**UNITED      STATES**

** SECURITIES      AND EXCHANGE COMMISSION**

** WASHINGTON,      D.C. 20549**

**FORM      10-Q**

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

**Commission      File Number 000-51368**

**TBS      INTERNATIONAL LIMITED**

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

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

| Indicate                by check mark whether the registrant (1) has filed all reports                required to be filed by Section 13 or 15(d) of the Securities                Exchange Act of 1934 during the preceding 12 months (or for such                shorter                period that the registrant was required to file such reports), and                (2) has been subject to such filing requirements for the past 90                days.                                                                             Yes x  No  ̈ |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Indicate                by check mark whether the registrant is a large accelerated filer,                an                accelerated filer or a non-accelerated filer. (See definition of                “accelerated filer and large accelerated filer”) in Rule 12b-2 of the                Act). Large                Accelerated Filer  ̈          Accelerated                Filer  ̈          Non-accelerated                Filer x                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Indicate                by check mark whether the registrant is a shell company (as defined                by                Rule 12b-2 of the                Act).                           Yes  ̈  No x                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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

----

| **TBS                INTERNATIONAL LIMITED** |   |
|----------------------------------------------|--------|
| **2007                FORM 10-Q**            |   |
| **Table                of Contents**         |   |

|                                                                                   |                                                                                                                                     |                                                                                                                                                                |     | **Page**     |   |
|----------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------------|--------|
|   **PART                I:  FINANCIAL INFORMATION**      |                                                                                                                                     |
| Item                1                                                                  | Financial                Statements                                                                                                      |                                                                                                                                                                |     |         |
|                                                                                   |                                                                                                                                     | Consolidated                Balance Sheets as of June 30, 2007                (Unaudited) and December 31, 2006 and                                                 |     |  3      |   |
|                                                                                   |                                                                                                                                     | Consolidated                Statements of Income (Unaudited) for                the three and six months ended June 30, 2007 and June 30,                2006  |     |  4      |   |
|                                                                                   |                                                                                                                                     | Consolidated                Statements of Cash Flows (Unaudited) for                the six months ended June 30, 2007 and June 30, 2006                            |     |  5      |   |
|                                                                                   |                                                                                                                                     | Consolidated                Statement of Changes in                Shareholders' Equity (Unaudited) for the six months ended June                30, 2007 |     |  6      |   |
|                                                                                   |                                                                                                                                     | Notes                to Consolidated Financial                Statements                                                                                            |     |  7      |   |
|                                                                                   |                                                                                                                                     |                                                                                                                                                                |     |    |   |
| Item 2                                                                            | Management’s                Discussion and                Analysis of Financial Condition and Results of                Operations |                                                                                                                                                                |  19 |         |
| Item 3                                                                            | Quantitative                and Qualitative Disclosure About                Market Risk                                                  |                                                                                                                                                                |  36 |         |
| Item 4                                                                            | Controls                and Procedures                                                                                                   |                                                                                                                                                                |  37 |         |
|                                                                                   |                                                                                                                                     |                                                                                                                                                                |     |    |   |
|   **PART                II:  OTHER INFORMATION**    |                                                                                                                                     |
| Item                1                                                                  | Legal                Proceedings                                                                                                         |                                                                                                                                                                |  37 |         |
| Item 1A                                                                           | Risk                Factors                                                                                                              |                                                                                                                                                                |  37 |         |
| Item 2                                                                            | Changes                in Securities, Use of Proceeds                and Issuers Purchases of Equity Securities                          |                                                                                                                                                                |  38 |         |
| Item 3                                                                            | Defaults                Upon Senior Securities                                                                                           |                                                                                                                                                                |  38 |         |
| Item 4                                                                            | Submission                of Matters to a Vote of                Security Holders                                                        |                                                                                                                                                                |  38 |         |
| Item 5                                                                            | Other              Information                                                                                                           |                                                                                                                                                                |  38 |         |
| Item 6                                                                            | Exhibits                                                                                                                                 |                                                                                                                                                                |  39 |         |
|                                                                                   | Signatures                                                                                                                               |                                                                                                                                                                |  40 |         |

----

**Part      I.    FINANCIAL INFORMATION**

**Item      1.    Financial Statements**

**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

CONSOLIDATED      BALANCE      SHEETS

|                                                                                                                                                                |   | **June                  30,** |        |   | **December                  31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|-----------------------------------|--------|
|                                                                                                                                                                |   | **2007**                      |        |   | **2006**                          |   |
|                                                                                                                                                                |   | (UNAUDITED)                   |        |   |                              |   |
| **Assets**                                                                                                                                                          |   |                          |        |   |                              |   |
| Current                  assets                                                                                                                                     |   |                          |        |   |                              |   |
| Cash                  and cash equivalents                                                                                                                          |   | $                             | 10,576,122  |   |                              | $      | 12,006,727 |   |
| Charter                  hire receivable, net of allowance of $520,116 in 2007                                                                                      |   |                          |        |   |                              |   |   |   |
|  and                  $442,529 in 2006                                                                                                                         |   |                          | 20,118,371  |   |                              |   | 25,396,093 |   |
| Fuel                  and other inventories                                                                                                                         |   |                          | 8,610,965   |   |                              |   | 7,256,483 |   |
| Prepaid                  expenses and other current assets                                                                                                          |   |                          | 4,599,797   |   |                              |   | 7,704,416 |   |
| Advances                  to affiliates                                                                                                                             |   |                          | 128,789     |   |                              |   | 5,604 |   |
| Total                  current assets                                                                                                                               |   |                          | 44,034,044  |   |                              |   | 52,369,323 |   |
| Deposit                  for vessel purchase                                                                                                                        |   |                          | 2,900,000   |   |                              |   | 1,695,000 |   |
| Fixed                  assets, net                                                                                                                                  |   |                          | 341,321,404 |   |                              |   | 336,869,094 |   |
| Goodwill                                                                                                                                                            |   |                          | 8,425,935   |   |                              |   | 8,425,935 |   |
| Other                  assets and deferred charges                                                                                                                  |   |                          | 12,774,116  |   |                              |   | 3,731,491 |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |
| Total                  assets                                                                                                                                       |   | $                             | 409,455,499 |   |                              | $      | 403,090,843 |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |
| **Liabilities                  and Shareholders' Equity**                                                                                                           |   |                          |        |   |                              |   |   |   |
| Current                  liabilities                                                                                                                                |   |                          |        |   |                              |   |   |   |
| Debt,                  current portion                                                                                                                              |   | $                             | 21,198,571  |   |                              | $      | 19,770,000 |   |
| Obligations                  under capital lease, current portion                                                                                                   |   |                          | 4,334,269   |   |                              |   | 4,087,484 |   |
| Accounts                  payable                                                                                                                                   |   |                          | 6,355,490   |   |                              |   | 6,049,174 |   |
| Accrued                  expenses                                                                                                                                   |   |                          | 16,173,754  |   |                              |   | 21,529,351 |   |
| Voyages                  in progress                                                                                                                                |   |                          | 4,469,161   |   |                              |   | 4,268,514 |   |
| Advances                  from affiliates                                                                                                                           |   |                          | 326,958     |   |                              |   | 481,103 |   |
| Total                  current liabilities                                                                                                                          |   |                          | 52,858,203  |   |                              |   | 56,185,626 |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |
| Debt,                  long-term portion                                                                                                                            |   |                          | 79,566,676  |   |                              |   | 106,034,033 |   |
| Obligations                  under capital lease, net of current portion                                                                                            |   |                          | 15,036,565  |   |                              |   | 17,267,206 |   |
| Total                  liabilities                                                                                                                                  |   |                          | 147,461,444 |   |                              |   | 179,486,865 |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES (Note 12)                                                                                                            |   |                          |        |   |                              |   |   |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |
| Shareholders'                  equity                                                                                                                               |   |                          |        |   |                              |   |   |   |
| Common                  shares, New Class A, $.01 par value, 75,000,000                                                                                             |   |                          |        |   |                              |   |   |   |
| authorized                  14,350,996 shares issued and outstanding in 2007 and 14,319,996                  shares                  issued and outstanding in 2006 |   |                          | 143,510     |   |                              |   | 143,200 |   |
| Common                  shares, New Class B, $.01 par value, 30,000,000                                                                                             |   |                          |        |   |                              |   |   |   |
| authorized,                  13,404,461 shares issued and outstanding                                                                                               |   |                          | 134,045     |   |                              |   | 134,045 |   |
| Warrants                                                                                                                                                            |   |                          | 20,747      |   |                              |   | 20,747 |   |
| Additional                  paid-in capital                                                                                                                         |   |                          | 88,180,239  |   |                              |   | 87,880,449 |   |
| Accumulated                  other comprehensive income                                                                                                             |   |                          | 2,041,606   |   |                              |   | 42,386 |   |
| Retained                  earnings                                                                                                                                  |   |                          | 171,473,908 |   |                              |   | 135,383,151 |   |
| Total                  shareholders' equity                                                                                                                         |   |                          | 261,994,055 |   |                              |   | 223,603,978 |   |
| Total                  liabilities and shareholders' equity                                                                                                         |   | $                             | 409,455,499 |   |                              | $      | 403,090,843 |   |
|                                                                                                                                                                |   |                          |        |   |                              |   |   |   |

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

Table          of Contents

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**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

CONSOLIDATED      STATEMENTS OF      INCOME (UNAUDITED)

|                                                              |                                                   |                                                    |       | **Three                  Months Ended June 30,** |       |   | **Six                  Months Ended June 30,** |       |
|-------------------------------------------------------------------|------------------------------------------------------------------|---------------------------------------------------------|------------|--------------------------------------------------|------------|--------|------------------------------------------------|------------|
|                                                              |                                                   |                                                    |       | **2007**                                         |       |   | **2006**                                       |       |   | **2007** |   |   | **2006** |   |
|                                                              |                                                   |                                                    |       |                                             |       |   | **(As                  Adjusted)**             |       |   |   |   |   | **(As                  Adjusted)** |   |
| **Revenue**                                        |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |
|                                                              | Voyage                  revenue                        |                                                    | $          | 60,937,406                                       |       |   | $                                              | 43,808,380 |   |   | $ | 113,388,189 |   |   | $ | 93,127,669 |   |
|                                                              | Time                  charter revenue                       |                                                    |       | 16,121,570                                       |       |   |                                           | 14,826,051 |   |   |   | 34,190,193 |   |   |   | 28,996,357 |   |
|                                                              | Other                  revenue                              |                                                    |       | 155,184                                          |       |   |                                           | 360,123    |   |   |   | 473,741 |   |   |   | 625,600 |   |
|                                                              |                                                             | Total                  revenue                          |       |                                             | 77,214,160 |   |                                           |       | 58,994,554 |   |   |   | 148,052,123 |   |   |   | 122,749,626 |   |
| **Operating                  expenses**                      |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |
|                                                              | Voyage                                            |                                                    |       | 20,087,019                                       |       |   |                                           | 19,170,725 |   |   |   | 39,780,324 |   |   |   | 41,907,648 |   |
|                                                              | Vessel                                            |                                                    |       | 22,940,802                                       |       |   |                                           | 16,832,388 |   |   |   | 40,498,222 |   |   |   | 34,369,908 |   |
|                                                              | Depreciation                  and amortization of vessels   |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |
|                                                              |                                                             | and                  other fixed assets                 |       |                                             | 8,422,966  |   |                                           |       | 7,281,910 |   |   |   | 16,836,803 |   |   |   | 14,164,021 |   |
|                                                              | General                  and administrative                 |                                                    |       | 7,663,170                                        |       |   |                                           | 6,577,308  |   |   |   | 14,843,279 |   |   |   | 12,366,849 |   |
|                                                              | Loss                  on sale of vessel                     |                                                    |       | 34,836                                           |       |   |                                           |       |   |   |   | 813,890 |   |   |   |   |   |
|                                                              |                                                   |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                                             | Total                  operating expenses               |       |                                             | 59,148,793 |   |                                           |       | 49,862,331 |   |   |   | 112,772,518 |   |   |   | 102,808,426 |   |
| Income                  from operations                      |                                                             |                                                    | 18,065,367 |                                             |       |   | 9,132,223                                      |       |   |   | 35,279,605 |   |   |   | 19,941,200 |   |
| **Other                  (expenses) and income**             |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |
|                                                              | Interest                  expense                           |                                                    |       | (2,396,890                                       | )          |   |                                           | (2,695,802 | ) |   |   | (5,168,740 | ) |   |   | (5,612,143 | ) |
|                                                              | Gain                  on constructive total loss of vessel  |                                                    |       | 6,033,745                                        |       |   |                                           |       |   |   |   | 6,033,745 |   |   |   |   |   |
|                                                              | Other                  income(expenses)                     |                                                    |       | (15,066                                          | )          |   |                                           | 497,457    |   |   |   | (53,853 | ) |   |   | 602,167 |   |
|                                                              |                                                             | Total                  other (expenses) and income, net |       |                                             | 3,621,789  |   |                                           |       | (2,198,345 | ) |   |   | 811,152 |   |   |   | (5,009,976 | ) |
|                                                              |                                              |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |
| Net                  income                        |                                                             | $                                                       | 21,687,156 |                                             |       | $      | 6,933,878                                      |       |   | $ | 36,090,757 |   |   | $ | 14,931,224 |   |
|                                                              |                                              |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |
|                                                              |                                              |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |
| Earnings                  per share                          |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |
| Net                  income per common share                 |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |
|                                                              | Basic                                             |                                                    | $          | 0.77                                             |       |   | $                                              | 0.25       |   |   | $ | 1.29 |   |   | $ | 0.53 |   |
|                                                              | Diluted                                           |                                                    | $          | 0.77                                             |       |   | $                                              | 0.25       |   |   | $ | 1.29 |   |   | $ | 0.53 |   |
| Weighted                  average common shares outstanding  |                                                             |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |
|                                                              | Basic                                             |                                                    |       | 28,014,925                                       |       |   |                                           | 27,984,458 |   |   |   | 28,014,122 |   |   |   | 27,984,136 |   |
|                                                              | Diluted                                           |                                                    |       | 28,064,954                                       |       |   |                                           | 28,088,310 |   |   |   | 28,048,295 |   |   |   | 28,088,310 |   |
|                                                              |                                                   |                                                    |       |                                             |       |   |                                           |       |   |   |   |   |   |   |   |   |   |   |

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

Table          of Contents

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**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

CONSOLIDATED      STATEMENTS OF CASH FLOWS      (UNAUDITED)

|                                                                                  |   | **Six                      Months Ended June 31,** |        |
|---------------------------------------------------------------------------------------|--------|----------------------------------------------------|-------------|
|                                                                                  |   | **2007**                                           |        |   | **2006** |   |
|                                                                                  |   |                                               |        |   | **(As                      Adjusted)** |   |
| **Cash                      flows from operating activities**                         |   |                                               |        |   |   |   |
| Net income                                                                       |   | $                                                  | 36,090,757  |   |   | $ | 14,931,224 |   |
| Adjustments                      to reconcile net income to net cash                  |   |                                               |        |   |   |   |   |   |
| provided                      by operating activities                                 |   |                                               |        |   |   |   |   |   |
| Gain                      on total constructive loss of vessel                        |   |                                               | (6,033,745  | ) |   |   |   |   |
| Loss                      on sale of vessel                                           |   |                                               | 813,890     |   |   |   |   |   |
| Depreciation                      and amortization                                    |   |                                               | 16,836,803  |   |   |   | 14,164,021 |   |
| Loss                      on change in value of interest swap                         |   |                                               | 155,209     |   |   |   |   |   |
| Amortization                      of deferred financing costs                         |   |                                               | 451,610     |   |   |   | 270,476 |   |
| Non                      cash stock based compensation                                |   |                                               | 175,100     |   |   |   | 147,500 |   |
| Loss                      in joint venture                                            |   |                                               | 312,193     |   |   |   | 26,601 |   |
| Changes                      in operating assets and liabilities                      |   |                                               |        |   |   |   |   |   |
| Decrease                      in charter hire receivable                              |   |                                               | 5,277,722   |   |   |   | 8,745,896 |   |
| (Increase)                      decrease in fuel and other inventories                |   |                                               | (1,354,482  | ) |   |   | 888,015 |   |
| Decrease                      (Increase) in prepaid expenses and other current assets |   |                                               | 3,126,813   |   |   |   | (2,382,804 | ) |
| (Increase) in                      other assets and deferred charges             |   |                                               | (568,845    | ) |   |   |   |   |
| Increase                      (decrease) in accounts payable                          |   |                                               | 306,316     |   |   |   | (90,087 | ) |
| (Decrease)                      in accrued expenses                                   |   |                                               | (5,230,597  | ) |   |   | (8,358,129 | ) |
| Increase                      (decrease) in voyages in progress                       |   |                                               | 200,647     |   |   |   | (637,341 | ) |
| (Decrease) in                      advances from/to affiliates, net              |   |                                               | (277,330    | ) |   |   | (1,588,199 | ) |
| Net                      cash provided by operating activities                        |   |                                               | 50,282,061  |   |   |   | 26,117,173 |   |
| **Cash                      flows from investing activities**                         |   |                                               |        |   |   |   |   |   |
| Proceeds                      on total constructive loss of vessel                    |   |                                               |        |   |   |   |   |   |
| and                      proceeds on sale of vessels                                  |   |                                               | 61,818,667  |   |   |   |   |   |
| Vessel                      acquisitions / capital improvement costs                  |   |                                               | (79,709,153 | ) |   |   | (22,334,028 | ) |
| Deposit                      for vessel purchases                                     |   |                                               | (2,900,000  | ) |   |   |   |   |
| Return                      of investment in security                                 |   |                                               | 160,000     |   |   |   |   |   |
| Investment                      in joint venture                                      |   |                                               | (200,000    | ) |   |   | (558,849 | ) |
| Net                      cash (used) by investing activities                          |   |                                               | (20,830,486 | ) |   |   | (22,892,877 | ) |
| **Cash                      flows from financing activities**                         |   |                                               |        |   |   |   |   |   |
| Repayment                      of debt principal                                      |   |                                               | (96,038,786 | ) |   |   | (17,187,616 | ) |
| Proceeds                      from debt                                               |   |                                               | 71,000,000  |   |   |   |   |   |
| Payment                      of deferred financing costs                              |   |                                               | (3,859,538  | ) |   |   |   |   |
| Reduction                      of obligations under capital leases                    |   |                                               | (1,983,856  | ) |   |   | (1,477,441 | ) |
| Net                      cash (used) by financing activities                          |   |                                               | (30,882,180 | ) |   |   | (18,665,057 | ) |
|                                                                             |   |                                               |        |   |   |   |   |   |
| Net                      (decrease) in cash and cash equivalents                      |   |                                               | (1,430,605  | ) |   |   | (15,440,761 | ) |
| Cash                      and cash equivalents beginning of period                    |   |                                               | 12,006,727  |   |   |   | 27,157,681 |   |
| Cash                      and cash equivalents end of period                          |   | $                                                  | 10,576,122  |   |   | $ | 11,716,920 |   |
| **Supplemental                      cash flow information:**                          |   |                                               |        |   |   |   |   |   |
| Interest                      paid, net of amounts capitalized                        |   | $                                                  | 4,563,300   |   |   | $ | 4,569,299 |   |
|                                                                             |   |                                               |        |   |   |   |   |   |

| **Noncash                      Investing activities:**                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| For                      the six months ended June 30, 2007, the proceeds on the sale-leaseback                      of                      the vessels *Laguna Belle* and *Seminole Maiden* excludes                      the noncash  portion of $5,500,000, which was retained by the                      buyer/lessor as a deposit on the bareboat charters. |   |   |   |   |   |   |
| **Noncash                      Financing activities:**                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| For                      the six months ended June 30, 2007, 31,000 shares were issued                      to                      independent directors and the Chief Financial Officer under                      the 2005                      Employee Incentive Plan.                                                                                                  |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |

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

Table          of Contents

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**TBS      INTERNATIONAL LIMITED AND SUBSIDIARIES**

CONSOLIDATED      STATEMENT OF      CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

|                                                                                              |       |       |       |   |               |   |        |    |           |   |         |   | **Accumulated** |       |      |
|---------------------------------------------------------------------------------------------------|------------|------------|------------|--------|--------------------|--------|-------------|---------|----------------|--------|--------------|--------|-----------------|------------|-----------|
|                                                                                              |       |       |       |   |               |   |        |    |           |   |         |   | **Other**       |       |      |
|                                                                                              |       |       |       |   |               |   |        |    | **Additional** |   |         |   | **Compre-**     |       |      |
|                                                                                              | **Common** |       |       |   | **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 |   | $ | 223,603,978 |
|  Net                    income                                                               |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   | 36,090,757 |   |   |   |   |   | 36,090,757 |
|  Unrealized                    gain on securities available                    for sale |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   |   |   |   | 390,903 |   |   | 390,903 |
|  Unrealized                    gain on cash flow hedges                                      |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   |   |   |   | 1,608,317 |   |   | 1,608,317 |
|  Comprehensive                    income                                                     |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   |   |   |   |   |   |   | 38,089,977 |
|  Shares                    issued under Incentive Stock Plan                                 |       | 31,000     |       |   | 310                |   |        |    |           |   |         |   |            | 299,790    |      |   |   |   |   |   |   |   | 300,100 |
|                                                                                              |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   |   |   |   |   |   |   |   |
|  Balance                    at June 30, 2007                                                 |       | 27,755,457 |       | $      | 277,555            |   |        | 288,853 |           | $      | 20,747       |   | $               | 88,180,239 |      | $ | 171,473,908 |   | $ | 2,041,606 |   | $ | 261,994,055 |
|                                                                                              |       |       |       |   |               |   |        |    |           |   |         |   |            |       |      |   |   |   |   |   |   |   |   |

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

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**TBS      INTERNATIONAL LIMITED AND      SUBSIDIARIES     **

** NOTES      TO UNAUDITED CONSOLIDATED FINANCIAL      STATMEMENTS         **

**Note      1 — Basis of Presentation**

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

*Audits of Airlines *

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| ***Consolidated                  Statement of Operations***           |                                                                  | As                  Reported |    |    | As                  Computed |   |    |                       |   |
|-----------------------------------------------------------------------|-----------------------------------------------------------------------|------------------------------|---------|---------|------------------------------|--------|---------|----------------------------|--------|
| ***For                  the Three Months Ended June 30, 2006***       |                                                                  | under                  the   |    |    | under                  the   |   |    |                       |   |
| *(thousands)*                                                         |                                                                  | Accrual                      |    |    | Deferral                     |   |    | Effect                  of |   |
|                                                                  |                                                                  |                         | Method  |    |                         | Method |    |                       | Change |   |
| Operating                  expenses:                                  |                                                                  |                         |    |    |                         |   |    |                       |   |
| Vessel                                                           |                                                                  | $                            | 17,799  |    |                         | $      | 16,832  |                       |   | $ | (967 | ) |
| Depreciation                  and amortization                        |                                                                  | $                            | 6,874   |    |                         | $      | 7,282   |                       |   | $ | 408 |   |
| Total                  operating expenses                             |                                                                  | $                            | 50,421  |    |                         | $      | 49,862  |                       |   | $ | (559 | ) |
| Income                  from operations                               |                                                                  | $                            | 8,573   |    |                         | $      | 9,132   |                       |   | $ | 559 |   |
| Net                  income                                           |                                                                  | $                            | 6,375   |    |                         | $      | 6,934   |                       |   | $ | 559 |   |
| Earnings  per                  share                        |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
|                                                                  | Basic                                                                 |                         | $       | 0.23    |                         |   | $       | 0.25                       |   |   | $ | 0.02 |   |
|                                                                  | Diluted                                                               |                         | $       | 0.23    |                         |   | $       | 0.25                       |   |   | $ | 0.02 |   |
|                                                                  |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |   |
| ***Consolidated                  Statement of Operations***           |                                                                  | As                  Reported |    |    | As                  Computed |   |    |                       |   |   |
| ***For                  the Six Months Ended June 30, 2006***         |                                                                  | under                  the   |    |    | under                  the   |   |    |                       |   |   |
| *(thousands)*                                                         |                                                                  | Accrual                      |    |    | Deferral                     |   |    | Effect                  of |   |
|                                                                  |                                                                  |                         | Method  |    |                         | Method |    |                       | Change |   |
| Operating                  expenses:                                  |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
| Vessel                                                           |                                                                  | $                            | 36,430  |    |                         | $      | 34,370  |                       |   | $ | (2,060 | ) |
| Depreciation                  and amortization                        |                                                                  | $                            | 13,348  |    |                         | $      | 14,164  |                       |   | $ | 816 |   |
| Total                  operating expenses                             |                                                                  | $                            | 104,053 |    |                         | $      | 102,809 |                       |   | $ | (1,244 | ) |
| Income                  from operations                               |                                                                  | $                            | 18,697  |    |                         | $      | 19,941  |                       |   | $ | 1,244 |   |
| Net                  income                                           |                                                                  | $                            | 13,687  |    |                         | $      | 14,931  |                       |   | $ | 1,244 |   |
| Earnings  per                  share                        |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
|                                                                  | Basic                                                                 |                         | $       | 0.49    |                         |   | $       | 0.53                       |   |   | $ | 0.04 |   |
|                                                                  | Diluted                                                               |                         | $       | 0.49    |                         |   | $       | 0.53                       |   |   | $ | 0.04 |   |
|                                                                  |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |   |
| ***Consolidated                  Statement of Cash Flows***           |                                                                  | As                  Reported |    |    | As                  Computed |   |    |                       |   |   |
| ***For                  the Six Months Ended June 30, 2006***         |                                                                  | under                  the   |    |    | under                  the   |   |    |                       |   |   |
| *(thousands)*                                                         |                                                                  | Accrual                      |    |    | Deferral                     |   |    | Effect                  of |   |
|                                                                  |                                                                  |                         | Method  |    |                         | Method |    |                       | Change |   |
|                                                                  |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |   |
| Net                  income                                           |                                                                  | $                            | 13,687  |    |                         | $      | 14,931  |                       |   | $ | 1,244 |   |
| Adjustments                  to reconcile net income to net           |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
| cash                  provided by operating activities:               |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
|                                                                  | Depreciation                  and amortization                        |                         | $       | 13,619  |                         |   | $       | 14,434                     |   |   | $ | 815 |   |
|                                                                  | Changes                  in operating assets and liabilities:         |                         |    |    |                         |   |    |                       |   |   |   |   |   |
|                                                                  | Increase                  (decrease) in accrued expenses  * |                         |    | (6,740  | )                            |   |    | (8,358                     | )      |   | $ | (1,618 | ) |
| Net                  cash provided by operating activities            |                                                                  | $                            | 25,676  |    |                         | $      | 26,117  |                       |   | $ | 441 |   |
| Cash                  flows from investing activities                 |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |
|                                                                  | Vessel                  acquisition / capital improvements            |                         | $       | (21,893 | )                            |   | $       | (22,334                    | )      |   | $ | (441 | ) |
| Net                  cash (used in ) provided by investing activities |                                                                  | $                            | (22,452 | )       |                         | $      | (22,893 | )                          |   | $ | (441 | ) |
|                                                                  |                                                                  |                         |    |    |                         |   |    |                       |   |   |   |   |   |

|   |  *   Depreciation                and amortization as originally reported and as adjusted above includes                $270,476 of amortization of deferred financing costs.  A                reclassification was made to the consolidated statement of cash flows                for                the six months ended June 30, 2006 to conform to the 2007 presentation,                which presents these costs on a separate line in the consolidated                statement of cash flows. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Note      3 — New Accounting Pronouncements**

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

*Fair Value Measurements*

*Accounting for Uncertainty in      Income Taxes*

**Note      4 — Fuel and Other Inventories**

|                             |   | **June                  30,** |          | **December                  31,** |   |
|----------------------------------|--------|-------------------------------|---------------|-----------------------------------|--------|
| **Description**                  |   | **2007**                      |          | **2006**                          |   |
| Fuel                             |   | $                             | 5,967,255     |                              | $      | 4,650,557 |   |
| Lubricating                  oil |   |                          | 2,223,795     |                              |   | 2,125,983 |   |
| Other                            |   |                          | 419,915       |                              |   | 479,943 |   |
|                             |   |                          |          |                              |   |   |   |
|                             |   |                          |          |                              |   |   |   |
| **TOTAL**                        |   | **$**                         | **8,610,965** |                              | **$**  | **7,256,483** |   |
|                             |   |                          |          |                              |   |   |   |

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**Note      5 — Prepaid Expenses and Other  Current Assets**

|                               |   | **June                  30,** |          | **December                  31,** |   |
|------------------------------------|--------|-------------------------------|---------------|-----------------------------------|--------|
| **Description**                    |   | **2007**                      |          | **2006**                          |   |
| Claims                  receivable |   | $                             | 1,364,212     |                              | $      | 2,905,013 |   |
| Due                  from agents   |   |                          | 1,042,520     |                              |   | 2,153,993 |   |
| Other                  receivables |   |                          | 598,934       |                              |   | 1,058,474 |   |
| Prepaid                  expenses  |   |                          | 1,594,131     |                              |   | 1,586,936 |   |
|                               |   |                          |          |                              |   |   |   |
|                               |   |                          |          |                              |   |   |   |
| **TOTAL**                          |   | **$**                         | **4,599,797** |                              | **$**  | **7,704,416** |   |
|                               |   |                          |          |                              |   |   |   |

**Note      6 — Fixed Assets**

| **Description**                                                 |   | **June                  30,****2007** |        | **December                  31, 2006** |   |
|-----------------------------------------------------------------|--------|---------------------------------------|-------------|----------------------------------------|--------|
| Vessels                                                         |   | $                                     | 312,616,576 |                                   | $      | 367,515,843 |   |
| Vessel                  improvements and other equipment        |   |                                  | 44,166,373  |                                   |   | 27,020,499 |   |
| Deferred                  dry docking costs                     |   |                                  | 9,598,741   |                                   |   | 7,780,192 |   |
| Vessel                  construction in process                 |   |                                  | 45,898,835  |                                   |   | 280,163 |   |
| Other                  fixed assets                             |   |                                  | 11,492,540  |                                   |   | 9,626,975 |   |
|                                                            |   |                                  |        |                                   |   |   |   |
|                                                            |   |                                  | 423,773,065 |                                   |   | 412,223,672 |   |
| Less                  accumulated depreciation and amortization |   |                                  | (82,451,661 | )                                      |   | (75,354,578 | ) |
|                                                            |   |                                  |        |                                   |   |   |   |
|                                                            |   | $                                     | 341,321,404 |                                   | $      | 336,869,094 |   |
|                                                            |   |                                  |        |                                   |   |   |   |

*Nanticoke      Belle*
*Blu Mistral II*

*Maya      Princess*

*Huron Maiden*

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

*Yakima*
*Yakima Princess*
*. *

**Note      7 — Advances to / from Affiliates**

**Note      8 — Accrued Expenses**

|                                      |   | **June                30,** |           | **December                31,** |   |
|-------------------------------------------|--------|-----------------------------|----------------|---------------------------------|--------|
| **Description**                           |   | **2007**                    |           | **2006**                        |   |
|                                      |   |                        |           |                            |   |
| Voyage                and vessel expenses |   | $                           | 14,404,345     |                            | $      | 16,910,180 |   |
| Payroll                and related costs  |   |                        | 1,374,847      |                            |   | 3,479,675 |   |
| Commissions                               |   |                        | 134,250        |                            |   | 667,453 |   |
| Cargo                claims               |   |                        | 169,999        |                            |   | 245,999 |   |
| Other                expenses             |   |                        | 90,313         |                            |   | 226,044 |   |
| **Total**                                 |   | **$**                       | **16,173,754** |                            | **$**  | **21,529,351** |   |
|                                      |   |                        |           |                            |   |   |   |

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**Note      9 — Financing**

|                                                                         |   | **Interest                  Rate at****June                  30, 2007** |   |   | **June                  30, 2007** |   | **December                  31, 2006** |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|------------------------------------|--------|---------------------------------------------|--------|
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |
| Bank                  of America - term credit facility,                     |   |                                                                    |   |   |                               |   |                                        |   |
| expires                  July 30, 2010                                       |   |                                                                    | 7.10   | %      |                               | $      | 60,535,714                                  |   | $ | 65,625,000 |   |
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| Bank                  of America - revolving credit facility,                |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| expires                  July 30, 2010                                       |   |                                                                    | 7.07   | %      |                               |   | 5,374,533                                   |   |   | 54,814,033 |   |
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| The                  Royal Bank of Scotland credit                           |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| facility                  loan, expires March 23, 2010                       |   |                                                                    | 6.81   | %      |                               |   | 4,855,000                                   |   |   | 5,365,000 |   |
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| The                  Royal Bank of Scotland credit facitilty,                |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| new                  vessel buildings,  expires September 20, 2020 |   |                                                                    | 7.10   | %      |                               |   | 30,000,000                                  |   |   |   |   |
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |
| **Debt                  balance**                                            |   |                                                                    |   |   |                               | **$**  | **100,765,247**                             |   | **$** | **125,804,033** |   |
|                                                                         |   |                                                                    |   |   |                               |   |                                        |   |   |   |   |

| 2007                  (July 1, 2007 through December 31, 2007) |   |   |   |   |   |   |   |   | $      | 10,599,286      |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------------|--------|
| 2008                                                           |   |   |   |   |   |   |   |   |   | 21,198,571      |   |
| 2009                                                           |   |   |   |   |   |   |   |   |   | 22,868,571      |   |
| 2010                                                           |   |   |   |   |   |   |   |   |   | 24,866,319      |   |
| 2011                                                           |   |   |   |   |   |   |   |   |   | 10,020,000      |   |
| Thereafter                                                     |   |   |   |   |   |   |   |   |   | 11,212,500      |   |
|                                                           |   |   |   |   |   |   |   |   |   |            |   |
|                                                           |   |   |   |   |   |   |   |   | $      | **100,765,247** |   |
|                                                           |   |   |   |   |   |   |   |   |   |            |   |

**Bank      of America Credit Facility**

*Alabama Belle*

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**The      Royal Bank of Scotland Credit Facility**

*Wichita Belle*

Table          of Contents

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

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

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**Note      10 —  Equity Transactions**

**Class      A and Class B Common Shares**

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**Warrants**

**Note      11 — Earnings Per Share**

|                                                                                                             |   | **Three                  Months Ended June 30,** |       |   | **Six                  Months Ended June 30,** |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|------------------------------------------------|--------|
|                                                                                                             |   | **2007**                                         |       |   | **2006**                                       |   |   | **2007** |   |   | **2006** |   |
|                                                                                                             |   |                                             |       |   | (as                  adjusted)                 |   |   |   |   |   | (as                  adjusted) |   |
| **Numerators:**                                                                                                  |   |                                             |       |   |                                           |   |   |   |   |   |   |   |
| Net                  income                                                                                      |   | $                                                | 21,687,156 |   |                                           | $      | 6,933,878 |   |   | $ | 36,090,757 |   |   | $ | 14,931,224 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| **Denominators:**                                                                                                |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic-weighted                  average common shares outstanding                                                |   |                                             | 28,014,925 |   |                                           |   | 27,984,458 |   |   |   | 28,014,122 |   |   |   | 27,984,136 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                  stock issued to employees and directors                                              |   |                                             | 50,029     |   |                                           |   | 103,852 |   |   |   | 34,173 |   |   |   | 104,174 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Diluted-weighted                  average common shares and potential common shares                  outstanding |   |                                             | 28,064,954 |   |                                           |   | 28,088,310 |   |   |   | 28,048,295 |   |   |   | 28,088,310 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  per common share:**                                                                    |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                            |   | $                                                | 0.77       |   |                                           | $      | 0.25 |   |   | $ | 1.29 |   |   | $ | 0.53 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                                          |   | $                                                | 0.77       |   |                                           | $      | 0.25 |   |   | $ | 1.29 |   |   | $ | 0.53 |   |
|                                                                                                             |   |                                             |       |   |                                           |   |   |   |   |   |   |   |   |   |   |   |

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**Note      12 — Commitments and Contingencies**

**Commitments**

*Charters-in      of Vessels*

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

*Office      Leases*

|                                                           |   |                             |       | **Office**   |   |      |   |
|----------------------------------------------------------------|--------|----------------------------------|------------|--------------|--------|-----------|--------|
| **At                  June 30,**                               |   | **Vessel                  Hire** |       | **Premises** |   | **Total** |   |
|                                                           |   |                             |       |         |   |      |   |   |   |   |
| 2007                  (July 1, 2007 through December 31, 2007) |   | $                                | 3,843,000  |         | $      | 217,000   |   | $ | 4,060,000 |   |
| 2008                                                           |   |                             | 7,665,000  |         |   | 240,000   |   |   | 7,905,000 |   |
| 2009                                                           |   |                             | 7,910,000  |         |   |      |   |   | 7,910,000 |   |
| 2010                                                           |   |                             | 5,951,000  |         |   |      |   |   | 5,951,000 |   |
| 2011                                                           |   |                             | 5,351,000  |         |   |      |   |   | 5,351,000 |   |
| Thereafter                                                     |   |                             | 11,157,000 |         |   |      |   |   | 11,157,000 |   |
|                                                           |   |                             |       |         |   |      |   |   |   |   |
|                                                           |   | $                                | 41,877,000 |         | $      | 457,000   |   | $ | 42,334,000 |   |
|                                                           |   |                             |       |         |   |      |   |   |   |   |

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**Litigation**

**Note      13 — Business Segment**

|                                    | **For                    the Three Months Ended June 30, 2006** |           | **For                    the six Months Ended June 30, 2006** |     |
|-----------------------------------------|-----------------------------------------------------------------|----------------|--------------------------------------------------------------------|----------|
| **Country**                             | **2007**                                                        |           |                                                               | **2006** |   | **2007** |   |   | **2006** |   |
| Brazil                                  | $                                                               | 17,649,011     |                                                               |     | $ | 11,392,365 |   | $ | 33,958,828 |   |   | $ | 26,975,983 |   |
| Japan                                   |                                                            | 8,830,908      |                                                               |     |   | 7,065,880 |   |   | 17,149,688 |   |   |   | 14,739,520 |   |
| Peru                                    |                                                            | 5,889,177      |                                                               |     |   | 3,079,125 |   |   | 14,391,352 |   |   |   | 7,584,202 |   |
| United                    Arab Emirates |                                                            | 6,505,999      |                                                               |     |   | 1,802,332 |   |   | 12,061,822 |   |   |   | 2,106,480 |   |
| China                                   |                                                            | 7,078,025      |                                                               |     |   | 2,915,562 |   |   | 9,546,908 |   |   |   | 6,284,366 |   |
| Chile                                   |                                                            | 2,416,112      |                                                               |     |   | 4,809,408 |   |   | 4,281,946 |   |   |   | 8,564,637 |   |
| Korea                                   |                                                            | 1,985,827      |                                                               |     |   | 1,229,023 |   |   | 3,442,661 |   |   |   | 3,480,472 |   |
| Venezuela                               |                                                            | 998,961        |                                                               |     |   | 2,524,508 |   |   | 3,200,029 |   |   |   | 5,076,368 |   |
| Others                                  |                                                            | 4,368,311      |                                                               |     |   | 3,564,118 |   |   | 4,927,980 |   |   |   | 6,526,699 |   |
|                                    |                                                            |           |                                                               |     |   |   |   |   |   |   |   |   |   |   |
|                                    |                                                            |           |                                                               |     |   |   |   |   |   |   |   |   |   |   |
| **Total**                               | **$**                                                           | **55,722,331** |                                                               |     | **$** | **38,382,321** |   | **$** | **102,961,214** |   |   | **$** | **81,338,727** |   |
|                                    |                                                            |           |                                                               |     |   |   |   |   |   |   |   |   |   |   |

**Note      14 — Subsequent Events**

*Elsa Oldendorff*
*Arapaho Belle*

Table          of Contents

----

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

**Recent      Developments**

*Elsa      Oldendorff*
*, *
* *
*Arapaho Belle *

**General**

**Overview**

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

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

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

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

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

Table          of Contents

----

**  Drydocking**

| ·   | Third                quarter 2007, includes 125 drydock days relating to vessels that                began                their drydock during the first six months of 2007 along                with  128 drydock days relating to five vessels beginning their                drydocking during the third quarter requiring about 760 metric tons                of                steel. In addition we anticipate two vessels will require an                additional 52 drydock days that will extend into the fourth quarter                of                2007; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fourth                quarter 2007, one vessel requiring about 200 metric tons of steel                and                about 16 drydock days. We anticipate one vessel will require an additional                24 drydock days that will extend into the first quarter of                2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Components      of revenue and expense**

***Voyage      revenue***

Table          of Contents

----

***Time      charter revenue***

***Voyage      expenses***

***Vessel      expenses***
* *

***Depreciation      and amortization***
* *

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

**Results      of Operations**

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

|                                             |   | **Three                    Months Ended**  |   | **Three                    Months Ended**  |                                           |                                             |                                |   |   |
|--------------------------------------------------|--------|-------------------------------------------------|--------|-------------------------------------------------|------------------------------------------------|--------------------------------------------------|-------------------------------------|--------|--------|
|                                             |   | **June                    30, 2007**       |   | **June                    30, 2006**       |                                           | **Increase                    (Decrease)**  |
|                                             |   |                                  |   |                                            | **(As                    Adjusted)**           |                                             |                      |   |
|                                             |   | **In                    Thousands**             |   |                                            | **As                    a % of Total Revenue** |                                             | **In                    Thousands** |   |   | **As                    a % of Total Revenue** |   | **In                    Thousands** |   | **Percentage** |   |
| Voyage                    revenue                |   | $                                               | 60,937 |                                            |                                           |                                             | 78.9                                |   | $      | 43,808 |   |   |   | 74.3 |   | $ | 17,129 |   |   | 39.1 |   |
| Time                    charter revenue          |   |                                            | 16,122 |                                            |                                           |                                             | 20.9                                |   |   | 14,826 |   |   |   | 25.1 |   |   | 1,296 |   |   | 8.7 |   |
| Other                    revenue                 |   |                                            | 155    |                                            |                                           |                                             | 0.2                                 |   |   | 360 |   |   |   | 0.6 |   |   | (205 | ) |   | (56.9 | ) |
| Total                    revenue                 |   |                                            | 77,214 |                                            |                                           |                                             | 100.0                               |   |   | 58,994 |   |   |   | 100.0 |   |   | 18,220 |   |   | 30.9 |   |
|                                             |   |                                            |   |                                            |                                           |                                             |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                    expense                |   |                                            | 20,087 |                                            |                                           |                                             | 26.0                                |   |   | 19,171 |   |   |   | 32.5 |   |   | 916 |   |   | 4.8 |   |
| Vessel                    expense                |   |                                            | 22,941 |                                            |                                           |                                             | 29.8                                |   |   | 16,832 |   |   |   | 28.5 |   |   | 6,109 |   |   | 36.3 |   |
| Depreciation                    and amortization |   |                                            | 8,423  |                                            |                                           |                                             | 10.9                                |   |   | 7,282 |   |   |   | 12.4 |   |   | 1,141 |   |   | 15.7 |   |
| General                    and administrative    |   |                                            | 7,663  |                                            |                                           |                                             | 9.9                                 |   |   | 6,577 |   |   |   | 11.1 |   |   | 1,086 |   |   | 16.5 |   |
| Loss                    from sale of vessel      |   |                                            | 35     |                                            |                                           |                                             |                                |   |   |   |   |   |   |   |   |   | 35 |   |   |   |   |
| Total                    operating expenses      |   |                                            | 59,149 |                                            |                                           |                                             | 76.6                                |   |   | 49,862 |   |   |   | 84.5 |   |   | 9,287 |   |   | 18.6 |   |
| Income                    from operations        |   |                                            | 18,065 |                                            |                                           |                                             | 23.4                                |   |   | 9,132 |   |   |   | 15.5 |   |   | 8,933 |   |   | 97.8 |   |
| Other                    (expenses) and income   |   |                                            |   |                                            |                                           |                                             |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    expense              |   |                                            | (2,397 | )                                               |                                           |                                             | (3.1                                |   |   | (2,696 | ) |   |   | (4.6 | )  |   | 299 |   |   | (11.1 | ) |
| Gain                    on total constructive    |   |                                            |   |                                            |                                           |                                             |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| loss                    of vessel                |   |                                            | 6,034  |                                            |                                           |                                             | 8.0                                 |   |   |   |   |   |   |   |   |   | 6,034 |   |   |   |   |
| Other                    income (expense)        |   |                                            | (15    | )                                               |                                           |                                             |                                |   |   | 498 |   |   |   | 0.8 |   |   | (512 | ) |   | (103.0 | ) |
| Net income                                  |   | $                                               | 21,687 |                                            |                                           |                                             | 28.3                                |   | $      | 6,934 |   |   |   | 11.7 |   | $ | 14,754 |   |   | 212.8 |   |
|                                             |   |                                            |   |                                            |                                           |                                             |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table                of Contents

----

**Voyage      revenue**

|                                                     |   | **Three                  Months Ended June 30,**   |   |   |     |   |                                     |   |
|----------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------|----------|--------|------------------------------------------|--------|
|                                                     |   | **2007**                                                     |   |   | **2006** |   | **Increase                  (Decrease)** |   |
| Number                  of vessels (1)                   |   |                                                         | 22     |   |     |   | 21                                       |   |   | 1 |   |   |   | 4.8 | % |
| Freight                  voyage days (2)                 |   |                                                         | 2,009  |   |     |   | 1,866                                    |   |   | 143 |   |   |   | 7.7 | % |
| Days                  on hire (3)                        |   |                                                         | 2,043  |   |     |   | 2,102                                    |   |   | (59 | ) |   |   | (2.8 | )% |
| Freight                  Rates (4)                       |   |                                                         |   |   |     |   |                                     |   |   |   |   |   |   |   |   |
| For                  all cargoes                         |   | $                                                            | 37.60  |   |     | $      | 42.39                                    |   | $ | (4.79 | ) |   |   | (11.3 | )% |
| Excluding                  aggregates                    |   | $                                                            | 67.38  |   |     | $      | 53.44                                    |   | $ | 13.94 |   |   |   | 26.1 | % |
| Daily                  time charter equivalent rates (5) |   | $                                                            | 19,247 |   |     | $      | 11,849                                   |   | $ | 7,398 |   |   |   | 62.4 | % |

| (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

----

|                                     |   |                      **Three Months Ended****June                    30, 2007**   |   | **Three                    Months Ended****June                    30, 2006** |   |                      **Increase                    (Decrease)** |   |
|------------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|
| **Description**                          |   | **In                    Thousands**                                                              |   | **As                    a % of Total Voyage Revenue**                         |   | **In                    Thousands**                                            |   | **As                    a % of Total Voyage Revenue** |   | **In                    Thousands** |   | **%** |   |
| Steel                    products        |   | $                                                                                                | 20,743 |                                                                          |   | 34.0                                                                           |   | $ | 15,403 |   |   | 35.2 |   | $ | 5,340 |   |   | 34.7 |   |
| Agricultural                    products |   |                                                                                             | 13,865 |                                                                          |   | 22.7                                                                           |   |   | 7,408 |   |   | 16.9 |   |   | 6,457 |   |   | 87.2 |   |
| Other                    bulk cargo      |   |                                                                                             | 9,976  |                                                                          |   | 16.4                                                                           |   |   | 4,874 |   |   | 11.1 |   |   | 5,102 |   |   | 104.7 |   |
| Metal                    concentrates    |   |                                                                                             | 7,161  |                                                                          |   | 11.8                                                                           |   |   | 6,729 |   |   | 15.4 |   |   | 432 |   |   | 6.4 |   |
| Rolling                    stock         |   |                                                                                             | 2,831  |                                                                          |   | 4.6                                                                            |   |   | 2,097 |   |   | 4.8 |   |   | 734 |   |   | 35.0 |   |
| Fertilizers                              |   |                                                                                             | 2,823  |                                                                          |   | 4.6                                                                            |   |   | 1,379 |   |   | 3.1 |   |   | 1,444 |   |   | 104.7 |   |
| General                    cargo         |   |                                                                                             | 1,528  |                                                                          |   | 2.5                                                                            |   |   | 1,226 |   |   | 2.8 |   |   | 302 |   |   | 24.6 |   |
| Automotive                    products   |   |                                                                                             | 1,006  |                                                                          |   | 1.7                                                                            |   |   | 1,275 |   |   | 2.9 |   |   | (269 | ) |   | (21.1 | ) |
| Other                                    |   |                                                                                             | 780    |                                                                          |   | 1.3                                                                            |   |   | 801 |   |   | 1.8 |   |   | (21 | ) |   | (2.6 | ) |
| Project                    cargo         |   |                                                                                             | 224    |                                                                          |   | 0.4                                                                            |   |   | 2,616 |   |   | 6.0 |   |   | (2,392 | ) |   | (91.4 | ) |
|                                     |   |                                                                                             |   |                                                                          |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    voyage revenue  |   | $                                                                                                | 60,937 |                                                                          |   | 100.0                                                                          |   | $ | 43,808 |   |   | 100.0 |   | $ | 17,129 |   |   | 39.1 |   |
|                                     |   |                                                                                             |   |                                                                          |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Time      charter revenue**

Table          of Contents

----

|                                                       |   | **Three                    Months Ended June 30,**  |   |     |   |                                             |   |
|------------------------------------------------------------|--------|----------------------------------------------------------|--------|----------|--------|--------------------------------------------------|--------|
|                                                       |   | **2007**                                                 |   | **2006** |   | **Increase                    (Decrease)**  |   |
|                                                       |   |                                                     |   |     |   |                                             |   |   |   |
| Number                    of vessels (1)                   |   |                                                     | 9      |     |   | 12                                               |   |   | (3 | ) |   | -25.0 | % |
| Time                    Charter days (2)                   |   |                                                     | 839    |     |   | 1,125                                            |   |   | (286 | ) |   | -25.4 | % |
| Daily                    charter hire rates (3)            |   | $                                                        | 19,215 |     | $      | 13,179                                           |   | $ | 6,036 |   |   | 45.8 | % |
| Daily                    time charter equivalent rates (4) |   | $                                                        | 18,134 |     | $      | 12,145                                           |   | $ | 5,989 |   |   | 49.3 | % |
|                                                       |   |                                                     |   |     |   |                                             |   |   |   |   |   |   |   |

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

**Voyage      expense**

|                                   |   | **Three                  Months Ended June 30,**  |   |     |   |                                     |   |   |
|----------------------------------------|--------|--------------------------------------------------------|--------|----------|--------|------------------------------------------|--------|--------|
|                                   |   | **2007**                                               |   | **2006** |   | **Increase                  (Decrease)** |   |
| Freight                  voyage days   |   |                                                   | 2,009  |     |   | 1,866                                    |   |   | 143 |   |   |   | 7.7 | % |
| Time                  charter out days |   |                                                   | 839    |     |   | 1,125                                    |   |   | (286 | ) |   |   | -25.4 | % |
| Total                  voyage days     |   |                                                   | 2,848  |     |   | 2,991                                    |   |   | (143 | ) |   |   | -4.8 | % |
|                                   |   |                                                   |   |     |   |                                     |   |   |   |   |   |   |   |   |

Table          of Contents

----

|                                       | **Three                      Months Ended**           |   |  **Three                      Months Ended**        |   |                                                         |   |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
|                                       | **June                      30, 2007**                                              |   | **June                      30, 2006**                                  |   | **Increase                      (Decrease)**       |   |
|                                       | **In                      Thousands**                                                                   |   | **As                      a % of Voyage Expense**                                           |   | **As                      a % of Revenue**                                  |   | **In                      Thousands** |   | **As                      a % of Voyage Expense** |   | **As                      a % of Revenue** |   | **In                      Thousands** |   | **As                      a % of 2006 Expense** |   | **As                      a % of Revenue** |   |
|                                       |                                                                                                    |   |                                                                                        |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                      expense          | $                                                                                                       | 8,738  |                                                                                        |   | 43.6                                                                             |   |   | 11.3 |   | $ | 8,708 |   |   | 45.5 |   |   | 14.7 |   | $ | 30 |   |   | 0.3 |   |   | 3.4 |   |
| Commission                      expense    |                                                                                                    | 2,911  |                                                                                        |   | 14.5                                                                             |   |   | 3.8 |   |   | 2,195 |   |   | 11.4 |   |   | 3.7 |   |   | 716 |   |   | 32.6 |   |   | (0.1 | ) |
| Port                      call expense     |                                                                                                    | 3,840  |                                                                                        |   | 19.1                                                                             |   |   | 5.0 |   |   | 3,849 |   |   | 20.1 |   |   | 6.5 |   |   | (9 | ) |   | (0.2 | ) |   | 1.5 |   |
| Stevedore                      and other   |                                                                                                    |   |                                                                                        |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cargo-related                      expense |                                                                                                    | 2,777  |                                                                                        |   | 13.8                                                                             |   |   | 3.6 |   |   | 2,693 |   |   | 14.0 |   |   | 4.6 |   |   | 84 |   |   | 3.1 |   |   | 1.0 |   |
| Miscellaneous                      voyage  |                                                                                                    |   |                                                                                        |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                    |                                                                                                    | 1,823  |                                                                                        |   | 9.0                                                                              |   |   | 2.4 |   |   | 1,726 |   |   | 9.0 |   |   | 2.9 |   |   | 97 |   |   | 5.6 |   |   | 0.5 |   |
|                                       |                                                                                                    |   |                                                                                        |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                      expense        | $                                                                                                       | 20,089 |                                                                                        |   | 100.0                                                                            |   |   | 26.1 |   | $ | 19,171 |   |   | 100.0 |   |   | 32.4 |   | $ | 918 |   |   | 4.8 |   |   | 6.3 |   |
|                                       |                                                                                                    |   |                                                                                        |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Vessel      expense**

|                                         |   | **Three                  Months Ended** |   | **Three                  Months Ended** |                                          |                                     |                              |
|----------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|-----------------------------------------------|------------------------------------------|-----------------------------------|
|                                         |   | **June                  30, 2007**      |   | **June                  30, 2006**      |                                          | **Increase                  (Decrease)** |                              |
|                                         |   | **In                  Thousands**       |   |                                    | **As                  a % of Vessel Expense** |                                     | **In                  Thousands** |   |   | **As                  a % of Vessel Expense** |   | **In                  Thousands** |   |   | **Percentage** |   |
|                                         |   |                                    |   |                                    |                                          |                                     |                              |   |   |   |   |   |   |   |   |   |
| Owned                  vessel expense        |   | $                                       | 12,900 |                                    |                                          |                                     | 56.2                              |   | $ | 11,699 |   |   |   | 69.5 |   | $ | 1,201 |   |   |   | 10.3 |   |
| Chartered-in                  vessel expense |   |                                    | 8,425  |                                    |                                          |                                     | 36.7                              |   |   | 3,830 |   |   |   | 22.8 |   |   | 4,595 |   |   |   | 120.0 |   |
| Controlled                  vessel expense   |   |                                    | 1,616  |                                    |                                          |                                     | 7.1                               |   |   |   |   |   |   |   |   |   | 1,616 |   |   |   |   |   |
| Space                  charter expense       |   |                                    |   |                                    |                                          |                                     |                              |   |   | 1,303 |   |   |   | 7.7 |   |   | (1,303 | ) |   |   | (100.0 | ) |
| Vessel                  expense              |   | $                                       | 22,941 |                                    |                                          |                                     | 100.0                             |   | $ | 16,832 |   |   |   | 100.0 |   | $ | 6,109 |   |   |   | 36.3 |   |

Table            of Contents

----

**.**

*Laguna Belle*
*Seminole Princess*

**Depreciation      and amortization**

**General      and administrative expense**

**Income      from operations**

Table          of Contents

----

**Interest      expense**

***Comparison      of the six months ended June 30, 2007 and June 30,      2006***

|                                           | **Six                  Months Ended** |    | **Six                  Months Ended** |                                         |                                     |                              |   |   |
|------------------------------------------------|---------------------------------------|---------|---------------------------------------|----------------------------------------------|------------------------------------------|-----------------------------------|--------|--------|
|                                           | **June                  30, 2007**    |    | **June                  30, 2006**    |                                         | **Increase                  (Decrease)** |
|                                           |                             |    |                                  | **(As                  Adjusted)**           |                                     |                              |   |
|                                           | **In                  Thousands**     |    |                                  | **As                  a % of Total Revenue** |                                     | **In                  Thousands** |   |   | **As                  a % of Total Revenue** |   | **In                  Thousands** |   | **Percentage** |   |
|                                           |                                  |    |                                  |                                         |                                     |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                  revenue                | $                                     | 113,388 |                                  |                                         |                                     | 76.6                              |   | $      | 93,128 |   |   |   | 75.9 |   |   | 20,260 |   |   | 21.8 |   |
| Time                  charter revenue          |                                  | 34,190  |                                  |                                         |                                     | 23.1                              |   |   | 28,996 |   |   |   | 23.6 |   |   | 5,194 |   |   | 17.9 |   |
| Other                  revenue                 |                                  | 474     |                                  |                                         |                                     | 0.3                               |   |   | 626 |   |   |   | 0.5 |   |   | (152 | ) |   | (24.3 | ) |
| Total                  revenue                 |                                  | 148,052 |                                  |                                         |                                     | 100.0                             |   |   | 122,750 |   |   |   | 100.0 |   |   | 25,302 |   |   | 20.6 |   |
|                                           |                                  |    |                                  |                                         |                                     |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                  expense                |                                  | 39,780  |                                  |                                         |                                     | 26.9                              |   |   | 41,908 |   |   |   | 34.1 |   |   | (2,128 | ) |   | (5.1 | ) |
| Vessel                  expense                |                                  | 40,498  |                                  |                                         |                                     | 27.4                              |   |   | 34,370 |   |   |   | 28.0 |   |   | 6,128 |   |   | 17.8 |   |
| Depreciation                  and amortization |                                  | 16,837  |                                  |                                         |                                     | 11.4                              |   |   | 14,164 |   |   |   | 11.5 |   |   | 2,673 |   |   | 18.9 |   |
| General                   and administrative   |                                  | 14,843  |                                  |                                         |                                     | 10.0                              |   |   | 12,367 |   |   |   | 10.1 |   |   | 2,476 |   |   | 20.0 |   |
| Loss                  on sale of vessel        |                                  | 814     |                                  |                                         |                                     | 0.5                               |   |   |   |   |   |   |   |   |   | 814 |   |   |   |   |
| Total                  operating expenses      |                                  | 112,772 |                                  |                                         |                                     | 76.2                              |   |   | 102,809 |   |   |   | 83.7 |   |   | 9,963 |   |   | 9.7 |   |
| Income                  from operations        |                                  | 35,280  |                                  |                                         |                                     | 23.8                              |   |   | 19,941 |   |   |   | 16.3 |   |   | 15,339 |   |   | 76.9 |   |
| Other                  (expenses) and income   |                                  |    |                                  |                                         |                                     |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense              |                                  | (5,169  | )                                     |                                         |                                     | (3.5                              | )      |   | (5,612 | ) |   |   | (4.6 | )  |   | 443 |   |   | (7.9 | ) |
| Gain                  on total constructive    |                                  |    |                                  |                                         |                                     |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   loss                  of vessel    |                                  | 6,034   |                                  |                                         |                                     | 4.0                               |   |   |   |   |   |   |   |   |   | 6,034 |   |   |   |   |
| Other                  income                  |                                  | (54     | )                                     |                                         |                                     |                              |   |   | 602 |   |   |   | 0.5 |   |   | (656 | ) |   | (109.0 | ) |
| Net  income                          | $                                     | 36,091  |                                  |                                         |                                     | 24.3                              |   | $      | 14,931 |   |   |   | 12.2 |   | $ | 21,160 |   |   | 141.7 |   |
|                                           |                                  |    |                                  |                                         |                                     |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Voyage      revenue**

Table          of Contents

----

|                                                       |   | **Six                    Months Ended June 30,** |   |   |     |   |   |                                       |   |
|------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|----------|--------|--------|--------------------------------------------|--------|
|                                                       |   | **2007**                                         |   |   | **2006** |   |   | **Increase                    (Decrease)** |   |
|                                                       |   |                                             |   |   |     |   |   |                                       |   |   |   |   |
| Number                    of vessels (1)                   |   |                                             | 22     |   |     |   | 22     |                                       |   |   |   |   |   |   | 0.0 | % |
| Freight                    voyage days (2)                 |   |                                             | 3,907  |   |     |   | 3,897  |                                       |   |   | 10 |   |   |   | 0.3 | % |
| Days                    on hire (3)                        |   |                                             | 3,955  |   |     |   | 4,325  |                                       |   |   | (370 | ) |   |   | (8.6 | )% |
| Freight                    Rates (4)                       |   |                                             |   |   |     |   |   |                                       |   |   |   |   |   |   |   |   |
| For                    all cargoes                         |   | $                                                | 36.31  |   |     | $      | 45.13  |                                       |   | $ | (8.82 | ) |   |   | (19.5 | )% |
| Excluding                    aggregates                    |   | $                                                | 61.46  |   |     | $      | 51.32  |                                       |   | $ | 10.14 |   |   |   | 19.8 | % |
| Daily                    time charter equivalent rates (5) |   | $                                                | 17,960 |   |     | $      | 12,099 |                                       |   | $ | 5,861 |   |   |   | 48.4 | % |

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

Table            of Contents

----

|                                     | **Six                    Months Ended****June                    30, 2007** |    | **Six                    Months Ended****June                    30, 2006** |                                                  | **Increase                    (Decrease)** |                                |
|------------------------------------------|-----------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------|-------------------------------------------------------|--------------------------------------------|-------------------------------------|
| **Description**                          | **In                    Thousands**                                         |    |                                                                        | **As                    a % of Total Voyage Revenue** |                                       | **In                    Thousands** |   |   | **As                    a % of Total Voyage Revenue** |   | **In                    Thousands** |   |   | **%** |   |
| Steel                    products        | $                                                                           | 36,851  |                                                                        |                                                  |                                       | 32.5                                |   | $ | 34,922 |   |   |   | 37.5 |   | $ | 1,929 |   |   |   | 5.5 |   |
| Agricultural                    products |                                                                        | 22,019  |                                                                        |                                                  |                                       | 19.4                                |   |   | 13,496 |   |   |   | 14.5 |   |   | 8,523 |   |   |   | 63.2 |   |
| Fertilizers                              |                                                                        | 19,829  |                                                                        |                                                  |                                       | 17.5                                |   |   | 13,045 |   |   |   | 14.0 |   |   | 6,784 |   |   |   | 52.0 |   |
| Metal                    concentrates    |                                                                        | 16,475  |                                                                        |                                                  |                                       | 14.5                                |   |   | 13,435 |   |   |   | 14.4 |   |   | 3,040 |   |   |   | 22.6 |   |
| Rolling                    stock         |                                                                        | 5,750   |                                                                        |                                                  |                                       | 5.1                                 |   |   | 4,374 |   |   |   | 4.7 |   |   | 1,376 |   |   |   | 31.5 |   |
| General                    cargo         |                                                                        | 4,435   |                                                                        |                                                  |                                       | 3.9                                 |   |   | 2,471 |   |   |   | 2.7 |   |   | 1,964 |   |   |   | 79.5 |   |
| Other                                    |                                                                        | 2,386   |                                                                        |                                                  |                                       | 2.1                                 |   |   | 3,143 |   |   |   | 3.3 |   |   | (757 | ) |   |   | (24.1 | ) |
| Automotive                    products   |                                                                        | 1,973   |                                                                        |                                                  |                                       | 1.7                                 |   |   | 2,189 |   |   |   | 2.4 |   |   | (216 | ) |   |   | (9.9 | ) |
| Other                    bulk cargo      |                                                                        | 1,872   |                                                                        |                                                  |                                       | 1.7                                 |   |   | 1,530 |   |   |   | 1.6 |   |   | 342 |   |   |   | 22.4 |   |
| Project                    cargo         |                                                                        | 1,798   |                                                                        |                                                  |                                       | 1.6                                 |   |   | 4,523 |   |   |   | 4.9 |   |   | (2,725 | ) |   |   | (60.2 | ) |
|                                     |                                                                        |    |                                                                        |                                                  |                                       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    voyage revenue  | $                                                                           | 113,388 |                                                                        |                                                  |                                       | 100.0                               |   | $ | 93,128 |   |   |   | 100.0 |   | $ | 20,260 |   |   |   | 21.8 |   |
|                                     |                                                                        |    |                                                                        |                                                  |                                       |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Time      charter revenue**

|                                                       |   | **Six                    months Ended June 30,**  |   |     |   |                                       |   |
|------------------------------------------------------------|--------|--------------------------------------------------------|--------|----------|--------|--------------------------------------------|--------|
|                                                       |   | **2007**                                               |   | **2006** |   | **Increase                    (Decrease)** |
| Number                    of vessels (1)                   |   |                                                   | 10     |     |   | 12                                         |   |   | (2 | ) |   | -16.7 | % |
| Time                    Charter days (2)                   |   |                                                   | 1,833  |     |   | 2,162                                      |   |   | (329 | ) |   | -15.2 | % |
| Daily                    charter hire rates (3)            |   | $                                                      | 18,653 |     | $      | 13,412                                     |   | $ | 5,241 |   |   | 39.1 | % |
| Daily                    time charter equivalent rates (4) |   | $                                                      | 17,256 |     | $      | 12,323                                     |   | $ | 4,933 |   |   | 40.0 | % |

| (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 ofavailable                days during the period.  TCE is an industry standard for                measuring and analyzing fluctuations                between financial periods and as a method of equating TCE revenue                generated from                a voyage charter to time charter revenue.  No voyage expenses                are deducted because they                are not applicable. |

Table          of Contents

----

**Voyage      expense**

|                                   |   | **Six                  Months Ended June 30,** |   |   |     |   |                                     |
|----------------------------------------|--------|------------------------------------------------|--------|--------|----------|--------|------------------------------------------|
|                                   |   | **2007**                                       |   |   | **2006** |   | **Increase                  (Decrease)** |
|                                   |   |                                           |   |   |     |   |                                     |   |   |   |
| Freight                  voyage days   |   |                                           | 3,907  |   |     |   | 3,897                                    |   |   | 10 |   |   | 0.3 | % |
| Time                  charter out days |   |                                           | 1,833  |   |     |   | 2,162                                    |   |   | (329 | ) |   | -15.2 | % |
| Total                  voyage days     |   |                                           | 5,740  |   |     |   | 6,059                                    |   |   | (319 | ) |   | -5.3 | % |

|                                   | **Six                  Months Ended**                      |   | **Six                  Months Ended**     |   |                                         |   |
|----------------------------------------|------------------------------------------------------------|--------|---------------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                   | **June                  30, 2007**     |   | **June                  30, 2006**        |   | **Increase                  (Decrease)**     |   |
|                                   | **In                  Thousands**                          |   | **As                  a % of Voyage Expense**                 |   | **As                  a % of Revenue**                      |   | **In                  Thousands** |   | **As                  a % of Voyage Expense** |   | **As                  a % of Revenue** |   | **In                  Thousands** |   | **Percentage** |   | **As                  a % of Revenue** |   |
|                                   |                                                       |   |                                                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                  expense          | $                                                          | 16,934 |                                                          |   | 42.6                                                             |   |   | 11.4 |   | $ | 18,193 |   |   | 43.4 |   |   | 14.8 |   | $ | (1,259 | ) |   | (6.9 | ) |   | 3.4 |   |
| Commission                  expense    |                                                       | 6,053  |                                                          |   | 15.2                                                             |   |   | 4.1 |   |   | 4,881 |   |   | 11.6 |   |   | 4.0 |   |   | 1,172 |   |   | 24.0 |   |   | (0.1 | ) |
| Port                  call expense     |                                                       | 7,599  |                                                          |   | 19.1                                                             |   |   | 5.1 |   |   | 9,062 |   |   | 21.6 |   |   | 7.4 |   |   | (1,463 | ) |   | (16.1 | ) |   | 2.3 |   |
| Stevedore                  and other   |                                                       |   |                                                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cargo-related                  expense |                                                       | 5,101  |                                                          |   | 12.8                                                             |   |   | 3.4 |   |   | 5,970 |   |   | 14.3 |   |   | 4.8 |   |   | (869 | ) |   | (14.6 | ) |   | 1.4 |   |
| Miscellaneous                  voyage  |                                                       |   |                                                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expense                                |                                                       | 4,093  |                                                          |   | 10.3                                                             |   |   | 2.8 |   |   | 3,802 |   |   | 9.1 |   |   | 3.1 |   |   | 291 |   |   | 7.7 |   |   | 0.3 |   |
|                                   |                                                       |   |                                                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage                  expense        | $                                                          | 39,780 |                                                          |   | 100.0                                                            |   |   | 26.8 |   | $ | 41,908 |   |   | 100.0 |   |   | 34.1 |   | $ | (2,128 | ) |   | (5.1 | ) |   | 7.3 |   |
|                                   |                                                       |   |                                                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

**Vessel        expense**

|                                         |   | **Six                  Months Ended** |   | **Six                  Months Ended** |                                          |                                     |                               |
|----------------------------------------------|--------|---------------------------------------|--------|---------------------------------------|-----------------------------------------------|------------------------------------------|------------------------------------|
|                                         |   | **June                  30, 2007**    |   | **June                  30, 2006**    |                                          | **Increase                  (Decrease)** |                               |
|                                         |   |                                  |   |                                  |                                          |                                     | **(As                  Adjusted)** |   |   |   |   |   |   |
|                                         |   | **In                  Thousands**     |   |                                  | **As                  a % of Vessel Expense** |                                     | **In                  Thousands**  |   |   | **As                  a % of Vessel Expense** |   | **In                  Thousands** |   |   | **Percentage** |   |
|                                         |   |                                  |   |                                  |                                          |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owned                  vessel expense        |   | $                                     | 26,263 |                                  |                                          |                                     | 64.9                               |   | $ | 21,607 |   |   |   | 62.9 |   | $ | 4,656 |   |   |   | 21.5 |   |
| Chartered-in                  vessel expense |   |                                  | 11,436 |                                  |                                          |                                     | 28.1                               |   |   | 10,979 |   |   |   | 32.0 |   |   | 457 |   |   |   | 4.0 |   |
| Controlled                  vessel expense   |   |                                  | 2,675  |                                  |                                          |                                     | 6.7                                |   |   |   |   |   |   |   |   |   | 2,675 |   |   |   |   |   |
| Space                  charter expense       |   |                                  | 124    |                                  |                                          |                                     | 0.3                                |   |   | 1,784 |   |   |   | 5.1 |   |   | (1,660 | ) |   |   | (93.0 | ) |
| Vessel                  expense              |   | $                                     | 40,498 |                                  |                                          |                                     | 100.0                              |   | $ | 34,370 |   |   |   | 100.0 |   | $ | 6,128 |   |   |   | 17.8 |   |
|                                         |   |                                  |   |                                  |                                          |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Table          of Contents

----

*Laguna Belle*
*Seminole Princess*

**Depreciation      and amortization**

**General      and administrative expense**

**Income      from operations**

**Interest      expense**

Table          of Contents

----

***Balance      Sheet***

**Charter      Hire Receivables**

**Prepaid      Expenses and other**

**Other      Commitments**

|                                                | **Total** |    | **Less                  than 1 year** |   | **1-3                  years** |   | **3-5                  years** |   | **More                  than 5 years** |   |
|-----------------------------------------------------|-----------|---------|---------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|----------------------------------------|--------|
|                                                |      |    |                                  |   |                           |   |                           |   |                                   |   |
| Debt                  Obligations (1)               | $         | 100,765 |                                  | $      | 21,199                         |   | $                              | 48,367 |                                   | $      | 24,997 |   | $ | 6,202 |   |
| Capital                  lease obligations          |      | 23,030  |                                  |   | 6,388                          |   |                           | 16,642 |                                   |   |   |   |   |   |   |
| Operating                  Lease obligations        |      | 47,445  |                                  |   | 14,054                         |   |                           | 14,134 |                                   |   | 10,746 |   |   | 8,511 |   |
| Other                  Purchase obligations (2)     |      | 26,100  |                                  |   | 26,100                         |   |                           |   |                                   |   |   |   |   |   |   |
|                                                |      |    |                                  |   |                           |   |                           |   |                                   |   |   |   |   |   |   |
|                                                |      |    |                                  |   |                           |   |                           |   |                                   |   |   |   |   |   |   |
| Total                  contractual cash obligations | $         | 197,340 |                                  | $      | 67,741                         |   | $                              | 79,143 |                                   | $      | 35,743 |   | $ | 14,713 |   |
|                                                |      |    |                                  |   |                           |   |                           |   |                                   |   |   |   |   |   |   |

| (1)   | As                of June 30, 2007, we had $100.8 million of indebtedness outstanding                under                loans to our subsidiaries that we guarantee, $60.5 million under                the $80.0                million term loan with Bank of America, $5.4 million under the $80.0                million revolving credit facility with Bank of America, $4.9 million                under                the $7.2 million credit facility with The Royal Bank of Scotland,                and                $30.0 million under the $150.0 million credit facility with The Royal                Bank                of Scotland for the new vessel building program.  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)   | Operating                lease obligations represents obligations under two seven-year bareboat                charters for the *Seminole Princess* and *Laguna                Belle* |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | We                entered into an agreement to acquire the *Yakima*, which we                intend to rename the *Yakima Prince*ss, for $29.0                million.  We paid a deposit of $2.9 million on May 11, 2007 and                will pay the balance of $26.1 million upon delivery of the vessel                which is                expected early in the fourth quarter of                2007. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Table          of Contents

----

***Liquidity      and Capital Resources***

**Changes      in Cash and Cash Equivalents**

**Cash      Flows from Investing Activities**

*Nanticoke Belle*
*Maya Princess*
*Seminole Princess*
*Laguna      Belle*
*Huron      Maiden*
* *
*Yakima*
*Yakima Princess*
*,*

*Kibishio Maru*
*Aztec Maiden*

**Cash      Flows from Financing Activities**

Table          of Contents

----

***Dividend        Policy***

***Significant      Related Party Transactions***

***Summary        of Critical Accounting Policies***

Table            of Contents

----

***New      Accounting Pronouncements***

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

*Fair Value Measurements*

*Accounting for      Uncertainty in Income Taxes*

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

***Interest      Rate Risk***

Table          of Contents

----

***Foreign      Exchange Rate Risk***

**Item      4. Controls and      Procedures**

**PART      II**

**Item      1.   Legal Proceedings**

**Item      1A. Risk      Factors**

Table          of Contents

----

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

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

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

| **MATTER**                                                                                                                                                                                                                                                                                                             | **FOR** |       | **AGAINST** |   | **ABSTAIN** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------|-------------|--------|-------------|--------|
|                                                                                                                                                                                                                                                                                                                   |    |       |        |   |        |   |   |   |   |
| Election                of James W. Bayley                                                                                                                                                                                                                                                                             |    | 19,093,891 |        |   | 564,326     |   |   | 20,313 |   |
| Election                of John P. Cahill                                                                                                                                                                                                                                                                              |    | 19,615,631 |        |   | 42,086      |   |   | 20,813 |   |
| Re-election                of Randee E. Day                                                                                                                                                                                                                                                                            |    | 19,601,568 |        |   | 56,150      |   |   | 20,813 |   |
| Re-election                of William P. Harrington                                                                                                                                                                                                                                                                    |    | 19,090,785 |        |   | 566,933     |   |   | 20,813 |   |
| Re-election                of Gregg L. McNelis                                                                                                                                                                                                                                                                         |    | 19,609,301 |        |   | 50,826      |   |   | 20,313 |   |
| Re-election                of Joseph E. Royce                                                                                                                                                                                                                                                                          |    | 19,610,112 |        |   | 50,126      |   |   | 18,293 |   |
| Re-election                of Peter S. Shaerf                                                                                                                                                                                                                                                                          |    | 19,605,826 |        |   | 51,892      |   |   | 20,813 |   |
| Election                of Alexander Smigelski                                                                                                                                                                                                                                                                    |    | 19,615,631 |        |   | 42,086      |   |   | 20,813 |   |
| Reappointment                of PricewaterhouseCoopers LLP as the Company’s independent registered                public accounting firm until the 2008 Annual General Meeting and                authorization of the Board of Directors, acting through the Audit                Committee, to set their fees. |    | 19,640,017 |        |   | 13,439      |   |   | 25,085 |   |

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

Table          of Contents

----

**Item      6 Exhibits**

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

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

| 10.1** | Amendment                Number 1 dated June 27, 2007 to Shipbuilding Contract between Argyle                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2** | Amendment                Number 2 dated June 27, 2007 to Shipbuilding Contract between Caton                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3** | Amendment                Number 2 dated June 27, 2007 to Shipbuilding Contract between Dorchester                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4** | Amendment                Number 2 dated June 27, 2007 to Shipbuilding Contract between Longwoods                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5** | Amendment                Number 2 dated June 27, 2007 to Shipbuilding Contract between McHenry                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6** | Amendment                Number 1 dated June 27, 2007 to Shipbuilding Contract between Sunswyck                Maritime Corp. and China Communications Construction Company Ltd                and                Nantong Yahua Shipbuilding Co.,                Ltd. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7** | Restricted                  stock grant agreement for 100,000 shares granted to Ferdinand Lepere                  under                  the TBS International Limited 2005 Equity Incentive                  Plan. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| 32** | Certification                  of the Chief Executive Officer, Chief Financial Officer and Chief                  Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted                  pursuant                  to Section 906 of the Sarbanes-Oxley Act of 2002.                  *** |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

Table          of Contents

----

**TBS      INTERNATIONAL LIMITED & SUBSIDIARIES**

**Signatures**

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