**UNITED      STATES**

** SECURITIES      AND EXCHANGE COMMISSION**

** WASHINGTON,      D.C. 20549**

**FORM      10-Q**

**For      the quarterly period ended September 30, 2007**

**Commission      File Number 000-51368**

**TBS      INTERNATIONAL LIMITED**

| **Bermuda**                                                                                                            | **98-0225954**                                   |
|------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization)                            | (IRS                Employer Identification No.) |
| **Commerce                Building,****Chancery                Lane,****Hamilton                HM 12, Bermuda**  |
| (Address                of principal executive offices)                                                                |
| **(441)                295-9230**                                                                                      |
|                                                                                                                   |
| (Registrant's                telephone number, including area                code)                                     |

|     N/A                                                                                      |
|------------------------------------------------------------------------------------------------------------------|
| (Former                name, former address and former fiscal year, if changed since last                report) |

| 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 whether the registrant is a large accelerated filer,                an                accelerated filer or a non-accelerated filer. (See definition of                “accelerated filer and large accelerated filer”) in Rule 12b-2 of the                Act). Large                Accelerated Filer  ̈  Accelerated                Filer  ̈                 Non-accelerated Filer x                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Indicate                by check mark whether the registrant is a shell company (as defined                by                Rule 12b-2 of the                Act).                             Yes  ̈  No x                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| As                of November 1, 2007, the registrant had outstanding 14,350,996 Class                A common shares, par value $0.01 per share, and 13,404,461 Class                B common                shares, par value $0.01 per share. |

----

| **TBS                INTERNATIONAL LIMITED** |
|----------------------------------------------|
| **2007                FORM 10-Q**            |
| **Table                of Contents**         |
|                                         |   |   |   |   |   |
|                                         |   |   |   |   | **Page** |
|                                         |   |   | **PART                I:  FINANCIAL INFORMATION** |   |   |
| Item                1                        | Financial                Statements |   |   |
|                                         |   |   | Consolidated                Balance Sheets as of September 30, 2007                (Unaudited) and December 31, 2006 |   | 3 |
|                                         |   |   | Consolidated                Statements of Income (Unaudited) for                the three and nine months ended September  30, 2007 and                September 30, 2006 |   | 4 |
|                                         |   |   | Consolidated                Statements of Cash Flows (Unaudited) for                the nine months ended September 30, 2007 and September 30,                2006 |   | 5 |
|                                         |   |   | Consolidated                Statement of Changes in                Shareholders' Equity (Unaudited) for the nine months ended September                30, 2007 |   | 6 |
|                                         |   |   | Notes                to Consolidated Financial                Statements |   | 7 |
|                                         |   |   |   |   |   |
| Item 2                                  | Management’s                Discussion and Analysis                of Financial Condition and Results of Operations |   | 20 |
| Item 3                                  | Quantitative                and Qualitative Disclosure About                Market Risk |   | 40 |
| Item 4T                                 | Controls                and Procedures |   | 41 |
|                                         |   |   |   |   |   |
|                                         |   |   | **PART                II:  OTHER INFORMATION** |   |   |
| Item                1                        | Legal                Proceedings |   | 42 |
| Item 1A                                 | Risk                Factors |   | 42 |
| Item 2                                  | Unregistered                Sales of Equity Securities                and Use of Proceeds |   | 42 |
| Item 3                                  | Defaults                Upon Senior Securities |   | 42 |
| Item 4                                  | Submission                of Matters to a Vote of Security                Holders |   | 42 |
| Item 5                                  | Other                Information |   | 42 |
| Item 6                                  | Exhibits |   | 43 |
|                                         | Signatures |   | 44 |

----

**Part      I.    FINANCIAL      INFORMATION**

**Item      1.    Financial Statements**

**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

|                                                                              | **September                  30,**                                                                          |                                                                                                        |                                                                                                                                                                       |  **December                  31,** |              |
|-----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|-------------------|
|                                                                              |  **2007**                                                                                              |                                                                                                        |                                                                                                                                                                       |  **2006**                          |              |
|                                                                              |  (UNAUDITED)                                                                                           |                                                                                                        |                                                                                                                                                                       |                                    |              |
|  **Assets**                                                   |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |
|                                                                              | Current                  assets                                                              |                                                                                                        |                                                                                                                                                                       |                                    |              |   |
|                                                                              |                                                                                                        | Cash                  and cash equivalents                                                        | $                                                                                                                                                                          | 53,806,923                              |              |   | $ | 12,006,727 |   |
|                                                                              |                                                                                                        | Charter                  hire receivable, net of allowance of $452,335 in                  2007   |                                                                                                                                                                       |                                    |              |   |   |   |   |
|                                                                              |                                                                                                        |                                                                                                        |  and                $442,529 in 2006                                                                                                                             |                                    | 24,988,966        |   |   |   | 25,396,093 |   |
|                                                                              |                                                                                                        | Fuel                  and other inventories                                                       |                                                                                                                                                                       | 9,925,719                               |              |   |   | 7,256,483 |   |
|                                                                              |                                                                                                        | Prepaid                  expenses and other current assets                                        |                                                                                                                                                                       | 6,626,801                               |              |   |   | 7,704,416 |   |
|                                                                              |                                                                                                        | Advances                  to affiliates                                                           |                                                                                                                                                                       | 236,834                                 |              |   |   | 5,604 |   |
|                                                                              |                                                                                                        |                                                                                                        | Total                  current assets                                                                                                                                 |                                    | 95,585,243        |   |   |   | 52,369,323 |   |
|                                                                              | Deposit                  for vessel purchase                                                 |                                                                                                        | 10,070,000                                                                                                                                                                 |                                    |              |   | 1,695,000 |   |
|                                                                              | Fixed                  assets, net                                                           |                                                                                                        | 362,864,073                                                                                                                                                                |                                    |              |   | 336,869,094 |   |
|                                                                              | Goodwill                                                                                     |                                                                                                        | 8,425,935                                                                                                                                                                  |                                    |              |   | 8,425,935 |   |
|                                                                              | Other                  assets and deferred charges                                           |                                                                                                        | 11,571,073                                                                                                                                                                 |                                    |              |   | 3,731,491 |   |
|                                                                              |                                                                                                        |                                                                                                        | Total                  assets                                                                                                                                         | $                                       | 488,516,324       |   |   | $ | 403,090,843 |   |
|                                                                              |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |   |   |   |
| **Liabilities                  and Shareholders' Equity**     |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |
|                                                                              | Current                  liabilities                                                         |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |
|                                                                              |                                                                                                        | Debt,                  current portion                                                            | $                                                                                                                                                                          | 21,198,571                              |              |   | $ | 19,770,000 |   |
|                                                                              |                                                                                                        | Obligations                  under capital lease, current portion                                 |                                                                                                                                                                       | 4,463,202                               |              |   |   | 4,087,484 |   |
|                                                                              |                                                                                                        | Accounts                  payable                                                                 |                                                                                                                                                                       | 5,860,316                               |              |   |   | 6,049,174 |   |
|                                                                              |                                                                                                        | Accrued                  expenses                                                                 |                                                                                                                                                                       | 20,802,069                              |              |   |   | 21,529,351 |   |
|                                                                              |                                                                                                        | Voyages                  in progress                                                              |                                                                                                                                                                       | 5,373,389                               |              |   |   | 4,268,514 |   |
|                                                                              |                                                                                                        | Advances                  from affiliates                                                         |                                                                                                                                                                       | 18,414                                  |              |   |   | 481,103 |   |
|                                                                              |                                                                                                        |                                                                                                        | Total                  current liabilities                                                                                                                            |                                    | 57,715,961        |   |   |   | 56,185,626 |   |
|                                                                              |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |   |   |   |
|                                                                              | Debt,                  long-term portion                                                     |                                                                                                        | 129,267,033                                                                                                                                                                |                                    |              |   | 106,034,033 |   |
|                                                                              | Obligations                  under capital lease, net of current                  portion    |                                                                                                        | 13,871,233                                                                                                                                                                 |                                    |              |   | 17,267,206 |   |
|                                                                              | Other                  liabilities                                                           |                                                                                                        | 870,028                                                                                                                                                                    |                                    |              |   | - |   |
|                                                                              |                                                                                                        |                                                                                                        |  Total                liabilities                                                                                                                                |                                    | 201,724,255  |   |   |   | 179,486,865  |   |
|                                                                              |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |   |   |   |
|                                                                              | COMMITMENTS                  AND CONTINGENCIES (Note 11)                                     |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |
|                                                                              |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |   |   |   |
|                                                                              | Shareholders'                  equity                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |
|                                                                              |                                                                                                        | Common                  shares, Class A, $.01 par value, 75,000,000                               |                                                                                                                                                                       |                                    |              |   |   |   |   |
|                                                                              |                                                                                                        |                                                                                                        | authorized,                  14,350,996 shares issued and outstanding in 2007 and 14,319,996                  shares                  issued and outstanding in 2006  |                                    | 143,510           |   |   |   | 143,200 |   |
|                                                                              |                                                                                                        | Common                  shares, Class B, $.01 par value, 30,000,000                               |                                                                                                                                                                       |                                    |              |   |   |   |   |
|                                                                              |                                                                                                        |                                                                                                        | authorized,                  13,404,461 shares issued and outstanding                                                                                                 |                                    | 134,045           |   |   |   | 134,045 |   |
|                                                                              |                                                                                                        | Warrants                                                                                          |                                                                                                                                                                       | 20,747                                  |              |   |   | 20,747 |   |
|                                                                              |                                                                                                        | Additional                  paid-in capital                                                       |                                                                                                                                                                       | 88,180,239                              |              |   |   | 87,880,449 |   |
|                                                                              |                                                                                                        | Accumulated                  other comprehensive (loss) income                                    |                                                                                                                                                                       | (164,406                                | )                 |   |   | 42,386 |   |
|                                                                              |                                                                                                        | Retained                  earnings                                                                |                                                                                                                                                                       | 198,477,934                             |              |   |   | 135,383,151 |   |
|                                                                              |                                                                                                        |                                                                                                        | Total                  shareholders' equity                                                                                                                           |                                    | 286,792,069       |   |   |   | 223,603,978 |   |
|                                                                              |                                                                                                        |                                                                                                        | Total                  liabilities and shareholders' equity                                                                                                           | $                                       | 488,516,324       |   |   | $ | 403,090,843 |   |
|                                                                              |                                                                                                        |                                                                                                        |                                                                                                                                                                       |                                    |              |   |   |   |   |   |   |

*The          accompanying notes are an integral part of these consolidated financial          statements.*

Table          of Contents

----

**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

|                                                              |                                                                 |                                                    | **Three                  Months Ended September 30,** |       | **Nine                  Months Ended September 30,** |                               |
|-------------------------------------------------------------------|----------------------------------------------------------------------|---------------------------------------------------------|-------------------------------------------------------|------------|------------------------------------------------------|------------------------------------|
|                                                              |                                                                 |                                                    | **2007**                                              |       |                                                 | **2006**                           |   | **2007** |   |   | **2006** |   |
|                                                              |                                                                 |                                                    |                                                  |       |                                                 | **(As                  Adjusted)** |   |   |   |   | **(As                  Adjusted)** |   |
| **Revenue**                                                  |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |
|                                                              | Voyage                  revenue                                 | $                                                       | 71,698,746                                            |       |                                                 | $                                  | 47,880,324 |   | $ | 185,086,935 |   |   | $ | 141,007,993 |   |
|                                                              | Time                  charter revenue                           |                                                    | 20,557,316                                            |       |                                                 |                               | 16,914,474 |   |   | 54,747,509 |   |   |   | 45,910,831 |   |
|                                                              | Other                  revenue                                  |                                                    | 140,305                                               |       |                                                 |                               | 606,928 |   |   | 614,046 |   |   |   | 1,232,527 |   |
|                                                              |                                                                 | Total                  revenue                          |                                                  | 92,396,367 |                                                 |                               |   | 65,401,726 |   |   | 240,448,490 |   |   |   | 188,151,351 |   |
| **Operating                  expenses**                      |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |
|                                                              | Voyage                                                          |                                                    | 23,767,668                                            |       |                                                 |                               | 21,857,064 |   |   | 63,547,993 |   |   |   | 63,764,712 |   |
|                                                              | Vessel                                                          |                                                    | 22,191,758                                            |       |                                                 |                               | 15,353,552 |   |   | 62,689,980 |   |   |   | 49,723,459 |   |
|                                                              | Depreciation                  and amortization of vessels       |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |   |
|                                                              |                                                                 | and                  other fixed assets                 |                                                  | 9,032,034  |                                                 |                               |   | 7,621,272 |   |   | 25,868,837 |   |   |   | 21,785,294 |   |
|                                                              | General                  and administrative                     |                                                    | 7,960,364                                             |       |                                                 |                               | 6,882,792 |   |   | 22,803,642 |   |   |   | 19,249,641 |   |
|                                                              | Loss                  (gain) on sale of vessel                  |                                                    |                                                  |       |                                                 |                               | (2,179,820 | ) |   | 813,890 |   |   |   | (2,179,820 | ) |
|                                                              |                                                                 | Total                  operating expenses               |                                                  | 62,951,824 |                                                 |                               |   | 49,534,860 |   |   | 175,724,342 |   |   |   | 152,343,286 |   |
| Income                  from operations                      |                                                                 | 29,444,543                                              |                                                  |       |                                                 | 15,866,866                         |   |   | 64,724,148 |   |   |   | 35,808,065 |   |
| **Other                  (expenses) and income**             |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |
|                                                              | Interest                  expense                               |                                                    | (2,602,952                                            | )          |                                                 |                               | (2,738,886 | ) |   | (7,771,692 | ) |   |   | (8,351,029 | ) |
|                                                              | Loss                  on extinguishment of debt                 |                                                    |                                                  |       |                                                 |                               | (3,551,614 | ) |   |   |   |   |   | (3,551,614 | ) |
|                                                              | Gain                  on sale and insurance recovery of vessel  |                                                    |                                                  |       |                                                 |                               |   |   |   | 6,033,745 |   |   |   |   |   |
|                                                              | Other                  income                                   |                                                    | 162,435                                               |       |                                                 |                               | 198,478 |   |   | 108,582 |   |   |   | 800,646 |   |
|                                                              |                                                                 | Total                  other (expenses) and income, net |                                                  | (2,440,517 | )                                                    |                               |   | (6,092,022 | ) |   | (1,629,365 | ) |   |   | (11,101,997 | ) |
|                                                              |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                  | $                                                                    | 27,004,026                                              |                                                  |       | $                                                    | 9,774,844                          |   | $ | 63,094,783 |   |   | $ | 24,706,068 |   |
|                                                              |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per share                          |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |
| Net                  income per common share                 |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |
|                                                              | Basic                                                           | $                                                       | 0.96                                                  |       |                                                 | $                                  | 0.35 |   | $ | 2.25 |   |   | $ | 0.88 |   |
|                                                              | Diluted                                                         | $                                                       | 0.96                                                  |       |                                                 | $                                  | 0.35 |   | $ | 2.25 |   |   | $ | 0.88 |   |
| Weighted                  average common shares outstanding  |                                                                 |                                                    |                                                  |       |                                                 |                               |   |   |   |   |   |   |   |   |
|                                                              | Basic                                                           |                                                    | 28,044,310                                            |       |                                                 |                               | 28,013,310 |   |   | 28,024,295 |   |   |   | 27,993,968 |   |
|                                                              | Diluted                                                         |                                                    | 28,081,678                                            |       |                                                 |                               | 28,088,310 |   |   | 28,059,545 |   |   |   | 28,088,310 |   |

*The            accompanying notes are an integral part of these consolidated financial            statements.*

Table          of Contents

----

**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                | **Nine                    Months Ended September 30,** |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|-------------------------------------------------------------------------------------|--------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                | **2007**                                               |       |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   | **(As                    Adjusted)** |   |
| **Cash                    flows from operating                    activities**                                                                                                                                                                                                                                                                                                                                     |                                                                                                             |                                                                   |                                                                                |                                                   |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Net  income                                                                                       | $                                                                      | 63,094,783                                                                          |                                                   |       | $ | 24,706,068 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Adjustments                    to reconcile net income to net cash                                          |                                                                   |                                                                                |                                                   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | provided                    by operating activities               |                                                                                |                                                   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Gain                    on sale and insurance recovery of vessel  |                                                                                | (6,033,745                                             | )          |   |   | (2,179,820 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Loss                    on sale of vessel                         |                                                                                | 813,890                                                |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Depreciation                    and amortization                  |                                                                                | 25,868,837                                             |       |   |   | 21,785,294 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Loss                    on change in value of interest swap       |                                                                                | 432,207                                                |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Amortization                    of deferred financing costs       |                                                                                | 791,891                                                |       |   |   | 1,989,881 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Non                    cash stock based compensation              |                                                                                | 261,426                                                |       |   |   | 210,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | (Income)                    loss in joint venture                 |                                                                                | 288,483                                                |       |   |   | (32,828 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | Changes                    in operating assets and liabilities    |                                                                                |                                                   |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Decrease                    in charter hire receivable                              |                                                   | 407,127    |   |   |   | 9,197,004 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | (Increase)                    decrease in fuel and other inventories                |                                                   | (2,669,236 | ) |   |   | 114,721 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Decrease                    (Increase) in prepaid expenses and other current assets |                                                   | 1,099,809  |   |   |   | (3,473,627 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Increase                    in other assets and deferred charges                    |                                                   | (818,674   | ) |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Decrease                    in accounts payable                                     |                                                   | (188,858   | ) |   |   | (171,703 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Decrease                  in accrued expenses                                       |                                                   | (688,607   | ) |   |   | (8,099,913 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | Increase                  (decrease) in voyages in progress                         |                                                   | 1,104,875  |   |   |   | (504,421 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   | (Decrease)  in                  advances from/to affiliates, net          |                                                   | (693,919   | ) |   |   | (1,268,981 | ) |
| Net                    cash provided by operating activities                                                                                                                                                                                                                                                                                                                                                       |                                                                                                             | 83,070,289                                                             |                                                                                |                                                   |       | 42,271,675 |   |
| **Cash                    flows from investing activities**                                                                                                                                                                                                                                                                                                                                                        |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Proceeds                    on  insurance recovery of vessel                                      |                                                                   |                                                                                |                                                   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | and                    proceeds on sale of vessels                |                                                                                | 62,014,151                                             |       |   |   | 3,160,500 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Vessel                    acquisitions / capital improvement costs                                          |                                                                   | (110,472,661                                                                        | )                                                      |       |   | (28,651,511 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Deposit                    for vessel purchases                                                             |                                                                   | (10,070,000                                                                         | )                                                      |       |   | (9,020,000 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Restricted                    cash for litigation/reclassification to other                    receivables  |                                                                   |                                                                                |                                                   |       |   | 532,500 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Return                    of investment in security                                                         |                                                                   | 160,000                                                                             |                                                   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Investment                    in government securities                                                      |                                                                   | (250,000                                                                            | )                                                      |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Investment                    in joint venture                                                              |                                                                   | (360,000                                                                            | )                                                      |       |   | (500,000 | ) |
| Net                    cash (used) by investing activities                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             | (58,978,510                                                            | )                                                                                   |                                                   |       | (34,478,511 | ) |
| **Cash                    flows from financing activities**                                                                                                                                                                                                                                                                                                                                                        |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Repayment                    of debt principal                                                              |                                                                   | (101,338,429                                                                        | )                                                      |       |   | (107,965,462 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Proceeds                    from debt                                                                       |                                                                   | 126,000,000                                                                         |                                                   |       |   | 93,974,533 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Payment                    of deferred financing costs                                                      |                                                                   | (3,932,899                                                                          | )                                                      |       |   | (2,828,475 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Reduction                    of obligations under capital leases                                            |                                                                   | (3,020,255                                                                          | )                                                      |       |   | (2,399,180 | ) |
| Net                    cash provided by (used in) financing                    activities                                                                                                                                                                                                                                                                                                                          |                                                                                                             | 17,708,417                                                             |                                                                                |                                                   |       | (19,218,584 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |   |   |   |
| Net                    increase (decrease) in cash and cash                    equivalents                                                                                                                                                                                                                                                                                                                         |                                                                                                             | 41,800,196                                                             |                                                                                |                                                   |       | (11,425,420 | ) |
| Cash                    and cash equivalents beginning of period                                                                                                                                                                                                                                                                                                                                                   |                                                                                                             | 12,006,727                                                             |                                                                                |                                                   |       | 27,157,681 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Cash                    and cash equivalents end of period                                                  |                                                                   | 53,806,923                                                                          |                                                   |       | $ | 15,732,261 |   |
| **Supplemental                    cash flow information:**                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         | Interest                    paid, net of amounts capitalized                                                     | $                                                                      | 6,298,367                                                                           |                                                   |       | $ | 7,668,126 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
| **Noncash                    Investing activities:**                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
| For                      the nine months ended September 30, 2007, the proceeds on the                      sale-leaseback of the vessels *Laguna Belle* and *Seminole                      Maiden* excludes the noncash  portion of $5,500,000, which                      was retained by the buyer/lessor as a deposit on the bareboat                      charters.        |                                                                                                             |
| **Noncash                    Financing activities:**                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                             |                                                                   |                                                                                |                                                   |       |   |   |
| For                    the nine months ended September 30, 2007, 31,000 shares were                    issued to                    independent directors and the Chief Financial Officer under the                    2005                    Employee Incentive                    Plan.                                                                                                |                                                                                                             |

*The          accompanying notes are an integral part of these consolidated financial          statements.*

Table          of Contents

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**TBS      INTERNATIONAL LIMITED. AND SUBSIDIARIES**

CONSOLIDATED      STATEMENT OF CHANGES IN SHAREHOLDERS'      EQUITY (UNAUDITED)

|                                                                                                             |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   | **Accumulated**   |       |      |   |
|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|--------------|------------|-------------|------------|--------------|--------|------------|--------|----------------|--------|--------------|--------|-------------------|------------|-----------|--------|
|                                                                                                             |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   | **Other**         |       |      |   |
|                                                                                                             |   |                               |       |         |       |        |       |         |   |       |   | **Additional** |   |         |   | **Comprehensive** |       |      |   |
|                                                                                                             |   | **Common                  Shares** |       | **Warrants** |       | **Paid-in** |       | **Retained** |   | **Income** |   |           |   |
|                                                                                                             |   | **Shares**                         |       |         | **Amount** |        | **Shares** |         |   | **Amount** |   | **Capital**    |   | **Earnings** |   | **(Loss)**        |       | **Total** |   |
|                                                                                                             |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   |              |       |      |   |
|  Balance                  at December 31, 2006                                                              |   |                               | 27,724,457 |         |       | $           | 277,245    |         |   | 288,853    |   |           | $      | 20,747       |   | $                 | 87,880,449 |      | $      | 135,383,151 |   | $ | 42,386 |   | $ | 223,603,978 |   |
|  Net                  income                                                                                |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   |              |       |      |   | 63,094,783 |   |   |   |   |   | 63,094,783 |   |
|  Unrealized                  gain on securities                      available for sale |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   |              |       |      |   |   |   |   | 273,414 |   |   | 273,414 |   |
|  Unrealized                  loss on cash flow hedges                                                       |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   |              |       |      |   |   |   |   | (480,206 | ) |   | (480,206 | ) |
|  Comprehensive                  income                                                                      |   |                               |       |         |       |        |       |         |   |       |   |           |   |         |   |              |       |      |   |   |   |   |   |   |   | 62,887,991 |   |
|  Shares                  issued under Incentive                     Stock Plan                    |   |                               | 31,000     |         |       |        | 310        |         |   |       |   |           |   |         |   |              | 299,790    |      |   |   |   |   |   |   |   | 300,100 |   |
|  Balance                  at September 30, 2007                                                             |   |                               | 27,755,457 |         |       | $           | 277,555    |         |   | 288,853    |   |           | $      | 20,747       |   | $                 | 88,180,239 |      | $      | 198,477,934 |   | $ | (164,406 | ) | $ | 286,792,069 |   |

*The        accompanying notes are an integral part of these consolidated financial        statements.*

Table          of Contents

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**Note      1 — Basis of      Presentation**

**Note      2 **
** Change in Accounting Method for Drydocking      Costs**

*Audits of Airlines *

| ***Consolidated                Statement of Operations***          |   | As                  Reported |   |   | As                Adjusted |   |   |                     |   |
|--------------------------------------------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|--------|--------------------------|--------|
| ***For                the Three Months Ended September 30, 2006*** |   | under                    the |   |   | under                the   |   |   |                     |   |
| *(thousands,                excluding per share amounts)*          |   | Accrual                      |   |   | Deferral                   |   |   | Effect                of |   |
|                                                               |   | Method                       |   |   | Method                     |   |   | Change                   |   |
|                                                               |   |                         |   |   |                       |   |   |                     |   |
| Operating                expenses:                                 |   |                         |   |   |                       |   |   |                     |   |
| Vessel                                                             |   | $                            | 16,324 |   |                       | $      | 15,354 |                     |   | $ | (970 | ) |
| Depreciation                and amortization                       |   | $                            | 7,211  |   |                       | $      | 7,621  |                     |   | $ | 410 |   |
| Total                operating expenses                            |   | $                            | 50,096 |   |                       | $      | 49,535 |                     |   | $ | (561 | ) |
| Income                from operations                              |   | $                            | 15,306 |   |                       | $      | 15,867 |                     |   | $ | 561 |   |
| Net                income                                          |   | $                            | 9,214  |   |                       | $      | 9,775  |                     |   | $ | 561 |   |
| Earnings  per                share                       |   |                         |   |   |                       |   |   |                     |   |   |   |   |
| Basic                                                              |   | $                            | 0.33   |   |                       | $      | 0.35   |                     |   | $ | 0.02 |   |
| Diluted                                                            |   | $                            | 0.33   |   |                       | $      | 0.35   |                     |   | $ | 0.02 |   |
|                                                               |   |                         |   |   |                       |   |   |                     |   |   |   |   |

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| ***Consolidated                Statement of Operations***         |   | As                  Reported |    |   | As                Adjusted |   |    |                     |   |
|-------------------------------------------------------------------|--------|------------------------------|---------|--------|----------------------------|--------|---------|--------------------------|--------|
| ***For                the Nine Months Ended September 30, 2006*** |   | under                    the |    |   | under                the   |   |    |                     |   |
| *(thousands,                excluding per share amounts)*         |   | Accrual                      |    |   | Deferral                   |   |    | Effect                of |   |
|                                                              |   | Method                       |    |   | Method                     |   |    | Change                   |   |
|                                                              |   |                         |    |   |                       |   |    |                     |   |
| Operating                expenses:                                |   |                         |    |   |                       |   |    |                     |   |
| Vessel                                                            |   | $                            | 52,754  |   |                       | $      | 49,723  |                     |   | $ | (3,031 | ) |
| Depreciation                and amortization                      |   | $                            | 20,560  |   |                       | $      | 21,785  |                     |   | $ | 1,225 |   |
| Total                operating expenses                           |   | $                            | 154,148 |   |                       | $      | 152,343 |                     |   | $ | (1,805 | ) |
| Income                from operations                             |   | $                            | 34,003  |   |                       | $      | 35,808  |                     |   | $ | 1,805 |   |
| Net                income                                         |   | $                            | 22,901  |   |                       | $      | 24,706  |                     |   | $ | 1,805 |   |
| Earnings  per                share                      |   |                         |    |   |                       |   |    |                     |   |   |   |   |
| Basic                                                             |   | $                            | 0.82    |   |                       | $      | 0.88    |                     |   | $ | 0.06 |   |
| Diluted                                                           |   | $                            | 0.82    |   |                       | $      | 0.88    |                     |   | $ | 0.06 |   |

| ***Consolidated                Statement of Cash Flows***           |   | As                  Reported |    |   | As                Adjusted |   |    |                     |   |
|---------------------------------------------------------------------|--------|------------------------------|---------|--------|----------------------------|--------|---------|--------------------------|--------|
| ***For                the Nine Months Ended September 30, 2006***   |   | under                    the |    |   | under                the   |   |    |                     |   |
| *(thousands)*                                                       |   | Accrual                      |    |   | Deferral                   |   |    | Effect                of |   |
|                                                                |   | Method                       |    |   | Method                     |   |    | Change                   |   |
|                                                                |   |                         |    |   |                       |   |    |                     |   |
| Net                income                                           |   | $                            | 22,901  |   |                       | $      | 24,706  |                     |   | $ | 1,805 |   |
| Adjustments                to reconcile net income to net           |   |                         |    |   |                       |   |    |                     |   |   |   |   |
| cash                provided by operating activities:               |   |                         |    |   |                       |   |    |                     |   |   |   |   |
| Depreciation                and amortization                        |   | $                            | 20,560  |   |                       | $      | 21,785  |                     |   | $ | 1,225 |   |
| Changes                in operating assets and liabilities:         |   |                         |    |   |                       |   |    |                     |   |   |   |   |
| Increase                (decrease) in accrued expenses              |   |                         | (5,529  | )      |                       |   | (8,100  | )                        |   | $ | (2,571 | ) |
| Net                cash provided by operating activities            |   | $                            | 41,812  |   |                       | $      | 42,272  |                     |   | $ | 460 |   |
| Cash                flows from investing activities                 |   |                         |    |   |                       |   |    |                     |   |   |   |   |
| Vessel                acquisition / capital improvements            |   | $                            | (28,192 | )      |                       | $      | (28,652 | )                        |   | $ | (460 | ) |
| Net                cash (used in ) provided by investing activities |   | $                            | (34,019 | )      |                       | $      | (34,479 | )                        |   | $ | (460 | ) |

**Note      3 — New Accounting Pronouncements**

Table          of Contents

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*The Fair Value Option for Financial Assets and      Financial Liabilities, Including an amendment of FASB Statement No. 115"*

*Fair Value Measurements*

*Accounting for      Uncertainty in Income Taxes*
*,*

**Note      4 — Fuel and Other Inventories**

|                             |   | **September                  30,** |          |   | **December                  31,** |   |
|----------------------------------|--------|------------------------------------|---------------|--------|-----------------------------------|--------|
| **Description**                  |   | **2007**                           |          |   | **2006**                          |   |
| Fuel                             |   | $                                  | 7,008,852     |   |                              | $      | 4,650,557 |   |
| Lubricating                  oil |   |                               | 2,509,365     |   |                              |   | 2,125,983 |   |
| Other                            |   |                               | 407,502       |   |                              |   | 479,943 |   |
| **TOTAL**                        |   | **$**                              | **9,925,719** |   |                              | **$**  | **7,256,483** |   |
|                             |   |                               |          |   |                              |   |   |   |

**Note      5 — Fixed Assets**

| **Description**                                                 |   | **September                  30,****2007** |        |   | **December                  31, 2006** |   |
|-----------------------------------------------------------------|--------|--------------------------------------------|-------------|--------|----------------------------------------|--------|
| Vessels                                                         |   | $                                          | 331,870,671 |   |                                   | $      | 367,515,843 |   |
| Vessel                  improvements and other equipment        |   |                                       | 37,707,613  |   |                                   |   | 27,020,499 |   |
| Deferred                  dry docking costs                     |   |                                       | 10,699,260  |   |                                   |   | 7,780,192 |   |
| Vessel                  construction in process                 |   |                                       | 61,321,015  |   |                                   |   | 280,163 |   |
| Other                  fixed assets                             |   |                                       | 12,751,179  |   |                                   |   | 9,626,975 |   |
|                                                            |   |                                       | 454,349,738 |   |                                   |   | 412,223,672 |   |
| Less                  accumulated depreciation and amortization |   |                                       | (91,485,665 | )      |                                   |   | (75,354,578 | ) |
|                                                            |   | $                                          | 362,864,073 |   |                                   | $      | 336,869,094 |   |
|                                                            |   |                                       |        |   |                                   |   |   |   |

Table          of Contents

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*Nanticoke      Belle*
*Blu Mistral II,*

*Maya      Princess*

*Huron Maiden*

*Seminole Princess*
*Laguna Belle*
*Seminole Maiden*
*Clipper Flamingo*
*Laguna      Belle*
*Clipper Frontier*

Table          of Contents

----

| **New**                        | **Former**                     |                               | **Actual                / Anticipated**                        |   | **September                30,** |           | **December                31,** |      |
|--------------------------------|--------------------------------|------------------------------------|----------------------------------------------------------------|--------|----------------------------------|----------------|---------------------------------|-----------|
| **Vessel                Name** | **Vessel                Name** | **Date                of Deposit** | **Delivery                Date**                               |   | **2007**                         |           | **2006**                        |      |
|                           |                           |                               |                                                           |   |                             |           |                            |      |
| Nanticoke                Belle | Blu                Mistral     | December                12, 2006   | April                10, 2007 (actual)                         |   |                             |           | $                               | 1,695,000 |   |
| Yakima                Princess | Yakima                         | May                11, 2007        | October                12, 2007 (actual)                       |   | $                                | 2,900,000      |                            |      |   |   |
| Arapaho                Belle   | Elsa                Oldendorff | July                10, 2007       | November  2007                                       |   |                             | 2,900,000      |                            |      |   |   |
| Savannah                Belle  | Atlantis                Charm  | August                17, 2007     | November 2007                                             |   |                             | 1,070,000      |                            |      |   |   |
| Oneida                Princess | Gebe                Oldendorff | September                17, 2007  | December                2007–January                2008 |   |                             | 3,200,000      |                            |      |   |   |
|                           |                           |                               | **TOTAL**                                                      |   | **$**                            | **10,070,000** |                            | **$**     | **1,695,000** |   |
|                           |                           |                               |                                                           |   |                             |           |                            |      |   |   |

**Note      6 — Advances to / from Affiliates**

**Note      7 — Accrued Expenses**

|                                        |   | **September                  30,** |           |   | **December                  31,** |   |
|---------------------------------------------|--------|------------------------------------|----------------|--------|-----------------------------------|--------|
| **Description**                             |   | **2007**                           |           |   | **2006**                          |   |
| Voyage                  and vessel expenses |   | $                                  | 17,275,752     |   |                              | $      | 16,910,180 |   |
| Payroll                  and related costs  |   |                               | 2,991,010      |   |                              |   | 3,479,675 |   |
| Commissions                                 |   |                               | 273,982        |   |                              |   | 667,453 |   |
| Cargo                  claims               |   |                               | 174,999        |   |                              |   | 245,999 |   |
| Other                  expenses             |   |                               | 86,326         |   |                              |   | 226,044 |   |
| **Total**                                   |   | **$**                              | **20,802,069** |   |                              | **$**  | **21,529,351** |   |

Table          of Contents

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**Note      8 — Financing**

|                                                                             | **Interest                      Rate at September 30, 2007** |      |   | **September                      30, 2007** |   | **December                      31, 2006** |   |
|----------------------------------------------------------------------------------|--------------------------------------------------------------|-----------|--------|--------------------------------------------------|--------|-------------------------------------------------|--------|
| Bank                      of America - term credit facility,                     |                                                         |      |   |                                             |   |                                            |   |
| expires                      July 30, 2010                                       |                                                         | 6.61      | %      |                                             | $      | 55,491,071                                      |   | $ | 65,625,000 |   |
|                                                                             |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| Bank                      of America - revolving credit facility,                |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| expires                      July 30, 2010                                       |                                                         | 6.4%-6.82 | %      |                                             |   | 55,374,533                                      |   |   | 54,814,033 |   |
|                                                                             |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| The                      Royal Bank of Scotland credit                           |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| facility                      loan, expires March 23, 2010                       |                                                         | 7.00      | %      |                                             |   | 4,600,000                                       |   |   | 5,365,000 |   |
|                                                                             |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| The                      Royal Bank of Scotland credit facility,                 |                                                         |      |   |                                             |   |                                            |   |   |   |   |
| new                      vessel buildings,  expires September 20, 2020 |                                                         | 7.06      | %      |                                             |   | 35,000,000                                      |   |   | - |   |
| **Debt                      balance**                                            |                                                         |      |   |                                             | **$**  | **150,465,604**                                 |   | **$** | **125,804,033** |   |
|                                                                             |                                                         |      |   |                                             |   |                                            |   |   |   |   |

| 2007                  (October 1, 2007 through December 31, 2007) |   |   | $      |             5,299,643 |   |
|-------------------------------------------------------------------|--------|--------|--------|-----------------------------------------------------------------------------------|--------|
| 2008                                                              |   |   |   |           21,198,571            |   |
| 2009                                                              |   |   |   |           23,286,071            |   |
| 2010                                                              |   |   |   |           75,701,319            |   |
| 2011                                                              |   |   |   |           10,020,000            |   |
| Thereafter                                                        |   |   |   |           14,960,000            |   |
|                                                              |   |   | $      | **     150,465,604**                                     |   |
|                                                              |   |   |   |                                                                              |   |

**Bank      of America Credit Facility**

*Alabama Belle*

Table          of Contents

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**The      Royal Bank of Scotland Credit Facility**

*Wichita      Belle*
*Wichita      Belle*

Table          of Contents

----

**The      Royal Bank of Scotland Credit Facility - New Vessel      Buildings**

|                            |   | Loan                A                |   | Loan                B               |   | Loan                C                    |   | Loan                D                   |   | Loan                E                 |   | Loan                F                  |
|---------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|----------------------------------------|
|                            |   | Argyle                Maritime Corp. |   | Caton                Maritime Corp. |   | Dorchester                Maritime Corp. |   | Longwoods                Maritime Corp. |   | McHenry                Maritime Corp. |   | Sunswyck                Maritime Corp. |
| Milestone                       |   | Hull                No NYHS200720    |   | Hull                No NYHS200721   |   | Hull                No NYHS200722        |   | Hull                No NYHS200723       |   | Hull                No NYHS200724     |   | Hull                No NYHS200725      |
| Contract                Signing |   | $5.0                million          |   | $5.0                million         |   | $5.0                million              |   | $5.0                million             |   | $5.0                million           |   | $5.0                million            |
| Steel                Cutting    |   | $5.0                million          |   | $5.0                million         |   | $5.0                million              |   | $5.0                million             |   | $5.0                million           |   | $5.0                million            |
| Keel                Laying      |   | $5.0                million          |   | $5.0                million         |   | $5.0                million              |   | $5.0                million             |   | $5.0                million           |   | $5.0                million            |
| Launching                       |   | $5.0                million          |   | $5.0                million         |   | $5.0                million              |   | $5.0                million             |   | $5.0                million           |   | $5.0                million            |
| Delivery                        |   | $5.0                million          |   | $5.0                million         |   | $5.0                million              |   | $5.0                million             |   | $5.0                million           |   | $5.0                million            |

Table          of Contents

----

**Note      9 — Equity Transactions**

**Class      A and Class B Common Shares**

Table          of Contents

----

**Warrants**

**Note      10 — Earnings Per Share**

|                                                                                                             |   | **Three                  Months Ended September 30,** |       |   | **Nine                  Months Ended September 30,** |   |
|------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|------------|--------|------------------------------------------------------|--------|
|                                                                                                             |   | **2007**                                              |       |   | **2006**                                             |   |   | **2007** |   |   | **2006** |   |
|                                                                                                             |   |                                                  |       |   | (as                  adjusted)                       |   |   |   |   |   | (as                  adjusted) |   |
| **Numerators:**                                                                                                  |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |
| Net                  income                                                                                      |   | $                                                     | 27,004,026 |   |                                                 | $      | 9,774,844 |   |   | $ | 63,094,783 |   |   | $ | 24,706,068 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **Denominators:**                                                                                                |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Basic-weighted                  average common shares outstanding                                                |   |                                                  | 28,044,310 |   |                                                 |   | 28,013,310 |   |   |   | 28,024,295 |   |   |   | 27,993,968 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                  stock issued to employees and directors                                              |   |                                                  | 37,368     |   |                                                 |   | 75,000 |   |   |   | 35,250 |   |   |   | 94,342 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Diluted-weighted                  average common shares and potential common shares                  outstanding |   |                                                  | 28,081,678 |   |                                                 |   | 28,088,310 |   |   |   | 28,059,545 |   |   |   | 28,088,310 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  per common share:**                                                                    |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                            |   | $                                                     | 0.96       |   |                                                 | $      | 0.35 |   |   | $ | 2.25 |   |   | $ | 0.88 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                                          |   | $                                                     | 0.96       |   |                                                 | $      | 0.35 |   |   | $ | 2.25 |   |   | $ | 0.88 |   |
|                                                                                                             |   |                                                  |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Note      11 — Commitments and Contingencies**

*Charters-in      of Vessels*

** **
*Laguna Belle *
*Seminole Princess*

*Office      Leases*

|                                                              |   |                             |       | **Office**   |   |      |   |
|-------------------------------------------------------------------|--------|----------------------------------|------------|--------------|--------|-----------|--------|
| **At                  September 30,**                             |   | **Vessel                  Hire** |       | **Premises** |   | **Total** |   |
| 2007                  (October 1, 2007 through December 31, 2007) |   | $                                | 1,911,000  |         | $      | 134,000   |   | $ | 2,045,000 |   |
| 2008                                                              |   |                             | 7,665,000  |         |   | 491,000   |   |   | 8,156,000 |   |
| 2009                                                              |   |                             | 7,910,000  |         |   |      |   |   | 7,910,000 |   |
| 2010                                                              |   |                             | 5,951,000  |         |   |      |   |   | 5,951,000 |   |
| 2011                                                              |   |                             | 5,351,000  |         |   |      |   |   | 5,351,000 |   |
| Thereafter                                                        |   |                             | 11,157,000 |         |   |      |   |   | 11,157,000 |   |
|                                                              |   | $                                | 39,945,000 |         | $      | 625,000   |   | $ | 40,570,000 |   |
|                                                              |   |                             |       |         |   |      |   |   |   |   |

Table          of Contents

----

*Litigation*

*Purchase      Obligations –Vessels*

*Yakima Princess*
*Yakima, *

**Note      12 — Business Segment**

|                                  | **For                  the Three Months Ended**** September                  30,** |           | **For                  the Nine Months Ended**** September                  30,** |     |
|---------------------------------------|-----------------------------------------------------------------------------------------|----------------|---------------------------------------------------------------------------------------------|----------|
| **Country**                           | **2007**                                                                                |           |                                                                                        | **2006** |   | **2007** |   |   | **2006** |   |
| Brazil                                | $                                                                                       | 17,620,748     |                                                                                        |     | $ | 9,949,259 |   | $ | 51,579,578 |   |   | $ | 36,925,242 |   |
| Japan                                 |                                                                                    | 10,377,499     |                                                                                        |     |   | 9,369,314 |   |   | 27,527,187 |   |   |   | 24,108,834 |   |
| China                                 |                                                                                    | 7,423,482      |                                                                                        |     |   | 6,332,335 |   |   | 16,970,390 |   |   |   | 12,616,701 |   |
| Peru                                  |                                                                                    | 7,148,928      |                                                                                        |     |   | 3,716,649 |   |   | 21,540,280 |   |   |   | 11,300,851 |   |
| United                  Arab Emirates |                                                                                    | 5,318,407      |                                                                                        |     |   | 3,340,415 |   |   | 17,380,229 |   |   |   | 5,142,747 |   |
| Chile                                 |                                                                                    | 3,480,506      |                                                                                        |     |   | 3,593,160 |   |   | 7,762,452 |   |   |   | 12,157,796 |   |
| Korea                                 |                                                                                    | 948,182        |                                                                                        |     |   | 1,676,668 |   |   | 4,390,843 |   |   |   | 5,157,140 |   |
| Venezuela                             |                                                                                    | 83,000         |                                                                                        |     |   | 1,837,872 |   |   | 3,283,029 |   |   |   | 6,914,240 |   |
| Others                                |                                                                                    | 13,159,120     |                                                                                        |     |   | 2,244,287 |   |   | 18,087,098 |   |   |   | 9,075,135 |   |
| **Total**                             | **$**                                                                                   | **65,559,872** |                                                                                        |     | **$** | **42,059,959** |   | **$** | **168,521,086** |   |   | **$** | **123,398,686** |   |
|                                  |                                                                                    |           |                                                                                        |     |   |   |   |   |   |   |   |   |   |   |

Table            of Contents

----

**Note      13 — Subsequent Events**

*Yakima Princess*
*Yakima*

*Diasozousa *
*Mohave Maiden*
*Ypermachos*
*Zuni Princess*

*Arapaho Belle*

*Elsa Oldendorff*

*Oneida Princess*

*Gebe Oldendorff*

*African        Sanderling *
*Hopi Princess*

Table          of Contents

----

**Item        2.    Management's Discussion and Analysis of Financial        Condition and Results of Operations**

**Recent      Developments**

*Yakima Princess*
*Yak*
*i*
*ma*

*Diasozousa *
*Mohave      Maiden*
*Ypermachos*
*Zuni Princess*

*Arapaho Belle*

*Elsa Oldendorff*

*Oneida Princess*

*Gebe Oldendorff*

*African        Sanderling *
*Hopi Princess*

**General**

**Overview**

Table          of Contents

----

| ·   | macroeconomic                conditions in the geographic regions where we                operate; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | general                economic conditions in the industries in which our customers                operate; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | changes                in our freight and sub-time charter rates - rates we charge for vessels                we                charter out - and, in periods when our voyage and vessel expenses                increase, our ability to raise our rates to pass such cost increases                through to our customers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                extent to which we are able to efficiently utilize our controlled                fleet                and optimize its capacity; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                extent to which we can control our fixed and variable costs, including                those for port charges, stevedore and other cargo-related expenses,                fuel,                and commission expenses. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Approximately                60 drydock days relating to vessels that began their drydock during                the                first nine months of 2007 along with approximately 110 drydock days                relating to three vessels, including one vessel that is scheduled for                delivery during the quarter, which will begin their drydocking during                the fourth quarter.  We estimate that 940 metric tons of steel                will be required for two vessels excluding the vessel scheduled for                delivery during the fourth quarter.  In addition we                anticipate one vessel will require an additional 10 drydock days                that will                extend into the first quarter of                2008. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Components      of revenue and expense**

Table          of Contents

----

***Voyage      revenue***

***Time      charter revenue***

***Voyage      expenses***

***Vessel      expenses***
* *

***Depreciation      and amortization***
* *

***Commissions      on freight and port agency fees***

**Results      of Operations**

Table          of Contents

----

***Comparison      of the three months ended September 30, 2007 and September 30,      2006***

|                                                | **Three                      Months Ended** |   | **Three                      Months Ended** |                                             |                                         |                                  |   |   |                                             |
|-----------------------------------------------------|---------------------------------------------|--------|---------------------------------------------|--------------------------------------------------|----------------------------------------------|---------------------------------------|--------|--------|--------------------------------------------------|
|                                                | **September                      30, 2007** |   | **September                      30, 2006** |                                             | **Increase                      (Decrease)** |                                  |
|                                                |                                   |   | **(As                      Adjusted)**      |                                             |                                    |                                  |
|                                                | **In                      Thousands**       |   |                                        | **As                      a % of Total Revenue** |                                         | **In                      Thousands** |   |   | **As                      a % of Total Revenue** |   | **In                      Thousands** |   |   | **Percentage** |   |
| Voyage                      revenue                 | $                                           | 71,699 |                                        |                                             |                                         | 77.6                                  |   | $      | 47,880                                           |   |   |   | 73.2 |   |   | 23,819 |   |   |   | 49.7 |   |
| Time                      charter revenue           |                                        | 20,558 |                                        |                                             |                                         | 22.2                                  |   |   | 16,915                                           |   |   |   | 25.9 |   |   | 3,643 |   |   |   | 21.5 |   |
| Other                      revenue                  |                                        | 140    |                                        |                                             |                                         | 0.2                                   |   |   | 607                                              |   |   |   | 0.9 |   |   | (467 | ) |   |   | (76.9 | ) |
| Total                      revenue                  |                                        | 92,397 |                                        |                                             |                                         | 100.0                                 |   |   | 65,402                                           |   |   |   | 100.0 |   |   | 26,995 |   |   |   | 41.3 |   |
|                                                |                                        |   |                                        |                                             |                                         |                                  |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                      expense                 |                                        | 23,768 |                                        |                                             |                                         | 25.7                                  |   |   | 21,857                                           |   |   |   | 33.4 |   |   | 1,911 |   |   |   | 8.7 |   |
| Vessel                      expense                 |                                        | 22,192 |                                        |                                             |                                         | 24.1                                  |   |   | 15,354                                           |   |   |   | 23.5 |   |   | 6,838 |   |   |   | 44.5 |   |
| Depreciation                      and amortization  |                                        | 9,032  |                                        |                                             |                                         | 9.8                                   |   |   | 7,621                                            |   |   |   | 11.8 |   |   | 1,411 |   |   |   | 18.5 |   |
| General                      and administrative     |                                        | 7,960  |                                        |                                             |                                         | 8.6                                   |   |   | 6,883                                            |   |   |   | 10.5 |   |   | 1,077 |   |   |   | 15.6 |   |
| Loss                      from sale of vessel       |                                        |   |                                        |                                             |                                         |                                  |   |   | (2,180                                           | ) |   |   | (3.3 | ) |   | 2,180 |   |   |   |   |   |
| Total                      operating expenses       |                                        | 62,952 |                                        |                                             |                                         | 68.2                                  |   |   | 49,535                                           |   |   |   | 75.9 |   |   | 13,417 |   |   |   | 27.1 |   |
| Income                      from operations         |                                        | 29,445 |                                        |                                             |                                         | 31.8                                  |   |   | 15,867                                           |   |   |   | 24.1 |   |   | 13,578 |   |   |   | 85.6 |   |
| Other                      (expenses) and income    |                                        |   |                                        |                                             |                                         |                                  |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                      expense               |                                        | (2,603 | )                                           |                                             |                                         | (2.8                                  | )      |   | (2,738                                           | ) |   |   | (4.2 | ) |   | 135 |   |   |   | (4.9 | ) |
|                                                |                                        |   |                                        |                                             |                                         |                                  |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                      on extinguishment of debt |                                        |   |                                        |                                             |                                         |                                  |   |   | (3,552                                           | ) |   |   |   |   |   | 3,552 |   |   |   |   |   |
| Other                      income (expense)         |                                        | 162    |                                        |                                             |                                         | 0.2                                   |   |   | 198                                              |   |   |   | 0.3 |   |   | (36 | ) |   |   | (18.2 | ) |
| Net  income                               | $                                           | 27,004 |                                        |                                             |                                         | 29.2                                  |   | $      | 9,775                                            |   |   |   | 20.2 |   | $ | 17,229 |   |   |   | 176.3 |   |
|                                                |                                        |   |                                        |                                             |                                         |                                  |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |

**Voyage      revenue**

Table          of Contents

----

|                                                     | **Three                  Months Ended September 30,** |   |
|----------------------------------------------------------|-------------------------------------------------------|--------|
|                                                     | **2007**                                              |   |   | **2006** |   |   | **Increase                  (Decrease)** |   |
| Number                  of vessels (1)                   |                                                  | 23     |   |   |   | 22 |   |   |   | 1 |   |   |   | 4.5 | % |
| Freight                  voyage days (2)                 |                                                  | 2,157  |   |   |   | 1,984 |   |   |   | 173 |   |   |   | 8.7 | % |
| Days                  on hire (3)                        |                                                  | 2,169  |   |   |   | 2,083 |   |   |   | 86 |   |   |   | 4.1 | % |
| Freight                  Rates (4)                       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For                  all cargoes                         | $                                                     | 43.16  |   |   | $ | 42.25 |   |   | $ | 0.91 |   |   |   | 2.2 | % |
| Excluding                  aggregates                    | $                                                     | 70.06  |   |   | $ | 57.18 |   |   | $ | 12.88 |   |   |   | 22.5 | % |
| Daily                  time charter equivalent rates (5) | $                                                     | 21,525 |   |   | $ | 12,601 |   |   | $ | 8,924 |   |   |   | 70.8 | % |

| (1) |   | Weighted                average number of vessels in the fleet, not including vessels chartered                out.      |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Number                of days that our vessels were earning revenue, not including vessels                chartered out. |
| (3) |   | Not                including vessels chartered out.                                                                      |
| (4) |   | Weighted                average freight rates measured in dollars per                ton.                                |

| (5) |   | Time                  Charter Equivalent or "TCE" rates are defined as voyage revenue                  less                  voyage expenses during the period divided by the number of available                  days                  during the period.  Voyage expenses include the following                  expenses: fuel, port call, commissions, stevedore and other cargo                  related                  and miscellaneous voyage expenses.  TCE is an industry standard                  for measuring and analyzing fluctuations between financial periods                  and as                  a method of equating TCE revenue generated from a voyage charter                  to time                  charter revenue. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |  **Three                    Months Ended** |   |   |  **Three                    Months Ended**       |   |                                       |                                |
|------------------------------------------|-------------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------------------------------------------|-------------------------------------|
|                                     | **September                    30, 2007**       |   |   | **September                    30, 2006**             |   | **Increase                    (Decrease)** |                                |
| **Description**                          | **In                    Thousands**             |   |   | **As                    a % of Total Voyage Revenue** |   |                                       | **In                    Thousands** |   |   | **As                    a % of Total Voyage Revenue** |   | **In                    Thousands** |   |   | **%** |   |
| Steel                    products        | $                                               | 24,084 |   |                                                  |   | 33.6                                       |                                |   | $ | 16,121 |   |   |   | 33.7 |   | $ | 7,963 |   |   |   | 49.4 |   |
| Agricultural                    products |                                            | 12,788 |   |                                                  |   | 17.7                                       |                                |   |   | 5,686 |   |   |   | 11.9 |   |   | 7,102 |   |   |   | 124.9 |   |
| Other                    bulk cargo      |                                            | 11,231 |   |                                                  |   | 15.7                                       |                                |   |   | 5,591 |   |   |   | 11.7 |   |   | 5,640 |   |   |   | 100.9 |   |
| Metal                    concentrates    |                                            | 9,507  |   |                                                  |   | 13.3                                       |                                |   |   | 6,757 |   |   |   | 14.1 |   |   | 2,750 |   |   |   | 40.7 |   |
| Fertilizers                              |                                            | 5,162  |   |                                                  |   | 7.2                                        |                                |   |   | 1,994 |   |   |   | 4.2 |   |   | 3,168 |   |   |   | 158.9 |   |
| Rolling                    stock         |                                            | 3,159  |   |                                                  |   | 4.4                                        |                                |   |   | 2,889 |   |   |   | 6.0 |   |   | 270 |   |   |   | 9.3 |   |
| General                    cargo         |                                            | 2,274  |   |                                                  |   | 3.2                                        |                                |   |   | 2,580 |   |   |   | 5.4 |   |   | (306 | ) |   |   | (11.9 | ) |
| Automotive                    products   |                                            | 1,413  |   |                                                  |   | 2.0                                        |                                |   |   | 999 |   |   |   | 2.1 |   |   | 414 |   |   |   | 41.4 |   |
| Other                                    |                                            | 1,810  |   |                                                  |   | 2.5                                        |                                |   |   | 1,508 |   |   |   | 3.1 |   |   | 302 |   |   |   | 20.0 |   |
| Project                    cargo         |                                            | 271    |   |                                                  |   | 0.4                                        |                                |   |   | 3,755 |   |   |   | 7.8 |   |   | (3,484 | ) |   |   | (92.8 | ) |
| Total                    voyage revenue  | $                                               | 71,699 |   |                                                  |   | 100.0                                      |                                |   | $ | 47,880 |   |   |   | 100.0 |   | $ | 23,819 |   |   |   | 49.7 |   |
|                                     |                                            |   |   |                                                  |   |                                       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Time      charter revenue**

|                                                     | **Three                  months Ended September 30,** |   |
|----------------------------------------------------------|-------------------------------------------------------|--------|
|                                                     | **2007**                                              |   |   | **2006** |   |   | **Increase                  (Decrease)** |   |
| Number                  of vessels (1)                   |                                                  | 9      |   |   |   | 12 |   |   |   | (3 | ) |   |   | -25.0 | % |
| Time                  Charter days (2)                   |                                                  | 807    |   |   |   | 1,118 |   |   |   | (311 | ) |   |   | -27.8 | % |
| Daily                  charter hire rates (3)            | $                                                     | 25,474 |   |   | $ | 15,129 |   |   | $ | 10,345 |   |   |   | 68.4 | % |
| Daily                  time charter equivalent rates (4) | $                                                     | 23,833 |   |   | $ | 13,989 |   |   | $ | 9,844 |   |   |   | 70.4 | % |

| (1) |   | Weighted                average number of vessels chartered out. |
|-----|--------|------------------------------------------------------------------|
| (2) |   | Number                of days vessels earned charter hire.       |
| (3) |   | Weighted                average charter hire rates.              |

| (4) |   | Time                  Charter Equivalent or "TCE" rates for vessels that are time chartered                  out                  are defined as time charter revenue during the period reduced by                  commissions, divided by the number of available days during the                  period.  TCE is an industry standard for measuring and analyzing                  fluctuations between financial periods and as a method of equating                  TCE                  revenue generated from a voyage charter to time charter                  revenue.  No voyage expenses are deducted because they are not                  applicable. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Voyage      expense**

|                                   | **Three                  Months Ended September 30,** |   |   |     |   |                                     |   |
|----------------------------------------|-------------------------------------------------------|--------|--------|----------|--------|------------------------------------------|--------|
|                                   | **2007**                                              |   |   | **2006** |   | **Increase                  (Decrease)** |   |
| Freight                  voyage days   |                                                  | 2,157  |   |     |   | 1,984                                    |   |   | 173 |   |   |   | 8.7 | % |
| Time                  charter out days |                                                  | 807    |   |     |   | 1,118                                    |   |   | (311 | ) |   |   | -27.8 | % |
| Total                  voyage days     |                                                  | 2,964  |   |     |   | 3,102                                    |   |   | (138 | ) |   |   | -4.4 | % |

Table          of Contents

----

|                                   | **Three                  Months Ended** |   | **Three                  Months Ended** |                                          |                                                       |   |                                        |   |                              |
|----------------------------------------|-----------------------------------------|--------|-----------------------------------------|-----------------------------------------------|------------------------------------------------------------|--------|---------------------------------------------|--------|-----------------------------------|
|                                   | **September                  30, 2007** |   | **September                  30, 2006** |                                          |    **Increase                  (Decrease)** |   |
|                                   | **In                  Thousands**       |   |                                    | **As                  a % of Voyage Expense** |                                                       |   | **As                  a % of Revenue** |   | **In                  Thousands** |   |   | **As                  a % of Voyage Expense** |   |   | **As                  a % of Revenue** |   | **In                  Thousands** |   |   | **As                  a % of 2006 Expense** |   |   | **As                  a % of Revenue** |   |
| Fuel                  expense          | $                                       | 10,689 |                                    |                                          |                                                       | 45.0   |                                        |   |                              | 11.5 |   | $ | 10,264 |   |   |   | 47.0 |   |   |   | 15.6 |   | $ | 425 |   |   |   | 4.1 |   |   |   | (4.1 | ) |
| Commission                  expense    |                                    | 3,971  |                                    |                                          |                                                       | 16.7   |                                        |   |                              | 4.3 |   |   | 2,852 |   |   |   | 13.0 |   |   |   | 4.4 |   |   | 1,119 |   |   |   | 39.2 |   |   |   | (0.1 | ) |
| Port                  call expense     |                                    | 4,732  |                                    |                                          |                                                       | 19.9   |                                        |   |                              | 5.1 |   |   | 3,861 |   |   |   | 17.7 |   |   |   | 5.9 |   |   | 871 |   |   |   | 22.6 |   |   |   | (0.8 | ) |
| Stevedore                  and other   |                                    |   |                                    |                                          |                                                       |   |                                        |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cargo-related                  expense |                                    | 2,728  |                                    |                                          |                                                       | 11.5   |                                        |   |                              | 3.0 |   |   | 2,934 |   |   |   | 13.4 |   |   |   | 4.5 |   |   | (206 | ) |   |   | (7.0 | ) |   |   | (1.5 | ) |
| Miscellaneous                  voyage  |                                    |   |                                    |                                          |                                                       |   |                                        |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                |                                    | 1,648  |                                    |                                          |                                                       | 6.9    |                                        |   |                              | 1.8 |   |   | 1,946 |   |   |   | 8.9 |   |   |   | 3.0 |   |   | (298 | ) |   |   | (15.3 | ) |   |   | (1.2 | ) |
| Voyage                  expense        | $                                       | 23,768 |                                    |                                          |                                                       | 100.0  |                                        |   |                              | 25.7 |   | $ | 21,857 |   |   |   | 100.0 |   |   |   | 33.4 |   | $ | 1,911 |   |   |   | 8.7 |   |   |   | (7.7 | ) |
|                                   |                                    |   |                                    |                                          |                                                       |   |                                        |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Vessel      expense**

|                                           | **Three                    Months Ended** |   | **Three                    Months Ended** |                                            |                                       |                                 |
|------------------------------------------------|-------------------------------------------|--------|-------------------------------------------|-------------------------------------------------|--------------------------------------------|--------------------------------------|
|                                           | **September                    30, 2007** |   | **September                    30, 2006** |                                            | **Increase                    (Decrease)** |                                 |
|                                           |                                      |   |                                      |                                            |                                       | **(As                    Adjusted)** |   |   |   |   |   |   |
|                                           | **In                    Thousands**       |   |                                      | **As                    a % of Vessel Expense** |                                       | **In                    Thousands**  |   |   | **As                    a % of Vessel Expense** |   | **In                    Thousands** |   |   | **Percentage** |   |
| Owned                    vessel expense        | $                                         | 14,229 |                                      |                                            |                                       | 64.1                                 |   | $ | 11,816 |   |   |   | 77.0 |   | $ | 2,413 |   |   |   | 20.4 |   |
| Chartered-in                    vessel expense |                                      | 6,235  |                                      |                                            |                                       | 28.1                                 |   |   | 3,518 |   |   |   | 22.9 |   |   | 2,717 |   |   |   | 77.0 |   |
| Controlled                    vessel expense   |                                      | 1,728  |                                      |                                            |                                       | 7.8                                  |   |   | - |   |   |   | - |   |   | 1,728 |   |   |   | - |   |
| Space                    charter expense       |                                      | -      |                                      |                                            |                                       | -                                    |   |   | 20 |   |   |   | 0.1 |   |   | (20 | ) |   |   | (100.0 | ) |
| Vessel                    expense              | $                                         | 22,192 |                                      |                                            |                                       | 100.0                                |   | $ | 15,354 |   |   |   | 100.0 |   | $ | 6,838 |   |   |   | 44.5 |   |
|                                           |                                      |   |                                      |                                            |                                       |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**.**

*Laguna Belle*
*Seminole Princess*
*.  B*

**Depreciation      and amortization**

Table          of Contents

----

**General      and administrative expense**

**Income      from operations**

**Interest      expense **

**Loss      on extinguishment of debt**

Table          of Contents

----

***Comparison      of the nine months ended September 30, 2007 and September 30,      2006***

|                                            | **Nine                  Months Ended**  |    | **Nine                  Months Ended**  |                                         |                                     |                              |   |   |                                         |
|-------------------------------------------------|-----------------------------------------|---------|-----------------------------------------|----------------------------------------------|------------------------------------------|-----------------------------------|--------|--------|----------------------------------------------|
|                                            | **September                  30, 2007** |    | **September                  30, 2006** |                                         | **Increase                  (Decrease)** |                              |
|                                            |                               |    | **(As                  Adjusted)**      |                                         |                                |                              |
|                                            | **In                  Thousands**       |    |                                    | **As                  a % of Total Revenue** |                                     | **In                  Thousands** |   |   | **As                  a % of Total Revenue** |   | **In                  Thousands** |   |   | **Percentage** |   |
| Voyage                  revenue                 | $                                       | 185,087 |                                    |                                         |                                     | 77.0                              |   | $      | 141,008                                      |   |   |   | 74.9 |   |   | 44,079 |   |   |   | 31.3 |   |
| Time                  charter revenue           |                                    | 54,748  |                                    |                                         |                                     | 22.8                              |   |   | 45,911                                       |   |   |   | 24.4 |   |   | 8,837 |   |   |   | 19.2 |   |
| Other                  revenue                  |                                    | 614     |                                    |                                         |                                     | 0.2                               |   |   | 1,232                                        |   |   |   | 0.7 |   |   | (618 | ) |   |   | (50.2 | ) |
| Total                  revenue                  |                                    | 240,449 |                                    |                                         |                                     | 100.0                             |   |   | 188,151                                      |   |   |   | 100.0 |   |   | 52,298 |   |   |   | 27.8 |   |
|                                            |                                    |    |                                    |                                         |                                     |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                  expense                 |                                    | 63,548  |                                    |                                         |                                     | 26.4                              |   |   | 63,765                                       |   |   |   | 33.9 |   |   | (217 | ) |   |   | (0.3 | ) |
| Vessel                  expense                 |                                    | 62,690  |                                    |                                         |                                     | 26.1                              |   |   | 49,723                                       |   |   |   | 26.4 |   |   | 12,967 |   |   |   | 26.1 |   |
| Depreciation                  and amortization  |                                    | 25,869  |                                    |                                         |                                     | 10.8                              |   |   | 21,785                                       |   |   |   | 11.6 |   |   | 4,084 |   |   |   | 18.7 |   |
| General                  and administrative     |                                    | 22,804  |                                    |                                         |                                     | 9.5                               |   |   | 19,250                                       |   |   |   | 10.2 |   |   | 3,554 |   |   |   | 18.5 |   |
| Loss                  (gain) on sale of vessel  |                                    | 814     |                                    |                                         |                                     | 0.3                               |   |   | (2,180                                       | ) |   |   | (1.2 | ) |   | 2,994 |   |   |   |   |   |
| Total                  operating expenses       |                                    | 175,725 |                                    |                                         |                                     | 73.1                              |   |   | 152,343                                      |   |   |   | 80.9 |   |   | 23,382 |   |   |   | 15.3 |   |
| Income                  from operations         |                                    | 64,724  |                                    |                                         |                                     | 26.9                              |   |   | 35,808                                       |   |   |   | 19.1 |   |   | 28,916 |   |   |   | 80.8 |   |
| Other                  (expenses) and income    |                                    |    |                                    |                                         |                                     |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense               |                                    | (7,772  | )                                       |                                         |                                     | (3.2                              | )      |   | (8,351                                       | ) |   |   | (4.4 | ) |   | 579 |   |   |   | (6.9 | ) |
| Loss                  on extinguishment of debt |                                    | -       |                                    |                                         |                                     | -                                 |   |   | (3,552                                       | ) |   |   | (1.9 | ) |   | 3,552 |   |   |   | (100.0 | ) |
| Gain                  on sale and insurance     |                                    |    |                                    |                                         |                                     |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   recovery                  of vessel |                                    | 6,034   |                                    |                                         |                                     | 2.5                               |   |   | -                                            |   |   |   | - |   |   | 6,034 |   |   |   |   |   |
| Other                  income                   |                                    | 109     |                                    |                                         |                                     | -                                 |   |   | 801                                          |   |   |   | 0.4 |   |   | (692 | ) |   |   | (86.4 | ) |
| Net  income                           | $                                       | 63,095  |                                    |                                         |                                     | 26.2                              |   | $      | 24,706                                       |   |   |   | 13.2 |   | $ | 38,389 |   |   |   | 155.4 |   |
|                                            |                                    |    |                                    |                                         |                                     |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |

**Voyage      revenue**

Table          of Contents

----

|                                                     | **Nine                  months ended September 30,** |   |
|----------------------------------------------------------|------------------------------------------------------|--------|
|                                                     | **2007**                                             |   |   | **2006** |   |   | **Increase                  (Decrease)** |   |
| Number                  of vessels (1)                   |                                                 | 22     |   |   |   | 22 |   |   |   | - |   |   |   | - |   |
| Freight                  voyage days (2)                 |                                                 | 6,064  |   |   |   | 5,881 |   |   |   | 183 |   |   |   | 3.1 | % |
| Days                  on hire (3)                        |                                                 | 6,124  |   |   |   | 6,408 |   |   |   | (284 | ) |   |   | (4.4 | )% |
| Freight                  Rates (4)                       |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For                  all cargoes                         | $                                                    | 38.69  |   |   | $ | 44.11 |   |   | $ | (5.42 | ) |   |   | (12.3 | )% |
| Excluding                  aggregates                    | $                                                    | 64.60  |   |   | $ | 53.13 |   |   | $ | 11.47 |   |   |   | 21.6 | % |
| Daily                  time charter equivalent rates (5) | $                                                    | 19,452 |   |   | $ | 12,269 |   |   | $ | 7,183 |   |   |   | 58.5 | % |

| (1) | Weighted                average number of vessels in the fleet, not including off-hire days                and                not including vessels chartered out.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Number                of days that our vessels were earning revenue, not including vessels                chartered out.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (3) | Not                including vessels chartered out.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4) | Weighted                average freight rates measured in dollars per ton.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (5) | Time                Charter Equivalent or "TCE" rates are defined as voyage revenue less                voyage expenses during the period divided by the number of available                days                during the period.  Voyage expenses include the following                expenses: fuel, port call, commissions, stevedore and other cargo                related                and miscellaneous voyage expenses.  TCE is an industry standard                for measuring and analyzing fluctuations between financial periods                and as                a method of equating TCE revenue generated from a voyage charter                to time                charter revenue. |

|                                     | **Nine                    Months Ended****September                    30, 2007** |    | **Nine                    Months Ended****September                    30, 2006** |                                                  | **Increase                    (Decrease)** |                                |
|------------------------------------------|-----------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------|-------------------------------------------------------|--------------------------------------------|-------------------------------------|
| **Description**                          | **In                    Thousands**                                               |    |                                                                              | **As                    a % of Total Voyage Revenue** |                                       | **In                    Thousands** |   |   | **As                    a % of Total Voyage Revenue** |   | **In                    Thousands** |   |   | **%** |   |
| Steel                    products        | $                                                                                 | 60,936  |                                                                              |                                                  |                                       | 32.9                                |   | $ | 51,043 |   |   |   | 36.2 |   | $ | 9,893 |   |   |   | 19.4 |   |
| Agricultural                    products |                                                                              | 34,807  |                                                                              |                                                  |                                       | 18.8                                |   |   | 19,182 |   |   |   | 13.6 |   |   | 15,625 |   |   |   | 81.5 |   |
| Fertilizers                              |                                                                              | 31,060  |                                                                              |                                                  |                                       | 16.8                                |   |   | 18,636 |   |   |   | 13.2 |   |   | 12,424 |   |   |   | 66.7 |   |
| Metal                    concentrates    |                                                                              | 25,983  |                                                                              |                                                  |                                       | 14.1                                |   |   | 20,192 |   |   |   | 14.3 |   |   | 5,791 |   |   |   | 28.7 |   |
| Rolling                    stock         |                                                                              | 8,909   |                                                                              |                                                  |                                       | 4.8                                 |   |   | 7,263 |   |   |   | 5.1 |   |   | 1,646 |   |   |   | 22.7 |   |
| General                    cargo         |                                                                              | 9,596   |                                                                              |                                                  |                                       | 5.2                                 |   |   | 4,465 |   |   |   | 3.2 |   |   | 5,131 |   |   |   | 114.9 |   |
| Other                                    |                                                                              | 4,660   |                                                                              |                                                  |                                       | 2.5                                 |   |   | 5,723 |   |   |   | 4.1 |   |   | (1,063 | ) |   |   | (18.6 | ) |
| Automotive                    products   |                                                                              | 3,386   |                                                                              |                                                  |                                       | 1.8                                 |   |   | 3,189 |   |   |   | 2.3 |   |   | 197 |   |   |   | 6.2 |   |
| Other                    bulk cargo      |                                                                              | 3,682   |                                                                              |                                                  |                                       | 2.0                                 |   |   | 3,038 |   |   |   | 2.1 |   |   | 644 |   |   |   | 21.2 |   |
| Project                    cargo         |                                                                              | 2,068   |                                                                              |                                                  |                                       | 1.1                                 |   |   | 8,277 |   |   |   | 5.9 |   |   | (6,209 | ) |   |   | (75.0 | ) |
| Total                    voyage revenue  | $                                                                                 | 185,087 |                                                                              |                                                  |                                       | 100.0                               |   | $ | 141,008 |   |   |   | 100.0 |   | $ | 44,079 |   |   |   | 31.3 |   |
|                                     |                                                                              |    |                                                                              |                                                  |                                       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Time      charter revenue**

|                                                     | **Nine                  months Ended September 30,**   |   |
|----------------------------------------------------------|------------------------------------------------------------------|--------|
|                                                     | **2007**                                                         |   |   | **2006** |   |   | **Increase                  (Decrease)** |   |
| Number                  of vessels (1)                   |                                                             | 10     |   |   |   | 12 |   |   |   | (2 | ) |   |   | -16.7 | % |
| Time                  Charter days (2)                   |                                                             | 2,640  |   |   |   | 3,280 |   |   |   | (640 | ) |   |   | -19.5 | % |
| Daily                  charter hire rates (3)            | $                                                                | 20,738 |   |   | $ | 13,997 |   |   | $ | 6,741 |   |   |   | 48.2 | % |
| Daily                  time charter equivalent rates (4) | $                                                                | 19,267 |   |   | $ | 12,891 |   |   | $ | 6,376 |   |   |   | 49.5 | % |

| (1) | Weighted                average number of vessels chartered out.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Number                of days vessels earned charter hire.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3) | Weighted                average charter hire rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (4) | Time                  Charter Equivalent or "TCE" rates for vessels that are time chartered                  out                  are defined as time charter revenue during the period reduced by                  commissions, divided by the number of available days during the                  period.  TCE is an industry standard for measuring and analyzing                  fluctuations between financial periods and as a method of equating                  TCE                  revenue generated from a voyage charter to time charter                  revenue.  No voyage expenses are deducted because they are not                  applicable. |

Table          of Contents

----

**Voyage      expense**

|                                   | **Nine                  Months Ended September 30,**      |   |
|----------------------------------------|------------------------------------------------------------------------------------|--------|
|                                   | **2007**                                                                           |   |   | **2006** |   | **Increase                  (Decrease)** |   |
| Freight                  voyage days   |                                                                               | 6,064  |   |   |   | 5,881 |   |   | 183 |   |   |   | 3.1 | % |
| Time                  charter out days |                                                                               | 2,640  |   |   |   | 3,280 |   |   | (640 | ) |   |   | -19.5 | % |
| Total                  voyage days     |                                                                               | 8,704  |   |   |   | 9,161 |   |   | (457 | ) |   |   | -5.0 | % |

|                                   | **Nine                  Months Ended**  |   | **Nine                  Months Ended**  |                                          |                                        |   |
|----------------------------------------|-----------------------------------------|--------|-----------------------------------------|-----------------------------------------------|------------------------------------------------------------|--------|
|                                   | **September                  30, 2007** |   | **September                  30, 2006** |                                          |    **Increase                  (Decrease)** |   |
|                                   | **In                  Thousands**       |   |                                    | **As                  a % of Voyage Expense** |                                                       |   | **As                  a % of Revenue** |   | **In                  Thousands** |   |   | **As                  a % of Voyage Expense** |   |   | **As                  a % of Revenue** |   | **In                  Thousands** |   |   | **Percentage** |   |   | **As                  a % of Revenue** |   |
| Fuel                  expense          | $                                       | 27,623 |                                    |                                          |                                                       | 43.5   |   |   |   | 11.5 |   | $ | 28,457 |   |   |   | 44.6 |   |   |   | 15.1 |   | $ | (834 | ) |   |   | (2.9 | ) |   |   | (3.6 | ) |
| Commission                  expense    |                                    | 10,024 |                                    |                                          |                                                       | 15.8   |   |   |   | 4.2 |   |   | 7,733 |   |   |   | 12.1 |   |   |   | 4.1 |   |   | 2,291 |   |   |   | 29.6 |   |   |   | 0.1 |   |
| Port                  call expense     |                                    | 12,331 |                                    |                                          |                                                       | 19.4   |   |   |   | 5.1 |   |   | 12,923 |   |   |   | 20.3 |   |   |   | 6.9 |   |   | (592 | ) |   |   | (4.6 | ) |   |   | (1.8 | ) |
| Stevedore                  and other   |                                    |   |                                    |                                          |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cargo-related                  expense |                                    | 7,829  |                                    |                                          |                                                       | 12.3   |   |   |   | 3.2 |   |   | 8,904 |   |   |   | 14.0 |   |   |   | 4.7 |   |   | (1,075 | ) |   |   | (12.1 | ) |   |   | (1.5 | ) |
| Miscellaneous                  voyage  |                                    |   |                                    |                                          |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                |                                    | 5,741  |                                    |                                          |                                                       | 9.0    |   |   |   | 2.4 |   |   | 5,748 |   |   |   | 9.0 |   |   |   | 3.1 |   |   | (7 | ) |   |   | (0.1 | ) |   |   | (0.7 | ) |
| Voyage                  expense        | $                                       | 63,548 |                                    |                                          |                                                       | 100.0  |   |   |   | 26.4 |   | $ | 63,765 |   |   |   | 100.0 |   |   |   | 33.9 |   | $ | (217 | ) |   |   | (0.3 | ) |   |   | (7.5 | ) |
|                                   |                                    |   |                                    |                                          |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Vessel        expense**

|                                         | **Nine                  Months Ended**  |   | **Nine                  Months Ended**  |                                          |                                     |                               |
|----------------------------------------------|-----------------------------------------|--------|-----------------------------------------|-----------------------------------------------|------------------------------------------|------------------------------------|
|                                         | **September                  30, 2007** |   | **September                  30, 2006** |                                          | **Increase                  (Decrease)** |                               |
|                                         |                                    |   |                                    |                                          |                                     | **(As                  Adjusted)** |   |   |   |   |   |   |
|                                         | **In                  Thousands**       |   |                                    | **As                  a % of Vessel Expense** |                                     | **In                  Thousands**  |   |   | **As                  a % of Vessel Expense** |   | **In                  Thousands** |   |   | **Per-****centage** |   |
| Owned                  vessel expense        | $                                       | 40,492 |                                    |                                          |                                     | 64.6                               |   | $ | 33,422 |   |   |   | 67.2 |   | $ | 7,070 |   |   |   | 21.2 |   |
| Chartered-in                  vessel expense |                                    | 17,671 |                                    |                                          |                                     | 28.2                               |   |   | 14,497 |   |   |   | 29.2 |   |   | 3,174 |   |   |   | 21.9 |   |
| Controlled                  vessel expense   |                                    | 4,403  |                                    |                                          |                                     | 7.0                                |   |   | - |   |   |   | - |   |   | 4,403 |   |   |   | - |   |
| Space                  charter expense       |                                    | 124    |                                    |                                          |                                     | 0.2                                |   |   | 1,804 |   |   |   | 3.6 |   |   | (1,680 | ) |   |   | (93.1 | ) |
| Vessel                  expense              | $                                       | 62,690 |                                    |                                          |                                     | 100.0                              |   | $ | 49,723 |   |   |   | 100.0 |   | $ | 12,967 |   |   |   | 26.1 |   |
|                                         |                                    |   |                                    |                                          |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

*Laguna Belle*
*Seminole Princess*
*.  *

**Depreciation      and amortization**

**General      and administrative expense**

**Income      from operations**

**Interest      expense**

Table          of Contents

----

**Loss      on extinguishment of debt**

**Gain      on sale and insurance recovery of vessel**

*Huron Maiden.  *

***Balance      Sheet***

**Charter      Hire Receivables**

**Other      Commitments**

|                                                    | **Total** |    | **Less                  than 1 year** |   | **1-3                  years** |   | **3-5                  years** |    | **More                  than 5 years** |   |
|---------------------------------------------------------|-----------|---------|---------------------------------------|--------|--------------------------------|--------|--------------------------------|---------|----------------------------------------|--------|
| Debt                  Obligations (1)                   | $         | 150,465 |                                  | $      | 21,199                         |   | $                              | 101,782 |                                   | $      | 20,040 |   | $ | 7,444 |   |
| Capital                  lease obligations              |      | 21,443  |                                  |   | 6,388                          |   |                           | 15,055  |                                   |   |   |   |   |   |   |
| Operating                  Lease obligations (2)        |      | 42,708  |                                  |   | 11,284                         |   |                           | 13,519  |                                   |   | 10,746 |   |   | 7,159 |   |
| Other                  Purchase obligations (3) (4) (5) |      | 248,730 |                                  |   | 140,230                        |   |                           | 108,500 |                                   |   |   |   |   |   |   |
| Total                  contractual cash obligations     | $         | 463,346 |                                  | $      | 179,101                        |   | $                              | 238,856 |                                   | $      | 30,786 |   | $ | 14,603 |   |
|                                                    |      |    |                                  |   |                           |   |                           |    |                                   |   |   |   |   |   |   |

| (1)   | As                of September 30, 2007, we had $150.5 million of indebtedness outstanding                under loans to our subsidiaries that we guarantee, comprised of:                $55.5                million under the $80.0 million term loan with Bank of America, $4.6                million under the $7.2 million credit facility with The Royal Bank                of                Scotland, $55.4 million under the $80.0 million revolving credit                facility                with Bank of America, and $35.0 million under the $150.0 million                credit                facility with The Royal Bank of Scotland for the new vessel                building.  The above schedule does not reflect the expected                future advances of $115.0 million under the $150.0 million credit                facility                with The Royal Bank of Scotland. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Operating                lease obligations includes obligations under separate seven-year                bareboat                charters for the *Seminole Princess* and *Laguna                Belle* |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | We                entered into agreements to acquire the following vessels as of September                30, 2007 (thousand): |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------|

Table          of Contents

----

| **New                  Vessel**** Name** |   | **Former                  Vessel**** Name** |   | **Deposit                  Date**   |   | **Anticipated                  Delivery Date** |   | **Purchase                  Price** |    | **Deposits                  2007** |   | **Purchase                  Obligations due less than one year** |   |
|-----------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------|--------|------------------------------------------------|--------|-------------------------------------|---------|------------------------------------|--------|------------------------------------------------------------------|--------|
| Yakima                  Princess              |   | Yakima                                           |   | May                  11, 2007       |   | October                  12, 2007 (actual)     |   | $                                   | 29,000  |                               | $      | 2,900                                                            |   | $ | 26,100 |   |
| Arapaho                  Belle                |   | Elsa                  Oldendorff                 |   | July                  10, 2007      |   | November                  2007                 |   |                                | 29,000  |                               |   | 2,900                                                            |   |   | 26,100 |   |
| Savannah                  Belle               |   | Atlantis                  Charm                  |   | August                  17, 2007    |   | November                  2007                 |   |                                | 10,700  |                               |   | 1,070                                                            |   |   | 9,630 |   |
| Oneida                  Princess              |   | Gebe                  Oldendorff                 |   | September                  17, 2007 |   | December                  2007-January 2008    |   |                                | 32,000  |                               |   | 3,200                                                            |   |   | 28,800 |   |
|                                          |   |                                             |   |                                |   |                                           |   | $                                   | 100,700 |                               | $      | 10,070                                                           |   | $ | 90,630 |   |
|                                          |   |                                             |   |                                |   |                                           |   |                                |    |                               |   |                                                             |   |   |   |   |

| (4)   | We                had outstanding purchase obligations at September 30, 2007, to build                and                purchase six new vessels as follows                (thousands): |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Owning                  Subsidiary**     |   | **Hull                  Number** |   | **Total** |    | **Less                  than 1 year** |   | **1-3                  years** |   | **3-5                  years** |
|--------------------------------------------|--------|----------------------------------|--------|-----------|---------|---------------------------------------|--------|--------------------------------|--------|--------------------------------|
| Argyle                  Maritime Corp.     |   | NYHS200720                       |   | $         | 21,400  |                                  | $      | 14,000                         |   | $                              | 7,400 |   |   |
| Caton                  Maritime Corp.      |   | NYHS200721                       |   |      | 28,400  |                                  |   | 14,000                         |   |                           | 14,400 |   |   |
| Dorchester                  Maritime Corp. |   | NYHS200722                       |   |      | 28,400  |                                  |   | 7,000                          |   |                           | 21,400 |   |   |
| Longwoods                  Maritime Corp.  |   | NYHS200723                       |   |      | 21,400  |                                  |   |                           |   |                           | 21,400 |   |   |
| McHenry                  Maritime Corp.    |   | NYHS200724                       |   |      | 28,400  |                                  |   | 7,000                          |   |                           | 21,400 |   |   |
| Sunswyck                  Maritime Corp.   |   | NYHS200725                       |   |      | 28,400  |                                  |   | 7,000                          |   |                           | 21,400 |   |   |
|                                       |   | Total                            |   | $         | 156,400 |                                  | $      | 49,000                         |   | $                              | 107,400 |   |   |
|                                       |   |                             |   |      |    |                                  |   |                           |   |                           |   |   |   |

| (5)   | In                connection with the new building program, we entered into a contract                for                the supervision and inspection of vessels under                construction.  As of September 30, 2007, commitments under the                contract were $1.7 million, with $0.6 million due within one year                and $1.1                million due between one and three                years. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Liquidity      and Capital Resources***

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**Changes      in Cash and Cash Equivalents**

**Cash      Flows from Investing Activities**

*Blu Mistral II*
*Nanticoke      Belle*
*Maya Princess*
*Seminole Princess*
* Laguna Belle*
*Yakima      Princess*
*Elsa Oldendorff*
*Arapaho Belle*
*Atlantis Charm*
*Savannah Belle*
*Gebe      Oldendorff*
*Oneida Princess*

*Kibishio Maru*
*Aztec      Maiden*
*Clipper Flamingo*
*Clipper Frontier*
* Seminole Princes*
*Laguna Belle*
*Dakota Belle*

**Cash      Flows from Financing Activities**

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*Clipper Flamingo*
*Clipper Frontier*
*Dakota Belle*

***Dividend        Policy***

***Significant      Related Party Transactions***

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***Summary        of Critical Accounting Policies***

***New      Accounting Pronouncements***

*"Offsetting of Amounts Related to Certain Contracts"*

*The Fair Value Option for Financial Assets and Financial      Liabilities, Including an amendment of FASB Statement No. 115"*

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*Fair Value Measurements*

*Accounting for      Uncertainty in Income Taxes*

**Item      3.    Quantitative and      Qualitative Disclosure About Market Risk**

***Interest      Rate Risk***

***Foreign      Exchange Rate Risk***

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**Item      4.    Controls and      Procedures**

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**PART      II**

**Item      1.    ****Legal      Proceedings**

**Item      1A.  ****Risk      Factors**

**Item      2.    ****Unregistered      Sales of Equity Securities and Use of Proceeds**

**Item      3.**   **Defaults      Upon Senior Securities**

**Item      4T. ****Submission      of Matters to a Vote of Security Holders**

**Item      5.  O****ther      Information**

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**Item      6.   ****Exhibits**

| 3.1 | Form                of Memorandum of Association* |
|-----|---------------------------------------------------|

| 3.2 | Bye-laws                * |
|-----|---------------------------|

| 10.1** | TBS                International Limited 2005 Equity Incentive Plan, as                amended |
|--------|------------------------------------------------------------------------------------------------|

| 10.2** | TBS                  International Limited 2005 Equity Incentive Plan - Form of Share                  Unit                  Award Agreement |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1** | Certification                of the Chief Executive Officer pursuant to rules 13a-15(a) and 15d-15(a)                under the Securities Exchange Act of 1934, as adopted pursuant to                Section                302 of the Sarbanes-Oxley Act of                2002 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2** | Certification                of the Chief Financial Officer pursuant to rules 13a-15(a) and 15d-15(a)                under the Securities Exchange Act of 1934, as adopted pursuant to                Section                302 of the Sarbanes-Oxley Act of                2002 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.3** | Certification                of the Chief Accounting Officer pursuant to rules 13a-15(a) and 15d-15(a)                under the Securities Exchange Act of 1934, as adopted pursuant to                Section                302 of the Sarbanes-Oxley Act of                2002 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1** | Certification                of the Chief Executive Officer, Chief Financial Officer and Chief                Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted                pursuant                to Section 906 of the Sarbanes-Oxley Act of 2002.                *** |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Incorporated                by                reference.  Filed as exhibits to the Registration Statement on                Form S-1/A, filed on May 16, 2005 (File                No.333-123157) |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ** | Filed                herewith. |
|----|--------------------------------|

| *** | Pursuant                to SEC Release No. 33-8212, this certification will be treated as                "accompanying" this Quarterly Report on Form 10-Q and not "filed"                as part                of such report for purposes of Section 18 of the Securities Exchange                Act,                as amended, or otherwise subject the liability of Section 18 of the                Securities Exchange Act, as amended, and this certification will                not be                deemed to be incorporated by reference into any filing under the                Securities Act of 1933, as amended, or the Securities Exchange Act,                as                amended, except to the extent that the registrant specifically                incorporates it by reference. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**TBS      INTERNATIONAL LIMITED & SUBSIDIARIES**

**Signatures**

|   |   | **TBS                INTERNATIONAL LIMITED**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | (Registrant)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | /s/                Joseph E.                Royce                                                                                                                                                                                                                                                                                                                                   |
|   |   | Joseph                E. RoycePresident                and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | /s/                Ferdinand V.                Lepere                                                                                                                                                     |
|   |   | Ferdinand                V. LepereExecutive                Vice President, Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | /s/                Frank                Pittella                                                                                              |
|   |   | Frank                PittellaController,                Chief Accounting                Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |