UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F
(Mark One)

[_]          REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2004

                                       OR

[_]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

                         Commission file number 0-_____

                          ULTRAPETROL (BAHAMAS) LIMITED

             (Exact name of Registrant as specified in its charter)

                           COMMONWEALTH OF THE BAHAMAS

                 (Jurisdiction of incorporation or organization)

                          Ultrapetrol (Bahamas) Limited
                          H & J Corporate Services Ltd.
                                  Shirlaw House
                                87 Shirley Street
                               P. O. Box SS-19084
                                 Nassau, Bahamas

                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: 9% First Preferred Ship Mortgage Notes due 2014

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

Common Shares, $0.01 par value                     2,134,452  Shares Outstanding

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 file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                                   Yes  [X]         No [_]
Indicate by check mark which financial statement item the Registrant has elected
to follow.
                                                   Item 17 [_]  Item 18 [X]


<PAGE>


                          INDEX TO REPORT ON FORM 20-F

Part I

         Item 1.   Identity of Directors, Senior Management and Advisors    1

         Item 2.   Offer Statistics and Expected Timetable                  1

         Item 3.   Key Information                                          2

         Item 4.   Information on the Company                               12

         Item 5.   Operating and Financial Review and Prospects             27

         Item 6.   Directors, Senior Management and Employees               37

         Item 7.   Major Shareholders and Related Party Transactions        39

         Item 8.   Financial Information                                    41

         Item 9.   The Offer and Listing                                    41

         Item 10.  Additional Information                                   41

         Item 11.  Quantitative and Qualitative Disclosures about
                   Market Risk                                              45

         Item 12.   Description of Securities                               45

Part II
         Item 13.  Defaults, Dividend Arrearages and Delinquencies          45

         Item 14.  Material Modifications to the Rights of
                   Security Holders and Use of Proceeds                     45

         Item 15.  Controls and Procedures                                  45

         Item 16A. Audit Committee Financial Expert                         46

         Item 16B. Code of Ethics
46

         Item 16C. Principal Accountant Fees and Services                   46

Part III
         Item 17. Financial Statements                                      46

         Item 18. Financial Statements                                      47

         Item 19. Exhibits                                                  A-1

<PAGE>


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

     Matters discussed in this document may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are other than statements of historical facts.

     Ultrapetrol (Bahamas) Limited desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe harbor
legislation. This document and any other written or oral statements made by us
or on our behalf may include forward-looking statements, which reflect our
current views with respect to future events and financial performance. When used
in this document, the words "anticipate," "estimate," "project," "forecast,"
"plan," "potential," "will," "may," "should," and "expect" reflect
forward-looking statements.

     The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, managements examination of historical operating
trends, data contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections.

     In addition to these assumptions and matters discussed elsewhere herein and
in the documents incorporated by reference herein, important factors that, in
our view, could cause actual results to differ materially from those discussed
in the forward-looking statements include the strength of world economies and
currencies, general market conditions, including fluctuations in charter hire
rates and vessel values, changes in demand in the tanker market, as a result of
changes in OPEC's petroleum production levels and world wide oil consumption and
storage, changes in the company's operating expenses, including bunker prices,
drydocking and insurance costs, changes in governmental rules and regulations or
actions taken by regulatory authorities, potential liability from pending or
future litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political events,
and other important factors described from time to time in the reports filed by
Ultrapetrol (Bahamas) Limited with the Securities and Exchange Commission.

                                     PART I

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not Applicable.


ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

     Not Applicable.


ITEM 3 - KEY INFORMATION

A. SELECTED FINANCIAL DATA

     The following summary financial information set forth below for Ultrapetrol
(Bahamas) Limited (the "Company") is for the years ended December 31, 2000,
2001, 2002, 2003 and 2004 and has been derived from the Company's Financial
Statements.

<PAGE>
<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                                       ------------------------------------------------------------
                                                       2000          2001          2002          2003        2004(1)
                                                       ----          ----          ----          ----        ----

                                                                     (dollars in thousands)
<S>                                                  <C>          <C>         <C>            <C>           <C>
Statement of Operations Data:
Revenues:                                            $104,391     $111,208      $ 73,124     $ 75,233       $ 95,160 (2)
Operating expenses(3).....................            (67,305)     (60,504)      (37,582)      (41,303)      (40,815)
  Depreciation and amortization...........            (21,161)     (23,443)      (24,807)      (22,567)      (18,688)
  Management fees to related parties(4)...             (3,780)      (3,250)       (3,176)       (2,863)       (1,513)
  Administrative and selling expenses.....             (4,269)      (4,520)       (3,642)       (4,955)       (7,494)
  Other operating income (expenses).......              4,483        1,534         1,741        (2,124)          784
  Loss on involuntary conversion Arg.

   Receivable(5)..........................                  --           --       (2,704)            --           --
                                                   -----------  -----------   ----------     ----------  -----------
Operating profit..........................             12,359       21,025         2,954         1,421        27,434
Financial expense.........................            (16,646)     (17,698)      (16,763)      (16,207)      (16,134)
Gain (loss) on extinguishments of debt....                                                       1,782        (5,078)
Financial income..........................                282          296           326           201           119
Investment in affiliates..................             (1,646)        (692)          (45)        3,140           406
Other income (expenses)...................               (132)        (126)          (43)         (337)          174
Income (loss) before income tax and minority
  interest................................             (5,783)       2,805       (13,571)      (10,000)        6,921
Minority interest.........................                                          (132)       (1,333)       (1,140)
Income tax expense........................               (284)        (390)         (150)         (185)         (642)
                                                   ----------   ----------    ----------    ----------    ----------
Net income (loss).........................         $   (6,067)  $    2,415    $  (13,853)   $  (11,518)   $    5,139
                                                   ==========   ==========    ==========    ==========    ==========
Balance Sheet Data (end of period):
Cash and cash equivalents.................         $    4,225   $    5,872    $    4,724    $    8,248    $   11,602
 Non-current  restricted cash.............                                                      16,461        30,010
Working capital...........................              9,702       18,920        21,013        15,416        13,441
Fixed assets..............................            148,946      135,289       134,797       120,803       160,535
Total assets..............................            232,894      225,576       213,546       208,161       273,648
Total debt................................            177,769      165,445       168,994       155,814       220,413
Shareholders' equity......................             42,235       47,838        35,089        23,793        28,910

EBITDA(6).................................         $   32,024   $   43,946    $   27,867    $   25,659    $   45,681
Ratio of earnings to fixed charges (7)....               - (8)         1.2          - (8)         - (8)          1.4
Dollar amount of the coverage deficiency           $    4,137   $      --     $   13,526     $  13,140    $      --

</TABLE>

     (1)  In a series of related transactions, on April 23, 2004, through two
          wholly owned subsidiaries, we acquired from ACBL the remaining 50%
          equity interest in UABL Limited that we did not previously own, along
          with a fleet of 50 river barges and seven river push boats. The
          results of UABL Limited's operations have been included in our
          condensed consolidated financial statements since that date.

     (2)  Includes total revenues from our Ocean Business of $54,049 and from
          our River Business of $41,111.

     (3)  Operating expenses include voyage expenses and running costs. Voyage
          expenses, which are incurred when a vessel is operating under a
          contract of affreightment (as well as any time when they are not
          operating under time or bareboat charter), comprise all costs relating
          to a given voyage, including port charges, canal dues and fuel
          (bunkers) costs, are paid by the vessel owner and are recorded as
          voyage expenses. Voyage expenses also include charter hire payments
          made by us to owners of vessels that we have chartered in. Running
          costs, or vessel operating expenses, include the cost of all ship
          management, crewing, repairs and maintenance, spares and stores,
          insurance premiums and lubricants and certain drydocking costs.

     (4)  Management fees to related parties include payments to our affiliates
          Ravenscroft and Oceanmarine.

     (5)  This relates to a loss resulting from the involuntary conversion of
          certain receivables from U.S. dollars to Argentine pesos. This
          conversion resulted pursuant to an emergency law passed by the
          Argentine government in January 2002. Under this law U.S. dollar
          obligations between private parties due after January 6, 2002 were to
          be liquidated in Argentine pesos at a negotiated rate of exchange
          which reflects a sharing of the impact of the devaluation. Our
          settlement in Argentine pesos of the U.S. dollar denominated
          agreements was completed in 2002 and resulted in a loss of $2,704.

     (6)  EBITDA consists of income prior to deductions for interest expense,
          income taxes, depreciation and amortization of drydock expense and
          financial gain (loss) on extinguishment of debt. EBITDA is not
          intended to represent cash flows from operations, as defined by GAAP
          ("GAAP" means generally accepted accounting principles in the United
          States of America in effect as of the date hereof) and should not be
          considered as an alternative to net income as an indicator of our
          operating performance or to cash flows from operations as a measure of
          liquidity. This definition of EBITDA may not be comparable to
          similarly titled measures disclosed by other companies. Generally,
          funds represented by EBITDA are available for management's
          discretionary use.

<TABLE>
<CAPTION>
                                                                          For the year ended December 31,
Reconciliation between EBITDA and Net income (loss) for
the years                                                          2000          2001        2002      2003       2004
                                                                   ----          ----        ----      ----       ----
                                                                               (dollars in thousands)
<S>                                                            <C>             <C>        <C>        <C>          <C>
EBITDA
Net Income (loss) for the year.                                 (6,067)         2,415    (13,853)    (11,518)       5,139
   Plus
   Financial expense                                             16,646        17,698      16,763      16,207      16,134
   Financial gain on extinguishments of debts                                                         (1,782)     (1,344)
   Financial losses on extinguishments of debts                                                                     6,422
   Income taxes                                                     284           390         150         185         642
   Depreciation of property and equipment                        15,572        16,197      15,968      15,335      13,493
   Amortization of dry-dock expense                               5,589         7,246       8,839       7,232       5,195
                                                           ------------- ------------- ----------- ----------- -----------
   EBITDA                                                       $32,024       $43,946     $27,867     $25,659     $45,681
                                                           ============= ============= =========== =========== ===========
</TABLE>

     (7)  The ratio of earnings to fixed charges is computed by aggregating
          income (loss) before income taxes, minority interest and fixed charges
          and dividing the total by fixed charges. Fixed charges comprise
          interest on all indebtedness including capital leases and amortization
          of debt expense.

     (8)  In these fiscal years the earnings are inadequate to cover fixed
          charges.

B.   CAPITALIZATION AND INDEBTEDNESS

     Not Applicable.

C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not Applicable.

D.   RISK FACTORS

     Please note: In this section, "we", "us" and "our" all refer to the Company
and its subsidiaries.

     Risks relating to our Company

We depend on a few significant customers for a large part of our revenues, and
the loss of one or more of these customers could adversely affect our revenues.

     We derive a significant part of our revenues from a small number of
customers. In 2004, Cargill and its subsidiaries accounted for 32% of our total
revenues, Pan Ocean Shipping accounted for 18% of our total revenues and our
five largest customers in terms of revenues, in aggregate, accounted for 65% of
our total revenues. The loss of any one or a number of these customers, whether
to our competitors or otherwise, could adversely affect our revenues.

Our earnings may be reduced and volatile if we do not efficiently deploy our
vessels between longer term and shorter term charters.

     We seek to deploy our vessels on spot voyages, which are typically single
voyages for a period of less than 60 days, or on time charters and contracts of
affreightment, which are longer term contracts for periods of typically three
months to three years. As of December 31, 2004, six of our seven oceangoing
vessels were employed under time charters expiring on dates ranging between
three and 15 months, and the vast majority of our fleet of push boats and barges
in our River Business were employed under contracts of affreightment, which
typically run for one year.

     Although time charters and contracts of affreightment provide steady
streams of revenue, vessels committed to such contracts are unavailable for spot
voyages or for entry into new longer term time charters or contracts of
affreightment. If such periods of unavailability coincide with a time when
market prices have risen, such vessels will be unable to capitalize on that
increase in market prices. For example, while at the end of 2003 and the
beginning of 2004 we fixed our Suezmax/OBOs and Capesize vessels at
progressively increased charter rates for periods of up to one year, this did
not permit us to take full advantage of the rise in market prices experienced
over the entire year in 2004. Conversely, if our vessels are available for spot
charter or entry into new time charters or contracts of affreightment, they are
subject to market prices, which may vary greatly. If such periods of
availability coincide with a time when market prices have fallen, we may have to
deploy our vessels on spot voyages or under long term time charters or contracts
of affreightment at depressed market prices, which would lead to reduced or
volatile earnings.

Our success depends upon our management team and other employees, and if we are
unable to attract and retain key management personnel and other employees, our
results of operations may be negatively impacted.

     Our success depends to a significant extent upon the abilities and efforts
of our management team and our ability to retain them. Although we intend to
negotiate employment agreements, we do not currently have employment contracts
with any of our senior executives, including Felipe Menendez R., Ricardo
Menendez R. and Leonard J. Hoskinson. The loss of any of these individuals could
adversely affect our business prospects and results of operations. We do not
maintain "key man" life insurance on any of our officers. Further, the efficient
and safe operation of our vessels requires skilled and experienced crew members.
Difficulty in hiring and retaining such crew could adversely affect the
operation of our vessels, and in turn adversely affect our results of
operations.

     As of December 31, 2004, we employed 88 land-based employees and
approximately 381 seafarers as crew on our vessels. These seafarers are covered
by industry-wide collective bargaining agreements that set basic standards
applicable to all companies who hire such individuals as crew. Because most of
our employees are covered by these industry-wide collective bargaining
agreements, failure of industry groups to renew these agreements may disrupt our
operations and adversely affect our earnings. In addition, we cannot assure you
that these agreements will prevent labor interruptions. Any labor interruptions
could disrupt our operations and harm our financial performance.

We operate in an inherently dangerous and risk-prone industry, and we may suffer
substantial losses and reputation harm as a result of our operations.

     Through their normal operation, our vessels are inherently subject to risks
of accidents, damage and total loss. These risks include, but are not limited
to:

     o    oil spills and other environmental damage and pollution;

     o    collisions with other vessels and property of third parties;

     o    grounding as a result of shifting navigational channels or otherwise;

     o    unexpected part or vessel breakage;

     o    death or injury to crew and third parties;

     o    adverse weather conditions;

     o    cargo damage or other loss;

     o    cargo or vessel theft;

     o    fire;

     o    mechanical and/or electronic failure;

     o    political instability in the various countries in which our vessels
          operate;

     o    acts of piracy, war, vandalism or terrorism; and

     o    other marine related disasters.

     While we take measures that we consider standard in the shipping industry
to minimize the possibility of the occurrence of the above risks, and to
minimize the damage that any of the above risks may have on our business if they
were to occur, most such risks are beyond our control, and any losses that we
suffer as a result of any of the foregoing, particularly losses involving oil
spills or other damage to the environment, could be substantial.

     Further, if our vessels suffer damage, they may need to be repaired at a
drydocking or other type of ship repair facility. The costs of drydock and
repairs and the length of time needed to complete such drydock and repairs are
unpredictable and can be substantial. While a vessel is in drydock, it cannot be
used to generate revenue. We may have to pay drydocking and repair costs that
our insurance does not cover. This would decrease earnings and may impact our
financial condition.

     The occurrence of any of the above risks, such as an oil spill where we are
deemed to be at fault, could also adversely impact our reputation as a safe and
reliable vessel owner and operator. Any damage to our reputation could make it
more difficult for us to retain our existing customers or to attract new
customers in the future, which could, in turn, have an adverse effect on our
results of operations.

The shipping industry is cyclical and volatile, and this may lead to reductions
and volatility in our charter rates and results of operations.

     The shipping industry is both cyclical and volatile. Fluctuations in
charter rates result from changes in the supply and demand for vessel capacity
and changes in the supply and demand for the major commodities carried by water
internationally. The factors affecting the supply and demand for vessels and
supply and demand for commodities are outside of our control, and the nature,
timing and degree of changes in industry conditions are unpredictable.

     The factors that influence demand for oceangoing vessel capacity include:

     o    the volume of world oil and dry bulk commodity production and demand;

     o    the volume of oil production and demand in the Western Hemisphere;

     o    freight rates;

     o    global and regional economic conditions;

     o    the distance that oil and dry bulk commodities must be transported;
          and

     o    changes in seaborne and other transportation patterns.

     The factors that influence the supply of oceangoing vessel capacity
include:

     o    the number of newbuilding deliveries;

     o    the scrapping rate of older vessels;

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

     o    national or international regulations that may effectively cause
          reductions in the carrying capacity of vessels or early obsolescence
          of vessels.

     Further, tanker markets are typically stronger in the winter months in the
northern hemisphere due to increased oil consumption. In addition, unpredictable
weather patterns in the winter months tend to disrupt vessel scheduling, leading
to increased oil trading activities.

     Our ability to recharter our vessels on the expiration or termination of
their current spot and time charters and the charter rates payable under any
renewal or replacement charters will depend upon, among other things, the
current state of the vessel market. If the vessel market is in a period of
depression when our vessels' charters expire, we may be forced to re-charter our
vessels at reduced rates or even possibly a rate whereby we incur a loss, which
may reduce our earnings or make our earnings volatile.

Because the fair market value of our vessels may fluctuate significantly, we may
incur losses when we sell vessels.

     The fair market value of vessels may increase and decrease depending on the
following factors, all of which are beyond our control:

     o    general economic and market conditions affecting the shipping
          industry;

     o    competition from other shipping companies;

     o    types and sizes of vessels currently on the market for sale;

     o    the viability of other modes of transportation that compete with our
          vessels;

     o    cost of new buildings;

     o    governmental or other regulations;

     o    prevailing level of charter rates; and

     o    technological advances.

     Vessel values have historically been very volatile. The market value of our
vessels may fluctuate significantly in the future and we may incur losses when
we sell vessels which may adversely affect our earnings.

Any drought or significant decline in production of soybeans or other
agricultural products in the Hidrovia region, or any significant change
affecting the navigability of certain rivers in the region, would have an
adverse effect on our River Business.

     A significant portion of our revenues in our River Business is derived from
transportation of soybeans and other agricultural products produced in the
Hidrovia region. Any drought or other adverse weather conditions, such as
floods, could result in a decline in production of these products which would
likely result in a reduction in demand for our services. This would, in turn,
negatively impact our results of operations and financial condition. Further,
most of the operations in our River Business occur on the Parana and Paraguay
Rivers, and any changes adversely affecting navigability of either of these
rivers, such as changes in the depth of the water or the width of the navigable
channel, could, in the short term, reduce or limit our ability to effectively
transport cargo on the rivers.

     A prolonged drought or other turn of events that is perceived by the market
to have an impact on the region, the navigability of the Parana or Paraguay
Rivers or our River Business in general may, in the short term, result in a
reduction in the market value of the barges and push boats that we operate in
the region. These barges and push boats are designed to operate in wide and
relatively calm rivers, of which there are only a few in the world. If it
becomes difficult or impossible to operate profitably our barges and push boats
in the Hidrovia region and we are forced to sell them to a third party located
outside of the region, there is a limited market in which we would be able to
sell these vessels, and accordingly we may be forced to sell them at a
substantial loss.

We may not have adequate insurance to compensate us if our vessels are damaged
or lost or if we harm third parties or their property or the environment.

    We procure insurance for our fleet against those risks that we believe the
shipping industry commonly insures against. These insurances include hull and
machinery insurance, protection and indemnity insurance (which includes
environmental damage and pollution insurance coverage) and war risk insurance.
We do not procure loss of hire insurance in most instances. All insurance
policies that we carry include deductibles (and some include limitations on
partial loss) and each of them may not be sufficient to fully compensate us
against losses that we incur, either from damage or loss of our vessels, or
through liability to a third party or for harm to the environment. For example,
our protection and indemnity insurance has a coverage limit of $1 billion
regarding oil spills and related harm to the environment. Although this is a
significant sum, it may be insufficient to fully compensate us, and any
uninsured losses that we incur may be substantial and may have a very
significant effect on our financial condition.

     We cannot assure you that we will be able to renew our insurance policies
on the same or commercially reasonable terms, or at all, in the future. Further,
we cannot assure you that our insurance policies will cover all types of losses
that we incur. Each of our policies is subject to limitations and exclusions
which, although we believe are standard in the shipping industry, may
nevertheless not cover all types of losses we incur.

Certain conflicts of interest may adversely affect us.

     Certain of our directors and officers hold similar positions with our
affiliates. Felipe Menendez R., who is our President, Chief Executive Officer
and a director, is a director of Oceanmarine and Ravenscroft, two related
parties that provide services to us. See "Certain Related Transactions." Ricardo
Menendez R., who is one of our directors, is the President of Oceanmarine and
Chairman of the Board of Directors of Ravenscroft, and is also the president of
The Standard Steamship Owners' Protection and Indemnity Association (Bermuda)
Limited (the "Standard"), a P&I club with which certain of our ships are
entered. Leonard J. Hoskinson, who is one of our directors, is General Manager
and a director of Ravenscroft. Although these directors and officers attempt to
perform their duties within each company independently, in light of their
positions with such entities, these directors and officers may face conflicts of
interest in selecting between our interests and those of Ravenscroft,
Oceanmarine and the Standard. In addition, Ravenscroft, and Oceanmarine are
indirectly controlled by the Menendez family, including Felipe Menendez R. and
Ricardo Menendez R. These conflicts may limit our fleet's earnings and adversely
affect our operations.

Secondhand vessels are more expensive to operate and repair than newbuildings
and may have a higher likelihood of accidents.

     All of our oceangoing vessels and substantially all of our other vessels
were purchased secondhand from other owners, and our current business strategy
includes growth through the acquisition of additional secondhand vessels. While
we inspect secondhand vessels prior to purchase, we may not discover defects or
other problems with such vessels prior to purchase. If this were to occur, such
hidden defects or problems, when detected, may be expensive to repair, and if
not detected, may result in accidents or other incidents for which we are liable
to third parties.

As our fleet ages, the risks and costs associated with older vessels increases.

     The costs to operate and maintain a vessel in operation increases with the
age of the vessel. The average age of vessels in our oceangoing fleet is 18
years, and most oceangoing vessels have an expected life of approximately 25
years. The average age of vessels in our River Business fleet is approximately
18 years for barges and 24 years for push boats, and most of these vessels have
an expected life of approximately 35 years. In some instances charterers prefer
newer vessels that are more fuel efficient than older vessels. Cargo insurance
rates also increase with the age of a vessel, making older vessels less
desirable to charterers as well. Governmental regulations, safety or other
equipment standards related to the age of vessels may require expenditures for
alterations, or the addition of new equipment, to our vessels and may restrict
the type of activities in which these vessels may engage. We cannot assure you
that as our vessels age, market conditions will justify those expenditures or
enable us to operate our vessels profitably during the remainder of their useful
lives. If we sell vessels, we may have to sell them at a loss, and if charterers
no longer charter our vessels due to their age, it could adversely affect our
earnings.

We are an international company and are exposed to the risks of doing business
in many different, and often underdeveloped and emerging market countries.

     We are an international company and conduct almost all of our operations
outside of the United States, and we expect to continue doing so for the
foreseeable future. Some of these operations occur in countries that are less
developed and stable than the United States, such as Argentina, Bolivia, Brazil,
Chile, Paraguay and Uruguay. Accordingly, our business operations and our
revenues are subject to the following potential risks, among others:

     o    political and economic instability, changing economic policies and
          conditions, and war and civil disturbances;

     o    recessions in economies of countries in which we have business
          operations;

     o    foreign countries may impose additional withholding taxes or otherwise
          tax our foreign income, impose tariffs or adopt other restrictions on
          foreign trade or investment, including currency exchange controls and
          currency repatriation limitations;

     o    imposition of or unexpected adverse changes in foreign laws or
          regulatory requirements;

     o    longer payment cycles in foreign countries and difficulties in
          collecting accounts receivable;

     o    difficulties and costs of staffing and managing our foreign
          operations; and

     o    acts of piracy or terrorism.

     These risks may result in unforeseen harm to our business or financial
condition. For example, in 2002, one of the banks used by our River Business in
Paraguay declared bankruptcy. Although we recovered all of the funds that were
held in this bank, our River Business was exposed to a maximum loss of
approximately $400,000.

     Also, some of our customers are headquartered in South America, and a
general decline in the economies of South America, or the instability of certain
South American countries and economies, could adversely affect that part of our
business.

     Our business in emerging markets requires us to respond to rapid changes in
market conditions in these countries. Our overall success in international
markets depends, in part, upon our ability to succeed in differing legal,
regulatory, economic, social and political conditions. We may not continue to
succeed in developing and implementing policies and strategies which will be
effective in each location where we do business. Furthermore, the occurrence of
any of the foregoing factors may have a material adverse effect on our business
and results of operations.

We are exposed to domestic and foreign currency fluctuations and devaluations
that could harm our reported revenue and results of operations.

     We are an international company and, while our financial statements are
reported in U.S. dollars, some of our operations are conducted in foreign
currencies. Approximately 10% of our revenues in 2004 were denominated in
non-U.S. currencies. These revenues could be materially affected by currency
fluctuations or devaluations. Changes in currency exchange rates could adversely
affect our reported revenues and could require us to reduce our prices to remain
competitive in foreign markets, which could also have a material adverse effect
on our results of operations. We have not historically hedged our exposure to
changes in foreign currency exchange rates and, as a result, we could incur
unanticipated losses.

     During 2002, the Argentine peso declined in value against the U.S. dollar
following the Argentine government's decisions to abandon the country's fixed
dollar-to-peso exchange rate, to require private sector, dollar-denominated
loans and contracts to be paid in pesos and to place restrictions on the
convertibility of the Argentine peso. The devaluation, coupled with the
government's mandated conversion of all dollar-based contracts to pesos,
required us to take a one time charge of $2.7 million. In addition, the
devaluation had an adverse effect on the attractiveness of our River Business to
our customers. When the currency devalued, trucking rates became relatively less
expensive than they previously had been and in turn became temporarily more
competitive with the rates that we charge for our barge transport for short
distances. Further devaluations may cause our results to materially suffer or
may cause the loss of customers.

Accidents or operational disruptions in connection with loading, discharging or
transiting the rivers in our River Business could adversely affect our
operations and revenues.

     Our River Business is dependent, in part, upon being able to timely and
effectively transit the rivers and load and discharge cargoes. Any accidents or
operational disruptions to ports, terminals, bridges or the lock on the high
Parana River could adversely affect our operations and our revenues in our River
Business.

We may not be able to grow or to effectively manage our growth.

     A principal focus of our strategy is to continue to grow by taking
advantage of changing market conditions, which may include expanding our
businesses, the primary geographic area and market where we operate or expanding
into other regions, or by increasing the number of vessels in our fleet. Our
future growth will depend upon a number of factors, some of which we can control
and some of which we cannot. These factors include our ability to:

     o    identify businesses engaged in managing, operating or owning vessels
          for acquisitions or joint ventures;

     o    identify vessels for acquisitions;

     o    integrate any acquired businesses or vessels successfully with our
          existing operations;

     o    hire, train and retain qualified personnel to manage and operate our
          growing business and fleet;

     o    identify new markets;

     o    improve our operating and financial systems and controls; and

     o    obtain required financing for our existing and new operations.

The failure to effectively identify, purchase, develop and integrate any vessels
or businesses could harm our business, financial condition and results of
operations.

Maritime claimants could arrest our vessels, which could interrupt our
operations.

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

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

We may have to pay tax on United States source income, which would reduce our
earnings and cash flows.

     Under the United States Internal Revenue Code of 1986, as amended (the
"Code"), 50% of the gross shipping income of a vessel owning or chartering
corporation, such as us and our subsidiaries, that is attributable to
transportation that begins or ends, but that does not both begin and end, in the
U.S. will be characterized as U.S. source shipping income and such income will
be subject to a 4% U.S. Federal income tax without allowance for deduction,
unless that corporation is entitled to a special tax exemption under the Code
which applies to the international shipping income derived by certain non-U.S.
corporations. We intend to take the position for U.S. Federal income tax return
reporting purposes that we and each of our subsidiaries qualify for this
statutory tax exemption for the year ended December 31, 2004. However, due to
the factual nature of the issues involved, we can give no assurances on our
tax-exempt status or that of any of our subsidiaries. If we or our subsidiaries
are not entitled to this statutory tax exemption for any taxable year, we or our
subsidiaries would be subject for such years to a 4% U.S. Federal income tax on
our U.S. source shipping income. The imposition of this taxation would have an
adverse effect on our earnings and cash flows.

Compliance with safety, environmental and other governmental and other
requirements may be very costly and may adversely affect our business.

     The shipping industry is subject to numerous regulations in the form of
international conventions, national, state and local laws and national and
international regulations in force in the jurisdictions in which such vessels
operate, as well as in the country or countries in which such vessels are
registered. These regulations include the U.S. Oil Pollution Act of 1990, as
amended ("OPA"), the International Convention on Civil Liability for Oil
Pollution Damage of 1969, International Convention for the Prevention of
Pollution from Ships, the IMO International Convention for the Safety of Life at
Sea of 1974 ("SOLAS"), the International Convention on Load Lines of 1966, the
U.S. Maritime Transportation Security Act of 2002 and the International Ship and
Port Facility Security Code, among others. In addition, vessel classification
societies also impose significant safety and other requirements on our vessels.

     These requirements can affect the resale value or useful lives of our
vessels, require a reduction in cargo capacity or other operational or
structural changes, lead to decreased availability of insurance coverage for
environmental matters, or result in the denial of access to, or detention in,
certain ports. We believe that regulation of the shipping industry will continue
to become more stringent and more expensive for us and our competitors. More
stringent maritime safety rules are also more likely to be imposed worldwide as
a result of the oil spill in November 2002 relating to the loss of the M.T.
Prestige, a 26-year old single-hull tanker owned by a company not affiliated
with us. Local, national and foreign laws, as well as international treaties and
conventions, can subject us to material liabilities in the event that there is a
release of petroleum or other hazardous substances from our vessels. We could
also become subject to personal injury or property damage claims relating to
exposure to hazardous materials associated with our current or historic
operations. In addition, environmental laws require us to satisfy insurance and
financial responsibility requirements to address oil spills and other pollution
incidents, and subject us to rigorous inspections by governmental authorities.
Violations of such requirements can result in substantial penalties, and in
certain instances, seizure or detention of our vessels. Additional laws and
regulations may also be adopted that could limit our ability to do business or
increase the cost of our doing business and that could have a material adverse
effect on our operations. Government regulation of vessels, particularly in the
areas of safety and environmental impact may change in the future and require us
to incur significant capital expenditure on our vessels to keep them in
compliance, or to even scrap or sell certain vessels altogether. For example, we
recently sold all of our single hull oceangoing tanker vessels in response to
regulatory requirements in Europe and the United States. Future changes in laws
and regulations may require us to undertake similar measures, and any such
actions may be costly.

     OPA provides that owners, operators and bareboat charterers are strictly
liable for the discharge of oil in U.S. waters, including the 200 nautical mile
zone off the U.S. coasts. OPA provides for unlimited liability in some
circumstances, such as a vessel operator's gross negligence or willful
misconduct. OPA also permits states to set their own penalty limits. Most states
bordering navigable waterways impose unlimited liability for discharges of oil
in their waters. The IMO has adopted a similar liability scheme that imposes
strict liability for oil spills, subject to limits that do not apply if the
release is caused by the vessel owner's intentional or reckless conduct.

     Under OPA, with certain limited exceptions, all newly built or converted
tankers operating in U.S. waters must be built with double hulls conforming to
particular specifications. Tankers that do not have double hulls are subject to
structural and operational measures to reduce oil spills and will be precluded
from operating in U.S. waters through 2015 according to size, age, hull
configuration and place of discharge unless retrofitted with double hulls. In
addition, OPA specifies annual inspections, vessel manning, equipment and other
construction requirements that are in various stages of development by the U.S.
Coast Guard ("USCG"), applicable to new and to existing vessels.

     Under OPA and per USCG interpretations, our tanker and OBOs will be
precluded from operation in US waters as follows:

Name                   OPA phase-out date*     Current TVEL/COC issuance date**
                      --------------------    ---------------------------------
Princess Katherine....N/A                     March.26,.2003.
Princess Nadia........January.2014.           August.26,.2001
Princess Susana.......November.2014           February.18,.2003
Princess Marina.......March.2014              August.29,.2002
----------

*    As per the applicable Tank Vessel Examination Letter ("TVEL")/Certificate
     of Compliance ("COC")

**   The USCG inspects vessels annually and determines when such vessels will be
     phased out under OPA, the dates of which are recorded in the TVEL or the
     COC. On April 30, 2001, the USCG replaced the TVEL with a newly generated
     document, the COC. The COC is issued for each tanker by the USCG, if/when
     the vessel calls at a U.S. port and is valid for a period of two years,
     with mid period examination.

     There is no phase out date for Princess Katherine since its configuration
meets the U.S. double hull standards. Although Princess Nadia, Princess Marina
and Princess Susana are double hull vessels, due to configuration requirements
under the U.S. double hull standards, the phase out dates indicated above are
applicable.

We obtain insurance through P&I Clubs and, as a result, we may be subject to
increased insurance costs and capital calls for losses suffered by other
members.

     Our protection and indemnity insurance, referred to as P&I, is provided by
the Standard and the UK Club, each a mutual P&I club which is a member of the
International Group Association of P&I Clubs. As a mutual club, each relies on
member premiums, investment reserves and income, and reinsurance to manage
liability risks on behalf of its members. Increased investment losses,
underwriting losses, or reinsurance costs could cause international marine
insurance clubs to substantially raise the cost of premiums, resulting not only
in higher premium cost but also higher levels of deductibles and self-insurance
retentions. In addition, we may be, and have been, subject to capital calls for
losses suffered by other members, including losses suffered in prior years. Any
such capital calls could have a negative impact on our results of operations or
financial condition.

We operate in a highly competitive industry, and we may not be able to compete
successfully for charters with new entrants or established companies with
greater resources.

     We employ our vessels in highly competitive markets. In particular, the
oceangoing market is international in scope and we compete with many different
companies, including other ship owners and major oil companies, such as
Transpetro, a subsidiary of Petrobras. Some of these competitors are
significantly larger and have significantly greater resources than us. This may
enable these competitors to offer their customers lower prices, higher quality
service and greater name recognition than we do, and accordingly we may be
unable to retain our current customers or to attract new customers. Further,
some of these competitors, such as Transpetro, are affiliated with or owned by
the governments of certain countries, and accordingly may receive government aid
or other assistance, or legally imposed preferences, that are unavailable to us.

Many of our customers are also our competitors and if they decide to cease using
our services, it could adversely affect our business.

     Many of our customers, including many of our most significant customers
such as Petrobras and ADM, are also our competitors who operate vessels of their
own. These customers may decide to cease using our services for any number of
reasons, including in order to utilize their own vessels. If we lose any of
these customers, it could adversely affect our business.

Our OBOs, while versatile, are less desired by certain charterers in the tanker
market.

     OBOs are versatile because they can transport both petroleum products and
dry bulk cargoes. Unlike the more traditional type of tanker, an OBO has fewer
tanks, but each tank is generally larger. Prior to the advent of computerized
loading systems, extra caution had to be used when loading an OBO due to the
amount of available free space and the possibility of cargo shifting and causing
the vessel to become unstable. While this problem, like other problems
originally linked to OBOs, have been solved with new technology, OBOs are still
less desired by certain charterers who prefer to use the more traditional form
of tanker to transport oil and other petroleum products. To the extent any
charterers elect not to use our OBOs and instead use standard tankers, this
could have a negative impact on our business and financial results.

Rising fuel prices may adversely affect our profits from our River Business.

     Fuel is a significant, if not the largest, operating expense for many of
our shipping operations, particularly in our River Business where most of our
contracts are contracts of affreightment. Under a contract of affreightment, we
are paid per ton of cargo shipped, and the cost of fuel is an expense that we
incur that is not generally passed on to the customer. We try to predict future
fuel costs, and when we think appropriate, hedge against future fuel costs, but
we are not always successful.

     The price and supply of fuel is unpredictable and fluctuates based on
events outside our control, including geopolitical developments, supply and
demand for oil and gas, actions by OPEC and other oil and gas producers, war and
unrest in oil producing countries and regions, regional production patterns and
environmental concerns. As a result, an increase in the price of fuel, such as
has been experienced recently, may adversely affect our profitability.

We currently participate in several joint ventures and may participate in
additional joint ventures in the future.

     We currently participate in five different joint ventures, including the
entity that engages in the Offshore Business, UP Offshore. In two of these joint
ventures, we do not exercise voting control over the joint venture entity, and
accordingly, we do not, in all cases, exercise control over operating and
financial decisions of these joint ventures. We may have disagreements with our
joint venture partners and these joint ventures may fail. Further, we may
undertake additional business operations through joint ventures in the future.

Governments could requisition our vessels during a period of war or emergency.

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

Some of our customers pay our bills late and, to the extent these bills are not
paid, we may have difficulty enforcing payments.

     Some of our customers, particularly those in our River Business, do not
promptly or, in some cases, at all pay their accounts. If they do not pay at
all, we may have problems enforcing judgments against them because of the many
different legal systems in which we operate. In addition, there is a risk that
certain charterers with poor credit may purposely default under our charters
with them when market prices decline in an effort to re-negotiate their
charters. If we are not able to receive payment or enforce judgments we seek
against past due accounts, or if charterers intentionally default under their
charters with us, it would have a negative impact on our results of operations
and financial condition.

ITEM 4  - INFORMATION ON THE COMPANY

A.   HISTORY AND DEVELOPMENT OF THE COMPANY

     Ultrapetrol (Bahamas) Limited, a Bahamas corporation, was formed on
December 23, 1997. We are a holding company, with no independent operations of
our own, other than ownership of the shares of our subsidiaries. We were formed
to consolidate the ownership of Princely International Finance Corp., a
Panamanian corporation, Ultrapetrol S.A., an Argentinean corporation, and their
respective subsidiaries ("Ultrapetrol").

B.   BUSINESS OVERVIEW

     We are a diversified ocean and river transportation company involved in the
carriage of dry and liquid bulk cargoes. In our Ocean Business, we are an owner
and operator of oceangoing vessels that transport petroleum products and dry
cargo around the world. Our Ocean Business fleet has a capacity of approximately
785,000 dwt., and our three versatile Suezmax/OBO vessels are capable of
carrying either dry bulk or liquid cargoes. Our River Business is the largest
owner and operator of river barges and push boats in the Hidrovia region of
South America, a fertile agricultural region of navigable waters on the Parana,
Paraguay and Uruguay Rivers and part of the River Plate, which flow through
Brazil, Bolivia, Uruguay, Paraguay and Argentina. The "dwt" capacity of a cargo
vessel is roughly the maximum weight of cargo it can carry, in metric tons.

     In addition, we entered into a joint venture to form UP Offshore, a company
which will provide transportation services to offshore petroleum exploration and
production companies, with particular emphasis in the Brazilian market. UP
Offshore has contracted for the construction of six modern, large,
technologically advanced PSVs, whose deliveries are expected to commence in the
second quarter of 2005.

     We are focused on growing with an efficient and flexible fleet, which
allows us to provide an array of transportation services to customers in several
different industries. We believe that the flexibility of our fleet and the
diversity of industries that we service reduce our dependency on any particular
sector of the transportation industry.

     Some of our significant customers in the last three years include
Petrobras, Cargill, ENAP, ADM-SAO, Continental Grain, Glencore, ExxonMobil,
Repsol-YPF, Petropar, I.O.L., Multigranos, Panocean, RTZ, Swissmarine, Pan
Ocean, Kleimar, PDVSA and Siderar.

Our Lines of Business

     Ocean Business: In our Ocean Business, we own and operate five oceangoing
vessels and two semi-integrated oceangoing tug barge units (one of which is
currently used as a transfer station in our River Business) under the trade name
Ultrapetrol. Our oceangoing ships transport dry and liquid bulk goods on major
trade routes around the globe. Major products carried include liquid cargo such
as petroleum and petroleum derivatives and dry cargo, iron ore, coal and other
bulk cargoes. Our ocean fleet currently has an aggregate cargo carrying capacity
of approximately 785,000 dwt. and an average age of approximately 18 years.

     Our Aframax and Suezmax vessels are versatile due to their ability to
service virtually all major routes used for crude oil transportation. In
addition, our Suezmax tankers, which are Oil/Bulk/Ore carriers, or OBOs, have
the added versatility of being able to carry either oil products or dry bulk
cargoes to take advantage of changing market conditions. Those vessels together
with our Cape Pampas are currently employed in the carriage of bulk dry cargoes
trading on a worldwide basis mostly loading coal and iron ore from South
America, Australia and South Africa to Europe, China and other Far East
countries.

     Our largest ocean customers include Cargill, Petrobras, Pan Ocean,
Swissmarine and Kleimar.

     Vessels operating on longer term time charters or COAs may be chartered for
several months or years, whereas vessels operating on shorter term charters
typically are chartered for a single voyage, which may last up to several weeks.
Vessels operating on shorter term charters may generate increased profit margins
during periods of improved freight rates, while vessels operating on longer term
time charters generally provide more predictable cash flows. Accordingly, we
actively monitor macroeconomic trends and governmental rules and regulations
that may affect vessel rates in an attempt to optimize the deployment of our
fleet.

     River Business: We operate our River Business through our trade name UABL.
We own and operate 455 barges with approximately 750,000 dwt capacity and 21
push boats. In addition, we use one ocean barge from our ocean fleet, the
Alianza G2, as a transfer station. Of the barges, 411 are dry barges and 44 are
tanker barges. The dry barges transport agricultural and forestry products, iron
ore and other cargoes, while the tanker barges carry petroleum products,
vegetable oils and other liquids.

     We operate our push boats and barges on the navigable waters of the Parana,
Paraguay, Uruguay and Plate Rivers (the greater Hidrovia region).

     We have our own drydock and repair facility to carry out maintenance to the
fleet and operate a floating transshipment facility to discharge the cargoes
from barges onto oceangoing vessels in the lower section of the Parana River.

     Prior to April 23, 2004, our subsidiary, UP River, owned a 50% interest in
UABL with our joint venture partner, ACBL. On April 23, 2004, we purchased
ACBL's 50% equity interest in UABL, together with its assets in the Hidrovia
region, including 50 barges and seven push boats and its share of the related
receivables and liabilities of UABL, for a total of $26.1 million. As a result
of this transaction, together with our prior financing arrangements, we
currently own 96.4% of UABL while IFC owns the remaining 3.6%.

     Our customers in our River Business include Cargill, Bunge, Dreyfus,
Petropar and ADM.

     Offshore Business--Future Opportunity: We own a 27.78% interest in UP
Offshore, and we have warrants to increase our ownership up to approximately
47.78%. The remaining ownership interests in UP Offshore are owned by LAIF, and
Comintra Enterprises, Ltd., which own 66.67% and 5.55%, respectively. UP
Offshore expects to take delivery of six PSVs, commencing in the second quarter
of 2005.

     On June 25, 2003, we signed an administration agreement with UP Offshore,
under which we provide management services required by UP Offshore in its
start-up phase, including providing the services of the Chief Executive Officer
and providing ongoing management and commercial advisory services thereafter.
Our professional fees under this agreement are 2% of UP Offshore's annual
EBITDA. Our services in connection with the administration agreement end on
December 31, 2013, unless earlier terminated.

Our Existing Fleet

Ocean Business

     The following table summarizes certain information with respect to our
existing vessels in our Ocean Business as of December 31, 2004:

<TABLE>
<CAPTION>
                                       Year
Vessel                                 Built        Vessel Type        DWT              Current Employment
                                     --------   ----------------  ------------      ----------------------
<S>                                    <C>       <C>                <C>             <C>
Princess Katherine.....................1986     Suezmax/OBO         164,100         Brazil, Far East, Europe
Princesa Nadia.........................1987     Suezmax/OBO         152,328         Brazil, Far East, Europe
Princess Susana........................1986     Suezmax/OBO         152,295         Brazil, Far East, Europe
Cape Pampas(1).........................1990     Capesize            151,380         Brazil, Far East, Europe
Princesa Marina........................1986     Aframax              83,930         Chile, Argentina, Peru
Alianza G2(2)/Alianza Rosario..........1994(3)  Semi-integrated      37,532(5)      River Plate/Parana River
                                                tug/barge unit
Alianza G3/Alianza Campana.............1993(4)  Semi-integrated      43,164(5)      Brazil
                                                tug/barge unit
</TABLE>
(1)  Owned by Ultracape (Holdings) Ltd., of which we own 60%.

(2)  Although the Alianza G2 is considered part of our ocean fleet, it is
     currently engaged as a transfer station in the lower Parana River as part
     of our River Business.

(3)  The keel of the barge, Alianza G2, was laid in 1980. The barge was
     delivered in 1982. It was refurbished and converted to its current use in
     1994. The separate but integrated tug, Alianza Rosario, was built in 1976.

(4) The barge, Alianza G3, was built in 1982 and was refurbished and converted
    to its current use in 1993. The separate but integrated tug, Alianza
    Campana, was built in 1976.

(5) As the tug carries no cargo, it is not considered in the calculations of
    aggregate dwt or age.


River Business

     The following table summarizes certain information with respect to our
existing vessels in our River Business:


               Vessel                 Units        Certain Pertinent Information
           --------------            ------        -----------------------------
           Push boats                   21                54,346 total bhp
           Tank barges...               44            94,378 total cubic meters
           Dry barges                  411                642,800 total dwt


Outsourced Vessel Technical Management and Crewing

     For the day-to-day management and administration of our operations, we and
our subsidiaries have entered into agreements whereby certain of our
subsidiaries and affiliates provide specific services for our operations.

     For administrative services, each of our ocean vessel owning/operating
subsidiaries pays Oceanmarine, an affiliate of ours, a monthly fee of $10,000
per vessel. Oceanmarine provides all general administration and accounting
services, including financial reporting, preparation of tax returns, invoicing
and accounts payable, office premises, a computer network, secretarial
assistance, payroll and other general duties.

     Through our respective owning/operating subsidiaries, we have contracted
with Ravenscroft, an affiliate of ours, to provide the operational management of
our vessels used in the Ocean Business and pay most of our vessel operating
expenses. We pay Ravenscroft a monthly ship management fee of $12,500 per
oceangoing vessel for services including technical management, crewing,
provisioning, superintendence and related accounting functions. Ravenscroft also
provides communication services for our vessels and serves as a contact with
clients and shipping agencies.

Customers

     For 2004 service for Cargill and its subsidiaries accounted for 32 % of our
total revenues and service for Pan Ocean Shipping accounted for 18% of total
revenues.

Competition

Ocean Business

     We face competition in the transportation of crude oil and petroleum
products as well as other bulk commodities from other independent ship owners
and from vessel operators who primarily charter-in vessels to meet their cargo
carrying needs. The charter markets in which our vessels compete are highly
competitive. Competition is primarily based on prevailing market charter rates,
vessel location and vessel manager reputation. Our primary competitor in crude
oil and petroleum products transportation within Argentina, and between
Argentina and other South American countries, as well as in Chile, is Antares
Naviera S.A. and its affiliated companies, including Ultragas, Lauderdale
Tankers Corp., and Sonap S.A., an independent tanker owner and operator. The
other major participant in the Argentina/Brazil trade is Transpetro. Transpetro
is a subsidiary of Petrobras, our primary customer in Brazil. In other South
American trades our main competitors are Heidmar Inc., Naviera Sur Petrolera
S.A., Naviera El Cano (through their various subsidiaries) and Sonacol S.A.
These companies and other smaller entities are regular competitors of ours in
our primary tanker trading areas. In our dry bulk trades, we operate our vessels
internationally where we compete against the main fleets of Capesize ships, with
companies such as The Offer Group, Frontline, Bocimar and others.

River Business

     We maintain a leading market share in our River Business. We own the
largest independent fleet of pushboats and barges in the Hidrovia region. We
believe our largest competitor has less than one-fourth of the number of barges
and less than one-fifth of our fleet's total dwt capacity. We compete based on
reliability, efficiency and price. Key competitors include Horamar, Cinco Bacia
and Fluviomar. In addition, some of our customers, including ADM and RTZ, have
some of their own dedicated barge capacity, which they can use to transport
cargoes in lieu of hiring a third party. Our River Business also indirectly
competes with other forms of land-based transportation such as truck and rail.

Offshore Business

     In our Offshore Business, our main competitors will be the Brazilian
offshore companies that own and operate modern PSVs. The largest of these
companies is CBO, which currently owns three UT-755 type vessels and is building
additional PSVs in Brazil. Also, some of the international offshore owners, such
as Tidewater, Inc. and Maersk, are presently building Brazilian-flagged PSVs.

Industry Conditions

     Certain statistical and graphical information contained in this document
has been supplied by Doll Shipping Consultancy ("DSC"), an independent U.
K.-based company providing market analysis and strategic planning services to
the shipping industry. DSC bases its analysis on information drawn from
published and private industry sources. For purposes of this Industry
discussion, Latin America includes Central America, South America, and the
Caribbean Basin islands. Consistent with revised International Energy Agency
definitions, North America includes the United States, Canada, and Mexico.

     We operate in the international tanker market, which is a global industry
and is affected by many factors throughout the world. Important industry
conditions for our operations are world oil production and demand, oil
production and demand in the Western Hemisphere, the size of the international
tanker fleet, the new production and scrapping of oceangoing tankers and freight
rates. We also operate combination carriers which have been employed in the dry
bulk shipping markets recently to take advantage of high earnings in the sector.
Important industry conditions for dry bulk shipping include world dry bulk
commodity production and demand, the size of the international dry bulk and
combination carrier fleet, the new production and scrapping of oceangoing dry
bulk carriers and freight rates. Doll Shipping Consultancy, an independent
company providing market analysis and strategic planning services to the
shipping industry, furnished the following information regarding industry
conditions in the international tanker and dry bulk markets:

World Oil Overview

     World oil demand increased from about 79.8 million barrels per day, or MBD,
in 2003 to 82.5 MBD in 2004, an increase of approximately 3.4%. Oil demand
decreased in OECD Pacific countries; increased in North America, China and other
non-OECD Asian countries, Europe, the Middle East, Former Soviet Union; and
Africa. Specifically, Japanese demand decreased from about 5.6 MBD to about 5.4
MBD.

     World oil supply increased from about 79.7 MBD in 2003 to 83.0 MBD in 2004.
OPEC crude oil production increased by about 1.9 MBD in 2004 to 28.7 MBD
(including Iraqi production, which increased by about 0.7 MBD to approximately
2.0 MBD.) Non-OPEC production increased by 1.1 MBD to about 50.1 MBD. Oil prices
were on average higher at historically high levels in 2004, with benchmark West
Texas Intermediate, or WTI, crude averaging $41.50 per barrel in 2004 compared
with $31.08 per barrel in 2003. WTI prices increased in early 2005, reaching an
average of about $54.19 per barrel in March 2005 due to high demand and market
reaction to actual or potential oil supply reductions.

Western Hemisphere crude oil trades

     U.S. oil demand increased from about 20.0 MBD in 2003 to about 20.5 MBD in
2004, while U.S. crude oil production decreased from approximately 7.8 MBD to
7.7 MBD over the same period.

     Arabian Gulf OPEC producers exported about 2.4 MBD of crude oil to the
United States during 2004, about the same as in 2003. Exports from Saudi Arabia
decreased by about 0.2 MBD while exports from Iraq increased by about 0.2 mbd.
Short haul Mexican and Latin American crude oil exports to the United States
increased to about 3.4 MBD during 2004, an increase of about 0.1 MBD. Venezuelan
exports were up by 0.1 MBD to 1.3 MBD. Mexican exports were stable at about 1.6
MBD during 2004. U.S. imports from Colombia decreased by less than 0.1 MBD to
about 0.1 MBD.

     Latin American oil demand increased from about 4.7 MBD in 2003 to about 4.9
MBD in 2004. Brazilian oil demand increased by nearly 0.1 MBD in 2004 to about
2.1 MBD. Latin American oil production (excluding Venezuela) was stable at
approximately 4.1 MBD. Venezuelan conventional crude oil production was about
2.2 MBD in 2003, an increase of about 0.2 MBD from 2003, which followed a 0.3
MBD decrease from 2002. Brazilian oil production was unchanged at 1.8 MBD, while
Colombian and Argentine oil production were stable unchanged at about 0.5 and
0.8 MBD, respectively.

     2004 crude oil production increased to keep world markets supplied at high
levels of demand. Iraqi production increased from about 1.3 MBD in 2003 to 2.0
MBD in 2004. Other OPEC producers increase production by 0.1MMD to 0.3MBD as
production capacity permitted.

     However, crude oil production in 2004 was affected by continuing production
losses in Venezuela. Venezuelan conventional crude production averaged about 2.2
MBD in 2004. Although an increase of 0.2 MBD versus 2003, production remains
below 2001 conventional crude production of 2.7 MBD. 2004 Venezuelan non
conventional oil production averaged about 0.4 mbd, about the same as 2003, and
has increased to nearly 0.6 mbd as of January 2005.

     2004 non-OPEC crude oil production increases were 1.1 mbd, led by a 0.9 mbd
increase in Former Soviet Union production. For non-OPEC producers in 2005,
production increases of an additional 0.9 MBD are projected by the International
Energy Agency, or IEA, including increases about 0.5 MBD from the Former Soviet
Union, 0.3 MBD from West Africa, 0.2 MBD from Brazil, and 0.1 MBD from the
United States; and a decrease of about 0.2 MBD from Europe.

     During early 2004, OPEC countries excluding Iraq (OPEC-10) had a crude oil
production target of 24.5 MBD (in effect since November 1, 2003) with actual
production about 1.3 MBD over target. Although WTI prices averaged $34.31 per
barrel during January, high by historical standards, OPEC decided in February to
further reduce OPEC 10 crude oil production to 23.5 MBD effective April 1, 2004.
As oil prices increased during 2004, OPEC members agreed to increase crude oil
production targets to 25.5 MBD (effective July 1), 26.0 MBD (effective August
1), and 27.0 MBD effective (November 1). During 2004, OPEC-10 countries produced
at an average 1.6 MBD above their quotas for commercial reasons and to ensure
security of supply in a high demand, high oil price market.

     The IEA projects an increase in year 2005 global oil demand of about 1.8
MBD to a total 84.3 MBD, consistent with continued economic growth in China,
other Asian countries, and the United States. Increased demand is projected for
China (+0.5 MBD), non-OECD Asia (+0.2 MBD), the United States (+0.3 MBD), and
Latin America (+0.1 MBD). As noted, forecast oil production is to increase by
approximately 0.1 MBD in the United States and 0.2 MBD in Brazil, while
remaining stable in elsewhere in non-OPEC Latin America.

     The IEA projects growing oil demand in 2005, consistent with ongoing
economic growth in the United States and most of Asia. High and volatile oil
prices in year to date 2005 indicate that oil markets overall remain finely
balanced. Eventual demand growth, normal seasonality, and replenishment of
industry inventories are consistent with increased OPEC production later in the
year. Uncertainty continues in Venezuela. Any combination of normal seasonality,
increased demand, reduction in expected non-OPEC production increases, supply
disruptions, and replacement of short haul Venezuelan crude with longer haul
substitutes would be positive factors for tanker demand.

Tanker Fleet

     Ultrapetrol operates tankers and combination carriers in the Suezmax
(120,000 to 200,000 dwt) and Aframax (80,000 to 120,000 dwt) sectors, and has
recently operated tankers in the Panamax (50,000 to 80,000 dwt) sectors.
Combination carriers have a built-in design flexibility allowing them to operate
in either dry cargo or oil trades.

<TABLE>
<CAPTION>
                                  Industry Tanker Fleet as of March 1, 2005

------------------------------------------------------------------------------------------------------
                   Cargo Carrying Capacity   Total No.     Total Mdwt     % of Total     % of Fleet
                           (in dwt)           Vessels                    Tanker Fleet   over 20 Yrs
                                                                           (by dwt)     Old (by dwt)
------------------------------------------------------------------------------------------------------
       <S>             <C>                     <C>            <C>             <C>           <C>
       Handy           10,000 to 49,999        2,060          62.9            19%           30%
------------------------------------------------------------------------------------------------------
      Panamax          50,000 to 79,999         304           20.0            6%            36%
------------------------------------------------------------------------------------------------------
      Aframax         80,000 to 119,999         624           62.6            19%           11%
------------------------------------------------------------------------------------------------------
      Suezmax         120,000 to 199,999        305           45.6            14%            7%
------------------------------------------------------------------------------------------------------
     VLCC/ULCC             200,000+             460           134.0           41%            4%
------------------------------------------------------------------------------------------------------

   Source: Doll Shipping Consultancy based on industry sources and estimates

</TABLE>

     In 2004, 1.0 million dwt, or Mdwt, of Suezmaxes were scrapped, while 4.1
Mdwt were delivered. As of March 1, 2005, 0.3 Mdwt have been scrapped, while 0.8
Mdwt have been delivered. The current orderbook is 12.0 Mdwt (76 vessels) with
3.3 Mdwt due for delivery this year, 4.0 Mdwt next year and 3.9 Mdwt in 2007.

     In the Aframax sector, 5.8 Mdwt were delivered in 2004, while 2.5 Mdwt were
scrapped. Through March 1, 2005, 0.5 Mdwt has been scrapped, and 1.7 Mdwt have
been delivered. The orderbook is 17.6 Mdwt (161 vessels) with 5.0 Mdwt due for
delivery this year, 5.8 Mdwt next year and 5.6 Mdwt in 2007.

     In 2004, 2.8 Mdwt of Panamax vessels were delivered, while 1.2 Mdwt were
scrapped. Through March 1, 2005, 0.3 Mdwt have been scrapped, while 1.0 Mdwt
have been delivered. The Panamax orderbook totaled 12.6 Mdwt (189 vessels), with
3.5 Mdwt set for delivery this year, 4.5 Mdwt next year, and 3.0 Mdwt in 2007.

     The International Maritime Organization adopted accelerated phaseout
regulations for single hull tankers in December 2003 which entered into force in
April 2005. The regulations are a complex set of requirements that accelerate
the phaseout of pre-MARPOL "Category 1" tankers without protectively located
segregated ballast to 2005. Single hull tankers with protectively located
segregated ballast are to be phased out in 2010. Flag States may make exceptions
for certain single hull, double bottom, or double sided vessels meeting
determined quality and/or structural requirements that allow the vessels to
continue in service until age 25 or 2015, whichever is earlier. Single hull
vessels are also to be banned from carriage of certain heavy oils, with some
exceptions allowed for double bottom or double sided vessels meeting certain
quality criteria. Certain crude oils have been exempted. Port states may
recognize the Flag State exemptions or may choose to enforce the earlier
phaseout dates. The effects of the regulations are complex but will tend to
accelerate the phaseout of single hull vessels.

     The European Union has regulations in effect since 2003 that require double
hull vessels for certain heavy oils with no exceptions. These regulations apply
to tankers of 5,000 dwt or more registered in EU countries or entering waters
within jurisdiction of EU countries.

     Actual scrapping behavior will depend upon many variables including the
state of the market and future Flag State and Port State implementation.

Vessel Earnings

     During 2004 and through March 2005, the concurrence of a number of positive
factors resulted in high tanker earnings. Tanker demand increased while the
industry fleet grew moderately. Growth in long haul trades to Asian and the
United States (including ongoing substitution of long haul oil for short haul
Venezuelan oil) were positive factors. The result was strong tanker earnings.

     Winter seasonality resulted in high vessel earnings during the first
quarter of 2004. Earnings remained volatile at somewhat lower but historically
high levels during the second and third quarters of 2004. During the fourth
quarter of 2004, earnings reached and exceeded the high earnings levels seen
early in the year. Earnings have decreased from these peaks during the first
quarter of 2005 but remain at historically high levels due to ongoing high oil
demand and moderate fleet growth.

     Volatile earnings below the peak earnings seen late in 2004 are expected
for 2005. Oil demand growth for 2005 is forecast to continue but the projected
increase is lower than last year. Similar to 2003 and 2004, it is expected that
the current high vessel earnings will decrease later in 2005. Oil demand in the
second quarter of 2005 is projected to decrease by 1.9 MBD versus the first
quarter due to normal seasonality. Vessel deliveries scheduled for 2005 will
increase the supply of vessels and tend to offset effects of increased tanker
demand on vessel earnings.

     However, ongoing positive factors remain in the market. Year on year growth
in oil demand is expected to continue in 2005. Both oil and tanker markets are
starting from a position of tight balance, as shown by recent price and earnings
volatility. Oil markets are functioning near capacity, with oil trade at high
levels. Transportation requirements can grow quickly, as seen this year.
Although 2004 vessel earnings were high, moderate scrapping continued during the
year. High scrap steel prices, single hull phaseout requirements, and increasing
costs for compliance with regulatory and market requirements could result in
continuation of some scrapping even at high earnings levels. Scrapping could
increase if vessel earnings were to decrease, consistent with concerns regarding
regulatory and market requirements.

     Continuation and strength of economic growth in the United States and Asia
are key elements for oil demand. If economic growth continues, oil demand growth
will need increased OPEC and non-OPEC production, resulting in increased tanker
demand. If Venezuelan production is low relative to expectations, substitution
of long haul oil for short haul Venezuelan supplies would be a positive factor
for tanker demand. High vessel deliveries clearly remain a cautionary factor and
high earnings levels of late 2004 have not continued. However, ongoing economic
growth and oil demand growth could result in equilibrium earnings at attractive
levels versus historical averages.

World Dry Bulk Overview

     Combination carriers have a built-in design flexibility allowing them to
operate in either dry cargo or oil trades. When trading dry, Ultrapetrol
operates combination carriers in the Capesize sector (cargo carrying capacity of
80,000 tonnes or more), which primarily carry iron ore and coal.

     2004 seaborne iron ore trade was estimated at approximately 587 million
tonnes (Mt), an increase of about 68 Mt from 2003. High demand for steel in
China and elsewhere has led to high iron ore trade. 2003 Chinese iron ore
imports were about 208 Mt, an increase of about 60 Mt over 2003. Japanese iron
ore imports reached about 135 Mt in 2004, an increase of about 3 Mt. The top
exporters are Australia (207 Mt in 2004, 19 Mt higher than 2003) and Brazil (205
Mt in 2004, 20 Mt higher than 2003.)

     World seaborne iron ore trade is forecast to grow to 630 Mt in 2005, an
increase of 43 Mt from 2004. Chinese iron ore imports in 2005 are projected to
grow to 249 Mt, an increase of 41 Mt, based on high forecast steel production
and demand.

     Coal trade is made up thermal coal (steam coal), burned for its heat value
primarily in power generation, and metallurgical coal (coking coal, met coal),
used in steelmaking. Estimated total 2004 seaborne steam coal trade was about
466 Mt, an increase of some 26 Mt from 2003. Asian steam coal imports reached
approximately 275 Mt, an increase of about 24 Mt from 2003. European Union
imports were about 137 Mt, an increase of about 1 Mt, while United States
imports totalled about 19 Mt, an increase of less than 1 Mt. Leading 2004
exporters are Australia (about 107 Mt, up 4Mt from 2003), China (about 81 Mt,
same as 2003), and Indonesia (about 102 Mt, up 13 Mt from 2003). World steam
coal trade is forecast to grow to 488 Mt in 2005, an increase of 22 Mt from
2004.

     World coking coal trade was about 184 Mt in 2004, an increase of about 10
Mt from 2003. 2005 coking coal trade is forecast to grow by about 9 Mt.

Capesize dry bulk vessels and combination carriers.

     Capesize dry bulk vessels and combination carriers have a cargo carrying
capacity of 80,000 dwt or greater. As of March 1, 2005, there were 680 Capesize
dry bulk vessels comprising about 108.5 million dwt. Capesizes primarily
transport iron ore and coal on trade routes where lack of port or Canal
constraints allow realization of economies of scale.

     In 2004, 0.1 Mdwt of Capesizes were scrapped, while 7.9 Mdwt were
delivered. As of March 1, 2005, none have been scrapped, while 2.3 Mdwt have
been delivered. The current orderbook is 33.3 Mdwt (219 vessels) with 7.8 Mdwt
due for delivery this year, 9.8 Mdwt next year and 8.3 Mdwt in 2007.

     Total Capesize combination carrier dwt is 7.9 million, with an estimated
4.5 Mdwt ( 57%) currently employed in dry bulk trades. None were delivered in
2004 or 2005 and none are currently on order. 0.5 Mdwt were scrapped in 2004.
None have been scrapped to March 1, 2005.

Capesize dry bulk vessel earnings.

     Throughout 2004, there were large increases dry bulk trade and tonnage
demand that offset fleet growth. Capesize vessel earnings were at very high
levels versus historical averages from January 2004 to March 2004. Earnings
decreased from these peak levels from April to October, but remained at high
levels historically. From November 2004 through March 2005, earnings returned to
the very high levels seen in the first quarter of 2004.

     Strong earnings were led by high Chinese steel demand and strong coal
markets.

     Capesize earnings are at very high levels. Any decrease in demand due to
seasonality or a slowdown in Chinese iron ore imports would be expected to
result in lower earnings. Vessel deliveries scheduled for 2005 will increase the
supply of vessels and tend to offset effects of high tonnage demand on vessel
earnings.

     However, ongoing positive factors remain in the market. China, Newly
Industrialising Asian countries, and the United States economies are continuing
to show strong economic growth.

     Dry bulk vessel and combination carrier markets are starting from a
position of tight balance, as shown by recent price and earnings volatility.
Continued strong economic growth in China and other Asian countries could keep
earnings at or near current levels. Additionally, earnings could decrease
significantly and still remain at high levels historically.

Parana River Industry Overview

     Key demand factors in the Parana-Paraguay River Hidrovia system include
agricultural production and exports, particularly soybeans, from Argentina,
Brazil, Paraguay and Bolivia ("the Region").

     Production of soybeans in Argentina, Brazil, Paraguay, and Bolivia is
estimated at about 91.6 million tons, or mt, in 2003 and about 99.5 mt in 2004,
an increase of about 8.6%.

     The growth in soybean production has not occurred at the expense of other
key cereal grains. Production of corn (maize) in the Region grew is estimated at
58.5 mt in 2003 and 59.9 mt in 2004. Production of wheat in the Region is
estimated at 20.7 mt in 2003 and 22.7 mt in 2004.

     The installation of crushing plants in Bolivia and Paraguay has generated
large volumes of vegetable oils and soybean meal that are also shipped via the
river for export. Soybean meal exports from Bolivia and Paraguay are estimated
at about 1.9 mt in 2003 and 2.0 mt in 2004. Soybean oil exports from Bolivia and
Paraguay are estimated at about 0.4 mbd in 2003 and 2004.

Offshore Industry Overview

     Within the OSV sector, main vessel types include supply vessels, platform
supply vessels (PSVs), anchor handling tugs, crew boats, and other vessel types.

     Supply vessels generally support oil exploration, production, construction
and maintenance activities on the continental shelf. The industry fleet has
approximately 718 supply vessels with about 12 vessels on order. The average age
is 20 years, with approximately two thirds of the industry fleet being age 20
years or older.

     Platform supply vessels (PSVs) are large and sophisticated supply vessels
constructed to allow for economic operation in environments with some
combination of deepwater operations, long distance support, economies of scale,
and demanding operating conditions. PSVs serve drilling and production
facilities and support offshore construction and maintenance work for clusters
of offshore locations and/or relatively distant deepwater locations. They have
larger deck space and larger and more varied cargo handling capabilities
relative to other offshore support vessels to provide more economic service to
distant installations or several locations. Some vessels may have dynamic
positioning which allows close station keeping while underway. PSVs can be
designed with certain characteristics required for specific offshore trades such
as the North Sea or deepwater Brazilian service.

     The industry fleet has about 321 PSVs with about 84 on order. The average
age is approximately 10 years.

     Of a total of about 61 Brazilian flag offshore vessels, about 36 are
categorized as Platform Supply Vessel and Supply Vessels. The current Brazilian
orderbook for offshore vessels is about 23 vessels, including about 15 Supply
and Platform Supply Vessels. 18 of the existing Platform Supply Vessels and
Supply Vessels are age 20 or older. DSC has advised us that (i) some industry
data included in this discussion is based on estimates or subjective judgments
in circumstances where data for actual market transactions either does not exist
or is not publicly available, (ii) the published information of other maritime
data collection experts may differ from this data, and (iii) while we have taken
reasonable care in the compilation of the industry statistical data, graphs and
tables and believe them to be correct, data collection is subject to limited
audit and validation procedures.

Environmental and Government Regulation

General

     Government regulation significantly affects the ownership and operation of
our vessels. They are subject to international conventions, national, state and
local laws and regulations in force in the countries in which our vessels may
operate or are registered.

     We are required by various governmental and quasi-governmental agencies to
obtain certain permits, licenses and certificates with respect to our
operations. Although we believe that we have been and will be able to obtain all
permits, licenses and certificates material to the conduct of our operations, we
cannot assure you that we will be successful in our attempts to do so in the
future. Failure to maintain necessary permits, licenses or certificates could
require us to incur substantial costs or temporarily suspend operations of one
or more of our vessels.

     We believe that the heightened environmental and quality concerns of
insurance underwriters, regulators and charterers will impose greater inspection
and safety requirements on all vessels in the shipping industry. Our vessels are
subject to both scheduled and unscheduled inspections by a variety of
governmental and private interests, each of whom may have a different
perspective or standards from the others. These interests include the local port
state authority (such as the United States Coast Guard or local equivalent),
vessel classification society, underwriters, flag state administration (country
or registry) and charterers, particularly major oil companies which conduct
vetting inspections, and load and discharge terminal operators.

     We believe that the operation of our vessels will be in substantial
compliance with applicable environmental laws and regulations; however, because
such laws and regulations are frequently changed and may impose increasingly
stricter requirements, we cannot predict the ultimate cost of complying with
these requirements, or the impact of these requirements on the resale value or
useful lives of our vessels.

International Regulations

     In 1992, the International Maritime Organization, or IMO (the United
Nations agency for maritime safety and the prevention of marine pollution by
ships) adopted regulations that set forth pollution prevention requirements
applicable to tankers. These regulations, which have been adopted by over 150
nations, including many of the jurisdictions in which our tankers operate,
provide, in part, that:

     o    tankers between 25 and 30 years old must be of double hull
          construction or of a mid-deck design with double sided construction,
          unless (1) they have wing tanks or double-bottom spaces not used for
          the carriage of oil that cover at least 30% of the length of the cargo
          tank section of the hull or bottom; or (2) they are capable of
          hydrostatically balanced loading (loading less cargo into a tanker so
          that in the event of a breach of the hull, water flows into the
          tanker, displacing oil upwards instead of into the sea);

     o    tankers 30 years old or older must be of double hull construction or
          mid-deck design with double sided construction; and

     o    all tankers are subject to enhanced inspections.

     Also, under IMO regulations, a tanker must be of double hull construction
or a mid-deck design with double sided construction or be of another approved
design ensuring the same level of protection against oil pollution if the
tanker:

     o    is the subject of a contract for a major conversion or original
          construction on or after July 6, 1993;

     o    commences a major conversion or has its keel laid on or after January
          6, 1994; or

     o    completes a major conversion or is a newbuilding delivered on or after
          July 6, 1996.

     Effective September 2002, the IMO accelerated its existing timetable for
the phase-out of single hull oil tankers. These regulations require the
phase-out of most single hull oil tankers by 2015 or earlier, depending on the
age of the tanker and whether it has segregated ballast tanks. After 2007, the
maximum permissible age for single hull tankers will be 26 years. Under current
regulations, retrofitting will enable a vessel to operate until the earlier of
25 years of age and the anniversary date of its delivery in 2017. However, as a
result of the oil spill in November 2002 relating to the loss of the M.T.
Prestige, which was owned by a company not affiliated with us, in December 2003,
the Marine Environmental Protection Committee of the IMO adopted a proposed
amendment to the International Convention for the Prevention of Pollution from
Ships to accelerate the phase out of single hull tankers from 2015 to 2010
unless the relevant flag states extend the date to 2015. This proposed amendment
will come into effect in April 2005 unless objected to by a sufficient number of
member states. Moreover, the IMO may still adopt regulations in the future that
could adversely affect the remaining useful lives of single hull tankers.

     The IMO has also negotiated international conventions that impose liability
for oil pollution in international waters and a signatory's territorial waters.
In September 1997, the IMO adopted Annex VI to the International Convention for
the Prevention of Pollution from Ships to address air pollution from ships.
Annex VI was ratified in May 2004 and will become effective 12 months after
ratification. Annex VI, when it becomes effective, will set limits on sulfur
oxide and nitrogen oxide emissions from ship exhausts and prohibit deliberate
emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI
also includes a global cap on the sulfur content of fuel oil and allows for
special areas to be established with more stringent controls on sulfur
emissions. Compliance with these regulations could require the installation of
expensive emission control systems and could have an adverse financial impact on
the operation of our vessels.

     The requirements contained in the ISM Code, promulgated by the IMO, also
affect our operations. The ISM Code requires the party with operational control
of a vessel to develop an extensive safety management system that includes,
among other things, the adoption of a safety and environmental protection policy
setting forth instructions and procedures for operating its vessels safely and
describing procedures for responding to emergencies. We intend to rely upon the
safety management system developed by Ravenscroft. The ISM Code requires that
vessel operators obtain a safety management certificate for each vessel they
operate. This certificate evidences compliance by a vessel's management with
code requirements for a safety management system. No vessel can obtain a
certificate unless its manager has been awarded a document of compliance, issued
by each flag state, under the ISM Code. Ravenscroft, which manages our vessels,
is certified as an approved ship manager under the ISM Code. As of December 31,
2004 all of our oceangoing vessels are ISM certified. This certification does
not apply to the equipment used in the river business.

     Noncompliance with the ISM Code and other IMO regulations may subject the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available insurance coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. For example, the U.S. Coast Guard and
European Union authorities have indicated that vessels not in compliance with
the ISM Code will be prohibited from trading in U.S. and European Union ports.

     Although the United States is not a party to these conventions, many
countries have ratified and follow the liability plan adopted by the IMO and set
out in the International Convention on Civil Liability for Oil Pollution Damage
of 1969. Under this convention and depending on whether the country in which the
damage results is a party to the 1992 Protocol to the International Convention
on Civil Liability for Oil Pollution Damage, a vessel's registered owner is
strictly liable for pollution damage caused in the territorial waters of a
contracting state by discharge of persistent oil, subject to certain complete
defenses. Under an amendment to the Protocol that became effective on November
1, 2003, for vessels of 5,000 to 140,000 gross tons (a unit of measurement for
the total enclosed spaces within a vessel), liability will be limited to
approximately $6.6 million plus $926 for each additional gross ton over 5,000.
For vessels of over 140,000 gross tons, liability will be limited to
approximately $131 million. As the convention calculates liability in terms of a
basket of currencies, these figures are based on currency exchange rates on
August 2, 2004. The right to limit liability is forfeited under the
International Convention on Civil Liability for Oil Pollution Damage where the
spill is caused by the owner's actual fault and under the 1992 Protocol where
the spill is caused by the owner's intentional or reckless conduct. Vessels
trading to states that are parties to these conventions must provide evidence of
insurance covering the liability of the owner. In jurisdictions where the
International Convention on Civil Liability for Oil Pollution Damage has not
been adopted, various legislative schemes or common law govern, and liability is
imposed either on the basis of fault or in a manner similar to that convention.
We believe that our P&I insurance will cover the liability under the plan
adopted by the IMO.

U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response,
Compensation, and Liability Act

     The United States regulates the tanker industry with an extensive
regulatory and liability regime for environmental protection and cleanup of oil
spills, consisting primarily of the U.S. Oil Pollution Act of 1990, or OPA, and
the Comprehensive Environmental Response, Compensation, and Liability Act, or
CERCLA. OPA affects all owners and operators whose vessels trade with the United
States or its territories or possessions, or whose vessels operate in the waters
of the United States, which include the U.S. territorial sea and the 200
nautical mile exclusive economic zone around the United States. CERCLA applies
to the discharge of hazardous substances (other than oil) whether on land or at
sea. Both OPA and CERCLA impact our operations.

     Under OPA, vessel owners, operators and bareboat charterers are
"responsible parties" who are jointly, severally and strictly liable (unless the
spill results solely from the act or omission of a third party, an act of God or
an act of war) for all containment and clean-up costs and other damages arising
from oil spills from their vessels. These other damages are defined broadly to
include:

     o    natural resource damages and related assessment costs

     o    real and personal property damages;

     o    net loss of taxes, royalties, rents, profits or earnings capacity;

     o    net cost of public services necessitated by a spill response, such as
          protection from fire, safety or health hazards; and

     o    loss of subsistence use of natural resources.

     OPA limits the liability of responsible parties to the greater of $1,200
per gross ton or $10 million per tanker that is over 3,000 gross tons (subject
to possible adjustment for inflation). The act specifically permits individual
states to impose their own liability regimes with regard to oil pollution
incidents occurring within their boundaries, and some states have enacted
legislation providing for unlimited liability for discharge of pollutants within
their waters. In some cases, states that have enacted this type of legislation
have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. CERCLA, which applies to owners and operators
of vessels, contains a similar liability regime and provides for cleanup,
removal and natural resource damages. Liability under CERCLA is limited to the
greater of $300 per gross ton or $5 million.

     These limits of liability do not apply, however, where the incident is
caused by violation of applicable U.S. federal safety, construction or operating
regulations, or by the responsible party's gross negligence or willful
misconduct. These limits do not apply if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the
substance removal activities. OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law. We believe that we are
in substantial compliance with OPA, CERCLA and all applicable state regulations
in the ports where our tankers call.

     OPA also requires owners and operators of vessels to establish and maintain
with the U.S. Coast Guard evidence of financial responsibility sufficient to
meet the limit of their potential strict liability under the act. The U.S. Coast
Guard has enacted regulations requiring evidence of financial responsibility in
the amount of $1,500 per gross ton for tankers, coupling the OPA limitation on
liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. Under the regulations, evidence of financial responsibility may be
demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA
regulations, an owner or operator of more than one tanker is required to
demonstrate evidence of financial responsibility for the entire fleet in an
amount equal only to the financial responsibility requirement of the tanker
having the greatest maximum strict liability under OPA and CERCLA. We have
demonstrated our financial responsibility by purchasing evidence of insurance
from special purpose insurers approved by the U.S. Coast Guard. We believe that
our vessels that call within United States waters comply with these U.S. Coast
Guard requirements.

     We insure each of our tankers with pollution liability insurance in the
maximum commercially available amount of $1.0 billion. A catastrophic spill
could exceed the insurance coverage available, in which event there could be a
material adverse effect on our business under OPA. With certain limited
exceptions, all newly built or converted vessels operating in U.S. waters must
be built with double-hulls, and existing vessels that do not comply with the
double-hull requirement will be prohibited from trading in U.S. waters over a
20-year period (1995-2015) based on size, age and place of discharge, unless
retrofitted with double hulls. Notwithstanding the prohibition to trade
schedule, the act currently permits existing single-hull and double-sided
tankers to operate until the year 2015 if their operations within U.S. waters
are limited to discharging at the Louisiana Offshore Oil Port or off-loading by
lightering within authorized lightering zones more than 60 miles off-shore.
Lightering is the process by which vessels at sea off-load their cargo to
smaller vessels for ultimate delivery to the discharge port.

     Under OPA and per USCG interpretations, our tanker and OBOs will be
precluded from operation in US waters as follows:

Name                    OPA phase-out date*    Current TVEL/COC issuance date**
                       --------------------   ---------------------------------
Princess Katherine.....N/A                     March 26, 2003
Princess Nadia.........January.2014            August 26, 2001
Princess Susana........November.2014           February 18, 2003
Princess Marina........March.2014              August 29, 2002

----------
*    As per TVEL/COC

**   The USCG inspects vessels annually and determines when such vessels will be
     phased out under OPA, the dates of which are recorded in the TVEL or the
     COC. On April 30, 2001, the USCG replaced the TVEL with a newly generated
     document, the COC. The COC is issued for each tanker by the USCG, if/when
     the vessel calls at a U.S. port and is valid for a period of two years,
     with mid period examination.

     There is no phase out date for Princess Katherine since its configuration
meets the U.S. double hull standards. Although Princess Nadia, Princess Marina
and Princess Susana are double hull vessels, due to configuration requirements
under the U.S. double hull standards, the phase out dates indicated above are
applicable.

     OPA also amended the Federal Water Pollution Control Act to require owners
or operators of tankers operating in the waters of the United States to file
vessel response plans with the USCG, and their tankers are required to operate
in compliance with their USCG approved plans. These response plans must, among
other things:

     o    address a "worst case" scenario and identify and ensure, through
          contract or other approved means, the availability of necessary
          private response resources to respond to a "worst case discharge";

     o    describe crew training and drills; and

     o    identify a qualified individual with full authority to implement
          removal actions.

     OPA does not prevent individual states from imposing their own liability
regimes with respect to oil pollution incidents occurring within their
boundaries. In fact, most U.S. states that border a navigable waterway have
enacted environmental pollution laws that impose strict liability on a person
for removal costs and damages resulting from a discharge of oil or a release of
a hazardous substance. These laws may be more stringent than U.S. federal law.

European Union Tanker Restrictions

     In July 2003, in response to the M.T. Prestige oil spill in November 2002,
the European Union adopted legislation that prohibits all single hull tankers
from entering into its ports or offshore terminals by 2010. The European Union
has also banned all single hull tankers carrying heavy grades of oil from
entering or leaving its ports or offshore terminals or anchoring in areas under
its jurisdiction. Commencing in 2005, certain single hull tankers above 15 years
of age will also be restricted from entering or leaving European Union ports or
offshore terminals and anchoring in areas under European Union jurisdiction. The
European Union is also considering legislation that would: (1) ban manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port authorities at least twice in a six month period) from European waters
and create an obligation of port states to inspect vessels posing a high risk to
maritime safety or the marine environment; and (2) provide the European Union
with greater authority and control over classification societies, including the
ability to seek to suspend or revoke the authority of negligent societies. The
sinking of the M.T. Prestige and resulting oil spill in November 2002 has lead
to the adoption of other environmental regulations by certain European Union
nations, which could adversely affect the remaining useful lives of all of our
tankers and our ability to generate income from them. For example, Italy
announced a ban of single hull crude oil tankers over 5,000 dwt from most
Italian ports, effective April 2001. Spain has announced a similar prohibition.
It is impossible to predict what legislation or additional regulations, if any,
may be promulgated by the European Union or any other country or authority.

Vessel Security Regulations

     Since the terrorist attacks of September 11, 2001, there have been a
variety of initiatives intended to enhance vessel security. On November 25,
2002, the Maritime Transportation Security Act of 2002, or MTSA, came into
effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast
Guard issued regulations requiring the implementation of certain security
requirements aboard vessels operating in waters subject to the jurisdiction of
the United States. Similarly, in December 2002, amendments to the International
Convention for the Safety of Life at Sea, or SOLAS, created a new chapter of the
convention dealing specifically with maritime security. The new chapter became
effective in July 2004 and imposes various detailed security obligations on
vessels and port authorities, most of which are contained in the newly created
International Ship and Port Facilities Security Code, or ISPS Code. The ISPS
Code is designed to protect ports and international shipping against terrorism.
After July 1, 2004, to trade internationally, a vessel must attain an
International Ship Security Certificate, or ISSC, from a recognized security
organization approved by the vessels flag state. Among the various requirements
are:

     o    on-board installation of automatic identification systems, or AIS, to
          provide a means for the automatic transmission of safety-related
          information from among similarly equipped ships and shore stations,
          including information on a ship's identity, position, course, speed
          and navigational status;

     o    on-board installation of ship security alert systems, which do not
          sound on the vessel but only alerts the authorities on shore;

     o    the development of vessel security plans;

     o    ship identification number to be permanently marked on a vessel's
          hull;

     o    a continuous synopsis record, or CSR, kept onboard showing a vessel's
          history including, name of the ship and of the state whose flag the
          ship is entitled to fly, the date on which the ship was registered
          with that state, the ship's identification number, the port at which
          the ship is registered and the name of the registered owner(s) and
          their registered address; and

     o    compliance with flag state security certification requirements.

     The U.S. Coast Guard regulations, intended to align with international
maritime security standards, exempt non-U.S. tankers from MTSA vessel security
measures provided such vessels have on board, by July 1, 2004, a valid ISSC that
attests to the vessel's compliance with SOLAS security requirements and the ISPS
Code. All of our vessels used in the Ocean Business maintain a valid ISSC and
are in compliance with applicable vessel security regulations.

Risk of Loss and Insurance

General

     The operation of any cargo vessel includes risks such as mechanical
failure, collision, property loss, cargo loss or damage and business
interruption due to political circumstances in foreign countries, hostilities
and labor strikes. In addition, there is always an inherent possibility of
marine disaster, including oil spills and other environmental mishaps, and the
liabilities arising from owning and operating vessels in international trade.

     We believe that we maintain insurance coverage against various casualty and
liability risks associated with our business that we consider to be adequate
based on industry standards and the value of our fleet, including hull and
machinery and war risk insurance, loss of hire insurance at certain times for
certain vessels and protection and indemnity insurance against liabilities to
employees and third parties for injury, damage or pollution and other customary
insurance. While we believe that our present insurance coverage is adequate, we
cannot guarantee that all risks will be insured, that any specific claim will be
paid, or that we will always be able to obtain adequate insurance coverage at
reasonable rates or at all.

Hull and Machinery and War Risk Insurance

     We maintain marine hull and machinery and war risk insurance, which include
the risk of actual or constructive total loss, for our wholly-owned vessels. At
times, we also obtain for part of our fleet increased value coverage and
additional freight insurance during periods of improved market rates, where
applicable. This increased value coverage and additional freight coverage
entitles us, in the event of total loss of a vessel, to some recovery for
amounts not otherwise recoverable under the hull and machinery policy. When we
obtain these additional insurances, our vessels will each be covered for at
least their fair market value, subject to applicable deductibles (and some may
include limitations on partial loss). We cannot assure you, however, that we
will obtain these additional coverages on the same or commercially reasonable
terms, or at all, in the future.

Loss of Hire

     We maintain loss of hire insurance at certain times for certain vessels.
Loss of hire insurance covers lost earnings resulting from unforeseen incidents
or breakdowns that are covered by the vessel's hull and machinery insurance and
result in loss of time to the vessel. Although loss of hire insurance will cover
up to ninety days of lost earnings, we must bear the applicable deductibles
which generally range between the first 14 to 30 days of lost earnings. We
intend to renew these insurance policies or replace them with other similar
coverage if rates comparable to those on our present policies remain available.
There can be no assurance that we will be able to renew these policies at
comparable rates or at all. Future rates will depend upon, among other things,
our claims history and prevailing market rates.

Protection and Indemnity Insurance

     Protection and indemnity insurance covers our legal liability for our
shipping activities. This includes the legal liability and other related
expenses of injury or death of crew, passengers and other third parties, loss or
damage to cargo, fines and other penalties imposed by customs or other
authorities, claims arising from collisions with other vessels, damage to other
third-party property, pollution arising from oil or other substances and
salvage, towing and other related costs, wreck removal and other risks. Coverage
is limited for vessels in our Ocean Business to approximately $4.25 billion with
the exception of oil pollution liability, which is limited to $1.0 billion per
vessel per incident. Vessels in our River Business have lower amounts of
coverage.

     This protection and indemnity insurance coverage is provided by protection
and indemnity associations, or P&I Clubs, which are non-profit mutual assurance
associations made up of members who must be either ship owners or ship managers.
The members are both the insured parties and the providers of capital. The P&I
Clubs in which our vessels are entered are currently members of the
International Group of P&I Associations, or the International Group and are
reinsured themselves and through the International Group in Lloyds of London and
other first class reinsurance markets. We may be subject to calls based on each
Club's yearly results. Similarly, the same P&I Clubs provide freight demmurage
and defense insurance which, subject to applicable deductibles, covers all legal
expenses in case of disputes, arbitrations and other proceedings related to our
vessels.

Legal Proceedings

1)   Bahia Blanca Customs Dispute

     Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Customs Authority of Bahia Blanca in Argentina over the alleged unauthorized
operation of the Princess Pia in Argentina during 2001. As a result, the Customs
Authority of Bahia Blanca issued a resolution claiming the sum of Argentine
pesos 4,689,695 (approximately U.S. $1,610,000) as import taxes and the sum of
Argentine pesos 4,689,695 (approximately U.S. $1,610,000) as fines. In response
to said resolution, on March 16, 2004, Ultrapetrol S.A. submitted an appeal with
the Argentine Tax Court arguing that it did not breach any applicable customs
laws since the Princess Pia operated within Argentine territory only during the
periods in which it was expressly authorized by the competent authorities. Said
appeal is pending resolution by the Argentine Tax Court. Based upon the facts
and circumstances of the case, the existing regulations and our insurance
coverage, we do not believe that the outcome of this matter should have a
material impact on our financial position or results of operations.

2)   Brazilian Customs Dispute

     Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Brazilian Customs tax authorities over the alleged infringement of customs
regulations by the Alianza G3 and Alianza Campana (collectively, the "Vessel")
in Brazil during 2004. As a result, the Brazilian Customs tax authorities
commenced an administrative proceeding and applied the penalty of apprehension
of the Vessel which required the Vessel to remain in port or within a maximum of
five nautical miles from the Brazilian maritime coast. The maximum customs
penalty that could be imposed would be confiscation of the Vessel, which is
estimated by the Brazilian Customs tax authorities to be valued at U.S.
$4,560,000. On February 22, 2005, we were notified of the decision that grounds
on which the tax assessment was based were ratified. In response to this
decision, on February 28, 2005, we presented a specific request for
clarification of the decision. We simultaneously presented a petition to the
Secretary of the Brazilian Internal Revenue Service requesting the replacement
of the confiscation penalty applied to the Vessel by a penalty corresponding to
1% (one percent) of the value of the Vessel. Both of our requests made on
February 28, 2005 are still pending judgment.

     On the same day that Ultrapetrol S.A. presented its defense to the above
mentioned administrative proceeding, a writ of injunction was filed on behalf of
Ultrapetrol S.A. seeking a judicial authorization allowing the return of the
Vessel to Boias de Xareu, which is located almost 20 nautical miles from the
Brazilian maritime coast, so the Vessel could resume its prior services. The
preliminary injunction was granted by the court in favor of Ultrapetrol S.A. on
September 17, 2004, conditioned on the weekly presentation of shipping letters
describing the location of the Vessel and the Vessel is now back in service at
Boias de Xareu. The tax authorities filed an interlocutory appeal against the
preliminary injunction that was granted in our favor. Currently, our lawsuit and
the interlocutory appeal by the tax authorities are pending judgment.

We note that in case we are not successful on the merits, under our insurance
coverage, we could request from The Standard Club, the Vessel's P&I insurer, an
indemnity corresponding to the value of the Vessel. Based upon the facts and
circumstances of the case, including the fact that the Vessel was operating
under a specific written authorization officially granted by the Brazilian
government, the existing regulations and our insurance coverage, we do not
believe that the outcome of this matter should have a material impact on our
financial position or results of operations.Various other legal proceedings
involving us may arise from time to time in the ordinary course of business.
However, we are not presently involved in any legal proceedings that, if
adversely determined, would have a material adverse effect on us

Dividend Policy

     It is the policy of the Company, unless the members decide otherwise, at
the annual general meeting to distribute a dividend of at least thirty percent
(30%) of the Company's net after-tax profit. However, such distributions shall
be subject to the restrictions, terms and conditions which may be imposed on the
Company by lenders, bondholders or other financial institutions, and/or those
limitations imposed by the contracts, agreements or other financial instruments,
including any trust indenture into which the Company may have entered. Also
before making distributions, the Company shall also make adequate reserves as
the Board of Directors may deem necessary for the company's commitments (even if
after giving effect to such reserves the distribution would be lower than thirty
per cent (30%)). The directors may, before recommencing any dividend, set aside
out of the profits of the Company such sum as they think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for special
dividends or bonuses, or for repairing, improving, maintaining any of the
property of the Company, and for such other purposes as the directors shall in
their absolute discretion think conducive to the interests of the Company.

C.   ORGANIZATIONAL STRUCTURE

     Ultrapetrol (Bahamas) Limited is a company organized and registered as a
Bahamas Corporation since December 1997.

     Ultrapetrol (Bahamas) Limited has an ownership in the following companies:

Ultrapetrol (Bahamas) Limited                                    (Bahamas)
   - 100% of Kattegat Shipping Inc.                              (Panama)
   - 100% of Majestic Maritime Ltd.                              (Bahamas)
   - 100% of Avemar Holdings (Bahams)  Ltd.                      (Bahamas)
   - 100% of Massena Port S.A.                                   (Uruguay)
      - 100% of Dampierre Holdings Spain S.L.                    (Spain)
         - 99% of Oceanpar S.A.                                  (Paraguay)
            - 7% of Ultrapetrol S.A.                             (Argentina)
         - 50% of Parfina S.A.                                   (Paraguay)
         - 93% of Ultrapetrol S.A.                               (Argentina)
   - 100% of Internationale Maritime S.A.                        (Bahamas)
   - 100% of Parkwood Commercial Corp.                           (Panama)
   - 100% of Princely International Finance Corp.                (Panama)
      - 100% of Baldwin Maritime Inc.                            (Panama)
      - 100% of Corporacion de Navegacion Mundial S.A.           (Chile)
         - 49% of Maritima SIPSA S.A.                            (Chile)
         - 50% of Parfina S.A.                                   (Paraguay)
      - 100% of Danube Maritime Inc.                             (Panama)
      - 100% of General Ventures Inc.                            (Liberia)
      - 100% of Imperial Maritime Ltd.                           (Bahamas)
      - 100% of Imperial Maritime Ltd. (Bahamas) Inc.            (Panama)
      - 100% of Kingly Shipping Ltd.                             (Bahamas)
      - 100% of Monarch Shipping Ltd.                            (Bahamas)
      - 100% of Noble Shipping Ltd.                              (Bahamas)
      - 1% of Oceanpar S.A.                                      (Paraguay)
      - 100% of Oceanview Maritime Inc.                          (Panama)
      - 100% of Regal International Investments S.A.             (Panama)
         - 100% of Bayham Investments S.A.                       (Panama)
         - 100% of Cavalier Shipping Inc.                        (Panama)
      - 100% of Riverview Commercial Corp.                       (Panama)
      - 100% of Sovereign Maritime Ltd.                          (Bahamas)
      - 100% of Tipton Marine Inc.                               (Panama)
      - 100% of Ultrapetrol International S.A.                   (Panama)
   - 100% of Stanmore Shipping Inc.                              (Panama)
   - 60% of Ultracape (Holdings) Ltd.                            (Bahamas)
      - 100% of Ultracape Delaware, LLC.                         (USA)
         - 99% of Parque Ecologico Industrial
           de Altamira S.A. de C.V.                              (Mexico)
      - 100% of Ultracape International S.A.                     (Panama)
         - 100% of Invermay Shipping Inc.                        (Panama)
         - 100% of Braddock Shipping Inc.                        (Panama)
      - 100% of Wallasey Shipping Inc.                           (Panama)
   - 27.78% of UP Offshore (Bahamas) Ltd.                        (Bahamas)
      - 100% of UP Offshore (Panama) S.A.                        (Panama)
         - 100% of Packet Maritime Inc.                          (Panama)
         - 100% of Padow Shipping Inc.                           (Panama)
         - 100% of Pampero Navigation Inc.                       (Panama)
      - 99.99% of UP Offshore Apoio Maritimo Ltda.               (Brazil)
   - 100% of UP Offshore (Holdings) Ltd.                         (Bahamas)
   - 92.86% of UP River (Holdings) Ltd.                          (Bahamas)
      - 50% of UABL Limited                                      (Bahamas)
   - 100% of UP River Terminals (Panama) S.A.                    (Panama)
      - 50% of UABL Terminals Ltd.                               (Bahamas)
         - 100% of UABL Terminals (Paraguay) S.A.                (Panama)
            - 50% of Obras Terminales y Servicios S.A.           (Paraguay)
            - 50% of Puertos del Sur S.A.                        (Paraguay)
   - 100% of UPB (Panama) Inc.                                   (Panama)
      - 50% of UABL Terminals Ltd.                               (Bahamas)
      - 50% of UABL Limited                                      (Bahamas)
         - 100% of Arlene Investment Inc.                        (Panama)
         - 100% of Blueroad Finance Inc.                         (Panama)
         - 100% of Corydon International S.A.                    (Uruguay)
            - 100% of Cedarino S.L.                              (Spain)
               - 90% of Parabal S.A.                             (Paraguay)
               - 97.5% of Riverpar S.A.                          (Paraguay)
               - 99.6% of Sernova S.A.                           (Argentina)
               - 97.5% of UABL Paraguay S.A.                     (Paraguay)
               - 96.6% of UABL S.A.                              (Argentina)
               - 90% of Yataity S.A.                             (Paraguay)
         - 100% of Lonehort S.A.                                 (Uruguay)
         - 100% of UP River Ltd.                                 (Bahamas)
            - 100% of UABL International S.A.                    (Panama)
            - 100% of Thurston Shipping Inc.                     (Panama)
               - 10% of Parabal S.A.                             (Paraguay)
              - 2.5% of Riverpar S.A.                            (Paraguay)
               - 0.4% of Sernova S.A.                            (Argentina)
               - 2.5% of UABL Paraguay S.A.                      (Paraguay)
               - 3.4% of UABL S.A.                               (Argentina)
              - 10% of Yataity S.A.                              (Paraguay)
         - 100% of UABL Barges (Panama) Inc.                     (Panama)

D.   PROPERTY AND EQUIPMENT

     Through UABL, we own a drydock and a repair facility for our river fleet at
Pueblo Esther, Argentina and land for the construction of two terminals in
Argentina and 50% joint venture participations in two grain loading terminals in
Paraguay. UABL also rents offices in Asuncion, Paraguay and Buenos Aires,
Argentina. We do not own any other buildings and do not pay any rental expense
other than as a portion of the administration fees paid to Oceanmarine.

     Also through Ultracape Delaware LLC, a new subsidiary of Ultracape
(Holdings) Ltd., we own land for expansion of a maritime oil products terminal
in Mexico.


ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.   OPERATING RESULTS

     The following discussion and analysis should be read in conjunction with
the consolidated financial statements of Ultrapetrol (Bahamas) Limited and
subsidiaries for the years ended December 31, 2004 and 2003 included elsewhere
in this report.

General

     We are a diversified ocean and river transportation company involved in the
carriage of dry and liquid bulk cargoes. In our Ocean Business, we are an owner
and operator of oceangoing vessels that transport petroleum products and dry
cargo around the world. Our Ocean Business fleet has a capacity of approximately
785,000 dwt, and our three versatile Suezmax/OBO vessels are capable of carrying
either dry bulk or liquid cargoes. Our River Business is the largest owner and
operator of river barges and push boats in the Hidrovia region of South America,
a fertile agricultural region of navigable waters on the Parana, Paraguay and
Uruguay Rivers and part of the River Plate, which flow through Brazil, Bolivia,
Uruguay, Paraguay and Argentina. In addition, in November, 2002, we entered into
a joint venture to form UP Offshore (Bahamas) Ltd. ("UP Offshore"), a company in
which we own a 27.78% interest and which will provide transportation services to
offshore petroleum exploration and production companies, with a particular
emphasis on the Brazilian market.

     Our business strategy focuses on maintaining an efficient and flexible
fleet, which allows us to provide an array of transportation services to
customers in several different industries. We believe that the flexibility of
our fleet and the diversity of industries that we service reduce our dependency
on any particular sector of the transportation industry.

     The following discussion covers the audited consolidated financial results
of the year ended December 31, 2004 with a comparison to the audited
consolidated financial results for the same period in 2003.

     Currently, we own seven oceangoing vessels (one of which is currently used
as a transfer station in our River Business) that operate in South America, the
Caribbean, the United States, Europe and the Far East. One of our vessels (Cape
Pampas) is owned through our 60% owned subsidiary, Ultracape (Holdings) Ltd.
("Ultracape"). The Company's Suezmax OBO's (Princess Katherine, Princess Nadia
and Princess Susana), are designed to carry oil as well as ore and other dry
bulk commodities. These vessels together with our Cape Pampas are currently
employed in the carriage of bulk dry cargoes.

     During the year ended December 31, 2004, we employed a significant part of
our fleet on time charter for different customers.

     During 2004, the international freight market maintained average rates
significantly above those experienced in 2003.

     Of the Company's ocean going fleet, the Princess Marina was out of service
due to accidents in her main engine for 52 days (in the first quarter of 2004)
and the Cape Pampas and the Alianza G3 were out of service undergoing major
repairs during 56 days and 111 days, respectively.

     On December 12, 2003 we entered into a Memorandum of Agreement, or MOA, to
sell the Princess Laura for a total price of $4.1 million. The vessel was
delivered to its new owners on January 9, 2004.

     On April 23, 2004 we entered into a MOA to sell the Princess Eva for a
total price of $4.2 million. The vessel was delivered to its new owners on June
2, 2004.

     On April 23, 2004 the Company acquired, in a series of related transactions
through two wholly-owned subsidiaries, from ACBL Hidrovias, Ltd. the remaining
50% equity interest in UABL Limited ("UABL"), that it did not own, along with a
fleet of 50 river barges and seven push boats. The total purchase price paid in
these transactions was $26.1 million, $17.7 million of which was derived from
the proceeds of previous vessel sales made by Ultrapetrol. The barges and push
boats entered Ultrapetrol's fleet as "Qualified Substitute Vessels" under the
Indenture. Following this transaction in the second quarter of 2004, the Company
has indirect control of UABL.

     During 2004, the Company through its subsidiaries, repurchased $5.7 million
nominal value of its 10.5% First Preferred Ship Mortgage Notes due 2008 (the
"Prior Notes") at a net amount of $4.3 million.

     On October 15, 2004, through Ultracape Delaware LLC, a new subsidiary of
Ultracape (Holdings) Ltd., we entered into a transaction with a related party to
acquire the land for expansion of a maritime oil products terminal in Mexico for
$2 million with a view to expanding our transportation services to that area.

     On October 27, 2004, we refinanced the existing senior secured credit
facility of Braddock Shipping Inc., an indirect wholly owned Panamanian
subsidiary of Ultracape, with a new senior secured credit facility of $10.0
million with DSB. This new credit facility has a five year maturity and contains
a covenant that requires Braddock to provide a minimum level of collateral to
secure the loans provided there under, as well as certain other restrictive
covenants that, among other things, limit Braddock's ability to incur additional
indebtedness, pay dividends, repay indebtedness, make investments, merge or
consolidate, change its lines of business, and amend the terms of subordinated
debt. The agreement governing the facility also contains customary events of
default, subject to grace periods, as appropriate.

     On October 26, 2004, we commenced a cash tender offer and consent
solicitation for our Prior Notes. Noteholders who validly tendered the Prior
Notes received an amount, paid in cash, equal to $1,037.50 per $1,000 principal
amount of the Prior Notes validly tendered and accepted for payment, plus
accrued and unpaid interest on the Prior Notes. On December 24, 2004, we also
redeemed, in accordance with the terms of the indenture governing the Prior
Notes, all of the remaining Prior Notes that were not validly tendered. We
funded the payments required under the Tender Offer and the redemption with a
portion of the proceeds from a new private offering of 9% First Preferred Ship
Mortgage Notes due 2014 in an aggregate principal amount of $180 million (the
"NewNotes"). We subsequently commenced an offer (the "Exchange Offer") to
exchange all of the NewNotes for an equal principal amount of 9% First Preferred
Ship Mortgage Notes due 2014, that are registered under the Securities Act of
1933, as amended (the "Registered Notes"). On April 8, 2005, we completed the
Exchange Offer. The terms of the Registered Notes are identical to those of the
NewNotes except that the Registered Notes are registered under the Securities
Act of 1933 and are not subject to restrictions on transfer. Based on
information received from the depositary regarding the Exchange Offer, all $180
million of NewNotes were exchanged for Registered Notes.

Contractual Methods of Earning Revenues and Allotting Expenses

     Ocean revenues can be contracted either on a time charter basis or on a COA
basis. Under the terms of a time charter, the charterer pays the ship owner a
daily rate for the use of the vessel and, in addition, the charterer pays
directly for all voyage expenses (including fuel and port charges). In contrast,
under the terms of a COA, the charterer pays the ship owner a rate based on
tonnage shipped (expressed in dollars per metric ton of cargo), but the ship
owner pays all voyage expenses. Accordingly, the charterer pays a higher overall
sum under a COA than under a time charter to compensate the ship owner for
having to pay the voyage expenses. Consequently, time charters result in lower
revenues and lower expenses for the ship owner than COAs, while COAs result in
higher revenues and higher expenses for the shipowner than time charters. Both
time charters and COAs at comparable price levels result in approximately the
same operating income. However, the margin as a percentage of revenues may
differ significantly. The differences between time charters and COAs are
summarized below:

     o    Time Charter:

          o    Revenue is derived from a daily rate paid for the use of the
               vessel

          o    Charterer pays for all voyage expenses

     o    COA:

          o    Revenue is derived from a rate based on tonnage shipped expressed
               in dollars per metric ton of cargo

          o    Vessel owner pays for all voyage expenses

Revenues

     Time charter revenues accounted for 59% of our total revenues (ocean and
river) for the year ended December 31, 2004 and for 65% of our total revenues
for the year ended December 31, 2003. COA revenues accounted for 41 % of our
total revenues for the year ended December 31, 2004 and for 35% of our total
revenues for the year ended December 31, 2003. With respect to COAs entered into
in connection with our Ocean Business and River Business, of the total revenues
obtained from COAs during 2004, 88% were in respect of repetitive voyages for
our regular customers and 12% in respect of single voyages for occasional
customers.

     In our Ocean Business, demand for our services is driven by the global
movements of liquid and dry bulk cargoes. Our primary liquid cargo is petroleum
and our key dry bulk cargoes include various agricultural products, coal and
iron ores.

     In our River Business, demand for our services is driven by agricultural,
mining and forestry activities in the Hidrovia region. Products move from the
inland areas of the Hidrovia region out to the Atlantic Ocean via the Parana and
Paraguay Rivers. Conversely, our tanker barges carry petroleum products from the
Atlantic Ocean to inland regions of South America via the Parana and Paraguay
Rivers. Substantially all of the push boats and barges in our River Business are
employed on a COA basis whereby we enter into contracts with our customers to
carry set volumes of dry or liquid cargo, typically for periods of up to one
year.A substantial portion of the revenues generated by the River Business
during the year 2004 related to the transportation of agricultural products
which are concentrated during a seven month period from March to September each
year. However, over the past several years, our largest customer, Cargill, has
increased production of soy pellets and vegetable oils, which are shipped
year-round and help offset some of the River Business' concentration of cargoes.

     In the Offshore Business, we expect that UP Offshore will seek to enter
into long term contracts of two to eight years, with oil exploration and
production companies in the Brazilian offshore market. We expect these contracts
will be structured as time charters. As of December 31, 2004, UP Offshore had
not formally entered into any contracts to provide offshore transportation
services.

Expenses

     In our Ocean Business, our vessel operating expenses, or running costs, are
generally paid through Ravenscroft, a related party, which provides ship
management services for our oceangoing vessels. Operating expenses include the
cost of all ship management, crewing, spares and stores, insurance, lubricants,
repairs and maintenance. The most significant of these expenses are maintenance
and repairs, wages paid to marine personnel and marine insurance costs.

     Our other primary operating expenses include general and administrative
expenses as well as ship management and administration fees paid to Ravenscroft
and Oceanmarine, another related party, which provides certain administrative
services. We pay Oceanmarine a monthly fee of $10,000 per oceangoing vessel for
administrative services including general administration and accounting
(financial reporting, preparation of tax returns), use of office premises, a
computer network, secretarial assistance and other general duties. We pay
Ravenscroft a monthly ship management fee of $12,500 per oceangoing vessel for
services including technical management, crewing, provisioning, superintendence
and related accounting functions. We do not expect to pay fees to any related
party other than those described here for management and administration
functions.

     In our River Business, prior to our acquisition of the remaining 50% equity
interest in UABL, our subsidiaries that owned push boats and barges contracted
with Lonehort, Inc., a subsidiary of UABL, for ship management services and
generally paid our operating expenses through Lonehort. Our operating expenses
include the cost of all ship management, crewing, spares and stores, insurance,
lubricants, repairs and maintenance. Following the acquisition of the remaining
50% equity interest in UABL, all ship management services are performed, and all
operating expenses are paid, in-house. UABL employs the services of Tecnical
Services S.A. to provide crew recruitment services in Argentina and Paraguay. We
pay Tecnical Services S.A. $140,000 per year, plus an additional $50 for each
active crew member. We do not expect to pay fees to any related entity other
than those described here for management and administration functions.

     In the Offshore Business, we expect operating expenses to include the cost
of all ship management, crewing, spares and stores, insurance, lubricants,
repairs and maintenance.

 Properties

     Through UABL, we own a drydock and a repair facility for our river fleet at
Pueblo Esther, Argentina and land for the construction of two terminals in
Argentina and 50% joint venture participations in two grain loading terminals in
Paraguay. UABL also rents offices in Asuncion, Paraguay and Buenos Aires,
Argentina. We do not own any other buildings and do not pay any other rental
expense other than as a portion of the administration fees paid to Oceanmarine.
Also through Ultracape Delaware LLC, we own land for expansion of a maritime oil
products terminal in Mexico.

Depreciation

     Vessels are depreciated to an estimated scrap value on a straight line
basis over their estimated useful lives. We follow the deferral method of
accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.

Fuel

     In our Ocean Business, when vessels are on time charter, fuel is supplied
and paid for by the charterers. Currently our Ocean fleet is employed on time
charters. However, in the future it may be employed under COAs in which case
fuel would be supplied and paid for by us. In our River Business (where we
generally carry cargoes for a freight per metric ton), fuel is our single
largest variable expense.

Results of Operations

     Year Ended December 31, 2004 Compared to year Ended December 31, 2003
<TABLE>
<CAPTION>
                                                  4(degree) Quarter    Year ended    4(degree) Quarter    Year ended
                                                        2004           31.Dec.04           2003           31.Dec.03
<S>                                                      <C>                <C>              <C>             <C>
Revenues
   Attributable to ocean fleet                            14,187             54,049          16,917            64,987
   Attributable to river fleet                             9,439             41,111           2,740            10,246
                                                  --------------- ------------------ --------------- -----------------
                                Total Revenues            23,626             95,160          19,657            75,233

Voyage expenses
   Attributable to ocean fleet                              (83)              (583)         (2,257)          (12,605)
   Attributable to river fleet                           (5,795)           (15,340)                              (39)
                                                  --------------- ------------------ --------------- -----------------
                                Total                    (5,878)           (15,923)         (2,257)          (12,644)

Running cost
   Attributable to ocean fleet                           (2,758)           (12,380)         (4,705)          (21,963)
   Attributable to river fleet                           (3,263)           (12,512)         (1,752)           (6,696)
                                                  --------------- ------------------ --------------- -----------------
                                Total                    (6,021)           (24,892)         (6,457)          (28,659)

Amortization of dry-dock expense                         (1,597)            (5,195)         (1,459)           (7,232)

Depreciation of property and equipment                   (3,710)           (13,493)         (3,472)          (15,335)

Management fees and administrative expenses              (3,155)            (9,007)         (2,655)           (7,818)

Other operating income (expenses)                            718                784         (3,545)           (2,124)

                                                  --------------- ------------------ --------------- -----------------
Operating profit                                           3,983             27,434           (188)             1,421

 Financial expense                                       (3,794)           (16,134)         (4,200)          (16,207)

 Financial  gain  (loss) on  extinguishments  of
debts                                                    (6,422)            (5,078)           1,782             1,782
</TABLE>

     Revenues. Total revenues from our ocean fleet, net of commissions,
decreased from $65.0 million in 2003 to $54.0 million in 2004, or a decrease of
17 %. This decrease is primarily attributable to the effect of reductions in the
revenues due to the sale of our vessels Princess Veronica, Princess Pia,
Princess Eva, Princess Laura and Princess Marisol as well as Alianza G1 during
the last twelve months . In addition, our Princess Susana operated under a time
charter during the first half of 2004 while she was employed on voyage charters
during the equivalent period of 2003. These reductions were partially offset by
the higher time charter rates of our Princess Nadia, Princess Susana, Princess
Katherine and Cape Pampas during the twelve months of 2004.

     Our revenues were also negatively affected by the Cape Pampas and the
Alianza G3 being out of service for a total of 167 days due to major repairs and
the fact that our Princess Marina being out of service for 52 days due to
accidents during the first quarter. Part of this off hire time was compensated
by our loss of hire insurance.

     Total revenues from our river fleet, net of commissions, increased by 303%
from $10.2 million to $41.1 million. This increase is primarily attributable to
the consolidation of UABL revenues since the second quarter of 2004, while in
2003 river revenues only included the net proceeds for those of our vessels
which were chartered by UABL.

     Voyage expenses. In 2004, voyage expenses of our ocean fleet were $0.6
million, as compared to $12.6 million for the same period of 2003, a decrease of
$12.0 million, or 95%. The decrease is primarily attributable to the combined
effect of a large portion of the Panamax fleet under COA employment during 2003
being sold during 2004 and the Princess Susana operating under time charter
employment instead of COA employment.

     In 2004, voyage expenses of our river fleet were $15.3 million, as compared
to $0 million for the same period of 2003, an increase of $15.3 million. The
increase is attributable to the effect of the consolidation of UABL, as our
subsidiary in the second quarter of 2004.

     Running costs. Running costs of our ocean fleet decreased by about 44%, to
$12.4 million in 2004 as compared to $22.0 million in the equivalent 2003
period. This decrease is mainly attributable to the sale of Princess Pia,
Princess Veronica, Princess Eva, Princess Marisol, Princess Laura and Alianza G1
during the last twelve months.

     In the twelve months of 2004, running expenses of our river fleet were
$12.5 million, as compared to $6.7 million for the same period of 2003, an
increase of $5.8 million. The increase is attributable to the effect of the
consolidation of UABL, as our subsidiary in the second quarter of 2004.

     Amortization of drydock expense. Amortization of dry docking and special
survey costs decreased by $2.0 million, or 28%, to $5.2 million in 2004 as
compared to $7.2 million in 2003. The decrease is primarily attributable to the
vessels sold during the last year. The unamortized balance is included in the
gain or loss resulting from the sales of the vessels.

     Depreciation of property and equipment. Depreciation decreased by $1.8
million, or 12%, to $13.5 million in 2004 as compared to $15.3 million in 2003.
This decrease is primarily due to the sale of the Princess Veronica, Princess
Laura, Princess Pia, Princess Eva, Princess Marisol and Alianza G1 which was
partially offset by the purchase of a new tug and river barges and the
depreciation of the UABL fleet.

     Management fees and administrative expenses. Management fees and
administrative expenses were $9.0 million in 2004 as compared to $7.8 million in
the same period in 2003. This increase of $1.2 million is attributable mainly to
an increase in the overhead expenses produced by the consolidation of UABL of
$2.7 million which was partially offset by a decrease in management fees of our
ocean fleet in the amount of $1.6 million resulting from a reduced number of
vessels in operation.

     Other operating income (expenses). This account disclosed an income of $0.8
million in 2004 and a loss of $2.1 million in 2003. The difference is explained
by the combined effect of the following: an increase in the gain from the sale
of property, plant and equipment of $3.7 million (a loss of $3.7 million in
2003, as compared to a loss of $0.0 million in 2004) and a decrease in income
from claims against insurance companies of $0.9 million (income of $1.6 million
in 2003, as compared to income of $0.7 million in 2004).

     Operating profit. Operating profit for the twelve months of 2004 was $27.4
million, an increase of $26.0 million from the same period in 2003. In comparing
these figures, the difference is mainly attributable to the higher results
obtained from our vessels Princess Susana, Princess Nadia, Princess Katherine
and Cape Pampas, the sale of our Princess Marisol, Princess Veronica, Princess
Pia, Princess Eva, Princess Laura and Alianza G1 as well as the consolidation of
the results of UABL following the acquisition of the remaining 50% equity
interest in that company, partially counter balanced by the negative effect
produced by the periods out of service experienced by our vessels Alianza G3 and
Alianza Campana.

     Interest expense. Interest expense decreased by about 1%, to $16.1 million
in 2004 as compared to $16.2 million in the equivalent 2003 period. This
variation is primarily attributable to the lower level of financial debt and
interest rates on our ocean vessels and consequential interest costs, offset by
an increase of $1.7 million in interest expenses attributable to the effect of
the consolidation of UABL, as our subsidiary.

     Financial gain (loss) on extinguishments of debt. During 2004, we
recognized a gain of $1.3 million for the retirement of our Prior Notes as
compared with a gain of $1.8 million during 2003. Also during the last quarter
of 2004 we incurred in $6.4 million in financial expenses on extinguishments of
debts of our Prior Notes.

 Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

     Revenues. Total revenues from freight net of commissions increased from
$24.8 million in 2002 to $26.4 million in 2003, or an increase of 6%. This
increase is primarily attributable to the Princess Susana and Princess Veronica
COA's employment instead of time charter operation of those vessels. Hire
revenues net of commissions, increased by 1% from $48.4 million to $48.7
million. This increase is attributable to the time charter employment of the
Princess Marisol and Cape Pampas, a new vessel we acquired in July 2002
partially offset by Princess Susana and Princess Veronica COA's employment. The
total of 103 days out of service experienced by the Princess Marina and the
Princess Susana due to major repairs, and Princess Eva and Princess Pia, which
were out of service due to accidents for 166 days during the first six months of
2003 negatively affected our revenues in this period. Part of this off hire time
is compensated by our loss of hire insurance included as other operating income.

     Voyage expenses. Voyage expenses for 2003 were $12.6 million, as compared
to $10.2 million for 2002, an increase of $2.4 million, or 24%. The increase is
primarily attributable to the Princess Susana and Princess Veronica COA's
employment instead of time charter employment and to a change in trading pattern
of Princess Laura which was employed on shorter voyages between ports where the
port costs are more significant.

     Running costs. Running costs increased by $1.3 million, or 5%, to $28.7
million in 2003 as compared to $27.4 million in the equivalent 2002 period. This
increase is mainly attributable to the Cape Pampas, a new vessel acquired in
July 2002 and additional expenses incurred in our Panamax fleet.

     Amortization of drydock expenses. Amortization of drydocking and special
survey costs decreased by $1.6 million, or 18%, to $7.2 million in 2003 as
compared to $8.8 million in 2002. The decrease is primarily attributable to the
cease of amortization for the vessels sold during the year. The unamortized
balance is included into the gain or loss disposal calculation.

     Depreciation of property and equipment. Depreciation and amortization
decreased by $0.7 million, or 4%, to $15.3 million in 2003 as compared to $16.0
million in 2002. This decrease is primarily due to the sale of the Princess
Fatima, Princess Veronica, Princess Pia and Princess Marisol partially offset by
an increase attributable to the purchase of the Cape Pampas.

     Management fees and administrative expenses. Management fees and
administrative expenses were $7.8 million in 2003 as compared to $6.8 million in
2002, an increase of $1.0 million, or 15%. This increase of $1.0 million is
attributable mainly to an increase in administrative expenses.

     Other operating income (expense). This account disclosed an income of $1.7
million in 2002 and a loss of $2.1 million in 2003. The difference is explained
by the combined effect of the following: an increase in the loss from the sale
of property, plant and equipment of $2.1 million (a loss of $3.7 million in
2003, as compared to a loss of $1.6 million in 2002) and a decrease in income
from claims against insurance companies of $1.7 million (income of $1.6 million
in 2003, as compared to income of $3.3 million in 2002).

     Operating profit. Operating profit for 2003 was $1.4 million, a decrease of
$1.5 million from 2002. This difference is mainly attributable to the combined
effect of: lower net earnings of our Panamax size vessels and Alianza G1 which
resulted from time lost due to accidents; lower freight and hire revenues of
these vessels and the subsequent sale of some of these vessels as described
above; lower net earnings of Princess Marina due to her repair period; the sale
in the last quarter of Princess Marisol and higher net earnings of vessels
Princess Katherine, Princess Nadia, and the Princess Susana and the earnings of
the Cape Pampas which operated partially in an improved dry cargo market during
the last quarter of 2003.

     Interest expense. Interest expenses decreased by $0.6 million, or 4%, to
$16.2 million in 2003 as compared to $16.8 million in 2002. The decrease is
primarily attributable to the lower level of financial debt and associated
interest costs.

     Financial gain on extinguishment of debt. During the last quarter of 2003,
through our subsidiaries, we repurchased $6.7 million nominal value of our Prior
Notes. We recognized a gain of $1.8 million for the extinguishment of the debt
(a gain of $2.0 million for the excess of the net carrying amount over the
reacquistion price less $0.1 million for commissions and $0.1 million for the
unamortized deferred issuance expense associated with these Notes).

B.   Liquidity and Capital Resources

     We operate in a capital-intensive industry requiring substantial ongoing
investments in revenue producing assets. Our subsidiaries have historically
funded their vessel acquisitions through a combination of bank indebtedness,
shareholder loans, cash flow from operations and equity contributions.

     As of December 31, 2004, we had total indebtedness of $220.4 million,
consisting of: $180.0 million from our New Notes due 2014; $10.0 million in a
senior loan facility with DSB for Braddock Shipping Inc., a 60% owned
subsidiary, for the refinancing of the vessel Cape Pampas. Also as of December
31, 2004, UABL, as our subsidiary, had the following indebtedness: $15.0 million
in a senior loan facility with IFC, $7.5 million with KfW, $2.0 million with
Citibank NA, $0.9 million with Touax LPG SA and $3.3 million with Transamerica
Leasing Inc. There was also accrued interest expenses for these loans of $1.7
million.

     At December 31, 2004, we had cash and cash equivalents on hand of $11.6
million. In addition, we had $3.0 million in restricted cash and $0.2 million in
short term investments. Also we have $30.0 million in non-current restricted
cash.

Operating Activities

     In the year ended December 31, 2004, we generated $23.1 million in cash
flow from operations compared to $18.6 million for the same period in 2003. Net
income for the twelve months ended December 31, 2004 was $5.1 million which is $
16.6 million more than the net loss in the same period of 2003.

     In 2003, we generated $18.6 million in cash flow from operations compared
to $8.4 million for in the same period in 2002. Net loss for 2003 was $11.5
million compared with a net loss of $13.8 million in 2002.

     Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred charges, and adjusted by changes in working capital and expenditures in
dry dock.

Investing Activities

     During the year ended December 31, 2004, we disbursed $ 21.0 million in the
purchase of push boats and river barges which we paid with funds available in
restricted cash. UP Offshore, in which we have a 27.78% ownership interest but
which was included in our consolidated results for the period January to
November 2004, disbursed $ 32.0 million in advances to the yards contracted to
build our new offshore vessels. Of this total, we made equity contributions to
UP Offshore of a total of $ 8.1 million. We also disbursed $ 2.0 million in
special work upgrading Cape Pampas and $2.0 million in a land in Mexico and
disbursed $1.7 million for the purchase of the remaining 50% equity interest in
UABL and UABL Terminals, net of the cash acquired. Since the second quarter of
2004, as result of the consolidation of UABL, as our subsidiary, we disbursed
$2.5 million in the purchase of river assets.

     During 2003 UP Offshore disbursed $14.3 million in advances to the yards
contracted to build the new offshore vessels. Of this total, we made an equity
contribution to UP Offshore for a total of $4.4 million and we disbursed $2.8
million for the purchase of the new river barges compared to $17.7 million
disbursed for the acquisition of vessels in 2002. Also during 2003, we received
net proceeds of vessel sales of $14.4 million.

Financing Activities

     Net cash provided by financing activities was $ 37.8 million during 2004,
compared to a use of $10.7 million in financing activities during the comparable
period in 2003. The increase in cash provided by financing activities in the
year ended December 31, 2004 is mainly attributable to the issuance of New Notes
of $180 million, due on 2014 net of the payments of our Prior Note of $131.5
million and the refinancing of the Cape Pampas mortgage indebtedness of $10.0
million, partially offset with the repayments of principal on its financial debt
made during 2004.

     Net cash used in financing activities was $10.7 million during 2003. The
use of cash in financing activities in 2003 is mainly attributable to capital
payments made during 2003. During the last quarter of 2003, through our
subsidiaries, we repurchased $6.7 million nominal value of our Prior Notes at a
net amount of $4.8 million.

Critical Accounting Policies and Estimates

     The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to bad debts, useful lives of vessels, deferred tax
assets, and certain accrued liabilities. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.

Revenue Recognition

     Revenue is generally recorded when services are rendered, we have a signed
charter agreement or other evidence of an arrangement, pricing is fixed or
determinable and collection is reasonably assured. Revenues are earned under
time charters or COAs. Revenue from time charters is earned and recognized on a
daily basis. Revenue for COAs is recognized based upon the percentage of voyage
completion. The percentage of voyage completion is based on the number of voyage
days worked at the balance sheet date divided by the total number of days
expected on the voyage.

Allowance for Doubtful Accounts

     We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. The estimate of
uncollectible amounts is based on the results of ongoing credit evaluations and
our historical experience. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

Asset Impairment

     We record impairment losses on long-lived assets used in operations when
indications of impairment are present and the estimated undiscounted cash flows
to be generated by those assets are less than the assets' carrying amounts. If
the carrying value is not recoverable, the carrying value of the assets is
reduced to estimate fair value. Undiscounted cash flows are estimated using
expected average long term day rates and utilization based largely on historical
industry and our experiences. If future market conditions do not meet
expectations, we may be required to record impairment charges which could be
material.

Useful Life Determination

     Management determines the useful lives of the vessels based upon regulatory
requirements such as OPA, market conditions and operational considerations. We
continue to evaluate the reasonableness of the useful lives of the vessels.

Drydocking Costs

     All of our vessels must be periodically drydocked and pass certain
inspections to maintain their operating classification, as mandated by certain
maritime regulations. Costs incurred to drydock the vessels are deferred and
amortized on a straight line basis over the period to the next drydocking,
generally 30 months. The alternative accounting policy for drydocking costs is
to expense the expenditures as incurred. The Financial Accounting Standards
Board and the American Institute of Certified Public Accountants have proposed
that the deferral method of accounting for planned major maintenance activities
such as drydocking expenditures should be eliminated. Under the proposal, we
would expense drydocking expenditures as incurred. Our unamortized drydocking
costs were approximately $11.7 million as of December 31, 2004 and $3.5 million
as of December 31, 2003.

Recent Developments

     On January 7th, 2005 IFC and KfW disbursed the remaining $7.5 million of
the $30 million loan granted to UABL in 2002. These funds were used to finance
the purchase and transportation from USA to the River Plate of 35 dry barges.

     We entered into a contract on March 4, 2005 to sell our vessel, Cape
Pampas, for a price of approximately $39.9 million.

     We also entered into a contract on March 4, 2005 to buy the cruise vessel,
New Flamenco, for a price of $13.5 million. This transaction was consummated on
March 24, 2005. The New Flamenco is managed by Ravenscroft (an affiliate of
ours) and we have agreed to extend her employment agreement with a large
European tour operator.

     On April 6, 2005 we purchased at auction for a price of $3.4 million the
cruise vessel, World Renaissance, which was delivered and fully paid for on
April 19, 2005. This vessel will have to pass her drydock and surveys before she
enters into service.

     On the April 28, 2005 we agreed to purchase the product tanker, Mt Sun
Chemist, for a total price of $10.3 million.

Quantitative and Qualitative Disclosures about Market Risks

 Inflation

     We do not believe that inflation has had a material impact on our
operations, although certain of our operating expenses (e.g., crewing, insurance
and drydocking costs) are subject to fluctuations as a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on our future operations in the case of our ocean vessels which are
mostly time chartered to third parties since it is the charterers who pay for
fuel. If the ocean vessels are employed under COA's, freight rates for voyage
charters are generally sensitive to the price of a ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level. In our river business,
we have some of our freight agreements adjusted by bunker prices automatically,
in other cases we have periodic renegotiations which adjust for fuel prices and
in other cases we adjust the fuel component of our cost into the freights on a
seasonal or yearly basis.

Interest Rate Fluctuation

     We are exposed to market risk from changes in interest rates, which may
adversely affect our results of operations and financial condition. Our policy
is not to use financial instruments for trading or other speculative purposes,
and we are not a party to any leveraged financial instruments.

     Short term variable rate debt, comprised approximately $6.2 million of our
total debt as of December 31, 2004, including accrued interest. Long term
variable rate debt, comprised approximately $ 27.9 million of our total debt as
of December 31, 2004. Our variable rate debt had an average interest rate of
approximately 5.5 % as of December 31, 2004. A hypothetical 1.0% increase in
interest rates on $34.1 million of debt would cause our interest expense to
increase on average approximately $0.3 million per year over the term of the
loans, with a corresponding decrease in income before taxes.

 Foreign Exchange Rate Fluctuation

     Substantially all of our revenues are denominated in U.S. dollars. However,
for the [twelve months ended December 31, 2004, 10% of our total revenues were
denominated in U.S. dollars but collected in Argentine Pesos and Paraguayan
Guaranies at the equivalent amount of U.S. dollars at the payment date, and 13%
of our total out of pocket operating expenses were paid in Argentine Pesos and
Paraguayan Guaranies. Our operating results, which are reported in U.S. dollars,
may be affected by fluctuations in the exchange rate between the U.S. dollar and
the local currencies. For accounting purposes, revenue and expense accounts are
translated into U.S. dollars at the exchange rate prevailing on the date of each
transaction.

C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

     Not Applicable.

D.   TREND INFORMATION

     Not Applicable.

E.   OFF-BALANCE SHEET ARRANGEMENTS

     Not Applicable.

F.   TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     The following schedule summarizes our contractual obligations and
commercial commitments as of December 31, 2004.

<TABLE>
<CAPTION>
                                                                       Payments Due by Period
                                                    ---------------------------------------------------------
                                                                 Current      1 - 3        3 - 5        After
                  Contractual Obligations              Total                  Years        Years       5 Years
  ---------------------------------------------- ------------ ------------  ----------  -----------  ---------
                                                                         (in thousands of U.S. dollars)
<S>                                                      <C>         <C>          <C>         <C>        <C>
  1.  Long-Term Debt Obligations
      -- Deutsche Schiffbank(a)..........................11,532       2,428        4,134        2,358      2,612
      -- International Finance Corporation (a)...........18,402       3,289        6,122        5,515      3,476
      -- KfW (a)......................................... 8,795       1,947        3,612        3,236
      -- Citibank NA (a)................................. 2,211         824          588          544        255
      -- Transamerica Leasing Inc........................ 3,540       1,931        1,609
      Private Investors.................................342,000      16,200       32,400       32,400    261,000
  2.  Capital (Finance) Lease Obligations
      -- Touax LPG S.A...................................   914         732          182
  3.  Operating Lease Obligations.......................
  4.  Purchase obligations
      - Fuel supply contract (b)                         14,000     14,000
  5.  Other Long-Term Liabilities Reflected on
      the Company's Balance Sheet under
      GAAP of the primary financial statements
      -- Minority interest subject to put rights......... 4,751                                            4,751
                                                 ---------------------------------------------------------------
  Total................................................ 406,145      41,351       48,647       44,053    272,094
                                                 ===============================================================
</TABLE>
(a)  For the calculation of interest on loans that accrue interest at LIBOR, the
     Company applied the value of such rate as of December 31, 2004, i.e. a
     nominal rate of 2.56% per annum.
(b)  UABL Paraguay S.A., a river subsidiary of the Company, entered into a fuel
     supply contract with Repsol-YPF that could be considered a "take or pay"
     contract. For the calculations the Company uses the market prices as of
     December 31, 2004.

     We believe, based upon current levels of operation, cash flow from
operations, together with other sources of funds, including the Escrowed
Proceeds, that we will have adequate liquidity to make required payments of
principal and interest on our debt, including obligations under the Registred
Notes, complete anticipated capital expenditures and fund working capital
requirements.

     Our ability to make scheduled payments of principal of, or to pay interest
on, or to refinance, our indebtedness, including the new notes, or to fund
planned capital expenditures will depend on our ability to generate cash in the
future. Our ability to general cash is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control.

     FUTURE CAPITAL REQUIREMENTS. Our near-term cash requirements are related
primarily to funding operations. We cannot provide assurance that our actual
cash requirements will not be greater than we currently expect. If the Company
cannot generate sufficient cash flow from operations, we may obtain additional
sources of funding through capital market transactions. The company cannot
provide assurance that these sources will be available.

G.   SAFE HARBOR

     Not Applicable.

ITEM 6. - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   Directors and Executive Officers

     Set forth below are the names and positions of our directors and executive
officers.

Name                                   Age      Position
                                      ----
Felipe Menendez R.................     50    President and Chief
                                                Executive Officer/Director
Ricardo Menendez R................     55    Director
James F. Martin...................     50    Director
Katherine A. Downs................     50    Director
Leonard J. Hoskinson..............     51    Director & Secretary

     The business address for each of our directors and officers is Ultrapetrol
(Bahamas) Limited c/o H & J Corporate Services Ltd., Shirlaw House, 87 Shirley
Street, P.O. Box SS-19084, Nassau, Bahamas. Our telephone number there is
1-242-322-8571.

     Certain biographical information with respect to each director and
executive officer is set forth below.

     Felipe Menendez R. Mr. Menendez has been President, Chief Executive Officer
and a Director since incorporation in December 1997 and is the brother of
Ricardo Menendez. He is also President, and has been a Director, of Ultrapetrol
S.A. since its incorporation in 1992. Mr. Menendez is also a Director of
Oceanmarine, SIPSA S.A., or SIPSA, a Chilean publicly traded company controlled
by the Menendez family, and Ravenscroft. Mr. Menendez has been, and continues to
be, actively involved in other businesses associated with the Menendez family,
as well as other companies affiliated with SIPSA. Mr. Menendez is also a
Director, President and Chief Executive Officer of UABL and a Director of UP
Offshore.

     Ricardo Menendez R. Mr. Menendez has been a Director since incorporation in
December 1997 and is the brother of Felipe Menendez. Mr. Menendez began his
career in the shipping industry in 1970 with Compania Chilena de Navegacion
Interoceania S.A., and has continuously been involved in the management of the
Menendez family's shipping interests. He is the President of Oceanmarine and
Chairman of the Board of Directors of Ravenscroft, and has been a Director of
Ultrapetrol S.A. since it was formed in 1992. Mr. Menendez is also a Director of
SIPSA, and remains involved in the management of other Menendez family
businesses. Mr. Menendez has been a member of the board of The Standard
Steamship Owners' Protection & Indemnity Association (Bermuda) Limited (a member
of the International Group of Protection & Indemnity Associations) since 1993.
Mr. Menendez is also a Director of UABL and Chief Executive Officer of UP
Offshore.

     James F. Martin. Mr. Martin has been a Director since 2000. He is a
Managing Director with Emerging Markets Partnership, or EMP, principal adviser
to the Bermuda-based AIG-GE Capital Latin America Infrastructure Fund L.P.,
where he heads a sector team focusing on transportation, environmental services,
and oil and gas investments. Prior to joining EMP in 1997, Mr. Martin was head
of a team responsible for investments in water and environmental infrastructure
at the International Finance Corporation. Mr. Martin is also a Director of UABL
and UP Offshore.

     Katherine A. Downs. Ms. Downs has been a Director since 2000. Ms. Downs is
a Director with EMP, where she focuses on transportation, environmental
services, and oil and gas investments. Prior to joining EMP in 1997, Ms. Downs
was a Managing Vice President in the private placement group of the Prudential
Insurance Company of America. Ms. Downs is also a Director of UABL and UP
Offshore.

     Leonard J. Hoskinson. Mr. Hoskinson was appointed Director in March 2000
and assumed the position of Secretary six months later. He is the General
Manager of Ravenscroft, the appointed manager of our oceangoing fleet with its
base in Miami, Florida. Mr. Hoskinson has been employed by Ravenscroft for over
13 years and prior to that headed the ship finance group of Marine Midland Bank
NA in New York.

B.   Compensation of Directors and Senior Management

     The aggregate annual net cost to us for the compensation paid to members of
the Board of Directors was, $0.9 million for the fiscal year ended December 31,
2000 ($0.4 million as monitoring fees and $0.5 million as a bonus to certain
directors and officers), $1.1 million for the fiscal year ended December 31,
2001 ($0.4 million as monitoring fees and $0.7 million as a bonus to certain
directors and officers), $1.1 million for the fiscal year ended December 31,
2002 ($0.4 million as monitoring fees and $0.7 million as a bonus to certain
directors and officers), $1.1 million for the fiscal year ended December 31,
2003 ($0.4 million as monitoring fees and $0.7 million as a bonus to certain
directors and officers) and $1.3 million for the fiscal year ended December 31,
2004 ($0.4 million as monitoring fees and $0.9 million as a bonus to certain
directors and officers). We have no funds set aside or accrued to provide
pension, retirement or similar benefits for our directors or officers. Although
we intend to negotiate employment contracts, we do not currently have employment
contracts with any of our senior executives or directors.

Management Agreements

     For the day to day management of our operations, we and/or our subsidiaries
have entered into administrative and management agreements to provide specific
services for our operations. We refer you to "Certain Related Transactions."

C.   Board Practices

     As provided in our organizational documents and the International Business
Companies Act, 1986, each of our elected directors holds office until a
successor is elected or until his earlier death, resignation or removal.
Officers are elected from time to time by vote of the Board of Directors and
hold office until a successor is elected. Our Board of Directors has not
appointed an audit or a compensation committee. Our full board performs the
functions of the audit and compensation committees.

D.   Employees

     As of December 31, 2004, we employed approximately 469 employees,
consisting of 88 land-based employees and approximately 381 seafarers as crew on
our vessels, of which 175 were in our Ocean Business and 206 were in our River
Business. These employees were employed through various manning agents depending
on the nationality as listed below:

o  Indian crew:     Orient Ship Management & Manning Pvt., Ltd., Mumbai, India
o  Argentine crew:  Tecnical Services S.A., Buenos Aires, Argentina
o  Filipino crew:   C.F. Sharp Crew Management, Manila, Philippines
o  Ukrainian crew:  South Star Ltd., Odessa, Ukraine
o  Romanian crew:   Corona Shipping SRL, Constanta, Romania
o  Paraguayan crew: Tecnical Services S.A., Buenos Aires, Argentina

     Our crew is employed under the standard collective bargaining agreements
with the seafarers' union in their respective countries. The crew is employed on
contractual terms valid for a fixed duration of service on board the vessels. We
ensure that all the crew employed on board our vessels have the requisite
experience, qualifications and certification to comply with all international
regulations and shipping conventions. Our training requirements for the crew
exceed the applicable statutory requirements. We always man our vessels above
the safe manning requirements of the vessels' flag state in order to ensure
proper maintenance and safe operation of the vessels. We have in force special
programs such as a performance-related incentive bonus, which is paid to senior
officers upon rejoining our ships. This ensures retention of qualified and
competent staff within our fleet.

E.   SHARE OWNERSHIP

DIRECTOR OR OFFICER                                         SHARES

Felipe Menendez R. (1)                                      1,138,443
Ricardo Menendez R. (1)                                     1,138,443

(1)  Reflects shares beneficially owned by Inversiones Los Avellanos S.A., as
     set forth below in Item 7.--Major Shareholders and Related Party
     Transactions.


ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   MAJOR SHAREHOLDERS

     The following table sets forth certain information regarding the current
ownership of our outstanding voting securities as of December 31, 2004 by each
person known by us to be the beneficial owner of more than 5% of such securities
and all the directors and senior management as a group.

<TABLE>
<CAPTION>
                                                                       Number of     Percent of
   Name                                                               Common Shares   Class
   ----                                                               -------------   ---------

<S>                                                                   <C>               <C>
  Solimar Holdings Ltd. (1)........................................      996,009       46.7%
  Inversiones Los Avellanos S.A. (2)...............................    1,138,443       53.3%
  All directors and senior management as a group (2)...............    1,138,443       53.3%
</TABLE>

--------------
(1)  Solimar Holdings Ltd. is a wholly-owned subsidiary of AIG-GE Capital Latin
     American Infrastructure Fund L.P., a Bermuda limited partnership.
(2)  In respect of 601,299 held directly by Inversiones Los Avellanos S.A. and
     537,144 held by Avemar Holdings (Bahamas) Limited, the full voting power of
     which has been granted to Inversiones Los Avellanos S.A. by irrevocable
     proxy. Inversiones Los Avellanos S.A. is controlled by members of the
     Menendez family, including our directors Felipe Menendez R. and Ricardo
     Menendez R.

B.   RELATED PARTY TRANSACTIONS

     A significant part of this revenue from related parties is derived from the
chartering activity of UABL (prior to the acquisition by us of the remaining 50%
interest in UABL) and Maritima SIPSA S.A. Certain of our subsidiaries in the
Ocean Business time charter their fleet of push boats and river barges to UABL.
For the years ended December 31, 2004, 2003 and 2002, these charters represented
revenues of approximately $2.7 million, $10.3 million and $10.0 million,
respectively. On April 23, 2004, we acquired the remaining 50% interest in UABL,
making UABL a consolidated subsidiary. Therefore all transactions with UABL and
its subsidiaries after such date are not reported as transactions with related
parties. In March 2003, the Princess Marina was chartered by a Chilean national
petroleum company under a time charter that required her to be flagged in Chile.
Pursuant to the laws of Chile, for her to be flagged in Chile, she needed to be
owned by a legal entity controlled by Chilean citizens. Maritima SIPSA S.A. is
controlled by Chilean citizens. We own 49% of Maritima SIPSA S.A., and the other
shareholder of Maritima SIPSA S.A., SIPSA S.A., is a Chilean public company that
is controlled by members of the Menendez family, which includes Felipe Menendez
R., our President and Chief Executive Officer and a director, and Ricardo
Menendez R., a director. In order to effect the re-flagging of the vessel, we
sold the Princess Marina to Maritima SIPSA S.A. for a purchase price of
approximately $15.1 million, and partially financed the sale by lending Maritima
SIPSA S.A. $7.4 million. Under the terms of our agreement with Maritima SIPSA
S.A., such entity pays us fees on a monthly basis that we record as charter
revenue excluding any time and expenses incurred while the vessel is in drydock
or undergoing major repairs resulting from accidents. For the years ended
December 31, 2004 and 2003, this charter revenue amounted to approximately $2.5
million and $2.0 million, respectively. We are obligated to repurchase the
Princess Marina from Maritima SIPSA S.A. in June 2006 at a purchase price of
$7.7 million, payable in $0.3 million in cash and the balance through the
cancellation of indebtedness Maritima SIPSA S.A. owes to us.

     We and our subsidiaries also contract with related parties for various
services. Certain of our respective owning/operating subsidiaries have
contracted with Oceanmarine for administrative services. Oceanmarine is
indirectly controlled by the Menendez family, which includes Felipe Menendez R.
and Ricardo Menendez R. We pay Oceanmarine a monthly fee of $10,000 per
oceangoing vessel for these services. For the years ended December 31, 2004,
2003 and 2002, these payments to Oceanmarine amounted to approximately $0.7
million, $1.2 million and $1.3 million, respectively. Certain of our
owning/operating subsidiaries have contracted with Ravenscroft for ship
management services for the vessels used in our Ocean Business. Ravenscroft is
indirectly controlled by the Menendez family, which includes Felipe Menendez R.
and Ricardo Menendez R. For these services, we pay Ravenscroft a monthly fee of
$12,500 per oceangoing vessel, plus certain other expenses. For the years ended
December 31, 2004, 2003 and 2002, these payments to Ravenscroft amounted to
approximately $0.8 million, $1.6 million and $1.9 million, respectively. Ship
management responsibilities for our vessels used in the River Business,
including the river barges and push boats chartered by certain of our
subsidiaries in the Ocean Business to UABL, are performed by Lonehort Inc., a
subsidiary of UABL. Prior to our acquisition of the remaining 50% interest in
UABL on April 23, 2004, Lonehort Inc. was treated as a related party. For the
years ended December 31, 2004, 2003 and 2002, ship management fees paid to and
accrued for Lonehort S.A. amounted to $1.7 million, $6.7 million and $6.6
million, respectively. During the years ended December 31, 2003 and 2002 we
outsourced freight from UABL for $0.04 million and $0.8, respectively. Besides
the expenses recovery from UABL totaled $0.1 million, $0.9 million and $0.5
million for the years ended December 31, 2004, 2003 and 2002 and the
administrative services fees to UABL totaled $0.09 million $0.3 million and $0.3
million during the years ended December 31, 2004, 2003 and 2002, respectively.

     Pursuant to an agency agreement with us, I. Shipping Services S.A. has
agreed to perform the duties of port agent for us in Argentina. I. Shipping
Services S.A. is indirectly controlled by the Menendez family, which includes
Felipe Menendez R. and Ricardo Menendez R. For these services, we pay I.
Shipping Services S.A. fees ranging from $800 to $1,875 per port call. For each
of the years ended December 31, 2004, 2003, and 2002 the amounts paid and/or
accrued for such services amounted to $0.02 million, $0.1 million and $0.2
million, respectively. We believe that payments made under the above agreements
reflect market rates for the services provided.

     Ravenscroft occasionally performs ship brokering services on our behalf. We
pay Ravenscroft industry standard rates for such services when used. For the
years ended December 31, 2004, 2003 and 2002 , ship broker fees paid to and
accrued for Ravenscroft for such services amounted to $0.7 million, $0.4 million
and $0.2 million, respectively.

     In October 2001, we sold Venecia, a wolly owned subsidiary, to a related
party, Windsor Financial Services Inc., at its bok value with a remaining
balance of $ 0.8 million and 1.2 million as of December 31, 2004 and 2003,
respectively.

     In October 2004, we purchased, through a subsidiary, 99.99% of Parque
Ecologico Industrial Altamira S.A. (PEISA) for $2,000 from a related party of
its shareholder, LAIF. The only asset of PEISA is land for expansion of the
maritime oil products terminal in Mexico.

     On June 25, 2003 we signed an administration agreement with UP Offshore.
Under this agreement we agree to assist UP Offshore by providing management
services required by the latter, including providing the services of the Chief
Executive Officer and to provide ongoing management and commercial advisory
services up to 2013. The parties agreed that Ultrapetrol professional fees under
this agreement shall be the 2% of UP Offshore annual EBITDA. None of such fees
has been recognized in 2003 and 2004, because UP Offshore has not commenced its
commercial operations.

     Certain of our directors and senior management hold similar positions with
our related parties. Felipe Menendez R., who is our President, Chief Executive
Officer and a director, is also a director of Oceanmarine, Maritima SIPSA S.A.,
Ravenscroft and I. Shipping Services S.A. Ricardo Menendez R., who is one of our
directors, is also the President of Oceanmarine and I. Shipping Services S.A., a
director of Maritima SIPSA S.A., and Chairman of the Board of Directors of
Ravenscroft. Leonard J. Hoskinson, who is one of our directors, is also General
Manager and a director of Ravenscroft. Although it is not their current
intention to do so, in light of their positions with such entities, these
officers and directors may experience conflicts of interest in selecting between
our interests and those of Ravenscroft, Oceanmarine, Maritima SIPSA S.A. and I.
Shipping Services Inc.

     Certain of our subsidiaries repurchased approximately $12.4 million of our
Prior Notes in the secondary market. We canceled these repurchased notes prior
to the closing of the offering of our New Notes.

     Prior to the commencement of the offering of our New Notes, an affiliate of
one of our shareholders, who also purchased New Notes in the offering, provided
advice to the initial purchaser on the terms and structure of the proposed
offering for which it was paid a fee of $0.5 million.

     In connection with the registration of the new notes, we and the subsidiary
guarantors have appointed Ravenscroft as an authorized representative in the
United States for a fee plus reimbursement of expenses. We and the subsidiary
guarantors will also indemnify Ravenscroft of its services as authorized
representative.

C.   INTERESTS OF EXPERTS AND COUNSEL

     Not Applicable.

ITEM 8 - FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     See Item 18.

B.   SIGNIFICANT CHANGES

     Not Applicable.

ITEM 9 - THE OFFER AND LISTING

     No active market within or outside the United States exists for the equity
securities of Ultrapetrol (Bahamas) Limited. Our equity securities have not been
registered under the Securities Act of 1933.

     As of the date of this report, there is no active trading market within or
outside the United States for our Registered Notes. The registration statement
covering $180,000,000 in aggregate principal amount of our 9 % First Preferred
Ship Mortgage Notes due 2014 was declared effective by the Securities and
Exchange Commission on March 4, 2005, and we then offered the Registered Notes
in exchange for all the New Notes. The offer to exchange closed April 8, 2005
and all New Notes were exchanged for Registered Notes.

ITEM 10 - ADDITIONAL INFORMATION

A.   SHARE CAPITAL

     Not Applicable.

B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

     The following summarizes certain provisions of the Company's Amended and
Restated Memorandum and Articles of Association. This summary is qualified in
its entirety by reference to the International Business Companies Act, 2000 and
the Company's Amended and Restated Memorandum and Articles of Association.
Information on where investors can obtain copies of the Memorandum and Articles
of Association is described under the heading "Documents on Display" under this
Item.

Objects and Purposes

     The Company is incorporated in the Commonwealth of the Bahamas ("The
Bahamas") under the name Ultrapetrol (Bahamas) Limited. The Registered Office of
the Company is situated at H & J Corporate Services Ltd., Shirlaw House, 87
Shirley Street, P.O. Box SS-19084, Nassau, Bahamas. The Registered Agent of the
Company is H & J Corporate Services Ltd., Shirlaw House, 87 Shirley Street, P.O.
Box SS-19084, Nassau, Bahamas.

     Clause 4 of the Company's Memorandum of Association provides that its
objects include the carrying out of the management and exploitation of vessels
of its own or third parties, as well as to act as representatives of other
owners and ship owners or to engage in other related activities; the handling of
maritime, fluvial and lacustrine transportation, domestic and international, of
cargoes, correspondence and maritime works and services in general; the
rendering of training services to personnel relative to sea navigation; the
owning, hiring, and leasing vessels on time charter, bareboat charter, or under
any other charter; to engage in the activities of transportation, transshipment
and unloading operations and cargo complement; to develop loading, discharge and
stowing operations; to render towage services; to act as ship brokers and/or
freighters, to act as maritime agents and to represent vessels of its own or of
third parties; to build vessels and naval appliances as well as to exploit
public and private franchises of any kind, to participate in bids, to construct
ports and also to operate them and represent third parties in any manner in the
maritime business; to effect the purchase, sale, building, management and
exploitation of real estates; and to execute all kinds of acts, representations,
agencies, commissions, consignments, business activities, and management of
properties, stocks and enterprises in general.

Directors

     The business and affairs of the Company shall be managed by the directors.
The Company shall pay to each director an annual fee of US$75,000.00 which
salary shall be paid out of the funds of the Company. Directors shall also be
paid out of funds of the Company all expenses, including travelling expenses,
properly incurred by them in connection with the business of the Company, as may
be approved by resolution of directors and subject to any resolution of the
shareholders. The Amended and Restated Memorandum and Articles of Association do
not place a general prohibition on a director voting in respect of any agreement
or transaction in which he has a financial interest other than by virtue of his
interest in shares of the Company. To this extent, the Company is governed by
the International Business Companies Act, 2000, which states that subject to any
limitations in the Memorandum and Articles of Association and any unanimous
shareholder agreement, no such agreement or transaction is void or voidable by
reason that the director is present at the meeting of directors that approves
the agreement or transaction or that the vote of the director is counted for
that purpose. Such agreement or transaction is valid if the material facts of
the director's interest in the agreement or transaction and his interest in or
relationship to any other party to the agreement or transaction are disclosed in
good faith or are known to the shareholders entitled to vote at a meeting of the
shareholders and the agreement or transaction is approved or ratified by
resolution of the shareholders. A director who has an interest in any particular
business to be considered at a meeting of directors may be counted for the
purpose of determining whether the meeting is duly constituted. A director need
not be a member of the Company and no shareholding qualification shall be
necessary to qualify a person as a director.

Share Rights, Preferences, Restrictions

     Subject to the rights of holders of shares entitled to special rights as to
dividends, all dividends shall be declared and ranked pari passu to shareholders
of record at the date of the declaration of the dividend; but no dividend shall
be paid on those shares which are held by the Company as Treasury shares.
Dividends shall only be paid out of the net profits of the Company and shall
only be paid in cash. It is policy of the Company, unless the members decide
otherwise, at the annual general meeting to distribute a dividend of at least
thirty percent (30%) of the Company's net after-tax profit. But such
distributions shall be subject to the restrictions, terms and conditions which
may be imposed on the Company by lenders, bondholders or other financial
institutions, and/or those limitations imposed by the contracts, agreements or
other financial instruments, including any trust indenture into which the
Company may have entered. Also before making distributions, the Company shall
also make adequate reserves as the Board of Directors may deem necessary for the
Company's commitments (even if after giving effect to such reserves the
distribution would be lower than thirty per cent (30%)). The directors may,
before recommending any dividend, set aside out of the profits of the Company
such sum as they think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for special dividends or bonuses, or for repairing,
improving, maintaining any of the property of the Company, and for such other
purposes as the directors shall in their absolute discretion think conducive to
the interests of the Company. If several persons are registered as joint holders
of any share, any of them may give effectual receipt for any dividend or other
moneys payable in respect of the share.

     Subject to certain voting requirements, the Company may alter or modify the
conditions contained in the Articles and Memorandum of Association as originally
prepared or as amended by resolution of the shareholders.

     No business shall be transacted at any general meeting unless a quorum of
members is present. A quorum shall consist of a shareholder or shareholders
holding not less than sixty-five percent (65%) of the issued and outstanding
shares entitled to vote, provided that for the period beginning on the date of
the Shareholders Agreement and ending on the last Installment Date (both as
defined in the Amended and Restated Articles of Association of the Company), the
presence of Solimar Holdings LDC shall be required to constitute a quorum.
Subject to certain voting requirements contained in Section 1.7 (c) and (e) of
Article I and the exceptions thereto contained in Section 1.8 of Article I, any
question presented to or action taken by the shareholders shall be approved or
disapproved at a meeting at which a quorum shall be present and acting
throughout in accordance with the votes of the shareholders holding a majority
of the shares of Common Stock or other voting Capital Stock of the Company
present at such meeting. At any general meeting of the shareholders unless a
poll is demanded by a shareholder present in person or by proxy, a declaration
by the Chairman of the meeting that a resolution has been carried and an entry
to that effect in the book of proceedings of the shareholders shall be
sufficient evidence of the fact, without proof of the number of proportion of
the votes recorded in favor of or against such resolution. If a poll is demanded
it shall be taken in such manner as the Chairman directs and the result of such
poll shall be deemed to be the resolution of the shareholders. Notice of
meetings of shareholders and other information or written statement required to
be given to shareholders, shall be given by personal service, or sent by
airmail, or by telex, telegram, telefax, cable or other electronic means at the
discretion of the directors.

     There are no limitations under the laws of The Bahamas on the rights of
non-resident or foreign shareholders to hold or exercise voting rights.

C.   MATERIAL CONTRACTS

     Not applicable

D.   Exchange Controls

     We are incorporated as an International Business Company, or IBC, in the
Commonwealth of The Bahamas. Under the International Business Companies Act,
(Chapter 309 of the Statute Laws of The Bahamas, 2000 Edition), or the IBC Act,
provides that so long as our operations are conducted exclusively overseas, we
are exempt from the Exchange Control Regulations Act, (Chapter 360 of the
Statute Laws of The Bahamas, 2000 Edition) (the "ECR Act"), and any regulations
made thereunder. Accordingly, the import or export of capital and the remittance
of dividends, interest or other payments to non-resident holders of our
securities will not require the prior approval of The Central Bank of the
Bahamas, or the Central Bank, other than in respect of local Bahamian currency.
However, the prior approval of the Central Bank must be obtained in respect of
our operations that will not be exclusively overseas.

     With regard to an IBC whose operations are exclusively overseas, the
transfer of shares between non-resident persons and the issuance of shares to or
by such persons may be effected without specific consent under the ECR Act, and
any regulations made thereunder. Issues and transfers of shares involving any
person regarded as resident in The Bahamas for Exchange Control purposes require
specific prior approval under the ECR Act and any regulations made thereunder.

     The IBC Act states that an IBC shall be exempt for a period of twenty years
from its date of incorporation from any business licence fee, corporation tax,
capital gains tax or any other tax on income or distributions accruing to such
IBC provided that the IBC is not resident for Exchange Control purposes. There
is a tax information exchange agreement between the United States and the
Bahamas that came into effect in relation to criminal tax matters for the
taxable period commencing in January 2004 and that comes into effect in relation
to civil matters for the taxable period commencing in January 2006. That
arrangement cannot be used by the United States in relation to persons that do
not have U.S. tax liability. Further, there are anti-third party provisions,
which means that the U.S. cannot share this information with any other country
or its agents or employees.

E.   TAXATION

     We have been advised by our Argentinean counsel, Perez Alati, Grondona,
Benites, Arnsten & Martinez de Hoz, that there is some uncertainty under
Argentinean law as to whether payments of interest by Ultrapetrol S.A., our
Argentinean subsidiary, under its guarantee of our Registered Notes, may be
subjected to Argentinean income tax withholding. Perez, Alati. have advised us
that payments by Ultrapetrol S.A. made in respect of interest on our Registered
Notes might be subject to withholding imposed by Argentinean taxing authorities.
They have advised us that the withholding determination would depend on whether
the Argentinean taxing authorities view such guarantee payments as equivalent to
loan interest payments.

     Certain of our subsidiaries who are guarantors of our Registered Notes are
incorporated in Panama. We have been advised by our Panamanian counsel, Tapia,
Linares y Alfaro, that there are no taxes or withholding provisions of any
nature to which United States holders of our Registered Notes are subject under
the laws of Panama in respect of any payments that might be made by our
Panamanian subsidiaries under their guarantees of our Registered Notes.

     We have been advised by our Bahamas counsel, Higgs & Johnson, that there
are presently no tax or withholding provisions of the Commonwealth of The
Bahamas to which any United States holders of our Registered Notes would be
subject.

     There is currently no reciprocal tax treaty in force between the United
States and any of Panama, the Bahamas or Argentina.

F.   DIVIDEND AND PAYING AGENTS

     Not Applicable.

G.   STATEMENTS BY EXPERTS

     Not Applicable.

H.   DOCUMENTS ON DISPLAY

     The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended. In accordance with these requirements we
file reports and other information with the Securities and Exchange Commission.
These materials, including this annual report and the accompanying exhibits may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the Commission's Regional Offices at 233 Broadway, New York, New York 10048 and
500 West Madison Street, Suite 1400, Northwestern Atrium Center, Chicago,
Illinois 60661. You may obtain information on the operation of the public
reference room by calling 1 (800) SEC-0330, and you may obtain copies at
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. 20549. The SEC maintains a website
(http://www.sec.gov.) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC. In addition, documents referred to in this annual report may be inspected
at the Company's headquarters at Eighty-Seven Shirley Street, Nassau, Bahamas.

I.   SUBSIDIARY INFORMATION

     Not Applicable.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from changes in interest rates, which may
adversely affect our results of operations and financial condition. Our policy
is not to use financial instruments for trading or other speculative purposes,
and we are not a party to any leveraged financial instruments. A discussion of
the fair value of financial instruments and our credit risk is included in Notes
2 and 10, respectively of the consolidated financial statements.

     Exposure To Interest Rates. Short-term variable rate debt, comprised
approximately $6.2 million of our total debt as of December 31, 2004, including
accrued interest. Long-term variable rate debt, comprised approximately $27.9
million of our total debt as of December 31, 2004. Our variable rate debt had an
average interest rate of approximately 5.5% as of December 31, 2004. A
hypothetical 1.0% increase in interest rates on $34.1 million of debt would
cause our interest expense to increase on average approximately $0.3 million per
year over the term of the loans, with a corresponding decrease in income before
taxes.

ITEM 12 - DESCRIPTION OF SECURITIES

     Not Applicable.

                                     PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not Applicable.

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     Not Applicable.

ITEM 15 CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

     Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
the Chief Executive Officer concluded that the Company's disclosure controls and
procedures are effective in alerting them timely to material information
relating to the Company required to be included in the Company's periodic SEC
filings.

Changes in Internal Controls

     There have been no significant changes in our internal controls or in other
factors that could have significantly affected those controls subsequent to the
date of our most recent evaluation of internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

     The Company's equity securities are not publicly traded, and its
obligations and duties to Note holders are defined in the indenture to the
Registered Notes. Accordingly, the Company is not required to appoint an audit
committee or select a financial expert. The Board of Directors does not believe
that the role played by an audit committee as defined in the Sarbanes Oxley Act.
and other regulations in force is applicable to the Company at this time.

ITEM 16B CODE OF ETHICS

     The Company's equity securities are not publicly traded, and its
obligations and duties to Note holders are defined in the indenture to the
Registered Notes. Accordingly, the Company has not adopted a business code of
ethics because the Board of Directors does not believe that role played by a
business code of ethics is applicable to the Company.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Pistrelli, Henry Martin y Asociados S.R.L. member of Ernst & Young Global
is the independent accounting firm that audits the financial statements of the
Company and its subsidiaries and is the principal accountant for the audit of
the Company.

     Aggregate fee for professional services rendered for the Company by
Pistrelli, Henry Martin y Asociados S.R.L. in 2004 and 2003 were:

                                    2004                     2003
                                      (Dollars in thousands)

           Audit fees            $440                       $200
           Tax fees               $27                         $8

     Audit fees include fees associated with the annual audit of the Company and
subsidiaries, statutory audits required internationally, comfort letters and SEC
filings. Tax fees relate to transfer pricing analysis.

     The Board of Directors pre-approves all audit, audit - related, and non
audit services provides by the Company's independent auditor prior to the
engagement of the independent auditor with respect to such services.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS.

Name of purchaser: Avemar Holding (Bahamas) Limited

Date of the transaction:  Oct 12, 2000

(a)  Total number of shares purchased: 537.144

(b)  Average price paid per share: $37,85 (Price with the related expenses to
     this transaction) bare price 37,65

(c)  Total number of Shares purchased as part of publicly announced plan or
     program: N/A

(d)  Maximum number (or approx. dollar value) of Shares that may be purchased
     under the plan or program: N/A

                                    PART III

ITEM 17 - FINANCIAL STATEMENTS

     Not Applicable.

ITEM 18 - FINANCIAL STATEMENTS

     The following financial statements listed below and set forth on pages F-1
through F-30, together with the report of independent registered public
accounting firm are filed as part of this annual report:

<PAGE>

Index to Financial Statements of Ultrapetrol (Bahamas) Limited and Subsidiaries

       Report of independent registered public accounting firm          F-1

       Consolidated Balance Sheets as of December 31, 2004 and 2003     F-3

       Consolidated statements of operations for the years ended
       December 31, 2004, 2003 and 2002                                 F-4

       Consolidated statements of changes in shareholders' equity
       for the years ended December 31, 2004, 2003 and 2002             F-5

       Consolidated statements of cash flows for the years ended
       December 31, 2004, 2003 and 2002                                 F-6

       Notes to consolidated financial statements for the years ended
       December 31, 2004, 2003 and 2002                                 F-7


<PAGE>

                 ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors of
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES:


     We have audited the accompanying consolidated balance sheets of Ultrapetrol
(Bahamas) Limited and subsidiaries, as of December 31, 2004 and 2003, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 2004. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Ultrapetrol
(Bahamas) Limited and subsidiaries as of December 31, 2004 and 2003, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2004, in conformity with U.S.
generally accepted accounting principles.


Buenos Aires, Argentina              PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
   March 10, 2005                          Member of Ernst & Young Global



                                                  DANIEL G. MINENNA
                                                       Partner

<PAGE>
<TABLE>
                            ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES

                   CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003

                 (stated in thousands of US dollars, except par value and share amounts)

<CAPTION>
                                                                          December 31,
                                                              ----------------- --------------------
                                                                     2004              2003
                                                              ----------------- --------------------
 ASSETS

   CURRENT ASSETS
    
                                                       <c>                <c>
     Cash and cash equivalents                                $      11,602      $       8,248
     Restricted cash                                                  2,975              1,155
     Investments                                                        217                194
     Accounts receivable, net of allowance for
       doubtful accounts of $739 and $1,142 in
       2004 and 2003, respectively                                    6,385              5,734
     Receivables from related parties                                 3,933              9,357
     Marine and river operating supplies                              2,194              1,009
     Prepaid expenses                                                 4,101              2,574
     Other receivables                                                5,724              4,624
                                                              ----------------- --------------------
       Total current assets                                          37,131             32,895
                                                              ----------------- --------------------
   NONCURRENT ASSETS

     Dry dock                                                        11,716              3,492
     Other receivables                                                7,944              6,414
     Receivables from related parties                                 2,540                  -
     Property and equipment, net                                    160,535            120,803
     Restricted cash                                                 30,010             16,461
     Investment in affiliates                                        15,607             25,729
     Other assets                                                     8,165              2,367
                                                              ------------------ -------------------
       Total noncurrent assets                                      236,517            175,266
                                                              ------------------ -------------------
       Total assets                                           $    273,648       $    208,161
                                                              ================== ===================

 LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY

   CURRENT LIABILITIES

     Accounts payable and accrued expenses                    $      11,487      $       4,991
     Payables to related parties                                        768              1,655
     Other financial debt                                            10,108             10,462
     Current portion of capital lease obligation                        695                  -
     Other payables                                                     632                371
                                                              ------------------ -------------------
       Total current liabilities                                     23,690             17,479
                                                              ------------------ -------------------
   NONCURRENT LIABILITIES

     Long-term notes                                                180,000            128,341
     Other financial debt, net of current portion                    29,430             17,011
     Capital lease obligation, less current portion                     180                  -
     Account payable and accrued expenses                               219                  -
                                                              ------------------ -------------------
       Total noncurrent liabilities                                 209,829            145,352
                                                              ------------------ -------------------
       Total liabilities                                      $    233,519       $    162,831
                                                              ------------------ -------------------
   MINORITY INTEREST                                          $       6,468      $     16,716
                                                              -------------------------------------

   MINORITY INTEREST SUBJECT TO PUT RIGHTS                    $       4,751      $       4,821
                                                              ------------------ -------------------
   SHAREHOLDERS' EQUITY

     Common stock, $.01 par value: authorized
        shares 2,134,452, issued and outstanding
        2,109,240                                                        21                 21
     Treasury stock                                                 (20,332)           (20,332)
     Additional paid-in capital                                      68,884             68,884
     Accumulated deficit                                            (19,863)           (25,002)
     Accumulated other comprehensive income                             200                222
                                                              ------------------ -------------------
     Total shareholders' equity                               $     28,910       $     23,793
                                                              ----------------- -------------------
   Total liabilities, minority interests and
      shareholders' equity                                     $    273,648       $    208,161
                                                               ================= ===================

                                            See accompanying notes.
</TABLE>

<PAGE>
<TABLE>

          CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003

    (stated in thousands of US dollars, except par value and share amounts)
<CAPTION>

                                                                              Year ended December 31,
                                                               -------------------------------------------------------
                                                                     2004              2003               2002
                                                               ---------------- ------------------- ------------------
<S>                                                            <C>               <C>                <C>
REVENUES

    Revenues form third parties                                $     89,956      $     62,996       $     63,152
    Revenues from related parties                                     5,204            12,237              9,972
                                                               ---------------- ------------------- ------------------
    Total revenues                                                   95,160            75,233             73,124
                                                               ---------------- ------------------- ------------------

OPERATING EXPENSES (1)

    Voyage expenses                                                 (15,923)          (12,644)           (10,185)
    Running costs                                                   (24,892)          (28,659)           (27,397)
    Amortization of dry dock                                         (5,195)           (7,232)            (8,839)
    Depreciation of property and equipment                          (13,493)          (15,335)           (15,968)
    Management fees to related parties                               (1,513)           (2,863)            (3,176)
    Administrative and selling expenses                              (7,494)           (4,955)            (3,642)
    Loss on involuntary conversion of Argentine receivables               -                 -             (2,704)
    Other operating income (expenses)                                   784            (2,124)             1,741
                                                               ---------------- ------------------- ------------------
                                                                    (67,726)          (73,812)           (70,170)
                                                               ---------------- ------------------- ------------------
  Operating profit                                                   27,434             1,421              2,954
                                                               ---------------- ------------------- ------------------

OTHER INCOME (EXPENSES)

    Financial expense                                               (16,134)          (16,207)           (16,763)
    Financial gain on extinguishment of debt                          1,344             1,782                  -
    Financial loss on extinguishment of debt                         (6,422)                -                  -
    Financial income                                                    119               201                326
    Investment in affiliates                                            406             3,140                (45)
    Other income (expenses)                                             174              (337)               (43)
                                                               ---------------- ------------------- ------------------
    Total other expenses                                            (20,513)          (11,421)           (16,525)
                                                               ---------------- ------------------- ------------------

  Income (loss) before income taxes and minority interest             6,921           (10,000)           (13,571)

    Income taxes                                                       (642)             (185)              (150)

    Minority interest                                                (1,140)           (1,333)              (132)
                                                               ---------------- ------------------- ------------------
  Net income (loss)                                            $      5,139     $     (11,518)      $    (13,853)
                                                               ================ =================== ==================

    (1)  In addition to management fees to related parties, operating expenses
         included $1,757, $6,833 and $7,669 in 2004, 2003, and 2002,
         respectively, related principally to ship management fees due to
         related parties.

                             See accompanying notes.

</TABLE>

<PAGE>


<TABLE>

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

                       (stated in thousands of US dollars)
<CAPTION>


                                                                                Accumulated
                                                        Additional                other
                                              Common     paid-in      Treasury  comprehensive  Accumulated
Balance                                       stock      capital      stock        income       deficit       Total
-------                                       -----      -------      -----        ------       -------       -----
<S>                                          <C>       <C>          <C>         <C>             <C>          <C>

December 31, 2001                             $   20   $   67,781  $ (20,332)     $   -        $      369    $  47,838

-        Capital stock increase                    1        1,103          -          -                 -        1,104
-        Net loss and comprehensive loss           -            -          -          -           (13,853)     (13,853)
                                            ----------------------------------------------------------------------------

December 31, 2002                                 21       68,884    (20,332)         -           (13,484)      35,089

Comprehensive loss:
-        Changes in value of derivatives           -            -          -        222                 -          222
-        Net loss                                  -            -          -          -           (11,518)     (11,518)
                                            ----------------------------------------------------------------------------

Total comprehensive loss                           -            -          -          -                 -      (11,296)
                                            ----------------------------------------------------------------------------

December 31, 2003                                 21       68,884    (20,332)       222           (25,002)      23,793

Comprehensive income:
-        Changes in value of derivatives           -            -          -        (22)                -          (22)
-        Net income                                -            -          -          -             5,139        5,139
                                            ----------------------------------------------------------------------------

Total comprehensive income                         -            -          -          -                 -        5,117
                                            ----------------------------------------------------------------------------

December 31, 2004                             $   21   $  68,884  $  (20,332)     $ 200        $  (19,863)   $  28,910
                                            ============================================================================

                             See accompanying notes.
</TABLE>

<PAGE>

<TABLE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

                       (stated in thousands of US dollars)
<CAPTION>

                                                                                     Year ended December 31,
                                                                           --------------------------------------------
                                                                               2004           2003           2002
                                                                           --------------------------------------------
<S>                                                                        <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net income (loss)                                                       $   5,139       $ (11,518)     $ (13,853)

   Adjustments to reconcile net income (loss) to net
    cash provided by operating  activities:
     Depreciation of property and equipment                                   13,493          15,335         15,968
     Amortization of dry dock                                                  5,195           7,232          8,839
     Expenditures for drydocking                                             (11,139)         (3,580)        (6,005)
     Note issuance expenses amortization                                         568             585            585
     Minority interest in equity of subsidiaries                               1,140           1,333            132
     Financial gain on extinguishment of debt                                 (1,344)         (1,782)             -
     Financial loss on extinguishment of debt                                  6,422               -              -
     (Gain) loss from disposal of property and equipment                         (41)          3,686          1,575
     Net (gain) loss from investment in affiliates                              (406)         (3,140)            45
     Allowance for doubtful accounts                                             355             882            322

   Changes in assets and liabilities, net of the effects from purchase of UABL
      Limited and UABL Terminals companies:
       (Increase) decrease in assets:
          Accounts receivables                                                 5,365           1,028          2,998
          Due from affiliates                                                  3,783           5,518          4,564
          Marine and river operating supplies                                    405             583            (79)
          Prepaid expenses                                                      (994)            725            495
          Other receivables                                                     (318)           (568)            94
       Increase (decrease) in liabilities:
          Accounts payable and accrued expenses                                1,801           1,404            (95)
          Due to affiliates                                                   (3,498)          1,387         (7,998)
          Other payables                                                        (251)           (363)           558
          Other                                                               (2,546)           (145)           245
                                                                           --------------------------------------------
          Net cash provided by operating activities                           23,129          18,602          8,390
                                                                           --------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of property and equipment                                        (59,934)        (17,089)       (17,690)
   Proceeds from disposals of property and equipment                           6,430          14,423          1,867
   Decrease (increase) in loan to affiliate                                        -          (1,750)           480
   Purchase of UABL and UABL Terminals companies net of cash acquired         (1,713)              -              -
   Investment in affiliates                                                   (1,542)              -              -
   Other                                                                        (797)              -            (80)
                                                                           --------------------------------------------
          Net cash used in investing activities                              (57,556)         (4,416)       (15,423)
                                                                           --------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Minority interest in equity of subsidiaries                                17,959          16,192          3,300
   Proceeds from long-term financial debt                                     27,700               -         11,032
   Proceeds from 2014 Senior Notes                                           180,000               -              -
   Payments of deferred financing costs under 2014 Senior Notes               (6,655)              -              -
   Payments of 2008 Senior Notes                                            (131,502)         (4,754)             -
   Payments of long-term financial debt                                      (39,149)         (4,946)        (3,320)
   Proceeds from issuance of redeemable preference shares of subsidiary        3,000               -              -
   Increase in restricted cash                                               (13,333)        (15,954)        (1,662)
   Capital contribution                                                            -               -          1,104
   Funds used in acquisition of treasury stock                                     -          (1,200)        (4,400)
   Other                                                                        (239)              -           (169)
                                                                           --------------------------------------------
          Net cash provided by (used in) financing activities                 37,781         (10,662)         5,885
                                                                           --------------------------------------------
          Net increase (decrease) in cash and cash equivalents                 3,354           3,524         (1,148)
          Cash and cash equivalents at the beginning of year               $   8,248      $    4,724      $   5,872
                                                                           --------------------------------------------
          Cash and cash equivalents at the end of year                     $  11,602      $    8,248      $   4,724
                                                                           ============================================
                             See accompanying notes.

</TABLE>

<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         (stated in thousands of US dollars, except otherwise indicated)

1.   CORPORATE ORGANIZATION

     Ultrapetrol (Bahamas) Limited ("Ultrapetrol Bahamas", "the Company", "us"
     or "we") is a company organized and registered as a Bahamas Corporation
     since December 1997.

     The Company is a diversified ocean and river transportation company
     involved in the carriage of dry and liquid cargoes. In its Ocean Business,
     it is an owner and operator of oceangoing vessels that transport petroleum
     products and dry cargo around the world. In its River Business is operator
     of river barges and push boats in the Hidrovia region of South America, a
     region on navigable waters on the Parana, Paraguay and Uruguay Rivers and
     part of the River Plate, which flow through Brazil, Bolivia, Uruguay,
     Paraguay and Argentina. In addition we recently made an investment in an
     offshore services transportation company, which will commence operations in
     2005.

     On June 28, 2001, the Company issued 138,443 new shares for $5,295 which
     were totally subscribed by Los Avellanos, one of the Company's original
     shareholders and was paid $3,297 in 2001 and $1,104 in 2002 and the balance
     are payable in July 2005. As of December 31, 2004 and 2003 the outstanding
     payment was $894 and was shown as a reduction of shareholders' equity. The
     Company has an option to repurchases 25,212 of its shares for a total price
     of $894 from Inversiones Los Avellanos S.A. until July 31, 2005.

     As of December 31, 2004 the shareholders of Ultrapetrol Bahamas are Solimar
     Holdings LDC, Inversiones Los Avellanos S.A. and Avemar Holdings (Bahamas),
     a wholly owned subsidiary of the Company (see Note 13), in the proportion
     of 46.66%, 28.17% and 25.17%, respectively. Since Avemar Holdings (Bahamas)
     granted an irrevocable proxy to Inversiones Los Avellanos S.A. in full for
     all of its voting powers related to its interest in the Company, as of
     December 31, 2004, Inversiones Los Avellanos S.A. held 53.30% of the
     Company's voting rights.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   Basis of presentation and principles of consolidation

          The consolidated financial statements have been prepared in accordance
          with U.S. generally accepted accounting principles ("US GAAP").

          The consolidated financial statements include the accounts of the
          Company and its subsidiaries, both majority and wholly owned.
          Significant intercompany accounts and transactions have been
          eliminated in consolidation. Investments in 50% or less owned
          affiliates, in which the Company exercises significant influence, are
          accounted for by the equity method.

          The consolidated statements of operations and cash flows for 2003 and
          2002 have been reclassified to conform with the 2004 presentation of
          certain items.

     b)   Cash and cash equivalents

          The Company considers all highly liquid investments with an original
          maturity of three months or less to be cash equivalents. Cash
          equivalents consist of money market instruments and overnight
          investments. The credit risk associated with cash and cash equivalents
          is considered low due to the high credit quality of the financial
          institutions. c) Restricted cash

          At December 31, 2004 and 2003 current restricted cash consisted in
          cash generated from the operations of our Cape Pampas vessels (see
          Note 6) and our river fleet required to fund the next installment
          under the debt agreements. As of December 31, 2003 the noncurrent
          restricted cash consisted to the proceeds from the sales of our
          single-hull vessels (see Note 5) to which under the terms and
          conditions of the Prior Notes, should only be used to acquire another
          vessels to guarantee the Prior Notes. As of December 31, 2004 the
          noncurrent restricted cash consisted on $30 million from the proceeds
          of the issuance of the 9% First Preferred Ship Mortgage Notes due
          2014, which will be released in connection with the acquisition by the
          Company of additional vessels upon satisfaction of certain conditions
          (see Note 6).

     d)   Accounts receivables

          Substantially all of the Company's accounts receivable are due from
          international oil companies and traders. The Company performs ongoing
          credit evaluations of its trade customers and generally does not
          require collateral. Expected credit losses are provided for in the
          consolidated financial statements.

          Changes in the allowance for doubtful accounts for the three years
          ended December 31, 2004, were as follow:

                                           2004          2003          2002
                                           ----          ----          ----

          Balance at January 1          $  1,142       $   810       $  540
          Provision                          679           882          322
          Recovery                          (324)            -            -
          Amounts written off               (758)         (550)         (52)
                                       ---------      --------      ---------
          Balance at December 31        $    739       $ 1,142       $ 810
                                       =========      ========      =========

     e)   Insurance claims receivables

          Insurance claims receivables represent costs incurred in connection
          with insurable incidents for which the Company expects it is probable
          it will be reimbursed by the insurance carriers, subject to applicable
          deductibles. Deductible amounts related to covered incidents are
          generally expensed in the period of occurrence of the incident.
          Expenses incurred for insurable incidents in excess of deductibles are
          recorded as receivables pending the completion of all repair work and
          the administrative claims process. The credit risk associated with
          insurance claims receivable is considered low due to the high credit
          quality and funded status of the insurance clubs in which the Company
          participates. Insurance claims receivable, included in other
          receivables in the accompanying balance sheets, amounts $10,318 and
          $8,784 at December 31, 2004 and 2003, respectively.

     f)   Marine and river operating supplies

          Such amounts consist of fuel and supplies that are recorded for at the
          lower of cost or market and are charged to operating expenses as
          consumed.

     g)   Property and equipment, net

          Vessels and equipment are stated at cost less accumulated
          depreciation. This cost includes the purchase price and all directly
          attributable costs. Depreciation is computed net from the estimated
          scrap value and is recorded using the straight-line method over the
          estimated useful lives of the assets. At the time property is disposed
          of, the assets and related accumulated depreciation are removed from
          the accounts, and any resulting gain or loss is recorded in other
          operating income (expense). Major renewals and betterments that extend
          the life of the vessels and equipment are capitalized. Interest
          incurred on debt related to newbuild vessels is capitalized.
          Maintenance and repairs are expensed as incurred except for drydocking
          expenditures.

          Listed below are the estimated useful lives of vessels and equipment:

                                                            Useful lives
                                                             (in years)
                                                             ----------

           Ocean-going vessels                                     24
           River barges and push boats                             35
           Furniture and equipment                              5 to 10

          Long-lived assets are reviewed for impairment in accordance with SFAS
          No. 144, "Accounting for the Impairment or Disposal of Long-lived
          Assets", whenever events or changes in circumstances indicate that the
          carrying amount may not be recoverable. If the sum of the expected
          future undiscounted cash flows is less than the carrying amount of the
          asset, a loss is recognized for the difference between the fair value
          and carrying value of the asset.

     h)   Dry dock costs

          The Company's vessel must be periodically drydocked and pass
          inspections to maintain its operating classification, as mandated by
          maritime regulations. Costs incurred to drydock the vessel is deferred
          and amortized over the period to the next drydocking, generally 24 to
          36 months. Drydocking costs are comprised to painting the vessel hull
          and sides, recoating cargo and fuel tanks, and performing other engine
          and equipment maintenance activities to bring the vessel into
          compliance with classification standards. At the time vessel is
          disposed of, the vessels and related accumulated amortization are
          removed from the accounts, and any resulting gain or loss is recorded
          in other operating income (expense).

     i)   Investments in affiliates

          These investments are accounted for by the equity method.

     j)   Other assets

          This account includes costs incurred to issue debt net of amortization
          costs and are being amortized over the debts term.

     k)   Accounts payable and accrued expenses

          Accounts payable and accrued expenses included in current liabilities
          as of December 31, 2004 and 2003 consist of insurance payables,
          operating expenses, customers advanced collected, among others.

     l)   Estimates

          The preparation of financial statements in conformity with generally
          accepted accounting principles in the United States requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities at the date of the financial
          statements, and the reported amounts of revenue and expenses during
          the years. Significant estimates have been made by management,
          including the allowance for doubtful accounts, useful lives and
          valuation of vessels, realizability of deferred tax assets and certain
          accrued liabilities. Actual results may differ from those estimates.

     m)   Revenues

          Revenue is generally recorded when services are rendered, the Company
          has a signed charter agreement or other evidence of an arrangement,
          pricing is fixed or determinable and collection is reasonably assured.
          Revenues are earned under time charters, bareboat charters,
          consecutive voyage charters or affreightment/voyage contracts. Revenue
          from time charters and bareboat charters is earned and recognized on a
          daily basis. Revenue and voyage expenses for the affreightment
          contracts and consecutive voyage charters are recognized based upon
          the percentage of voyage completion. The percentage of voyage
          completion is based on the number of voyage days worked at the balance
          sheet date divided by the total number of days expected on the voyage.

     n)   Foreign currency translation

          The Company uses the US dollar as its functional currency. Operations
          denominated in other currencies are remeasured into US dollars in
          accordance with SFAS No. 52, Foreign Currency Translation ("SFAS 52").
          Assets and liabilities denominated in foreign currencies are
          translated into US dollars at the rate of exchange at the balance
          sheet date, while revenues and expenses are translated using the
          average exchange rate for each month. Translation gains and losses
          resulting from changes in exchange rates for each year are included in
          the accompanying consolidated statements of operations.

     o)   Comprehensive Income (Loss)

          SFAS No. 130 Reporting Comprehensive Income ("SFAS 130"), establishes
          standards for the reporting and display of comprehensive income
          (loss), which is defined as the change in equity arising from
          non-owner sources. Comprehensive income (loss) is reflected in the
          consolidated statement of shareholders' equity. In addition, to net
          income (loss), total comprehensive income (loss) includes a loss of
          foreign currency forward contract of $22 in 2004 and a gain of $222 in
          2003.

     p)   Fair value of financial instruments

          The following methods and assumptions were used to estimate the fair
          value of financial instruments included in the following categories:

          -    Cash, cash equivalents, accounts receivables, accounts payables
               and accrued liabilities: the carrying amounts reported in the
               balance sheet approximate fair value due to the short-term nature
               of such instruments.

          -    Long-term notes as of December 31, 2003: the fair value has been
               valued at the discounted amount of future cash flows at market
               interest rates current available to the Company for loans with
               similar terms.

          -    Long-term notes as of December 31, 2004, other financial debt and
               capital lease obligations: the carrying amounts reported in the
               balance sheet approximate fair value as the interest rates either
               adjust based on LIBOR, or in the case of fixed rate borrowings,
               such rate approximates the Company's current borrowing rate.

          The following table presents the carrying value and fair value of the
          financial instruments at December 31.

<TABLE>

                                                                 As of December 31,
                                                        2004                         2003
                                                        ----                         ----

                                                Carrying      Fair          Carrying         Fair
                                                 value        value          value           value
                                                 -----        -----          -----           -----
          <S>                                   <C>             <C>            <C>             <C>
          Assets

          Windsor Financial Services
          Inc. note receivable (Note 9)         $     834      $      834      $   1,234     $    1,234
          Forward contract                              -               -            606            606

          Liabilities

          Notes (Note 6)                          181,620         181,620        131,708         93,206
          Other financial debt (Note 6)            37,918          37,918         24,106         24,106
          Capital lease obligation (Note 7)     $     875       $     875      $       -     $        -
</TABLE>

          q)   Other operating income (expense)

          For the three years ended December 31, 2004, this account includes:

                                                 2004        2003        2002
                                                 ----        ----        ----

           Gain (Loss) on vessels disposal      $    41   $ (3,686)    $(1,575)
           Claims against insurance companies       743      1,562       3,316
                                               --------   --------     --------
                                                $  784    $ (2,124)    $ 1,741
                                               ========   ========     ========

3.   NEW OPERATIONS AND ORGANIZATION OF NEW AFFILIATES

     a)   Acquisition of UABL and river fleet

          On April 23, 2004, the Company acquired in a series of related
          transactions, through two wholly owned subsidiaries from ACBL
          Hidrovias Ltd. ("ACBL"), the remaining 50% equity interest in UABL
          Limited and UABL Terminals that it did not own (together "UABL"). In
          addition, it acquired from the same vendor a fleet of 50 river barges
          and 7 push boats, which UABL Limited and its subsidiaries previously
          leased from ACBL, certain receivables and liabilities.

          UABL operates a river transportation business on the Parana, Paraguay
          and Uruguay rivers in Argentina, Bolivia, Brazil, Paraguay and
          Uruguay. As a result of the acquisition, the Company is the leading
          barge transportation company in South America, has consolidated its
          position in the river business through the Hidrovia and is
          well-positioned to grow. The results of UABL's operations have been
          consolidated in the consolidated financial statements since the date
          of acquisition.

          The aggregate purchase price was $26,100, including $24,100 in cash
          and 2,000 shares of ACBL acquired by the Company for $2,000 shortly
          before this transaction.

          The following table summarizes the estimated fair values of the assets
          acquired and liabilities assumed and allocation of purchase price at
          the date of acquisition.

           Current assets                                          $   10,472
           Property and equipment:
           |X|      Fair value                        $   68,627
           |X|      Re-allocation of purchase credit     (34,497)      34,130
                                                     -----------
           Other noncurrent assets                                      3,967
                                                                   -----------
                 Total assets acquired                                 48,569
                                                                   -----------
           Current liabilities                                         (8,592)
           Noncurrent liabilities                                     (13,877)
                                                                   -----------
                 Total liabilities assumed                            (22,469)
                                                                   -----------
                 Total purchase price                              $   26,100
                                                                   ===========

          If the transaction had been consummated on January 1, 2003 the
          Company's unaudited pro forma revenues and net income (loss) for the
          years ended December 31, 2004 and 2003, would have been as shown
          below. However, such pro forma information is not necessarily
          indicative of what actually would have occurred had the transaction
          occurred on such date.

                                              For the year ended December 31,
                                                        (unaudited)
                                          -------------------------------------
                                                  2004                 2003
                                          -------------------- -----------------

          Revenues                          $   103,473          $  111,131
          Net income (loss)                 $     5,591          $   (6,543)

     b)   UP Offshore (Bahamas) Ltd. and subsidiaries

          In April 2002, the Company formed a company in Bahamas, named UP
          Offshore (Bahamas) Ltd (UP Offshore). The Company has a 27.78%
          interest in UP Offshore. UP Offshore has contracted for the
          construction of six Platform Supply Vessels (PSVs) whose deliveries
          are expected to commence in the second quarter of 2005. At December
          31, 2004 the Company contributed $12,500. The Company has not
          guaranteed any debt of UP Offshore.

          UP Offshore was a restricted subsidiary under the indenture governing
          of the Notes due 2008, since the Company had the right to control its
          Board of Directors. Accordingly, the Company has consolidated UP
          Offshore' financial statements with its financial statements for 2003
          and 2002. In connection with the discharge of the indenture governing
          the Notes due 2008, on November 24, 2004, the Company relinquished
          control of the Board of Directors of UP Offshore. Accordinly, UP
          Offshore is accounted for by the equity method since such date. As of
          December 31, 2004, the Company's investment in UP Offshore was $13,097
          and is presented in investment in affiliates in the accompanying
          consolidated balance sheet.

     c)   UP River (Holdings) Ltd.

          On June, 2003, the Company sold to the International Finance
          Corporation (IFC) a 7.14% interest in UP River (Holdings) Ltd.

          Also, the Company agreed to pay to the IFC the 7.14% of the amount of
          the respective Charter Party Payments pursuant to the Charter Party
          Agreements between Ultrapetrol and UABL.

          In full consideration for (a) the sale of the shares, and (b) the
          right to receive a portion of the Charter Party Payments, the IFC paid
          to the Company $5 million.

          During the period beginning on December 31, 2009 and ending on
          December 31, 2010 the IFC will be able to exercise an option to put
          all of the shares of UP River (Holdings) Ltd. then owned by it to UP
          River (Holdings) Ltd. for an amount in cash equal to $5 million minus
          the amount of any cash received by IFC in respect of ownership of such
          shares (whether by dividend, proceeds from Charter Party Payments or
          otherwise) plus interest thereon, compounded annually calculated as a
          rate equal to LIBOR plus 200 basic points.

          Also, Ultrapetrol shall have the right, exercisable from time to time
          to purchase from the IFC all of the shares of UP River (Holdings) Ltd.
          then owned by IFC. The purchase price for the shares to be purchased,
          which shall be an amount sufficient to result in a realized internal
          return rate to the IFC on such shares equal to 18% per annum.

          As of December 31, 2004 and 2003, the Company presents $4,751 and
          $4,821, respectively, as a "Minority interest subject to put rights",
          which represents the initial proceeds received by the IFC plus accrued
          interest less Charter Party Payments made to the IFC.

4.   DRY DOCK

     The capitalized amounts in dry dock as of December 31, 2004 and 2003 were
     as follows:

                                                2004             2003
                                                ----             ----


      Original book value                    $    28,196      $   18,997
      Accumulated amortization                   (16,480)        (15,505)
                                             -----------      ------------
      Net book value                         $    11,716      $    3,492
                                             ===========      =============

5.   PROPERTY AND EQUIPMENT, NET

     The capitalized cost of all property and equipment and the related
     accumulated depreciation as of December 31, 2004 and 2003 were as follows:

                                          2004                 2003
                                    ----------------------------------------
                                             Original book value
                                    ----------------------------------------

      Ocean-going vessels              $    134,825          $    155,870
      River barges and pushboats            105,426                24,870
      Furniture and equipment                 4,672                   106
      Construction in progress                    -                14,309
      Land and operating base                 4,758                     -
      Prepayment to supplies                  1,242                     -
                                    ------------------- --------------------
      Total original book value             250,923               195,155
      Accumulated depreciation              (90,388)              (74,352)
                                    ------------------- --------------------
                                    ------------------- --------------------
      Net book value                   $    160,535          $    120,803
                                    =================== ====================

     As of December 31, 2004 the net book value of the assets pledged as a
     guarantee of the debt was approximately $152 million.

     During the last three years the Company sold certain older single hull
     tankers serving the regional trade of Argentina and Brazil. Gain or loss on
     disposal of such vessels is presented in other operating income (expense).

     During 2004 the Company incurred interest cost of $15,162 of which $685 was
     capitalized. During 2003 the Company incurred interest cost of $15,190.

6.   LONG-TERM DEBT AND OTHER FINANCIAL DEBT

     10.5% First Preferred Ship Mortgage Notes due 2008

     As of December 31, 2003 the aggregating outstanding amount related with its
     10.5% First Preferred Ship Mortgage Notes due 2008 ("Notes due 2008") was
     $128,341, due in full in 2008.

     In connection with the issue of its 9% First Preferred Ship Mortgage Notes
     due 2014, the Company repaid all its Notes due 2008.

     9% First Preferred Ship Mortgage Notes due 2014

     On November 24, 2004 the Company completed the Offering of $180 million of
     9% First Preferred Ship Mortgage Notes due 2014 (the "2014 Senior Notes"),
     through a private placement to institutional investors eligible for resale
     under Rule 144A and Regulation S. The net proceeds of the offering were
     used to repaid the Notes due 2008, certain other existing credit facilities
     and to fund the Escrow Account.

     Interest on the 2014 Senior Notes is payable semi-annually on May 24 and
     November 24 of each year. The 2014 Senior Notes are senior obligations
     guaranteed by the majority of the Company's subsidiaries directly involved
     in our ocean business. The Notes are secured by first preferred ship
     mortgages on 16 vessels, 2 oceangoing barges and 193 river barges.

     The 2014 Senior Notes are subject to certain covenants, including, among
     other things, limiting the parent's and guarantees subsidiaries' ability to
     incur additional indebtedness or issued preferred stock, pay dividends to
     stockholders, make investments or sell assets, under certain conditions.

     On January 24, 2005 the Company filed a registration statement with the SEC
     to register substantially identical senior notes to be exchanged for the
     2014 Senior Notes pursuant to a registration rights agreement, to allow the
     2014 Senior Notes be eligible for trading in the public markets. On March
     4, 2005 the registration statement was declared effective and the Company
     completed the exchange offer on April 8, 2005.

     At the time of the Offering, approximately $30,000, was deposited in an
     Escrow Account which will be released in connection with the acquisition by
     the Company of additional vessels upon the satisfaction of certain
     conditions. To the extent that after December 31, 2005 amounts on deposit
     in the Escrow Account exceed $1,000, the Company will be required to redeem
     as much principal amount of Notes as can be redeemed with such amounts on
     deposit at a redemption price equal to 101% of the principal amount of such
     Notes together with accrued and unpaid interest thereon to the date of such
     redemption.

     Although Ultrapetrol (Bahamas) Limited, the parent company, subscribed the
     issued Notes, principal and related expenses will be paid through funds
     obtained from the operations of the Company's subsidiaries.

     Early Extinguishment of Debt

     In connection with the 2014 Senior Notes offering, the Company paid
     $122,641 to redeem principal of its Notes due 2008. In addition, an early
     extinguishment premium of $4,600 was paid. Such premium and a $1,822
     balance of unamortized deferred financial cost were charged to expenses for
     a total of $6,422 in 2004.

     Previously the Company recognized a gain on extinguishment of debt of
     $1,344 and $1,782 in 2004 and 2003, respectively related to the repurchases
     of its Notes due 2008.

     Loan Agreement with Deutsche Schiffbank Aktiengesellschaft ("DSB")

     On October 27, 2004, Braddock Shipping Inc. a 60% owned subsidiary
     ("Braddock"), entered into a $10 million loan agreement with DSB for the
     purpose of refinancing debt previously incurred in connection with the
     purchase of the vessel Cape Pampas. The loan accrues interest at LIBOR rate
     plus 1.625% per annum. The term of the loan is five years and is scheduled
     to be repaid in 20 quarter-annual installments, including a balloon payment
     of $2.5 million at maturity. The loan is secured by a mortgage on the Cape
     Pampas and a pledge of 100% of the stock of Braddock and is guaranteed by
     both the direct and indirect parents of Braddock.

     The loan also contains customary covenants that limit, among other things,
     Braddock's ability to incur additional indebtedness, grant liens over its
     assets, sell assets, pay dividends, repay indebtedness, make investments,
     merge or consolidate, change its lines of business, and amend the terms of
     subordinated debt. The agreement governing the facility also contains
     customary events of default. If an event of default occurs and is
     continuing, DSB may require the entire amount of the loan be immediately
     repaid in full. Further, the loan agreement requires at all times that the
     vessels pledged as security have a fair market value of at least 150% of
     the then outstanding debt amount.

     Loan Agreements with IFC and KfW

     On December 17, 2002, UABL Barges, a subsidiary in the river business,
     entered into a loan agreement with the International Financial Corporation
     (IFC) in an aggregate principal amount of $20 million.

     This loan is divided into two tranches:

     -    Tranche A, amounting to $15 million, is payable in 14 semiannual
          installments of 1,071 each, beginning on June 15, 2005 and ending on
          December 15, 2011 and accrues interest at LIBOR plus 3.75% per annum,
          and

     -    Tranche B, amounting to $5 million, is payable in 10 semiannual
          installments of 500 each, beginning on June 15, 2005 and ending on
          December 15, 2009 and accrues interest at LIBOR plus 3.50% per annum.

     As of December 31, 2004 $15 million had been borrowed under the IFC Loan
     and remained outstanding. UABL Barges pays a fee of 0.50% per annum on the
     unused portion of the credit facility on a semiannually basis.

     In addition, on February 27, 2003, UABL Barges, a subsidiary in our river
     business, entered into a loan agreement with Kreditanstalt fur Wiederaufbau
     (KfW) in an aggregate principal amount of $10 million.

     This loan is payable in 10 semiannual installments of $1,000 each,
     beginning on June 15, 2005 and ending on December 15, 2009 and accrues
     interest at LIBOR plus 3.50% per annum.

     As of December 31, 2004 $7.5 million had been borrowed under the KfW Loan
     and remained outstanding. UABL Barges pays a fee of 0.50% per annum on the
     unused portion of the credit facility on a semiannually basis.

     Each of the IFC Loan and the KfW Loan is guaranteed by UABL Limited, the
     parent of UABL Barges. Each loan is also secured by mortgages on existing
     and future barges and push boats belonging to the subsidiaries of UABL
     Limited and by a stock pledge of 100% of the stock of UABL Barges. Each
     loan requires that at all times, the vessels pledged as security have a
     fair market value of at least 175% of the then outstanding loan amount.
     Each loan also contains certain restrictive covenants applicable to UABL
     Barges, including, among other customary covenants and restrictions: a
     minimum debt service coverage ratio not lower than 1.00; a limitation on
     the incurrence of additional debt; a limitation on making expenditures for
     assets; a prohibition on paying dividends or other distributions or
     repurchasing, redeeming or otherwise acquiring its stock without the
     consent of IFC or KfW, as applicable; a limitation on transactions with
     affiliates; and a limitation on selling, leasing, transferring, pledging or
     disposing of its assets. Each loan also contains customary events of
     default. If an event of default occurs and is continuing, IFC or KfW, as
     applicable, may require that the entire amount of the applicable loan be
     immediately repaid in full.

     In addition, as guarantor of the loans, UABL Limited is subject to certain
     restrictive covenants, including, among other customary covenants and
     restrictions: a minimum consolidated debt service coverage ratio of 1.25
     until June 15, 2005, and 1.5 thereafter; a maximum consolidated debt to
     equity ratio of 1.0; a limitation on its or its subsidiaries incurrence of
     indebtedness; a limitation on it or its subsidiaries making expenditures
     for assets; a prohibition on its payment of dividends or other
     distributions, or the purchase, redemption or other acquisition of its
     shares of stock, unless the proposed distribution or payment is out of
     retained earnings; a limitation on its and its subsidiaries ability to
     enter into transactions with affiliates; and a limitation on its or its
     subsidiaries selling, transferring, pledging or disposing of their
     respective assets. Each loan also contains a limitation on changes of
     control, including the sale or pledge by Ultrapetrol (Bahamas) Limited of
     the stock it holds in the parent entities of UABL Limited.

     Neither UABL Barges nor UABL Limited, nor any subsidiaries of UABL Limited,
     will be a subsidiary guarantor of the 2014 Senior Notes. With IFC's and
     KfW's consent, approximately $16 million of barges owned by certain
     subsidiaries of UABL Limited will be pledged as collateral to secure the
     2014 Senior Notes.

     During March 2003, UABL Paraguay S.A., a river subsidiary of the Company,
     entered into a fuel supply contract that could be considered as a "take or
     pay" contract. UABL Limited, the parent company of UABL Paraguay S.A. and
     our river subsidiary guaranteed the compliance with this contract and UABL
     S.A., a river subsidiary of the Company, mortgaged its port tug "San Jose
     V" to secure such contract. These facts resulted in the noncompliance with
     sections 16 (g) and (h) of the Guarantee Agreement by UABL Limited in favor
     of IFC and KfW. On February 18, 2004 (for the years 2003 and 2004) and on
     February 28, 2005 (for the year 2005), the IFC signed a waiver to sections
     16 (g) and (h) of the Guarantee Agreement in order to allow UABL Paraguay
     S.A. to enter into the "take or pay" fuel supply contract, allow UABL S.A.
     to mortgage its port tug "San Jose V" as a security for the fuel supply
     contract and UABL Limited to guarantee the compliance with this contract.
     On February 12, 2004, KfW signed a waiver to sections 16 (g) and (h) of the
     Guarantee Agreement for the three years.

<TABLE>
      Balances of financial debt as of December 31, 2004:
<CAPTION>

                                                                     Nominal value
                                                                ------------------------
                         Financial                                                         Accrued                   Average
                        institution / other          Due-year     Current    Noncurrent   interest     Total          rate
                        -----------------------------------------------------------------------------------------------------------
    <S>                  <C>                        <C>           <C>        <C>          <C>          <C>          <C>
    Ultrapetrol Bahamas  Notes                         2014        $   -      $  180,000   $  1,620   $   181,620      9.00%
    Braddock             DSB                        Through 2010       2,000        8,000         78        10,078  Libor + 1.625%
    UABL Barges          IFC                        Through 2011       1,607        9,643         35        11,285  Libor + 3.75%
    UABL Barges          IFC                        Through 2009         750        3,000         11         3,761  Libor + 3.50%
    UABL Barges          KfW                        Through 2009       1,500        6,000         23         7,523  Libor + 3.50%
    UABL Paraguay        Citibank N.A.              Through 2010         247        1,235          -         1,482  Libor + 2.75%
    UABL Paraguay        Citibank N.A.              Through 2005         500            -          4           504      5.60%
    UABL Limited         Transamerica Leasing Inc.  Through 2006       1,733        1,552          -         3,285      8.00%
                                                                  -------------------------------------------------
    December 31, 2004                                               $  8,337   $  209,430   $  1,771   $   219,538
                                                                  =================================================
    December 31, 2003                                               $  7,024   $  145,352   $  3,438   $   155,814
                                                                  =================================================
</TABLE>

     Aggregate annual future payments due on the long-term debt:

             Year ending December 31:
       --------------------------------------

                       2005                         $     10,108
                       2006                                8,156
                       2007                                5,104
                       2008                                5,104
                       2009                                5,104
                    Thereafter                           185,962
                                             -----------------------
                                       Total        $    219,538
                                             =======================

7.   COMMITMENTS AND CONTINGENCIES

     The Company is subject to legal proceedings, claims and contingencies
     arising in the ordinary course of business. When such amounts can be
     estimated and the contingency is probable, management accrues the
     corresponding liability. While the ultimate outcome of lawsuits or other
     proceedings against the Company cannot be predicted with certainty,
     management does not believe the costs of such actions will have a material
     effect on the Company's consolidated financial position or results of
     operations.

     Ursa and Valero Complaints

     On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
     United States District Court for the District of New Jersey against M/T
     Princess Susana and Noble Shipping Ltd., "Noble", (a wholly owned
     subsidiary of the Company) seeking damages arising out of the delay in
     delivery of a cargo of Kirkuk crude oil to the Valero terminal in
     Paulsboro, New Jersey. Also in February, 2003, Valero Marketing and Supply
     Co. ("Valero") commenced an action against Noble. The Valero and Ursa
     complaints sought damages in excess of $9,000.

     On May 26, 2004 the parties reached a global settlement of all the issues
     in the litigation and full releases were exchanged. In connection with the
     settlement, among other things, Noble's protection and indemnity insurers
     paid $2,250 in full settlement of Valero's claims and Noble's freight and
     demurrage counterclaim was paid in the amount of $275. The matter is now
     fully concluded.

     Bahia Blanca Customs Dispute

     Ultrapetrol S.A., one of the Company's subsidiaries, is involved in a
     customs dispute with the Customs Authority of Bahia Blanca in Argentina
     over the alleged unauthorized operation of the Princess Pia in Argentina
     during 2001. As a result, the Customs Authority of Bahia Blanca issued a
     resolution claiming the equivalent to $1,610 as import taxes and the
     equivalent to $1,610 as fines. In response to said resolution, on March 16,
     2004, Ultrapetrol S.A. submitted an appeal with the Argentine Tax Court
     arguing that it did not breach any applicable customs laws since the
     Princess Pia operated within Argentine territory only during the periods in
     which it was expressly authorized by the competent authorities. Said appeal
     is pending resolution by the Argentine Tax Court. Based upon the facts and
     circumstances of the case, the existing regulations and applicable
     insurance coverage, the Company does not believe that the outcome of this
     matter should have a material impact on its financial position or results
     of operations.

     Brazilian Customs Dispute

     Ultrapetrol S.A. is involved in a customs dispute with the Brazilian
     Customs tax authorities over the alleged infringement of customs
     regulations by the Alianza G3 and Alianza Campana (collectively, the
     "Vessel") in Brazil during 2004. As a result, the Brazilian Customs tax
     authorities commenced an administrative proceeding and applied the penalty
     of apprehension of the Vessel which required the Vessel to remain in port
     or within a maximum of five nautical miles from the Brazilian maritime
     coast. The maximum custom penalty that could be imposed would be
     confiscation of the Vessel, which is estimated by the Brazilian Customs tax
     authorities to be valued at $4,560. On the same day that Ultrapetrol S.A.
     presented its defense to this administrative proceeding, a writ of
     injunction was filed on behalf of Ultrapetrol S.A. seeking a judicial
     authorization allowing the return of the Vessel to Boias de Xareu, which is
     located almost 20 nautical miles from the Brazilian maritime coast, so the
     Vessel could resume its prior services. The preliminary injunction was
     granted by the court in favor of Ultrapetrol S.A. on September 17, 2004,
     conditioned on the weekly presentation of shipping letters describing the
     location of the Vessel.

     On February 22, 2005, the Company was notified of the decision that grounds
     on which the tax assessment was based were ratified. In response to this
     decision, on February 28, 2005, the Company presented a specific request
     for clarification of the decision. The Company simultaneously presented a
     petition to the Secretary of the Brazilian Internal Revenue Service
     requesting the replacement of the confiscation penalty applied to the
     vessel by a penalty corresponding to 1% (one percent) of the value of the
     vessel. Both of the Company request made on February 28, 2005 are still
     pending judgment.

     In case the Company is not successful on the merits, under applicable
     insurance coverage, it could request from The Standard Club, the Vessel's
     P&I insurer, an indemnity corresponding to the value of the Vessel. Based
     upon the facts and circumstances of the case, including the fact that the
     Vessel was operating under a specific written authorization officially
     granted by the Brazilian government, the existing regulations and
     applicable insurance coverage, the Company does not believe that the
     outcome of this matter should have a material impact on its financial
     position or results of operations.

     Capital Leases of UABL Paraguay

     UABL Paraguay, a subsidiary in our river business, leases a push boat and
     16 barges under capital leases until 2006.

     Included in property and equipment at December 31, 2004 are a push boat and
     16 barges under capital leases until 2006 of $2,798 net of accumulated
     depreciation of $551 and recorded depreciation expense in the amount of
     $104 on assets recorded under capital leases for the year ended December
     31, 2004.

     Future minimum payments under capital leases with initial terms of one year
     or more consisted of the following as of December 31, 2004:

                 2005                               $           732
                 2006                                           183
                                                    -------------------
                                                    -------------------
                 Total minimum lease payments                   915
                 Amount representing interest                   (40)
                                                    -------------------
      Present value of net minimum lease payments
         (including current portion of $695)        $           875
                                                    ===================

     Fuel supply contract of UABL Paraguay

     In January 2005, UABL Paraguay, a river subsidiary of the Company, entered
     into a fuel supply contract. Under this contract, UABL Paraguay, has
     contracted to purchase a minimum amount of fuel per month through the year
     2005 and to make a minimum annual payment of approximately $14 millions,
     whether or not it is able to take delivery. The minimum amount of fuel
     guaranteed is 36,000 cubic meter and is reasonable and used solely for the
     river subsidiaries operations. The price for the cubic meter is equivalent
     to the price in the international market plus a margin.

     Other

     As of December 31, 2004, we employed 88 land-based employees and
     approximately 381 seafarers as crew on our vessels. These seafarers are
     covered by industry-wide collective bargaining agreements that set basic
     standards applicable to all companies who hire such individuals as crew.
     Because most of our employees are covered by these industry-wide collective
     bargaining agreements, failure of industry groups to renew these agreements
     may disrupt our operations and adversely affect our earnings. In addition,
     we cannot assure you that these agreements will prevent labor
     interruptions. Any labor interruptions could disrupt our operations and
     harm our financial performance.

8.   INCOME TAXES

     The Company operates through its subsidiaries, which are subject to several
     tax jurisdictions, as follows:

     a)   Panama

          The earnings from shipping operations were derived from sources
          outside Panama and such earnings were not subject to Panamanian taxes.

     b)   Paraguay

          Two of the Company's subsidiaries, Parfina S.A. and Oceanpar S.A. are
          subject to Paraguayan corporate income taxes. In addition, since
          acquisition of UABL, four subsidiaries of UABL Limited, UABL Paraguay,
          Parabal S.A., Yataiti and Riverpar are subject to Paraguayan corporate
          income taxes.

     c)   Argentina

          Ultrapetrol S.A. is subject to Argentine corporate income taxes. Since
          the UABL acquisition, in addition to this subsidiary, two
          subsidiaries, UABL S.A. and Sernova S.A. are subject to Argentine
          corporate income taxes.

          In Argentina, the tax on minimum presumed income ("TOMPI"),
          supplements income tax since it applies a minimum tax on the potential
          income from certain income generating-assets at a 1% tax rate. The
          Company's tax obligation in any given year will be the higher of these
          two tax amounts. However, if in any given tax year tax on minimum
          presumed income exceeds income tax, such excess may be computed as
          payment on account of any excess of income tax over TOMPI that may
          arise in any of the ten following years.

     d)   Chile

          Cor.Na.Mu S.A. is subject to Chilean corporate income taxes.

     e)   The United States

          Certain entities, defined as "Qualified Foreign Corporations", are
          exempt from United States of America ("U.S.") corporate income tax on
          U.S. source income from their international shipping operations
          ("shipping income"), pursuant to Section 883 of the US tax code. A
          corporation will be considered a Qualified Foreign Corporation if (i)
          its country of incorporation is a "Qualified Foreign Country" which,
          as defined, is a foreign country that exempts US corporations from
          income tax on its shipping income (the "Incorporation Test"), (ii) it
          meets the "Ultimate Owner Test", and (iii) it files a US Federal
          income tax return (Form 1120F) to claim the Section 883 exemption. A
          corporation meets the Ultimate Owner Test if (a) more than 50% of the
          value of its stocks is ultimately owned by "Qualified Shareholders"
          which, as defined, includes individuals who are tax residents of one
          or more Qualified Foreign Countries that exempt U.S. persons from tax
          on shipping earnings, (b) the scope of the exemption provided by such
          jurisdictions is broad enough to cover the type of shipping income
          (e.g. freight income, time charter hire or bareboat charter hire)
          earned by the foreign corporation and (c) the corporation obtains
          ownership statements, signed under penalties of perjury, from its
          beneficial owners and all intermediate owners, that enable the
          corporation to evidence that more than 50% of the value of its stock
          is ultimately owned by individuals who are tax residents of one or
          more foreign countries that exempt U.S. persons from tax on shipping
          earnings. For the years ended December 31, 2004, 2003 and 2002
          Princely and Ultracape (Holdings) Ltd. satisfied the Incorporation
          Test because they are incorporated in Panama and Bahamas,
          respectively, which provide the required exemption to U.S.
          corporations as confirmed by Revenue Ruling 2001-48. In addition, we
          believe that each of Princely and Ultracape have obtained ownership
          statements from their ultimate individual owners and all intermediate
          owners to evidence that more than 50% of the value of their
          outstanding shares are ultimately owned by Qualified Shareholders.
          Consistent with the prior years, Princely and Ultracape will file IRS
          Form 1120F for the year 2004 to claim the Section 883 exemption.

          Based on the foregoing, the Company expects all of its income to
          remain exempt from U.S. income taxes.

          Ultrapetrol Bahamas accounts for income taxes under the liability
          method in accordance with SFAS No. 109 Accounting for Income Taxes.

          Under this method, deferred tax assets and liabilities are established
          for temporary differences between the financial reporting basis and
          the tax basis of the Company's assets and liabilities at each period
          end. Deferred tax assets are recognized for all temporary items and an
          offsetting valuation allowance is recorded to the extent that it is
          not more likely than not that the asset will be realized.
<TABLE>
The provision for income taxes (which includes TOMPI) is comprised of:
<CAPTION>

                                                                             For the year ended December 31,
                                                                ----------------------------------------------------------
                                                                       2004                2003               2002
                                                                ------------------- --------------------------------------
      <S>                                                       <C>                  <C>                <C>
      Current expense                                           $       570          $     108         $      150
      Deferred                                                           72                  77               -
                                                                ------------------- --------------------------------------
                                                                $      642           $     185         $      150
                                                                =================== ======================================
</TABLE>

     Ultrapetrol's pre-tax income for the three years ended December 31, 2004
     was taxed in foreign jurisdictions (principally Argentina and Paraguay).
<TABLE>

     Reconciliation of tax provision to taxes calculated based on the statutory
     tax rate is as follows:
<CAPTION>

                                                                            For the year ended December 31,
                                                                ---------------------------------------------------------
                                                                       2004               2003               2002
                                                                ------------------- ------------------ ------------------
      <S>                                                       <C>                  <C>                <C>
      Pre-tax income (loss)                                     $     6,921          $ (10,000)        $  (13,571)
      Sources not subject to income tax (tax exempt income)          (7,468)             5,271              6,475
                                                                ------------------- ------------------ ------------------
                                                                       (547)            (4,729)            (7,096)
      Statutory tax rate                                                 35%                35%                35%
                                                                ------------------- ------------------ ------------------
      Tax benefit at statutory tax rate                                (192)            (1,655)            (2,484)

      Decrease in valuation allowance                                     -                (33)              (368)
      Effects of foreign exchange changes related to Argentine
         subsidiary                                                     527              1,873              2,887
      TOMPI                                                               -                  -                115
      Others                                                            307                  -                  -
                                                                ------------------- ------------------ ------------------
      Income tax provision                                      $      642          $      185         $      150
                                                                =================== ================== ==================
</TABLE>

     As of December 31, 2004, Argentine subsidiaries had a consolidated credit
     related to TOMPI of $1,250 which expires $262 in 2010, $244 in 2011, $331
     in 2012, $177 in 2013 and $236 in 2014.

     As of December 31, 2004, Argentine subsidiaries had accumulated net
     operating loss carryforwards ("NOLs") for a consolidated total of $2,463
     that expire $643 in 2005, $46 in 2006 and $1,774 in 2009. The use of the
     NOLs will depend upon future taxable income in Argentina.

                                                         As of December 31,
                                                        ---------------------
                                                         2004         2003
                                                         ----         ----

     Deferred tax assets
         NOLs                                          $      886    $      -
         TOMPI credit                                       1,250         274
         Other, net                                           149         119
                                                       ----------    ----------
         Total deferred assets                         $    2,285    $    393

     Deferred tax liabilities
         Property and equipment                               793         339
         Dry dock                                             519         131
                                                       ----------    ----------
         Total deferred liabilities                    $    1,312    $    470
                                                       ----------    ----------
         Net deferred tax assets (liabilities)         $      973    $    (77)
                                                       ==========    ==========
9.   RELATED PARTY TRANSACTIONS

     As of December 31, 2004 and 2003, the balances of receivables from related
     parties, were as follows:

                                                         As of December 31,
                                                        ---------------------
                                                         2004         2003
                                                         ----         ----

    Current receivables:

    -     Ravenscroft Shipping Inc.                    $    2,533    $  3,966
    -     Maritima Sipsa S.A.                                 754       1,890
    -     Comintra                                            250           -
    -     Oceanmarine                                         204           -
    -     UP Offshore and its subsidiaries                     76           -
    -     UABL and its subsidiaries                             -       3,501
    -     Other                                               116           -
                                                       ----------    ----------
         Receivables from affiliates                   $    3,933    $  9,357
                                                       ==========    ==========

    Noncurrent loans:

    -     OTS S.A. (1)                                 $      260    $      -
    -     Puerto del Sur S.A. (2)                           2,280           -
                                                       ----------    ----------
                                                       $    2,540    $      -
                                                       ==========    ==========

     (1)  This loan accrues no interest and has no maturity date.

     (2)  This loan accrues interest at a nominal interest rate of 3% per year,
          payable semiannually. The principal will be repaid in 8 equal
          semiannual installments, beginning on June 30, 2006.

     As of December 31, 2004 and 2003 the balance of payables to related parties
     was as follows:

                                                         As of December 31,
                                                        ---------------------
                                                         2004         2003
                                                         ----         ----


     -        Ravenscroft Shipping Inc.                $      587    $      -
     -        OTS S.A.                                        146           -
     -        UABL and its subsidiaries                         -       1,550
     -        Oceanmarine                                       -          98
     -        Other                                            35           7
                                                       ----------    ----------
          Payables to affiliates                       $      768    $  1,655
                                                       ==========    ==========
<TABLE>
     For the three years ended December 31, 2004, the revenues derived from
     related parties were as follows:
<CAPTION>

                                                                           For the years ended
                                                                              December 31,
                                                        ----------------------------------------------------------
                                                               2004                2003               2002
                                                        ----------------------------------------------------------
     <S>                                                   <C>                  <C>                 <C>
     -        UABL and its subsidiaries                     $      2,737        $     10,284        $      9,972
     -        Maritima Sipsa S.A.                                  2,467               1,953                   -
                                                        ----------------------------------------------------------
                                                        ----------------------------------------------------------
                                                            $      5,204        $     12,237        $      9,972
                                                        ==========================================================
</TABLE>

     Management fee and other services

     The Company through certain of its subsidiaries has contracted with
     Oceanmarine, a company under the same common control as Ultrapetrol, for
     certain administrative services. This agreement stipulates a fee of $10 per
     month and per vessel. Pursuant to the individual ship management agreement
     between Ravenscroft Ship Management Ltd., a Bahamas Corporation
     ("Ravenscroft Bahamas") under the same common control as Ultrapetrol, and
     the Company's relevant vessel-owning subsidiaries, Ravenscroft Bahamas has
     agreed to provide certain ship management services for all of the Company's
     vessels. Ravenscroft Bahamas has subcontracted the provision of these
     services to Ravenscroft Shipping Inc., a Miami-based related party of the
     Company. This agreement stipulates a fee of $12.5 per month and per vessel.

     Under these contracts, these related parties are to provide all services
     necessary for such companies to operate, including but not limited to
     crewing, insurance, accounting and other required services. Additionally,
     commissions and agency fees are paid to those related parties.
<TABLE>
     For the three years ended December 31, 2004, management fees expensed to
     these related parties for such services amounted to:
<CAPTION>

                                                                     2004               2003                2002
                                                              ------------------- ------------------ -------------------
     <S>                                                         <C>                 <C>                <C>
     Oceanmarine                                                 $          680      $        1,215     $        1,316
     Ravenscroft                                                            833               1,648             1,860
                                                              ------------------- ------------------ -------------------
     Total                                                       $        1,513      $        2,863     $        3,176
                                                              =================== ================== ===================
</TABLE>

     Additionally, during December 2004 the Company paid in advance to
     Oceanmarine some administrative fees for the year 2005 for about $240. As
     of December 31, 2004, such amount was recorded in Prepaid expenses.

     For the years ended December 31, 2004, 2003 and 2002, Ravenscroft has
     provided certain other services to the Company in the amount of $694, $429
     and $151, respectively.

     For the years ended December 31, 2004, 2003 and 2002, ship management fees
     expensed for Lonehort S.A., a shipping agent wholly owned by UABL, for
     vessel administration services amounted to $1,736, $6,691 and $6,599,
     respectively.

     During the years ended December 31, 2003 and 2002 the Company outsourced
     freight from UABL for $42 and $835, respectively. Besides the expense
     recovery from UABL totaled $131, $906 and $543 for the years ended December
     31, 2004, 2003 and 2002 and the administrative services fees to UABL
     totaled $87, $348 and $348 during the years ended December 31, 2004, 2003
     and 2002, respectively.

     Pursuant to an agency agreement with Ultrapetrol S.A., I. Shipping Services
     S.A., a company under the same common control as Ultrapetrol, has agreed to
     perform the duties of port agent for the Company in Argentina. For each of
     the years ended December 31, 2004, 2003 and 2002 the amounts expensed for
     such services amounted to $21, $100 and $235, respectively.

     Venecia stock sold

     In October 2001, the Company sold Venecia, a wholly owned subsidiary, to a
     related party, Windsor Financial Services Inc., at its book value with a
     remaining other receivable balance of $834 and $1,234 as of December 31,
     2004 and 2003, respectively.

     Financial advisory services

     Prior to the commencement of the offering of its 2014 Senior Notes, an
     affiliate of one of Ultrapetrol shareholder, provided advice to the initial
     purchaser on the terms and structure of the proposed offering for which it
     was paid a fee of $500.

     In connection with the registration of the exchange notes, the Company and
     its subsidiary guarantors have appointed Ravenscroft as an authorized
     representative in the United States for a fee plus reimbursement of
     expenses. The Company and the subsidiary guarantors will also indemnify
     Ravenscroft of its services as authorized representative.

     Sale and repurchase of vessel Princess Marina

     In 2003 the Company entered into certain transactions to sell, and
     repurchase in 2006, to and from Maritima Sipsa S.A., a 49% owned company,
     the vessel Princess Marina.

     The combined effect of the sale at $15,100, repurchase at $7,700 and a loan
     granted to Maritima Sipsa S.A. for $7,400 resulted in no cash flow on
     consolidated basis at the time of execution. The loan is repaid to the
     Company on a quarterly basis over a three-year period ending in June 2006,
     when the vessel will be delivered to the Company.

     The transaction was recognized in the Company's statements of operations as
     a lease, reflecting quarterly payments as charter revenues for $2,467 and
     $1,953 in 2004 and 2003, respectively, while the vessel remains presented
     in the accompanying balance sheets as an asset.

     Administration agreement with UP Offshore

     On June 25, 2003 the Company signed an administration agreement with UP
     Offshore.

     Under this agreement Ultrapetrol agrees to assist UP Offshore by providing
     management services required by the latter, including providing the
     services of the Chief Executive Officer and to provide ongoing management
     and commercial advisory services up to 2013.

     The parties agreed that Ultrapetrol professional fees under this agreement
     shall be the 2% of UP Offshore annual EBITDA. None of such fees has been
     recognized in 2003 and 2004, because UP Offshore has not commenced its
     commercial operations.

     Acquisition of land for a maritime terminal in Mexico

     In October 2004 the Company through a subsidiary, purchased the 99.99% of
     Parque Ecologico Industrial Altamira S.A. (PEISA) for $2,000 from a related
     party of its shareholder, LAIF. The only asset of PEISA is a land for
     expansion of the maritime oil products terminal in Mexico.

10.  MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

     Major customers

     As of December 31, 2003 revenues from three customers of the Company
     represented approximately $20 million, $10 million and $9 million,
     respectively, of the Company's consolidated revenues. As of December 31,
     2002 revenues from four customers of the Company represented approximately
     $30 million, $13 million, $10 million and $6 million, respectively, of the
     Company's consolidated revenues.

     Concentration of credit risk

     Financial instruments that potentially subject the Company to significant
     concentrations of credit risk consist principally of cash and cash
     equivalents, restricted cash, investment, accounts receivable, receivables
     from affiliates and other receivables.

     The financial institutions are located in Argentina and the United States
     and the Company's cash management policy is designed to limit exposure to
     any one institution. As of December 31, 2004 the Company has restricted
     cash in Citibank N.A. for 327 and in All First Bank for 32,658.

     Concentrations of credit risk with respect to accounts receivable are
     limited due to the large number of entities comprising the Company's
     customer base and their credit rating.

     As of December 31, 2004 the Company's receivables from Windsor Financial
     Service Inc. amounted to 834.

      The Company does not require collateral for this or other receivables.

11.  BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION

     Since acquisition of UABL, the Company organizes its business and started
     to evaluate performance by its new three operating segments, ocean, river
     and offshore business. Prior to such acquisition the Company operated with
     no segments. The accounting policies of the reportable segments are the
     same as those for the consolidated financial statements (Note 2). The
     Company does not have significant intersegment transactions. These segments
     and their respective operations are as follows:

     Ocean business: consists of international and inland transportation of
     petroleum and dry-cargo products by oceangoing vessels owned by its
     subsidiaries.

     River business: consists of river transportation of refined petroleum and
     dry-cargo products by barges owned by its subsidiaries.

     Offshore business: consist of platform supply vessels to provide
     transportation services to the offshore petroleum exploration and
     production companies. Such vessels are currently under construction and
     expected to start operations in 2005.

     Ultrapetrol's oceangoing vessels operate on a worldwide basis and are not
     restricted to specific locations. Also, Ultrapetrol's river barges operate
     a river transportation business on the Parana, Paraguay and Uruguay rivers
     and part of River Plate in Argentina, Bolivia, Brazil, Paraguay and
     Uruguay. Accordingly, it is not possible to allocate the assets of these
     operations to specific countries. In addition, the Company does not manage
     its operating profit on a geographic basis.
<TABLE>

                                                                             For year ended December 31,
                                                              ----------------------------------------------------------
                                                                     2004               2003                2002
                                                              ------------------- ------------------ -------------------
     <S>                                                         <C>                 <C>                <C>
      Revenues (1)

      -        South America                                     $       39,871      $       23,739     $       54,184
      -        Europe                                                    30,356              21,349              5,317
      -        Asia                                                      21,647               5,188                  -
      -        Central America                                            3,286              10,351             10,129
      -        North America                                                  -              14,606              3,494
                                                              ------------------- ------------------ -------------------
                                                                 $       95,160      $       75,233     $       73,124
                                                              =================== ================== ===================
      (1)  Classified by country of domicile of charterers.
</TABLE>

     Revenue by segment consists only of services provided to external
     customers, as reported in the consolidated statement of operations.
     Resources are allocated based on segment profit or loss from operations,
     after interest and taxes.

     Identifiable assets represent those assets used in the operations of each
     segment.
<TABLE>
     The following schedule presents segment information about the Company's
     operations for the year ended December 31, 2004:
<CAPTION>

                                                   Ocean              River             Offshore
                                                 business            business           business             Total
                                             ------------------ -------------------------------------- ------------------
     <S>                                       <C>                <C>                <C>                 <C>
     Revenues                                  $       54,049     $       41,111     $            -      $       95,160
     Running and voyage expenses                       12,963             27,852                  -              40,815
     Depreciation and amortization                     13,483              5,205                  -              18,688
     Segment operating profit (losses)                 22,831              5,217               (614)             27,434
     Financial income                                     119                  -                  -                 119
     Financial expense                                 14,427              1,707                  -              16,134
     Financial gain on extinguishment
       of debt                                          1,344                  -                  -               1,344
     Financial loss on extinguishment
       of debt                                          6,422                  -                  -               6,422
     Income tax (provision) benefit                       265             (1,065)               158                (642)
     Segment assets                                   187,201             73,350             13,097             273,648
     Investments in affiliates                            145              2,365             13,097              15,607
     Additions to long-lived assets                     4,044             23,877             32,013              59,934
     Contributions to affiliates               $            -     $            -     $        1,542       $        1,542
</TABLE>

     In 2004 revenues from one customer of Ultrapetrol ocean and river business
     represents approximately $31 million of the Company's consolidated
     revenues.

     In 2004 revenues from one customer of Ultrapetrol ocean business represents
     approximately $17 million of the Company's consolidated revenues.

12.  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     Interest and income taxes paid for the three years ended December 31, 2004,
     were as follows:

                                            For year ended December 31,
                                      ------------------------------------
                                      2004            2003            2002
                                      ----            ----            ----

     Interest paid                  $  18,346      $  14,983     $    15,641
     Income taxes paid              $     784      $     182     $       108

13.  TREASURY STOCK

     On October 12, 2000 the Company through a wholly owned subsidiary, Avemar
     Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares of the
     Company previously owned by Societe Internationale D'Investissement S.A.
     (Bahamas) ("SII"). The nominal purchase price of said shares was $20,000,
     $8,000 of which was paid as of December 31, 2000 and the balance of which
     was payable $6,400 in 2001, $4,400 in 2002 and $1,200 in 2003.

     As of December 31, 2004 and 2003, the Company presents $20,332 in the
     "Treasury stock" account, $20,000 of which relates to the amount paid to
     SII and $332 relates to direct cost of acquisition.

14.  SUMMARIZED FINANCIAL INFORMATION OF UABL

     Summarized financial information of UABL Limited is presented below, to the
     periods such affiliate was accounted for by the equity method:

a)   Summarized balance sheet

                                                            December 31,
                                                                2003
                                                        ---------------------

          Current assets                                      12,311
          Noncurrent assets                                   86,827
                                                        ---------------------
          Total assets                                        99,138
                                                        =====================

          Current liabilities                                 11,278
          Noncurrent liabilities                              22,497
                                                        ---------------------
          Total liabilities                                   33,775
          Shareholders' equity                                65,363
                                                        ---------------------
          Total liabilities and shareholders' equity          99,138
                                                        =====================

     b)   Summarized statements of operations
<TABLE>

                                                                                  For the year ended December 31,
                                                                              ----------------------------------------
                                                                                     2003                 2002
                                                                              -------------------- -------------------
           <S>                                                                       <C>                 <C>
           Revenues                                                                    60,260              47,060

           Operating expenses                                                         (54,537)            (48,712)
                                                                              -------------------- -------------------
           Operating income (loss)                                                      5,723              (1,652)

           Other income (expense)                                                      (1,359)             (1,013)
                                                                              -------------------- -------------------
           Income (loss) before tax on minimum presumed
               income and income tax                                                    4,364              (2,665)

           Recovery of tax on minimum presumed income                                     529                   -
           Tax on minimum presumed income                                                  (3)               (200)
           Income taxes                                                                  (623)                402
                                                                              -------------------- -------------------
           Net income (loss) for the year                                               4,267              (2,463)
                                                                              ==================== ===================
</TABLE>

15.  SUPPLEMENTAL GUARANTOR INFORMATION

     On November 24, 2004, the Company issued $180 million 9% First Preferred
     Ship Mortagage Notes due 2014.

     The 2014 Senior Notes are fully and unconditionally guaranteed on a joint
     and several senior basis by the majority of the Company's subsidiaries
     directly involved in our ocean business.

     The Indenture provides that the 2014 Senior Notes and each of the
     guarantees granted by Subsidiaries, other than the Mortgage, are governed
     by, and construed in accordance with, the laws of the state of New York.
     Each of the mortgaged vessels is registered under either the Panamanian
     flag, or another jurisdiction with similar procedures. All of the
     Subsidiary Guarantors are outside of the United States.

     Supplemental condensed combining financial information for the Guarantor
     Subsidiaries for the 2014 Senior Notes is presented below. This information
     is prepared in accordance with the Company's accounting policies. This
     supplemental financial disclosure has been prepared on the same basis
     described in note 2, and should be read in conjunction with the
     consolidated financial statements.
<TABLE>

                 SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET
                             AS OF DECEMBER 31, 2004

                       (stated in thousands of US dollars)
<CAPTION>

                                                               Combined         Combined                             Total
                                                               subsidiary     non-subsidiary    Consolidating     consolidated
                                               Parent          guarantors       guarantors       adjustments         amounts
                                          ----------------- ---------------------------------- ----------------- ----------------
<S>                                         <C>               <C>               <C>             <C>               <C>
Current assets
Receivables from related parties           $    101,870      $       3,332      $    2,862      $    (104,131)     $      3,933
Other current assets                                627             11,440          21,131                  -            33,198
                                          ----------------- ---------------------------------- ----------------- ----------------
Total current assets                            102,497             14,772          23,993           (104,131)           37,131
                                          ----------------- ---------------------------------- ----------------- ----------------

Noncurrent assets
Property and equipment, net                           -             95,353          65,182                  -           160,535
Investment in affiliates                         71,646                  -          15,607            (71,646)           15,607
Other noncurrent assets                          36,588             15,305           8,482                  -            60,375
                                          ----------------- ---------------------------------- ----------------- ----------------

Total noncurrent assets                         108,234            110,658          89,271            (71,646)          236,517
                                          ----------------- ---------------------------------- ----------------- ----------------
Total assets                               $    210,731      $     125,430      $  113,264      $    (175,777)     $    273,648
                                          ================= ================================== ================= ================

Current liabilities
Payables to related parties                $          -      $      97,184      $    7,715      $    (104,131)     $        768
Other financial debt                              1,620                  -           9,183                  -            10,803
Other current liabilities                           201              4,854           7,064                  -            12,119
                                          ----------------- ---------------------------------- ----------------- ----------------

Total current liabilities                         1,821            102,038          23,962           (104,131)           23,690
                                          ----------------- ---------------------------------- ----------------- ----------------

Noncurrent liabilities
Long-term debt                                   180,000                 -               -                  -           180,000
Other financial debt, net of current
portion                                               -                  -          29,610                  -            29,610
Other noncurrent liabilities                           -                 -             219                  -               219
                                          ----------------- ---------------------------------- ----------------- ----------------
Total noncurrent liabilities                    180,000                  -          29,829                  -           209,829
                                          ----------------- ---------------------------------- ----------------- ----------------
Total liabilities                               181,821            102,038          53,791           (104,131)          233,519

Minority interests                                    -                  -               -              6,468             6,468

Minority interests subject to put right               -                  -               -              4,751             4,751

Shareholders' equity                       $     28,910      $      23,392     $    59,473      $     (82,865)     $     28,910
                                          ----------------- ---------------------------------- ----------------- ----------------

 Total liabilities, minority interests
   and shareholders' equity                $    210,731      $     125,430     $   113,264      $    (175,777)     $    273,648
                                          ================= ================================== ================= ================
</TABLE>

<PAGE>

<TABLE>

                 SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
                             AS OF DECEMBER 31, 2003

                       (stated in thousands of US dollars)

<CAPTION>

                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ---------------------------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>
Current assets
Receivables from related parties            $    97,692       $    -            $    -          $    (88,335)     $      9,357
Other current assets                                581            19,280            8,361            (4,684)           23,538
                                          ---------------- ----------------- ---------------------------------- -----------------
Total current assets                             98,273            19,280            8,361           (93,019)           32,895
                                          ---------------- ----------------- ---------------------------------- -----------------

Noncurrent assets
Property and equipment, net                           -            91,476           29,327                 -           120,803
Investment in affiliates                         45,092                 -                -           (19,363)           25,729
Other noncurrent assets                          18,828             9,176              730                 -            28,734
                                          ---------------- ----------------- ---------------------------------- -----------------
Total noncurrent assets                          63,920           100,652           30,057           (19,363)          175,266
                                          ---------------- ----------------- ---------------------------------- -----------------
Total assets                                $   162,193       $   119,932       $   38,418      $   (112,382)     $    208,161
                                          ================ ================= ================================== =================

Current liabilities
Payables to related parties                 $         7       $    89,983       $        -      $    (88,335)     $      1,655
Other financial debt                              3,367             4,455            2,640             -                10,462
Other current liabilities                            26             5,020              316             -                 5,362
                                          ---------------- ----------------- ---------------------------------- -----------------
Total current liabilities                         3,400            99,458            2,956           (88,335)           17,479
                                          ---------------- ----------------- ---------------------------------- -----------------

Noncurrent liabilities
Long-term debt                                  135,000               -               -               (6,659)          128,341
Other financial debt, net
of current portion                                    -            10,300            6,711                 -            17,011
                                          ---------------- ----------------- ---------------------------------- -----------------

Total noncurrent liabilities                    135,000            10,300            6,711            (6,659)          145,352
                                          ---------------- ----------------- ---------------------------------- -----------------
Total liabilities                           $   138,400       $   109,758       $    9,667      $    (94,994)     $    162,831

Minority interests                                    -                 -                -            16,716            16,716

Minority interest subject to put rights               -                 -                -             4,821             4,821

Shareholders' equity                        $    23,793       $    10,174       $   28,751      $    (38,925)     $     23,793
                                          ---------------- ----------------- ---------------------------------- -----------------
 Total liabilities, minority
   interests and shareholders' equity       $   162,193       $   119,932       $   38,418      $   (112,382)     $    208,161
                                          ================ ================= ================================== =================
</TABLE>


<PAGE>
<TABLE>

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2004

                       (stated in thousands of US dollars)
<CAPTION>


                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>
Revenues                                    $         -       $    61,856       $   54,121      $    (20,817)     $   95,160

Operating expenses                               (1,222)          (39,667)         (47,654)           20,817           (67,726)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Operating profit (loss)                          (1,222)           22,189            6,467                 -            27,434

Other income (expenses)                           6,361            (9,236)          (1,396)          (16,242)           (20,513)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Income (loss) before income tax and
  minority interests                              5,139            12,953            5,071           (16,242)            6,921

Income taxes                                          -               265             (907)                -              (642)
Minority interests                                    -                 -                -            (1,140)           (1,140)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Net income (loss)                           $     5,139       $    13,218       $    4,164      $    (17,382)     $      5,139
                                           ================ ================= ================= ================ =================

</TABLE>

<TABLE>

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2003
<CAPTION>



                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>
Revenues                                    $        -        $    67,523       $    7,710      $          -        $   75,233

Operating expenses                                 (994)          (68,943)          (3,875)                -           (73,812)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Operating profit (loss)                            (994)           (1,420)           3,835                 -             1,421

Other income (expenses)                         (10,524)          (15,628)            (301)           15,032           (11,421)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Income before income tax and
  minority interests                            (11,518)          (17,048)           3,534            15,032           (10,000)

Income taxes                                          -              (185)               -                 -              (185)
Minority interests                                    -                 -                -            (1,333)           (1,333)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Net income (loss)                           $   (11,518)      $   (17,233)      $    3,534      $     13,699      $    (11,518)
                                           ================ ================= ================= ================ =================
</TABLE>

<PAGE>
<TABLE>

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2002

                       (stated in thousands of US dollars)
<CAPTION>

                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>


Revenues                                    $         -       $    70,908       $    2,216      $          -      $     73,124

Operating expenses                               (1,355)          (67,208)          (1,607)                -           (70,170)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Operating profit (loss)                          (1,355)            3,700              609                 -             2,954

Other income (expenses)                         (12,498)          (15,160)            (190)           11,323           (16,525)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Income (loss) before income                     (13,853)          (11,460)             419            11,323           (13,571)
tax and minority interests

Income taxes                                          -              (150)               -                 -              (150)
Minority interests                                    -                 -                -              (132)             (132)
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Net income (loss)                            $  (13,853)        $ (11,610)      $       419      $   11,191        $ (13,853)
                                           ================ ================= ================= ================ =================

</TABLE>

<TABLE>

             SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOW
                      FOR THE YEAR ENDED DECEMBER 31, 2004
<CAPTION>



                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>


Net income (loss)                           $     5,139       $    13,218       $    4,164      $    (17,382)     $      5,139
Adjustments to reconcile net income
  (loss) to net cash provided by
  operating activities:                          (7,155)           10,333           (2,570)           17,382            17,990
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Net cash provided by (used in)                   (2,016)           23,551            1,594                 -            23,129
   operating activities

Net cash provided by (used in)
   investing activities                         (18,115)           (8,580)         (40,420)            9,559           (57,556)

Net cash provided by (used in)
   financing activities                          19,507           (12,526)          40,359            (9,559)           37,781
                                           ---------------- ----------------- ----------------- ---------------- -----------------
Net increase (decrease) in cash and
   cash equivalents                         $      (624)      $     2,445       $    1,533      $          -      $      3,354
                                           ================ ================= ================= ================ =================

</TABLE>


<PAGE>
<TABLE>

            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOW
                      FOR THE YEAR ENDED DECEMBER 31, 2003

                        (stated in thousands of US dollars)
<CAPTION>


                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>

Net income (loss)                           $   (11,518)      $   (17,233)      $    3,534      $     13,699      $    (11,518)
Adjustments to reconcile net income
  (loss) to net cash provided by
  operating activities:                          13,825            27,407            2,587           (13,699)           30,120
                                            ---------------- ----------------- ----------------- ---------------- -----------------
Net cash provided by (used in)
   operating activities                           2,307            10,174            6,121                 -            18,602

Net cash provided by (used in)
   investing activities                          14,384            (4,491)         (14,309)                -            (4,416)

Net cash provided by (used in)
   financing activities                         (16,644)           (3,299)           9,281                 -           (10,662)
                                            ---------------- ----------------- ----------------- ---------------- -----------------
Net increase in cash and cash
   equivalents                              $        47       $     2,384       $    1,093      $          -      $      3,524
                                           ================ ================= ================= ================ =================
</TABLE>

<TABLE>

            SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW
                      FOR THE YEAR ENDED DECEMBER 31, 2002

<CAPTION>


                                                               Combined          Combined                           Total
                                                              subsidiary      non-subsidiary    Consolidating     consolidated
                                             Parent            guarantors        guarantors      adjustments         amounts
                                          ---------------- ----------------- ------------------ --------------- -----------------
<S>                                         <C>               <C>               <C>             <C>               <C>


Net income (loss)                           $   (13,853)      $   (11,610)      $      419      $     11,191      $    (13,853)
Adjustments to reconcile net income
  (loss) to net cash provided by
  operating activities:                          17,699            11,306            4,429           (11,191)            22,243
                                            ---------------- ----------------- ----------------- ---------------- -----------------
Net cash provided by (used in)
   operating activities                           3,846              (304)           4,848                 -             8,390

Net cash provided by (used in)
   investing activities                             403               857          (16,683)                -           (15,423)

Net cash provided by (used in)
   financing activities                          (4,490)                -           10,375                 -             5,885
                                            ---------------- ----------------- ----------------- ---------------- -----------------
Net increase (decrease) in cash and
   cash equivalents                         $      (241)      $       553       $   (1,460)     $          -      $     (1,148)
                                           ================ ================= ================= ================ =================
</TABLE>

16.  SUBSEQUENT EVENTS

     -    Cape Pampas sale

          In March 2005 Braddock Shipping Inc., entered into an agreement to
          sell its vessel, Cape Pampas for a total price of approximately
          $39,900. The sale will be completed in the second quarter of 2005, at
          which time a gain on sale of approximately $22 million will be
          recognized.

          Braddock Shipping Inc. will use part of the proceeds from the sale
          mentioned above to cancel its financial obligations.

     -    New Flamenco acquisition

          In March 2005, the Company entered into a contract with Cruise Elysia
          Inc. to purchase a Passengers Vessel, named New Flamenco for a total
          purchase price of $13.5 million. The purchase price was funded by a
          combination of funds deposited in the Escrow Account (see Note 6) and
          available cash.

     17.  SUBSEQUENT EVENTS TO THE DATE OF THE AUDITORS REPORT (Unaudited)

     -    World Renaissance acquisition

          On April 6, 2005 the Company purchased at auction for a price of $3.4
          million the cruise vessel World Renaissance which was delivered and
          fully paid for on April 19, 2005.

     -    Mt sun Chemist acquisition

          On April 28, 2005 the Company agreed to purchase the product tanker Mt
          Sun Chemist for a total price of $10.3 million.


ITEM 19 - EXHIBITS
<PAGE>

EXHIBIT INDEX

        Exhibit Number            Description

               3.1  Articles of Incorporation and By-laws of Ultrapetrol
                    (Bahamas) Limited.*

               3.2  Articles of Incorporation (English translation) and By-laws
                    of Baldwin Maritime Inc.*

               3.3  Articles of Incorporation (English translation) and By-laws
                    of Bayham Investments S.A.*

               3.4  Articles of Incorporation (English translation) and By-laws
                    of Cavalier Shipping Inc.*

               3.5  Bylaws (English translation) of Corporacion De Navegacion
                    Mundial S.A.*

               3.6  Articles of Incorporation (English translation) and By-laws
                    of Danube Maritime Inc.*

               3.7  Articles of Incorporation and By-laws of General Ventures
                    Inc.*

               3.8  Articles of Incorporation (English translation) and By-laws
                    of Imperial Maritime Ltd. (Bahamas) Inc.*

               3.9  Articles of Incorporation (English translation) and By-laws
                    of Kattegat Shipping Inc.*

               3.10 Memorandum of Association and Articles of Association of
                    Kingly Shipping Ltd.*

               3.11 Memorandum of Association and Articles of Association of
                    Majestic Maritime Ltd.*

               3.12 Articles of Incorporation and Bylaws of Massena Port S.A.
                    (English translation)*

               3.13 Memorandum of Association and Articles of Association of
                    Monarch Shipping Ltd.*

               3.14 Memorandum of Association and Articles of Association of
                    Noble Shipping Ltd.*

               3.15 Articles of Incorporation (English translation) and Bylaws
                    (English translation) of Oceanpar S.A.*

               3.16 Articles of Incorporation (English translation) and By-laws
                    of Oceanview Maritime Inc.*

               3.17 Articles of Incorporation and Bylaws of Parfina S.A.
                    (English translation)*

               3.18 Articles of Incorporation (English translation) and By-laws
                    of Parkwood Commercial Corp.*

               3.19 Articles of Incorporation (English translation) and By-laws
                    of Princely International Finance Corp.*

               3.20 Memorandum of Association (English translation) and Articles
                    of Association of Regal International Investments S.A.*

               3.21 Articles of Incorporation (English translation) and By-laws
                    of Riverview Commercial Corp.*

               3.22 Memorandum of Association and Articles of Association of
                    Sovereign Maritime Ltd.*

               3.23 Articles of Incorporation (English translation) and By-laws
                    of Stanmore Shipping Inc.*

               3.24 Articles of Incorporation (English translation) and By-laws
                    of Tipton Marine Inc.*

               3.25 Articles of Incorporation (English translation) and By-laws
                    of Ultrapetrol International S.A.*

               3.26 Articles of Incorporation and Bylaws of Ultrapetrol S.A.
                    (English translation)*

               3.27 Memorandum of Association and Articles of Association of UP
                    Offshore (Holdings) Ltd.* 4.1 Form of Global Exchange Notes
                    (attached as Exhibit A to Exhibit 4.3).*

               4.2  Registration Rights Agreement dated November 10, 2004.*

               4.3  Indenture dated November 24, 2004.*

               4.4  Form of Subsidiary Guarantee (attached as Exhibit F to
                    Exhibit 10.4).*

               12.1 Statement of Ratio of Earning to Fixed Charges

               31.1 Section 302 Certification of Chief Executive Officer

               31.2 Section 302 Certification of Chief Financial Officer

               32.1 Section 906 Certification of Chief Executive Officer

               32.2 Section 906 Certification of Chief Financial Officer

--------------------
*    Incorporated by reference to Exhibits of corresponding number in the
     Registration Statement of Ultrapetrol (Bahamas) Limited filed March 4, 2005
     (Reg. No. 333-8878).


SIGNATURE

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized, on May 1, 2005.

ULTRAPETROL (BAHAMAS) LIMITED


/s/ Felipe Menendez Ross
------------------------
Felipe Menendez Ross
President


<PAGE>



                                                                    EXHIBIT 12.1

<TABLE>
                                                     ULTRAPETROL (BAHAMAS) LIMITED


                                            STATEMENT OF RATIO OF EARNING TO FIXED CHARGES



<CAPTION>
                                                                     Year Ended December 31,
                                                     ---------------------------------------------------
                                                        2000         2001          2002          2003          2004
                                                        ----         ----          ----          ----          ----

                                                                     (dollars in thousands)
<S>                                                   <C>              <C>        <C>          <C>              <C>
 Consolidated income (loss) before
 Income tax and minority interest                     $ (-5,783)       $ 2,805   $ (-13,571)   $ (-10,000)       $ 6,921
 Investment in affiliates                                  1,646           692            45      (-3,140)         (406)
 Interest expense                                         16,061        17,113        16,178     (1)15,622     (1)15,566
 Amortization of debt issue costs                            585           585           585           585           568
                                                   ----------------------------------------------------------------------
          Earnings                                        12,509        21,195         3,237         3,067        22,649
                                                   ======================================================================

 Interest expenses                                        16,061        17,113        16,178     (1)15,622     (1)15,566
 Amortization of debt issue costs                            585           585           585           585           568
                                                   ----------------------------------------------------------------------
         Fixed Charges                                    16,646        17,692        16,763        16,207        16,134
                                                   ======================================================================
   Ratio of Earnings to Fixed Charges                  _ (2)            1.2             _ (2)        _ (2)           1.4

(1)  The interest expenses amounts presented in this exhibit do not include the
     Financial gain (loss) on extinguishments of debt amounting $ 1,782 and $
     (5,078) for the year ended December 31, 2003 and 2004, respectively.

(2)  In these fiscal years the earnings are inadequate to cover fixed charges.

</TABLE>