**UNITED
      STATES**




**SECURITIES
      AND EXCHANGE COMMISSION**




**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**


(Mark
      One)




x Quarterly
      Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934




**For
      the quarterly period ended March 31, 2007**


or


o Transition
      Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934




For
      the
      transition period from  to




**Commission
      File Number 000-51368**




**TBS
      INTERNATIONAL LIMITED**




(Exact
      name of registrant as specified in its charter )




**Bermuda**
              
              **98-0225954**(State
                  or other jurisdiction of
                incorporation
                  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)




(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. YesxNo ̈




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
                Filerx




Indicate
                by check markwhether
                the registrantis
                a shell company (as defined by Rule 12b-2 of the Act).
                Yes ̈Nox




As
                of April 23, 2007, the registrant had outstanding 14,325,996 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
                  StatementsConsolidated
                Balance Sheets as of
                December 31, 2006 and March 31, 2007 (Unaudited)
              
              3Consolidated
                  Statements of Income (Unaudited) for
                  the three months ended March 31, 2007 and March 31,
                  2006
              4Consolidated
                Statements of Cash Flows (Unaudited)
                for the three months ended March 31, 2007 and March 31, 2006
              
              5Consolidated
                Statement of Changes in Shareholders' Equity
                (Unaudited) for the three months ended March 31, 2007
              
              6Notes
                  to Consolidated Financial
                  Statements
              
              7Item
                  2
              Management’s
                  Discussion and Analysis of Financial
                  Condition and Results of Operations
              
              17Item
                  3
              Quantitative
                  and Qualitative Disclosure About
                  Market Risk
              
              29Item
                  4
              Controls
                  and Procedures
              
              29**PART
                II:  OTHER INFORMATION**Item
                  1
              Legal
                  Proceedings
              
              30Item
                  1A
              Risk
                  Factors
              
              30Item
                  2
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              
              30Item
                  3
              Defaults
                  Upon Senior Securities
              
              30Item
                  4
              Submission
                  of Matters to a Vote of Security
                  Holders
              
              30Item
                  5
              Other
                  Information
              
              30Item
                  6
              Exhibits
              
              30Signatures
              
              32














**Part
        I.    FINANCIAL INFORMATION**


**Item
      1.    Financial Statements**




**TBS
      INTERNATIONAL LIMITED AND SUBSIDIARIES**




**CONSOLIDATED
      BALANCE SHEETS**


**(UNAUDITED**)


**March
                    31, 2007**
                
                
                **December
                    31, 2006****Assets**Current
                    assetsCash
                    and cash equivalents
                
                $
                23,235,641
                
                $
                12,006,727Charter
                    hire receivable, net of allowance of $442,529 in 2007 and
                    2006
                
                
                17,294,190
                
                
                25,396,093Claims
                    receivable
                
                
                1,224,163
                
                
                2,905,013Due
                    from agents
                
                
                775,759
                
                
                2,153,993Other
                    receivables
                
                
                1,158,569
                
                
                1,058,474Fuel
                    and other inventories
                
                
                6,557,127
                
                
                7,256,483Prepaid
                    expenses
                
                
                2,050,691
                
                
                1,586,936Advances
                    to affiliates
                
                
                5,704
                
                
                5,604Total
                    current assets
                
                
                52,301,844
                
                
                52,369,323Deposit
                    for vessel purchase
                
                
                1,695,000
                
                
                1,695,000Fixed
                    assets, net
                
                
                323,069,623
                
                
                336,869,094Goodwill
                
                
                8,425,935
                
                
                8,425,935Other
                    assets and deferred charges
                
                
                10,948,918
                
                
                3,731,491**Total
                    assets**
                
                $
                **396,441,320**
                ****
                **$**
                **403,090,843****Liabilities
                    and Shareholders' Equity**Current
                    liabilitiesDebt,
                    current portion
                
                $
                21,308,462
                
                $
                19,770,000Obligations
                    under capital lease, current portion
                
                
                4,209,067
                
                
                4,087,484Accounts
                    payable
                
                
                5,278,179
                
                
                6,049,174Accrued
                    expenses
                
                
                14,184,195
                
                
                21,529,351Voyages
                    in progress
                
                
                2,085,427
                
                
                4,268,514Advances
                    from affiliates
                
                
                427,791
                
                
                481,103Total
                    current liabilities
                
                
                47,493,121
                
                
                56,185,626Debt,
                    long-term portion
                
                
                94,713,572
                
                
                106,034,033Obligations
                    under capital lease, net of current portion
                
                
                16,168,234
                
                
                17,267,206Total
                    liabilities
                
                
                158,374,927
                
                
                179,486,865COMMITMENTS
                    AND CONTINGENCIES (Note 11)Shareholders'
                    equityCommon
                    shares, New Class A, $.01 par value, 75,000,000authorized,
                    14,325,996 shares issued and outstanding
                
                
                143,260
                
                
                143,200Common
                    shares, New Class B, $.01 par value, 30,000,0000authorized,
                    13,404,461 shares issued and outstanding
                
                
                134,045
                
                
                134,045Warrants
                
                
                20,747
                
                
                20,747Additional
                    paid-in capital
                
                
                87,930,489
                
                
                87,880,449Accumulated
                    other comprehensive income
                
                
                51,099
                
                
                42,386Retained
                    earnings
                
                
                149,786,753
                
                
                135,383,151Total
                    shareholders' equity
                
                
                238,066,393
                
                
                223,603,978**Total
                    liabilities and shareholders' equity**
                ****
                **$**
                **396,441,320**
                ****
                **$**
                **403,090,843**




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




Table
        of Contents
 3


**TBS
      INTERNATIONAL LIMITED AND SUBSIDIARIES**




**CONSOLIDATED
      STATEMENTS OF INCOME**


**(UNAUDITED)**


**Three
                  Months Ended March 31,****2007**
              
              **2006****(As
                  adjusted)****Revenue**Voyage
                  revenue
              
              $
              52,450,782
              
              $
              49,319,289Time
                  charter revenue
              
              
              18,068,624
              
              
              14,170,306Other
                  revenue
              
              
              318,556
              
              
              265,477Total
                  revenue
              
              
              70,837,962
              
              
              63,755,072**Operating
                  expenses**Voyage
              
              
              19,693,303
              
              
              22,736,923Vessel
              
              
              17,557,419
              
              
              17,537,519Depreciation
                  and amortization of vesselsand
                  other fixed assets
              
              
              8,413,838
              
              
              6,882,112General
                  and administrative
              
              
              7,180,109
              
              
              5,789,542Loss
                  from sale of vessel
              
              
              779,053
              
              
              -Total
                  operating expenses
              
              
              53,623,722
              
              
              52,946,096Income
                  from operations
              
              
              17,214,240
              
              
              10,808,976**Other
                  (expenses) and income**Interest
                  expense
              
              
              (2,771,850
              )
              
              (2,916,340
              )Interest
                  and other income (expense)
              
              
              (38,788
              )
              
              104,711Total
                  other expenses, net
              
              
              (2,810,638
              )
              
              (2,811,629
              )**Net
                  income**
              
              $
              **14,403,602**
              ****
              **$**
              **7,997,347****Earnings
                  per share**Net
                  income per common shareBasic
              
              $
              0.51
              
              $
              0.29Diluted
              
              $
              0.51
              
              $
              0.28Weighted
                  average common shares outstandingBasic
              
              
              28,013,310
              
              
              27,983,829Diluted
              
              
              28,035,881
              
              
              28,088,329







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


Table
      of
      Contents  4


**TBS
      INTERNATIONAL LIMITED AND SUBSIDIARIES**




CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(UNAUDITED)


**Three
                  Months Ended March 31,****2007**
              
              
              **2006****Cash
                  flows from operating activities**
              
              
              
              
              
              **(As
                  Adjusted)**Net
                  income
              
              $
              14,403,602
              
              $
              7,997,347Adjustments to reconcile net income to net cashprovided by operating activitiesLoss on sale of vessel
              
              
              779,053
              
              
              -Depreciation and amortization
              
              
              8,413,838
              
              
              6,882,112Amortization of deferred financing costs
              
              
              216,674
              
              
              140,233Write-off of bad debt
              
              
              
              
              
              (235,004
              )Non cash stock based compensation
              
              
              92,560
              
              
              73,750Loss in joint venture
              
              
              162,825
              
              
              29,393Changes
                  in operating assets and liabilitiesDecrease in charter hire receivable
              
              
              8,101,903
              
              
              7,970,627Decrease (increase) in claims receivable
              
              
              1,680,850
              
              
              (570,493
              )Decrease (increase) in due from agents
              
              
              1,378,234
              
              
              (815,784
              )(Increase) in other receivables
              
              
              (77,901
              )
              
              (280,548
              )Decrease in fuel and other inventories
              
              
              699,356
              
              
              1,020,952(Increase) decrease in prepaid expenses
              
              
              (463,755
              )
              
              663,525(Increase) in other assets and deferred changes
              
              
              (228,286
              )
              
              -(Decrease) increase in accounts payable
              
              
              (770,995
              )
              
              1,969,775(Decrease) in accrued expenses
              
              
              (7,559,639
              )
              
              (10,345,369
              )(Decrease) in voyages in progress
              
              
              (2,183,087
              )
              
              (66,105
              )(Decrease) in advances from/to affiliates, net
              
              
              (53,412
              )
              
              (1,182,720
              )Net
                  cash provided by operating activities
              
              
              24,591,820
              
              
              13,251,691**Cash
                  flows from investing activities**Proceeds on sale of vessels
              
              
              52,313,711
              
              
              -Vessel acquisition/capital improvement costs
              
              
              (53,207,130
              )
              
              (4,962,910
              )Deposit for vessel purchases
              
              
              -
              
              
              (810,000
              )Investment in joint venture
              
              
              (200,000
              )
              
              (500,000
              )Net
                  cash provided (used) by investing activities
              
              
              (1,093,419
              )
              
              (6,272,910
              )**Cash
                  flows from financing activities**Repayment of debt principal
              
              
              (74,782,000
              )
              
              (8,586,407
              )Proceeds from debt
              
              
              65,000,000
              
              
              -Payment of deferred financing costs
              
              
              (1,510,098
              )
              
              -Reduction of obligations under capital leases
              
              
              (977,389
              )
              
              (582,330
              )Net
                  cash used by financing activities
              
              
              (12,269,487
              )
              
              (9,168,737
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              11,228,914
              
              
              (2,189,956
              )Cash and cash equivalents beginning of period
              
              
              12,006,727
              
              
              27,157,681Cash
                  and cash equivalents end of period
              
              $
              23,235,641
              
              $
              24,967,725**Supplemental
                  cash flow information:**Interest paid
              
              $
              2,627,556
              
              $
              1,980,614**Noncash
                  Investing activities:**For
                  the three months ended March 31, 2007, the proceeds on the sale-leaseback
                  of the vessels*Laguna
                  Belle*and*Seminole
                  Princess*excludes the noncash portion of $5,500,000, which was retained
                  by the
                  buyer/lessor as a deposit on the bareboat charters.




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




Table
        of
        Contents
 5


**TBS
      INTERNATIONAL LIMITED AND SUBSIDIARIES**




**CONSOLIDATED
      STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY**


**(UNAUDITED)**


**Accumulated****(Accumulated**
              
              
              **Other****Additional**
              
              
              **Deficit**)****
              
              
              **Compre-****Common
                  Shares**
              
              **Warrants**
              
              
              **Paid-in**
              
              
              **Retained**
              
              
              **hensive****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Capital**
              
              
              **Earnings**
              
              
              **Income**
              
              
              **Total**Balance
                  at December 31, 2006
              
              27,724,457
              
              $
              277,245
              
              
              288,853
              
              $
              20,747
              
              $
              87,880,449
              
              $
              135,383,151
              
              $
              42,386
              
              $
              223,603,978Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              14,403,602
              
              
              
              
              
              14,403,602Unrealized
                  gain on securitiesavailable
                  for sale
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              223,122
              
              
              223,122Net
                  loss on cash flow hedge
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (214,409
              )
              
              (214,409
              )Comprehensive
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              14,412,315Shares
                  issued under Incentive Stock Plan
              
              6,000
              
              
              60
              
              
              
              
              
              
              
              
              50,040
              
              
              
              
              
              
              
              
              50,100Balance
                  at March 31, 2007
              
              27,730,457
              
              $
              277,305
              
              
              288,853
              
              $
              20,747
              
              $
              87,930,489
              
              $
              149,786,753
              
              $
              51,099
              
              $
              238,066,393




































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


Table
      of
      Contents


6


**Note
      1 — Basis of Presentation**




TBS
      International Limited (" TBS")
      and
      subsidaries (the "Company" "we" or "our") is an ocean transportation services
      company that offers worldwide shipping solutions through liner, parcel, bulk
      and
      vessel chartering services. Substantially all the related corporations of TBS
      are non-US corporations and conduct their business operations worldwide. The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles for interim financial
      information and with the instructions to Form 10-Q and Article 10 of Regulation
      S-X. Accordingly, they do not include all of the information and footnotes
      required by generally accepted accounting principles for complete financial
      statements.  In the opinion of management, all adjustments (consisting of
      normal recurring accruals) considered necessary for a fair presentation have
      been included.  Operating results for the three month period ended March
      31, 2007 are not necessarily indicative of the results that may be expected
      for
      the year ended December 31, 2007.




The
      consolidated balance sheet at December 31, 2006 has been derived from the
      audited financial statements at that date, but does not include all of the
      information and footnotes required by generally accepted accounting principles
      for complete financial statements.




For
      further information, refer to the consolidated financial statements and
      footnotes thereto for the year ended December 31, 2006 included in TBS's Form
      10-K filed on March 12, 2007.


Reclassifications
  Certain
        reclassifications were made to the consolidated financial statements for
        the
        three months ended March 31, 2006 to conform to the 2007 presentaion. These
        reclassifications did not impact net income for the three months ended March
        31,
        2006.


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




Effective
      January 1, 2006, the Company changed the method of accounting for drydocking
      costs to the deferral method, whereas in all prior years drydocking costs
      were accounted for using the accrual method. Under the deferral method of
      accounting for drydocking, the actual costs incurred are deferred and are
      amortized on a straight-line basis over the period through the date of the
      next
      drydocking. The change in accounting method for drydocking costs was made in
      connection with the Company's early adoption of FSP No. AUGAIR-1, Accounting
      for
      Planned Major Maintenance Activities issued by the Fianancial Accounting
      Standards Baord ("FASB") on September 8, 2006, which amended certain provisions
      in the American Institute of Certified Public Accountants ("AICPA"), Industry
      Audit Guide, *Audits
      of Airlines* ("Airline
      Guide"). The Airline Guide is the principal source of guidance on the accounting
      for planned major maintenance and is relevant to the maritime industry. The
      consolidated statement of income for the three months ended March 31, 2006
      has
      been adjusted to apply the new method retrospectively. The following financial
      statement line items for the three months ended March 31, 2006 were affected
      by
      the change in accounting principle.




***Consolidated
                  Statement of Operations***
              
              
              As
                  Reported
              
              
              As
                  Computed***For
                  the Three Months Ended March 31, 2006***
              
              
              under
                  the
              
              
              under
                  the*(thousands)*
              
              
              Accrual
              
              
              Deferral
              
              
              Effect
                  ofMethod
              
              
              Method
              
              
              ChangeOperating
                  expenses:Vessel
              
              $
              18,631
              
              $
              17,538
              
              $
              (1,093
              )Depreciation
                  and amortization
              
              $
              6,474
              
              $
              6,882
              
              $
              408Total
                  operating expenses
              
              $
              53,632
              
              $
              52,946
              
              $
              (686
              )Income
                  from operations
              
              $
              10,123
              
              $
              10,809
              
              $
              686Net
                  income
              
              $
              7,312
              
              $
              7,997
              
              $
              685Earnings
                  per shareBasic
              
              $
              0.26
              
              $
              0.29
              
              $
              0.03Diluted
              
              $
              0.26
              
              $
              0.28
              
              $
              0.02




Table
        of
        Contents
 7


***Consolidated
                  Statement of Cash Flows***
              
              
              As
                  Reported
              
              
              As
                  Computed***For
                  the Three Months Ended March 31, 2006***
              
              
              under
                  the
              
              
              under
                  the*(thousands)*
              
              
              Accrual
              
              
              Deferral
              
              
              Effect
                  ofMethod
              
              
              Method
              
              
              ChangeNet
                  income
              
              $
              7,312
              
              $
              7,997
              
              $
              685Adjustments
                  to reconcile net income to netcash
                  provided by operating activities:Depreciation
                  and amortization
              
              $
              6,614
              
              $
              7,022
              
              $
              408Changes
                  in operating assets and liabilities:Increase
                  (decrease) in accrued expenses
              
              $
              (9,179
              )
              $
              (10,272
              )
              $
              (1,093
              )




**Note
      3 — New Accounting Pronouncements**


In
          February 2007, the Financial Accounting Standards Board ("FASB") issued
          Statement of Financial Accounting Standards ("SFAS") Statement No. 159
          " *The
          Fair Value Option for Financial Assets and Financial Liabilities, Including
          an
          amendment of FASB Statement No. 115"* ("SFAS
          159"). SFAS 159 permits all entities the option to measure many financial
          instruments and certain other items at fair value. If a company elects
          the fair
          value option for an eligible item, then it will report unrealized gains
          and
          losses on those items at each subsequent reporting date. SFAS 159 is effective
          for fiscal years beginning after November 15, 2007. The Company has not
          yet
          determined the impact, if any, that SFAS 159 will have on our consolidated
          financial statements.




In
      September 2006, FASB issued Statement of Financial Accounting Standards ("SFAS")
      No. 157, " *Fair
      Value Measurements* "
      ("SFAS
      157"), which defines and establishes a framework for measuring fair value and
      expands disclosures about fair value measurements. The accounting provisions
      of
      SFAS 157 are effective for the Company beginning on January 1, 2008. The Company
      is in the process of evaluating the effect, if any, that the adoption of
      SFAS 157 will have on our consolidated financial statements.




In
      July 2006, the
      FASB issued FASB Interpretation No. 48 ("FIN 48") " *Accounting
      for Uncertainty in Income Taxes* "
      which
      prescribes a recognition threshold and measurement process
      for recording in the financial statements uncertain tax positions taken or
      expected to be taken in a tax return. Additionally, FIN 48 provides guidance
      on
      the derecognition, classification, accounting in interim periods and disclosure
      requirements for uncertain tax positions. The adoption of FIN 48, which was
      effective for the Company beginning January 1, 2007, did not have a significant
      impact on our consolidated results of operations, cash flows, or financial
      position.




**Note** **4
      — Advances to / from Affiliates**




Advances
      to / from affiliates, which are entities related by common shareholders, are
      non-interest-bearing, due on demand, and expected to be collected or paid in
      the
      ordinary course of business, generally within the year. The Company typically
      advances funds to affiliates in connection with the payment of management fees,
      commissions and consulting fees. Advances from affiliates originated primarily
      from amounts due to affiliates for management fees, commissions and consulting
      fees earned.




Table
        of
        Contents
 8


**Note
      5 — Fixed Assets**




Fixed
      assets consist of the following :




March
                  31,
                  2007
              
              
              December
                    31,
                  2006Vessels
              
              $
              306,167,713
              
              $
              367,515,843Vessel
                  inprovements and other equipment
              
              
              32,239,419
              
              
              27,020,499Deferred
                  dry docking costs
              
              
              9,056,291
              
              
              7,780,192Vessel
                  construction in process
              
              
              44,754,432
              
              
              280,163Other
                  fixed assets
              
              
              10,669,687
              
              
              9,626,975402,887,542
              
              
              412,223,672Less
                  accumulated depreciation and amortization
              
              
              (79,817,919
              )
              
              (75,354,578
              )$
              323,069,623
              
              $
              336,869,094




On
      March
      13, 2007, the Company completed the sale of the multipurpose
      tweendecker *Maya
      Princess* for
      $13.0 million. A loss of $0.8 million was recognized on the sale.





In
      February 2007, the Company entered into individual contracts, through six wholly
      owned subsidiaries, with China Communications Construction Company Ltd and
      Nantong Yahua Shipbuilding Co., Ltd. to build six newly designed
      multipurpose vessels with retractable tweendecks at a contract purchase price
      of
      $35.4 million per vessel. The agreements provide for the delivery of two vessels
      in 2009 and four vessels in 2010.  On March 31, 2007, we made payments of
      $42.0 million on the contracts.





On
      January 30, 2007, the Company's wholly owned subsidiaries Fairfax Shipping
      Corp. ("Fairfax") and Beekman Shipping Corp. ("Beekman") each sold and leased
      back a vessel pursuant to a sale-leaseback arrangement. Net proceeds from the
      transactions after expenses and deposits were $38.6 million. Fairfax sold the
      vessel *Seminole
      Princess* to
      Adirondack Shipping LLC ("Adirondack") for $23.0 million, and Beekman sold
      the
      vessel *Laguna
      Belle* to
      Rushmore Shipping LLC ("Rushmore") for $22.0 million each pursuant to a
      memorandum of agreement. Fairfax had taken delivery of the vessel *Seminole
      Princess* (formerly the *Clipper
      Flamingo* )
      for
      $23.1 million on November 10, 2006. Beekman had taken delivery of the
      vessel *Laguna
      Belle* (formerly the *Clipper
      Frontier* )
      for
      $22.0 million on November 15, 2006.  Under the sale-leaseback
      arrangement, Fairfax entered into a seven-year bareboat charter with Adirondack
      and Beekman entered into a seven-year bareboat charter with Rushmore for their
      respective vessels. The charters are classified as operating leases - see Note
      9
      "Charters-in of Vessels." Proceeds from the sale were used to repay advances
      outstanding under the revolving credit facility.





The
      deposits for vessel purchases represent deposits on vessels that we have
      contracted to purchase but that have not yet been delivered. In December 2006,
      we signed a Memorandum of Agreement and made a deposit of $1,695,000 to purchase
      the multipurpose tweendecker *Blu
      Mistral II* for
      $16,950,000. The vessel, which will be renamed *Nanticoke Belle* , was
      delivered April 10, 2007




**Note
      6 — Accrued Expenses**




Accrued
      expenses consist of the following :




**March
                  31,**
              
              
              **December
                  31,****Description**
              
              
              **2007**
              
              
              **2006**Voyage
                  and vessel expenses
              
              $
              12,036,625
              
              $
              16,910,179Payroll
                  and related costs
              
              
              215,802
              
              
              3,479,676Commissions
              
              
              115,915
              
              
              667,453Cargo
                  claims
              
              
              174,999
              
              
              245,999Other
                  expenses
              
              
              1,640,854
              
              
              226,044**Total**
              
              **$**
              **14,184,195**
              
              **$**
              **21,529,351**




Table
      of
      Contents


9





**Note
      7 — Financing**




The
      Company's outstanding debt balances were as follows:




**Interest
                  Rate at**
                **March
                  31, 2007**
              
              **March
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Bank
                    of America - term credit facility, expires July 30,
                    2010
              
              
              7.61%
              
              $
              65,937,501
              
              $
              65,625,000Bank
                    of America - revolving credit facility, expires July 30,
                    2010
              
              
              7.57%
                  & 8.75%
              
              
              14,974,533
              
              
              54,814,033The
                    Royal Bank of Scotland creditfacility
                    loan, expires March 23, 2010
              
              
              6.84%
              
              
              5,110,000
              
              
              5,365,000The
                Royal Bank of Scotland credit facitilty, new vessel
                buildings,expires September 20, 2020
              
              
              7.10%
              
              
              30,000,000**Debt
                  balance**
              
              
              
              
              $
              **116,022,034**
              
              $
              **125,804,033**





The
      repayment of debt over the next five years and thereafter is as
      follows:


2007
                  (April 1, 2007 through December 31, 2007)
              $
              15,981,3462008
              
              21,308,4622009
              
              22,978,4622010
              
              34,521,264Thereafter
              
              21,232,500$
              **116,022,034**




**Bank
      of America Credit Facility**




On
      July
      31, 2006, the TBS, through its subsidiaries, entered into a $140.0 million
      credit facility (the "Credit Facility") with a syndicate of commercial lenders
      led by Bank of America. The Credit Facility is composed of a $75.0 million
      term
      loan facility ("Term Credit Facility") and a $65.0 million revolving credit
      facility ("Revolving Credit Facility").




On
      July
      31, 2006, the Company made a full drawdown on the Term Credit Facility of $75.0
      million and an initial drawdown of $10.0 million on the Revolving Credit
      Facility to repay $80.9 million of outstanding principal and interest due on
      the
      loans with the existing lenders and $5.2 million to cover costs associated
      with
      the refinancing, including deferred financing costs of $3.1 million.




On
      January 23, 2007, the Company added an additional $20.0 million under the
      syndicated credit facility. The Revolving Credit Facility was increased by
      $15.0
      million to $80.0 million from $65.0 million, and an additional $5.0 million
      was
      borrowed under the Term Credit Facility. In connection with the increase to
      the
      credit facility, the credit agreement dated July 31, 2006, was amended to
      include Exeter Shipping Corp. as a borrower and include the vessel *Alabama
      Belle* as additional collateral.




Payment
      of principal on the Term Credit Facility was originally due in 16 quarterly
      installments of $4.7 million beginning September 2006. Quarterly payments under
      the Term Credit Facility were subsequently increased to $5.0 million beginning
      June 2007 due to the additional $5.0 million borrowed in January
      2007.




The
      non-amortizing Revolving Credit Facility is due in July 2010. Interest on the
      Credit Facility is at the 30-day, 60-day, or 90-day Eurodollar LIBOR rate or
      the
      Base rate as definined in the credit agreement, as selected by the Company,
      plus
      a loan margin rate based on the Company’s consolidated leverage ratio. The loan
      margin rate can vary, in .50% increments, between four pricing levels from
      2.75%
      to 1.25%. The initial loan margin rate is 2.25% and becomes adjustable after
      December 31, 2006 and on or before March 31, 2007. The Company's consolidated
      leverage ratio at March 31, 2007, was below 1.5 to 1 and; accordingly, the
      loan
      margin decreased 50 basis points to 1.75% effective in second quarter 2007.
      In
      connection with the Credit Facility, the Company and its subsidiaries, incurred
      deferred financing costs of $2.8 million in July 2006 that are being amortized
      over the term of the Credit Facility.




Table
      of
      Contents


10




In
      November 2006, the Company entered into a floating-to-fixed interest rate swap
      agreement to hedge the variable cash outflow exposure relating to interest
      payments on $56.25 million of its four-year Term Credit Facility. The index
      rate
      on the LIBOR based loans is fixed at 5.09% through June 2009.  At March 31,
      2007, the Company had a liability on its interest rate swap of approximately $172,000 ,
      which
      is included in " accrued
      expenses. " 
      Accumulated loss on the
      interest rate swap agreement at March 31, 2007 was approximately  $214,000,
      which is included in"Accumulated other comprehensive
      income."




The
      Credit Facility is collateralized primarily by 23 of our vessels with a net
      book
      value at March 31, 2007 of $226.1 million, as well as by the Company’s equity
      interests in the subsidiaries that own the vessels. Each subsidiary of the
      Company with an ownership interest in the collateralized vessels has provided
      an
      unconditional guaranty and pledged any insurance proceeds received related
      to
      the vessels.




The
      Credit Facility agreement contains certain financial and non-financial
      covenants. The non-financial covenants include customary restrictions on the
      Company’s ability to incur indebtedness or grant liens, pay dividends under
      certain circumstances, enter into transactions with affiliates, merge,
      consolidate, or dispose of assets, and change the nature of its business. The
      financial covenants require that we maintain certain fixed charge and leverage
      ratios, as well as maintain tangible net worth within defined limits. We are
      also required to maintain minimum cash and cash equivalent balances and
      collateral coverage. In addition, the Credit Facility requires minimum
      collateral coverage, restricts the payment of dividends and restricts leverage,
      investment and capital expenditures without consent of the lender and requires
      mandatory prepayment or delivery of additional security in the event that the
      fair market value of the vessels falls below limits specified in the loan
      agreement. At March 31, 2007, the Company was in compliance with all covenants.




**The
      Royal Bank of Scotland Credit Facility**




The
      Company entered into a credit facility with The Royal Bank of Scotland for
      $7.15
      million in December 2004. The Company drew down the full facility in December
      2004, to replenish the Company's working capital in connection with the
      acquisition of the vessel *Wichita Belle*. Interest is at LIBOR plus
      1.5%, compounded monthly and paid quarterly. Payment of principal is due in
      20
      quarterly installments of $255,000 commencing on June 30, 2005 (six months
      after
      drawdown). A balloon installment of $2,050,000 is payable with the last
      quarterly installment on March 23, 2010. The credit facility is collateralized
      by a First Preferred Ship Mortgage on the vessel Wichita Belle and assignment
      of
      freight revenue and insurance. The credit facility requires that the Company
      maintain a monthly average of $1,500,000 on deposit with the bank.




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




On
      March
      29, 2007, the Company entered into a credit agreement with a syndicate of
      lenders led by The Royal Bank of Scotland plc for a $150.0 million term loan
      credit facility (the "RBS Credit Facility") to finance the building and purchase
      of six new Multi-Purpose vessels with retractable
      tweendecks. The
      RBS
      Credit Facility is made up of six $25.0 million individual term loans designated
      as Loan A, Loan B, Loan C, Loan D, Loan E and Loan F, which are available
      through May 31, 2009, November 30, 2009, April 30, 2010, August 31, 2010, June
      30, 2010 and October 31, 2010, respectively or such later date as the lenders
      may agree to. Advances under the RBS Credit Facility will be drawn down in
      the
      following amounts, by the following subsidiaries upon the completion of the
      milestones noted below:





Loan
                A
            
            
            Loan
                B
            
            
            Loan
                C
            
            
            Loan
                D
            
            
            Loan
                E
            
            
            Loan
                FArgyle
              Maritime
              Corp.
            
            
            Caton
              Maritime
              Corp.
            
            
            Dorchester
                Maritime
              Corp.
            
            
            Longwoods
                Maritime
              Corp.
            
            
            McHenry
                Maritime
              Corp.
            
            
            Sunswyck
                Maritime
              CorpMilestone
            
            
            Hull
                No NYHS200720
            
            
            Hull
                No NYHS200721
            
            
            Hull
                No NYHS200722
            
            
            Hull
                No NYHS200723
            
            
            Hull
                No NYHS200724
            
            
            Hull
                No NYHS200725Contract
                Signing
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                millionSteel
                Cutting
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                millionKeel
                Laying
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                millionLaunching
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                millionDelivery
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million
            
            $
            5.0
                million





Table
        of
        Contents
 11


The
      advances due at the time of delivery, as shown in the above table, are subject
      to adjustment if the total advanced by the lenders, including the scheduled
      delivery advance, exceeds 75% of the value of the vessel at the time of
      delivery. The RBS Credit Facility is collateralized by the respective
      shipbuilding contracts while the vessels are under construction and by Preferred
      Ship Mortgages on the new vessels, and assignment of freight revenue and
      insurance after delivery of the respective vessel. TBS guarantees the
      obligations of the borrowing subsidiaries under the RBS Credit Facility. 
An arrangement fee of .75% or $1,125,000 was paid in connection with the
      RBS Credit Facility.





Interest
      on the RBS Credit Facility is at LIBOR plus a margin of 1.75% prior to the
      drawdown of the advance at the time of delivery and at LIBOR plus a margin
      of
      1.50% after the delivery advance is drawn down. Interest is payable either
      monthly, quarterly or semi-annually depending on interest period selected by
      the
      Company.  Each of the loans made under the RBS Credit Facility is payable
      in 40 quarterly installments of $417,500 beginning three months after the
      drawdown of the delivery advance with a final payment of $8,300,000 due when
      the
      last quarterly payment is made. If the delivery advance is not advanced in
      full, the repayment installments will be reduced pro-rata.




The
      RBS
      Credit Facility agreement contains certain financial and non-financial
      covenants. The non-financial covenants include customary restrictions on the
      borrowing subsidiaries' ability to incur indebtedness or grant liens, enter
      into
      transactions with affiliates, merge, consolidate, or dispose of assets, and
      change the nature of their business and materially amend or fail to enforce
      the
      shipbuilding contracts with China Communications Construction Company Ltd and
      Nantong Yahua Shipbuilding Co., Ltd. The borrowing subsidiaries are also
      required to, among other things, maintain the vessels when delivered, comply
      with all applicable laws, keep proper books and records, preserve their
      corporate existence, maintain insurance, and pay taxes in a timely manner.
      Further, the fair market value of the vessels subject to the mortgage must
      be at
      least 125% of the outstanding loan amount. The financial covenants require
      that
      the Company maintain certain fixed charge and leverage ratios, as well as
      maintain tangible net worth within defined limits. We are also required to
      maintain minimum cash and cash equivalent balances and collateral coverage.
      TBS as Guarantor is restricted from paying dividends or making other
      distributions that would (1) result in a default of the RBS Credit Facility
      (2) exceed 50% of consolidated net income for the fiscal year the dividend
      or distributions are made, or (3) cause the Company to be out of compliance
      with
      the minimum Consolidated Fixed Charge Coverage Ratio set forth in the loan
      agreement. At March 31, 2007, the Company was in compliance with all
      covenants.





Concurrent
      with the TBS's subsidiaries entering into the RBS Credit Facility, the borrowing
      subsidiaries entered into an agreement ("Guarantee Facility") to have The Royal
      Bank of Scotland plc guarantee payments due under the Building Contracts. Under
      the Guarantee Facility, The Royal Bank of Scotland plc has agreed to guarantee
      the second, third, and fourth installments due by the borrowing subsidiaries
      under their respective shipbuilding contract. The Guarantee Facility provides
      for a guarantee of up to $14.0 million for each borrower subsidiary for an
      aggregate guarantee of $84.0 million. The Guarantee Facility for each borrower
      subsidiary expires twelve months after the anticipated delivery date of the
      respective vessel. The Company guarantees the obligations of the borrower
      subsidiary under the Guarantee Facility.  An arrangement fee of 1% or
      $840,000 was paid in connection with the Guarantee Facility.




**Note
      8 — Equity Transactions**




**Class
      A and Class B Common Shares**




The
      Company has two classes of common shares that are issued and outstanding -
      Class
      A and Class B. The Class A common shares and Class B common shares have
      identical rights to dividends, surplus and assets on liquidation; however,
      the
      holders of Class A common shares are entitled to one vote for each Class A
      common share on all matters submitted to a vote of holders of common shares,
      while holders of Class B common shares are entitled to one-half of a vote for
      each Class B common share.




The
      holders of Class A common shares can convert their Class A common shares into
      Class B common shares, and the holders of Class B common shares can convert
      their Class B common shares into Class A common shares at any time. Further,
      the
      Class B common shares will automatically convert into Class A common shares
      upon
      transfer to any person other than another holder of Class B common shares,
      in
      each case as long as the conversion will not cause the Company to become a
      controlled foreign corporation, as defined in the Internal Revenue Code or
      the
      Class A common shares cease to be regularly traded on an established securities
      market for purposes of Section 883 of the Internal Revenue Code.




Table
        of
        Contents
 12


**Warrants**




Warrants
      were issued by the Company in connection with its emergence from bankruptcy
      in
      2001 and became exercisable when the first Preferred Ship Mortgage Notes were
      not paid on June 29, 2005. The warrant agreement includes an anti-dilution
      provision that adjusts the number of shares issuable upon exercise of the
      warrants whenever the Company issues additional common shares or engages in
      similar transactions. At
      March
      31, 2007, there were outstanding exercisable warrants to purchase 98,311 Class
      A
      and 190,542 Class B common shares, held by parties not affiliated with
      existing shareholders.
      The warrants are exercisable for a period of ten years following the date on
      which their exercise condition was met (February 8, 2005), at a price of $.01
      per share.




**Note** **9
      — Charters-in of Vessels**




As
      of
      March 31, 2007 the Company had nine chartered-in vessels, seven vessels under
      capital leases and two vessels under operating leases with initial or remaining
      lease terms exceeding one-year.  The future minimum commitments under
      charters-in are as follows:




**At
                March 31,**
            
            
            **Operating**
            
            
            **Capital**2007
                (April 1, 2007 through December 31, 2007)
            
            $
            5,775,000
            
            $
            4,790,6242008
            
            
            7,665,000
            
            
            6,387,5002009
            
            
            7,910,000
            
            
            13,458,9582010
            
            
            5,950,8002011
            
            
            5,350,800Thereafter
            
            
            11,157,300Net
                minimum lease payments
            
            $
            43,808,900
            
            
            24,637,082Less
                amount representing interest
            
            
            
            
            
            4,259,781Present
                  value of net minimum lease payments, including current maturities
                  of
                  $4,209,067
            
            
            
            
            $
            20,377,301




**Charters-in
      Classified as Operating Leases**




The
      Company charters-in two vessels (*Laguna Belle* and *Seminole
      Princess*) under two bareboat charters that were part of a sale-leaseback
      transaction. Both charters expire on January 30, 2014.  Each charter
      requires charter hire payments of $10,500 per day for the first two years of
      the
      charter, $10,000 per day during the third year of the charter and $7,350 per
      day
      during the fourth through seventh years of the charter. The charter agreements
      allow for the purchase of the respective vessel at the end of the fifth, sixth
      or seventh year of the charter period at a vessel price of $11.1 million, $9.15
      million, or $6.75 million, respectively.  The bareboat charters allow the
      purchase options to be exercised at any other date during the option period
      at a
      pro-rata price. Deposits of $2.75 million, to be held by the lessor for each
      charter during the charter period, were required at the inception of the lease.
      The deposits are to be returned, without interest, at the expiration of the
      charter period, unless applied earlier toward the amounts due upon exercise
      of
      the purchase option.




**Charters-in
      Classified as Capital Leases**




In
      December 2003, the Company entered into sale-leaseback agreements for seven
      of
      its Handysize Tweendecker vessels, which leases are classified as capital
      leases. The
      vessels were sold for $31.5 million and leased back for a period of 66 months
      at
      $2,500 per vessel, per day with a $10.5 million balloon purchase option payment
      due at the end of the lease term on July 1, 2009. Interest
      rates on the capitalized leases have been imputed based on the Company's
      incremental borrowing rate at the inception of the leases. The
      Company anticipates exercising its purchase option. The purchase options for
      each of the seven vessels covered under this transaction are shown in the
      following table. The amount of the purchase options decrease
      from December 2006, the initial period in which the Company can exercise the
      purchase options, through June 2009, the end of the lease term:





June
                2007
            $
            3,300,000December
                2007
            $
            2,900,000June
                2008
            $
            2,400,000December
                2008
            $
            2.000,000June
                2009
            $
            1,500,000


Table
      of
      Contents


13




The
      assets and liabilities under the capital leases were recorded at the fair values
      of the acquired assets, which approximated the present values. There are no
      executory costs for capital lease vessels.





**Gross**
            
            **Accumulated**
            
            **Net****Period**
            
            **Asset**
            
            **Depreciation**
            
            **Book
                Value**March
                31, 2007
            
            $
            39,839,100
            
            $
            9,156,539
            
            $
            30,682,560December
                31, 2006
            
            $
            38,306,837
            
            $
            8,308,402
            
            $
            29,998,435




Depreciation
      expense on the vessels under capital leases was $ 0.8 million and $0.6 million
      for the three months ended March 31, 2007 and 2006 respectively.




**Note
      10 — Earnings Per Share**




In
      accordance with FASB No. 128, “Earnings per Share,” the following table sets
      forth the computation of basic and diluted net income per share for the three
      months ended March 31, 2007 and 2006:




**Three
                Months Ended March 31,****2007**
            
            
            **2006**(as
                adjusted)**Numerators:**Net
                income
            
            $
            14,403,602
            
            $
            7,997,347**Denominators:**Basic-weighted
                average common shares outstanding
            
            
            28,013,310
            
            
            27,983,829Restricted
                stock issued to employees and directors
            
            
            22,571
            
            
            104,500Diluted-weighted
                average common shares and potential common shares
                outstanding
            
            
            28,035,881
            
            
            28,088,329**Income
                per common share:**Basic
            
            $
            0.51
            
            $
            0.29Diluted
            
            $
            0.51
            
            $
            0.28





At
      March
      31, 2007 and 2006, there were outstanding exercisable warrants to purchase
      98,311 Class A and 190,542 Class B common shares, held by parties not affiliated
      with existing shareholders. The warrants have been treated as outstanding for
      purposes of basic earnings per share for the three months ended March 31, 2007
      and 2006, because they are issuable for nominal consideration upon exercise
      of
      the warrants.




**Note
      1** **1
      — Commitments and Contingencies**




**Litigation**




In
      connection with the acquisition of the vessel *Sea
      Pantheon* (renamed *Tamoyo
      Maiden),* which
      was
      delivered on January 18, 2005, the Company, through a subsidiary, sought damages
      for the cost of repairs and loss of hire related to ballast tank contamination
      discovered after delivery of the vessel. As specified in the purchase agreement,
      the dispute was made in London before an arbitration tribunal selected by the
      Company and the seller. The Company, through its subsidiary, had an associated
      vessel that is owned by a company related to the seller arrested to secure
      its
      claim. That vessel was released upon the seller providing a bank guarantee
      for
      $2.1 million. The seller alleged damages due to the arrest of the associated
      vessel and we deposited, on June 6, 2005, $750,000 in escrow to provide
      counter-security for estimated arbitration/litigation costs as required under
      English law. On August 17, 2005, we obtained a reduction of $217,500 in the
      amount of the counter-security to $532,500. Arbitration proceedings took place
      in April 2006. On September 4, 2006, the Arbitrators issued a decision in our
      favor, finding that the seller was in breach of the contract and that the seller
      is responsible for the cost of repair and cleaning. We anticipate receiving
      an
      award of between $0.9 million and $1.0 million. In October 2006, our counter
      security of $532,500 was returned with interest.




Table
        of
        Contents
 14


The
      Company is periodically a defendant in cases involving personal injury and
      other
      matters that arise in the normal course of business. While any pending or
      threatened litigation has an element of uncertainty, the Company believes that
      the outcome of these lawsuits or claims, individually or combined, will not
      materially adversely affect the consolidated financial position, results of
      operations or cash flows of the Company.




**Note
      1** **2
      — Business Segment**




The
      Company is managed as a single business unit that provides worldwide ocean
      transportation of dry cargo service to its customers through the use of owned
      and chartered vessels. The vessels are operated as one fleet and when making
      resource allocation decisions, our chief operating decision maker evaluates
      voyage profitability data, which considers vessel type and route economics,
      but
      gives no weight to the financial impact of the resource allocation decision
      on
      an individual vessel basis. The Company's objective in making resource
      allocation decisions is to maximize its consolidated financial results, not
      the
      individual results of the respective vessels or routes.




The
      Company transports cargo throughout the world, including the U.S. The amount
      of
      voyage revenue generated in countries other than the U.S. is $47.2 million
      and
      $43.0 million for the three months ended March 31, 2007 and 2006,
      respectively.




Revenue
      was generated in the following principal foreign geographic areas:


**Three****Months
                    Ended March 31,****Country**
                
                
                **2007**
                
                
                **2006**Brazil
                
                $
                16,309,817
                
                $
                15,583,618Japan
                
                
                8,318,780
                
                
                7,673,640Chile
                
                
                1,865,834
                
                
                3,755,228Peru
                
                
                8,502,175
                
                
                4,505,077Venezuela
                
                
                2,201,068
                
                
                2,551,860Korea
                
                
                1,456,834
                
                
                2,251,449China
                
                
                2,468,883
                
                
                3,368,804United
                    Arab Emirates
                
                
                5,555,823
                
                
                304,148Others
                
                
                559,668
                
                
                2,962,582**Total**
                
                **$**
                **47,238,882**
                
                **$**
                **42,956,406**




Revenue
      is attributed to these countries based on the location where the cargo is
      loaded. The difference between total voyage revenues and total revenue by
      country is revenue from the United States. Time charter revenue by country
      cannot be allocated because the Company does not control the itinerary of the
      vessel.




One
      customer accounted for 13.0% and 10.4% of charter hire receivables at March
      31,
      2007 and December 31, 2006, respectively. One customer accounted for 20.5%
      and
      16.8% of voyage and time charter revenue for three months ended March 31,2007
      and 2006, respectively. No other customers accounted for more than 10% of
      revenues for three months ended March 31,2007 and 2006.




**Note
      13 — Subsequent Events**




**Interest
      Swap Transactions**




The
      Company entered into three interest rate swap transactions on April 2, 2007,
      effectively converting $50.0 million of its current and future borrowings under
      the Royal Bank of Scotland credit facility relating to the new building program
      from a floating to a fixed-rate. Exclusive of the applicable loan margin, the
      Company will pay interest based on a fixed rate of 5.2425% on $30.0 million
      of
      debt through December 29, 2019. The second interest rate swap transaction sets
      the interest rate at 4.8275% on $20.0 million of debt. The second swap
      transaction will begin on June 29, 2008, upon the draw down of additional
      advances under the credit facility and end on December 29 , 2014. After the
      expiration of the second swap transaction, on December 29, 2014, the third
      swap
      transaction commences and continues through December 29 , 2019.  The third
      swap transaction also fixes the interest rate at 4.8275% on $20.0 million of
      debt; however, this swap transaction, which terminates December 29, 2019, is
      callable at the bank’s option at anytime during the term of the
      agreement.





Table
        of
        Contents
 15


**Disposal
      of Vessel**




On
        March 9,
        2007, the *Huron
        Maiden* was
        severely damaged in a grounding accident on an uncharted rock while on passage
        near Indonesia. The grounding resulted in damage to the vessel that was too
        extensive to repair, rendering the vessel a total loss. On April 4, 2007,
        the
        vessel was declared a constructive total loss. Accordingly, the Company expects
        to receive a net amount of $8.0 million from its Hull & Machinery/ Increased
        Value insurances after a scrap value credit of $2.0 million. The Company
        retained the proceeds on the sale of the vessel for scrap, which was sold
        and
        delivered to the buyer on May 4, 2007 for $2.5 million on an "as is, where
        is
        basis." The book value of the vessel at March 31, 2007, was about $3.7 million,
        and we incurred approximately $1.0 million in expenses in connection with
        the
        accident and the sale of the vessel. The vessel collateralizes the credit
        facilty with Bank of America and accordingly, the insurance and scrapping
        sale
        proceeds will be used to pay down the revolver portion of the credit
        facility.








Table
        of
        Contents
 16




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






This
      Quarterly Report on Form 10-Q contains forward-looking statements within the
      meaning of the Private Securities Litigation Reform Act of 1995. These
      statements are only our management's current expectations. They are based on
      our
      management's beliefs and assumptions and on information currently available
      to
      our management. Forward-looking statements include, among other things, the
      information concerning our possible or assumed future results of operations,
      business strategies, financing plans, competitive position, potential growth
      opportunities and the effects of future regulation and competition.
      Forward-looking statements include all statements that are not historical facts
      and can be identified by the use of forward-looking terminology such as the
      words "anticipates," "believes," "estimates," "expects," "future," "intends,"
      "plans" and similar terms.




Forward-looking
      statements involve risks, uncertainties and assumptions. Although the Company
      does not make forward-looking statements unless it believes it has a reasonable
      basis for doing so, it cannot guarantee their accuracy. Actual results may
      differ materially from those expressed in these forward-looking statements
      due
      to a number of uncertainties and risks, including the risks d isclosed
      in our Form 10-K filed March 12, 2007, and other unforeseen risks. You should
      not rely on any forward-looking statements.




**Recent
      Developments**




On
        May 7,
        2007, the Comapny entered
        into an agreement to acquire the bulk carrier *Yakima* ,
        to be
        renamed *Yakima
        Princess* for
        $29.0 million. Delivery of the vessel is expected  between July 7, 2007 and
        October 7, 2007.


On
      April
      10, 2007, the Company took delivery of the multipurpose tweendecker *Blu
      Mistral II* ** to
      be
      renamed ** *Nanticoke
      Belle* for
      $17.0 million. The Company funded the acquisition from the $13.0
      million proceeds
      on the sale of the *Maya
      Princess*  and
      exisitng working capital.




The
      Company entered into three interest rate swap tranasctions with The Royal Bank
      of Scotland on April 2, 2007, effectively converting $50.0 million of its
      current and future borrowings under The Royal Bank of Scotland credit facility
      relating to the new building program from a floating to a fixed-rate. Exclusive
      of the applicable loan margin, the Company will pay interest based on a fixed
      LIBOR rate of 5.2425% on $30.0 million of debt through December 29, 2019 and
      4.8275% on $20.0 million, commencing on June 29, 2008, upon the draw down of
      additional advances under the credit facility, through December 29 , 2014.
      On
      December 29, 2014, the third swap tranasction for $20.0 million commences and
      continues through December 29, 2019, fixing the LIBOR rate at 4.8275%. This
      swap
      contract is callable at the bank’s option at anytime during the term of the
      agreement.




On
      March 9, 2007,
      the *Huron
      Maiden*was
      severely damaged in a grounding accident on an uncharted rock while on passage
      near Indonesia. The grounding resulted in damage to the vessel that was too
      extensive to repair, rendering the vessel a total loss. On April 4, 2007, the
      vessel was declared a constructive total loss. Accordingly, the Company expects
      to receive a net amount of $8.0 million from its Hull & Machinery/ Increased
      Value insurances after a scrap value credit of $2.0 million. The Company
      retained the proceeds on the sale of the vessel for scrap, which was sold and
      delivered to the buyer on May 4, 2007 for $2.5 million on an "as is, where
      is
      basis." The book value of the vessel at March 31, 2007, was about $3.7 million,
      and we incurred approximately $1.0 million in expenses in connection with the
      accident and the sale of the vessel. The vessel collateralizes the credit
      facilty with Bank of America and accordingly, the insurance and scrapping sale
      proceeds will be used to pay down the revolver portion of the credit
      facility




**General**




The
      following is a discussion of our financial condition at March 31, 2007 and
      December 31, 2006 and our results of operations comparing the three months
      ended
      March 31, 2007 with the three months ended March 31, 2006. You should read
      this
      section in conjunction with the our consolidated financial statements including
      the related notes to those financial statements included elsewhere in this
      Quarterly Report.




Table
        of
        Contents
 17


**Overview**




We
      are an
      ocean transportation services company that offers worldwide shipping solutions
      through liner, parcel, bulk and vessel chartering services. We offer our
      services globally in more than ten countries to over 300 customers through
      a
      network of affiliated service companies.




Our
      financial results are largely driven by the following factors:




·
            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, fuel, commission expense and stevedore and
                other
                cargo-related expenses.




Drydocking





In
        the
        last three years, our fleet has grown from 12 to 34 vessels. These vessels
        must
        be drydocked two times every five years to coincide with special survey cycles.
        Thus, our fleet of 33 vessels at March 31, 2007, would result in 66 drydockings
        over 5 years or an average of three to four vessels per quarter. We also
        have a
        program to upgrade to our standards vessels that have been purchased in the
        last
        two years, and accordingly we have made the decision to perform extensive
        steel
        renewals at each vessel's drydocking.
 
 During
        the three months ended March 31, 2007, we drydocked seven vessels for a total
        of
        212 drydock days and a capitalized cost of approximately $6.0 million. We
        expect
        the capitalized costs of the 13 vessels that will be drydocked during the
        remainder of 2007 to be approximately $12.0 million, which is consistent
        with
        our original estimate. Because of the higher number of vessels in drydock
        and
        the increased duration of drydocking, we estimate that during the first quarter
        we incurred additional incremental charter-in cost of approximately $1.1
        million.  The impact on revenues due to the first quarter drydockings was
        largely offset due to efficient operational planning and a strong shipping
        market that permitted us to generate additional voyage revenue instead of
        ballasting the vessels (carry no cargo) while they were in route to the
        drydocking facilities.  We are unable to estimate at this time any
        potential impact on future earnings attributable to the higher than normal
        drydocking schedule for the remainder of 2007 because the effect on future
        earnings is dependent on future market conditions, including shipyard
        congestion, charter rates and cargo opportunities, as well as future vessel
        positions.
  Our anticipated drydocking schedule for the remainder of 2007 is as follows:







·
            Second
                quarter of 2007, six vessels requiring about 1,050 metric tons of
                steel
                and about 208 drydock days. We anticipate two vessels will require
                an
                additional 47 drydock days that will extend into the third quarter
                of
                2007;


·
            Third
                quarter 2007, six vessels requiring about 1,100 metric tons of steel
                and
                about 235 drydock days. We anticipate one vessel will require an
                additional 15 drydock days that will extend into the fourth quarter
                of
                2007; and


·
            Fourth
                quarter 2007, one vessel requiring about 180 metric tons of steel
                and
                about 40 days in drydock.




**Components
      of revenue and expense**




We
      report
      our revenue as voyage revenue, reflecting the operations of our vessels that
      are
      not chartered out, and charter revenue, reflecting the operations of our vessels
      that have been chartered out to third parties. Voyage revenue and expenses
      for
      each reporting period include estimates for voyages in progress at the end
      of
      the period. Estimated profits from voyages in progress are recognized on a
      percentage of completion basis by prorating the estimated final voyage revenue
      and expenses using the ratio of voyage days completed through period end to
      total voyage days. When a loss is forecast for a voyage, the full amount of
      the
      anticipated loss is recognized in the period in which that determination is
      made. Revenue from time charters in progress is calculated using the daily
      charter hire rate, net of daily expenses multiplied by the number of voyage
      days
      on-hire through period end.




***Voyage
      revenue*** consists
      of freight charges paid to our subsidiaries for the transport of customers'
      cargo. F reight
      rates are set by the market and depend on the relationship between the demand
      for ocean freight transportation and the availability of appropriate vessels. The
      key
      factors driving voyage revenue are the number of vessels in the fleet, the
      days
      on hire, freight rates and tons carried.




***Time
      charter revenue*** consists
      of a negotiated daily hire rate for the duration of the time charter. The key
      factors driving time charter revenue are the number of days that vessels




Table
      of
      Contents


18




are
        chartered out and the daily charter hire rates.
  ***Voyage
        expenses*** consist
        primarily of fuel, port costs, stevedoring, commissions and lashing materials,
        all of which are paid by our subsidiaries.




***Vessel
      expenses*** ** are
      vessel operating expenses — crewing, stores, lube oil, repairs and maintenance,
      registration taxes and fees, insurance and communication expenses — for vessels
      we control, charter hire fees we pay to owners for use of their vessels and
      space charters (relets). These costs are paid by our subsidiaries.




***Depreciation
      and amortization*** ** expense
      is computed on the basis of 30-year useful lives for our vessels.




***Commissions
      on freight and port agency fees*** are paid
      to TBS Commercial Group Ltd., a company that is owned by our principal
      shareholders. Renewal of the current management agreements with TBS Commercial
      Group Ltd. and approval of any new management agreements or amendments to the
      current management agreements with TBS Commercial Group Ltd. are subject to
      approval by the compensation committee of our Board of Directors.




**Results
      of Operations**





Effective
      January 1, 2006, our drydocking expense and surveys are being accounted for
      using the deferral method. Accordingly, vessel expense and depreciation and
      amortization for the three months ended March 31, 2006 has been retrospectively
      adjusted for the change in the method of accounting for drydocking costs. See
      notes "2 — Change in Accounting Method for Drydocking costs" to our consolidated
      financial statements.




***Comparison
      of the three months ended March 31, 2007 and March 31,
      2006***




**Three
                  Months Ended****Three
                  Months Ended**
              
              
              **March
                  31, 2006****March
                  31, 2007**
              
              **(As
                  adjusted)**
              
              **Increase
                  (Decrease)****In
                  Thousands**
              
              **As
                  a % of Total Revenue**
              
              
              **In
                  Thousands**
              
              **As
                  a % of Total Revenue**
              
              **In
                  Thousands**
              
              **Percentage**Voyage
                  revenue
              
              $
              52,451
              
              74.0
              
              $
              49,320
              
              77.4
              
              3,132
              
              6.4Time
                  charter revenue
              
              
              18,069
              
              25.5
              
              
              14,170
              
              22.2
              
              3,899
              
              27.5Other
                  revenue
              
              
              318
              
              0.5
              
              
              265
              
              0.4
              
              52
              
              19.5Total
                  revenue
              
              
              70,838
              
              100.0
              
              
              63,755
              
              100.0
              
              7,083
              
              11.1Voyage
                  expense
              
              
              19,693
              
              27.8
              
              
              22,737
              
              35.7
              
              (3,044
              )
              (13.4
              )Vessel
                  expense
              
              
              17,557
              
              24.8
              
              
              17,538
              
              27.5
              
              19
              
              0.1Depreciation
                and amortization
              
              
              8,414
              
              11.9
              
              
              6,882
              
              10.8
              
              1,532
              
              22.3General
                  and administrative
              
              
              7,180
              
              10.1
              
              
              5,790
              
              9.1
              
              1,390
              
              24.0Loss
                  from sale of vessels, net
              
              
              779
              
              1.1
              
              
              -
              
              -
              
              779Total
                  operating expenses
              
              
              53,623
              
              75.7
              
              
              52,947
              
              83.0
              
              676
              
              1.3Income
                  from operations
              
              
              17,215
              
              24.3
              
              
              10,808
              
              17.0
              
              6,407
              
              59.3Other
                  (expenses) and incomeInterest
                  expense
              
              
              (2,772
              )
              (3.9
              )
              
              (2,916
              )
              (4.6
              )
              144
              
              (4.9
              )Other
                  income
              
              
              (39
              )
              (0.1
              )
              
              105
              
              0.2
              
              (144
              )
              (137.1
              )Net
                  income
              
              $
              14,404
              
              20.3
              
              $
              7,997
              
              12.5
              
              6,407
              
              80.1




Table
        of
        Contents
 19


**Voyage
      revenue**




The
      increase in our voyage revenue for the three months ended March 31, 2007, as
      compared to the comparable period in 2006, was primarily due to an increase
      in
      revenue tons carried that were offset by a decrease in average freight rates.
      As
      mentioned above, the key factors driving voyage revenue are the number of
      vessels in the fleet, the days on hire, freight rates and tons
      carried.




Revenue
      tons carried increased 471 ,870
      tons
      or 45.8% to 1,502,090 tons for the three months ended March 31, 2007 from
      1,030,220 tons for the same period in 2006. The increase in r evenue
      tons carried is due
      to an increase
      in aggregate bulk cargo carried.




Average
      freight rates for the three months ended March 31, 2007, as
      compared to the same
      period in 2006, decreased $12.95
      per ton, or 27.1%, to $34.92 per ton from $47.87 per ton for the same period
      of
      2006. The
      decrease in average freight rates is due to the increase in high-volume,
      low-freighted aggregates bulk cargo that we
      handled in 2007 as compared to 2006. Excluding
      this type of bulk cargo, of which we carried 661,340 tons for the three months
      ended March
      31,
      2007, the
      average freight rates would have been $55.78 per ton as compared to $49.68
      per
      ton for the same period in 2006. While average freight rates on aggregates
      bulk
      cargo is lower than average freight rates on other types of cargos, voyage
      costs
      are also lower resulting in comparable daily time charter equivalent
      rates.




The
      weighted average number
      of
      vessels in the fleet, freight
      voyage days, the days
      on hire, excluding
      vessels time-chartered out, and freight rates (overall freight rates and freight
      rates excluding aggregates) for
      the
      three months ended March 31, 2007 and 2006 are
      as
      follows:


**Three
                  Months Ended March 31,****2007**
              
              **2006**
              
              **Increase
                  (Decrease)**Number
                  of vessels (1)
              
              
              21
              
              
              23
              
              
              (2
              )
              
              (8.7
              )%Freight
                  voyage days (2)
              
              
              1,898
              
              
              2,031
              
              
              (133
              )
              
              (6.5
              )%Days
                  on hire (3)
              
              
              1,912
              
              
              2,223
              
              
              (311
              )
              
              (14.0
              )%Freight
                  Rates (4)For
                  all cargoes
              
              $
              34.92
              
              $
              47.87
              
              $
              (12.95
              )
              
              (27.1
              )%Excluding
                  aggregates
              
              $
              55.78
              
              $
              49.68
              
              $
              6.10
              
              
              12.3
              %Daily
                  time charter equivalent rates (5)
              
              $
              16,740
              
              $
              12,330
              
              $
              4,410
              
              
              35.8
              %




(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.





Table
        of
        Contents
 20


The
      following table shows revenues attributed to our principal cargoes:


**Three
                  Months Ended March 31, 2007**
              
              
              **Three
                  Months Ended**
                **March
                  31, 2006**
              
              
              **Increase
                  (Decrease****)****Description**
              
              
              **In
                  Thousands**
              
              
              **As
                  a % of Total Voyage Revenue**
              
              
              **In
                  Thousands**
              
              
              **As
                  a % of Total Voyage Revenue**
              
              
              **In
                  Thousands**
              
              **Percentage**Steel
                  products
              
              $
              16,106
              
              
              30.7
              
              $
              19,517
              
              
              39.6
              
              $
              (3,411
              )
              
              (17.5
              )Metal
                  concentrates
              
              
              9,315
              
              
              17.8
              
              
              6,706
              
              
              13.6
              
              
              2,609
              
              
              38.9Fertilizers
              
              
              1,612
              
              
              3.1
              
              
              1,092
              
              
              2.2
              
              
              520
              
              
              47.6Other
                  bulk cargo
              
              
              9,854
              
              
              18.8
              
              
              8,172
              
              
              16.6
              
              
              1,682
              
              
              20.6Project
                  cargo
              
              
              1,574
              
              
              3.0
              
              
              1,907
              
              
              3.9
              
              
              (333
              )
              
              (17.5
              )General
                  cargo
              
              
              858
              
              
              1.6
              
              
              1,917
              
              
              3.9
              
              
              (1,059
              )
              
              (55.2
              )Rolling
                  stock
              
              
              2,919
              
              
              5.6
              
              
              2,277
              
              
              4.6
              
              
              642
              
              
              28.2Agricultural
                  products
              
              
              8,154
              
              
              15.5
              
              
              6,088
              
              
              12.3
              
              
              2,066
              
              
              33.9Automotive
                  products
              
              
              967
              
              
              1.8
              
              
              914
              
              
              1.9
              
              
              53
              
              
              5.8Other
              
              
              1,092
              
              
              2.1
              
              
              729
              
              
              1.4
              
              
              363
              
              
              49.8******Total
                voyage revenue**
              
              $
              52,451
              
              
              100.0
              
              $
              49,319
              
              
              100.0
              
              $
              3,132
              
              
              6.4




**Time
      charter revenue**





Time
      charter revenue increased 27.5% to $18.1 million for the three months ended
      March 31, 2007 from $14.2 million for the comparable period in 2006. As
      mentioned above, the key factors driving time charter revenue are the number
      of
      days that vessels are chartered out and the daily charter hire rates.




Time
      charter revenue increased because of an increase in the average charter hire
      rate, which increased $4,513 per day to $18,178 per day for the three months
      ended March 31, 2007 from $13,665 per day for the comparable period in 2006.
      The
      increase in the average charter hire rate per day is primarily due to the upward
      trend in the overall worldwide shipping spot market rates. Charter hire rates
      are set, to a significant degree, by the market and depend on the relationship
      between the demand for ocean freight transportation and the availability of
      appropriate vessels. The increase in average charter rates was offset by a
      decrease in the chartered vessel days, which decreased 43 days to 994 days
      for
      the three months ended March 31, 2007, from 1,037 days for the same period
      in
      2006.




The
      number of vessels time chartered out, time charter days and average daily
      charter rates for the three months ended March 31, 2007 and 2006 are as
      follows:


**Three
                  Months Ended March 31,****2007**
              
              
              **2006**
              
              **Increase
                  (Decrease)**Number
                  of vessels (1)
              
              
              11
              
              
              12
              
              
              (1
              )
              
              -8.3
              %Time
                  Charter days (2)
              
              
              994
              
              
              1,037
              
              
              (43
              )
              
              -4.1
              %Daily
                  charter hire rates (3)
              
              $
              18,178
              
              $
              13,665
              
              $
              4,513
              
              
              33.0
              %Daily
                  time charter equivalent rates (4)
              
              $
              16,515
              
              $
              12,515
              
              $
              4,000
              
              
              32.0
              %




(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
 21


**Voyage
      expense**





Voyage
      expense consists of costs attributable to specific voyages. The number of voyage
      days is a significant determinant of voyage expense, which consist of fuel
      costs, commissions, port call, stevedore and miscellaneous voyage expense.
      The following table shows the change in the number of voyage days for the three
      months ended March 31, 2007 as compared to the same period in 2006.


**Three
                  Months Ended March 31,**2007
              
              **2006**
              
              
              **Increase
                  (Decrease****)**Freight
                  voyage days
              
              
              1,898
              
              
              2,031
              
              
              (133)
              -6.5%Time
                  charter out days
              
              
              994
              
              
              1,037
              
              
              (43)
              -4.1%Total
                  voyage days
              
              
              2,892
              
              
              3,068
              
              
              (176)
              -5.7%


The
      principal components of voyage expense were as follows:


**Thee
                  Months Ended**
              
              
              **Three
                  Months Ended****March
                  31, 2007**
              
              
              **March
                  31, 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**
              
              
              **Per-centage**
              
              
              **As
                  a % of Revenue**Fuel
                  expense
              
              $
              8,196
              
              
              41.6
              
              
              11.5
              
              $
              9,485
              
              
              41.8
              
              
              14.8
              
              $
              (1,289
              )
              
              (13.6
              )
              
              3.3Commission
                  expense
              
              
              3,142
              
              
              16.0
              
              
              4.4
              
              
              2,686
              
              
              11.8
              
              
              4.2
              
              
              456
              
              
              17.0
              
              
              (0.2
              )Port
                  call expense
              
              
              3,759
              
              
              19.1
              
              
              5.3
              
              
              5,213
              
              
              22.9
              
              
              8.2
              
              
              (1,454
              )
              
              (27.9
              )
              
              2.9Stevedore
                  and othercargo-related
                  expense
              
              
              2,325
              
              
              11.8
              
              
              3.3
              
              
              3,277
              
              
              14.4
              
              
              5.1
              
              
              (952
              )
              
              (29.1
              )
              
              1.8Miscellaneous
                  voyageexpense
              
              
              2,271
              
              
              11.5
              
              
              3.2
              
              
              2,076
              
              
              9.1
              
              
              3.3
              
              
              195
              
              
              9.4
              
              
              0.1Voyage
                  expense
              
              $
              19,693
              
              
              100.0
              
              
              27.7
              
              $
              22,737
              
              
              100.0
              
              
              35.6
              
              $
              (3,044
              )
              
              (13.4
              )
              
              7.9


Voyage
      expense decreased $3.0 million or 13.4% to $19.7 million for the three months
      ended March 31, 2007 from $22.7 million for the
      comparable period in 2006 .
      The
      decrease in voyage expense is primarily attributable to the decrease in fuel
      expenses, port call expense, stevedore and other cargo related expense offset
      by
      an increase in commission and miscellaneous voyage expenses.




The
      13.6%
      decrease in fuel expense is due to both the decrease in the average price per
      metric ton ("MT") and a decrease in consumption. Average price per metric ton
      ("MT") decreased to $325 per MT for the three months ended March 31, 2007
      compared to $351 per MT for the same period in 2006. Consumption decreased
      to
      25,231 MT for the three months ended March 31, 2007 from 27,053 MT for the
      same
      period in 2006, due to a decrease in voyage days.




Table
        of
        Contents
 22


The
      27.9%
      decrease in port call expense is primarily due to the decrease in the number
      of
      port days, which decreased 405 port days or 30.0% to 944 port days for the
      three
      months ended March 31, 2007 from 1,349 port days for the same period in 2006,
      and a decrease in the number of port calls, which decreased by 37 port calls
      to
      183 port calls for the three months ended March 31, 2007 as compared to 220
      port
      calls for the same period in 2006.




Stevedore
      and other cargo-related expense for the three months ended March 31, 2007
      decreased 29.1% as compared to the same period in 2006. The fluctuation of
      stevedore and other cargo-related expense is based on the shipping terms that
      cargo is booked under and cargo volumes. For analysis purposes, we group cargoes
      into three categories: (1) cargo booked under "free-in free-out" terms, which
      are shipments that the customer pays all or part of the costs of loading and
      unloading, (2) cargo booked under "full liner" terms which are shipments where
      we bear the costs of loading and unloading, and (3) a combination of free-in
      free-out and full liner terms. Cargo booked under partial or full "free-in
      free-out" terms increased $3.5 million to $43.2 million for three months ended
      March 31, 2007 from $39.7 million for the same period in 2006. The increase
      in
      cargo booked under partial or full free-in free-out terms, resulted in a
      decrease in costs that were offset by an increase in cargo volumes as noted
      previously.




The
      17.0%
      increase in commission expense for the three months ended March 31, 2007
      compared to the comparable period in 2006 is primarily due to an increase in
      commissions due to third party brokers.




**Vessel
      expense**





Vessel
      expense consists of costs we incur to own and maintain our fleet that are not
      allocated to a specific voyage, such as charter hire rates for vessels we
      charter-in, maintenance, insurance and crewing expenses for vessels we own
      or
      control. The following table sets forth the basic components of vessel
      expense:


**Three
                  Months Ended**
              
              
              **Three
                  Months Ended****March
                  31, 2007**
              
              
              **March
                  31, 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
              
              $
              13,362
              
              
              76.1
              
              $
              9,908
              
              
              56.5
              
              $
              3,454
              
              
              34.9Controlled
                  vessel expense
              
              
              1,060
              
              
              6.0
              
              
              -
              
              
              -
              
              
              1,060
              
              
              -Chartered-in
                  vessel expense
              
              
              3,011
              
              
              17.2
              
              
              7,148
              
              
              40.8
              
              
              (4,137
              )
              
              (57.9
              )Space
                  charter expense
              
              
              124
              
              
              0.7
              
              
              482
              
              
              2.7
              
              
              (358
              )
              
              (74.3
              )Vessel
                  expense
              
              $
              17,557
              
              
              100.0
              
              $
              17,538
              
              
              100.0
              
              $
              19
              
              
              0.1


Vessel
      expense for the three months ended March 31, 2007 as compared to the same period
      in 2006, was flat.




Chartered-in
      vessel expense consists of charter hire-in costs for vessels under charter
      agreements that do not have a purchase option. The 57.9% decrease in
      chartered-in vessel expense for the three months ended March 31, 2007, as
      compared to the same period in 2006, was due to our chartering-in vessels for
      326 fewer vessel days. Due to the change in the composition of our controlled
      fleet, as described below, we chartered-in vessels for 144 days for the three
      months ended March 31, 2007 as compared to 470 days for the same period in
      2006.
      The decrease was partially offset by an increase in the average charter-in
      rate
      per day, which increased $5,698 per day to $20,907 per day for the three months
      ended March 31, 2007 from $15,209 per day for the same period in
      2006.





Table
        of
        Contents
 23


For
      the
      three months ended March 31, 2007 there was a change in the composition of
      our
      controlled fleet compared to the same period in 2006. As a result, owned vessel
      days increased 252 days to 3,042 days for this time-period from 2,790 days
      for
      the same period in 2006. This translated to an increase in the average number
      of
      vessels in our owned/controlled fleet to 34 vessels during the three months
      March 31, 2007 as compared to 31 vessels in the prior year.





Controlled
      vessel expense consists of charter hire-in costs for vessels under charter
      agreements that contain a purchase option. During the three months ended March
      31, 2007, we incurred charter-in hire costs under
      the
      bareboat charters for the *Laguna
      Belle* and *Seminole
      Princess* both of
      which were part of a sale/ leaseback transaction that we entered into in January
      2007.





Space
      charter expense is the cost paid to place cargo that we are committed to ship
      on
      vessels other than those that we control. The decrease in space charter expense
      for the three months ended March 31, 2007, as compared to the same period in
      2006 was due to the increased frequency of the TBS Pacific Liner Ltd. eastbound
      and westbound services that decreased the need to space charter
      vessels.





**Depreciation
      and amortization**





The
      $1.6
      million increase in depreciation and amortization expense was due to the growth
      of our controlled fleet and additional depreciation and amortization expense
      on
      vessel capital improvements made after March 31, 2006.





**General
      and administrative expense**





General
      and administrative expense increased for the three months ended March 31, 2007
      as compared to the same period in 2006, because of our business growth. The
      increase in general and administrative expenses is due to a $0.6 million
      increase in salary and related costs, a $0.1 million increase in professional
      fees and a $0.5 million increase in other and miscellaneous expenses. We also
      incurred advertising costs of $0.4 million in 2007 to develop a video to assist
      our agents and us in promoting our business. These expenses were offset by
      a
      decrease in travel and representation expenses of $0.2 million.





**Loss
      on sale of vessel**





On
      March
      13, 2007, we sold the vessel *Maya
      Princess* for
      $13.0 million and realized a loss of approximately $0. 8
      million.





**Income
      from operations**





The
      $6.4
      million increase in income from operations for the three months ended March
      31,
      2007, as compared to the three months ended March 31, 2006, was mainly
      attributable to an increase in revenue and a decrease in voyage expense
      (specifically fuel and port call expense) offset by an increase in depreciation
      and general and administration expense. For the same reasons, our operating
      margin increased to 24.3% for the three months ended March 31, 2007 from 17.0%
      for the same period in 2006.





Table
        of
        Contents
 24


**Interest
      expense**





Interest
      expense for the three months ended March 31, 2007, as compared to the same
      period in 2006 was flat. Although our average debt balance and average LIBOR
      rates, which is the principal index rate for our loans, increased approximately
      11% and 4%, respectively, during the current period as compared to the same
      period in 2006, we were able to contain our borrowing costs due to the
      refinancing we completed in July 2006. The refinancing lowered the
      weighted-average loan interest margin that we pay on our debt by approximately
      68 basis points. We were further able to control our borrowing costs due to
      an
      interest swap that we entered into in November 2006, which converted
      approximately $56.3 million of floating rate debt to a fixed rate loan of 7.34%




***Balance
      Sheet***




**Charter
      Hire Receivables**




Our
      gross
      charter hire receivables balance at March 31, 2007 and December 31, 2006 was
      $17.7 million ($17.3 million net of allowance for doubtful accounts) and $25.8
      million ($25.4 million net of allowance for doubtful accounts), respectively.
      The decrease in receivables was principally due to the timing of payments
      received on voyages loading near the end of the period.




In
      accordance with our reserve policy, we reserve for a percentage
      of outstanding receivables, usually between 2% and 3%, based on prior
      years' experience. Our management also identifies specific receivables that
      it
      believes we will have difficulty collecting and creates additional reserves
      for
      those balances. At March 31, 2007, our general reserve totaled $0.4 million
      with
      no additional reserves. At December 31, 2006, our general reserve also totaled
      $0.4 million with no additional reserves.




**Claims
      Receivable**




Claims
      receivable represent claims for reimbursement of expenses incurred that are
      made
      under our hull and machinery and protection and indemnity coverages. Claims
      receivable are recorded
      at the probable amount that we expect to recover from insurance, net of the
      applicable deductible. Claims
      receivable at March 31, 2007 decreased $1.7 million from the December 31, 2006
      balance due
      to
      the collection of several large claims.




**Prepaid
      Expenses**




Prepaid
      expense at March 31, 2007 increased $0.5 million from the December 31, 2006
      balance. Prepaid expenses are principally comprised of prepaid insurance and
      prepaid charter-hire. The increase in prepaid expenses at March 31, 2007 is
      due
      to the prepayment of charter-hire on additional vessels at March 31, 2007 as
      compared to December 31, 2006.




**Other
      Commitments**




Our
      contractual obligations as of March 31, 2007 are shown in the following
      table:


****
              **Total**
              
              
              **Less
                  than 1 year**
              
              
              **1-3
                  years**
              
              
              **3-5
                  years**
              
              
              **More
                  than 5 years**Debt
                  Obligations (1)
              
              $
              116,022
              
              $
              21,308
              
              $
              45,122
              
              $
              40,884
              
              $
              8,708Capital
                  lease obligations
              
              
              24,638
              
              
              6,388
              
              
              18,250
              
              
              -
              
              
              -Operating
                  Lease obligations
              
              
              52,375
              
              
              14,101
              
              
              21,766
              
              
              16,508
              
              
              -Other
                  Purchase obligations (2)
              
              
              15,255
              
              
              15,255
              
              
              -
              
              
              -
              
              
              -Total
                  contractual cash obligations
              
              $
              208,290
              
              $
              57,052
              
              $
              85,138
              
              $
              57,392
              
              $
              8,708


(1)  
As
        of March
        31, 2007, we had $116.0
        million of indebtedness outstanding under loans to our subsidiaries that
        we
        guarantee, $65.9 million under the term loan with Bank
 of America,
        $5.1 million under the credit facility with the Royal Bank of Scotland plc,
        $15.0 million under the $80.0 million revolving credit facility with Bank
        of
        America, and $30.0 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 future advances of $120.0 million under the $150.0 million credit
        facility with the Royal Bank of Scotland for the new vessel
        building.




(2)  
We
      entered into a memorandum of agreement to purchase the Blue Mistral (renamed
      Nanticoke Belle) for $17.0 million. We paid a deposit of $1.7 million on
      December 11, 2006 and the balance of $15.4 million upon delivery on April 10,
      2007.




Table
      of
      Contents


25


***Liquidity
      and Capital Resources***




Our
      principal sources of funds are operating cash flows and long-term bank
      borrowings. Our principal uses of funds are capital expenditures to grow and
      maintain the quality of our fleet and keep us in compliance with international
      shipping standards and regulations, working capital requirements and principal
      repayments on outstanding loan facilities and capital lease
      obligations.




**Changes
      in Cash and Cash Equivalents**




Cash
      and
      cash equivalents increased $11.2 million from $12.0 million at December 31,
      2006
      to $23.2 million as of March 31, 2007. The increase in cash and cash equivalents
      at March 31, 2007 resulted from 2007 first quarter operating activities. We
      believe that our current cash balance as well as operating cash flows and
      available borrowings under our existing credit facilities will be sufficient
      to
      meet our liquidity needs for the next twelve months.




**Cash
      Flows from Investing Activities**




For
      the
      three months ending March 31, 2007, net cash provided by investing activities
      was $1.1 million. For the same period in 2006, $6.3 million in net cash was
      used
      by investing activities.





For
      the
      three months ended March 31, 2007, we invested $53.2 million in vessel and
      other
      capital improvements. We paid a first instament of $42.0
      million for the building and purchase of six multipurpose vessels with
      retractable tweendecks that are scheduled for delivery in 2009 and 2010. Each
      vessel will cost $35.4 million for a total cost, for the six vessels, of $212.5
      million. As discussed below, the building and acquisition of the vessels will
      be
      financed with proceeds from our new building credit facility with a syndicate
      of
      lenders led by The Royal Bank of Scotland (RBS), our revolving credit facility
      with a syndicate of lenders led by Bank of America and cash
      flows.    In connection with our new vessel building program
      we paid design costs of $0.5 million and $2.0 million in fees to RBS for the
      new
      building credit facility and a performance guarantee issued by the bank. 
During the quarter we also paid $7.7 million for capital improvements and
      drydockings, and $1.0 million for the purchase of other assets. We sold the
      vessel *Maya
      Princess* for
      $13.0 million and the vessels *Laguna
      Belle* and *Seminole
      Princess* under a
      sale-leaseback transaction for $45.0 million. We realized $38.6 million on
      the
      sale-leaseback transaction after expenses and a deduction for a deposit of
      $5.5
      million to be held by the buyer. The net proceeds on the sales were used to
      repay loan advances under our revolving credit facility. In addition, we made
      additional loans of $200 thousand to a joint venture with GMT Shipping Line
      Ltd.





For
      the
      three months ended March 31, 2006, investing activities consisted of vessel
      improvements and other assets of $5.0 million, a vessel deposit on the vessel *Kibishio
      Maru* of
      $0.8
      million and $0.5 million in investments in and loans to a joint venture with
      GMT
      Shipping Line Ltd. to provide liner services to and from the East and North
      Coasts of South America and from and to the West Coast of Africa. The $5.0
      million of vessel improvements and other assets consisted of $4.1 million of
      vessel capital improvements, $0.9 million for the purchase of other assets,
      which includes equipment that enable self-loading and discharging of cargo
      on
      the vessels and computer equipment on board the vessels.




**Cash
      Flows from Financing Activities**




Net
      cash
      used by financing activities was $12.3 million and $9.2 million for three months
      ending March 31, 2007 and 2006, respectively.





Table
        of
        Contents
 26


During
      the three months ending March 31, 2007, our revolving credit facility with
      the
      Bank of America was increased $15.0 million to $80.0 million. We also added
      $5.0
      million to our term credit facility with Bank of America. On March 29, 2007,
      we
      entered into a $150.0 million credit facility with a syndicate of lenders led
      by
      The Royal Bank of Scotland to finance the building and acquisition of six
      vessels. On March 30, 2007, we drew down $30.0 million under The Royal Bank
      of
      Scotland facility to make the firest instalment due under the contracts to
      build
      the vessels. We drew down $35.0 million and repaid approximately $70.0 million
      on the revolving credit facility with Bank of America during the quarter. We
      made scheduled debt repayments totaling $4.8 million on our term credit
      facilities and payments of $1.0 million towards obligations under capital
      leases. In connection with the sale-leaseback of the *Laguna Belle* and *Seminole
      Princess* ,
      and the
      addition to the Bank of America credit facilities we paid $1.5 million in
      deferred financing and leasing costs.





Net
      cash
      used in financing activities was $9.2 million during the three months ended
      March 31, 2006 made up of $8.6 million in repayment of debt principal and $0.6
      million in repayment of obligations under capital leases.




***Dividend
      Policy***




We
      have
      not declared or paid and do not anticipate declaring or paying any cash
      dividends on our common shares in the foreseeable future. The provisions of
      some
      of our debt instruments and related loan agreements prevent some of our
      subsidiaries from paying dividends to TBS International Limited, which may
      restrict our ability to pay dividends on our common shares. The timing and
      amount of future cash dividends, if any, would be determined by our board of
      directors and would depend upon our earnings, financial condition, cash
      requirements and obligations to lenders at the time.




Pursuant
      to Bermuda law, we cannot declare or pay a dividend, or make a distribution
      out
      of contributed surplus, if there are reasonable grounds for believing that
      we
      are, or after the payment would be, unable to pay our liabilities as they become
      due, or that the realizable value of our assets would thereby be less than
      the
      aggregate of our liabilities, our issued share capital and our share premium
      accounts.




Because
      we are a holding company with no material assets other than the stock of our
      subsidiaries, our ability to pay dividends will depend on the earnings and
      cash
      flow of our subsidiaries and their ability to pay dividends to us.




***Significant
      Related Party Transactions***




Messrs.
      James W. Bayley, Lawrence A. Blatte, Gregg L. McNelis and Joseph E. Royce, are
      collectively the beneficial owners of approximately 60.7% of our issued and
      outstanding common shares. Each of these individuals is also a principal of
      and,
      together with Alkis N. Meimaris who retired from the Company effective January
      1, 2006, control TBS Commercial Group Ltd. ("TBSG"). Messrs. Royce, McNelis,
      Blatte, and Meimaris own 31%, 15%, 9% and 9%, respectively of TBSG. We have
      established long-term commercial and operational relationships with other
      commercial agency service companies that are located in various overseas ports
      in which we conduct our business. The majority of these companies are wholly-
      or
      partly-owned direct or indirect subsidiaries of TBSG. We believe that the
      transactions described below are on terms no less favorable than those that
      could be obtained pursuant to arm's-length negotiations with independent third
      parties. Under the arrangements with these commercial agents, we generally
      pay a
      commission on freight revenue booked by the agent, which commission is based
      upon market rates, and on certain freights where they attend to the receivers
      of
      the cargo. Under the arrangements with the ship agents, we pay fees to the
      agents for attending vessels while in port, which fees are also based on market
      rates for such services. For the three months ended March 31, 2007 and 2006,
      we
      paid TBSG $1.6 million and $1.7 million, respectively.




Table
        of
        Contents
 27


Lawrence
      A. Blatte, Gregg L. McNelis, and Joseph E. Royce have been principals of, and
      together with Alkis N. Meimaris, controlled, TBS Shipping Services and Roymar
      prior to our purchase of these companies in June 2005, for $7.5 million plus
      the
      undistributed S-corporation earnings for the period January 1, 2005 through
      the
      date of acquisition of $0.6 million.




Globe
      Maritime Limited, owned by James W. Bayley, provides vessel sale and purchase
      brokerage services, which commissions are based upon market rates. For the
      three
      months ended March 31, 2007, we paid Globe Maritime $130,000 and no payments
      for
      the three months ended March 31, 2006.




TBS
      Shipping Services maintains an office in Yonkers, New York that is leased from
      our chairman and chief executive officer, Joseph E. Royce. For the three months
      ended March 31, 2006 and 2007 payments to Mr. Royce under this lease totaled
      $60,000 for each quarter. Lease payments of $240,000 per year are required
      under
      the lease.




Our
      board
      has delegated authority to the compensation committee to review and approve
      on
      an annual basis all transactions with our executive officers, directors, and
      affiliates.




*Summary
      of Critical Accounting
      Policies*




The
      Company's discussion and analysis of its results of operations, financial
      condition, and liquidity are based upon the Company’s consolidated financial
      statements, which have been prepared in accordance with accounting principles
      generally accepted in the United States of America. The preparation of these
      financial statements requires the Company to make estimates and judgments that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      The
      Company bases its estimates on historical experience and on various other
      assumptions that are believed to be reasonable under the circumstances. Actual
      results may materially differ from these estimates under different assumptions
      or conditions.





Critical
      accounting policies are those that reflect significant judgments or
      uncertainties and could result in materially different results under different
      assumptions and conditions. We believe that there have been no material changes
      in our critical accounting policies from those disclosed in our Form 10-K filed
      March 12, 2007.




***New
      Accounting Pronouncements***




In
        February 2007, the Financial Accounting Standards Board ("FASB") issued
        Statement of Financial Accounting Standards ("SFAS") Statement No. 159
        " *The
        Fair Value Option for Financial Assets and Financial Liabilities, Including
        an
        amendment of FASB Statement No. 115"* ("SFAS
        159"). SFAS 159 permits all entities the option to measure many financial
        instruments and certain other items at fair value. If a company elects the
        fair
        value option for an eligible item, then it will report unrealized gains and
        losses on those items at each subsequent reporting date. SFAS 159 is effective
        for fiscal years beginning after November 15, 2007. The Company has not yet
        determined the impact, if any, that SFAS 159 will have on our consolidated
        financial statements.




In
      September 2006, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 157, " *Fair
      Value Measurements* "
      ("SFAS
      157"), which defines and establishes a framework for measuring fair value and
      expands disclosures about fair value measurements. The accounting provisions
      of
      SFAS 157 are effective for the Company beginning on January 1, 2008. We are
      in
      the process of evaluating the effect, if any, that the adoption of SFAS 157
      will
      have on our consolidated financial statements.




In
      July
      2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), " *Accounting
      for Uncertainty in Income Taxes* "
      which
      prescribes a recognition threshold and measurement process for recording in
      the
      financial statements uncertain tax positions taken or expected to be taken
      in a
      tax return. Additionally, FIN 48 provides guidance on the derecognition,
      classification, accounting in interim periods and disclosure requirements for
      uncertain tax positions. The adoption of FIN 48, which is effective for the
      Company beginning January 1, 2007, did not have a significant impact on our
      consolidated results of operations, cash flows, or financial position.




Table
        of
        Contents
 28


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





***Interest
      Rate Risk*** ***:***




We
      are
      exposed to various market risks associated with changes in interest rates.
      Our
      exposure to interest rate risk relates to our floating rate debt. At March
      31,
      2007, we had $116.0 million of floating rate debt, excluding $56.2 million
      of
      debt hedged under an interest rate swap agreement that fixed our interest rate
      at 5.09% before loan margin. Interest loan margins over LIBOR were 1.5%, 1.75%
      and 2.25% on $5.1 million, $30.0 million, and $80.9 million of debt,
      respectively. The loan margin on $80.9 million of debt with Bank of America
      is
      determined based on the level of our consolidated leverage ratio. At March
      31,
      2007, our consolidated leverage ratio was below 1.5 to 1 and; accordingly,
      the
      loan margin decreased 50 basis points to 1.75% effective in the second quarter
      of 2007. At December 31, 2006, we had $125.8 million of floating rate debt
      excluding $56.2 million of debt hedged under the above mentioned interest rate
      swap agreement. As an indication of the extent of our sensitivity to interest
      rate changes, an increase in the LIBOR rate of 100 basis points would have
      decreased our net income and cash flows for the three months ending March 31,
      2007 by approximately $598,000 based upon our debt level at March 31, 2007.





O n
      April
      2, 2007, we entered into an interest rate swap agreement that fixed
      our
      interest rate before loan margin, on $30.0 million of debt under
      The
      Royal Bank of Scotland credit facility relating to the new building program at
      5.2425% before loan margin. On that date, we also entered into a second interest
      rate swap agreement that fixed
      our
      interest rate before loan margin, on $20.0 million of future advances to be
      made under
      The
      Royal Bank of Scotland credit facility at
      4.8275%




***Foreign
      Exchange Rate Risk:***




We
      consider the U.S. dollar to be the functional currency for all of our entities.
      Our financial results are affected by changes in foreign exchange rates. Changes
      in foreign exchange rates could adversely affect our earnings. We generate
      all
      of our revenues in U.S. dollars, but incur approximately 9.7% of our operating
      expenses in currencies other than U.S. dollars. For accounting purposes,
      expenses incurred in currencies other than U.S. dollars are converted into
      U.S.
      dollars at the exchange rate prevailing on the date of each transaction. At
      March 31, 2007, approximately 5.7% of our outstanding accounts payable were
      denominated in currencies other than U.S. dollars.





**Item
      4.**  **Controls
      and Procedures**




As
      of
      March 31, 2007, an evaluation was performed under the supervision and with
      the
      participation of the Company's management, including the Chief Executive Officer
      ("CEO"), Chief Financial Officer ("CFO"), and Chief Accounting Officer ("CAO")
      of the effectiveness of the design and operation of the Company's disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Exchange Act). Based on that evaluation, the Company's management, including
      the
      CEO, CFO and CAO, concluded that the Company's disclosure controls and
      procedures were effective as of March 31, 2007. There have been no changes
      in
      the Company's internal control over financial reporting that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting during the period covered by this quarterly
      report.




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**PART
      II**





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





The
      Company is periodically a defendant in cases involving personal injury and
      other
      matters that arise in the normal course of business. While any pending or
      threatened litigation has an element of uncertainty, the Company believes that
      the outcome of these lawsuits or claims, individually or combined, will not
      materially adversely affect the consolidated financial position, results of
      operations or cash flows of the Company. During the three months ended March
      31,
      2007, there have been no material changes to legal proceedings from those
      considered in our Annual Report on From 10-K for the year ended December 31,
      2006.




**Item
      1A. Risk Factors**





We
      believe that there have not been any material changes to the risk factors as
      previously disclosed in our Form 10-K filed March 12, 2007. The risk factors
      are
      hereby incorporated in Part II, Item 1A of this Form 10-Q. The risk factors
      and other information included in our Form 10-K should be carefully considered
      prior to making an investment decision with respect to the Company’s stock. The
      risks and uncertainties described in our Form 10-K are not the only ones we
      face. Additional risks and uncertainties not presently known to us or that
      we
      currently deem immaterial also may impair our business operations. If any of
      the
      risks occur, our business, financial condition, operating results and cash
      flows
      could be materially adversely affected and the trading price of our common
      stock
      could decline.





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





None.





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





None.





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





During
      the first quarter of 2007, no matters were submitted to a vote of security
      holders through the solicitation of proxies or otherwise.




**Item
      5**  **Other
      Information**


In connection with six wholly owned subsidiaries of the Company entering
        into
        contracts with China Communications Construction Company Ltd. and Nantong
        Yahua
        Shipbuilding Co., Ltd. (together, the "Seller") to build six Multi-Purpose
        Tweendeck vessels, as described in a Form 8-K filed on March 6, 2007 and
        as
        discussed above, effective February **** 28 ,
        2007,
        TBS entered into an Overall Agreement with the Seller that defines the delivery
        dates of the vessels, defines the time of payment of the second installment
        of
        the purchase price, and acknowledges the parties' intention that the vessels
        are
        to be built as a series of six sisterships.  This description of the
        Overall Agreement is qualified in its entirety by reference to the full text
        of
        the Overall Agreement, which is attached hereto as Exhibit 10.1.


**Item
      6**  **Exhibits**





3.1  Memorandum
      of Association (a)




3.2  Bylaws
      (a)




10.1
            Overall
                Agreement between TBS International Limited and China Communications
                Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.
                (Confidential treatment has been requested for portions of this
                agreement.)




10.2
            Shipbuilding
                Contract and Addendum between Argyle Maritime Corp. and China
                Communications Construction Company Ltd and Nantong Yahua Shipbuilding
                Co., Ltd. (Confidential treatment has been requested for portions
                of this
                agreement.)




10.3
            Shipbuilding
                Contract and Addendum between Caton Maritime Corp. and China
                Communications Construction Company Ltd and Nantong Yahua Shipbuilding
                Co., Ltd. (Confidential treatment has been requested for portions
                of this
                agreement.)




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10.4
            Shipbuilding
                Contract and Addendum between Dorchester Maritime Corp. and China
                Communications Construction Company Ltd and Nantong Yahua Shipbuilding
                Co., Ltd. (Confidential treatment has been requested for portions
                of this
                agreement.)




10.5
            Shipbuilding
                Contract and Addendum between Longwoods Maritime Corp. and China
                Communications Construction Company Ltd and Nantong Yahua Shipbuilding
                Co., Ltd. (Confidential treatment has been requested for portions
                of this
                agreement.)




10.6
            Shipbuilding
                Contract and Addendum between McHenry Maritime Corp. and China
                Communications Construction Company Ltd and Nantong Yahua Shipbuilding
                Co., Ltd. (Confidential treatment has been requested for portions
                of this
                agreement.)




10.7
            Shipbuilding
                Contract between Sunswyck Maritime Corp. and China Communications
                Construction Company Ltd and Nantong Yahua Shipbuilding Co., Ltd.
                (Confidential treatment has been requested for portions of this
                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
                (b)




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
                (b)




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
                (b)




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.
                (c)




__________




(a)  Incorporated
      by reference from the Quarterly Report on Form 10-Q filed on October 12, 2005.




(b)  Filed
      herewith.




(c)
            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**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this Quarterly Report on Form 10-Q to be signed on its behalf
      by the undersigned, thereunto duly authorized, on the 15 th day of
      May 2007.





**TBS
                INTERNATIONAL LIMITED**(Registrant)/s/
                Joseph E.
                RoyceJoseph
                E. Royce
              President
                and Chief Executive Officer/s/
                Ferdinand V.
                LepereFerdinand
                V. Lepere
              Senior
                Vice President, Chief Financial Officer/s/
                Anthony
                GentileAnthony
                Gentile
              Controller,
                Chief Accounting Officer










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