                                                         | —   |                       |  |   | 470,384    |    |
| Management fees                               |  |                                                         | 111,540   |                       |  |   | 1,473,080  |    |
| General andadministrative expenses            |  |                                                         | 35,100    |                       |  |   | 779,539    |    |
| Depreciation                                  |  |                                                         | 264,458   |                       |  |   | 5,611,942  |    |
| Total expenses                                |  |                                                         | 1,511,311 |                       |  |   | 20,118,676 |    |
| Income from operations                        |  |                                                         | 536,695   |                       |  |   | 16,525,915 |    |
| Interest and finance costs, net               |  |                                                         | —   |                       |  |   | (2,685,207 | )  |
| Loss on derivative                            |  |                                                         | —   |                       |  |   | (67,000    | )  |
| Interestincome                                |  |                                                         | 47        |                       |  |   | 780,434    |    |
| Foreignexchange loss                          |  |                                                         | (5,534    | )                     |  |   | (18,091    | )  |
| Other expenses, net                           |  |                                                         | (5,487    | )                     |  |   | (1,989,864 | )  |
| Net income                                    |  | $                                                            | 531,208   |                       |  | $      | 14,536,051 |    |
| Earnings per share, basic anddiluted          |  | $                                                            | 0.09      |                       |  | $      | 1.84       |    |
| Weighted average number of shares outstanding |  |                                                         | 6,000,000 |                       |  |   | 7,906,849  |    |
|                                               |

|                                                |  |                 |             |         |  |        |              |         |  |  |
|------------------------------------------------|--|-----------------|-------------|---------|--|--------|--------------|---------|--|--|
|                                           |  | December31,     |
|                                           |  | 2004 (restated) |             | 2005    |
| BALANCESHEET DATA (at period end)              |  |            |        |    |  |   |         |    |
| Currentassets, including cash                  |  | $               | 1,316.069   |    |  | $      | 26,016,248   |    |
| Total assets                                   |  |            | 40,617,369  |    |  |   | 256,978,768  |    |
| Currentliabilities                             |  |            | 3,234,013   |    |  |   | 20,725,441   |    |
| Derivative liability                           |  |            | —     |    |  |   | 67,000       |    |
| Total long-term debt, including currentportion |  |            | —     |    |  |   | 97,706,000   |    |
| Totalstockholders' equity                      |  |            | 37,383,356  |    |  |   | 151,107,327  |    |
| OTHER FINANCIALDATA                            |  |            |        |    |  |   |         |    |
| Net cash provided by operatingactivities       |  | $               | 598,710     |    |  | $      | 24,414,729   |    |
| Net cash used in investing activities          |  |            | (37,415,758 | )  |  |   | (197,780,709 | )  |
| Net cashprovided by financing activities       |  |            | 36,817,048  |    |  |   | 196,576,223  |    |
| FLEETDATA                                      |  |            |        |    |  |   |         |    |
| Average number ofvessels(1)                    |  |            | 2.3         |    |  |   | 11.9         |    |
| Total voyage days for fleet(2)                 |  |            | 208         |    |  |   | 4,288        |    |
| Total time charter days forfleet(3)            |  |            | 96          |    |  |   | 4,105        |    |
| Total spot market days for fleet(4)            |  |            | 112         |    |  |   | 183          |    |
| Total calendar days forfleet(5)                |  |            | 208         |    |  |   | 4,334        |    |
| Fleet utilization(6)                           |  |            | 100         | %  |  |   | 99           | %  |
| AVERAGE DAILYRESULTS                           |  |            |        |    |  |   |         |    |
| Time charterequivalent(7)                      |  | $               | 5,377       |    |  | $      | 7,919        |    |
| Vessel operating expenses(8)                   |  |            | 2,712       |    |  |   | 2,099        |    |
| General and administrative expenses            |  |            | 169         |    |  |   | 180          |    |
| Management fees                                |  |            | 390         |    |  |   | 340          |    |
| Total vessel operatingexpenses(9)              |  |            | 3,271       |    |  |   | 2,279        |    |
|                                                |

3

----

Table of Contents

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Averagenumber of vessels is the number of vessels that constituted our fleetfor the relevant period, as measured by the sum of the number of dayseach vessel was a part of our fleet during the period divided by thenumber of calendar days in that period. |

|     |                                                                                                                                                                                                                          |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Our total voyage days for ourfleet reflect the total days the vessels were in our possession for therelevant periods, net of off-hire days associated with major repairs,drydockings or special or intermediate surveys. |

|     |                                                                                                                                           |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Total time charter days forfleet are the number of voyage days the vessels in our fleet operatedon time charters for the relevant period. |

|     |                                                                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Total spot market charter daysfor fleet are the number of voyage days the vessels in our fleetoperated on spot market charters for the relevant period. |

|     |                                                                                                                                                                                                       |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Total calendar days are thetotal days the vessels were in our possession for the relevant periodincluding off-hire days associated with major repairs, drydockings orspecial or intermediate surveys. |

|     |                                                                                                                                                                                                        |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Fleet utilization is thepercentage of time that our vessels were available for revenuegenerating voyage days, and is determined by dividing voyage days byfleet calendar days for the relevant period. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Time charter equivalent, or TCE,is a measure of the average daily revenue performance of a vessel on aper voyage basis. Our method of calculating TCE is consistent withindustry standards and is determined by dividing voyage revenues (netof voyage expenses) by voyage days for the relevant time period. Voyageexpenses primarily consist of port, canal and fuel costs that areunique to a particular voyage, which would otherwise be paid by thecharterer under a time charter contract, as well as commissions. TCE isa standard shipping industry performance measure used primarily tocompare period-to-period changes in a shipping company'sperformance despite changes in the mix of charter types (i.e., spotcharters, time charters and bareboat charters) under which the vesselsmay be employed between the periods. |

|     |                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8) | Vessel operating expenses, whichinclude crew costs, provisions, deck and engine stores, lubricatingoil, insurance, maintenance and repairs is calculated by dividingvessel operating expenses by fleet calendar days for the relevant timeperiod. |

|     |                                                                                                                                                                                                                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | Total vesseloperating expenses, or TVOE, is a measurement of our total expensesassociated with operating our vessels. TVOE is the sum of vesseloperating expenses and general and administrative expenses. Daily TVOEis calculated by dividing TVOE by fleet calendar days for the relevanttime period. |

Capitalization and Indebtedness

NotApplicable.

Reasons For the Offer and Use of Proceeds

Not Applicable.

Risk Factors

Risks Related To OurIndustry

The cyclical nature of the demand for LPG producttransportation may lead to significant changes in our chartering andvessel utilization, which may adversely affect our revenues,profitability and financial position

The international LPGcarrier market is cyclical with attendant volatility in profitability,charter rates and vessel values. Recent fluctuations attest to thevolatility in the gas carrier market. Because many factors influencingthe supply of, and demand for, vessel capacity are unpredictable, thetiming, direction and degree of changes in the international gascarrier market are also not predictable.

The degree of charterrate volatility among different types of gas carriers has variedwidely. To the extent we have vessels in the spot market, we areexposed to changes in spot rates for gas carriers and such changes canaffect our earnings and the value of our gas carriers at any giventime. There is no assurance that as our period charters expire thatthey will be extended or renewed on favorable terms.

Inaddition, when LPG vessel prices are considered to be low, companiesnot usually involved in shipping may make speculative vessel orders,thereby increasing the LPG shipping supply, satisfying demand soonerand potentially suppressing charter rates. Any of the foregoing factorscould have an adverse effect on our revenues, profitability andfinancial position.

4

----

Table of Contents

Charter rates for LPG carriers haverecently reached high levels and future demand for LPG carriers andcharter rates will depend on continued economic growth in the worldeconomy and demand for LPG product transportation that exceeds thecapacity of the growing worldwide LPG carrier fleet's ability tomatch it

We believe that the future demand for LPGcarriers and the charter rate levels for LPG carriers will depend uponcontinued economic growth in the world's economy, particularly inthe economies of China, India and Southeast Asia, and upon seasonal andregional changes in demand and changes to the capacity of the worldfleet. The capacity of the world fleet seems likely to increase andthere can be no assurance that economic growth will continue. Adverseeconomic, political, social or other developments could have a materialadverse effect on world economic growth and thus on our business andresults of operations.

The factors affecting the supply anddemand for LPG carriers are outside of our control, and the nature,timing and degree of changes in industry conditions areunpredictable.

The factors that influence demand for our vesselsinclude:

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | supply anddemand for LPG products; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | global and regionaleconomic conditions; |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | the distance LPGproducts are to be moved by sea; |

|  |              |                                                      |
|--|--------------|------------------------------------------------------|
|  | •  | availability ofalternative transportation means; and |

|  |              |                                                       |
|--|--------------|-------------------------------------------------------|
|  | •  | changes in seaborne andother transportation patterns. |

The factors thatinfluence the supply of vessel capacity include:

|  |              |                                      |
|--|--------------|--------------------------------------|
|  | •  | the number of newbuildingdeliveries; |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | the scrappingrate of older vessels; |

|  |              |                    |
|--|--------------|--------------------|
|  | •  | LPGcarrier prices; |

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | •  | changes inenvironmental and other regulations that may limit the useful lives ofvessels; and |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | the number ofvessels that are out of service. |

Any material increase inthe supply of LPG carrier capacity without a corresponding growth inLPG carrier demand could have a material adverse effect on theemployment of our LPG fleet and on prevailing charter rates and couldaccordingly adversely affect our business, financial condition andoperating results.

Various economic factors couldmaterially adversely affect our business, financial position andresults of operations, as well as our future prospects

Some LPG products we carry are used in cyclical businesses such asthe manufacturing of plastics and in the chemical industry and,accordingly, a slackening of demand in those industries could adverselyaffect the LPG carrier industry. Moreover, an adverse change ineconomic conditions affecting China, Japan, India or Southeast Asiacould have a negative effect on the demand for LPG products, therebyadversely affecting our business, financial position and results ofoperations, as well as our future prospects. In particular, in recentyears China and India have been among the world's fastest growingeconomies in terms of gross domestic product. We cannot assure you thatsuch growth will be sustained or that these countries' economieswill not experience a slowdown or recession in the future. Moreover,any slowdown in the economies of the United States or the EuropeanUnion may adversely affect economic growth in Asia. Our business,financial position and results of operations, as well as our futureprospects, could likely be materially and adversely affected by aneconomic downturn in any of these countries or regions.

5

----

Table of Contents

If the demand for LPG products and LPGshipping does not continue to grow, our business, results of operationsand financial condition could be adversely affected

Ourgrowth depends on continued growth in world and regional demand for LPGproducts and LPG shipping, all of which could be adversely affected bya number of factors, such as:

|  |              |                                                                      |
|--|--------------|----------------------------------------------------------------------|
|  | •  | increases in the cost ofpetroleum and LNG from which LPG is derived; |

|  |              |                                                                                                                                                                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | increases in the production anddemand for industrial and residential area petroleum gas in areaslinked by pipelines to consuming areas, or the conversion of existingnon-petroleum gas pipelines to petroleum gas pipelines in thosemarkets; |

|  |              |                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | decreases in theconsumption of LPG or LNG due to increases in its price relative toother energy sources or other factors making consumption of LPG or LNGless attractive; |

|  |              |                                                 |
|--|--------------|-------------------------------------------------|
|  | •  | availability of new,alternative energy sources; |

|  |              |                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------|
|  | •  | a reduction in global orgeneral industrial activity specifically in the plastics and chemicalindustry; and |

|  |              |                                                                                                                                          |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | adverseglobal or regional economic or political conditions, particularly inLPG consuming regions, which could reduce energy consumption. |

Reduced demand for LPG products and LPG shipping would have amaterial adverse effect on our future growth and would harm ourbusiness, results of operations and financial condition.

Our operating results are subject to seasonal fluctuations,which could affect our operating results and the amount of availablecash with which we can pay dividends

We operate ourvessels in markets that have historically exhibited seasonal variationsin demand and, as a result, in charter hire rates. This seasonality mayresult in quarter-to-quarter volatility in our operating results, whichcould affect the amount of dividends that we pay to our stockholdersfrom quarter-to-quarter. The LPG carrier market is typically strongerin the fall and winter months in anticipation of increased consumptionof propane and butane for heating during the winter months. Inaddition, unpredictable weather patterns in these months tend todisrupt vessel scheduling and supplies of certain commodities. As aresult, our revenues may be stronger in fiscal quarters endedDecember  31 and March  31, and conversely, our revenuesmay be weaker during the fiscal quarters ended June  30 andSeptember  30. This seasonality could materially affect ouroperating results and cash available for distribution to ourstockholders as dividends in the future.

Our revenues,operations and future growth could be adversely affected by a decreasein supply of liquefied natural gas, or LNG

As of thecurrent period, there has been a strong supply for and an increase inthe construction of plants and projects involving LNG, of which LPG isa byproduct. If the supply of LNG decreases, we may see a concurrentreduction in the production of LPG and resulting lesser demand andlower charter rates for our vessels. A significant reduction in thesupply of LPG would ultimately have a material adverse impact on ourrevenues, operations and future growth.

Because the marketvalue of our vessels are currently at high levels and may fluctuatesignificantly, we may incur losses when we sell our vessels, which mayadversely affect our earnings and possibly lead to defaults under ourloan agreements

The market value of our vessels, which arecurrently at high levels, may fluctuate depending on a number offactors including:

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | generaleconomic and market conditions affecting the shipping industry; |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | age, sophistication andcondition of our vessels; |

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | types and sizes of vessels; |

6

----

Table of Contents

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | availabilityof other modes of transportation; |

|  |              |                                                 |
|--|--------------|-------------------------------------------------|
|  | •  | cost and delivery of schedulesfor newbuildings; |

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | governmental and otherregulations; |

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | supply anddemand for LPG products; |

|  |              |                                           |
|--|--------------|-------------------------------------------|
|  | •  | prevailing level of LPG charterrates; and |

|  |              |                        |
|--|--------------|------------------------|
|  | •  | technologicaladvances. |

If we sell vessels at a time when vessel prices havefallen and before we have recorded an impairment adjustment to ourfinancial statements, the sale may be less than the vessel'scarrying value on our financial statements, resulting in a loss andreduction in earnings. If the market value of our fleet declines, wemay not be in compliance with certain provisions of our existing loanagreements and we may not be able to refinance our debt or obtainadditional financing. If we are unable to pledge additional collateral,our lenders could accelerate our debt and foreclose on our fleet. Theloss of our vessels would mean we could not run our business.

We are subject to regulation and liability under environmentallaws that could require significant expenditures and affect ourfinancial conditions and results of operations

Ourbusiness and the operation of our vessels are materially affected bygovernment regulation in the form of international conventions,national, state and local laws and regulations in force in thejurisdictions in which the vessels operate, as well as in the countryor countries of their registration. Because those laws and regulationsare often revised, we cannot predict the ultimate cost of complyingwith them or the impact they may have on the resale prices or usefullives of our vessels. Additional rules and regulations may be adoptedwhich could limit our ability to do business or increase the cost ofour doing business and which could materially adversely affect ouroperations. We are also required by various governmental andquasi-governmental agencies to obtain permits, licenses andcertificates with respect to our operations. These permits, licensesand certificates may be issued or renewed with terms that couldmaterially and adversely affect our operations.

The UnitedStates Oil Pollution Act of 1990, or OPA, established an extensiveregulatory and liability regime for the protection and cleanup of theenvironment from oil spills. OPA  90 applies to discharges of anyoil from a vessel, including discharges of fuel and lubricants from anLPG carrier. OPA affects all owners and operators whose vessels tradein the United States, its territories and possessions or whose vesselsoperate in United States waters, which includes the United States'territorial sea and its 200 nautical mile exclusive economic zone. Ourgas carriers will not be carrying oil in bulk as cargo, and willtherefore not be subject to oil spill liability under the provisions ofOPA 90 (except in the case of a discharge of fuel oil or bunkers). Gascarriers, however, are considered ‘‘vessels’’for purposes of OPA financial responsibility requirements. Under OPA,vessel owners, operators and bareboat charterers are‘‘responsible parties’’ and are jointly,severally and strictly liable (unless the discharge of pollutantsresults solely from the act or omission of a third party, an act of Godor an act of war) for all containment and clean-up costs and otherdamages arising from discharges or threatened discharges of pollutantsfrom their vessels. See ‘‘Environmental and OtherRegulation.’’

The International MaritimeOrganization (the ‘‘IMO’’), which is an agencyof the United Nations, has adopted final regulations that are designedto reduce pollution in international waters, both from accidents andfrom routine operations. These regulations address oil discharges,ballasting and unloading operations, sewage, garbage, and airemissions. In complying with OPA 90 and the IMO regulations and otherregulations that may be adopted, including regulations governing thesafety, construction, equipment, operation and liability of gascarriers, shipowners and operators may be required to incur additionalcosts in meeting new maintenance and inspection requirements, indeveloping contingency plans for potential spills, and in obtaininginsurance coverage.

The operation of our vessels is affected bythe requirements set forth in the International Management Code for theSafe Operation of Ships and Pollution Prevention (‘‘ISMCode’’). The ISM 

7

----

Table of Contents

Code requires shipowners and bareboatcharterers to develop and maintain an extensive ‘‘SafetyManagement System’’ that includes the adoption of a safetyand environmental protection policy setting forth instructions andprocedures for safe operation and describing procedures for dealingwith emergencies. The failure of a shipowner or bareboat charterer tocomply with the ISM Code may subject the owner or charterer toincreased liability, may decrease available insurance coverage for theaffected vessels, and may result in a denial of access to, or detentionin, certain ports. Currently, each of the vessels in our fleet is ISMCode-certified. Because these certifications are critical to ourbusiness, we place a high priority on maintaining them. For thisreason, we believe it is highly unlikely that such certifications couldbe discontinued. However, there can be no assurance that suchcertifications will be maintained indefinitely.

We currentlymaintain, for each of our vessels, pollution liability coverageinsurance in the amount of $1.0  billion per incident. Inaddition, we carry hull and machinery and protection and indemnityinsurance to cover the risks of fire and explosion. Given therelatively small amount of bunkers our vessels carry, we believe that aspill of oil from the vessels should not be catastrophic. However,under certain circumstances, fire and explosion could result in acatastrophic loss. While we believe that our present insurance coverageis adequate, not all risks can be insured, and there can be noguarantee that any specific claim will be paid, or that we will alwaysbe able to obtain adequate insurance coverage at reasonable rates. Ifthe damages from a catastrophic spill exceeded our insurance coverage,it would have a severe effect on us and could possibly result in ourinsolvency.

We believe that regulation of the shipping industrywill continue to become more stringent and more expensive for us andour competitors. Substantial violations of applicable requirements or acatastrophic release from one of our vessels could have a materialadverse impact on our financial condition and results ofoperations.

Our vessels are subject to periodic inspectionsby a classification society

The hull and machinery ofevery commercial vessel must be classed by a classification societyauthorized by its country of registry. The classification societycertifies that a vessel is safe and seaworthy in accordance with theapplicable rules and regulations of the country of registry of thevessel and the Safety of Life at Sea Convention. Our fleet is currentlyclassed with Bureau Veritas, Nippon Kaiji Kyokai, or NKK, the AmericanBureau of Shipping, Det Norske Veritas and RINA SpA.

A vesselmust undergo annual surveys, intermediate surveys and special surveys.In lieu of a special survey, a vessel's machinery may be on acontinuous survey cycle, under which the machinery would be surveyedperiodically over a five-year period. Our vessels are on special surveycycles for hull inspection and continuous survey cycles for machineryinspection. Every vessel is also required to be drydocked every two tothree years for inspection of the underwater parts of such vessel.

If a vessel does not maintain its class and/or fails any annualsurvey, intermediate survey or special survey, the vessel will beunable to trade between ports and will be unemployable and we could bein violation of covenants in our loan agreements and insurancecontracts or other financing arrangements. This would adversely impactour operations and revenues.

Maritime claimants couldarrest our vessels, which could interrupt our cash flow

Crew members, suppliers of goods and services to a vessel, shippersof cargo and others may be entitled to a maritime lien against thatvessel for unsatisfied debts, claims or damages. In many jurisdictions,a maritime lienholder may enforce its lien by arresting a vesselthrough foreclosure proceedings. The arrest or attachment of one ormore of our vessels could interrupt our cash flow and require us to paylarge sums of funds to have the arrest lifted.

In addition, insome jurisdictions, such as South Africa, under the‘‘sister ship’’ theory of liability, a claimantmay arrest both the vessel which is subject to the claimant'smaritime lien and any ‘‘associated’’ vessel,which is any vessel owned or controlled by the same owner. Claimantscould try to assert ‘‘sister ship’’ liabilityagainst one vessel in our fleet for claims relating to another of ourships or, possibly, another vessel managed by the Vafias Group.

8

----

Table of Contents

Governments could requisition ourvessels during a period of war or emergency, resulting in loss ofrevenues

A government could requisition for title or seizeour vessels. Requisition for title occurs when a government takescontrol of a vessel and becomes the owner. Also, a government couldrequisition our vessels for hire. Requisition for hire occurs when agovernment takes control of a vessel and effectively becomes thecharterer at dictated charter rates. Generally, requisitions occurduring a period of war or emergency. Government requisition of one ormore of our vessels would adversely impact our operations and revenues,thereby resulting in loss of revenues.

Risks involved withoperating ocean-going vessels could affect our business and reputation,which would adversely affect our revenues and stock price

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

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | marine accident ordisaster; |

|  |              |                      |
|--|--------------|----------------------|
|  | •  | piracy andterrorism; |

|  |              |             |
|--|--------------|-------------|
|  | •  | explosions; |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | environmental accidents; |

|  |              |            |
|--|--------------|------------|
|  | •  | pollution; |

|  |              |               |
|--|--------------|---------------|
|  | •  | loss of life; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | cargo and property losses ordamage; and |

|  |              |                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | businessinterruptions caused by mechanical failure, human error, war,terrorism, political action in various countries, labor strikes oradverse weather conditions. |

Any of these circumstances or eventscould increase our costs or lower our revenues. The involvement of ourvessels in a serious accident could harm our reputation as a safe andreliable vessel operator and lead to a loss of business.

Our vessels may suffer damage and we may face unexpecteddrydocking and repair costs, which could affect our cash flow andfinancial condition

If our vessels suffer damage, they mayneed to be repaired at a shipyard facility. The costs of drydocking andrepairs are unpredictable and can be substantial. We may have to paydrydocking and repair costs that our insurance does not cover. The lossof earnings while these vessels are being repaired and repositioned, aswell as the actual cost of these repairs, would have an adverse effecton our cash flow and financial condition. We do not intend to carrybusiness interruption insurance.

Our operations outside theUnited States expose us to global risks, such as terrorism, that mayinterfere with the operation of our vessels

We are aninternational company and primarily conduct our operations outside theUnited States. Changing economic, political and governmental conditionsin the countries where we are engaged in business or where our vesselsare registered affect us. In the past, political conflicts,particularly in the Arabian Gulf, resulted in attacks on vessels,mining of waterways and other efforts to disrupt shipping in the area.For example, in October  2002, the vessel Limburg wasattacked by terrorists in Yemen. Acts of terrorism and piracy have alsoaffected vessels trading in regions such as the South China Sea.Following the terrorist attack in New York City on September11,  2001, and the military response of the United States,including the recent conflict in Iraq, the likelihood of future acts ofterrorism may increase, and our vessels may face higher risks of beingattacked. In addition, future hostilities or other politicalinstability in regions where our vessels trade could affect our tradepatterns and adversely affect our operations and performance.Furthermore, future terrorist attacks could result in increasedvolatility of the financial markets in the United States and globallyand could result in an 

9

----

Table of Contents

economic recession in the United States orthe world. Any of these occurrences could have a material adverseimpact on our operating results, revenue and costs.

Terroristattacks, or the perception that LPG or LNG facilities and LPG or LNGcarriers are potential terrorist targets, could materially andadversely affect the continued supply of LPG and LNG to the UnitedStates and to other countries. Concern that LPG and LNG facilities maybe targeted for attack by terrorists has contributed to a significantcommunity and environmental resistance to the construction of a numberof LNG facilities, primarily in North America. If a terrorist incidentinvolving a gas facility or gas carrier did occur, the incident mayadversely affect necessary LPG facilities or LNG facilities currentlyin operation.

Risks Related To Our Business

Because we have a limited operating history, our limitedhistorical financial and operating data may not be a reliable indicatorof our prospects and future performance and may not be sufficient toevaluate our business plan

We have a limited operatinghistory. The consolidated financial statements included in this reporton Form 20-F reflect the historical business activities of ourvessel-owning companies both before and after their acquisition by us.Our consolidated financial statements have been presented as if thevessel-owning companies were our consolidated subsidiaries as of thedates indicated in our consolidated financial statements and using thecombined historical carrying costs of the assets and the liabilities ofsuch vessel-owning companies. Our consolidated financial statementscover only the period from October  12,  2004 toDecember  31,  2004 and the year ended December31,  2005. Accordingly, we have only a limited operating historyupon which you can evaluate our prospects and future performance. Theseperiods covered by our consolidated financial statements may be tooshort to determine whether our business will succeed. Our prospects maybe adversely affected by the risks, expenses and difficultiesfrequently encountered in the operation of a new business in anevolving and competitive industry.

Dependence on ourrelationship with the Vafias Group and Stealth Maritime

Wecurrently do not have any salaried employees, although we intend tocontinue to reimburse our fleet manager, Stealth Maritime, for thesalaries of our CEO and CFO. As of March 31, 2006, Stealth Maritime hasserved as the technical manager for one of the vessels in our fleetwhile subcontracting the technical management of the remaining vesselsin our fleet to third party managers. We are accordingly dependent uponour fleet manager, Stealth Maritime, for the administration, charteringand operations supervision of our fleet. Stealth Maritime is aprivately-owned company controlled by the Vafias Group and about whichthere is little public information. We depend on our relationship withthe Vafias Group for:

|  |              |                                                                                                      |
|--|--------------|------------------------------------------------------------------------------------------------------|
|  | •  | ourrecognition and acceptance in the LPG carrier sector, including ourability to attract charterers; |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | relations with charterers andcharter brokers; |

|  |              |                            |
|--|--------------|----------------------------|
|  | •  | operational expertise; and |

|  |              |                        |
|--|--------------|------------------------|
|  | •  | management experience. |

The loss of Stealth Maritime's services or its failure toperform its obligations to us properly for financial or other reasonscould materially and adversely affect our business and the results ofour operations. Although we may have rights against Stealth Maritime ifit defaults on its obligations to us, you will have no recourse againstStealth Maritime. In addition, we cannot assure you that we will beable to find a replacement manager on terms as favorable as thosecurrently in place with Stealth Maritime. Further, we expect that wewill need to seek approval from our lenders to change our manager.

We depend on third party managers to manage our fleet

Stealth Maritime subcontracts the technical management of our fleet,including crewing, operation, maintenance and repair, to third partymanagers. The loss of their services or their failure 

10

----

Table of Contents

to perform their obligations couldmaterially and adversely affect the results of our operations. Althoughwe may have rights against these managers if they default on theirobligations, you will have no recourse against these parties. Inaddition, we cannot assure you that we will be able to find replacementtechnical managers on terms as favorable as those currently in place.Further, we expect that we will need to seek approval from our lendersto change these third party managers.

We may enter intocertain significant transactions with companies affiliated with theVafias Group which may result in conflicts of interests

Inaddition to our management contract with Stealth Maritime, a companycontrolled by the Vafias Group and the Vafias family, of which our CEOis a member, we may enter into other transactions with companiesaffiliated with the Vafias Group. Such transactions could createconflicts of interest that could adversely affect our business or yourinterests as stockholders of our common stock, as well as our financialposition and results of operations, as well as our futureprospects.

Our directors and officers may in the futurehold direct or indirect interests in companies that compete withus

Our directors and officers each have a history ofinvolvement in the shipping industry and may in the future, directly orindirectly, hold investments in companies that compete with us. In thatcase, they may face conflicts between their own interests and theirobligations to us.

Stealth Maritime and companiesaffiliated with Stealth Maritime may acquire vessels that compete withour fleet

It is possible that Stealth Maritime orcompanies affiliated with Stealth Maritime could, in the future, agreeto manage vessels that compete directly with ours. As long as StealthMaritime is our fleet manager, Stealth Maritime has granted us a rightof first refusal to acquire any LPG carrier, which Stealth Maritime,its principals or any of their controlled affiliates may acquire in thefuture. In addition, Stealth Maritime has agreed that it will notcharter-in any LPG carrier without first offering the opportunity tocharter-in such vessel to us. Were we, however, to decline any suchopportunity offered to us or if we do not have the resources or desireto accept any such opportunity, Stealth Maritime could retain andmanage the vessel. Furthermore, this right of first refusal does notprohibit Stealth Maritime from managing vessels owned by unaffiliatedthird parties in competition with us. In such cases, they could competewith our fleet and may face conflicts between their own interests andtheir obligations to us. In addition, in the future, we may alsoconsider diversifying into wet, dry or other gas shipping sectors. Anysuch vessels would be in competition with Stealth Maritime andcompanies affiliated with Stealth Maritime. Stealth Maritime might befaced with conflicts of interest with respect to their own interestsand their obligations to us that could adversely affect our businessand your interests as stockholders.

As our current chartersexpire, new charters at attractive rates may not be available whichwould have an adverse impact on our revenues and financialcondition

Charter rates for LPG carriers are currently attheir highest levels in recent years. In the remainder of 2006 and in2007, we expect to derive the greater part of our revenues from periodcharters, including time and bareboat charters. When these currentcharters expire, it may not be possible to re-charter these vessels atsimilar rates and as a result, we may have to accept lesser rates orexperience off-hire time for our vessels, which may adversely impactour revenues and financial condition.

We are dependent onthe ability of our charterers to honor their commitments to us for allour revenues

We derive all our revenues from the paymentof hire by charterers. If our charterers encounter financialdifficulties and cannot pay us, or otherwise refuse to pay us, ourrecourse against them may be limited or may not be able to beundertaken in a timely fashion. Non-payment by charterers would have amaterial adverse effect on our revenues.

11

----

Table of Contents

As our fleet continues to grow insize, we will need to improve our operations and financial systems,staff and crew; if we cannot improve these systems or recruit suitableemployees, our business and results of operations may be adverselyaffected

We have rapidly expanded our fleet in the pasttwelve months, and our current operating and financial systems may notbe adequate as we implement our plan to continue to expand the size ofour fleet, and our attempts to improve those systems may beineffective. In addition, as we expand our fleet, we will have to relyon our technical managers to recruit suitable additional seafarers andshoreside administrative and management personnel. We cannot assure youthat Stealth Maritime and those technical managers will be able tocontinue to hire suitable employees as we expand our fleet. Our LPGcarriers require a technically skilled staff with specialized training.If the technical managers' crewing agents are unable to employsuch technically skilled staff, they may not be able to adequatelystaff our vessels. If Stealth Maritime is unable to operate ourfinancial and operations systems effectively or our technical managersare unable to recruit suitable employees as we expand our fleet, ourresults of operation may be adversely affected.

We dependupon a few significant customers for a large part of our revenues. Theloss of one or more of these customers could adversely affect ourfinancial performance

In our limited operating history wehave derived a significant part of our revenue from a small number ofcharterers. For the year ended December  31,  2005,approximately 69% of our revenue was derived from our fivelargest charter customers. We anticipate continuing to service thesecustomers as well as additional customers which will representsignificant amounts of our revenue after our acquisition of additionalvessels which we have yet to identiy. If we encounter any difficultiesin our relationships with these charterers, our results of operations,cash flows and financial condition could be adversely affected.

If we fail to manage our planned growth properly, we may not beable to successfully expand our market share

Theacquisition of additional vessels imposes significant additionalresponsibilities on our management and staff, and may necessitate thatwe, and they, increase the number of personnel.

We intend tocontinue to grow our fleet. We may not be able to identify suitablevessels, acquire vessels on advantageous terms or obtain financing forsuch acquisitions. Our growth will depend on:

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | locating and acquiring suitablevessels; |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | identifying andcompleting acquisitions or joint ventures; |

|  |              |                                                                             |
|--|--------------|-----------------------------------------------------------------------------|
|  | •  | integrating any acquiredbusiness successfully with our existing operations; |

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | expanding our customerbase; |

|  |              |                            |
|--|--------------|----------------------------|
|  | •  | managing ourexpansion; and |

|  |              |                              |
|--|--------------|------------------------------|
|  | •  | obtainingrequired financing. |

Growing our business by acquisition presentsnumerous risks such as undisclosed liabilities and obligations,difficulty experienced in obtaining additional qualified personnel andmanaging relationships with customers and our commercial and technicalmanagers and integrating newly acquired vessels into existinginfrastructures. We cannot give any assurance that we will besuccessful in executing our growth plans or that we will not incursignificant expenses and losses in connection therewith.

Wemay be unable to attract and retain key management personnel and otheremployees in the LPG carrier industry, which may negatively affect theeffectiveness of our management and our results of operation

Our success depends to a significant extent upon the abilities andefforts of our management team, including our CEO, Harry Vafias, andour Chief Financial Officer, Andrew Simmons. In 

12

----

Table of Contents

addition, Harry Vafias is a member of theVafias family, which controls the Vafias Group, which in turn controlsStealth Maritime, our fleet manager. Our success will depend upon ourand Stealth Maritime's ability to hire and retain qualifiedmanagers to oversee our operations. The loss of any of theseindividuals could adversely affect our business prospects and financialcondition. Difficulty in hiring and retaining personnel could adverselyaffect our results of operations. We do not have employment agreementsdirectly with our CEO or Chief Financial Officer, who are technicallyemployees of Stealth Maritime, our fleet manager, although under ourmanagement agreement with Stealth Maritime, our relationship with eachof our CEO and Chief Financial Officer is governed by termssubstantially similar to those typically included in employmentagreements. We do not intend to maintain ‘‘keyman’’ life insurance on any of our officers.

Our CEO has limited experience running a publiccompany

While our CEO, Harry Vafias, age 28, has beenactively involved in the management and operation of vessels forseveral years as an employee of the Vafias Group, he has not had priorexperience as a CEO of a public company. Mr.  Vafias will have torely on the experience of the Vafias Group for the management of ourvessels, as well as the advice and oversight of the Board of Directors,in his role as our CEO.

A significant increase in our debtlevels may adversely affect us and our cash flows

We haverecently incurred additional debt to acquire more vessels and the needto service the indebtedness may impact our profitability and cashavailable for growth of our fleet, working capital and dividends.Additionally, an increase in the present interest rate levels mayincrease the cost of servicing our indebtedness with similarresults.

To finance our future fleet expansion program beyondour current fleet, we expect to incur additional secured debt. We willhave to dedicate a portion of our cash flow from operations to pay theprincipal and interest on our debt. These payments will limit fundsotherwise available for working capital, capital expenditures,dividends and other purposes. The need to service our debt may limitour funds available for other purposes, including distributing cash toour stockholders, and our inability to service our debt could lead toacceleration of our debt and foreclosure on our fleet.

Moreover,carrying secured indebtedness exposes us to increased risks if thedemand for LPG product transportation drops significantly and charterrates and vessel values are adversely affected.

Our loanagreements or other financing arrangements contain restrictivecovenants that may limit our liquidity and corporateactivities

Our loan agreements impose, and our futurefinancing arrangements may impose, operating and financial restrictionson us. These restrictions may limit our ability to:

|  |              |                               |
|--|--------------|-------------------------------|
|  | •  | incur additionalindebtedness; |

|  |              |                            |
|--|--------------|----------------------------|
|  | •  | create lienson our assets; |

|  |              |                                        |
|--|--------------|----------------------------------------|
|  | •  | sell capitalstock of our subsidiaries; |

|  |              |                   |
|--|--------------|-------------------|
|  | •  | make investments; |

|  |              |                                   |
|--|--------------|-----------------------------------|
|  | •  | engage in mergers oracquisitions; |

|  |              |                   |
|--|--------------|-------------------|
|  | •  | paydividends; and |

|  |              |                           |
|--|--------------|---------------------------|
|  | •  | make capitalexpenditures. |

The Fortis Bank loan agreement requires us tomaintain specified financial ratios and satisfy financial covenants.These financial ratios and covenants include requirements that we:

|  |              |                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------|
|  | •  | maintain an aggregate minimumcash balance with Fortis Bank of at least $3.0  million; |

|  |              |                                                                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | ensure that our ratio of ourtotal liabilities less total stockholders' equity to total assetsdoes not exceed 0.80 to 1.0 at any time; and |

13

----

Table of Contents

|  |              |                                                                                                                                          |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | maintaina ratio of the aggregate market value of the vessels securing the loanto the principal amount of the loan of at least 1.25 to 1. |

As ofDecember  31,  2005, our ratio of the aggregate marketvalue of the vessels securing the loan to the principal amount of theloan was 1.90 to 1.

The DnB NOR Bank loan agreement requires usto maintain a ratio of the aggregate market value of the vesselssecuring the loan to the principal amount of the loan of at least 1.25to 1. Under the DnB NOR Bank loan agreement, we are also required toensure that the ratio of our total net debt to the total value of ouradjusted assets less cash does not exceed 0.80 to 1.0 at any time andthat the ratio of our consolidated EBITDA to our consolidated grossinterest expense be at least 2.5.

As of December31,  2005, our ratio of the aggregate market value of the vesselssecuring the loan to the principal amount of the loan was 1.66 to 1,the ratio of our total net debt to the total value of our adjustedassets less cash was 0.31 to 1.0 and the ratio of our consolidatedEBITDA to our consolidated gross interest expense was 7.5.

As aresult of the restrictions in our loan agreements, or similarrestrictions in our future financing arrangements with respect tofuture vessels which we have yet to identify, we may need to seekpermission from our lenders in order to engage in some corporateactions. Our lenders' interests may be different from ours, and wecannot guarantee that we will be able to obtain their permission whenneeded. This may prevent us from taking actions that we believe are inour best interest.

A failure by us to meet our payment and otherobligations could lead to defaults under our secured loan agreements.Our lenders could then accelerate our indebtedness and foreclose on ourfleet. The loss of our vessels would mean we could not run ourbusiness.

Our ability to obtain additional debt financingmay be dependent on the performance of our then existing charters andthe creditworthiness of our charterers

The actual orperceived credit quality of our charterers, and any defaults by them,may materially affect our ability to obtain the additional capitalresources that we will require to purchase additional vessels or maysignificantly increase our costs of obtaining such capital. Ourinability to obtain additional financing at all or at a higher thananticipated cost may materially affect our results of operation and ourability to implement our business strategy.

Because wegenerate all of our revenues in United States dollars but incur asignificant portion of our expenses in other currencies, exchange ratefluctuations could hurt our results of operations

Wegenerate all of our revenues in United States dollars and a portion,depending on the trade routes, of our vessels' expenses incurrencies other than United States dollars. This difference could leadto fluctuations in net income due to changes in the value of the UnitedStates dollar relative to the other currencies, in particular the Euro.Expenses incurred in foreign currencies against which the United Statesdollar falls in value can increase, decreasing our net income. We havenot hedged these risks. Our operating results could suffer as aresult.

In the highly competitive international LPG carriermarket, we may not be able to compete for charters with new entrants orestablished companies with greater resources

We deploy ourvessels in a highly competitive market that is capital intensive.Competition arises primarily from other vessel owners, some of whichhave substantially greater resources than we do. Competition for thetransportation of LPG can be intense and depends on price, location,size, age, condition and the acceptability of the vessel and itsmanagers to the charterers. Competitors with greater resources couldenter and operate larger fleets through consolidations or acquisitionsthat may be able to offer more competitive prices and fleets.

We principally operate in one segment of the shipping industry,the seaborne transport of LPG, and our lack of a diversified businesscould adversely affect us

Unlike many other shippingcompanies, which may carry drybulk, crude oil and oil products, wecurrently depend primarily on the transport of LPG. Substantially allof our revenue is derived from a 

14

----

Table of Contents

single source — the seaborne transportof LPG — and our lack of a diversified business model couldadversely affect us if the LPG seaborne transport business fails toperform to our expectations.

If we expand into dry,wet or other gas shipping sectors, we may not be able to successfullyexecute such expansion plans, which could have an adverse effect on ourbusiness, results of operation and financial condition

Inthe future, we may expand into dry, wet or other gas shipping sectorsif opportunities arise. We have limited experience in these sectors andan inability to successfully execute such expansion plans could:

|  |              |            |
|--|--------------|------------|
|  | •  | be costly; |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | distract us from our LPGcarrier business; and |

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | divert managementresources, |

each of which could have an adverse effect onour business, results of operation and financial condition.

Purchasing and operating previously owned, or secondhand,vessels may result in increased operating costs and vessels off-hire,which could adversely affect our revenues

Our examinationof secondhand vessels, which may not include physical inspection priorto purchase, does not provide us with the same knowledge about theircondition and cost of any required (or anticipated) repairs that wewould have had if these vessels had been built for and operatedexclusively by us. Generally, we do not receive the benefit ofwarranties on secondhand vessels.

In general, the costs ofmaintaining a vessel in good operating condition increase with its age.The average age of the 24 LPG carriers in our fleet is approximately10.8 years. Older vessels are typically less fuel efficient and morecostly to maintain than more recently constructed vessels due toimprovements in engine technology. Cargo insurance rates increase withthe age of a vessel, making older vessels less desirable tocharterers.

Governmental regulations, safety or other equipmentstandards related to the age of vessels may require expenditures foralterations, or the addition of new equipment, to our vessels and mayrestrict the type of activities in which the vessels may engage. Wecannot assure you that, as our vessels age, market conditions willjustify those expenditures or enable us to operate our vesselsprofitably during the remainder of their useful lives. If we sellvessels, we cannot be certain that the sales prices will equal at leasttheir carrying values at that time.

The shipping industryhas inherent operational risks that may not be adequately covered byour insurance

We procure hull and machinery insurance,protection and indemnity insurance, which includes environmental damageand pollution insurance coverage, insurance and war risk insurance forour fleet. We can give no assurance that we are adequately insuredagainst all risks. We may not be able to obtain adequate insurancecoverage for our fleet in the future. The insurers may not payparticular claims. Even if our insurance coverage is adequate, we maynot be able to timely obtain a replacement vessel in the event of aloss. Our insurance policies contain deductibles for which we will beresponsible and limitations and exclusions which may increase our costsor lower our revenue.

Our existing major stockholdereffectively controls the outcome of matters on which our stockholdersare entitled to vote and his interests may be different fromyours

Our current major stockholder, a company controlledby our CEO, owns approximately 42.9% of our outstanding commonstock and effectively controls the outcome of matters on which ourstockholders are entitled to vote, including the election of our entireBoard of Directors and other significant corporate actions. Theinterests of this stockholder may be different from your interests.

We may have to pay tax on United States-source income, whichwould reduce our earnings

Under the United States InternalRevenue Code of 1986, as amended, or the Code, 50% of the grossshipping income of vessel owning or chartering corporations, such asour subsidiaries, that is 

15

----

Table of Contents

attributable to transportation that beginsor ends, but does not both begin and end, in the United States ischaracterized as United States shipping income. United States shippingincome is subject to either a (i) 4% United States federalincome tax without allowance for deductions or (ii) taxation at thestandard United States federal income tax rates (and potentially to a30% branch profits tax), unless derived by a corporation thatqualifies for exemption from tax under Section 883 of the Code and theTreasury Regulations promulgated thereunder.

Generally, oursubsidiaries will qualify for this exemption for a taxable year if ourshares are treated as ‘‘primarily and regularlytraded’’ on an established securities market in the UnitedStates. Our shares of common stock will be so treated if (i) theaggregate number of our shares of common stock traded during such yearon an established securities market in the United States exceeds theaggregate number of our shares of common stock traded during that yearon established securities markets in any other single country, (ii)either (x) our shares of common stock are regularly quoted during suchyear by dealers making a market in our shares or (y) trades in ourshares of common stock are effected, other than in de minimisquantities, on an established securities market in the United States onat least 60 days during such taxable year and the aggregate number ofour shares of common stock traded on an established securities marketin the United States during such year equals at least 10% of theaverage number of our shares of common stock outstanding during suchtaxable year and (iii) our shares of common stock are not‘‘closely held’’ during such taxable year. Forthese purposes, our shares of common stock will be treated as closelyheld during a taxable year if, for more than one-half the number ofdays in such taxable year, one or more persons each of whom owns eitherdirectly or under applicable attribution rules, at least 5% ofour shares of common stock, own, in the aggregate, 50% or moreof our shares of common stock, unless we can establish, in accordancewith applicable documentation requirements, that a sufficient number ofthe shares of common stock in the closely-held block are owned,directly or indirectly, by persons that are residents of foreignjurisdictions that provide United States shipping companies with anexemption from tax that is equivalent to that provided by Section 883to preclude other stockholders in the closely-held block from owning50% or more of the closely-held block of shares of commonstock.

We believe that it may currently be the case, and may bethe case in the future, that, one or more persons each of whom owns,either directly or under applicable attribution rules, at least5% of our shares of common stock own, in the aggregate,50% or more of our shares of common stock. In suchcircumstances, we and our subsidiaries may qualify for the exemptionprovided in Section 883 of the Code only if enough of the closely-heldblock of our shares of common stock was owned or treated as owned by‘‘qualified stockholders’’ so it could not bethe case that, for more than half of the days in our taxable year, theshares of common stock in the closely-held block not owned or treatedas owned by qualified stockholders represented 50% or more ofour shares of common stock. For these purposes, a‘‘qualified stockholder’’ includes anindividual that owns or is treated as owning shares of our common stockand is a resident of a jurisdiction that provides an exemption that isequivalent to that provided by Section 883 of the Code and certainother persons; provided in each case that such individual or otherperson complies with certain documentation and certificationrequirements set forth in the Section 883 regulations and designed toestablish status as a qualified stockholder.

Our CEO, whocurrently, under applicable constructive ownership rules ownsapproximately 42.9% of our shares of common stock has enteredinto an agreement with us regarding his compliance, and the complianceby certain entities that he controls and through which he owns ourshares, with the certification procedures designed to establish statusas a qualified stockholder. In certain circumstances, his complianceand the compliance of such entities he controls with the terms of thatagreement may enable us and our subsidiaries to qualify for thebenefits of Section 883 even where persons each of whom owns, eitherdirectly or under applicable attribution rules, 5% or more ofour shares own, in the aggregate, more than 50% of ouroutstanding shares. There can be no assurance, however, that hiscompliance and the compliance of such entities he controls with theterms of that agreement will enable us or our subsidiaries to qualifyfor the benefits of Section 883.

The entities that own ourvessels that we acquired through stock acquisitions in 2005 may notqualify for the benefits of Section 883 for 2005, with the result thatUnited States federal tax, as 

16

----

Table of Contents

described below, may apply if such vesselsmade voyages in 2005 that began or ended in the United States. We donot believe that such vessels made such a voyage.

If oursubsidiaries do not qualify for the exemption under Section 883 of theCode for any taxable year, they would be subject for those years to the4% United States federal income tax on their gross United Statesshipping income or, in certain circumstances to net income taxation atthe standard United States federal income tax rates (and potentiallyalso to a 30% branch profits tax). The imposition of such taxcould have a negative effect on our business and would result indecreased earnings available for distribution to our stockholders.

United States tax authorities could treat us as a‘‘passive foreign investment company,’’ whichcould have adverse United States federal income tax consequences toUnited States holders

A foreign corporation will betreated as a ‘‘passive foreign investmentcompany,’’ or PFIC, for United States federal income taxpurposes if either (1) at least 75% of its gross income for anytaxable year consists of certain types of ‘‘passiveincome’’ or (2) at least 50% of the average value ofthe corporation's assets produce or are held for the production ofthose types of ‘‘passive income.’’ For purposesof these tests, ‘‘passive income’’ includesdividends, interest, and gains from the sale or exchange of investmentproperty and rents and royalties other than rents and royalties whichare received from unrelated parties in connection with the activeconduct of a trade or business. For purposes of these tests, incomederived from the performance of services does not constitute‘‘passive income’’ and working capital andsimilar assets held pending investment in vessels will generally betreated as an asset which produces passive income. United Statesstockholders of a PFIC are subject to a disadvantageous United Statesfederal income tax regime with respect to the income derived by thePFIC, the distributions they receive from the PFIC and the gain, ifany, they derive from the sale or other disposition of their shares inthe PFIC.

Based on our historic operations and our proposedmethod of operation we do not believe that we were a PFIC for 2005 anddo not expect to qualify as a PFIC with respect to any subsequenttaxable year. In this regard, we intend to treat the gross income wederive or are deemed to derive from our time chartering activities asservices income, rather than rental income. We believe that our incomefrom our time chartering activities does not constitute‘‘passive income,’’ and the assets that we ownand operate in connection with the production of that income do notconstitute passive assets. We intend to treat the income that we derivefrom bareboat charters as ‘‘passive income,’’and the assets giving rise to such income as ‘‘passiveassets’’ for the purposes of the PFIC rules.

Thereis, however, no direct legal authority under the PFIC rules addressingour current and proposed method of operation. Accordingly, no assurancecan be given that the United States Internal Revenue Service, or IRS,or a court of law will accept our position, and there is a risk thatthe IRS or a court of law could determine that we have been, are orwill become a PFIC. Moreover, no assurance can be given that we wouldnot constitute a PFIC for any future taxable year if there were to bechanges in the nature and extent of our operations.

Ourexpectation that we will not be treated as a PFIC is based in part uponour beliefs and expectations regarding the value of the vessels that wewill lease on a bareboat basis relative to the value of our otherassets. Should our beliefs or expectations turn out to be incorrect,then we could, in certain circumstances, be treated as a PFIC.

If the IRS were to find that we are or have been a PFIC for anytaxable year, our United States stockholders would face adverse UnitedStates tax consequences. Under the PFIC rules, unless thosestockholders make an election available under the Code (which electioncould itself have adverse consequences for such stockholders, asdiscussed below under Item 10 ‘‘Tax Considerations —United States Federal Income Taxation of United StatesHolders’’), such stockholders would be liable to pay UnitedStates federal income tax at the then prevailing income tax rates onordinary income plus interest upon excess distributions and upon anygain from the disposition of our shares of common stock, as if theexcess distribution or gain had been recognized ratably over thestockholder's holding period of our shares of common stock. SeeItem 10 ‘‘Tax Considerations — United States FederalIncome Tax Considerations — United States Federal Income Taxationof United States Holders’’ for a 

17

----

Table of Contents

more comprehensive discussion of the UnitedStates federal income tax consequences to United States stockholders ifwe are treated as a PFIC.

We are incorporated in theRepublic of the Marshall Islands, which does not have a well-developedbody of corporate law

Our corporate affairs are governedby our articles of incorporation and bylaws and by the Marshall IslandsBusiness Corporations Act, or BCA. The provisions of the BCA resembleprovisions of the corporation laws of a number of states in the UnitedStates. However, there have been few judicial cases in the Republic ofthe Marshall Islands interpreting the BCA. The rights and fiduciaryresponsibilities of directors under the law of the Republic of theMarshall Islands are not as clearly established as the rights andfiduciary responsibilities of directors under statutes or judicialprecedent in existence in certain United States jurisdictions.Stockholder rights may differ as well. While the BCA does specificallyincorporate the non-statutory law, or judicial case law, of the Stateof Delaware and other states with substantially similar legislativeprovisions, our public stockholders may have more difficulty inprotecting their interests in the face of actions by the management,directors or controlling stockholders than would stockholders of acorporation incorporated in a United States jurisdiction.

It may be difficult to enforce service of process andenforcement of judgments against us and our officers anddirectors

We are a Marshall Islands company, and ourexecutive offices are located outside of the United States in Athens,Greece. All but one of our directors and officers reside outside of theUnited States, and most of our assets and their assets are locatedoutside the United States. As a result, you may have difficulty servinglegal process within the United States upon us or any of these persons.You may also have difficulty enforcing, both in and outside the UnitedStates, judgments you may obtain in the United States courts against usor these persons in any action, including actions based upon the civilliability provisions of United States federal or state securitieslaws.

There is also substantial doubt that the courts of theMarshall Islands or Greece would enter judgments in original actionsbrought in those courts predicated on United States, federal or statesecurities laws.

Risks Related To Our Shares of CommonStock

We may not be able to pay cash dividends on ourshares of common stock as intended.

We intend to declareand pay dividends to stockholders quarterly in amounts our Board ofDirectors determines are appropriate. We made a dividend payment of$0.1875 per share in January  2006. However, we could incurexpenses, obligations or liabilities that would reduce or eliminate thecash we have available for distribution as dividends. Our loanagreements, including the loan agreements with Fortis Bank and DnB NORBank, or other financing arrangements, as well as Marshall Islands law,may also restrict or prohibit our declaration and payment of dividendsunder some circumstances. There can be no assurance that we will payregular quarterly dividends in the future. Such dividends as we do paymay be in amounts less than the $0.1875 per share dividend we declaredand paid in January  2006.

Identifying and acquiring othervessels may take a significant amount of time. We may not be able toearn charterhire consistent with our current anticipations, and ourprofitability and our ability to pay dividends will be affected.

In addition, the declaration and payment of dividends will besubject at all times to the discretion of our Board of Directors. Thetiming and amount of dividends will depend on our earnings, financialcondition, cash requirements and availability, fleet renewal andexpansion, restrictions in our loan agreements or other financingarrangements, the provisions of Marshall Islands law affecting thepayment of dividends and other factors. Marshall Islands law generallyprohibits the payment of dividends other than from surplus or while acompany is insolvent or would be rendered insolvent upon the payment ofsuch dividends.

18

----

Table of Contents

Anti-takeover provisions inour organizational documents could make it difficult for ourstockholders to replace or remove our current Board of Directors orhave the effect of discouraging, delaying or preventing a merger oracquisition, which could adversely affect the market price of ourcommon stock

Several provisions of our amended andrestated articles of incorporation and bylaws could make it difficultfor our stockholders to change the composition of our Board ofDirectors in any one year, preventing them from changing thecomposition of management. In addition, the same provisions maydiscourage, delay or prevent a merger or acquisition that stockholdersmay consider favorable.

These provisions include:

|  |              |                                                                                                                                 |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------|
|  | •  | authorizing our Boardof Directors to issue ‘‘blank check’’ preferredstock without stockholder approval; |

|  |              |                                                                               |
|--|--------------|-------------------------------------------------------------------------------|
|  | •  | providing for aclassified Board of Directors with staggered three-year terms; |

|  |              |                                                            |
|--|--------------|------------------------------------------------------------|
|  | •  | prohibiting cumulativevoting in the election of directors; |

|  |              |                                                                                                                                                                                             |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | authorizing theremoval of directors only for cause and only upon the affirmative voteof the holders of 80% of the outstanding shares of our commonstock entitled to vote for the directors; |

|  |              |                                                                    |
|--|--------------|--------------------------------------------------------------------|
|  | •  | limiting the personswho may call special meetings of stockholders; |

|  |              |                                                                                                                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | establishing advancenotice requirements for nominations for election to our Board ofDirectors or for proposing matters that can be acted on by stockholdersat stockholder meetings; and |

|  |              |                                                               |
|--|--------------|---------------------------------------------------------------|
|  | •  | prohibiting certaintransactions with interested stockholders. |

These anti-takeoverprovisions could substantially impede the ability of publicstockholders to benefit from a change in control and, as a result, mayadversely affect the market price of our common stock and your abilityto realize any potential change of control premium.

|              |                            |
|--------------|----------------------------|
| Item4.  | Information on the Company |

We wereincorporated in December  2004 in the Republic of the MarshallIslands. In October  2005, we completed an initial publicoffering of our shares of common stock in the United States and ourshares of common stock began trading on the Nasdaq National Market. Ourprincipal executive offices are located at 331 Kiffissias Avenue,Erithrea 14561 Athens, Greece. Our telephone number for callsoriginating from the United States is +(30) (210) 6250001. Prior to theinitial public offering, we owned nine LPG carriers. Since the initialpublic offering, we have grown our fleet to 24 LPG carriers and weintend to expand to 28 vessels within the year 2006.

A list ofour subsidiaries as of April 17, 2006, all of which are wholly owned byus, is set forth in Exhibit 8 to this Annual Report on Form 20-F.

Business Overview

We own a fleet of LPG carriers providinginternational seaborne transportation services to LPG producers andusers. We carry various petroleum gas products in liquefied form,including propane, butane, butadiene, isopropane, propylene and vinylchloride monomer, which are all byproducts of the production of crudeoil and natural gas. We believe that we have established a reputationas a safe, cost efficient operator of modern and well-maintained LPGcarriers. We also believe that these attributes, together with ourstrategic focus on meeting our customers’ chartering needs, hascontributed to our ability to attract leading charterers as ourcustomers and to our success in obtaining charter renewals. We aremanaged by Stealth Maritime, a privately owned company controlled bythe Vafias Group.

19

----

Table of Contents

As of March  31,  2006, ourfleet consisted of 24 vessels whose average age was 10.8 years.

Our fleet as of March  31,  2006

|                |  |           |        |                  |  |                    |         |               |  |                   |  |                      |  |                     |  |                |  |        |         |        |  |  |  |  |  |  |  |  |  |  |
|----------------|--|-----------|--------|------------------|--|--------------------|---------|---------------|--|-------------------|--|----------------------|--|---------------------|--|----------------|--|--------|---------|--------|--|--|--|--|--|--|--|--|--|--|
|           |  | YearBuilt |        | VesselSize (cbm) |  | Type ofLPG Carrier |         | Delivery Date |  | EmploymentStatus  |  | Expirationof Charter |  | MonthlyCharter Rate |
| Gas Cathar(1)  |  |      | 2001   |             |  |               | 7,517   |          |  | fully-pressurized |  | October2005          |  | timecharter         |  | August2007     |  | $      | 365,000 |   |
| Gas Marathon   |  |      | 1995   |             |  |               | 6,572   |          |  | fully-pressurized |  | November  2005       |  | bareboat            |  | October  2007  |  |   | 220,000 |   |
| Gas Chios      |  |      | 1991   |             |  |               | 6,562   |          |  | fully-pressurized |  | October  2005        |  | timecharter         |  | March  2007    |  |   | 300,000 |   |
| Gas Amazon     |  |      | 1992   |             |  |               | 6,526   |          |  | fully-pressurized |  | May  2005            |  | timecharter         |  | May  2006      |  |   | 420,000 |   |
| Gas Monarch(2) |  |      | 1997   |             |  |               | 5,018   |          |  | fully-pressurized |  | December2005         |  | time charter        |  | June  2007     |  |   | 295,000 |   |
| Gas Emperor    |  |      | 1995   |             |  |               | 5,013   |          |  | fully-pressurized |  | February2005         |  | time charter        |  | June  2007     |  |   | 245,000 |   |
| Birgit Kosan   |  |      | 1995   |             |  |               | 5,012   |          |  | fully-pressurized |  | April2005            |  | bareboat            |  | April  2007    |  |   | 190,000 |   |
| Catterick      |  |      | 1995   |             |  |               | 5,001   |          |  | fully-pressurized |  | November2005         |  | time charter        |  | February  2007 |  |   | 300,000 |   |
| Gas Sincerity  |  |      | 2000   |             |  |               | 4,123   |          |  | fully-pressurized |  | November2005         |  | time charter        |  | July  2006     |  |   | 285,000 |   |
| Gas Spirit(3)  |  |      | 2001   |             |  |               | 4,112   |          |  | fully-pressurized |  | December  2005       |  | time charter        |  | June2007       |  |   | 195,000 |   |
| FeistyGas(4)   |  |      | 2001   |             |  |               | 4,111   |          |  | fully-pressurized |  | December  2005       |  | timecharter         |  | August  2006   |  |   | 199,000 |   |
| Gas Courchevel |  |      | 1991   |             |  |               | 4,109   |          |  | semi-refrigerated |  | November  2004       |  | timecharter         |  | August  2006   |  |   | 395,000 |   |
| Gas Prophet    |  |      | 1996   |             |  |               | 3,556   |          |  | fully-pressurized |  | October  2004        |  | spot                |  | —        |  |   | — |   |
| GasShanghai    |  |      | 1999   |             |  |               | 3,526   |          |  | fully-pressurized |  | December  2004       |  | spot                |  | —        |  |   | — |   |
| GasCzar(5)     |  |      | 1995   |             |  |               | 3,510   |          |  | fully-pressurized |  | February  2006       |  | timecharter         |  | November  2007 |  |   | 171,250 |   |
| Gas Legacy     |  |      | 1998   |             |  |               | 3,500   |          |  | fully-pressurized |  | October  2005        |  | timecharter         |  | April2007      |  |   | 250,000 |   |
| Gas Fortune    |  |      | 1995   |             |  |               | 3,500   |          |  | fully-pressurized |  | February  2006       |  | time charter        |  | December2006   |  |   | 184,000 |   |
| Gas Eternity   |  |      | 1998   |             |  |               | 3,500   |          |  | fully-pressurized |  | March  2006          |  | spot                |  | —        |  |   | — |   |
| Gas Arctic(6)  |  |      | 1992   |             |  |               | 3,434   |          |  | semi-refrigerated |  | April  2005          |  | bareboat            |  | April  2009    |  |   | 190,000 |   |
| Gas Ice(6)     |  |      | 1991   |             |  |               | 3,434   |          |  | semi-refrigerated |  | April  2005          |  | bareboat            |  | April  2008    |  |   | 174,250 |   |
| Gas Crystal    |  |      | 1990   |             |  |               | 3,211   |          |  | semi-refrigerated |  | November2005         |  | spot                |  | —        |  |   | — |   |
| Gas Oracle     |  |      | 1990   |             |  |               | 3,014   |          |  | fully-pressurized |  | December  2005       |  | timecharter         |  | May  2006      |  |   | 118,000 |   |
| Gas Prodigy    |  |      | 1995   |             |  |               | 3,014   |          |  | fully-pressurized |  | October 2005         |  | timecharter         |  | December  2006 |  |   | 219,000 |   |
| Gas Tiny       |  |      | 1991   |             |  |               | 1,320   |          |  | semi-refrigerated |  | October  2004        |  | timecharter         |  | December  2006 |  |   | 120,000 |   |
| TOTAL          |  |      |   |             |  |               | 102,195 |          |  |              |  |                 |  |                |  |           |  |   |    |   |
|                |

|  |
|--|
|  |  |
|  |

|     |                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------|
| (1) | AfterAugust  2006, the vessel will be employed for a further one yearperiod at a rate of $355,000. |

|     |                                                                      |
|-----|----------------------------------------------------------------------|
| (2) | As of February24,  2005, the Sweet Dream was renamed the GasMonarch. |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (3) | After June  2006,the rate for the 12 month period for the vessel after June  2006will be $250,000 per month. |

|     |                                                              |
|-----|--------------------------------------------------------------|
| (4) | As of April 3, 2006, theFeisty Gas was renamed the Gas Zael. |

|     |                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | After November2006, the rate for the vessel for the period between December2006 and November  2007 will be agreed no later than thecommencement of the charter extension for the 12 months and will rangebetween a minimum of $190,000 and a maximum of $210,000. |

|     |                                                                                                                                          |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | These vessels areiceclass ships. Iceclass ships are capable of stable operations inextreme conditions and have ice-pushing capabilities. |

20

----

Table of Contents

Commercial and Technical Management ofOur Fleet

We have a five year management agreement with StealthMaritime which expires in December  2009 under which StealthMaritime will be responsible for the administration of our affairs andthe commercial and technical management of our fleet. Under theagreement, we pay Stealth Maritime a management fee of $390 (based onan exchange rate of €1.00:US$1.25) per vessel operatingunder a voyage or time charter per day on a monthly basis in advance,pro rated for the calendar days we own the vessels. We pay a fee of$125 (based on an exchange rate of €1.00:US$1.25) pervessel per day for each of our vessels operating on bareboat charter.The management fee will be adjusted quarterly based on the UnitedStates dollar/Euro exchange rate as published by Bloomberg LP two daysprior to the end of the previous calendar quarter. We are alsoobligated to pay Stealth Maritime a fee equal to 1.25% of thegross freight, demurrage and charter hire collected from the employmentof our vessels. Stealth Maritime will also earn a fee equal to1.0% of the contract price of any vessel bought or sold by themon our behalf. In addition, as long as Stealth Maritime is our fleetmanager, Stealth Maritime has granted us a right of first refusal toacquire any LPG carrier, which Stealth Maritime may acquire in thefuture. In addition, Stealth Maritime has agreed that it will notcharter-in any LPG carrier without first offering the opportunity tocharter-in such vessel to us. This right of first refusal does notprohibit Stealth Maritime from managing vessels owned by unaffiliatedthird parties in competition with us. Additional vessels that we mayacquire in the future may be managed by Stealth Maritime, which is anaffiliate of the Vafias Group, or by other unaffiliated managementcompanies. In addition, we reimburse Stealth Maritime for its paymentof the compensation to our CEO and Chief Financial Officer. During theyear ended December  31,  2005, such compensation was inthe aggregate amount of €513,559 (US$608,156, based on theexchange rate of €1.00:US$1.1842 in effect onDecember  29,  2005) on an annualized basis. Of thisamount, €188,862 ($223,651, based on the exchange rate of€1.00:US$1.1842 in effect on December 29, 2005) was paidto our CEO and Chief Financial Officer since our CEO was paid for onlyfour months of service and our Chief Financial Officer for only sixmonths of service provided to us during the year ended December 31,2005.

Stealth Maritime currently subcontracts the technicalmanagement of the vessels in our fleet, other than the GasEternity, which Stealth Maritime has technically managed as ofMarch 31, 2006, to either V.Ships, a ship management company based inCyprus, Tesma, a ship management company based in Singapore, HanseaticShipping Co. Ltd., or Hanseatic Shipping, a privately owned shipmanagement company in Cyprus or Swan Shipping Corporation (Manila), orSwan Shipping, a ship management company based in the Philippines.These four technical managers, which Stealth Maritime will continue tosupervise, are responsible for the day-to-day activities of thosevessels including the operation, crewing, maintenance and repair of ourships; they also must ensure that our vessels’ operations complywith environmental and other regulatory requirements. V.Ships is aninternational ship management company with offices in 26 countries. Itservices a fleet of over 600 vessels of all major vessel types. Since2001, V.Ships has been the largest provider of independent shipmanagement and related marine services to the shipping industry in theworld. Tesma (Singapore) is one of the technical competence centers ofTesma Holding, a Danish alliance network of professional shipmanagement companies currently providing full technical service to over70 vessels and providing crews to over 150 vessels. Hanseatic Shippinghas more than 230 ships in management including containerships, bulkcarriers, oil tankers, gas carriers, RoRos and multi-purpose ships.Hanseatic Shipping was the first off-shore ship management company inCyprus and played an active role in establishing Cyprus as a leadingship management center. Swan Shipping, originally a joint venturecompany between Southwest Maritime Corporation of Manila and NavixMarine (S) Pte. Ltd. of Singapore, has been involved in ship managementoperations in the Philippines since 1995 and has provided fulltechnical management services to 17 LPG carriers. The technicalmanagement agreements with V.Ships (Cyprus), Tesma (Singapore),Hanseatic Shipping and Swan Shipping may be terminated at any time uponthree months' notice.

21

----

Table of Contents

The following chart illustrates themanagement of our fleet:

|  |
|--|
|  |  |
|  |

|   |                                                                                                                    |
|---|--------------------------------------------------------------------------------------------------------------------|
| * | Asof March 31, 2006, Stealth Maritime has served as the technical managerfor one of our vessels, the Gas Eternity. |

Crewingand Employees

We have no salaried employees, although wereimburse our fleet manager, Stealth Maritime, for the salaries of ourCEO and CFO. Stealth Maritime ensures that all seamen have thequalifications and licenses required to comply with internationalregulations and shipping conventions, and that our vessels employexperienced and competent personnel.

V.Ships (Cyprus), Tesma(Singapore), Hanseatic Shipping, Swan Shipping and Stealth Maritime,for the vessel it technically manages, are responsible for the crewingof the fleet. These responsibilities include training, compensation,transportation and insurance of the crew.

Chartering of theFleet

We, through Stealth Maritime, manage the employment ofour fleet. We deploy our fleet between period charters, including timeand bareboat charters which can last up to several years, and spotmarket charters (through voyage charters and short-term time charters),which generally last from one to six months, subject to marketconditions. Period charters and short-term time charters are for afixed period of time. A voyage charter is generally a contract to carrya specific cargo from a loading port to a discharging port for anagreed-upon total charge.

Vessels operating on period charterprovide more predictable cash flows, but can yield lower profit marginsthan vessels operating in the spot market during periods characterizedby favorable market conditions. As a result, during the time our LPGcarriers are committed on period charters, we will be unable, duringperiods of improving charter markets, to take advantage of improvedcharter rates as we could if our LPG carriers were employed only onspot charters. Vessels operating in the spot market generate revenuesthat are less predictable but may enable us to capture increased profitmargins during periods of improvements in LPG charter rates although weare then exposed to the risk of declining LPG carrier charter rates,which may have a materially adverse impact on our financialperformance. If we commit vessels to period charters, future spotmarket rates may be higher or lower than those rates at which we haveperiod chartered our vessels.

Customers

Our assessmentof a charterer's financial condition and reliability is animportant factor in negotiating employment for our vessels. Principalcharterers include producers of LPG products, such as national, majorand other independent energy companies and energy traders, andindustrial users of those products. Our largest customer is PetredecLtd., and our other customers include Dow Chemical 

22

----

Table of Contents

Company, Finaval SpA, Petrobras and Shell.For the year ended December  31,  2005, approximately69% of our revenue was derived from our top five charterers asfollows:

|             |  |                              |    |         |  |  |
|-------------|--|------------------------------|----|---------|--|--|
| Customer    |  | Year Ended December 31, 2005 |
| Petredec    |  |                         | 32 | %  |
| DowChemical |  |                         | 11 | %  |
| Finaval     |  |                         | 9  | %  |
| Petrobras   |  |                         | 9  | %  |
| Shell       |  |                         | 8  | %  |
|             |

Environmental and otherRegulations

Government regulation significantly affects theownership and operation of our vessels. They are subject tointernational conventions, national, state and local laws andregulations in force in the countries in which our vessels may operateor are registered.

A variety of governmental and privateentities subject our vessels to both scheduled and unscheduledinspections. These entities include the local port authorities (UnitedStates Coast Guard, harbor master or equivalent), classificationsocieties, flag state administration (country of registry) andcharterers, particularly terminal operators. Certain of these entitiesrequire us to obtain permits, licenses and certificates for theoperation of our vessels. Failure to maintain necessary permits orapprovals could require us to incur substantial costs or temporarilysuspend operation of one or more of our vessels.

We believe thatthe heightened level of environmental and quality concerns amonginsurance underwriters, regulators and charterers is leading to greaterinspection and safety requirements on all vessels and may acceleratethe scrapping of older vessels throughout the industry. Increasingenvironmental concerns have created a demand for vessels that conformto the stricter environmental standards. We are required to maintainoperating standards for all of our vessels that will emphasizeoperational safety, quality maintenance, continuous training of ourofficers and crews and compliance with United States and internationalregulations. We believe that the operation of our vessels is insubstantial compliance with applicable environmental laws andregulations; however, because such laws and regulations are frequentlychanged and may impose increasingly stricter requirements, such futurerequirements may limit our ability to do business, increase ouroperating costs, force the early retirement of our vessels, and/oraffect their resale value, all of which could have a material adverseeffect on our financial condition and results of operations.

Environmental Regulation — International MaritimeOrganization (‘‘IMO’’)

Our vesselsare subject to standards imposed by the International MaritimeOrganization, or ‘‘IMO’’ (the United Nationsagency for maritime safety and the prevention of pollution by ships).In order to operate in the navigable waters of the IMO's memberstates, liquefied gas carriers must have an IMO Certificate of Fitnessdemonstrating compliance with construction codes for liquefied gascarriers. These codes, and similar regulations in individual memberstates, address fire and explosion risks posed by the transport ofliquefied gases. Collectively, these standards and regulations imposedetailed requirements relating to the design and arrangement of cargotanks, vents, and pipes; construction materials and compatibility;cargo pressure; and temperature control.

In addition, we aresubject to international conventions that regulate pollution ininternational waters and a signatory's territorial waters. Underthe IMO regulations, gas carriers that comply with the IMOcertification requirements are deemed to satisfy the requirements ofAnnex II of the International Convention for the Prevention ofPollution from Ships (‘‘MARPOL’’) applicable totransportation of chemicals at sea, which would otherwise apply tocertain liquefied gases. The IMO revised the Annex II regulations thatrestrict discharges of ‘‘noxious liquidsubstances’’ during cleaning or deballasting operations.The revisions are scheduled to take effect in January  2007. Asinterpreted by the IMO at meetings in April  2005, theserevisions will not impose further restriction on the types ofsubstances gas carriers may carry under their gas carrier codecertificates of fitness, nor will they 

23

----

Table of Contents

require changes in the manner in whichproduct tanks must be cleaned. In September  1997, the IMOadopted MARPOL Annex VI to address air pollution from ships. Annex VIwas ratified in May  2004, and became effective in May2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissionsfrom ship exhausts and prohibit deliberate emissions of ozone depletingsubstances, such as chlorofluorocarbons. Annex VI also includes aglobal cap on the sulfur content of fuel oil and allows for specialareas to be established with more stringent controls on sulfuremissions. Annex VI has been ratified by some, but not all IMO memberstates. Vessels that are subject to Annex VI must, if built before theeffective date, obtain an International Air Pollution PreventionCertificate evidencing compliance with Annex VI not later than eitherthe first dry docking after May 19, 2005, but no later than May 19,2008. All vessels subject to Annex VI and built after May 19, 2005 mustalso have this Certificate. Options for implementing the requirementsof Annex VI include use of low sulfur fuels, modifications to vesselengines, or the addition of post combustion emission controls. We haveobtained International Oil Pollution Prevention Certificates for all ofour vessels, and believe that maintaining compliance with Annex VI willnot have an adverse financial impact on the operation of ourvessels.

The operation of our vessels is also affected by therequirements set forth in the IMO's International Management Codefor the Safe Operation of Ships and Pollution Prevention, which wereadopted in July  1998 (‘‘ISM Code’’). TheISM Code requires shipowners and bareboat charterers to develop andmaintain an extensive ‘‘Safety ManagementSystem’’ that includes the adoption of a safety andenvironmental protection policy setting forth instructions andprocedures for safe operation and describing procedures for dealingwith emergencies. The failure of a shipowner or bareboat charterer tocomply with the ISM Code may subject such party to increased liability,decrease available insurance coverage for the affected vessels andresult in a denial of access to, or detention in, certain ports.Currently, each of the vessels in our fleet is ISM code-certified.However, there can be no assurance that such certification will bemaintained indefinitely.

Environmental Regulations —The United States Oil Pollution Act of 1990(‘‘OPA’’).

The United States OilPollution Act of 1990, or OPA, established an extensive regulatory andliability regime for the protection and cleanup of the environment fromoil spills. OPA applies to discharges of any oil from a vessel,including discharges of fuel and lubricants from an LPG carrier. OPAaffects all owners and operators whose vessels trade in the UnitedStates, its territories and possessions or whose vessels operate inUnited States waters, which includes the United States'territorial sea and its two hundred nautical mile exclusive economiczone. Although our gas carriers will not be carrying oil in bulk ascargo, and will therefore not be subject to liability under theprovisions of OPA 90 (except in the case of a discharge of fuel oil orbunkers), gas carriers are considered‘‘vessels’’ for purposes of OPA financialresponsibility requirements discussed below.

Under OPA, vesselowners, operators and bareboat charterers are ‘‘responsibleparties’’ and are jointly, severally and strictly liable(unless the discharge of pollutants results solely from the act oromission of a third party, an act of God or an act of war) for allcontainment and clean-up costs and other damages arising fromdischarges or threatened discharges of pollutants from their vessels.OPA defines these other damages broadly to include:

|  |              |                                                              |
|--|--------------|--------------------------------------------------------------|
|  | •  | natural resources damage andthe costs of assessment thereof; |

|  |              |                                   |
|--|--------------|-----------------------------------|
|  | •  | real and personal propertydamage; |

|  |              |                                                                   |
|--|--------------|-------------------------------------------------------------------|
|  | •  | net loss of taxes,royalties, rents, fees and other lost revenues; |

|  |              |                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------|
|  | •  | lost profits or impairment ofearning capacity due to property or natural resources damage; and |

|  |              |                                                                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | net cost of public servicesnecessitated by a spill response, such as protection from fire, safetyor health hazards, and loss of subsistence use of naturalresources. |

OPA limits the liability of responsible parties tothe greater of $600 per gross ton or $0.5  million per drybulkvessel that is over 300 gross tons (subject to possible adjustment forinflation). These 

24

----

Table of Contents

limits of liability do not apply if anincident was directly caused by violation of applicable United Statesfederal safety, construction or operating regulations or by aresponsible party's gross negligence or willful misconduct, or ifthe responsible party fails or refuses to report the incident or tocooperate and assist in connection with oil removal activities.

We currently maintain, for each of our vessels, pollution liabilitycoverage insurance in the amount of $1  billion per incident. Inaddition, we carry hull and machinery and protection and indemnityinsurance to cover the risks of fire and explosion. Given therelatively small amount of bunkers our vessels carry, we believe that aspill of oil from the vessels would not be catastrophic. However, undercertain circumstances, fire and explosion could result in acatastrophic loss. While we believe that our present insurance coverageis adequate, not all risks can be insured, and there can be noguarantee that any specific claim will be paid, or that we will alwaysbe able to obtain adequate insurance coverage at reasonable rates. Ifthe damages from a catastrophic spill exceeded our insurance coverage,it would a severe effect on us and could possibly result in ourinsolvency.

OPA requires owners and operators of vessels toestablish and maintain with the United States Coast Guard evidence offinancial responsibility sufficient to meet their potential liabilitiesunder the OPA. In December  1994, the United States Coast Guardimplemented regulations requiring evidence of financial responsibilityin the amount of $1,500 per gross ton, which includes the OPAlimitation on liability of $1,200 per gross ton and the United StatesComprehensive Environmental Response, Compensation, and Liability Actliability limit of $300 per gross ton. Under the United States CoastGuard regulations implementing OPA, vessel owners and operators mayevidence their financial responsibility by showing proof of insurance,surety bond, self-insurance, or guaranty. Under the OPA regulations, anowner or operator of a fleet of vessels is required only to demonstrateevidence of financial responsibility in an amount sufficient to coverthe vessels in the fleet having the greatest maximum liability underOPA.

The United States Coast Guard's regulations concerningcertificates of financial responsibility provide, in accordance withOPA, that claimants may bring suit directly against an insurer orguarantor that furnishes certificates of financial responsibility. Inthe event that such insurer or guarantor is sued directly, it isprohibited from asserting any contractual defense that it may have hadagainst the responsible party and is limited to asserting thosedefenses available to the responsible party and the defense that theincident was caused by the willful misconduct of the responsible party.Certain organizations, which had typically provided certificates offinancial responsibility under pre-OPA 90 laws, including the majorprotection and indemnity organizations, have declined to furnishevidence of insurance for vessel owners and operators if they aresubject to direct actions or required to waive insurance policydefenses.

The United States Coast Guard's financialresponsibility regulations may also be satisfied by evidence of suretybond, guaranty or by self-insurance. Under the self-insuranceprovisions, the ship owner or operator must have a net worth andworking capital, measured in assets located in the United Statesagainst liabilities located anywhere in the world, that exceeds theapplicable amount of financial responsibility. We have complied withthe United States Coast Guard regulations by providing a financialguaranty evidencing sufficient self-insurance.

OPA specificallypermits individual states to impose their own liability regimes withregard to oil pollution incidents occurring within their boundaries,and some states have enacted legislation providing for unlimitedliability for oil spills. In some cases, states, which have enactedsuch legislation, have not yet issued implementing regulations definingvessels owners' responsibilities under these laws. We intend tocomply with all applicable state regulations in the ports where ourvessels call.

Environmental Regulation — OtherEnvironmental Initiatives

The European Union is consideringlegislation that will affect the operation of vessels and the liabilityof owners for oil pollution. It is difficult to predict whatlegislation, if any, may be promulgated by the European Union or anyother country or authority.

25

----

Table of Contents

Vessel Security Regulations

Since the terrorist attacks of September  11,  2001,there have been a variety of initiatives intended to enhance vesselsecurity. On November  25,  2002, the MaritimeTransportation Security Act of 2002, or MTSA, came into effect in theUnited States. To implement certain portions of the MTSA, inJuly  2003, the United States Coast Guard issued regulationsrequiring the implementation of certain security requirements aboardvessels operating in waters subject to the jurisdiction of the UnitedStates. Similarly, in December  2002, amendments to theInternational Convention for the Safety of Life at Sea, or SOLAS,created a new chapter of the convention dealing specifically withmaritime security. The new chapter went into effect in July2004, and imposes various detailed security obligations on vessels andport authorities, most of which are contained in the newly createdInternational Ship and Port Facilities Security or, ISPS, Code. Amongthe various requirements are:

|  |              |                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------|
|  | •  | on-board installation ofautomatic information systems, or AIS, to enhance vessel-to-vessel andvessel-to-shore communications; |

|  |              |                                                      |
|--|--------------|------------------------------------------------------|
|  | •  | on-board installation of shipsecurity alert systems; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | thedevelopment of vessel security plans; and |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | compliance with flag statesecurity certification requirements. |

The United States CoastGuard regulations, intended to align with international maritimesecurity standards, exempt non-United States vessels from MTSA vesselsecurity measures provided such vessels have on board, by July1,  2004, a valid International Ship Security Certificate (ISSC)that attests to the vessel's compliance with SOLAS securityrequirements and the ISPS Code. We will implement the various securitymeasures addressed by the MTSA, SOLAS and the ISPS Code and ensure thatour vessels attain compliance with all applicable security requirementswithin the prescribed time periods. We do not believe these additionalrequirements will have a material financial impact on ouroperations.

Classification and inspection

All ourvessels are certified as being ‘‘in class’’ byBureau Veritas, NKK, Det Norske Veritas, the American Bureau ofShipping and RINA SpA. All new and secondhand vessels that we purchasemust be certified prior to their delivery under our standard contractsand memorandum of agreement. If the vessel is not certified on the dateof closing, we have no obligation to take delivery of the vessel. Everyvessel’s hull and machinery is‘‘classed’’ by a classification societyauthorized by its country of registry. The classification societycertifies that the vessel has been built and maintained in accordancewith the rules of such classification society and complies withapplicable rules and regulations of the country of registry of thevessel and the international conventions of which that country is amember. Each vessel is inspected by a surveyor of the classificationsociety every year, an annual survey, every two to three years, anintermediate survey, and every four to five years, a special survey.Vessels also may be required, as part of the intermediate surveyprocess, to be dry-docked every 30 to 36 months for inspection of theunderwater parts of the vessel and for necessary repair related to suchinspection.

In addition to the classification inspections, manyof our customers, including the major oil companies, regularly inspectour vessels as a precondition to chartering voyages on these vessels.We believe that our well-maintained, high quality tonnage shouldprovide us with a competitive advantage in the current environment ofincreasing regulation and customer emphasis on quality of service.

All areas subject to survey as defined by the classification societyare required to be surveyed at least once per class period, unlessshorter intervals between surveys are prescribed elsewhere. The periodbetween two subsequent surveys of each area must not exceed fiveyears.

Most vessels are also drydocked every 30 to 36 months forinspection of the underwater parts and for repairs related toinspections. If any defects are found, the classification surveyor willissue a ‘‘recommendation’’ which must berectified by the ship owner within prescribed time limits.

Mostinsurance underwriters make it a condition for insurance coverage thata vessel be certified as ‘‘in class’’ by aclassification society which is a member of the InternationalAssociation of 

26

----

Table of Contents

Classification Societies. All our vesselsare certified as being ‘‘in class’’ by BureauVeritas, NKK, Det Norske Veritas, the American Bureau of Shipping andRINA SpA. All new and second hand vessels that we purchase must becertified prior to their delivery under our standard contracts andmemorandum of agreement. If the vessel is not certified on the date ofclosing, we have no obligation to take delivery of the vessel.

Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanicalfailure, physical damage, collision, property loss, cargo loss ordamage and business interruption due to political circumstances inforeign countries, hostilities and labor strikes. In addition, there isalways an inherent possibility of marine disaster, includingenvironmental mishaps, and the liabilities arising from owning andoperating vessels in international trade. While we believe that ourpresent insurance coverage is adequate, not all risks can be insured,and there can be no guarantee that any specific claim will be paid, orthat we will always be able to obtain adequate insurance coverage atreasonable rates.

Hull and Machinery Insurance

We have obtained marine hull and machinery and war risk insurance,which includes the risk of actual or constructive total loss, for allof our vessels. The vessels are each covered up to at least fair marketvalue, with deductibles of $75,000 per vessel.

We also arrangedincreased value insurance for most of the vessels. Under the increasedvalue insurance in case of total loss of the vessel we will be able torecover the sum insured under the increased value policy in addition tothe sum insured under the Hull and Machinery policy. Increased valueinsurance also covers excess liabilities which are not recoverable infull by the Hull and Machinery policies by reason of underinsurance.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protectionand indemnity associations, or P&I Associations, which covers ourthird party liabilities in connection with our shipping activities.This includes third-party liability and other related expenses ofinjury or death of crew, passengers and other third parties, loss ordamage to cargo, claims arising from collisions with other vessels,damage to other third-party property, pollution arising from oil orother substances, and salvage, towing and other related costs,including wreck removal. Protection and indemnity insurance is a formof mutual indemnity insurance, extended by protection and indemnitymutual associations, or ‘‘clubs.’’ Subject tothe ‘‘capping’’ discussed below, our coverage,except for pollution, is unlimited.

Our current protection andindemnity insurance coverage for pollution is $1.0  billion pervessel per incident. The 14 P&I Associations that comprise theInternational Group insure approximately 90% of the world'scommercial tonnage and have entered into a pooling agreement toreinsure each association's liabilities. Each P&I Associationhas capped its exposure to this pooling agreement at $4.5billion. As a member of a P&I Association, which is a member of theInternational Group, we are subject to calls payable to theassociations based on its claim records as well as the claim records ofall other members of the individual associations, and members of thepool of P&I Associations comprising the International Group.

Competition

The world wide LPG sector is comparativelysmaller than other shipping sectors, consisting of approximately 930ships as of December  2005. Overall throughout the LPG sectorapproximately 125 new buildings are on order and expected to bedelivered from 2006 to the end of 2009. However in our specific sectorof Handy Sized vessels i.e. 500 cbm to 8,000 cbm only 53 vessels are onorder over the next three years, while some 34% of the fleet inthis sector is 20 years or older. Our fleet has an 

27

----

Table of Contents

average age of 10.8 years thus we believe weare well positioned from a competitive standpoint in terms of ourvessels meeting the ongoing needs of increasingly discerningcharterers. Also we now have the largest single-owned fleet in oursector which also in our view positions us well from the standpoint ofcharterers and competitors alike. However we believe the LPG shippingsector will continue to be highly competitive, and driven by bothenergy production and consumption. However due to our rapid expansionduring 2005 we believe we have enhanced our competitive position withinthe industry and that we have increasingly gained the respect of ourcustomer base.

Employees

We have no salaried employees.As of December  31,  2005, 156 officers and 155 crewmembers served on board the vessels in our fleet.

Properties

We have no freehold or leasehold interest in anyreal property. We lease office space from the Vafias Group. The initiallease term is three years beginning January  3,  2005 withthree consecutive options to renew for a one-year term at our optionthereafter. The total rent per year is $31,200. We believe this is nomore than would be incurred on an arm's length basis with anunaffiliated landlord.

|                |                          |
|----------------|--------------------------|
| Item 4A.  | UnresolvedStaff Comments |

None.

|              |                                             |
|--------------|---------------------------------------------|
| Item5.  | Operating and Financial Review andProspects |

The following discussion of our financialcondition and results of operations should be read in conjunction withthe financial statements and the notes to those statements includedelsewhere in this Annual Report. This discussion includesforward-looking statements that involve risks and uncertainties. As aresult of many factors, such as those set forth under Item 3"Key Information—Risk Factors" andelsewhere in this Annual Report, our actual results may differmaterially from those anticipated in these forward-lookingstatements.

Overview

Incorporated under the laws ofthe Republic of the Marshall Islands in December  2004, we areinvolved in providing international seaborne transportation services toLPG producers and users. We carry various petroleum gas products inliquefied form, including propane, butane, butadiene, isopropane,propylene and vinyl chloride monomer, which are all byproducts of theproduction of crude oil and natural gas. As of December31,  2004, our fleet consisted of four LPG carriers, the first ofwhich was delivered in October  2004. As of December31,  2005, our fleet consisted of 21 vessels and has since grownto 24 vessels. We generated revenues from our LPG transportationbusiness only during the period from October  12 throughDecember  31 in 2004. As a result, comparisons of our results ofoperations for the years ended December  31,  2005 with theperiod ended December  31,  2004 are not meaningful orindicative of our future operating results. We took delivery of 17 LPGcarriers in the year ended December  31,  2005. InOctober  2005, we completed an initial public offering of ourshares of common stock in the United States and our shares of commonstock began trading on the Nasdaq National Market.

We, throughStealth Maritime, manage the employment of our fleet. We intend tocontinue to deploy our fleet under period charters including time andbareboat charters, which can last up to several years, and spot marketor voyage charters, which generally last from one to six months, asmarket conditions warrant. Period charters and short term time chartersare for a fixed period of time.

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Charters andrevenues.    Under a time charter, the charterer pays a fixedrate per day over the term of the charter; a time charter, including ashort term time charter, may provide for rate adjustments and profitsharing. Under a bareboat charter, the charterer pays us a fixed ratefor its use of our ship for the term of the charter. Under a voyagecharter, we agree to transport a specified cargo from a loading port toa discharging port for a fixed amount. |

28

----

Table of Contents

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Chartersand expenses.    Under a time charter, we are responsible forthe vessel's operating costs (crew, provisions, stores,lubricants, insurance, maintenance and repairs) incurred during theterm of the charter, while the charterer pays voyage expenses (port,canal and fuel costs) that are unique to each particular voyage. Undera bareboat charter, the charterer is responsible for all vesseloperating expenses and voyage expenses incurred during the term of thecharter. Under a voyage or spot charter, we are responsible for boththe vessel operating expenses and the voyage expenses incurred inperforming the charter. |

We expanded the size of our fleetsignificantly from four vessels as of December 31, 2004 to 21 vesselsas of December 31, 2005 and charter rates improved steadily during2005. Our performance in 2005 was primarily driven by the expansion ofour fleet and improved charter rates. As we expanded our fleet, thepercentage of vessels which were placed on bareboat charters diminishedand accordingly, our operating expenses per vessel increased sinceunder a bareboat charter, the charterer is responsible for all vesseloperating expenses and voyage expenses incurred during the term of thecharter.

Factors Affecting Our Results of Operations

Webelieve that the important measures for analyzing trends in the resultsof our operations consist of the following:

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Calendar days.    Wedefine calendar days as the total number of days in a period duringwhich each vessel in our fleet was in our possession including off-hiredays associated with major repairs, drydockings or special orintermediate surveys. Calendar days are an indicator of the size of ourfleet over a period and affect both the amount of revenue and theamount of expense that we record during that period. |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Voyage days.    Wedefine voyage days as the total number of days in a period during whicheach vessel in our fleet was in our possession net of off-hire daysassociated with major repairs, drydockings or special or intermediatesurveys. The shipping industry uses voyage days (also referred to asavailable days) to measure the number of days in a period during whichvessels actually generate revenues. |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Fleetutilization.    We calculate fleet utilization by dividing thenumber of our voyage days during a period by the number of our calendardays during that period. The shipping industry uses fleet utilizationto measure a company's efficiency in finding suitable employmentfor its vessels and minimizing the amount of days that its vessels areoff-hire for reasons such as scheduled repairs, vessel upgrades ordrydockings and other surveys. |

|  |              |                                                                                                                                                                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Cyclicality.    Theinternational gas carrier market, including the transport of LPG, iscyclical with attendant volatility in profitability, charter rates andvessel values, resulting from changes in the supply of, and demand for,LPG carrier capacity. |

To the extent we have vessels inthe spot market, we are exposed to changes in spot rates for LPGcarriers and such changes affect our earnings and the value of our LPGcarriers at any given time. When LPG vessel prices are considered to below, companies not usually involved in shipping may make speculativevessel orders, thereby increasing the LPG shipping supply, satisfyingdemand sooner and potentially suppressing charter rates.

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Seasonality.    TheLPG carrier market is typically stronger in the fall and winter monthsin anticipation of increased consumption of propane and butane forheating during the winter months. In addition, unpredictable weatherpatterns in these months tend to disrupt vessel scheduling and suppliesof certain commodities. As a result, our revenues may be stronger infiscal quarters ended December  31 and March  31 andrelatively weaker during the fiscal quarters ended June  30 andSeptember  30. |

Basis of Presentation and GeneralInformation

Voyage Revenues

Our voyage revenuesare driven primarily by the number of vessels in our fleet, the numberof voyage days during which our vessels generate revenues and theamount of daily charter hire that our 

29

----

Table of Contents

vessels earn under charters which, in turn,are affected by a number of factors, including our decisions relatingto vessel acquisitions and disposals, the amount of time that we spendpositioning our vessels, the amount of time that our vessels spend indrydock undergoing repairs, maintenance and upgrade work, the age,condition and specifications of our vessels and the levels of supplyand demand in the LPG carrier charter market.

Vessels operatingon period charters provide more predictable cash flows, but can yieldlower profit margins than vessels operating in the spot charter marketduring periods characterized by favorable market conditions. As aresult, during the time our LPG carriers are committed on periodcharters we will be unable, during periods of improving chartermarkets, to take advantage of improving charter rates as we could ifour LPG carriers were employed only on spot charters. Vessels operatingin the spot charter market generate revenues that are less predictablebut may enable us to capture increased profit margins during periods ofimproving charter rates, although we are then exposed to the risk ofdeclining LPG carrier charter rates, which may have a materiallyadverse impact on our financial performance. If we commit vessels totime charters, future spot market rates may be higher or lower thanthose rates at which we have time chartered our vessels.

Voyage Expenses

Voyage expenses include port andcanal charges, bunker (fuel oil) expenses and commissions. Thesecharges and expenses increase in periods during which vessels areemployed on spot market or voyage charters because, under thesecharters, these expenses are for the account of the vessel owner. Underperiod charters, these charges and expenses are paid by the charterer.In the remainder of 2006, port and canal charges and bunker expenseswill represent a relatively small portion of our vessels' overallexpenses because all but four of our vessels will be employed underperiod charters, including time and bareboat charters, that require thecharterer to bear all of those expenses.

Time CharterEquivalent

A standard maritime industry performance measureused to evaluate performance is the daily time charter equivalent, ordaily TCE. Daily TCE revenues are voyage revenues minus voyage expensesdivided by the number of voyage days during the relevant time period.Voyage expenses primarily consist of port, canal and fuel costs thatare unique to a particular voyage, which would otherwise be paid by acharterer under a time charter, as well as commissions. We believe thatthe daily TCE neutralizes the variability created by unique costsassociated with particular voyages or the employment of LPG carriers ontime charter or on the spot market and presents a more accuraterepresentation of the revenues generated by our LPG carriers. Ouraverage daily TCE rate was $7,919 for the year ended December31,  2005 and was $5,377 during the period ended December31,  2004. The reasons for these changes are discussed belowunder ‘‘Results of operations— Year endedDecember  31,  2005 and the period from October12,  2004 through December  31, 2004’’.

Vessel Operating Expenses

Vessel operating expensesinclude crew wages and related costs, the cost of insurance, expensesfor repairs and maintenance, the cost of spares and consumable stores,tonnage taxes and other miscellaneous expenses. These expensesincreased during the year ended December  31,  2005 andwill continue to increase as our fleet grows. Factors beyond ourcontrol, some of which may affect the shipping industry in general,including, for instance, developments relating to market prices forinsurance, may also cause these expenses to increase.

Management Fees

We pay Stealth Maritime, our fleetmanager, a fixed management fee of $390 per day for each vessel in ourfleet; however, we pay it a fee of $125 per day (instead of $390) foreach of the vessels operating on bareboat charter. Stealth Maritimealso receives a brokerage commission of 1.25% on freight, hireand demurrage for each vessel and a fee equal to 1.0% calculatedon the price as stated in 

30

----

Table of Contents

the relevant memorandum of agreement for anyvessel bought or sold by them on our behalf. Stealth Maritime pays thetechnical managers that are responsible for the day-to-day operationsof all of our vessels that are not on bareboat charter or that aretechnically managed by Stealth Maritime. In addition, we reimburseStealth Maritime for its payment of the compensation to our CEO andChief Financial Officer. During the year ended December31,  2005, such compensation was in the aggregate amount of€513,559 (US$608,156, based on the exchange rate of€1.00:US$1.1842 in effect on December  29,2005) on an annualized basis. Of this amount, €188,862($223,651, based on the exchange rate of €1.00:US$1.1842in effect on December 29, 2005) was paid to our CEO and Chief FinancialOfficer since our CEO was paid for only four months of service and ourChief Financial Officer for only six months of service provided to usduring the year ended December 31, 2005.

General andAdministrative Expenses

We incur general and administrativeexpenses which include our onshore vessel related expenses such aslegal, accounting and professional expenses and other general vesselexpenses. Our general and administrative expenses also include ourdirect compensation expenses and the value of non-cash executiveservices provided through, and other expenses arising from, ourmanagement agreement with Stealth Maritime, our directors'compensation and the value of the lease expense for the space we rentfrom Stealth Maritime.

Depreciation

Wedepreciate our LPG carriers on a straight-line basis over theirestimated useful lives determined to be 30 years from the date of theirinitial delivery from the shipyard. Depreciation is based on cost lessthe estimated scrap value of the vessels. We expense costs associatedwith drydockings and special and intermediate surveys as incurred.

Interest Expense

We had no outstanding indebtednessin 2004. In March  2005, we entered into a $54.0  millionloan agreement with Fortis Bank. We have drawn down the full amount ofavailable credit under this facility in order to finance vesselacquisitions and to provide working capital. In December  2005,we entered into a $50.0  million loan agreement with DnB NORBank. We have drawn down the full amount of available credit under thisfacility in order to finance vessel acquisitions. The DnB NOR Bank loanis repayable from June  2006 through December  2015. As aresult, we incurred interest expense of $2,685,207 for the year endedDecember  31,  2005. In February  2006, we enteredinto a $14.0  million supplemental agreement to the DnB NOR Bankloan, increasing the full amount of available credit under thatfacility to $64.0  million. We will incur additional interestexpense in the remainder of 2006 on those outstanding borrowings andunder any new credit facilities we may obtain to finance the purchaseprice of additional vessels that have not yet been identified.

Results of operations

Year ended December31,  2005 and the period from October  12,  2004through December  31,  2004 

The averagenumber of vessels in our fleet was 11.9 in the year endedDecember  31,  2005 compared to 2.3 in the period fromOctober  12,  2004 through December  31,  2004,or the 2004 period.

VOYAGE REVENUES — Voyage revenues forthe year ended December  31,  2005 were $36,644,591 andwere $2,048,006 in the 2004 period. The average daily TCE rate for theyear ended December  31,  2005 was $7,919 and was $5,377 inthe 2004 period.

The growth in revenue reflects principally thegrowth in the average number of vessels in our fleet from 2.3 vesselsin the 2004 period to 11.9 vessels for the year ended December31,  2005. During the year ended December  31,  2005,our fleet operated under time charters for a total of 4,105 days andunder spot charters for a total of 183 days for a total of 4,288 voyagedays and a fleet utilization of 99.9%. During the year endedDecember  31,  2005, the Gas Arctic, the GasIce, the Birgit Kosan and the Gas Marathon wereemployed on bareboat charters, which generally are for lower monthlyamounts but in connection with which we are not responsible for voyageor operating expenses.

31

----

Table of Contents

VOYAGE EXPENSES — Voyage expenseswere $2,688,155 for the year ended December  31,  2005 andwere $341,203 in the 2004 period. Voyage expenses for the year endedDecember  31,  2005 consisted largely of bunker charges inthe amount of $1,020,946, compared to bunker charges in the amount of$183,107 in the 2004 period. The increase in voyage expenses reflectsthe increase in the average number of vessels in our fleet compared tothe 2004 period.

VESSEL OPERATING EXPENSES — Vesseloperating expenses were $9,095,576 for the year ended December31,  2005 and were $759,010 in the 2004 period, reflecting anincrease in crew wages and related expenses incurred as a result of theincrease in the average number of vessels in our fleet compared to the2004 period.

MANAGEMENT FEES — Management fees were$1,473,080 for the year ended December  31,  2005 and were$111,540 in the 2004 period, reflecting the increase in the averagenumber of vessels in our fleet compared to the 2004 period. We payStealth Maritime, our fleet manager, a fee of $390 per vessel per dayexcept when the vessels are on bareboat charters, in which case the feeis $125 per vessel per day.

GENERAL AND ADMINISTRATIVE EXPENSES— General and administrative expenses were $779,539 for the yearended December  31,  2005, including the $243,750 value ofnon-cash executive services and lease expense of $31,200 and were$35,100 in the 2004 period. This increase is due to the fact that therewas only one month of executive services provided in the 2004 periodand the office space was provided to us without charge by StealthMaritime during the same period.

DEPRECIATION —Depreciation expenses for the 21 vessels in our fleet for the yearended December  31,  2005 were $5,611,942 and were $264,458for the four vessels in our fleet in the 2004 period, reflecting theincrease in the average number of vessels in our fleet since the 2004period.

INTEREST AND FINANCE COSTS, NET — Net interest andfinance costs were $2,685,207 for the year ended December31,  2005, resulting primarily from indebtedness incurred to fundvessel acquisitions. We had no indebtedness outstanding in the 2004period.

LOSS ON DERIVATIVE — For the year endedDecember  31,  2005, we incurred a non-cash loss onderivative of $67,000 based on the estimated fair value of the interestrate swap, which we agreed to enter into with Fortis Bank onMarch  31,  2005 in connection with the Fortis Bank loanagreement. The aforementioned interest rate swap was our onlyderivative instrument during the year ended December  31,2005. We had no derivative instruments in the 2004 period.

INTEREST INCOME — Net interest income was $780,434 for theyear ended December  31,  2005, and was $47 in the 2004period, reflecting more cash on hand held in interest bearingaccounts.

FOREIGN EXCHANGE LOSS — For the year endedDecember  31,  2005, we incurred a foreign exchange loss of$18,091. We incurred a foreign exchange loss of $5,534 in the 2004period. This increase resulted from our increased expenses denominatedin currencies other than the U.S. dollar in the year endedDecember  31,  2005.

NET INCOME — As a resultof the above factors, net income was $14,536,051 for the year endedDecember  31,  2005, representing an increase of$14,004,843 from net income of $531,208 in the 2004 period.

Liquidity and Capital Resources

Since our inception, ourprincipal source of funds has been equity provided by our affiliates,proceeds from our initial public offering, cash generated by ouroperations and, more recently, bank borrowings. Our principal use offunds has been to acquire our vessels, to maintain the quality of ourLPG carriers, to comply with international standards, laws andregulations and to fund working capital requirements. We will rely uponoperating cash flows, bank borrowings, as well as future financings toimplement our growth plan.

We believe that, unless there is amajor and sustained downturn in market conditions, our internallygenerated cash flows and the borrowings under our existing creditfacilities will be sufficient to fund the operations of our fleet,including working capital requirements.

32

----

Table of Contents

We entered into a $54.0  millionloan agreement dated March  16,  2005 with Fortis Bank(Nederland) N.V. In December  2005, we entered into a$50.0  million loan agreement dated December  5,2005 with DnB NOR Bank ASA. In February  2006, we entered into a$14.0  million supplemental agreement to the DnB NOR Bank loan,increasing the full amount of available credit under that facility to$64.0  million, which we used to partially finance theacquisition of two vessels. During the year ended December31,  2005, we acquired a total of 17 vessels for an aggregatepurchase price of $205.9  million. Of the total purchase price of$205.9  million, $32.306  million was financed withborrowings under the Fortis Bank Loan facility and $50.0  millionwas financed with borrowings under the DnB NOR Bank loan facility. Thepurchase price for four vessels was funded by the borrowings under theFortis Bank Loan facility and capital contributions from our solestockholder. With the borrowings, and the prepayment of the $3,580,500portion of the Fortis Bank loan attributable to the Gas Prodigy,the credit facility under the Fortis Bank loan agreement was fullydrawn. During the year ended December  31,  2005, we placeda deposit of $983,000 on the Gas Czar, which we acquired inFebruary  2006. See ‘‘— LoanAgreements.’’ As of December  31,  2005, we hadcash and cash equivalents of $23.2  million.

CashFlows

NET CASH PROVIDED BY OPERATING ACTIVITIES — was$24,414,729 for the year ended December  31,  2005 and$598,710 in the 2004 period. This represents the net amount of cash,after expenses, generated by chartering our vessels. Stealth Maritime,on our behalf, collects our chartering revenues and pays ourexpenses.

NET CASH USED IN INVESTING ACTIVITIES — was$197,780,709 for the year ended December  31,  2005reflecting the acquisition of 17 vessels and the deposit we placed onthe Gas Czar, which was delivered in February  2006. Inthe 2004 period, net cash used in investing activities was $37,415,758reflecting the acquisition of four vessels and deposits we placed onthe Gas Arctic and the Gas Ice, which were delivered inApril  2005.

NET CASH PROVIDED BY FINANCING ACTIVITIES— was $196,576,223 for the year ended December  31,2005, drawings under the Fortis Bank and DnB NOR Bank loan agreementsto provide working capital and to fund the acquisitions of the 17vessels. In the 2004 period, net cash provided by financing activitieswas $36,817,048 reflecting the contribution to us of the four vesselswhich comprised our fleet in the 2004 period.

CriticalAccounting Policies

The discussion and analysis of ourfinancial condition and results of operations is based upon ourconsolidated financial statements, which have been prepared inaccordance with generally accepted accounting principles in the UnitedStates, or U.S. GAAP. The preparation of those financial statementsrequires us to make estimates and judgments that affect the reportedamount of assets and liabilities, revenues and expenses and relateddisclosure of contingent assets and liabilities at the date of ourfinancial statements. Actual results may differ from these estimatesunder different assumptions or conditions.

Critical accountingpolicies are those that reflect significant judgments or uncertainties,and potentially result in materially different results under differentassumptions and conditions. We have described below what we believe areour most critical accounting policies that involve a high degree ofjudgment and the methods of their application. For a description of allof our significant accounting policies, see Note 2 to our consolidatedfinancial statements included elsewhere herein.

Revenue andExpenses.    Revenue and expenses resulting from each voyage orperiod time charter are accounted for on an accrual basis. Periodcharter revenues are recognized over the term of the charter as serviceis provided. Period charter revenues received in advance are recordedas liabilities until charter service is rendered. Under a voyagecharter, the revenues and associated voyage costs are recognized on apro-rata basis over the duration of the voyage. Voyage expensescomprise commissions, bunkers and port expenses. The impact of ourmethod of recognizing voyage 

33

----

Table of Contents

costs on a pro-rata basis is not materiallydifferent from a method of recognizing such costs as incurred. We willmodify our policy in future periods in the event the difference betweenthe two methods becomes material.

The operating results ofvoyages in progress at a reporting date are estimated and recognizedpro-rata on a per day basis. Probable losses on voyages are providedfor in full at the time such losses can be estimated.

Vesseloperating expenses comprise all expenses relating to the operation ofthe vessel, including crewing, repairs and maintenance, insurance,stores, lubricants and miscellaneous expenses. Vessel operatingexpenses are accounted for on an accrual basis.

Impairment oflong-lived assets.    We evaluate the carrying amounts andperiods over which long-lived assets are depreciated to determine ifevents have occurred which would require modification to their carryingvalues or useful lives. In evaluating useful lives and carrying valuesof long-lived assets, we review certain indicators of potentialimpairment, such as undiscounted projected operating cash flows, vesselsales and purchases, business plans and overall market conditions. Wedetermine undiscounted projected net operating cash flows for eachvessel and compare it to the vessel carrying value. In the event thatimpairment occurred, we would determine the fair value of the relatedasset and we record a charge to operations calculated by comparing theasset's carrying value to the estimated fair market value. Weestimate fair market value primarily through the use of third partyvaluations performed on an individual vessel basis.

Depreciation.    We record the value of our vessels attheir cost (which includes acquisition costs directly attributable tothe vessel and expenditures made to prepare the vessel for its initialvoyage) less accumulated depreciation. We depreciate our vessels on astraight-line basis over their estimated useful lives, estimated to be30 years from date of initial delivery from the shipyard. We believethat a 30-year depreciable life is consistent with that of other gasvessel owners. Depreciation is based on cost less the estimatedresidual scrap value. An increase in the useful life of the vessel orin the residual value would have the effect of decreasing the annualdepreciation charge and extending it into later periods. A decrease inthe useful life of the vessel or in the residual value would have theeffect of increasing the annual depreciation charge.

Drydockcosts.    Our vessels are required to be drydocked for majorrepairs and maintenance that cannot be performed while the vessel isoperating approximately every 30 to 60 months. Costs expected to beincurred as part of the drydock include actual costs incurred at thedrydock yard, cost of fuel consumed between the vessel's lastdischarge port prior to the drydock and the time the vessel leaves thedrydock yard, cost of hiring riding crews to effect repairs on a shipand parts used in making such repairs that are reasonably made inanticipation of reducing the duration or cost of the drydock, cost oftravel, lodging and subsistence of our personnel sent to the drydocksite to supervise; and the cost of hiring a third party to oversee adrydock.

Allowance for doubtful accounts.    Revenueis based on contracted charter parties and although our business iswith customers who we believe to be of the highest standard, there isalways the possibility of dispute over terms and payment of freight. Insuch circumstances, we assess the recoverability of amounts outstandingand we estimate a provision if there is a possibility ofnon-recoverability. Although we believe our provisions to be based onfair judgment at the time of their creation, it is possible that anamount under dispute is not recovered and the estimated provision fordoubtful recoverability is inadequate.

VesselsAcquisitions.    Our vessels are stated at cost, which consistsof the contract price less discounts and any material expenses incurredupon acquisition (initial repairs, improvements, acquisition andexpenditures made to prepare the vessel for its initial voyage).Subsequent expenditures for conversions and major improvements are alsocapitalized when they appreciably extend the life, increase the earningcapacity or improve the efficiency or safety of the vessels, andotherwise are charged to expenses as incurred.

We record allidentified tangible and intangible assets associated with theacquisition of a vessel or liabilities at fair value. Where vessels areacquired with existing time charters, we allocate the 

34

----

Table of Contents

purchase price to the time charters based onthe present value (using an interest rate which reflects the risksassociated with the acquired charters) of the difference between (i)the contractual amounts to be paid pursuant to the charter terms and(ii) management's estimate of the fair market charter rate,measured over a period equal to the remaining term of the charter. Thecapitalized above-market (assets) and below-market (liabilities)charters are amortized as a reduction and increase, respectively, tovoyage revenues over the remaining term of the charter.

RecentAccounting Pronouncements

On January  17,  2003,the Financial Accounting Standards Board(‘‘FASB’’) issued FASB Interpretation No. 46,‘‘Consolidation of Variable Interest Entities’’(‘‘FIN 46’’). Such interpretation addresses theconsolidation of variable interest entities(‘‘VIEs’’), including special purpose entities(‘‘SPEs’’), that are not controlled throughvoting interests or in which the equity investors do not bear theresidual economic risks and rewards. The provisions of FIN 46 wereeffective immediately for transactions entered into by us subsequent toJanuary  31,  2003 and became effective for all othertransactions as of July  1,  2003. However, inOctober  2003, the FASB permitted companies to defer theJuly  1,  2003 effective date to December  31,2003, in whole or in part. On December  24,  2003, the FASBissued a complete replacement of FIN 46 (‘‘FIN46R’’), which clarified certain complexities of FIN 46 andgenerally requires adoption no later than December  31,2003 for entities that were considered SPEs under previous guidance,and no later than March  31,  2004 for all other entities.The adoption of FIN 46R did not have a material impact on our financialstatements.

In December  2004, the FASB issued SFASNo. 123R that will require compensation costs related to share-basedpayment transactions to be recognized in the financial statements. Withlimited exceptions, the amount of compensation cost will be measuredbased on the grant-date fair value of the equity or liabilityinstruments issued. In addition, liability awards will be remeasuredeach reporting period. Compensation cost will be recognized over theperiod that an employee provides service in exchange for the award.SFAS 123R replaces SFAS  No. 123, ‘‘Accounting forStock-Based Compensation’’, and supersedes APB 25. ThisStatement will be effective as of the beginning of the first annualreporting period that begins after June  15,  2005.

Entities that used the fair-value-based method for eitherrecognition or disclosure under SFAS  No. 123 will apply thisrevised Statement using a modified version of prospective application.Under this transition method, for the portion of outstanding awards forwhich the requisite service has not yet been rendered, compensationcost is recognized on or after required effective date based on thegrant-date fair value of those awards calculated under SFAS  No.123 for either recognition or pro forma disclosures. For periods beforethe required effective date, those entities may elect to apply amodified version of the retrospective application under which financialstatements for periods are adjusted on a basis consistent with the proforma disclosures required for those periods by SFAS No. 123. We arecurrently evaluating the impact of adopting SFAS No. 123R.

InMay  2005, the FASB issued SFAS No. 154, ‘‘AccountingChanges and Error Corrections’’ which replaces AccountingPrinciples Board Opinion No. 20 ‘‘AccountingChanges’’ and SFAS No. 3, ‘‘ReportingAccounting Changes in Interim Financial Statements.’’ Thisstatement applies to all voluntary changes in accounting principle andchanges resulting from adoption of a new accounting pronouncement thatdoes not specify transition requirements. SFAS 154 requiresretrospective application to prior periods' financial statementsfor changes in accounting principle unless it is impracticable todetermine either the period-specific effects or the cumulative effectof the change. SFAS 154 also requires that retrospective application ofa change in accounting principle be limited to the direct effects ofthe change. Indirect effects of a change in accounting principle shouldbe recognized in the period of the accounting change. SFAS 154 iseffective for the accounting changes and corrections of errors made infiscal years beginning after December  15,  2005 with earlyimplementation permitted for accounting changes and corrections oferrors made in fiscal years beginning after the date this statement wasissued. SFAS 154 is effective for us as of January  1,2006 and is not expected to have a material impact on our financialstatements.

On February 16, 2006, the FASB issued SFAS No.155,"Accounting for Certain Hybrid Instruments — anamendment of FASB Statements No. 133 and 140". FAS 155permits fair value 

35

----

Table of Contents

remeasurement for any hybrid financialinstrument that contains an embedded derivative that otherwise wouldrequire bifurcation, clarifies which interest-only strips andprincipal-only strips are not subject to the requirements of FAS 133,establishes a requirement to evaluate interests in securitizedfinancial assets to identify interests that are freestandingderivatives or that are hybrid financial instruments that contain anembedded derivative requiring bifurcation, clarifies thatconcentrations of credit risk in the form of subordination are notembedded derivatives, and amends FAS 140, to eliminate the prohibitionon a qualifying special-purpose entity from holding a derivativefinancial instrument that pertains to a beneficial interest other thananother derivative financial instrument.

FAS No. 155 generallyis effective for all financial instruments acquired or issued after thebeginning of a company's first fiscal year that begins afterSeptember 15, 2006. The adoption of SFAS No. 155 is not expected tohave a material impact on our financial statements.

LoanAgreements

We entered into a loan agreement dated March16,  2005 with Fortis Bank in which it agreed, subject to certainfunding conditions, to provide a credit facility of up to $54.0million principally to partially finance or refinance the acquisitionof our vessels. The borrowers under this loan agreement included oursubsidiaries. The loan was fully drawn in May  2005. The interestrate under the loan agreement is the sum of LIBOR and a margin. Themargin varies with the ratio of the outstanding balance of the loan tothe aggregate market value of the vessels subject to mortgage in thatperiod. If the ratio is equal to or lower than 60%, the interestrate will be 0.9% over LIBOR. If the ratio is higher than60% but lower or equal to 70%, the interest rate will be0.975% over LIBOR. If the ratio is higher than 70%, theinterest rate will be 1.05% over LIBOR. We paid a non-refundablefee of $162,000 upon the signing of the loan agreement.

OnJune  10,  2005, the $3,580,500 portion of the Fortis Bankloan attributable to the Gas Prodigy was prepaid and FortisBank's security interest in the Gas Prodigy was released.As of December  31,  2005, $47,706,000 was outstandingunder the loan agreement. We are obligated to repay the principal andinterest under the credit facility through 2013 in 32 consecutivequarterly installments; our first installment payment was made inAugust  2005. Our quarterly installments of principal will be inan amount of $1,356,750 with a balloon installment of $7,003,500 due onthe earlier of the eighth anniversary of the delivery date of the lastship or on May  30,  2013. In the event that one of thevessels securing the loan is sold or becomes a total loss, we will beobligated to prepay the relevant portion of the credit facility.

We entered into a loan agreement dated December  5,2005 with DnB NOR Bank ASA in which it agreed to provide a creditfacility of up to $50.0  million to partially finance orrefinance the acquisition of the Gas Marathon, the GasSincerity, the Gas Cathar, the Gas Legacy, theSweet Dream (renamed in February  2006 as the GasMonarch) and the Gas Oracle. The DnB NOR Bank ASA loan wassupplemented in February  2006 by a $14.0  millionsupplemental agreement dated February  27,  2006,increasing the full amount of available credit under that facility to$64.0  million. The $14.0  million was used to partiallyfinance the acquisition of the Gas Czar and the GasEternity. The borrowers under this loan agreement were ourship-owning subsidiaries of the six vessels. As supplemented by thesupplemental agreement, we are obligated to repay the principal andinterest under the credit facility beginning in June  2006through December  2015 in two semi-annual payments of $4,608,000each, four semi-annual payments of $3,072,000 each, and 14 semi-annualpayments of $2,304,000 each, plus a balloon payment of $10,240,000payable together with the final installment. Under the terms of the DnBNOR Bank loan, as supplemented, the interest rate is the sum of LIBORand a margin. The margin varies with the ratio of the outstandingbalance of the loan to the aggregate market value of the vesselssubject to mortgage in that period. If the ratio is equal to or lowerthan 130%, the interest rate will be 0.85% over LIBOR. Ifthe ratio is between 130% and 150%, the interest ratewill be 0.75% over LIBOR. If the ratio is equal to or higherthan 150%, the interest rate will be 0.70% over LIBOR. Wepaid a non-refundable fee of $95,000 upon the signing of the DnB NORBank ASA loan agreement and a non-refundable fee of $28,000 upon thesigning of the DnB NOR Bank supplemental agreement.

36

----

Table of Contents

Capital Expenditures

During theperiod ended December  31,  2004, four vessels acquired ata cost of $29.6  million by the Vafias Group were contributed tous by the Vafias Group for nominal consideration, and became part ofour fleet. In addition, in 2004, deposits totaling $1.9  millionwere placed by the Vafias Group on the Gas Arctic and the GasIce, which were delivered in April  2005.

During theyear ended December  31,  2005, we acquired 17 vessels foran aggregate purchase price of $205.9  million. In addition, weplaced a deposit of $983,000 during the year on the Gas Czar,which was delivered in February  2006. Of the $205.9million total purchase price for these 17 vessels, $32.306million was financed with borrowings under the Fortis Bank loanagreement and $50.0  million was financed with borrowings underthe DnB NOR Bank agreement.

Research and development, patentsand licenses

We incur from time to time expenditures relatingto inspections for acquiring new vessels that meet our standards. Suchexpenditures are insignificant and they are expensed as they incur.

Trend information

Our results of operations dependprimarily on the charterhire rates that we are able to realize.Charterhire rates paid for LPG carriers are primarily a function of theunderlying balance between vessel supply and demand. The demand for LPGcarrier capacity is determined by the underlying demand for LPG,ammonia and petrochemical gases, which are transported in LPG carriers,which in turn is influenced by trends in the global economy. The recentexpansion of the supply of LPG commodities has been driven by theincreased production of LNG, of which LPG is a byproduct. Althoughthere can be no assurances, absent a major and sustained downturn inmarket conditions or significant unforeseeable changes in supply anddemand of LPG vessels, charter rates are expected to remain relativelystrong for the remainder of 2006.

Off Balance SheetArrangements

We do not have any off-balance sheetarrangements.

Contractual Obligations

Contractualobligations as of December  31,  2005 were:

|                                              |  |                                      |         |                 |  |           |        |           |  |                  |         |        |  |        |         |        |  |        |         |        |  |  |
|----------------------------------------------|--|--------------------------------------|---------|-----------------|--|-----------|--------|-----------|--|------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                         |  | Payments due by period (inthousands) |
|                                         |  | Total                                |         | Less than 1year |  | 1-3 years |        | 3-5 years |  | More than5 years |
| Long-term debtobligation(1)                  |  | $                                    | 97,706  |            |  | $         | 12,627 |      |  | $                | 20,454  |   |  | $      | 18,054  |   |  | $      | 46,571  |   |
| Interest on principal amounts outstanding(2) |  | $                                    | 30,664  |            |  | $         | 5,439  |      |  | $                | 9,634   |   |  | $      | 7,139   |   |  | $      | 8,452   |   |
| Management fees(3)                           |  | $                                    | 13,010  |            |  | $         | 2,602  |      |  | $                | 5,204   |   |  | $      | 5,204   |   |  |   | — |   |
| Office lease(4)                              |  | $                                    | 58      |            |  | $         | 29     |      |  | $                | 29      |   |  |   | — |   |  |   | — |   |
| Operating lease(5)                           |  | $                                    | 115     |            |  | $         | 41     |      |  | $                | 74      |   |  |   | — |   |  |   | — |   |
| Vessel purchaseagreements(6)                 |  | $                                    | 21,747  |            |  | $         | 21,747 |      |  |             | — |   |  |   | — |   |  |   | — |   |
| Total                                        |  | $                                    | 163,300 |            |  | $         | 42,485 |      |  | $                | 35,395  |   |  | $      | 30,397  |   |  | $      | 55,023  |   |
|                                              |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Asof December  31,  2005, $47,706,000 principal amount wasoutstanding under the Fortis Bank loan agreement and $50,000,000principal amount was outstanding under the DnB NOR Bank Loan. Theoriginal DnB NOR Bank loan was amended in February  2006 by a$14.0  million supplemental agreement increasing the full amountof available credit under that facility to $64.0  million. Thefollowing principal amounts under the Fortis Loan and the DnB NOR BankLoan, as supplemented, are payable by us during the periods indicated:$14,643 payable within one year of December  31,  2005,$23,142 payable between one and three years of December31,  2005, $20,070 payable between three and five years ofDecember  31,  2005 and $53,851 payable more than fiveyears after December  31,  2005. |

|     |                                                                                                                                                                                                                                                                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | We entered into an interest rateswap agreement with Fortis Bank with the initial nominal amount of theswap at $22.5  million amortizing to $4.8  million over itssix-year life commencing May  30,  2007. The swap willhedge our risk of increases in three month LIBOR over 4.55% andup to 7.5%, but will not hedge our risk if three month LIBORequals or |

37

----

Table of Contents

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | exceeds 7.5%. The interest ratespayable reflected in the above table assumes a LIBOR of 5.5% for2006, 6.0% for 2007 until 2009, 6.0% for 2008 until 2011and 6.0% for each subsequent period through the maturity of theloan and with respect to the Fortis Bank loan, after taking intoaccount our interest rate swap agreement with respect to the$47.7  million outstanding under the Fortis Bank loan, effectiveinterest rates of 5.6% for 2006, 5.6% for 2007 until2009, 5.6% for 2008 until 2011 and 5.6% for eachsubsequent period through the maturity of the loan. Based on the aboveassumptions and taking into account the DnB NOR Bank loan, assupplemented, the following interest payments are payable by us duringthe periods indicated: $5,438,505 payable within one year ofDecember  31,  2005, $9,634,427 payable between one andthree years of December  31,  2005, $7,139,133 payablebetween three and five years of December  31,  2005 and$8,452,075 payable more than five years after December31,  2005. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Underour management agreement with Stealth Maritime, we pay it $125 pervessel per day for vessels on bareboat charter and $390 per vessel perday for vessels not on bareboat charter. Following our acquisition of17 vessels during the year ended December  31,  2005 and anadditional three vessels in 2006, and based on the payment of amanagement fee of $390 per vessel per day, we expect to pay at least$2,602,000 per year to Stealth Maritime as management fees under themanagement agreement. We also will pay 1.25% of the grossfreight, demurrage and charter hire collected from employment of ourships and 1% of the contract price of any vessels bought or soldon our behalf. In addition, we will reimburse Stealth Maritime for itspayment of the compensation to our CEO and Chief Financial Officer.Such compensation is expected to be in the aggregate amount of€717,000 (US$850,000, based on the exchange rate of€1.00US:$1.1842 in effect on December  29,2005) in the year 2006 on an annualized basis. |

|     |                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | We lease office space from theVafias Group. The initial lease term is three years beginningJanuary  3,  2005 with three consecutive options to renewfor a one-year term at our option thereafter. |

|     |                                                                                                                                                                                                                                                     |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | In October  2005, we enteredinto a three year cancelable operating lease for an armored car. Theinitial term of the lease terminates in October  2008. During theperiod October  15,  2005 through December31,  2005, our lease expense was $8,340. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | The total purchase price for thetwo LPG carriers, the Gas Czar and the Gas Eternity,covered by the vessel agreements, is $22.7  million of which wepaid an advance deposit of $983,000 on the Gas Czar during theyear ended December  31,  2005. We took delivery of theGas Czar in February  2006 and the Gas Eternity inMarch  2006 and paid the $21.7  million balance of thepurchase prices that were due on delivery. Of that amount, $14.0million was financed with additional indebtedness drawn down under theloan agreement with DnB NOR Bank. We entered into a memorandum ofagreement on February 14, 2006 to acquire the Gas Fortune for apurchase price of $9.5  million, which was paid and delivered inFebruary  2006. |

|              |                                            |
|--------------|--------------------------------------------|
| Item6.  | Directors, Senior Management and Employees |

The following table sets forth, as of December  31,2005, information for each of our directors and senior managers.

|                          |  |        |  |                                         |  |                   |         |                  |  |        |         |        |  |  |  |  |  |  |
|--------------------------|--|--------|--|-----------------------------------------|--|-------------------|---------|------------------|--|--------|---------|--------|--|--|--|--|--|--|
| Name                     |  | Age(1) |  | Positions                               |  | Year FirstElected |         | Year TermExpires |
| Harry N. Vafias          |  | 28     |  | President, CEO andClass III Director(2) |  |              | 2005    |             |  |   | 2006    |   |
| Andrew J. Simmons        |  | 50     |  | Chief FinancialOfficer                  |  |              | — |             |  |   | — |   |
| MichaelG. Jolliffe       |  | 56     |  | Chairman of the Board, Class IIDirector |  |              | 2005    |             |  |   | 2007    |   |
| Thanassis J.Martinos     |  | 56     |  | Class I Director                        |  |              | 2005    |             |  |   | 2008    |   |
| Miranda Xafa             |  | 52     |  | ClassIII Director(3)                    |  |              | 2005    |             |  |   | 2006    |   |
| Markos Drakos            |  | 46     |  | Class IIIDirector(4)                    |  |              | 2006    |             |  |   | 2006    |   |
| Nikolaos Markomichelakis |  | 43     |  | OperationsManager(5)                    |  |              | — |             |  |   | — |   |
| George Koliopoulos       |  | 53     |  | TechnicalManager(5)                     |  |              | — |             |  |   | — |   |
|                          |

|  |
|--|
|  |  |
|  |

|     |                           |
|-----|---------------------------|
| (1) | Asof December  31,  2005. |

|     |                                                                                                                                                               |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The term of a Class III directorexpires in 2006. Mr.  Vafias will be put forward for re-electionat the annual shareholder meeting scheduled for May  18,2006. |

|     |                                                                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | The term of aClass III director expires in 2006. Ms.  Xafa will retire at theexpiration of her term and will not be put forward for re-election atthe annual shareholder meeting scheduled for May  18,2006. |

|     |                                                                                                                                                                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Mr.  Drakoswas elected to the Board of Directors by the unanimous written consentof the Board of Directors on February  10,  2006, as aClass III Director and Chairman of the Audit Committee. As a Class IIIdirector, his term expires in 2006. Mr.  Drakos will be putforward for re-election at the annual shareholder meeting scheduled forMay  18,  2006. |

|     |                                                                                     |
|-----|-------------------------------------------------------------------------------------|
| (5) | Employee of our fleet manager,Stealth Maritime; primary responsibilities are to us. |

Certain biographical information about each of these individuals isset forth below.

Harry N. Vafias is our President and CEOand a member of our Board of Directors. Mr.  Vafias has beenactively involved in the tanker and gas shipping industry since 1999.He has worked at Seascope, a leading ship brokering firm specializingin sale and purchase of vessels and chartering of oil tankers.Mr.  Vafias also worked at Braemar, a leading ship brokeringfirm, where he gained extensive experience in tanker and dry cargochartering. Seascope and Braemar merged in 2001 to form BraemarSeascope Group plc, a public company quoted on the London StockExchange and one 

38

----

Table of Contents

of the world's largest ship brokeringand shipping service groups. From 2000 until 2004, he worked at BraveMaritime and Stealth Maritime, companies providing comprehensive shipmanagement services, where Mr.  Vafias headed the operations andchartering departments of Stealth Maritime and served as manager forthe sale and purchase departments of both Brave Maritime and StealthMaritime. Mr.  Vafias graduated from City University BusinessSchool in the City of London in 1999 with a B.A. in Management Scienceand from Metropolitan University in 2000 with a Masters degree inShipping, Trade and Transport.

Andrew J. Simmons, ourChief Financial Officer, joined us in June  2005. Mr.Simmons has over 32 years of experience in the banking industry, withparticular expertise in shipping finance. From 2002 until June2005, Mr.  Simmons served as General Manager of Heath LambertMiddle East in Bahrain and subsequently as Director at Heath Lambert(UAE) LLC in the Marine and Project Finance Division where he wasresponsible for overseeing the identification and development of marinefinance for clients within the Dubai and Gulf regions. Mr.Simmons served as the Managing Director of Talal Al Zawawi Enterprises,a conglomerate encompassing trading, business services and retailbusiness units in Oman, from 2000 until 2002, where he was responsiblefor overseeing the day-to-day operational activities of the company.From 1973 until 2000, Mr.  Simmons served as Director, Managerand Vice President at a number of banks including BHF Bank and GuinessMahon & Co. Ltd., both in the United Kingdom, Taib Bank EC inBahrain and Mid-Med Bank PLC in Dubai and also served in theInternational Treasury department of Saatchi & Saatchi PLC.

Michael G. Jolliffe is Chairman of our Board of Directors. Heis a director of a number of companies in shipping, oil, textiles,telecommunications and other industries. He is Deputy Chairman ofTsakos Energy Navigation Limited, an oil and product tanker shippingcompany listed on the New York Stock Exchange. Mr.  Jolliffe isalso Vice-Chairman of both Klonatex S.A. and Naoussa Spinning MillsS.A., two companies quoted on the Athens Stock Exchange that togetherform the third largest integrated textiles company in Europe.Mr.  Jolliffe is a Director of Lannet S.A., Greece's secondlargest telephone company, which is also quoted on the Athens StockExchange. Mr.  Jolliffe is also Chairman of Wigham-RichardsonShipbrokers Ltd, one of the oldest established shipbroking companies inthe City of London, and of Shipping Spares Repairs and Supplies Ltd, anAgency Company based in Piraeus, Greece. He is also joint president ofHanjin Euorbulk Ltd., a joint venture broking company with HanjinShipping of Korea. Additionally, Mr.  Jolliffe is the Presidentof Eurotrans Hermes Hellas S.A., the Greek agent of the Skoda Group fortrams, buses and trains.

Thanassis J. Martinos is amember of our Board of Directors. He has had over 35 years ofexperience in the shipping industry having served as Co-ManagingDirector of Thenamaris Ships Management, a ship management company withover three decades of experience servicing major oil companies, tradersand government agencies. Since 1991, Mr.  Martinos has been theManaging Director of Eastern Mediterranean Maritime Ltd., a shipmanagement company specializing in the management of tankers and drybulk carriers that presently operates a fleet that exceeds 2.8million dwt. Mr.  Martinos holds a B.S. in Economics from AthensUniversity.

Miranda Xafa is a member of our Board ofDirectors. Ms.  Xafa is currently the Alternate ExecutiveDirector at the Board of the International Monetary Fund where sheserves as the representative for countries such as Italy, Greece andPortugal. She previously worked as a staff member at the InternationalMonetary Fund where she focused on the design and monitoring ofstabilization programs, focusing particularly on Latin America.Ms.  Xafa also served as chief economic advisor under PrimeMinister Constantin Mitsotakis in Athens, Greece from 1991 to 1993.Following her service to the Prime Minister, Ms.  Xafa worked atSalomon Brothers in London, initially as an emerging markets strategistand subsequently as an Athens based market analyst covering Greek andglobal economic prospects. Ms.  Xafa has also served as anadviser to the management of Piraeus Bank and was a director on theboard of S&B Industrial Minerals, a public international group ofcompanies listed on the Athens Stock Exchange that is primarilyinvolved in the mining, processing and trade of industrial materialsand ores. Ms.  Xafa holds both a Masters degree and a Ph.D. ineconomics from the University of Pennsylvania. She has taught economicsat the University of Pennsylvania and Princeton University and is theauthor of several published articles on international trade policy, theLatin American debt crisis and European monetary unification.

39

----

Table of Contents

Markos Drakos is a member of ourBoard of Directors and Chairman of our Audit Committee. In 1998,Mr.  Drakos co-founded Touche Ross & Co., later renamedDeloitte & Touche, Nicosia and served as co-managing partner of thecompany’s Nicosia office in Cyprus until 2002. Following theDecember  2002 reorganization of Deloitte & Touche, Nicosia,Mr.  Drakos founded Markos Drakos Consultants Group, a consultingcompany, which served as successor to the consulting, special servicesand international business division of Deloitte & Touche, Nicosia.From 2000 until 2003, Mr.  Drakos also served as Vice Chairman ofthe Cyprus Telecommunications Authority, the leading telecommunicationscompany in Cyprus. Mr.  Drakos has also served as a member of theOffshore, Shipping & Foreign Investment Committee of the Instituteof Certified Public Accountants of Cyprus. Mr.  Drakos received aBachelor of Science degree in Economics from the London School ofEconomics and is a Fellow of the Institute of Chartered Accountants inEngland and Wales and a member of the Institute of Certified PublicAccountants of Cyprus.

Nikolaos Markomichelakis is theOperations Manager of Stealth Maritime. Mr.  Markomichelakis hasbeen the Fleet and Operations Manager of Stealth Maritime since 2000where he has acted as the Alternate DPA and Security Officer of thecompany's product tankers as well as general supervisor of thecompany's LPG carriers under third party management. He has hadover 22 years of experience in the shipping industry having served aschief officer or operator of a number of shipping companies such asOlympic Maritime S.A., Tsakos Shipping & Trading S.A., Glafki(Hellas) Maritime S.A., Adriatic Tankers Shipping Co., Cardiff MarineInc., Kristen Navigation Inc., and Larus S.A. Mr.Markomichelakis graduated from Private Nautical Academy Spirourani andMerchant Marine Academy Aspropirgos in Greece.

GeorgeKoliopoulos is the Technical Manager of Stealth Maritime.Mr.  Koliopoulos has had over 33 years of experience in theshipping industry having served as an Engineer with SinergasiaShipbrokers Ltd. in London and as Superintendent Engineer at VarnimaCorporation Int. S.A., where he was responsible for the operations,maintenance, engine and hull repairs, installations, drydockings andclass surveys and claims of three tanker vessels. Mr.Koliopoulos served for 10 years with Anangel Maritime Services Inc. asboth group leader to one of the company's Technical Departmentsand as a member of the team responsible for the final specifications,negotiations and plan approvals for the newbuilding projects of Panamaxand Capesize vessels in Korea and Japan. Mr.  Koliopoulos iscurrently the Technical Manager of Stealth Maritime where he isresponsible for all the technical matters concerning bulk carriers, oiltankers and all newbuildings on order in addition to negotiatingspecifications with shipyards for recently ordered LPG carriers inJapan. Mr.  Koliopoulos attended Sunderland Polytechnic in theUnited Kingdom where he received a diploma in Naval Architecture andPortsmouth Polytechnic in the United Kingdom where he received a B.A.in Mechanical Engineering.

Board Practices

Our Board ofDirectors is elected annually on a staggered basis, and each directorelected holds office for a three-year term. All of our currentdirectors, other than Mr.  Vafias, are independent since none ofthem have any relationship or had any transaction with the Companywhich the Board believes would compromise their independence. Officersare elected from time to time by vote of our Board of Directors andhold office until a successor is elected. At December  31,2005 we had four directors on our Board. On February  10,2006 by the unanimous written consent of the Board of Directors, weexpanded the size of our Board to five directors and elected Mr.Markos as a Class III director and Chairman of our Audit Committee.

Committees of the Board of Directors.

The Board ofDirectors has established an Audit Committee, a Nominating andCorporate Governance Committee and a Compensation Committee. Themembers of each committee are Messrs. Jolliffe, Martinos, Drakos andMs.  Xafa.

Audit Committee

The AuditCommittee is governed by a written charter, which is approved andannually adopted by the Board. The Board has determined that themembers of the Audit Committee meet the 

40

----

Table of Contents

applicable independence requirements of theSEC and the Nasdaq Stock Market, that all members of the AuditCommittee fulfill the requirement of being financially literate andthat Mr.  Drakos is an Audit Committee financial expert asdefined under current SEC regulations.

The Audit Committee isappointed by the Board and is responsible for, among other mattersoverseeing the:

|  |              |                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------|
|  | •  | integrityof the Company’s financial statements, including its system ofinternal controls; |

|  |              |                                                                       |
|--|--------------|-----------------------------------------------------------------------|
|  | •  | theCompany’s compliance with legal and regulatory requirements; |

|  |              |                                                                         |
|--|--------------|-------------------------------------------------------------------------|
|  | •  | the independentauditor’s qualifications and independence; and the |

|  |              |                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------|
|  | •  | performance of theCompany’s independent audit function and independentauditors, |

as well preparing an Audit Committee Report asrequired by the SEC to be included in the Company’s annual proxystatement.

Nominating and Corporate GovernanceCommittee

The Nominating and Corporate GovernanceCommittee is appointed by the Board and is responsible for, among othermatters:

|  |              |                                                                                                                                                     |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | reviewing theBoard structure, size and composition and making recommendations to theBoard with regard to any adjustments that are deemed necessary; |

|  |              |                                                                                                                                                                                                     |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | identifying candidates for theapproval of the Board to fill Board vacancies as and when they arise aswell as developing plans for succession, in particular, of the chairmanand executive officers; |

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | overseeing the Board’sannual evaluation of its own performance and the performance of otherBoard committees; and |

|  |              |                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | developing and recommending tothe Board for adoption a set of Corporate Governance Guidelinesapplicable to the Company and to periodically review the same. |

Compensation Committee

The Compensation Committeeis appointed by the Board and is responsible for, among othermatters:

|  |              |                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------|
|  | •  | establishing andperiodically reviewing the Company’s compensation programs; |

|  |              |                                                                                                                                                                                                                         |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | reviewing the performance ofdirectors, officers and employees of the Company who are eligible forawards and benefits under any plan or program and adjust compensationarrangements as appropriate based on performance; |

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | reviewing and monitoringmanagement development and succession plans and activities; and |

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | reporting on compensationarrangements and incentive grants to the Board. |

Compensation ofDirectors and Senior Management

We did not pay any compensationto members of senior management or our directors in 2004. For the yearended December  31,  2005, each of the independentdirectors received fees in the amount of $35,000 per annum pro ratedfor the number of days in 2005 for which we were a public company, plusreimbursement for their out-of-pocket expenses. BeginningFebruary  2006, the Chairman of our Board of Directors willreceive annual fees of $70,000, plus reimbursement for hisout-of-pocket expenses, while each of our other independent directorswill continue to receive fees of $35,000 per annum, plus reimbursementof their out-of-pocket expenses. Executive directors received nocompensation for their services as directors. In addition, wereimbursed Stealth Maritime for its payment of the compensation to ourCEO and Chief Financial Officer. During the year ended December31,  2005, such compensation was in the aggregate amount of€513,559 (US$608,156, based 

41

----

Table of Contents

on the exchange rate of€1.00:US$1.1842 in effect on December  29,2005) on an annualized basis. Of this amount, €188,862($223,651, based on the exchange rate of €1.00:US$1.1842in effect on December 29, 2005) was paid to our CEO and Chief FinancialOfficer since our CEO was paid for only four months of service and ourChief Financial Officer for only six months of service provided to usduring the year ended December 31, 2005. We anticipate that cashcompensation in the future will not materially increase.

Employees.    We have no salaried employees. As ofDecember  31,  2005, 156 officers and 155 crew membersserved on board the vessels in our fleet.

Shareownership.    The shares of common stock beneficially owned byour directors and senior managers and/or companies affiliated withthese individuals are disclosed in ‘‘Item 7. MajorShareholders and Related Party Transactions’’ below.

Equity Compensation Plan

We have an equity compensationplan, which we refer to as the Plan. As of April 17, 2006, we have notmade any grants under the Plan. The Plan is generally administered bythe Compensation Committee of our board of directors, except that thefull board may act at any time to administer the Plan, and authority toadminister any aspect of the Plan may be delegated by our board ofdirectors or by the Compensation Committee to an executive officer orany other person. The Plan allows the plan administrator to grantawards of shares of our common stock or the right to receive orpurchase shares of our common stock (including options to purchasecommon stock, restricted stock and stock units, bonus stock,performance stock, and stock appreciation rights) to our employees,directors or other persons or entities providing significant servicesto us or our subsidiaries, and further provides the plan administratorthe authority to reprice outstanding stock options or other awards. Theactual terms of an award, including the number of shares of commonstock relating to the award, any exercise or purchase price, anyvesting, forfeiture or transfer restrictions, the time or times ofexercisability for, or delivery of, shares of common stock, are to bedetermined by the plan administrator and set forth in a written awardagreement with the participant.

The aggregate number of sharesof our common stock for which awards may be granted under the Plancannot exceed 10% of the number of shares of our common stockissued and outstanding at the time any award is granted. Awards madeunder the Plan that have been forfeited (including our repurchase ofshares of common stock subject to an award for the price, if any, paidto us for such shares of common stock, or for their par value),cancelled or have expired, will not be treated as having been grantedfor purposes of the preceding sentence.

The Plan permits theplan administrator to make an equitable adjustment to the number, kindand exercise price per share of awards in the event of ourrecapitalization, reorganization, merger, spin-off, share exchange,dividend of common stock, liquidation, dissolution or other similartransaction or events. In addition, the plan administrator may makeadjustments in the terms and conditions of any awards in recognition ofany unusual or nonrecurring events. Our board of directors may, at anytime, alter, amend, suspend or discontinue the Plan. The Plan willautomatically terminate ten years after it has been most recentlyapproved by our stockholders.

|               |                                                  |
|---------------|--------------------------------------------------|
| Item 7.  | MajorShareholders and Related Party Transactions |

It is our policythat transactions with related parties are entered into on terms noless favorable to us than would exist if these transactions wereentered into with unrelated third parties on an arm’s lengthbasis.

Management affiliations

Harry Vafias, ourpresident, chief executive officer and one of our directors, is anofficer, director and the sole shareholder of Flawless Management Inc.,our largest stockholder. He is also the son of the principal andfounder of Brave Maritime, an affiliate of Stealth Maritime, which isour management company.

42

----

Table of Contents

Management and other fees

We payStealth Maritime a management fee of $390 (based on an exchange rate of€1.00:US$1.25) per vessel operating under a voyage or timecharter per day on a monthly basis in advance, pro rated for thecalendar days we own the vessels. We pay a fee of $125 (based on anexchange rate of €1.00:US$1.25) per vessel per day for eachof our vessels operating on bareboat charter. The management fee isadjusted quarterly based on the United States Dollar/Euro exchange rateas published by Bloomberg LP two days prior to the end of the previouscalendar quarter. We are also obligated to pay Stealth Maritime a feeequal to 1.25% of the gross freight, demurrage and charter hirecollected from the employment of our vessels. Stealth Maritime alsoearns a fee equal to 1.0% calculated on the price as stated inthe relevant memorandum of agreement for any vessel bought or sold bythem on our behalf. We believe that the amounts we pay to StealthMaritime are no more than amounts that we would pay to an unaffiliatedship manager. In addition, we reimburse Stealth Maritime for itspayment of the compensation to our CEO and Chief Financial Officer.During the year ended December  31,  2005, suchcompensation was in the aggregate amount of €513,559(US$608,156, based on the exchange rate of €1.00:US$1.1842in effect on December  29,  2005) on an annualized basis.Of this amount, €188,862 ($223,651, based on the exchangerate of €1.00:US$1.1842 in effect on December 29, 2005)was paid to our CEO and Chief Financial Officer since our CEO was paidfor only four months of service and our Chief Financial Officer foronly six months of service provided to us during the year endedDecember 31, 2005. For the year ended December  31,  2005,aggregate payments made to Stealth Maritime amounted to $1,473,080.

In addition, as long as Stealth Maritime is our fleet manager,Stealth Maritime has granted us a right of first refusal to acquire anyLPG carrier, which Stealth Maritime may acquire in the future. Inaddition, Stealth Maritime has agreed that it will not charter-in anyLPG carrier without first offering the opportunity to charter-in suchvessel to us. This right of first refusal does not prohibit StealthMaritime from managing vessels owned by unaffiliated third parties incompetition with us. Additional vessels that we may acquire in thefuture may be managed by Stealth Maritime or other unaffiliatedmanagement companies.

The initial term of our managementagreement with Stealth Maritime expires in 2009 but may be extended ona year to year basis unless written six-months written notice isprovided prior to the expiration of the initial term. We believe thatthe amounts we pay to Stealth Maritime are no more than amounts that wewould pay to an unaffiliated ship manager.

Charteringcommissions

We pay a chartering commission to Stealth Maritimeequal to 1.25% of the gross freight, demurrage and charter hirecollected from the employment of our vessels.

MajorShareholders

The following table sets forth certain informationregarding the beneficial ownership of our outstanding shares of commonstock as of March  31,  2006 by:

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | •  | each person or entity that weknow beneficially owns 5% or more of our shares of commonstock; |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | our chief executiveofficer and our other members of senior management; |

|  |              |                            |
|--|--------------|----------------------------|
|  | •  | each of our directors; and |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | all of our current directorsand executive officers as a group. |

Beneficial ownership isdetermined in accordance with the rules of the SEC. In general, aperson who has voting power and/or investment power with respect tosecurities is treated as a beneficial owner of those securities. Itdoes not necessarily imply that the named person has the economic orother benefits of ownership. For purposes of this table, shares subjectto options, warrants or rights currently exercisable or exercisablewithin 60 days of March  31,  2006 are considered asbeneficially owned by the person holding such options, warrants orrights. Each shareholder is entitled to one vote for each share held.The applicable percentage of ownership for each shareholder is based on

43

----

Table of Contents

14,000,000 shares of common stockoutstanding as of March  31,  2006. Information for certainholders is based on their latest filings with the Securities andExchange Commission or information delivered to us.

|                                                            |  |                          |           |            |  |        |         |         |  |  |
|------------------------------------------------------------|--|--------------------------|-----------|------------|--|--------|---------|---------|--|--|
|                                                       |  | SharesBeneficially Owned |
| Nameof Beneficial Owner                                    |  | Number                   |           | Percentage |
| PrincipalStockholders                                      |  |                     |      |       |  |   |    |    |
| FlawlessManagement Inc.(1)                                 |  |                     | 6,000,000 |       |  |   | 42.9    | %  |
| 331 KiffissiasAvenue                                       |  |                     |      |       |  |   |    |    |
| Erithrea14561                                              |  |                     |      |       |  |   |    |    |
| Athens,Greece                                              |  |                     |      |       |  |   |    |    |
| WellingtonManagement Company, LLP(2)                       |  |                     | 1,356,300 |       |  |   | 9.69    | %  |
| 75 StateStreet                                             |  |                     |      |       |  |   |    |    |
| Boston, MA02109                                            |  |                     |      |       |  |   |    |    |
| ExecutiveOfficers and Directors                            |  |                     |      |       |  |   |    |    |
| Harry N.Vafias(3)                                          |  |                     | 6,000,000 |       |  |   | 42.9    | %  |
| Andrew J. Simmons                                          |  |                     | —   |       |  |   | — |    |
| Michael G.Jolliffe                                         |  |                     | —   |       |  |   | — |    |
| Thanassis J. Martinos                                      |  |                     | —   |       |  |   | — |    |
| Miranda Xafa                                               |  |                     | —   |       |  |   | — |    |
| Markos Drakos(4)                                           |  |                     | —   |       |  |   | — |    |
| All executive officersand directors as a group (6 persons) |  |                     | 6,000,000 |       |  |   | 42.9    | %  |
|                                                            |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Accordingto a Schedule 13G dated February  13,  2006 jointly filedby Flawless Management Inc. and Harry N. Vafias, Flawless ManagementInc. beneficially owns 6,000,000 shares of common stock and has solevoting power and sole dispositive power with respect to all suchshares. Harry N. Vafias, our CEO, President and Director, is the solestockholder of Flawless Management Inc. |

|     |                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | According to a Schedule 13G datedFebruary  14,  2006, Wellington Management Company, LLPbeneficially owns 1,356,300 shares of common stock and has sharedvoting power with respect to 803,700 such shares and shared dispositivepower with respect to all such shares. The shares of common stock areowned of record by clients of Wellington Management Company, LLP, aninvestment advisor. |

|     |                                                                         |
|-----|-------------------------------------------------------------------------|
| (3) | Byvirtue of the shares owned indirectly through Flawless ManagementInc. |

|     |                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Mr.  Drakoswas not a director of our Board at December  31,  2005.Mr.  Drakos was elected as the fifth director of our Board by theunanimous written consent of our Board on February  10,2006. |

We effected a registered public offering ofour shares of common stock and our shares of common stock began tradingon the Nasdaq National Market in October  2005. Accordingly,certain of our principal shareholders acquired their shares of commonstock either at or subsequent to this time. Our major shareholders havethe same voting rights as our other shareholders. As of April 12, 2006,we had approximately seven shareholders of record. Six of theshareholders of record were located in the United States and held inthe aggregate 8,000,000 shares of common stock representingapproximately 57.1% of our outstanding shares of common stock.However, the six United States shareholders of record include CEDEFAST,which, as nominee for the Depository Trust Company, is the recordholder of 7,998,557 shares of common stock. Accordingly, we believethat the shares held by CEDEFAST include shares of common stockbeneficially owned by both holders in the United States and non-UnitedStates beneficial owners. As a result, these numbers may not accuratelyrepresent the number of beneficial owners in the United States. We arenot aware of any arrangements the operation of which may at asubsequent date result in a change of control of the company.

|               |                       |
|---------------|-----------------------|
| Item 8.  | Financial Information |

See‘‘Item 18. Financial Statements’’ below.

44

----

Table of Contents

Significant Changes.    Nosignificant change has occurred since the date of the annual financialstatements included in this Annual Report on Form 20-F.

LegalProceedings.    To our knowledge, we are not currently a partyto any material lawsuit that, if adversely determined, would have amaterial adverse effect on our financial position, results ofoperations or liquidity. From time to time in the future we may besubject to legal proceedings and claims in the ordinary course ofbusiness, principally personal injury and property casualty claims.Those claims, even if lacking merit, could result in the expenditure ofsignificant financial and managerial resources. We have not beeninvolved in any legal proceedings which may have, or have had asignificant effect on our financial position, results of operations orliquidity, nor are we aware of any proceedings that are pending orthreatened which may have a significant effect on our financialposition, results of operations or liquidity.

DividendPolicy.    While we cannot assure you that we will do so, andsubject to the limitations discussed below, we currently intend todeclare and pay quarterly dividends from our net profits tostockholders each February, May, August and November in amounts theBoard of Directors determines are appropriate.

Declaration andpayment of any dividend is subject to the discretion of our Board ofDirectors. The timing and amount of dividend payments will be dependentupon our earnings, financial condition, cash requirements andavailability, fleet renewal and expansion, restrictions in our loanagreements, including the loan agreements with Fortis Bank and DnB NORBank, the provisions of Marshall Islands law affecting the payment ofdistributions to stockholders and other factors. The payment ofdividends is not guaranteed or assured, and may be discontinued at anytime at the discretion of our Board of Directors. Because we are aholding company with no material assets other than the stock of oursubsidiaries, our ability to pay dividends depends on the earnings andcash flow of our subsidiaries and their ability to pay dividends to us.If there is a substantial decline in the LPG carrier market, ourearnings would be adversely affected thus limiting our ability to paydividends. Marshall Islands law generally prohibits the payment ofdividends other than from surplus or while a company is insolvent orwould be rendered insolvent upon the payment of such dividend.

Under the terms of our existing credit facilities, we are permittedto declare or pay a cash dividend in any year as long as the amount ofthe dividend does not exceed 50% of our net income for thatyear. See Item 3. ‘‘Key Information — Risks relatedto our Shares of Common Stock — We may not be able to pay cashdividends as intended’’.

|              |                       |
|--------------|-----------------------|
| Item9.  | The Offer and Listing |

Our shares ofcommon stock are quoted on the Nasdaq National Market.

Tradingon the Nasdaq National Market

Since our initial public offeringin the United States in October  2005, our shares of common stockhave been quoted on the Nasdaq National Market under the symbol‘‘GASS’’. The following table shows the highand low closing prices for our shares of common stock during theindicated periods.

|                                     |  |        |        |        |  |        |        |        |  |  |
|-------------------------------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                                |  | High   |        | Low    |
| 2005                                |  |   |   |   |  |   |   |   |
| October2005                         |  | $      | 14.59  |   |  | $      | 12.10  |   |
| November  2005                      |  |   | 13.25  |   |  |   | 10.8   |   |
| December  2005                      |  |   | 12.85  |   |  |   | 11.71  |   |
| 2006                                |  |   |   |   |  |   |   |   |
| FirstQuarter                        |  |   |   |   |  |   |   |   |
| January  2006                       |  | $      | 14.18  |   |  | $      | 12.50  |   |
| February2006                        |  |   | 13.10  |   |  |   | 10.90  |   |
| March  2006                         |  |   | 14.30  |   |  |   | 12.05  |   |
| April  2006 (through April17, 2006) |  |   | 14.25  |   |  |   | 13.75  |   |
|                                     |

45

----

Table of Contents

|               |                        |
|---------------|------------------------|
| Item10.  | Additional Information |

Description ofCapital Stock

Under our articles of incorporation, ourauthorized capital stock consists of 100,000,000 shares of commonstock, $.01 par value per share, of which 14,000,000 shares are issuedand outstanding and fully paid, and 5,000,000 shares of blank checkpreferred stock, $.01 par value per share. All of our shares of stockare in registered form. As of March  31,  2006, there were14,000,000 outstanding shares of common stock and no outstandingoptions.

Common Stock

As of December  31,2005, we had 14,000,000 shares of common stock outstanding, out of100,000,000 shares authorized to be issued. Each outstanding share ofcommon stock entitles the holder to one vote on all matters submittedto a vote of stockholders. Subject to preferences that may beapplicable to any outstanding shares of preferred stock, holders ofshares of common stock are entitled to receive ratably all dividends,if any, declared by our Board of Directors out of funds legallyavailable for dividends. Holders of common stock do not haveconversion, redemption or preemptive rights to subscribe to any of oursecurities. All outstanding shares of common stock are, and the sharesto be sold in this offering when issued and paid for will be, fullypaid and nonassessable. The rights, preferences and privileges ofholders of common stock are subject to the rights of the holders of anyshares of preferred stock which we may issue in the future.

Our Articles of Incorporation and Bylaws.

Ourpurpose is to engage in any lawful act or activity for whichcorporations may now or hereafter be organized under the MarshallIslands Business Corporations Act, or BCA. Our articles ofincorporation and bylaws do not impose any limitations on the ownershiprights of our stockholders.

Under our bylaws, annual stockholdermeetings will be held at a time and place selected by our Board ofDirectors. The meetings may be held in or outside of the MarshallIslands. Special meetings may be called by the Board of Directors. OurBoard of Directors may set a record date between 15 and 60 days beforethe date of any meeting to determine the stockholders that will beeligible to receive notice and vote at the meeting.

Directors.    Our directors are elected by a plurality ofthe votes cast at a meeting of the stockholders by the holders ofshares entitled to vote in the election. There is no provision forcumulative voting.

The Board of Directors may change the numberof directors by a vote of a majority of the entire board. Each directorshall be elected to serve until his successor shall have been dulyelected and qualified, except in the event of his death, resignation,removal, or the earlier termination of his term of office. The Board ofDirectors has the authority to fix the amounts which shall be payableto the members of our Board of Directors for attendance at any meetingor for services rendered to us.

Dividends.    While wecannot assure you that we will do so, and subject to the limitationsdiscussed below, we currently intend to declare and pay regular cashdividends on a quarterly basis from our net profits, in amounts theBoard of Directors may from time to time determine are appropriate.However, we may have to make provisions for vessel acquisitions andother liabilities that would reduce or eliminate the cash available fordistribution as dividends. We declared and paid a dividend per share of$0.1875 in January  2006. There can be no assurance that we willpay regular quarterly dividends in the future. Such dividends as we dopay may be in amounts less than the $0.1875 per share dividend wedeclared and paid in January  2006.

Declaration andpayment of any dividend is subject to the discretion of our Board ofDirectors. The timing and amount of dividend payments will be dependentupon our earnings, financial condition, cash requirements andavailability, restrictions in our loan agreements, including the loanagreements with Fortis Bank and DnB NOR Bank, or other financingarrangements, the provisions of Marshall Islands law affecting thepayment of distributions to stockholders and other factors. The

46

----

Table of Contents

payment of dividends is not guaranteed orassured, and may be discontinued at any time at the discretion of ourBoard of Directors. Because we are a holding company with no materialassets other than the stock of our subsidiaries, our ability to paydividends will depend on the earnings and cash flow of our subsidiariesand their ability to pay dividends to us. If there is a substantialdecline in the LPG carrier market, our earnings would be negativelyaffected thus limiting our ability to pay dividends. Marshall Islandslaw generally prohibits the payment of dividends other than fromsurplus or while a company is insolvent or would be rendered insolventupon the payment thereof.

Dissenters' Rights ofAppraisal and Payment.    Under the BCA, our stockholders havethe right to dissent from various corporate actions, including anymerger or sale of all or substantially all of our assets not made inthe usual course of our business, and receive payment of the fair valueof their shares. In the event of any further amendment of our articlesof incorporation, a stockholder also has the right to dissent andreceive payment for his or her shares if the amendment alters certainrights in respect of those shares. The dissenting stockholder mustfollow the procedures set forth in the BCA to receive payment. In theevent that we and any dissenting stockholder fail to agree on a pricefor the shares, the BCA procedures involve, among other things, theinstitution of proceedings in the circuit court in the judicial circuitin the Marshall Islands in which our Marshall Islands office issituated. The value of the shares of the dissenting stockholder isfixed by the court after reference, if the court so elects, to therecommendations of a court-appointed appraiser.

Stockholders' Derivative Actions.    Under the BCA,any of our stockholders may bring an action in our name to procure ajudgment in our favor, also known as a derivative action, provided thatthe stockholder bringing the action is a holder of common stock both atthe time the derivative action is commenced and at the time of thetransaction to which the action relates.

Anti-takeoverProvisions of our Charter Documents.    Several provisions ofour articles of incorporation and bylaws may have anti-takeovereffects. These provisions are intended to avoid costly takeoverbattles, lessen our vulnerability to a hostile change of control andenhance the ability of our Board of Directors to maximize stockholdervalue in connection with any unsolicited offer to acquire us. However,these anti-takeover provisions, which are summarized below, could alsodiscourage, delay or prevent (1) the merger or acquisition of ourcompany by means of a tender offer, a proxy contest or otherwise, thata stockholder may consider in its best interest and (2) the removal ofincumbent officers and directors.

Blank Check PreferredStock

Under the terms of our articles of incorporation, ourBoard of Directors has authority, without any further vote or action byour stockholders, to issue up to 5,000,000 shares of blank checkpreferred stock. Our Board of Directors may issue shares of preferredstock on terms calculated to discourage, delay or prevent a change ofcontrol of our company or the removal of our management.

Classified Board of Directors

Our articles ofincorporation provide for a Board of Directors serving staggered,three-year terms. Approximately one-third of our Board of Directorswill be elected each year. This classified board provision coulddiscourage a third party from making a tender offer for our shares orattempting to obtain control of our company. It could also delaystockholders who do not agree with the policies of the Board ofDirectors from removing a majority of the Board of Directors for twoyears.

Election and Removal of Directors

Ourarticles of incorporation and bylaws prohibit cumulative voting in theelection of directors. Our bylaws require parties other than the Boardof Directors to give advance written notice of nominations for theelection of directors. Our bylaws also provide that our directors maybe removed only for cause and only upon the affirmative vote of theholders of at least 80% of the outstanding shares of our capitalstock entitled to vote for those directors. These provisions maydiscourage, delay or prevent the removal of incumbent officers anddirectors.

47

----

Table of Contents

Calling of Special Meetings ofStockholders

Our bylaws provide that special meetings ofour stockholders may be called only by resolution of our board ofdirectors.

Advance Notice Requirements for StockholderProposals and Director Nominations

Our bylaws provide thatstockholders seeking to nominate candidates for election as directorsor to bring business before an annual meeting of stockholders mustprovide timely notice of their proposal in writing to the corporatesecretary.

Generally, to be timely, a stockholder's noticemust be received at our principal executive offices not less than 90days nor more than 120 days prior to the first anniversary date of thedate on which we first mailed our proxy materials for the previousyear's annual meeting. Our bylaws also specify requirements as tothe form and content of a stockholder's notice. These provisionsmay impede stockholders' ability to bring matters before an annualmeeting of stockholders or make nominations for directors at an annualmeeting of stockholders.

Business Combinations

Although the BCA does not contain specific provisions regarding‘‘business combinations’’ between companiesorganized under the laws of the Marshall Islands and‘‘interested stockholders,’’ we have includedthese provisions in our articles of incorporation. Specifically, ourarticles of incorporation prohibit us from engaging in a‘‘business combination’’ with certain personsfor three years following the date the person becomes an interestedstockholder. Interested stockholders generally include:

|  |              |                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------|
|  | •  | persons who are the beneficialowners of 15% or more of the outstanding voting stock of thecorporation; and |

|  |              |                                                                                                                                                                                                                                                        |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | personswho are affiliates or associates of the corporation and who hold15% or more of the corporation's outstanding voting stockat any time within three years before the date on which theperson's status as an interested stockholder is determined. |

Subject to certain exceptions, a business combinationincludes, among other things:

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | certain mergers orconsolidations of the corporation or any direct or indirectmajority-owned subsidiary of the company; |

|  |              |                                                                                                                                                                                                                                                                                                                          |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the sale, lease, exchange,mortgage, pledge, transfer or other disposition of assets having anaggregate market value equal to 10% or more of either theaggregate market value of all assets of the corporation, determined ona consolidated basis, or the aggregate value of all the outstandingstock of the corporation; |

|  |              |                                                                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | certain transactions thatresult in the issuance or transfer by the corporation of any stock ofthe corporation to the interested stockholder; |

|  |              |                                                                                                                                                                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | any transaction involving thecorporation that has the effect of increasing the proportionate shareof the stock of any class or series, or securities convertible into thestock of any class or series, of the corporation that is owned directlyor indirectly by the interested stockholder; and |

|  |              |                                                                                                                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | any receipt by the interestedstockholder of the benefit (except as a stockholder) of any loans,advances, guarantees, pledges or other financial benefits provided byor through the corporation. |

These provisions of ourarticles of incorporation do not apply to a business combinationif:

|  |              |                                                                                                                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | before a person becomesan interested stockholder, the board of directors of the corporationapproves the business combination or transaction in which thestockholder became an interested stockholder; |

48

----

Table of Contents

|  |              |                                                                                                                                                                                                                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | uponconsummation of the transaction that resulted in the interestedstockholder becoming an interested stockholder, the interestedstockholder owned at least 85% of the voting stock of thecorporation outstanding at the time the transaction commenced, otherthan certain excluded shares; or |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | following a transaction inwhich the person became an interested stockholder, the businesscombination is (a) approved by the board of directors of thecorporation and (b) authorized at a regular or special meeting ofstockholders, and not by written consent, by the vote of the holders ofat least two-thirds of the voting stock of the corporation not owned bythe stockholder. |

Material Contracts

The following is asummary of each material contract that we entered into outside theordinary course of business during the two year period immediatelypreceding the date of this Annual Report. Such summaries are notintended to be complete and reference is made to the contractsthemselves, which are included as exhibits to this Annual Report:

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (a)  | Amended and Restated ManagementAgreement dated as of June  20,  2005 between the Companyand Stealth Maritime S.A. for an initial term of five years. Pursuantto our management agreement with Stealth Maritime, Stealth Maritime isresponsible for the administration of our affairs and the commercialand technical management of our fleet. Under the agreement, we payStealth Maritime a management fee of $390 per day (based on an exchangerate of €1.00:US$1.25) per vessel operating under a voyageor time charter (and $125 per vessel per day for any vessel on bareboatcharter) in advance on a monthly basis, pro rated for the calendar dayswe own the vessels. The management fee is adjusted quarterly based onthe United States Dollar/Euro exchange rate as published by BloombergLP two days prior to the end of the previous calendar quarter. We arealso obligated to pay Stealth Maritime a fee equal to 1.25% ofthe gross freight, demurrage and charter hire collected from theemployment of our vessels. Stealth Maritime will also earn a fee equalto 1.0% calculated on the price as stated in the relevantmemorandum of agreement for any vessel bought or sold by them on ourbehalf. We currently reimburse Stealth Maritime for its payment of thecompensation to our CEO and Chief Financial Officer. During the yearended December  31,  2005, such compensation was in theaggregate amount of €513,559 (US$608,156, based on theexchange rate of €1.00:US$1.1842 in effect onDecember  29,  2005) on an annualized basis. Of thisamount, €188,862 ($223,651, based on the exchange rate of€1.00:US$1.1842 in effect on December 29, 2005) was paidto our CEO and Chief Financial Officer since our CEO was paid for onlyfour months of service and our Chief Financial Officer for only sixmonths of service provided to us during the year ended December 31,2005. |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (b)  | Right of First RefusalAgreement dated as of August  26,  2005 among the Company,Harry  N. Vafias and Stealth Maritime S.A. Under the Right ofFirst Refusal Agreement, Stealth Maritime granted the Company a rightof first refusal to acquire any LPG carrier which Stealth Maritime mayacquire in the future. In addition, under the agreement, StealthMaritime agreed that it will not charter-in any LPG carrier withoutfirst offering the opportunity to charter-in such vessel to theCompany. Under the agreement, Stealth Maritime is not prohibited frommanaging vessels owned by unaffiliated third parties in competitionwith us. The agreement is effective for as long as Stealth Maritime (orany entity with respect to which Harry Vafias is an executive officer,director or principal shareholder) manages vessels owned or charteredin by the Company and Harry Vafias is the executive officer or directorof the Company. |

|  |           |                                                                                                                                                                                                                                                                                                                                                                |
|--|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (c)  | Loan Agreementdated as of March  16,  2005 between Matrix Gas TradingLtd., Gaz de Brazil, Inc., VCM Trading Ltd., Geneve Butane Inc., LPGoneLtd., Semichlaus Exports Ltd., Ventspils Gases Ltd., Pacific GasesLtd., Aracruz Trading Ltd., Industrial Materials Inc. and the Company,as joint and several borrowers, and Fortis Bank (Nederland) N.V., aslender |

49

----

Table of Contents

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | relating to a $54.0  million loanfacility for the partial financing of four vessels and the partialrefinancing of six vessels, including the Gas Prodigy. OnJune  10,  2005, the portion of the loan attributable tothe Gas Prodigy was prepaid and the security interest in theGas Prodigy was released. This facility had an outstandingbalance as of December  31,  2005 of $47,706,000million, repayable in a further 30 quarterly installments of amountsranging from $1.36  million, plus a final payment of $7.0million due on the earlier of the eighth anniversary of the deliverydate of the last ship or on May  30,  2013. The loan issecured by liens on the nine ships and bears interest at LIBOR plus amargin which varies according to the outstanding balance of the loan tothe aggregate market value of the vessels subject to a mortgage in thatperiod. |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (d)  | Loan Agreement dated asof December  5,  2005 between Empire Spirit Ltd.,Independent Trader Ltd., Triathlon Inc., Soleil Trust Inc., JungleInvestment Limited and Northern Yield Shipping Limited, as joint andseveral borrowers, and DnB NOR Bank ASA, as lender relating to a$50.0  million loan facility, and as supplemented by a$14.0  million Supplemental Agreement dated as of February27,  2006, increasing the full amount of available credit underthe facility to $64.0  million. As amended by the supplementalagreement, we are obligated to repay the principal and interest underthe credit facility beginning in June  2006 throughDecember  2015 in two semi-annual payments of $4,608,000 each,four semi-annual payments of $3,072,000 each, and 14 semi-annualpayments of $2,304,000 each, plus a balloon payment of $10,240,000payable together with the final installment. Under the terms of the DnBNOR Bank loan, as supplemented, the interest rate is the sum of LIBORand a margin. The margin varies with the ratio of the outstandingbalance of the loan to the aggregate market value of the vesselssubject to mortgage in that period. If the ratio is equal to or lowerthan 130%, the interest rate will be 0.85% over LIBOR. Ifthe ratio is between 130% and 150%, the interest ratewill be 0.75% over LIBOR. If the ratio is equal to or higherthan 150%, the interest rate will be 0.70% over LIBOR. Wepaid a non-refundable fee of $95,000 upon the signing of the DnB NORBank ASA loan agreement and a non-refundable fee of $28,000 upon thesigning of the DnB NOR Bank supplemental agreement. |

Exchangecontrols

Under Marshall Island law, there are currently norestrictions on the export or import of capital, including foreignexchange controls or restrictions that affect the remittance ofdividends, interest or other payments to non-resident holders of ourcommon stock.

TAX CONSIDERATIONS

Marshall Islands TaxConsiderations

We are incorporated in the Marshall Islands.Under current Marshall Islands law, we are not subject to tax on incomeor capital gains, and no Marshall Islands withholding tax will beimposed upon payments of dividends by us to our stockholders.

United States Federal Income Tax Considerations

Except asotherwise noted, this discussion is based on the assumption that wewill not maintain an office or other fixed place of business within theUnited States. We have no current intention of maintaining such anoffice. References in this discussion to ‘‘we’’and ‘‘us’’ are to StealthGas Inc. and itssubsidiaries on a consolidated basis, unless the context otherwiserequires.

United States Federal Income Taxation of OurCompany

Taxation of Operating Income: In General

Unless exempt from United States federal income taxation under therules discussed below, a foreign corporation is subject to UnitedStates federal income taxation in respect of any income that is

50

----

Table of Contents

derived from the use of vessels, from thehiring or leasing of vessels for use on a time, voyage or bareboatcharter basis, from the participation in a pool, partnership, strategicalliance, joint operating agreement or other joint venture it directlyor indirectly owns or participates in that generates such income, orfrom the performance of services directly related to those uses, whichwe refer to as ‘‘shipping income,’’ to theextent that the shipping income is derived from sources within theUnited States. For these purposes, 50% of shipping income thatis attributable to transportation that begins or ends, but that doesnot both begin and end, in the United States constitutes income fromsources within the United States, which we refer to as‘‘United States-source shipping income.’’

Shipping income attributable to transportation that both begins andends in the United States is generally considered to be 100%from sources within the United States. We do not expect to engage intransportation that produces income which is considered to be100% from sources within the United States.

Shippingincome attributable to transportation exclusively between non-UnitedStates ports is generally considered to be 100% derived fromsources outside the United States. Shipping income derived from sourcesoutside the United States will not be subject to any United Statesfederal income tax.

In the absence of exemption from tax underSection 883, our gross United States-source shipping income, unlessdetermined to be effectively connected with the conduct of a UnitedStates trade or business, as described below, would be subject to a4% tax imposed without allowance for deductions as describedbelow.

Exemption of Operating Income from United States FederalIncome Taxation

Under Section 883 of the Code, we will beexempt from United States federal income taxation on our UnitedStates-source shipping income if:

|  |           |                                                                                                                                                                                                                  |
|--|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1)  | we are organized in a foreigncountry (our ‘‘country of organization’’) thatgrants an ‘‘equivalent exemption’’ tocorporations organized in the United States; and |

|  |           |        |
|--|-----------|--------|
|  | (2)  | either |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                           |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (A)  | more than 50% of the valueof our stock is owned, directly or indirectly, by individuals who are‘‘residents’’ of our country of organization orof another foreign country that grants an ‘‘equivalentexemption’’ to corporations organized in the United States,which we refer to as the ‘‘50% OwnershipTest’’; or |

|  |           |                                                                                                                                                                                                                                                                                                                                                             |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (B)  | ourstock is ‘‘primarily and regularly traded on an establishedsecurities market’’ in our country of organization, inanother country that grants an ‘‘equivalentexemption’’ to United States corporations, or in the UnitedStates, which we refer to as the ‘‘Publicly-TradedTest.’’ |

We believe, based on Revenue Ruling 2001-48,2001-2 C.B. 324, and, in the case of the Marshall Islands, an exchangeof notes between the United States and the Marshall Islands, 1990-2C.B. 321, and, in the case of Malta, an exchange of notes between theUnited States and Malta, 1997-1 C.B. 314, (each an‘‘Exchange of Notes’’) that the MarshallIslands and Malta, the jurisdictions in which we and our ship-owningsubsidiaries are incorporated, grant an ‘‘equivalentexemption’’ to United States corporations. Based on advicereceived from Marshall Islands counsel, we believe that the MarshallIslands continues to honor the Exchange of Notes and that, since thedate the Exchange of Notes was entered into, the tax law of theMarshall Islands has not changed so as to be inconsistent with theExchange of Notes with the United States. Therefore, we believe that wewill be exempt from United States federal income taxation with respectto our United States-source shipping income if either the 50%Ownership Test or the Publicly-Traded Test is met. For periodssubsequent to our initial public offering it may be difficult tosatisfy the 50% Ownership Test due to the widely-held ownershipof our stock. Our ability to satisfy the Publicly-Traded Test isdiscussed below.

The Section 883 regulations provide, inpertinent part, that stock of a foreign corporation will be consideredto be ‘‘primarily traded’’ on an establishedsecurities market in a particular country if the 

51

----

Table of Contents

number of shares of each class of stock thatare traded during any taxable year on all established securitiesmarkets in that country exceeds the number of shares in each such classthat are traded during that year on established securities markets inany other single country. Our common stock, which is the sole class ofour issued and outstanding stock is ‘‘primarilytraded’’ on the Nasdaq National Market.

Under theregulations, our common stock will be considered to be‘‘regularly traded’’ on an establishedsecurities market if one or more classes of our stock representing morethan 50% of our outstanding shares, by total combined votingpower of all classes of stock entitled to vote and total value, islisted on the market. We refer to this as the listing threshold. Sinceour common stock is the sole class of stock listed on the NasdaqNational Market, we will satisfy the listing requirement.

It isfurther required that with respect to each class of stock relied uponto meet the listing threshold (i) such class of the stock is traded onthe market, other than in minimal quantities, on at least 60 daysduring the taxable year or 1/6 of the days in a short taxable year; and(ii) the aggregate number of shares of such class of stock traded onsuch market is at least 10% of the average number of shares ofsuch class of stock outstanding during such year or as appropriatelyadjusted in the case of a short taxable year. We believe we willsatisfy the trading frequency and trading volume tests. Even if thiswere not the case, the regulations provide that the trading frequencyand trading volume tests will be deemed satisfied if, as we believe tobe the case with our common stock, such class of stock is traded on anestablished market in the United States and such stock is regularlyquoted by dealers making a market in such stock.

Notwithstandingthe foregoing, the regulations provide, in pertinent part, that a classof our stock will not be considered to be ‘‘regularlytraded’’ on an established securities market for anytaxable year in which 50% or more of such class of ouroutstanding shares of the stock is owned, actually or constructivelyunder specified stock attribution rules, on more than half the daysduring the taxable year by persons who each own 5% or more ofthe value of such class of our outstanding stock, which we refer to asthe ‘‘5 Percent Override Rule.’’

Forpurposes of being able to determine the persons who own 5% ormore of our stock, or ‘‘5%Stockholders,’’ the regulations permit us to rely on thosepersons that are identified on Schedule 13G and Schedule 13D filingswith the United States Securities and Exchange Commission, or the‘‘SEC,’’ as having a 5% or morebeneficial interest in our common stock. The regulations furtherprovide that an investment company which is registered under theInvestment Company Act of 1940, as amended, will not be treated as a5% Stockholder for such purposes.

Our shares of commonstock may currently be, or may in the future come to be, owned,actually or under applicable attribution rules, such that 5%Stockholders own, in the aggregate, 50% or more of our commonstock. In such circumstances, we will be subject to the 5%Override Rule unless we can establish that among the shares included inthe closely-held block of our shares of common stock are a sufficientnumber of shares of common stock that are owned or treated as owned by‘‘qualified stockholders’’ that the shares ofcommon stock included in such block that are not so treated could notconstitute 50% or more of the shares of our common stock formore than half the number of days during the taxable year. In order toestablish this, such qualified stockholders would have to comply withcertain documentation and certification requirements designed tosubstantiate their identity as qualified stockholders. For thesepurposes, a ‘‘qualified stockholder’’ includes(i) an individual that owns or is treated as owning shares of ourcommon stock and is a resident of a jurisdiction that provides anexemption that is equivalent to that provided by Section 883 of theCode and (ii) certain other persons. There can be no assurance that wewill not be subject to the 5% Override Rule.

Our CEO, whois treated under applicable ownership attribution rules as owningapproximately 42.9% of our shares of common stock, has enteredinto an agreement with us regarding his compliance, and the complianceby certain entities that he controls and through which he owns ourshares, with the certification requirements designed to substantiatestatus as qualified stockholders. In certain circumstances, hiscompliance and the compliance of such entities he controls with theterms of that agreement may enable us and our subsidiaries to qualifyfor the benefits of Section 883 even where persons each of whom owns,either directly or under applicable attribution rules, 5% ormore of 

52

----

Table of Contents

our shares own, in the aggregate, more than50% of our outstanding shares. There can be no assurance,however, that his compliance and the compliance of such entities hecontrols with the terms of that agreement will enable us or oursubsidiaries to qualify for the benefits of Section 883.

Theentities that own our vessels that we are acquired in 2005 throughstock acquisitions may not qualify for the benefits of Section 883 for2005, with the result that United States federal tax, as describedbelow, may apply if such vessels made voyages in 2005 that began orended in the United States. We do not believe that such vessels madesuch a voyage.

To the extent the benefits of Section 883 areunavailable, our United States-source shipping income, to the extentnot considered to be ‘‘effectively connected’’with the conduct of a United States trade or business, as describedbelow, would be subject to a 4% tax imposed by Section 887 ofthe Code on a gross basis, without the benefit of deductions. Sinceunder the sourcing rules described above, we expect that no more than50% of our shipping income would be treated as being derivedfrom United States-sources, we expect that the maximum effective rateof United States federal income tax on our gross shipping income wouldnever exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 exemption areunavailable and our United States-source shipping income is consideredto be ‘‘effectively connected’’ with theconduct of a United States trade or business, as described below, anysuch ‘‘effectively connected’’ UnitedStates-source shipping income, net of applicable deductions, would besubject to the United States federal corporate income tax currentlyimposed at rates of up to 35%. In addition, we may be subject tothe 30% ‘‘branch profits’’ taxes onearnings effectively connected with the conduct of such trade orbusiness, as determined after allowance for certain adjustments, and oncertain interest paid or deemed paid attributable to the conduct of ourUnited States trade or business.

Our United States-sourceshipping income, other than leasing income, will be considered‘‘effectively connected’’ with the conduct of aUnited States trade or business only if:

|  |              |                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | we have, or are considered tohave, a fixed place of business in the United States involved in theearning of shipping income; and |

|  |              |                                                                                                                                                                                                                                                                                                                                                        |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | substantially all (at least90%) of our United States-source shipping income, other thanleasing income, is attributable to regularly scheduled transportation,such as the operation of a vessel that follows a published schedulewith repeated sailings at regular intervals between the same points forvoyages that begin or end in the United States. |

We do not intendto have, or permit circumstances that would result in having, anyvessel operating to the United States on a regularly scheduledbasis.

Our United States-source shipping income from leasingwill be considered ‘‘effectively connected’’with the conduct of a United States trade or business only if:

|  |              |                                                                                                                                             |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | we have, or are considered tohave a fixed place of business in the United States that is involved inthe meaning of such leasing income; and |

|  |              |                                                                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | substantially all (at least 90percent) of our United States-source shipping income from leasing isattributable to such fixed place of business. |

For thesepurposes, leasing income is treated as attributable to a fixed place ofbusiness where such place of business is a material factor in therealization of such income and such income is realized in the ordinarycourse of business carried on through such fixed place of business.Based on the foregoing and on the expected mode of our shippingoperations and other activities, we believe that none of our UnitedStates-source shipping income is ‘‘effectivelyconnected’’ with the conduct of a United States trade orbusiness.

United States Taxation of Gain on Sale ofVessels

Regardless of whether we qualify for exemption underSection 883, we will not be subject to United States federal incometaxation with respect to gain realized on a sale of a vessel, providedthe sale is considered to occur outside of the United States underUnited States federal income tax 

53

----

Table of Contents

principles. In general, a sale of a vesselwill be considered to occur outside of the United States for thispurpose if title to the vessel, and risk of loss with respect to thevessel, pass to the buyer outside of the United States. It is expectedthat any sale of a vessel will be so structured that it will beconsidered to occur outside of the United States.

UnitedStates Federal Income Taxation of United States Holders

Asused herein, the term ‘‘United States Holder’’means a beneficial owner of common stock that is a United Statescitizen or resident, United States corporation or other United Statesentity taxable as a corporation, an estate the income of which issubject to United States federal income taxation regardless of itssource, or a trust if a court within the United States is able toexercise primary jurisdiction over the administration of the trust andone or more United States persons have the authority to control allsubstantial decisions of the trust.

If a partnership holds ourcommon stock, the tax treatment of a partner will generally depend uponthe status of the partner and upon the activities of the partnership.If you are a partner in a partnership holding our common stock, you areencouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companiesbelow, any distributions made by us with respect to our common stock toa United States Holder will generally constitute dividends, which maybe taxable as ordinary income or ‘‘qualified dividendincome’’ as described in more detail below, to the extentof our current or accumulated earnings and profits, as determined underUnited States federal income tax principles. Distributions in excess ofour earnings and profits will be treated first as a nontaxable returnof capital to the extent of the United States Holder's tax basisin his common stock on a dollar for dollar basis and thereafter ascapital gain. Because we are not a United States corporation, UnitedStates Holders that are corporations will not be entitled to claim adividends received deduction with respect to any distributions theyreceive from us. Dividends paid with respect to our common stock willgenerally be treated as ‘‘passive income’’ (or‘‘passive category income’’ for taxable yearsbeginning after December  31,  2006) or, in the case ofcertain types of United States Holders, ‘‘financialservices income’’ (which will be treated as‘‘general category income’’ income for taxableyears beginning after December  31,  2006) for purposes ofcomputing allowable foreign tax credits for United States foreign taxcredit purposes.

Dividends paid on our common stock to a UnitedStates Holder who is an individual, trust or estate (a‘‘United States Individual Holder’’) should betreated as ‘‘qualified dividend income’’ thatis taxable to such United States Individual Holders at preferential taxrates (through 2008) provided that (1) the common stock is readilytradable on an established securities market in the United States (suchas the Nasdaq National Market); (2) we are not a passive foreigninvestment company, or PFIC, for the taxable year during which thedividend is paid or the immediately preceding taxable year (wedo not believe we are, have been or will be a PFIC); and (3) the UnitedStates Individual Holder owns the common stock for more than 60 days inthe 121-day period beginning 60 days before the date on which thecommon stock becomes ex-dividend. Special rules may apply to any‘‘extraordinary dividend’’. Generally, anextraordinary dividend is a dividend in an amount which is equal to orin excess of ten percent of a stockholder's adjusted basis (orfair market value in certain circumstances) in a share of common stockpaid by us. If we pay an ‘‘extraordinarydividend’’ on our common stock that is treated as‘‘qualified dividend income,’’ then any lossderived by a United States Individual Holder from the sale or exchangeof such common stock will be treated as long-term capital loss to theextent of such dividend. There is no assurance that any dividends paidon our common stock will be eligible for these preferential rates inthe hands of a United States Individual Holder. Any dividends paid byus which are not eligible for these preferential rates will be taxed toa United States Individual Holder at the standard ordinary incomerates. Legislation has proposed which, if enacted into law in itspresent form, would likely preclude, prospectively from the date ofenactment, our dividends from being treated as ‘‘qualifieddividend income’’ eligible for the preferential tax ratesdescribed above.

54

----

Table of Contents

Sale, Exchange or other Disposition ofCommon Stock

Assuming we do not constitute a PFIC for anytaxable year, a United States Holder generally will recognize taxablegain or loss upon a sale, exchange or other disposition of our commonstock in an amount equal to the difference between the amount realizedby the United States Holder from such sale, exchange or otherdisposition and the United States Holder's tax basis in suchstock. Such gain or loss will be treated as long-term capital gain orloss if the United States Holder's holding period is greater thanone year at the time of the sale, exchange or other disposition. Suchcapital gain or loss will generally be treated as United States-sourceincome or loss, as applicable, for United States foreign tax creditpurposes. A United States Holder's ability to deduct capitallosses is subject to certain limitations.

PFIC Status andSignificant Tax Consequences

Special United States federalincome tax rules apply to a United States Holder that holds stock in aforeign corporation classified as a PFIC for United States federalincome tax purposes. In general, we will be treated as a PFIC withrespect to a United States Holder if, for any taxable year in whichsuch holder held our common stock, either:

|  |              |                                                                                                                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | at least 75% of ourgross income for such taxable year consists of passive income (e.g.,dividends, interest, capital gains and rents derived other than in theactive conduct of a rental business); or |

|  |              |                                                                                                                                    |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | at least 50% of theaverage value of our assets during such taxable year produce, or areheld for the production of, passive income. |

For purposes ofdetermining whether we are a PFIC, we will be treated as earning andowning our proportionate share of the income and assets, respectively,of any of our subsidiary corporations in which we own at least 25percent of the value of the subsidiary's stock. Income earned, ordeemed earned, by us in connection with the performance of serviceswill not constitute passive income. By contrast, rental income willgenerally constitute ‘‘passive income’’ unlesswe are treated under specific rules as deriving our rental income inthe active conduct of a trade or business.

Based on our currentoperations and future projections, we do not believe that we have beenor are, and we do not expect to become, a PFIC with respect to anytaxable year. Although there is no legal authority directly on point,our belief is based principally on the position that, for purposes ofdetermining whether we are a PFIC, the gross income we derive or aredeemed to derive from the time chartering and voyage charteringactivities of our wholly-owned subsidiaries should constitute servicesincome, rather than rental income. Correspondingly, such income shouldnot constitute passive income, and the assets that we or ourwholly-owned subsidiaries own and operate in connection with theproduction of such income, in particular, the vessels, should notconstitute passive assets for purposes of determining whether we are aPFIC. We believe there is substantial legal authority supporting ourposition consisting of case law and Internal Revenue Servicepronouncements concerning the characterization of income derived fromtime charters and voyage charters as services income for other taxpurposes. However, in the absence of any legal authority specificallyrelating to the statutory provisions governing PFIC status, theInternal Revenue Service or a court could disagree with our position.In addition, although we currently intend to conduct our affairs in amanner to avoid being classified as a PFIC with respect to any taxableyear, we cannot assure you that the nature of our operations will notchange in the future.

Our expectation that we will not betreated as a PFIC is based in part upon our beliefs and expectationsregarding the value of the vessels that we will lease on a bareboatbasis relative to the value of our other assets. Should our beliefs orexpectations turn out to be incorrect, then we could, in certaincircumstances, be treated as a PFIC.

As discussed more fullybelow, if we were to be treated as a PFIC for any taxable year, aUnited States Holder would be subject to different taxation rulesdepending on whether the United States Holder makes an election totreat us as a ‘‘Qualified Electing Fund,’’which election we refer to as a ‘‘QEFelection.’’ As an alternative to making a QEF election, aUnited States Holder should be able to make a‘‘mark-to-market’’ election with respect to ourcommon stock, as discussed below.

55

----

Table of Contents

Taxation of United States Holders Makinga Timely QEF Election

If a United States Holder makes a timelyQEF election, which United States Holder we refer to as an‘‘Electing Holder,’’ the Electing Holder mustreport each year for United States federal income tax purposes hispro-rata share of our ordinary earnings and our net capital gain, ifany, for our taxable year that ends with or within the taxable year ofthe Electing Holder, regardless of whether or not distributions werereceived from us by the Electing Holder. The Electing Holder'sadjusted tax basis in the common stock will be increased to reflecttaxed but undistributed earnings and profits. Distributions of earningsand profits that had been previously taxed will result in acorresponding reduction in the adjusted tax basis in the common stockand will not be taxed again once distributed. An Electing Holder wouldgenerally recognize capital gain or loss on the sale, exchange or otherdisposition of our common stock. A United States Holder would make aQEF election with respect to any year that our company is a PFIC byfiling one copy of IRS Form 8621 with his United States federal incometax return and a second copy in accordance with the instructions tosuch form. If we were aware that we were to be treated as a PFIC forany taxable year, we would provide each United States Holder with allnecessary information in order to make the qualified electing fundelection described above.

Taxation of United States HoldersMaking a ‘‘Mark-to-Market’’ Election

Alternatively, if we were to be treated as a PFIC for any taxableyear and, as we anticipate, our common stock is treated as‘‘marketable stock,’’ a United States Holderwould be allowed to make a ‘‘mark-to-market’’election with respect to our common stock, provided the United StatesHolder completes and files IRS Form 8621 in accordance with therelevant instructions and related Treasury Regulations. If thatelection is made, the United States Holder generally would include asordinary income in each taxable year the excess, if any, of the fairmarket value of the common stock at the end of the taxable year oversuch holder's adjusted tax basis in the common stock. The UnitedStates Holder would also be permitted an ordinary loss in respect ofthe excess, if any, of the United States Holder's adjusted taxbasis in the common stock over its fair market value at the end of thetaxable year, but only to the extent of the net amount previouslyincluded in income as a result of the mark-to-market election. A UnitedStates Holder's tax basis in his common stock would be adjusted toreflect any such income or loss amount. Gain realized on the sale,exchange or other disposition of our common stock would be treated asordinary income, and any loss realized on the sale, exchange or otherdisposition of the common stock would be treated as ordinary loss tothe extent that such loss does not exceed the net mark-to-market gainspreviously included by the United States Holder.

Taxation ofUnited States Holders Not Making a Timely QEF or Mark-to-MarketElection

If we were to be treated as a PFIC for any taxableyear, a United States Holder who does not make either a QEF election ora ‘‘mark-to-market’’ election for that year,whom we refer to as a ‘‘Non-Electing Holder,’’would be subject to special rules with respect to (1) any excessdistribution (i.e., the portion of any distributions received by theNon-Electing Holder on our common stock in a taxable year in excess of125 percent of the average annual distributions received by theNon-Electing Holder in the three preceding taxable years, or, ifshorter, the Non-Electing Holder's holding period for the commonstock), and (2) any gain realized on the sale, exchange or otherdisposition of our common stock. Under these special rules:

|  |              |                                                                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the excess distribution or gainwould be allocated ratably over the Non-Electing Holder'saggregate holding period for the common stock; |

|  |              |                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------|
|  | •  | the amount allocated to thecurrent taxable year would be taxed as ordinary income; and |

|  |              |                                                                                                                                                                                                                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the amount allocated to each ofthe other taxable years would be subject to tax at the highest rate oftax in effect for the applicable class of taxpayer for that year, andan interest charge for the deemed deferral benefit would be imposedwith respect to the resulting tax attributable to each such othertaxable year. |

These penalties would not apply to a pension orprofit sharing trust or other tax-exempt organization that did notborrow funds or otherwise utilize leverage in connection with itsacquisition 

56

----

Table of Contents

of our common stock. If a Non-ElectingHolder who is an individual dies before January  1,  2010while owning our common stock, such holder's successor generallywill not receive a step-up in tax basis with respect to such stock.

Other PFIC Elections.

Under recently issued temporaryregulations, if a United States Holder held our stock during a periodwhen we were treated as a PFIC but the United States Holder did nothave a QEF election in effect with respect to us, then in the eventthat we failed to qualify as a PFIC for a subsequent taxable year, theUnited States Holder could elect to cease to be subject to the rulesdescribed above with respect to those shares by making a‘‘deemed sale’’ or, in certain circumstances, a‘‘deemed dividend’’ election with respect toour stock. If the United States Holder makes a deemed sale election,the United States Holder will be treated, for purposes of applying therules described above under the heading ‘‘Taxation ofUnited States Holders Not Making a Timely QEF or Mark-to-MarketElection’’, as having disposed of our stock for its fairmarket value on the last day of the last taxable year for which wequalified as a PFIC (the ‘‘termination date’’).The United States Holder would increase his, her or its basis in suchcommon stock by the amount of the gain on the deemed sale described inthe preceding sentence. Following a deemed sale election, the UnitedStates Holder would not be treated, for purposes of the PFIC rules, ashaving owned the common stock during a period prior to the terminationdate when we qualified as a PFIC.

If we were treated as a‘‘controlled foreign corporation’’ for UnitedStates federal income tax purposes for the taxable year that includedthe termination date, then a United States Holder could make a‘‘deemed dividend’’ election with respect toour common stock. If a deemed dividend election is made, the UnitedStates Holder is required to include in income as a dividend his, heror its pro rata share (based on all of our stock held by the UnitedStates Holder, directly or under applicable attribution rules, on thetermination date) of our post-1986 earnings and profits as of the closeof the taxable year that includes the termination date (taking onlyearnings and profits accumulated in taxable years in which we were aPFIC into account). The deemed dividend described in the precedingsentence is treated as an excess distribution for purposes of the rulesdescribed above under the heading ‘‘Taxation of UnitedStates Holders Not making a Timely QEF or Mark-to-MarketElection’’. The United States Holder would increase his,her or its basis in our stock by the amount of the deemed dividend.Following a deemed dividend election, the United States Holder wouldnot be treated, for purposes of the PFIC rules, as having owned thestock during a period prior to the termination date when we qualifiedas a PFIC. For purposes of determining whether the deemed dividendelection is available, we generally will be treated as a controlledforeign corporation for a taxable year when, at any time during thatyear, United States persons, each of whom owns, directly or underapplicable attribution rules, shares having 10% or more of thetotal voting power of our stock, in the aggregate own, directly orunder applicable attribution rules, shares representing more than50% of the voting power or value of our stock.

A deemedsale or deemed dividend election must be made on the United StatesHolder’s original or amended return for the shareholder’staxable year that includes the termination date and, if made on anamended return, such amended return must be filed not later than thedate that is three years after the due date of the original return forsuch taxable year. Special rules apply where a person is treated, forpurposes of the PFIC rules, as indirectly owning our common stock.

United States Federal Income Taxation of‘‘Non-United States Holders’’

Abeneficial owner of common stock that is not a United States Holder andis not treated as a partnership for United States federal income taxpurposes is referred to herein as a ‘‘Non-United StatesHolder.’’

Dividends on Common Stock

Non-United States Holders generally will not be subject to UnitedStates federal income tax or withholding tax on dividends received fromus with respect to our common stock, unless that income 

57

----

Table of Contents

is effectively connected with the Non-UnitedStates Holder's conduct of a trade or business in the UnitedStates. If the Non-United States Holder is entitled to the benefits ofa United States income tax treaty with respect to those dividends, thatincome generally is taxable only if it is attributable to a permanentestablishment maintained by the Non-United States Holder in the UnitedStates.

Sale, Exchange or Other Disposition of CommonStock

Non-United States Holders generally will not be subjectto United States federal income tax or withholding tax on any gainrealized upon the sale, exchange or other disposition of our commonstock, unless:

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the gain iseffectively connected with the Non-United States Holder's conductof a trade or business in the United States. If the Non-United StatesHolder is entitled to the benefits of an income tax treaty with respectto that gain, that gain generally is taxable only if it is attributableto a permanent establishment maintained by the Non-United States Holderin the United States; or |

|  |              |                                                                                                                                                                          |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Non-United States Holder isan individual who is present in the United States for 183 days or moreduring the taxable year of disposition and other conditions aremet. |

If the Non-United States Holder is engaged in a UnitedStates trade or business for United States federal income tax purposes,the income from the common stock, including dividends and the gain fromthe sale, exchange or other disposition of the stock that iseffectively connected with the conduct of that trade or business willgenerally be subject to regular United States federal income tax in thesame manner as discussed in the previous section relating to thetaxation of United States Holders. In addition, in the case of acorporate Non-United States Holder, such holder's earnings andprofits that are attributable to the effectively connected income,which are subject to certain adjustments, may be subject to anadditional branch profits tax at a rate of 30%, or at a lowerrate as may be specified by an applicable income tax treaty.

Backup Withholding and Information Reporting

Ingeneral, dividend payments, or other taxable distributions, made withinthe United States to a noncorporate United States holder will besubject to information reporting requirements and backup withholdingtax if such holder:

|  |              |                                                             |
|--|--------------|-------------------------------------------------------------|
|  | •  | failsto provide an accurate taxpayer identification number; |

|  |              |                                                                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | is notified by the InternalRevenue Service that you have failed to report all interest ordividends required to be shown on your federal income tax returns;or |

|  |              |                                                                                     |
|--|--------------|-------------------------------------------------------------------------------------|
|  | •  | in certaincircumstances, fails to comply with applicable certificationrequirements. |

Non-United States Holders may be required toestablish their exemption from information reporting and backupwithholding by certifying their status on IRS Form W-8BEN, W-8ECI orW-8IMY, as applicable.

If a holder sells our common stock to orthrough a United States office or broker, the payment of the proceedsis subject to both United States backup withholding and informationreporting unless the holder certifies that it is a non-United Statesperson, under penalties of perjury, or the holder otherwise establishesan exemption. If a holder sells our common stock through a non-UnitedStates office of a non-United States broker and the sales proceeds arepaid outside the United States then information reporting and backupwithholding generally will not apply to that payment. However, UnitedStates information reporting requirements, but not backup withholding,will apply to a payment of sales proceeds, even if that payment is madeoutside the United States, if a holder sells our common stock through anon-United States office of a broker that is a United States person orhas some other contacts with the United States.

Backupwithholding tax is not an additional tax. Rather, a holder generallymay obtain a refund of any amounts withheld under backup withholdingrules that exceed such stockholder's income tax liability byfiling a refund claim with the Internal Revenue Service.

58

----

Table of Contents

Documents on Display

We aresubject to the informational requirements of the Securities ExchangeAct of 1934, as amended. In accordance with these requirements, we filereports and other information as a foreign private issuer with the SEC.You may inspect and copy our public filings without charge at thepublic reference facilities maintained by the Securities and ExchangeCommission at 100 F Street, N.E., Washington, D.C. 20549. You mayobtain information on the operation of the public reference room bycalling 1 (800) SEC-0330, and you may obtain copies at prescribed ratesfrom the Public Reference Section of the Commission at its principaloffice at 100 F Street, N.E., Washington, D.C. 20549. The SEC maintainsa website (http://www.sec.gov) that contains reports, proxy andinformation statements and other information regarding registrants thatfile electronically with the Commission.

|               |                                                           |
|---------------|-----------------------------------------------------------|
| Item11.  | Quantitative and Qualitative Disclosures AboutMarket Risk |

Our risk management policy

Our policy isto continuously monitor our exposure to business risks, including theimpact of changes in interest rates, currency rates, and bunker priceson earnings and cash flows. We intend to assess these risks and, whenappropriate, enter into derivative contracts with credit-worthy counterparties to minimize our exposure to the risks.

Interest raterisk

We are subject to market risks relating to changes ininterest rates, because we have floating rate debt outstanding underthe loan with Fortis Bank and with DnB Nor Bank ASA. We pay interest onthis debt based on LIBOR plus a margin. On March  31,2005, we entered into a six-year interest rate swap agreement inconnection with the Loan Agreement with Fortis Bank (Nederland) N.V.The initial amount of the swamp will be $22.5  million amortizingto $4.8  million over its six-year life, commencing May30,  2007. The swap will hedge our risk of increases in threemonth LIBOR over 4.55% and up to 7.5%, but will not hedgeour risk if three month LIBOR equals or exceeds 7.5%. We do notintend to enter into interest rate swaps for speculative purposes. Wecurrently have $22.5 million in an effective interest rate hedge withDnB NOR Bank and a further $22.5 million in another interest rate swapmechanism commencing May 30, 2007 with Fortis Bank. The swap with DnBNOR Bank was entered into in January 2006 and has been effective sinceMarch 2006. The maximum annualized impact in terms of total debtinterest payable owing to a one percent increase in interest rates isapproximately $1.12 million in 2006. The maximum annualized impact interms of the swap in place owing to a one percent increase in interestrates is approximately $445,000 in 2006.

Foreign exchange ratefluctuation

We generate all of our revenues in United Statesdollars and incur less than 10% of our expenses in currenciesother than United States dollars. For accounting purposes, expensesincurred in Euros are converted into United States dollars at theexchange rate prevailing on the date of each transaction. AtDecember  31,  2005, less than 10% of ouroutstanding accounts payable was denominated in currencies other thanthe United States dollar (mainly in Euros). We have not hedged currencyexchange risks and our operating results could be adversely affected asa result.

|                |                                                       |
|----------------|-------------------------------------------------------|
| Item 12.  | Description ofSecurities Other than Equity Securities |

NotApplicable.

59

----

Table of Contents

PART II

|                |                                                |
|----------------|------------------------------------------------|
| Item 13.  | Defaults, Dividend Arrearages andDelinquencies |

Not Applicable.

|               |                                                                             |
|---------------|-----------------------------------------------------------------------------|
| Item14.  | Material Modifications to the Rights ofSecurity Holders and Use of Proceeds |

Our registration statementon Form F-1 (File No. 333-127905), relating to our initial publicoffering of 8,000,000 shares of common stock, was declared effective bythe SEC on October  5,  2005 and the offering commenced onthat date. Cantor Fitzgerald & Co., Morgan Keegan & Company,Inc., Johnson Rice & Company L.L.C., Hibernia Southcoast Capital,Inc. and Harrisdirect, LLC served as managing underwriters forthe offering. The shares of common stock were sold at a public offeringprice of $14.50 for gross offering proceeds of $116,000,000. Thediscount to the underwriters was $0.87  per common share for atotal underwriting discount of $6,960,000 and we incurred otherexpenses (including filing, legal and accounting fees) of approximately$1.65  million, none of which were paid to our directors,officers or their affiliates or to persons owning 10% or more ofany class of our capital stock. The total net proceeds to us from theoffering was $107.4  million.

We used approximately$100.5  million of the net proceeds of the offering to acquirenine LPG carriers, which we purchased from the Vafias Group. Otherproceeds have been used for working capital and for other generalcorporate purposes.

|                |                        |
|----------------|------------------------|
| Item 15.  | Controls andProcedures |

Within 90 days prior to the filing of this AnnualReport, the Company carried out, under the supervision of theCompany's management, including its chief executive officer andchief financial officer, an evaluation of the effectiveness of thedesign and operation of the Company’s disclosure controls andprocedures. Based on that evaluation, the chief executive officer andchief financial officer concluded that the Company’s disclosurecontrols and procedures have been designed and are being operated in amanner that provides reasonable assurance that the information requiredto be disclosed by the Company in reports filed under the SecuritiesExchange Act of 1934 is recorded, processed, summarized and reportedwithin the time periods specified in the SEC’s rules and forms.A  controls system, no matter how well designed and operated,cannot provide absolute assurance that the objectives of the controlssystem are met, and no evaluation of controls can provide absoluteassurance that all control issues and instances of fraud, if any,within a company have been detected.

Subsequent to the date ofthe most recent evaluation of the Company’s internal controls,there were no significant changes in the Company’s internalcontrols or in other factors that could significantly affect theinternal controls, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

|                |                                  |
|----------------|----------------------------------|
| Item16A.  | Audit Committee Financial Expert |

TheBoard has determined that Markos Drakos is an Audit Committee financialexpert as defined by the U.S. Securities and Exchange Commission andmeets the applicable independence requirements of the U.S. Securitiesand Exchange Commission and the Nasdaq Stock Market.

|                |                |
|----------------|----------------|
| Item16B.  | Code of Ethics |

The Company has adopteda code of ethics that applies to all officers, directors and employeesof the Company. A copy of the Company’s code of ethics isavailable on the Company’s website. No waivers from the code ofethics have been granted to any person during the year endedDecember  31,  2005.

60

----

Table of Contents

|                 |                                       |
|-----------------|---------------------------------------|
| Item 16C.  | PrincipalAccountant Fees and Services |

Auditors’remuneration

|                                     |  |                    |         |                    |  |        |         |        |  |  |
|-------------------------------------|--|--------------------|---------|--------------------|--|--------|---------|--------|--|--|
|                                |  | 2005(in thousands) |         | 2004(in thousands) |
| Audit fees                          |  | $                  | 651     |               |  | $      | — |   |
| Further assurance/auditrelated fees |  |               | — |               |  |   | — |   |
| Taxfees                             |  |               | — |               |  |   | — |   |
| Otherfees                           |  |               | — |               |  |   | — |   |
| Total                               |  | $                  | 651     |               |  | $      | — |   |
|                                     |

Auditfees

Audit fees paid to Deloitte Hadjipavlou, Sofianos& Cambanis S.A. were compensation for professional services theyrendered for the audits of the consolidated financial statements of theCompany in connection with the initial public offering, and for thereview of the financial statements included in the Company'sReport on Form 6-K with respect to the results for the three monthsended September 30, 2005 and for the quarterly and year-end results forthe period ended December  31, 2005.

Furtherassurance/audit related fees

Deloitte Hadjipavlou,Sofianos & Cambanis S.A. did not provide any services that would beclassified in this category in 2005 and 2004.

Taxfees

Deloitte Hadjipavlou, Sofianos & Cambanis S.A.did not provide any tax services in 2005 and 2004.

Otherfees

Deloitte Hadjipavlou, Sofianos & Cambanis S.A.did not provide any other services that would be classified in thiscategory in 2005 and 2004.

Non-auditservices:    The US Sarbanes-Oxley Act of 2002 identifiescertain categories of non-audit services which are no longer to beperformed by the external auditor. We have incorporated thatprohibition into our own policy regarding services from the externalauditor. The list of prohibited non-audit services may only be variedby the Audit Committee.

The external auditor is permittedto undertake some non-audit services, for example due diligenceactivities associated with potential acquisitions or disposals ofbusinesses by the Company, but these services and their associatedfees, must be approved in advance by the Committee. Where such servicesare considered recurring in nature, approval may be sought for the fullfinancial year at the beginning of that year. Approval for otherpermitted non-audit services has to be sought on an ad hoc basis. Whereno Committee meeting is scheduled within an appropriate time frame, theapproval is sought from the Chairman of the Committee subject toconfirmation at the next meeting.

|                |                                                           |
|----------------|-----------------------------------------------------------|
| Item16D.  | Exemptions from the Listing Standards forAudit Committees |

None

|                |                                                                       |
|----------------|-----------------------------------------------------------------------|
| Item16E.  | Purchases of Equity Securities by the Issuerand Affiliated Purchasers |

None

61

----

Table of Contents

PART III

|                |                      |
|----------------|----------------------|
| Item 17.  | Financial Statements |

NotApplicable

|                |                     |
|----------------|---------------------|
| Item 18.  | FinancialStatements |

Reference is made to pages F-1 through F- 21incorporated herein by reference.

|               |          |
|---------------|----------|
| Item19.  | Exhibits |

|        |  |                                                                                                                                         |  |  |  |  |
|--------|--|-----------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| Number |  | Description                                                                                                                             |
| 1.1    |  | Amended and RestatedArticles of Incorporation of the Company*                                                                           |
| 1.2    |  | Amended and Restated Bylaws of the Company*                                                                                             |
| 4.1    |  | Amended and Restated Management Agreement betweenthe Company and Stealth Maritime S.A.*                                                 |
| 4.2    |  | Form of Right of First Refusal among the Company, Harry Vafias andStealth Maritime S.A.*                                                |
| 4.3    |  | Form of EquityCompensation Plan*                                                                                                        |
| 4.4    |  | Loan Agreement withFortis Bank (Nederland) N.V. and Deed of Release of Security andObligations*                                         |
| 4.5    |  | Loan Agreement with DnBNor Bank ASA                                                                                                     |
| 4.6    |  | Supplemental Agreementwith DnB Nor Bank ASA                                                                                             |
| 8      |  | Subsidiaries ofthe Company                                                                                                              |
| 12.1   |  | Certification of theChief Executive Officer                                                                                             |
| 12.2   |  | Certificationof the Chief Financial Officer                                                                                             |
| 13.1   |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C.Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of2002 |
| 13.2   |  | Certification of the ChiefFinancial Officer pursuant to 18 U.S.C. Section 1350 as added bySection 906 of the Sarbanes-Oxley Act of2002  |
|        |

|  |
|--|
|  |  |
|  |

|   |                                                                                                                                                                                                     |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | Previouslyfiled as an exhibit to the Company’s Registration Statement onForm F-1 (File  No. 333-127905) filed with the SEC and herebyincorporated by reference to such RegistrationStatement. |

62

----

Table of Contents

SIGNATURES 

The registrant hereby certifies that it meets all of therequirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this annual report on itsbehalf.

|                                                     |  |  |
|-----------------------------------------------------|--|--|
| STEALTHGAS INC.                                     |
| /s/ Harry N.Vafias                                  |
| Harry N. VafiasPresident and ChiefExecutive Officer |
| Date:   April 19,2006                |
|                                                     |

63

----

Indexto consolidated financial statements

|                                                                                                                                                      |  |       |  |  |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--|-------|--|--|--|--|
|                                                                                                                                                 |  | Pages |
| Report of Independent Registered Public Accounting Firm                                                                                              |  | F-2   |
| Consolidated Balance Sheets –December 31, 2004 (restated) and December31, 2005                                                                 |  | F-3   |
| ConsolidatedStatements of Income for the period ended December 31,2004 (restated) and year ended December 31, 2005                                   |  | F-4   |
| Consolidated Statements of Cash Flowsfor the period ended December 31, 2004 (restated) andyear ended December 31, 2005                               |  | F-5   |
| Consolidated Statement of Changes in Stockholders’Equity for the period ended December 31, 2004 (restated)and the year ended December 31, 2005 |  | F-6   |
| Notes to the Consolidated FinancialStatements                                                                                                        |  | F-7   |
|                                                                                                                                                      |

F-1

----

Table of Contents

Report of Independent Registered PublicAccounting Firm

To the Board of Directors andStockholders of StealthGas Inc.

We have audited theaccompanying consolidated balance sheets of StealthGas Inc. andsubsidiaries (the Company') as ofDecember 31, 2004 and 2005, and the related consolidated statements ofincome, stockholders' equity, and cash flows for the period fromOctober 12, 2004 to December 31, 2004 and the year ended December 31,2005. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinionon these financial statements based on our audit.

Weconducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting.Our audits included consideration of internal control over financialreporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Company's internal controlover financial reporting. Accordingly, we express no such opinion. Anaudit also includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis forour opinion.

In our opinion, such consolidated financialstatements present fairly, in all material respects, the financialposition of StealthGas Inc. and subsidiaries at December 31, 2004 and2005, and the results of their operations and their cash flows for theperiod from October 12, 2004 to December 31, 2004 and the year endedDecember 31, 2005, in conformity with accounting principles generallyaccepted in the United States of America.

As described inNote 2 to the financial statements, the historical consolidatedfinancial statements at December 31, 2004 have been retroactivelyrestated as if the vessels under common control with the Vafias Groupwere consolidated subsidiaries for all periods presented in accordancewith the guidance in FASB statement No. 141 "BusinessCombinations" and EITF 02-05 "Definition ofCommon Control' in relation to FASBStatement No. 141."

Deloitte.Hadjipavlou, Sofianos & Cambanis S.A. February 27, 2006

Athens, Greece

F-2

----

Table of Contents

StealthGasInc.Consolidated Balance SheetsDecember  31,  2004(restated) and December  31,  2005(Expressed in UnitedStates Dollars)

|  |
|--|
|  |  |
|  |

|                                                                                                   |  |        |        |                           |  |                  |            |        |  |        |             |        |  |  |
|---------------------------------------------------------------------------------------------------|--|--------|--------|---------------------------|--|------------------|------------|--------|--|--------|-------------|--------|--|--|
|                                                                                              |  | Note   |        | December31,2004(restated) |  | December 31,2005 |
| Assets                                                                                            |  |   |   |                      |  |             |       |   |  |   |        |   |
| Currentassets                                                                                     |  |   |   |                      |  |             |       |   |  |   |        |   |
| Cash and cashequivalents                                                                          |  |   |   |                      |  | $                | —    |   |  | $      | 23,210,243  |   |
| Receivables from related party                                                                    |  |   | 3      |                      |  |             | 1,162,470  |   |  |   | —     |   |
| Tradereceivables                                                                                  |  |   |   |                      |  |             | 19,623     |   |  |   | 13,330      |   |
| Inventories                                                                                       |  |   | 4      |                      |  |             | 124,846    |   |  |   | 399,624     |   |
| Advances and prepayments                                                                          |  |   |   |                      |  |             | 9,130      |   |  |   | 161,094     |   |
| Fair value ofabove market acquired time charters                                                  |  |   | 9      |                      |  |             | —    |   |  |   | 597,754     |   |
| Restricted cash                                                                                   |  |   |   |                      |  |             | —    |   |  |   | 1,634,203   |   |
| Total current assets                                                                              |  |   |   |                      |  | $                | 1,316,069  |   |  | $      | 26,016,248  |   |
| Non currentassets                                                                                 |  |   |   |                      |  |             |       |   |  |   |        |   |
| Advances for vesselsacquisitions                                                                  |  |   | 5      |                      |  |             | 1,905,282  |   |  |   | 983,000     |   |
| Vessels, net                                                                                      |  |   | 6      |                      |  |             | 37,396,018 |   |  |   | 229,763,864 |   |
| Deferred finance charges                                                                          |  |   | 7      |                      |  |             | —    |   |  |   | 215,656     |   |
| Total non current assets                                                                          |  |   |   |                      |  | $                | 39,301,300 |   |  | $      | 230,962,520 |   |
| Total assets                                                                                      |  |   |   |                      |  | $                | 40,617,369 |   |  | $      | 256,978,768 |   |
| Liabilitiesand Stockholders'Equity                                                                |  |   |   |                      |  |             |       |   |  |   |        |   |
| Currentliabilities                                                                                |  |   |   |                      |  |             |       |   |  |   |        |   |
| Overdraftfacility                                                                                 |  |   |   |                      |  |             | —    |   |  |   | 200,000     |   |
| Payable to related party                                                                          |  |   | 3      |                      |  |             | —    |   |  |   | 1,549,837   |   |
| Trade accountspayable                                                                             |  |   |   |                      |  |             | 495,925    |   |  |   | 984,997     |   |
| Other accrued liabilities                                                                         |  |   | 8      |                      |  |             | 360,818    |   |  |   | 1,635,040   |   |
| Fair value ofbelow market acquired time charters                                                  |  |   | 9      |                      |  |             | 1,842,857  |   |  |   | 1,443,989   |   |
| Deferred income                                                                                   |  |   | 10     |                      |  |             | 534,413    |   |  |   | 2,284,578   |   |
| Current portion of long-term debt                                                                 |  |   | 11     |                      |  |             | —    |   |  |   | 12,627,000  |   |
| Total current liabilities                                                                         |  |   |   |                      |  | $                | 3,234,013  |   |  | $      | 20,725,441  |   |
| Non currentliabilities                                                                            |  |   |   |                      |  |             |       |   |  |   |        |   |
| Derivativeliability                                                                               |  |   | 12     |                      |  |             | —    |   |  |   | 67,000      |   |
| Long-term debt                                                                                    |  |   | 11     |                      |  |             | —    |   |  |   | 85,079,000  |   |
| Total liabilities                                                                                 |  |   |   |                      |  | $                | 3,234,013  |   |  | $      | 105,871,441 |   |
| Stockholders'equity                                                                               |  |   |   |                      |  |             |       |   |  |   |        |   |
| Capital stock100,000,000 shares authorized; 14,000,000 shares outstanding with a parvalue of $.01 |  |   | 13     |                      |  |             | 60,000     |   |  |   | 140,000     |   |
| Additional paid-in capital                                                                        |  |   | 14     |                      |  |             | 36,792,148 |   |  |   | 145,883,121 |   |
| Retainedearnings                                                                                  |  |   |   |                      |  |             | 531,208    |   |  |   | 5,084,206   |   |
| Total stockholders'equity                                                                         |  |   |   |                      |  | $                | 37,383,356 |   |  | $      | 151,107,327 |   |
| Total liabilities andstockholders' equity                                                         |  |   |   |                      |  | $                | 40,617,369 |   |  | $      | 256,978,768 |   |
|                                                                                                   |

The accompanyingnotes are an integral part of these consolidated financialstatements.

F-3

----

Table of Contents

StealthGas Inc. Consolidatedstatements of incomeFor the period ended December  31,2004 (restated) and year ended December  31,2005(Expressed in United States Dollars)

|  |
|--|
|  |  |
|  |

|                                               |  |        |        |                             |  |                  |           |         |  |        |            |         |  |  |
|-----------------------------------------------|--|--------|--------|-----------------------------|--|------------------|-----------|---------|--|--------|------------|---------|--|--|
|                                          |  | Note   |        | December 31, 2004(restated) |  | December 31,2005 |
|                                          |  |   |   |                        |  |             |      |    |  |   |       |    |
| Revenues                                      |  |   |   |                        |  |             |      |    |  |   |       |    |
| Voyagerevenues                                |  |   |   |                        |  | $                | 2,048,006 |    |  | $      | 36,644,591 |    |
| Expenses                                      |  |   |   |                        |  |             |      |    |  |   |       |    |
| Voyageexpenses                                |  |   | 17     |                        |  |             | 341,203   |    |  |   | 2,688,155  |    |
| Vessels' operating expenses                   |  |   | 17     |                        |  |             | 759,010   |    |  |   | 9,095,576  |    |
| Dry-dockingcosts                              |  |   |   |                        |  |             | —   |    |  |   | 470,384    |    |
| Management fees                               |  |   | 3      |                        |  |             | 111,540   |    |  |   | 1,473,080  |    |
| General and administrativeexpenses            |  |   | 14     |                        |  |             | 35,100    |    |  |   | 779,539    |    |
| Depreciation                                  |  |   | 6      |                        |  |             | 264,458   |    |  |   | 5,611,942  |    |
| Total expenses                                |  |   |   |                        |  |             | 1,511,311 |    |  |   | 20,118,676 |    |
| Income from operations                        |  |   |   |                        |  |             | 536,695   |    |  |   | 16,525,915 |    |
| Other revenuesand (expense)                   |  |   |   |                        |  |             |      |    |  |   |       |    |
| Interest andfinance costs, net                |  |   |   |                        |  |             | —   |    |  |   | (2,685,207 | )  |
| Loss on derivatives                           |  |   |   |                        |  |             | —   |    |  |   | (67,000    | )  |
| Interestincome                                |  |   |   |                        |  |             | 47        |    |  |   | 780,434    |    |
| Foreign exchange loss                         |  |   |   |                        |  |             | (5,534    | )  |  |   | (18,091    | )  |
| Other expenses, net                           |  |   |   |                        |  |             | (5,487    | )  |  |   | (1,989,864 | )  |
| Net income                                    |  |   |   |                        |  |             | 531,208   |    |  |   | 14,536,051 |    |
| Earnings per share, basicand diluted          |  |   | 16     |                        |  |             | 0.09      |    |  |   | 1.84       |    |
| Weighted average number of shares,outstanding |  |   | 16     |                        |  |             | 6,000,000 |    |  |   | 7,906,849  |    |
|                                               |

The accompanying notes arean integral part of these consolidated financialstatements.

F-4

----

Table of Contents

StealthGas Inc.Consolidated statementof cash flowsFor the period ended December  31,  2004(restated) and year ended December  31,  2005(Expressedin United States Dollars)

|  |
|--|
|  |  |
|  |

|                                                       |  |        |        |                            |  |                  |             |         |  |        |              |         |  |  |
|-------------------------------------------------------|--|--------|--------|----------------------------|--|------------------|-------------|---------|--|--------|--------------|---------|--|--|
|                                                  |  | Note   |        | December 31,2004(restated) |  | December 31,2005 |
| Cash flows from operatingactivities                   |  |   |   |                       |  |             |        |    |  |   |         |    |
| Net income forthe period/year                         |  |   |   |                       |  | $                | 531,208     |    |  | $      | 14,536,051   |    |
| Items included in net income not affecting cashflows: |  |   |   |                       |  |             |        |    |  |   |         |    |
| Depreciation andamortization                          |  |   |   |                       |  |             | 264,458     |    |  |   | 5,653,286    |    |
| Amortization of fair value of time charter            |  |   |   |                       |  |             | (307,143    | )  |  |   | (1,907,622   | )  |
| Noncash general and administrative expenses           |  |   | 14     |                       |  |             | 35,100      |    |  |   | 243,750      |    |
| Net loss ofvessels acquired from the Vafias Group     |  |   |   |                       |  |             |        |    |  |   | 16,947       |    |
| Loss on derivative                                    |  |   |   |                       |  |             | —     |    |  |   | 67,000       |    |
| Changes in operating assets andliabilities:           |  |   |   |                       |  |             |        |    |  |   |         |    |
| (Increase)decrease in receivable from related party   |  |   |   |                       |  |             | (1,162,470  | )  |  |   | 1,162,470    |    |
| (Increase) decrease in trade receivables              |  |   |   |                       |  |             | (19.623     | )  |  |   | 6,293        |    |
| (Increase)in inventories                              |  |   |   |                       |  |             | (124,846    | )  |  |   | (274,778     | )  |
| (Increase) in advances and prepayments                |  |   |   |                       |  |             | (9,130      | )  |  |   | (151,964     | )  |
| Increasein payable to related party                   |  |   |   |                       |  |             | —     |    |  |   | 1,549,837    |    |
| Increase in trade accountspayable                     |  |   |   |                       |  |             | 495,925     |    |  |   | 489,072      |    |
| Increase in other accrued liabilities                 |  |   |   |                       |  |             | 360,818     |    |  |   | 1,274,222    |    |
| Increasein deferred income                            |  |   |   |                       |  |             | 534,413     |    |  |   | 1,750,165    |    |
| Net cash provided by operatingactivities              |  |   |   |                       |  |             | 598,710     |    |  |   | 24,414,729   |    |
| Cash flows frominvestingactivities                    |  |   |   |                       |  |             |        |    |  |   |         |    |
| Advances forvessels acquisitions                      |  |   |   |                       |  |             | (1,905,282  | )  |  |   | (983,000     | )  |
| Increase in restricted cashaccount                    |  |   |   |                       |  |             | —     |    |  |   | (1,634,203   | )  |
| Acquisition of vessels                                |  |   |   |                       |  |             | (37,660,476 | )  |  |   | (196,074,506 | )  |
| Fair value of acquired timecharter                    |  |   | 9      |                       |  |             | 2,150,000   |    |  |   | 911,000      |    |
| Net cash used in investingactivities                  |  |   |   |                       |  |             | (37,415,758 | )  |  |   | (197,780,709 | )  |
| Cash flowsfrom financingactivities                    |  |   |   |                       |  |             |        |    |  |   |         |    |
| Capitalstock                                          |  |   | 13     |                       |  |             | 60,000      |    |  |   | 80,000       |    |
| Additional paid-in capital                            |  |   | 14     |                       |  |             | 36,757,048  |    |  |   | 62,752,877   |    |
| InitialPublic Offering                                |  |   | 14     |                       |  |             | —     |    |  |   | 116,000,000  |    |
| Issuance costs                                        |  |   | 14     |                       |  |             | —     |    |  |   | (8,694,657   | )  |
| Deemed dividends                                      |  |   | 14     |                       |  |             | —     |    |  |   | (6,312,500   | )  |
| Vafias group of LPGcarriers                           |  |   | 14     |                       |  |             |        |    |  |   | (54,898,497  | )  |
| Dividends paid                                        |  |   | 15     |                       |  |             | —     |    |  |   | (10,000,000  | )  |
| Deferred financecharges                               |  |   | 7      |                       |  |             | —     |    |  |   | (257,000     | )  |
| Overdraft facility                                    |  |   |   |                       |  |             | —     |    |  |   | 200,000      |    |
| Loan repayment                                        |  |   | 11     |                       |  |             | —     |    |  |   | (42,294,000  | )  |
| Proceedsfrom long-term debt                           |  |   | 11     |                       |  |             | —     |    |  |   | 140,000,000  |    |
| Net cash provided by financing activities             |  |   |   |                       |  |             | 36,817,048  |    |  |   | 196,576,223  |    |
| Net Increase in cash andcash equivalents              |  |   |   |                       |  |             | —     |    |  |   | 23,210,243   |    |
| Cash and cash equivalents at beginning of period/year |  |   |   |                       |  |             | —     |    |  |   | —      |    |
| Cash and cash equivalents at end of period/year       |  |   |   |                       |  |             | —     |    |  |   | 23,210,243   |    |
| SupplementalCash Flow Information:                    |  |   |   |                       |  |             |        |    |  |   |         |    |
| Cashpaid during the period for: Interest payments     |  |   |   |                       |  | $                | —     |    |  | $      | 2,130,228    |    |
|                                                       |

The accompanying notes are anintegral part of these consolidated financial statements.

F-5

----

Table of Contents

StealthGas Inc.Consolidated statementof changes in stockholders’ equityFor the period endedDecember  31,  2004 (restated) and the year endedDecember  31,  2005(Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|                                              |  |        |            |                          |  |                 |            |                                   |  |                  |         |        |  |        |             |         |  |        |             |         |  |        |             |         |  |  |
|----------------------------------------------|--|--------|------------|--------------------------|--|-----------------|------------|-----------------------------------|--|------------------|---------|--------|--|--------|-------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                         |  | Income |            | Number ofShares(Note 13) |  | Amount(Note 13) |            | AdditionalPaid-inCapital(Note 14) |  | RetainedEarnings |         | Total  |
| Capitalstock                                 |  |   | —    |                     |  |            | 6,000,000  |                              |  | $                | 60,000  |   |  |   | —     |    |  |   | —     |    |  | $      | 60,000      |    |
| Additional Paid-in Capital                   |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  | $      | 36,757,048  |    |  |   | —     |    |  | $      | 36,757,048  |    |
| Paid-in capital/contributedServices          |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  | $      | 35,100      |    |  |   | —     |    |  | $      | 35,100      |    |
| Dividendspaid                           |  |   |       |                     |  |            |       |                              |  |             |    |   |  |   |        |    |  |   |        |    |  |   |        |    |
| Netincome for the period                     |  | $      | 531,208    |                     |  |            | —    |                              |  |             | — |   |  |   | —     |    |  | $      | 531,208     |    |  | $      | 531,208     |    |
| Comprehensiveincome                          |  | $      | 531,208    |                     |  |            | —    |                              |  |             | — |   |  |   | —     |    |  |   | —     |    |  |   | —     |    |
| Balance,December  31,  2004                  |  |   | —    |                     |  |            | 6,000,000  |                              |  | $                | 60,000  |   |  | $      | 36,792,148  |    |  | $      | 531,208     |    |  | $      | 37,383,356  |    |
| Paid-in capital/contributedservices          |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  | $      | 243,750     |    |  |   | —     |    |  | $      | 243,750     |    |
| Additional Paid-in Capital                   |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  | $      | 62,752,877  |    |  |   | —     |    |  | $      | 62,752,877  |    |
| Initial Public Offering net ofissuance costs |  |   | —    |                     |  |            | 8,000,000  |                              |  | $                | 80,000  |   |  | $      | 107,305,343 |    |  |   | —     |    |  | $      | 107,385,343 |    |
| Deemed dividends                             |  |   | —    |                     |  |            |       |                              |  |             |    |   |  | $      | (6,312,500  | )  |  |   | —     |    |  | $      | (6,312,500  | )  |
| Less: Repayment of capitalcontributions      |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  | $      | (54,898,497 | )  |  | $      | 16,947      |    |  | $      | (54,881,550 | )  |
| Dividends paid                               |  |   | —    |                     |  |            | —    |                              |  |             | — |   |  |   | —     |    |  | $      | (10,000,000 | )  |  | $      | (10,000,000 | )  |
| Net income for the year                      |  | $      | 14,536,051 |                     |  |            | —    |                              |  |             | — |   |  |   | —     |    |  | $      | 14,536,051  |    |  | $      | 14,536,051  |    |
| Comprehensive income                         |  | $      | 14,536,051 |                     |  |            | —    |                              |  |             | — |   |  |   | —     |    |  |   | —     |    |  |   | —     |    |
| Balance, December  31,2005                   |  |   | —    |                     |  |            | 14,000,000 |                              |  | $                | 140,000 |   |  | $      | 145,883,121 |    |  | $      | 5,084,206   |    |  | $      | 151,107,327 |    |
|                                              |

The accompanying notes arean integral part of these consolidated financialstatements.

F-6

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                              |
|----------|----------------------------------------------|
| 1.  | Basisof Presentation and General Information |

The accompanyingconsolidated financial statements include the accounts of StealthGasInc. and its wholly owned subsidiaries (collectively, the‘‘Company’’) which, as of December31,  2005 owned a fleet of twenty-one liquefied petroleum gascarriers providing worldwide marine transportation services under long,medium or short-term charters. StealthGas Inc. was formed under thelaws of Marshall Islands on December  22,  2004.

As of December  31,  2004, under the direction ofStealth Maritime Corporation S.A., the shareholders of the vesselowning companies contributed all of their issued and outstanding sharesof common stock to StealthGas Inc. and StealthGas Inc. became the soleowner of all the outstanding shares of all the subsidiaries mentionedin note 1a. below. The transaction described above constitutes areorganization of companies under common control, and has beenaccounted for in a manner similar to a pooling of interests, as eachship-owning company was, indirectly, wholly owned by and under thecommon control of the Vafias Group prior to the transfer of ownershipof the companies to StealthGas Inc. Accordingly, the consolidatedfinancial statements of the Company have been presented as if theship-owning companies were consolidated subsidiaries of the Company asof the dates indicated and using the combined historical carrying costsof the assets and the liabilities of the ship-owning companies listedin note 1a below.

The vessels noted in 1c.‘‘Vafias Group of LPG Carriers’’ were acquiredby affiliates of the Vafias Group from unrelated parties. The‘‘Vafias Group of LPG Carriers’’ were acquiredby the Company with a portion of the proceeds of the offering. TheCompany and the Vafias Group of LPG Carriers are entities that arecommonly controlled by the Vafias Group. Due to these relationships andthe common control therein, the acquisition of the Vafias Group of LPGCarriers by the Company was accounted for as a combination of entitiesunder common control in a manner similar to a pooling of interests.Such accounting resulted in the retroactive restatement of thehistorical financial statements of the Company as if the Vafias Groupof LPG Carriers were consolidated subsidiaries of the Company for allperiods presented.

|           |                                                                     |
|-----------|---------------------------------------------------------------------|
| (a)  | Ship-owningcompanies originally acquired by StealthGas Inc in 2004: |

|                         |  |               |  |                     |  |        |          |        |  |  |  |  |  |  |
|-------------------------|--|---------------|--|---------------------|--|--------|----------|--------|--|--|--|--|--|--|
| Nameof Company          |  | Vessel Name   |  | Acquisition Date    |  | cbm    |
| VCM TradingLtd.         |  | GasProphet    |  | October12,  2004    |  |   | 3,516.44 |   |
| LPGONE Ltd.             |  | Gas Tiny      |  | October  29,  2004  |  |   | 1,319.96 |   |
| Geneve Butane Inc       |  | GasCourchevel |  | November  24,  2004 |  |   | 4,102.00 |   |
| Matrix Gas Trading Ltd. |  | GasShanghai   |  | December  7,  2004  |  |   | 3,525.92 |   |
|                         |

F-7

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                                    |
|----------|--------------------------------------------------------------------|
| 1.  | Basisof Presentation and General Information - Continued |

|           |                                                           |
|-----------|-----------------------------------------------------------|
| (b)  | Ship-owningcompanies acquired by StealthGas Inc. in 2005: |

|                           |  |               |  |                     |  |        |          |        |  |  |  |  |  |  |
|---------------------------|--|---------------|--|---------------------|--|--------|----------|--------|--|--|--|--|--|--|
| Nameof Company            |  | Vessel Name   |  | Acquisition Date    |  | cbm    |
| Pacific GasesLtd.         |  | GasEmperor    |  | February2,  2005    |  |   | 5,009.07 |   |
| Semichlaus ExportsLtd.    |  | Gas Ice       |  | April  7,  2005     |  |   | 3,434.08 |   |
| Ventspils Gases Ltd.      |  | GasArctic     |  | April  7,  2005     |  |   | 3,434.08 |   |
| Industrial Materials Inc. |  | Birgit Kosan  |  | April  11,  2005    |  |   | 5,013.33 |   |
| Aracruz Trading Ltd.      |  | GasAmazon     |  | May  19,  2005      |  |   | 6,562.41 |   |
| Soleil Trust Inc.         |  | Gas Sincerity |  | November  14,  2005 |  |   | 4,128.98 |   |
| East Propane Inc.         |  | Catterick     |  | November24,  2005   |  |   | 5,001.41 |   |
| Petchem TradingInc.       |  | Gas Spirit    |  | December  16,  2005 |  |   | 4,112.18 |   |
| Malibu Gas Inc.           |  | FeistyGas     |  | December  16,  2005 |  |   | 4,111.24 |   |
|                           |

|           |                                     |
|-----------|-------------------------------------|
| (c)  | Vafias’Group of LPG carriers: |

|                              |  |              |  |                   |  |        |          |        |  |  |  |  |  |  |
|------------------------------|--|--------------|--|-------------------|--|--------|----------|--------|--|--|--|--|--|--|
| Nameof Company               |  | Vessel Name  |  | Acquisition Date  |  | cbm    |
| Gaz De BrazilInc.            |  | GasProdigy   |  | October15,  2004  |  |   | 3,014.59 |   |
| IndependentTrader Ltd.       |  | Gas Oracle   |  | April  26,2005    |  |   | 3,014.59 |   |
| Continent Gas Inc.           |  | Gas Chios    |  | May  20,  2005    |  |   | 6,562.09 |   |
| Empire Spirit Ltd.           |  | SweetDream   |  | May  31,  2005    |  |   | 5,018.35 |   |
| Jungle Investment Limited    |  | Gas Cathar   |  | July  27,  2005   |  |   | 7,517.18 |   |
| East Technologies Ltd.       |  | Gas Crystal  |  | July  28,  2005   |  |   | 3,211.04 |   |
| Quicksilver Shipping Limited |  | Gas Legacy   |  | August  26,  2005 |  |   | 3,513.79 |   |
| Triathlon Gas Inc.           |  | Gas Marathon |  | October  3,  2005 |  |   | 6,572.20 |   |
|                              |

During the fourth quarter of2005, the above ship-owning companies were acquired by the Company withshare purchase agreements except for the vessels Gas Crystal, GasLegacy and Gas Marathon which were sold as assets to the newly formedsubsidiaries of the Company, called Iceland Ltd., Northern YieldShipping Ltd. and Triathlon Inc.

|           |                                                                   |
|-----------|-------------------------------------------------------------------|
| (d)  | Ship-owning company with advance onvessel delivered in year 2006: |

Advances of $983,000 were made in the year 2005 for the acquisition of the followingvessel in the year 2006.

|                     |  |                        |  |        |          |        |  |  |  |  |
|---------------------|--|------------------------|--|--------|----------|--------|--|--|--|--|
| Nameof Company      |  | Vessel Name            |  | cbm    |
| Balkan Holding Inc. |  | Islas Gas tbr. GasCzar |  |   | 3,509.65 |   |
|                     |

The Company’svessels are managed by Stealth Maritime Corporation S.A. - Liberia (the‘‘Manager’’), a related party. The Manager is acompany incorporated in Liberia and registered in Greece on May17,  1999 under the provisions of law 89/1967, 378/1968 andarticle 25 of law 27/75 as amended by the article 4 of law 2234/94.(See Note 3).

F-8

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                                    |
|----------|--------------------------------------------------------------------|
| 1.  | Basisof Presentation and General Information - Continued |

During 2004 and 2005, six charterersindividually accounted for more than 10% of the Company’svoyage revenues as follows:

|           |  |                                        |         |                             |  |        |         |         |  |  |
|-----------|--|----------------------------------------|---------|-----------------------------|--|--------|---------|---------|--|--|
| Charterer |  | Period endedDecember 31,2004(restated) |         | Year endedDecember 31, 2005 |
| A         |  |                                   | 26      | %                      |  |   | — |    |
| B         |  |                                   | 16      | %                      |  |   | — |    |
| C         |  |                                   | 12      | %                      |  |   | 11      | %  |
| D         |  |                                   | 10      | %                      |  |   | — |    |
| E         |  |                                   | — |                        |  |   | 32      | %  |
| F         |  |                                   | 16      | %                      |  |   | — |    |
|           |

|          |                                |
|----------|--------------------------------|
| 2.  | SignificantAccounting Policies |

Principles ofConsolidation:    The accompanying consolidated financialstatements have been prepared in accordance with accounting principlesgenerally accepted in the United States (‘‘USGAAP’’) and include the accounts of the StealthGas Inc. andits wholly owned subsidiaries referred to in note 1(a), 1(b) and 1(c)above. All significant inter-company balances and transactions havebeen eliminated upon consolidation.

Use ofEstimates:    The preparation of consolidated financialstatements in conformity with US GAAP requires management to makeestimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities atthe date of the consolidated financial statements and the reportedamounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates.

OtherComprehensive Income:    The Company follows the provisions ofStatement of Financial Accounting Standards No. 130‘‘Statement of Comprehensive Income’’ (SFAS130) which requires separate presentation of certain transactions,which are recorded directly as components of stockholders' equity.The Company has no other comprehensive income and, accordingly,comprehensive income equals net income for the periods presented.

Foreign Currency Translation:    The functionalcurrency of the Company and each of its subsidiaries is the U.S. Dollarbecause the Company's vessels operate in international shippingmarkets, which utilize the U.S. Dollar as the functional currency. Theaccounting books of the Company are maintained in U.S. Dollars.Transactions involving other currencies during the year are convertedinto U.S. Dollars using the exchange rates in effect at the time of thetransactions. At the balance sheet dates, monetary assets andliabilities, which are denominated in other currencies, are translatedto reflect the current exchange rates. Resulting gains or losses areseparately reflected in the accompanying consolidated statements ofincome.

Cash and Cash Equivalents:    TheCompany considers highly liquid investments such as time deposits andcertificates of deposit with original maturity of three months or lessto be cash equivalents.

RestrictedCash:    Restricted cash reflects deposits with certain banksthat can only be used to pay the current loan installments.

Trade Receivables:    The amount shown as tradereceivables includes estimated recoveries from charterers for hire,freight and demurrage billings, net of allowance for doubtful accounts.During 2004 and for the year ended December  31,  2005, allpotentially un-collectible accounts are assessed individually forpurposes of determining the appropriate provision for doubtfulaccounts. No provision for doubtful accounts is required atDecember  31,  2004 and 2005.

F-9

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                      |
|----------|------------------------------------------------------|
| 2.  | SignificantAccounting Policies - Continued |

Trade AccountsPayable:    The amount shown as trade accounts payable at thebalance sheet date includes payables to suppliers of port services,bunkers, and other goods and services payable by the Company.

Segmented Reporting:    The Company hasdetermined that it operates in one reportable segment, the seatransportation of liquefied gas.

Inventories:    Inventories consist of bunkers(for vessels under voyage charter) and lubricants. The cost isdetermined by the first-in, first-out method. The Company considersvictualling and stores as being consumed when purchased and, therefore,no inventories are taken at the balance sheet date.

Vessels Acquisitions:    Vessels are stated atcost, which consists of the contract price less discounts and anymaterial expenses incurred upon acquisition (initial repairs,improvements, acquisition and expenditures made to prepare the vesselfor its initial voyage). Subsequent expenditures for conversions andmajor improvements are also capitalized when they appreciably extendthe life, increase the earning capacity or improve the efficiency orsafety of the vessels, and otherwise are charged to expenses asincurred.

The Company records all identified tangible andintangible assets associated with the acquisition of a vessel orliabilities at fair value. Where vessels are acquired with existingtime charters, the Company allocates the purchase price to the timecharters based on the present value (using an interest rate whichreflects the risks associated with the acquired charters) of thedifference between (i) the contractual amounts to be paid pursuant tothe charter terms and (ii) management’s estimate of the fairmarket charter rate, measured over a period equal to the remaining termof the charter. The capitalized above-market (assets) and below-market(liabilities) charters are amortized as a reduction and increase,respectively, to voyage revenues over the remaining term of thecharter.

Impairment of Long-livedAssets:    The Company follows SFAS No.144‘‘Accounting for the Impairment or Disposal of Long-livedAssets’’ in 2004, which addresses financial accounting andreporting for the impairment or disposal of long-lived assets. Thestandard requires that long-lived assets and certain identifiableintangibles held and used or disposed of by an entity be reviewed forimpairment whenever events or changes in circumstances indicate thatthe carrying amount of the assets may not be recoverable. An impairmentloss for an asset held for use should be recognized when the estimateof undiscounted cash flows, excluding interest charges, expected to begenerated by the use of the asset is less than its carrying amount.Measurement of the impairment loss is based on the fair value of theasset as provided by third parties. In this respect, managementregularly reviews the carrying amount of the vessels in connection withthe estimated recoverable amount for each of the Company'svessels.

Vessels' Depreciation:    Thecost of each of the Company's vessels is depreciated on astraight-line basis over the vessels' remaining economic usefullife, after considering the estimated residual value. Managementestimates the useful life of each of the Company's vessels to be30 years from the date of their construction.

Accounting for Special Survey and Dry-dockingCosts:    Special survey and dry-docking costs and allnon-capitalizable repair and maintenance expenses are expensed in theyear incurred.

Financing Costs:    Feesincurred for obtaining new loans or refinancing existing ones aredeferred and amortized to interest expense over the life of the relateddebt using the effective interest method. Unamortized fees relating toloans repaid or refinanced are expensed in the period the repayment orrefinancing is made.

F-10

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                      |
|----------|------------------------------------------------------|
| 2.  | SignificantAccounting Policies - Continued |

Pension and Retirement BenefitObligations - Crew:    The ship-owning companies included inthe consolidation employ the crew on board under short-term contracts(usually up to seven months) and accordingly, they are not liable forany pension or any post-retirement benefits.

Accounting for Revenue and Expenses:    Revenueand expenses resulting from each voyage or time charter are accountedfor on an accrual basis. Time charter revenues are recognized over theterm of the charter as service is provided. Time charter revenuesreceived in advance are recorded as liabilities until charter serviceis rendered. Under a voyage charter, the revenues and associated voyagecosts are recognized on a pro-rata basis over the duration of thevoyage. Voyage costs comprise commissions, bunkers and port expenses.The impact of this method of recognizing voyage costs on a pro-ratabasis is not materially different from a method of recognizing suchcosts as incurred.

The operating results of voyages inprogress at a reporting date are estimated and recognized pro-rata on aper day basis. Probable losses on voyages are provided for in full atthe time such losses can be estimated.

Vessel operatingexpenses comprise all expenses relating to the operation of the vessel,including crewing, repairs and maintenance, insurance, stores,lubricants and miscellaneous expenses. Vessel operating expenses areaccounted for on an accrual basis.

Leasing:    Leases are classified as capitalleases whenever the terms of the lease transfer substantially all therisks and rewards of ownership to the lessee. All other leases areclassified as operating leases.

Earnings perShare:    Basic earnings per share are computed by dividing netincome by the weighted average number of common shares outstandingduring the year. Diluted earnings per share reflect the potentialdilution that could occur if securities or other contracts to issuecommon stock were exercised. The Company had no dilutive securitiesoutstanding at December  31,  2004 and 2005.

Income Taxes:    The Company is not liable forany income tax on its net income derived from shipping operationsbecause the countries in which the subsidiaries ship-owning companiesare incorporated do net levy tax on income, but rather a tonnage tax onthe vessel. (Note 18)

Derivatives:    TheSFAS No. 133, ‘‘Accounting for Derivative Instruments andHedging Activities’’ as amended establishes accounting andreporting standards requiring that every derivative instrument(including certain derivative instruments embedded in other contracts)be recorded in the balance sheet as either an asset or liabilitymeasured at its fair value, with changes in the derivatives’fair value recognized currently in earnings unless specific hedgeaccounting criteria are met. The Company had no derivatives as ofDecember  31,  2004. At December  31,  2005,there was an interest rate swap outstanding with an approximate fairvalue of $67,000 (liability). Changes in the estimated fair value ofthat instrument are recognized in the statement of income.

Restatement:    The historical consolidatedfinancial statements at December  31,  2004 have beenretroactively restated as if the vessels under common control with theVafias Group were consolidated subsidiaries for all periods presentedin accordance with the guidance in FASB statement No. 141‘‘Business Combinations’’ and EITF 02-05‘‘Definition of ‘Common Control’ in relationto FASB Statement No. 141.’’

RecentAccounting Pronouncements:    On January  17,2003, the Financial Accounting Standards Board(‘‘FASB’’) issued FASB Interpretation No. 46,‘‘Consolidation of Variable Interest Entities’’(‘‘FIN 46’’). Such Interpretation addresses theconsolidation of variable interest entities(‘‘VIEs’’), including special purpose entities(‘‘SPEs’’), that are not controlled throughvoting interests or in which the equity investors do not bear theresidual economic risks and rewards. The provisions of FIN 46 wereeffective immediately for transactions entered into by the Companysubsequent to January  31,  2003 

F-11

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                      |
|----------|------------------------------------------------------|
| 2.  | SignificantAccounting Policies - Continued |

and became effective for all othertransactions as of July  1,  2003. However, inOctober  2003, the FASB permitted companies to defer theJuly  1,  2003 effective date to December  31,2003, in whole or in part. On December  24,  2003, the FASBissued a complete replacement of FIN 46 (‘‘FIN46R’’), which clarified certain complexities of FIN 46 andgenerally requires adoption no later than December  31,2003 for entities that were considered SPEs under previous guidance andno later than March  31,  2004 for all other entities. Theadoption of FIN46R did not have a material impact on the Company'sfinancial statements.

In December  2004, the FASBissued SFAS No. 123R that will require compensation costs related toshare-based payment transactions to be recognized in the financialstatements. With limited exceptions, the amount of compensation costwill be measured based on the grant-date fair value of the equity orliability instruments issued. In addition, liability awards will beremeasured each reporting period. Compensation cost will be recognizedover the period that an employee provides service in exchange for theaward. SFAS 123R replaces SFAS No. 123, ‘‘Accounting forStock-Based Compensation’’, and supersedes APB 25.

Entities that used the fair-value-based method for eitherrecognition or disclosure under SFAS No. 123 will apply this revisedStatement using a modified version of prospective application. Underthis transition method, for the portion of outstanding awards for whichthe requisite service has not yet been rendered, compensation cost isrecognized on or after required effective date based on the grant-datefair value of those awards calculated under SFAS No. 123 for eitherrecognition or pro forma disclosures. SFAS No. 123R will be effectiveas of the beginning of the first interim or annual reporting periodthat begins after June  15,  2005. The adoption of SFAS123R did not have an impact on the company’s financialstatement.

In May  2005, the FASB issued SFAS No.154, ‘‘Accounting Changes and ErrorCorrections’’ which replaces Accounting Principles BoardOpinion No. 20 ‘‘Accounting Changes’’ and SFASNo. 3, ‘‘Reporting Accounting Changes in Interim FinancialStatements.’’ This statement applies to all voluntarychanges in accounting principle and changes resulting from adoption ofa new accounting pronouncement that does not specify transitionrequirements. SFAS 154 requires retrospective application to priorperiods' financial statements for changes in accounting principleunless it is impracticable to determine either the period-specificeffects or the cumulative effect of the change. SFAS 154 also requiresthat retrospective application of a change in accounting principle belimited to the direct effects of the change.

Indirecteffects of a change in accounting principle should be recognized in theperiod of the accounting change. SFAS 154 is effective for theaccounting changes and corrections of errors made in fiscal yearsbeginning after December  15,  2005 with earlyimplementation permitted for accounting changes and corrections oferrors made in fiscal years beginning after the date this statement wasissued. SFAS 154 is effective for us as of January  1,2006 and is not expected to have a material impact on our financialstatements.

|          |                                |
|----------|--------------------------------|
| 3.  | Transactionswith Related Party |

The Manager provides the vessels witha wide range of shipping services such as chartering, technical supportand maintenance, insurance, consulting, financial and accountingservices, for a fixed daily fee of $390 or $125 if the vessel is onbareboat charter and a brokerage commission of 1.25% on freight,hire and demurrage per vessel. For the year ended December31,  2005, a total amount of $436,201 ($316,293 for the periodended December  31,  2004) was included as voyage expensesand $1,473,080 ($111,540 for the period ended December31,  2004) as operating expenses.

F-12

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                                                      |
|----------|------------------------------------------------------|
| 3.  | Transactionswith Related Party - Continued |

The Manager also acts as a salesand purchase broker of the Company in exchange for a commission feeequal to 1% of the gross sale or purchase price of vessels orcompanies. For the year ended December  31,  2005, anamount of $1,955,450 ($350,500 for the period ended December31,  2004) was capitalized to the cost of the vessels.

The Manager has subcontracted the technical management of thevessels to four unaffiliated ship-management companies, V.Ships Limited(‘‘V.Ships’’), Tesma Singapore Pte Ltd(‘‘Tesma’’), Hanseatic Shipping Co. Ltd(Cyprus) and Swan Shipping Corporation (Manila). These companiesprovide technical management to the Company’s vessels for afixed annual fee per vessel. Such fees for the year endedDecember  31,  2005, amounted to $845,144 ($75,300 for theperiod ended December  31,  2004) and are included in thetotal management fees of $1,473,080 ($111,540 for the period endedDecember  31,  2004).

The Manager maintainedand handled the cash generated from the vessels’ operations upto March  21,  2005. Subsequently, bank accounts wereopened in the name of StealthGas Inc. for all the vessels owned. Thecurrent account balance with the Manager at December  31,2005 was a payable of $1,549,837 (a receivable of $1,162,470 for theperiod ended December  31,  2004) which represents revenuescollected less payments made by the Manager on behalf of theship-owning companies.

|          |             |
|----------|-------------|
| 4.  | Inventories |

The amounts shown in the accompanying consolidated balancesheets are analyzed as follows:

|            |  |                                        |         |                             |  |        |         |        |  |  |
|------------|--|----------------------------------------|---------|-----------------------------|--|--------|---------|--------|--|--|
|       |  | Period endedDecember 31,2004(restated) |         | Year endedDecember 31, 2005 |
| Bunkers    |  |                                   | 52,073  |                        |  |   | 126,529 |   |
| Lubricants |  |                                   | 72,773  |                        |  |   | 273,095 |   |
| Total      |  |                                   | 124,846 |                        |  |   | 399,624 |   |
|            |

|          |                                  |
|----------|----------------------------------|
| 5.  | Advancesfor Vessels Acquisitions |

The amount shown in theaccompanying consolidated balance sheet for the period endedDecember  31,  2005 amounting to $ 983,000 representsadvance payments to sellers of the vessel discussed in note 1(d). Thetotal purchase price of this vessel is $ 9,830,000.

|          |         |
|----------|---------|
| 6.  | Vessels |

|                                      |  |             |             |                         |  |                |            |         |  |        |             |         |  |  |
|--------------------------------------|--|-------------|-------------|-------------------------|--|----------------|------------|---------|--|--------|-------------|---------|--|--|
|                                 |  | Vessel Cost |             | AccumulatedDepreciation |  | Net Book Value |
| Balance,December 31, 2004 (restated) |  |        | 37,660,476  |                    |  |           | (264,458   | )  |  |   | 37,396,018  |    |
| Acquisitions                         |  |        | 197,979,788 |                    |  |           | —    |    |  |   | 197,979,788 |    |
| Depreciation for the period          |  |        | —     |                    |  |           | (5,611,942 | )  |  |   | (5,611,942  | )  |
| Balance, December31,  2005           |  |        | 235,640,264 |                    |  |           | (5,876,400 | )  |  |   | 229,763,864 |    |
|                                      |

F-13

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                               |
|----------|-------------------------------|
| 6.  | Vessels - Continued |

Vessel costs are analyzed asfollows:

|                        |  |               |             |              |  |                      |           |                                     |  |                                          |         |                      |  |        |         |         |  |        |           |         |  |        |             |        |  |  |
|------------------------|--|---------------|-------------|--------------|--|----------------------|-----------|-------------------------------------|--|------------------------------------------|---------|----------------------|--|--------|---------|---------|--|--------|-----------|---------|--|--------|-------------|--------|--|--|
| Vessel                 |  | Purchaseprice |             | Brokeragefee |  | Pre-deliveryexpenses |           | Interestincome earnedon 10% deposit |  | Fairvalueof acquiredTime charter(Note 8) |         | Totalacquisitioncost |
| Gas Prophet            |  |          | 8,316,000   |         |  |                 | 84,000    |                                |  |                                     | 86,549  |                 |  |   | — |    |  |   | —   |    |  |   | 8,486,549   |   |
| Gas Tiny               |  |          | 1,225,000   |         |  |                 | 12,250    |                                |  |                                     | 73,238  |                 |  |   | — |    |  |   | —   |    |  |   | 1,310,488   |   |
| GasCourchevel          |  |          | 9,652,500   |         |  |                 | 97,500    |                                |  |                                     | 56,677  |                 |  |   | — |    |  |   | —   |    |  |   | 9,806,677   |   |
| Gas Shanghai           |  |          | 9,801,000   |         |  |                 | 99,000    |                                |  |                                     | 55,554  |                 |  |   | — |    |  |   | —   |    |  |   | 9,955,554   |   |
| Gas Emperor            |  |          | 11,385,000  |         |  |                 | 115,000   |                                |  |                                     | 30,753  |                 |  |   | (826    | )  |  |   | —   |    |  |   | 11,529,927  |   |
| Gas Ice                |  |          | 9,500,000   |         |  |                 | 95,000    |                                |  |                                     | 22,102  |                 |  |   | (2,515  | )  |  |   | —   |    |  |   | 9,614,587   |   |
| GasArctic              |  |          | 9,500,000   |         |  |                 | 95,000    |                                |  |                                     | 32,281  |                 |  |   | (2,590  | )  |  |   | —   |    |  |   | 9,624,691   |   |
| Birgit Kosan           |  |          | 12,500,000  |         |  |                 | 125,000   |                                |  |                                     | 10,860  |                 |  |   | (4,472  | )  |  |   | —   |    |  |   | 12,631,388  |   |
| Gas Amazon             |  |          | 9,250,000   |         |  |                 | 92,500    |                                |  |                                     | 129,070 |                 |  |   | (4,919  | )  |  |   | —   |    |  |   | 9,466,651   |   |
| GasProdigy             |  |          | 5,775,000   |         |  |                 | 57,750    |                                |  |                                     | 118,458 |                 |  |   | — |    |  |   | 2,150,000 |    |  |   | 8,101,208   |   |
| Gas Chios              |  |          | 11,000,000  |         |  |                 | 110,000   |                                |  |                                     | 45,418  |                 |  |   | (1,537  | )  |  |   | —   |    |  |   | 11,153,881  |   |
| Gas Legacy             |  |          | 12,500,000  |         |  |                 | 125,000   |                                |  |                                     | 74,495  |                 |  |   | (8,606  | )  |  |   | —   |    |  |   | 12,690,889  |   |
| GasCathar              |  |          | 19,557,135  |         |  |                 | 196,950   |                                |  |                                     | 14,703  |                 |  |   | (5,496  | )  |  |   | —   |    |  |   | 19,763,292  |   |
| Gas Marathon           |  |          | 14,400,000  |         |  |                 | 144,000   |                                |  |                                     | 7,692   |                 |  |   | (10,373 | )  |  |   | —   |    |  |   | 14,541,319  |   |
| Gas Crystal            |  |          | 8,500,000   |         |  |                 | 85,000    |                                |  |                                     | 40,533  |                 |  |   | (6,027  | )  |  |   | —   |    |  |   | 8,619,506   |   |
| GasSincerity           |  |          | 14,949,000  |         |  |                 | 151,000   |                                |  |                                     | 15,983  |                 |  |   | (3,451  | )  |  |   | (265,000  | )  |  |   | 14,847,532  |   |
| Catterick              |  |          | 12,592,800  |         |  |                 | 127,500   |                                |  |                                     | 24,520  |                 |  |   | (950    | )  |  |   | (421,000  | )  |  |   | 12,322,870  |   |
| Sweet Dream            |  |          | 14,000,000  |         |  |                 | 140,000   |                                |  |                                     | 14,700  |                 |  |   | (8,831  | )  |  |   | —   |    |  |   | 14,145,869  |   |
| GasOracle              |  |          | 4,850,000   |         |  |                 | 48,500    |                                |  |                                     | 36,423  |                 |  |   | (495    | )  |  |   | 700,000   |    |  |   | 5,634,428   |   |
| Gas Spirit             |  |          | 15,345,000  |         |  |                 | 155,000   |                                |  |                                     | 7,953   |                 |  |   | (1,130  | )  |  |   | 406,000   |    |  |   | 15,912,823  |   |
| Feisty Gas             |  |          | 14,830,000  |         |  |                 | 150,000   |                                |  |                                     | 10,228  |                 |  |   | (1,093  | )  |  |   | 491,000   |    |  |   | 15,480,135  |   |
| Total acquisition cost |  |          | 229,428,435 |         |  |                 | 2,305,950 |                                |  |                                     | 908,190 |                 |  |   | (63,311 | )  |  |   | 3,061,000 |    |  |   | 235,640,264 |   |
|                        |

|          |                         |
|----------|-------------------------|
| 7.  | DeferredFinance Charges |

Deferred finance chargesamounting to $215,656 represent fees paid to the lenders for obtainingthe related loans, net of amortization, and were recorded as a contrato debt in accordance with the company accounting policy. Theamortization of financing costs amounted to $41,344 for the year endedDecember  31,  2005 and is included in Interest and financecosts, net in the accompanying consolidated income statements.

F-14

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|          |                    |
|----------|--------------------|
| 8.  | AccruedLiabilities |

The amounts shown in the accompanyingconsolidated balance sheets are analyzed as follows:

|                                       |  |                                        |         |                             |  |        |           |        |  |  |
|---------------------------------------|--|----------------------------------------|---------|-----------------------------|--|--------|-----------|--------|--|--|
|                                  |  | Period endedDecember 31,2004(restated) |         | Year endedDecember 31, 2005 |
| Interest on long-term debt            |  |                                   | — |                        |  |   | 394,488   |   |
| Lease expense                         |  |                                   | — |                        |  |   | 39,540    |   |
| Vessels' operating and voyageexpenses |  |                                   | 360,818 |                        |  |   | 1,201,012 |   |
| Total                                 |  |                                   | 360,818 |                        |  |   | 1,635,040 |   |
|                                       |

|          |                                    |
|----------|------------------------------------|
| 9.  | Fairvalue of acquired time charter |

The fair value of thetime charters acquired at below / (above) fair market charter rates onthe acquisition of the vessels is summarized below. These amounts areamortized on a straight-line basis to the end of the charter period.The amounts of $ 307,143 and $ 1,907,622 are included in voyage revenuefor the period ended December  31,  2004 and year endedDecember  31,  2005, respectively.

|                                               |  |                    |  |                                  |           |                                                         |  |                                           |            |         |  |        |           |         |  |  |  |  |
|-----------------------------------------------|--|--------------------|--|----------------------------------|-----------|---------------------------------------------------------|--|-------------------------------------------|------------|---------|--|--------|-----------|---------|--|--|--|--|
| Vessel                                        |  | End of TimeCharter |  | Fair valueofacquired timeCharter |           | Totalaccumulatedamortization forthe yearended12.31.2005 |  | Unamortizedbalance at yearended12.31.2005 |
| Fairvalue of acquired time charter - Asset    |
| GasSincerity                                  |  | July  2006         |  |                             | (265,000  | )                                                  |  |                                      | 51,681     |    |  |   | (213,319  | )  |
| Catterick                                     |  | January  2006      |  |                             | (421,000  | )                                                  |  |                                      | 36,565     |    |  |   | (384,435  | )  |
| Total                                         |  |               |  |                             | (686,000  | )                                                  |  |                                      | 88,246     |    |  |   | (597,754  | )  |
| Fair value ofacquired time charter -Liability |
| GasProdigy                                    |  | March  2006        |  |                             | 2,150,000 |                                                    |  |                                      | (1,781,429 | )  |  |   | 368,571   |    |
| GasOracle                                     |  | May  2006          |  |                             | 700,000   |                                                    |  |                                      | (461,741   | )  |  |   | 238,259   |    |
| GasSpirit                                     |  | June  2006         |  |                             | 406,000   |                                                    |  |                                      | (31,071    | )  |  |   | 374,929   |    |
| FeistyGas                                     |  | August  2006       |  |                             | 491,000   |                                                    |  |                                      | (28,770    | )  |  |   | 462,230   |    |
| Total                                         |  |               |  |                             | 3,747,000 |                                                    |  |                                      | (2,303,011 | )  |  |   | 1,443,989 |    |
| Grand Total                                   |  |               |  |                             | 3,061,000 |                                                    |  |                                      | (2,214,765 | )  |  |   | 846,235   |    |
|                                               |

|           |                |
|-----------|----------------|
| 10.  | DeferredIncome |

The amounts shown in the accompanyingconsolidated balance sheets are analyzed as follows:

|                          |  |                                        |         |                             |  |        |           |        |  |  |
|--------------------------|--|----------------------------------------|---------|-----------------------------|--|--------|-----------|--------|--|--|
|                     |  | Period endedDecember 31,2004(restated) |         | Year endedDecember 31, 2005 |
| Voyage in progress       |  |                                   | 59,158  |                        |  |   | —   |   |
| Hire received in advance |  |                                   | 475,255 |                        |  |   | 2,284,578 |   |
| Total                    |  |                                   | 534,413 |                        |  |   | 2,284,578 |   |
|                          |

F-15

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |               |
|-----------|---------------|
| 11.  | Long-termDebt |

(a)    In March  2005, the Companyentered into a $54,000,000 loan agreement with Fortis Bank (the‘‘Fortis Loan’’). On June  10,2005, on August  19,  2005 and on November19,  2005 the amounts of $3,580,500, $1,356,750 and $1,356,750respectively, were repaid, leaving an outstanding balance of$47,706,000. The term loan was fully drawn down on May17,  2005 and is repayable in 32 equal consecutive quarterlyinstallments from August  2005 through May  2013, of$1,356,750 plus a balloon payment of $7,003,500 payable together withthe last installment. The term loan charges interest at LIBOR plus0.90% and is secured by a first priority mortgage over thevessels involved plus the assignment of the vessels’ insurances,earnings and the vessels’ operating and retention accounts.

The term loan contains financial covenants requiring theCompany to ensure that the aggregate market value of the mortgagedvessels at all times exceed 125% of the amount outstanding underthe term loan, to maintain minimum cash balances of $3  millionat all times, and that the leverage of the Company should never exceedthe level of 80%. There are also restrictions on the payment ofdividends.

The amount outstanding at December31,  2005 of $47,706,000 bore an average interest rate (includingthe margin) of 4.66%.

Bank loan interest expensefor the year ended December  31,  2005 amounted to$1,701,535 and is included in Interest and finance costs, net in theaccompanying consolidated statements of income.

(b)    In December  2005, the Company enteredinto a $50,000,000 loan agreement with DnB NOR bank (the‘‘DnB Loan’’). The term loan was fully drawndown in two tranches, an amount of $28,000,000 was drawn down onDecember  7,  2005, and an amount of $22,000,000 was drawndown on December  8,  2005, and is repayable fromJune  2006 through December  2015. This loan will be repaidin two semi-annual instalments of $3,600,000 each, four semi-annualinstallments of $2,400,000 each, and fourteen semi-annual installmentsof $1,800,000 each plus a balloon payment of $8,000,000 payabletogether with the last installment. The term loan charges interest atLIBOR plus 0.70% and is secured by a first priority mortgageover the vessels involved plus the assignment of the vessels’insurances, earnings and the vessels’ operating and retentionaccounts, and the guarantee of StealthGas Inc.

The termloan contains financial covenants requiring the Company to ensure thatthe aggregate market value of the mortgaged vessels at all timesexceeds 125% of the amount outstanding under the term loan, theleverage of the Company should never exceed the level of 80%,the Interest Coverage Ratio of StealthGas Inc. to be at all timesgreater than or equal to 2.5, and that at least 30% ofStealthGas Inc. is to always be owned by members of the Vafias family.There are also restrictions on the payment of dividends.

The amount outstanding at December  31,  2005 was$54,000,000 and bore an average interest rate (including the margin) of5.35%.

Accrued bank loan expenses for the yearended December  31,  2005 amounted to $178,313 and isincluded in interest and finance costs, net in the accompanyingconsolidated statements of income.

F-16

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |                                     |
|-----------|-------------------------------------|
| 11.  | Long-termDebt - Continued |

The annual principal payments tobe made, for both loans, after December  31,  2005 are asfollows:

|            |  |        |            |        |  |  |
|------------|--|--------|------------|--------|--|--|
| Yearended  |  | Amount |
| 2006       |  |   | 12,627,000 |   |
| 2007       |  |   | 10,227,000 |   |
| 2008       |  |   | 10,227,000 |   |
| 2009       |  |   | 9,027,000  |   |
| 2010       |  |   | 9,027,000  |   |
| Thereafter |  |   | 46,571,000 |   |
| Total      |  |   | 97,706,000 |   |
|            |

(c)    OnMay  23,  2005, Empire Spirit Ltd. (the owner of SweetDream) and Independent Trader Ltd. (the owner of Gas Oracle) enteredinto a $14,000,000 loan agreement with Den Norske Bank. The total loanamount had been drawn down at June  01,  2005 since bothvessels had been delivered. The loan is repayable in 20 equalconsecutive semi-annual installments from December  1,2005 through May  31,  2015 of $550,000 plus a balloonpayment of $3,000,000 payable together with the last installment. Theloan can be prepaid, without premium or penalty, at any time giving notless than five days prior written notice to the bank.

Theterm loan charges interest at LIBOR plus a margin and is secured by afirst priority mortgage over the vessels involved plus the personalguarantee of the majority shareholder, the assignment of thevessels’ insurances, earnings and the vessels’ operatingand retention accounts.

The term loan contains financialcovenants requiring the Company to ensure that the aggregate marketvalue of the mortgaged vessels at all times exceed 125% of theamount outstanding under the term loan.

Bank loaninterest expense for the year ended December  31,  2005amounted to $351,979 and is included in Interest and Finance Costs, netin the accompanying consolidated statements of income. The actualinterest rate at December  31,  2005 was 4.655%.

(d)    On August  22,  2005, QuicksilverShipping Limited (the owner of Gas Legacy) and Jungle InvestmentLimited (the owner of Gas Cathar) entered into a $22,000,000 loanagreement with Calyon Bank. The total loan amount had been drawn downat August  26,  2005 since both vessels had been delivered.The loan is repayable in 8 equal consecutive semi-annual installmentsfrom February  26,  2005 through August  31,2009 of $1,200,000 and 8 equal consecutive semi-annual installmentsfrom February  27,  2010 through August  31,2013 of $675,000 plus a balloon payment of $7,000,000 payable togetherwith the last installment. The loan can be prepaid, without premium orpenalty, at any time giving not less than five days prior writtennotice to the bank.

The term loan charges interest atLIBOR plus a 0.90% and is secured by a first preferred mortgageover the vessels involved plus the corporate guarantee of BraveMaritime Co. Inc., the assignment of the vessels’ insurances,earnings and the vessels’ operating and retention accounts.

The term loan contains financial covenants requiring theCompany to ensure that the aggregate market value of the mortgagedvessels at all times exceed 125% of the amount outstanding underthe term loan.

Bank loan interest expense for the yearended December  31,  2005 amounted to $175,804 and has beencalculated using an average interest rate of 4.64% and isincluded in Interest and Finance Costs, net in the accompanyingconsolidated statements of income. The actual interest rate atDecember  31,  2005 (LIBOR plus 0.90% margin) was4.64%.

F-17

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |                                     |
|-----------|-------------------------------------|
| 11.  | Long-termDebt - Continued |

The aforementioned loans (c) and(d) have been fully repaid on December  8,  2005 andOctober  27,  2005 respectively by ‘‘VafiasGroup of LPG Carriers’’ before the Company acquired thesubject vessels.

|           |                             |
|-----------|-----------------------------|
| 12.  | Interest Rate SwapAgreement |

On March  31,  2005, the Companyentered into an agreement to enter into an interest rate swap on the‘‘Fortis Loan’’. The initial amount of the swapwill be $22,549,000 amortizing to $4,764,250 over its six-year lifecommencing May  30,  2007, If the United States dollarthree month LIBOR is less than 7.5%, the fixed rate is4.55%. If the United States dollar three month LIBOR is equal toor higher than 7.5%, then the fixed rate will be the UnitedStates dollar three month LIBOR, As of December  31,  2005,the fair value of the instrument was $67,000 (liability).

|           |              |
|-----------|--------------|
| 13.  | Common Stock |

OnAugust  26,  2005, the Company effected a 60,000-for-onestock split. All share and per share data give retroactive effect tothe stock split. On October  5,  2005 the Company completedits initial public offering. It issued eight million additional sharesbringing the total number of shares outstanding to fourteen million.The holders of the shares are entitled to one vote on all matterssubmitted to a vote of stockholders and to receive all dividends, ifany.

|           |                           |
|-----------|---------------------------|
| 14.  | Additional Paid-inCapital |

The amount shown in the accompanyingconsolidated balance sheets, as additional paid-in capital, representspayments made by the stockholders for the acquisitions of theCompany's vessels.

Included in paid-in capital isthe value of executive management services provided through themanagement agreement with Stealth Maritime S.A. to the Company, as wellas the value of the lease expense for the office space that areprovided to the Company at no extra charge by Stealth Maritime S.A. Thevalue of the above services is estimated at $243,750 (excluding officespace) for the year ended December  31,  2005 ($35,100 forthe period ended December  31,  2004) and is recorded asgeneral and administrative expenses in the accompanying consolidatedstatements of income and as a contribution to paid-in capital in therelated accompanying statements of changes in stockholders’equity.

On October  5,  2005 the Companycompleted its initial public offering. It issued eight millionadditional shares at a cost of $14.50 per share less issuance costs of$8,614,657. The remaining amount of $80,000 has increased the capitalstock.

The $6,312,500 reduction of additional paid incapital represents the difference in the acquisition cost of thevessels of companies acquired from the Vafias Group as part of theVafias Group of LPG Carriers for those vessels. For accountingpurposes, this difference is treated as deemed dividends.

The paid in capital and retained earnings of the Vafias Grouprepresents the repayment to the shareholder of the Vafias Group of LPGCarriers, the capital contributed by them of $54,898,497 and the lossesof $16,947 of the companies whose vessels were sold to subsidiaries ofStealthGas Inc.

F-18

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |               |
|-----------|---------------|
| 15.  | DividendsPaid |

On July  4,  2005, the Company proposedand approved a dividend to its sole shareholder of $10  millionwhich was paid on July  13,  2005.

|           |                           |
|-----------|---------------------------|
| 16.  | Earnings per Common Share |

Basic and diluted earnings per common share are computed asfollows:

|                                             |  |                                        |           |                             |  |        |            |        |  |  |
|---------------------------------------------|--|----------------------------------------|-----------|-----------------------------|--|--------|------------|--------|--|--|
|                                        |  | Period endedDecember 31,2004(restated) |           | Year ended December31, 2005 |
| Income:                                     |  |                                   |      |                        |  |   |       |   |
| Netincome                                   |  |                                   | 531,208   |                        |  |   | 14,536,051 |   |
| Basic and Diluted earnings pershare:        |  |                                   |      |                        |  |   |       |   |
| Weighted average commonshares - outstanding |  |                                   | 6,000,000 |                        |  |   | 7,906,849  |   |
| Basic and Diluted earnings per share:       |  |                                   | 0.09      |                        |  |   | 1.84       |   |
|                                             |

|           |                                              |
|-----------|----------------------------------------------|
| 17.  | Voyage Expensesand Vessel Operating Expenses |

The amounts in theaccompanying consolidated statements of operations are analyzed asfollows:

|                                      |  |                                        |         |                             |  |        |           |        |  |  |
|--------------------------------------|--|----------------------------------------|---------|-----------------------------|--|--------|-----------|--------|--|--|
| VoyageExpenses                       |  | Period endedDecember 31,2004(restated) |         | Year endedDecember 31, 2005 |
| Port expenses                        |  |                                   | 83,671  |                        |  |   | 504,224   |   |
| Bunkers                              |  |                                   | 183,107 |                        |  |   | 1,020,946 |   |
| Commissions charged by third parties |  |                                   | 49,684  |                        |  |   | 688,640   |   |
| Commissions charged by relatedparty  |  |                                   | 21,741  |                        |  |   | 436,201   |   |
| Other voyageexpenses                 |  |                                   | 3,000   |                        |  |   | 38,144    |   |
| Total                                |  |                                   | 341,203 |                        |  |   | 2,688,155 |   |
|                                      |

|                              |  |                                          |         |                              |  |        |           |        |  |  |
|------------------------------|--|------------------------------------------|---------|------------------------------|--|--------|-----------|--------|--|--|
| Vessels'Operating Expenses   |  | PeriodendedDecember  31,  2004(restated) |         | YearendedDecember  31,  2005 |
| Crew wagesand related costs  |  |                                     | 426,800 |                         |  |   | 5,095,177 |   |
| Insurance                    |  |                                     | 54,445  |                         |  |   | 729,552   |   |
| Repairs and maintenance      |  |                                     | 34,892  |                         |  |   | 753,726   |   |
| Spares and consumable stores |  |                                     | 196,403 |                         |  |   | 1,878,675 |   |
| Miscellaneousexpenses        |  |                                     | 46,470  |                         |  |   | 638,446   |   |
| Total                        |  |                                     | 759,010 |                         |  |   | 9,095,576 |   |
|                              |

F-19

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |             |
|-----------|-------------|
| 18.  | IncomeTaxes |

Under the laws of the countries of thecompanies' incorporation and/or vessels' registration, thecompanies are not subject to tax on international shipping income,however, they are subject to registration and tonnage taxes, which havebeen included in Vessel operating expenses in the accompanyingconsolidated statement of income.

Pursuant to theInternal Revenue Code of the United States (the‘‘Code’’), U.S. source income from theinternational operations of ships is generally exempt from U.S. tax ifthe Company operating the ships meets certain requirements. Among otherthings, in order to qualify for this exemption, the Company operatingthe ships must be incorporated in a country, which grants an equivalentexemption from income taxes to U.S. corporations. All theCompany’s ship-operating subsidiaries satisfy these initialcriteria. In addition, these companies must be more than 50%owned by individuals who are residents, as defined, in the country ofincorporation or another foreign country that grants an equivalentexemption to U.S. corporations. These companies also currently satisfythe more than 50% beneficial ownership requirement.

In addition, upon completion of the public offering of theCompany’s shares, the management of the Company believes that byvirtue of a special rule applicable to situations where theship-operating companies are beneficiary owned by a publicly tradedcompany like the Company, the more than 50% beneficial ownershiprequirement can also be satisfied based on the trading volume and theanticipated widely-held ownership of the Company’s shares, butno assurance can be given that this will remain so in the future, sincecontinued compliance with this rule is subject to factors outside theCompany’s control.

|           |                      |
|-----------|----------------------|
| 19.  | FinancialInstruments |

The principal financial assets of theCompany consist of accounts receivable due from charterers and relatedparty. The principal financial liabilities of the Company consist ofaccounts payable due to suppliers, related party and the loan repayableto the bank. The recorded value of all of the Company’sfinancial assets and liabilities approximate their fair value due totheir short-term nature and the variable interest rate of the loan.

|           |                              |
|-----------|------------------------------|
| 20.  | Commitmentsand Contingencies |

|  |              |                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Fromtime to time the Company expects to be subject to legal proceedings andclaims in the ordinary course of its business, principally personalinjury and property casualty claims. Such claims, even if lackingmerit, could result in the expenditure of significant financial andmanagerial resources. The Company is not aware of any current legalproceedings or claims. |

F-20

----

Table of Contents

StealthGasInc. Notes to the consolidated financial statements For theperiod ended December  31,  2004 (restated) and the yearended December  31,  2005 (Expressed in United StatesDollars)

|  |
|--|
|  |  |
|  |

|           |                                                    |
|-----------|----------------------------------------------------|
| 20.  | Commitmentsand Contingencies - Continued |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | OperatingLeases.    In January  2005, the Company entered into athree-year cancelable operating lease for its office facilities thatterminates in January  2008. Rental expense for the periodJanuary  3, 2005 through December  31,  2005 was$29,035. In October  2005, the Company entered into a three-yearcancelable operating lease for an armored car that terminates inOctober  2008. Rental expense for the period October  15through December  31,  2005 was $8,340. Future rentalcommitments were payable as follows: |

|        |  |              |         |        |  |  |
|--------|--|--------------|---------|--------|--|--|
|   |  | Total Amount |
| 2006   |  |         | 69,535  |   |
| 2007   |  |         | 69,535  |   |
| 2008   |  |         | 33,750  |   |
| Total  |  |         | 172,820 |   |
|        |

|           |                  |
|-----------|------------------|
| 21.  | SubsequentEvents |

|  |              |                                                                                                                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | On January6,  2006 the Company’s Board of Directors declared a cashdividend of $0.1875  cents per common share, payable on theJanuary  25,  2006 to stockholders of record on theJanuary  17,  2006. |

|  |              |                                                                                                                                                                                                                                                                       |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company reached anagreement in principle with DnB NOR Bank to increase its facility anadditional $14,000,000 for a total of $64  million to finance theacquisition of the Gas Czar and the Gas Eternity, each expected to bedelivered during February/March 2006. |

|  |              |                                                                                                                                                                          |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | On December  22,2005, the Company entered into an agreement to acquire the‘‘Gas Czar’’ for $9,830,000 which was deliveredon February  14,  2006. |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | On January 23, 2006, theCompany entered into an agreement to enter into an interest rate swapon the "DnB Loan". The initial amount of theswap will be $22,500,000 amortizing to $4,410,000 over its ten-yearlife commencing March 9, 2006. If the United States dollar six monthLIBOR is less than or equal to 5.75%, the fixed rate is4.52%. If the United States dollar six month LIBOR is higherthan 5.75%, then the fixed rate will be the United States dollarsix month LIBOR less 1.23%. |

|  |              |                                                                                                                                                                                                                                          |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | On February  14,2006, the Company entered into separate memorandum of agreement toacquire one additional vessel named ‘‘GasFortune’’ for a contract price of $9,500,000 which wasdelivered on February  24,2006. |

F-21

----

Table of Contents

ExhibitList

|  |         |                                                               |
|--|---------|---------------------------------------------------------------|
|  | 1  | Amended and RestatedArticles of Incorporation of the Company* |

|  |         |                                            |
|--|---------|--------------------------------------------|
|  | 1  | Amended and Restated Bylaws of theCompany* |

|  |           |                                                                                         |
|--|-----------|-----------------------------------------------------------------------------------------|
|  | 4.1  | Amended and RestatedManagement Agreement between the Company and Stealth Maritime S.A.* |

|  |           |                                                                                          |
|--|-----------|------------------------------------------------------------------------------------------|
|  | 4.2  | Form of Right of First Refusal amongthe Company, Harry Vafias and Stealth Maritime S.A.* |

|  |           |                                  |
|--|-----------|----------------------------------|
|  | 4.3  | Form of Equity CompensationPlan* |

|  |           |                                                                                                 |
|--|-----------|-------------------------------------------------------------------------------------------------|
|  | 4.4  | Loan Agreement with FortisBank (Nederland) N.V. and Deed of Release of Security andObligations* |

|  |           |                                     |
|--|-----------|-------------------------------------|
|  | 4.5  | Loan Agreement withDnB Nor Bank ASA |

|  |           |                                             |
|--|-----------|---------------------------------------------|
|  | 4.6  | SupplementalAgreement with DnB Nor Bank ASA |

|  |         |                             |
|--|---------|-----------------------------|
|  | 8  | Subsidiaries of the Company |

|  |            |                                             |
|--|------------|---------------------------------------------|
|  | 12.1  | Certification of the ChiefExecutive Officer |

|  |            |                                            |
|--|------------|--------------------------------------------|
|  | 12.2  | Certificationof the Chief FinancialOfficer |

|  |            |                                                                                                                                         |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------|
|  | 13.1  | Certification of theChief Executive Officer pursuant to 18 U.S.C. Section 1350 as added bySection 906 of the Sarbanes-Oxley Act of 2002 |

|  |            |                                                                                                                                         |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------|
|  | 13.2  | Certification of the ChiefFinancial Officer pursuant to 18 U.S.C. Section 1350 as added bySection 906 of the Sarbanes-Oxley Act of 2002 |

|  |
|--|
|  |  |
|  |

|   |                                                                                                                                                                                                       |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | Previously filed asan exhibit to the Company’s Registration Statement on Form F-1(File  No.  333-127905 ) filed with the SEC and herebyincorporated by reference to such RegistrationStatement. |

----