20-F

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 20-F

	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission file number 000-51559

STEALTHGAS INC.

(Exact name of Registrant as specified in its charter)

Republic of the Marshall Islands

(Jurisdiction of incorporation or organization)

331 Kifissias Avenue, Erithrea 14561 Athens, Greece

(Address of principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class				Name of each exchange on which registered
N/A				N/A

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, par value $0.01 per share

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
PURSUANT TO SECTION 15(d) OF THE ACT:
None

(Title of Class)

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2005 was:

Common Stock, par value $0.01 per share				14,000,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

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

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

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

    Yes        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 Exchange Act. (Check one):

	Large accelerated filer				Accelerated filer				Non-accelerated filer

Indicate by check mark which financial statement item the registrant has elected to follow.

	Item 17				Item 18

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

TABLE OF CONTENTS

				Page
FORWARD-LOOKING INFORMATION				1
PART I				2
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS				2
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE				2
ITEM 3. KEY INFORMATION				2
ITEM 4. INFORMATION ON THE COMPANY				19
ITEM 4A. UNRESOLVED STAFF COMMENTS				28
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS				28
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES				38
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS				42
ITEM 8. FINANCIAL INFORMATION				44
ITEM 9. THE OFFER AND LISTING				45
ITEM 10. ADDITIONAL INFORMATION				46
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				59
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES				59
PART II				60
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES				60
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS				60
ITEM 15. CONTROLS AND PROCEDURES				60
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT				60
ITEM 16B. CODE OF ETHICS				60
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES				61
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES				61
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS				61
PART III				62
ITEM 17. FINANCIAL STATEMENTS				62
ITEM 18. FINANCIAL STATEMENTS				62
ITEM 19. EXHIBITS				62

i

Table of Contents

FORWARD-LOOKING INFORMATION

This Annual Report on Form 20-F includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as ‘‘forward-looking statements.’’ We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material.

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

	•	future operating or financial results;

	•	global and regional political conditions;

	•	statements about pending or recent acquisitions, business strategy and expected capital spending or operating expenses;

	•	competition in the marine transportation industry;

	•	statements about shipping market trends, including charter rates, factors affecting supply and demand and world fleet composition;

	•	future LPG prices and production;

	•	future supply and demand for LNG gas of which LPG is a byproduct;

	•	our ability to obtain additional financing; and

	•	expectations regarding vessel acquisitions.

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

1

Table of Contents

PART I

StealthGas Inc. is a Marshall Islands company that is referred to in this Annual Report on Form 20-F, together with its subsidiaries, as ‘‘StealthGas,’’ ‘‘the Company,’’ ‘‘we,’’ ‘‘us,’’ or ‘‘our.’’ This report should be read in conjunction with our consolidated financial statements and the accompanying notes thereto, which are included in Item 18 to this report.

Item 1.	Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2.	Offer Statistics and Expected Timetable

Not Applicable.

Item 3.	Key Information

Selected Consolidated Financial Data

The following table sets forth our selected consolidated financial data and other operating data. The table should be read together with ‘‘Item 5. Operating and Financial Review and Prospects.’’ The selected consolidated financial data of StealthGas is a summary of, is derived from and is qualified by reference to, our consolidated financial statements and notes thereto which have been prepared in accordance with U.S. generally accepted accounting principles, or US GAAP, and have been audited for the fiscal years ended December 31, 2004 and December 31, 2005 by Deloitte Hadjipavlou, Sofianos & Cambanis S.A., or Deloitte.

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

Our audited consolidated statements of income, consolidated statements of cash flows and consolidated statements of changes in shareholders’ equity for the years ended December 31, 2004 and 2005 and the consolidated balance sheets as of December 31, 2004 and 2005, together with the notes thereto, are included in ‘‘Item 18. Financial Statements’’ and should be read in their entirety.

2

Table of Contents

Selected Consolidated Financial and Other Data

				Period from October 12, 2004 through December 31, 2004 (restated)				Year ended December 31, 2005
INCOME STATEMENT DATA
Revenues:
Voyage revenues				$	2,048,006			$	36,644,591
Operating expenses:
Voyage expenses					341,203				2,688,155
Vessels operating expenses					759,010				9,095,576
Dry-docking costs					—				470,384
Management fees					111,540				1,473,080
General and administrative expenses					35,100				779,539
Depreciation					264,458				5,611,942
Total expenses					1,511,311				20,118,676
Income from operations					536,695				16,525,915
Interest and finance costs, net					—				(2,685,207	)
Loss on derivative					—				(67,000	)
Interest income					47				780,434
Foreign exchange loss					(5,534	)			(18,091	)
Other expenses, net					(5,487	)			(1,989,864	)
Net income				$	531,208			$	14,536,051
Earnings per share, basic and diluted				$	0.09			$	1.84
Weighted average number of shares outstanding					6,000,000				7,906,849

				December 31,
				2004 (restated)				2005
BALANCE SHEET DATA (at period end)
Current assets, including cash				$	1,316.069			$	26,016,248
Total assets					40,617,369				256,978,768
Current liabilities					3,234,013				20,725,441
Derivative liability					—				67,000
Total long-term debt, including current portion					—				97,706,000
Total stockholders' equity					37,383,356				151,107,327
OTHER FINANCIAL DATA
Net cash provided by operating activities				$	598,710			$	24,414,729
Net cash used in investing activities					(37,415,758	)			(197,780,709	)
Net cash provided by financing activities					36,817,048				196,576,223
FLEET DATA
Average number of vessels(1)					2.3				11.9
Total voyage days for fleet(2)					208				4,288
Total time charter days for fleet(3)					96				4,105
Total spot market days for fleet(4)					112				183
Total calendar days for fleet(5)					208				4,334
Fleet utilization(6)					100	%			99	%
AVERAGE DAILY RESULTS
Time charter equivalent(7)				$	5,377			$	7,919
Vessel operating expenses(8)					2,712				2,099
General and administrative expenses					169				180
Management fees					390				340
Total vessel operating expenses(9)					3,271				2,279

3

Table of Contents

(1)	Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

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

(3)	Total time charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.

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

(5)	Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.

(6)	Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.

(7)

Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

(8)	Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.

(9)	Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

Capitalization and Indebtedness

Not Applicable.

Reasons For the Offer and Use of Proceeds

Not Applicable.

Risk Factors

Risks Related To Our Industry

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

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

The degree of charter rate volatility among different types of gas carriers has varied widely. To the extent we have vessels in the spot market, we are exposed to changes in spot rates for gas carriers and such changes can affect our earnings and the value of our gas carriers at any given time. There is no assurance that as our period charters expire that they will be extended or renewed on favorable terms.

In addition, when LPG vessel prices are considered to be low, companies not usually involved in shipping may make speculative vessel orders, thereby increasing the LPG shipping supply, satisfying demand sooner and potentially suppressing charter rates. Any of the foregoing factors could have an adverse effect on our revenues, profitability and financial position.

4

Table of Contents

Charter rates for LPG carriers have recently reached high levels and future demand for LPG carriers and charter rates will depend on continued economic growth in the world economy and demand for LPG product transportation that exceeds the capacity of the growing worldwide LPG carrier fleet's ability to match it

We believe that the future demand for LPG carriers and the charter rate levels for LPG carriers will depend upon continued economic growth in the world's economy, particularly in the economies of China, India and Southeast Asia, and upon seasonal and regional changes in demand and changes to the capacity of the world fleet. The capacity of the world fleet seems likely to increase and there can be no assurance that economic growth will continue. Adverse economic, political, social or other developments could have a material adverse effect on world economic growth and thus on our business and results of operations.

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

The factors that influence demand for our vessels include:

	•	supply and demand for LPG products;

	•	global and regional economic conditions;

	•	the distance LPG products are to be moved by sea;

	•	availability of alternative transportation means; and

	•	changes in seaborne and other transportation patterns.

The factors that influence the supply of vessel capacity include:

	•	the number of newbuilding deliveries;

	•	the scrapping rate of older vessels;

	•	LPG carrier prices;

	•	changes in environmental and other regulations that may limit the useful lives of vessels; and

	•	the number of vessels that are out of service.

Any material increase in the supply of LPG carrier capacity without a corresponding growth in LPG carrier demand could have a material adverse effect on the employment of our LPG fleet and on prevailing charter rates and could accordingly adversely affect our business, financial condition and operating results.

Various economic factors could materially adversely affect our business, financial position and results of operations, as well as our future prospects

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

5

Table of Contents

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

Our growth depends on continued growth in world and regional demand for LPG products and LPG shipping, all of which could be adversely affected by a number of factors, such as:

	•	increases in the cost of petroleum and LNG from which LPG is derived;

	•	increases in the production and demand for industrial and residential area petroleum gas in areas linked by pipelines to consuming areas, or the conversion of existing non-petroleum gas pipelines to petroleum gas pipelines in those markets;

	•	decreases in the consumption of LPG or LNG due to increases in its price relative to other energy sources or other factors making consumption of LPG or LNG less attractive;

	•	availability of new, alternative energy sources;

	•	a reduction in global or general industrial activity specifically in the plastics and chemical industry; and

	•	adverse global or regional economic or political conditions, particularly in LPG consuming regions, which could reduce energy consumption.

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

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

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results, which could affect the amount of dividends that we pay to our stockholders from quarter-to-quarter. The LPG carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues may be stronger in fiscal quarters ended December 31 and March 31, and conversely, our revenues may be weaker during the fiscal quarters ended June 30 and September 30. This seasonality could materially affect our operating results and cash available for distribution to our stockholders as dividends in the future.

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

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

Because the market value of our vessels are currently at high levels and may fluctuate significantly, we may incur losses when we sell our vessels, which may adversely affect our earnings and possibly lead to defaults under our loan agreements

The market value of our vessels, which are currently at high levels, may fluctuate depending on a number of factors including:

	•	general economic and market conditions affecting the shipping industry;

	•	age, sophistication and condition of our vessels;

	•	types and sizes of vessels;

6

Table of Contents

	•	availability of other modes of transportation;

	•	cost and delivery of schedules for newbuildings;

	•	governmental and other regulations;

	•	supply and demand for LPG products;

	•	prevailing level of LPG charter rates; and

	•	technological advances.

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

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our financial conditions and results of operations

Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because those laws and regulations are often revised, we cannot predict the ultimate cost of complying with them or the impact they may have on the resale prices or useful lives of our vessels. Additional rules and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which could materially adversely affect our operations. We are also required by various governmental and quasi-governmental agencies to obtain permits, licenses and certificates with respect to our operations. These permits, licenses and certificates may be issued or renewed with terms that could materially and adversely affect our operations.

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA 90 applies to discharges of any oil from a vessel, including discharges of fuel and lubricants from an LPG carrier. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its 200 nautical mile exclusive economic zone. Our gas carriers will not be carrying oil in bulk as cargo, and will therefore not be subject to oil spill liability under the provisions of OPA 90 (except in the case of a discharge of fuel oil or bunkers). Gas carriers, however, are considered ‘‘vessels’’ for purposes of OPA financial responsibility requirements. Under OPA, vessel owners, operators and bareboat charterers are ‘‘responsible parties’’ and are jointly, severally and strictly liable (unless the discharge of pollutants results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of pollutants from their vessels. See ‘‘Environmental and Other Regulation.’’

The International Maritime Organization (the ‘‘IMO’’), which is an agency of the United Nations, has adopted final regulations that are designed to reduce pollution in international waters, both from accidents and from routine operations. These regulations address oil discharges, ballasting and unloading operations, sewage, garbage, and air emissions. In complying with OPA 90 and the IMO regulations and other regulations that may be adopted, including regulations governing the safety, construction, equipment, operation and liability of gas carriers, shipowners and operators may be required to incur additional costs in meeting new maintenance and inspection requirements, in developing contingency plans for potential spills, and in obtaining insurance coverage.

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

7

Table of Contents

Code requires shipowners and bareboat charterers to develop and maintain an extensive ‘‘Safety Management System’’ that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject the owner or charterer to increased liability, may decrease available insurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports. Currently, each of the vessels in our fleet is ISM Code-certified. Because these certifications are critical to our business, we place a high priority on maintaining them. For this reason, we believe it is highly unlikely that such certifications could be discontinued. However, there can be no assurance that such certifications will be maintained indefinitely.

We currently maintain, for each of our vessels, pollution liability coverage insurance in the amount of $1.0 billion per incident. In addition, we carry hull and machinery and protection and indemnity insurance to cover the risks of fire and explosion. Given the relatively small amount of bunkers our vessels carry, we believe that a spill of oil from the vessels should not be catastrophic. However, under certain circumstances, fire and explosion could result in a catastrophic loss. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. If the damages from a catastrophic spill exceeded our insurance coverage, it would have a severe effect on us and could possibly result in our insolvency.

We believe that regulation of the shipping industry will continue to become more stringent and more expensive for us and our competitors. Substantial violations of applicable requirements or a catastrophic release from one of our vessels could have a material adverse impact on our financial condition and results of operations.

Our vessels are subject to periodic inspections by a classification society

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. Our fleet is currently classed with Bureau Veritas, Nippon Kaiji Kyokai, or NKK, the American Bureau of Shipping, Det Norske Veritas and RINA SpA.

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

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

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

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

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

8

Table of Contents

Governments could requisition our vessels during a period of war or emergency, resulting in loss of revenues

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

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

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

	•	marine accident or disaster;

	•	piracy and terrorism;

	•	explosions;

	•	environmental accidents;

	•	pollution;

	•	loss of life;

	•	cargo and property losses or damage; and

	•	business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions.

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

Our vessels may suffer damage and we may face unexpected drydocking and repair costs, which could affect our cash flow and financial condition

If our vessels suffer damage, they may need to be repaired at a shipyard facility. The costs of drydocking and repairs are unpredictable and can be substantial. We may have to pay drydocking and repair costs that our insurance does not cover. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would have an adverse effect on our cash flow and financial condition. We do not intend to carry business interruption insurance.

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

We are an international company and primarily conduct our operations outside the United States. Changing economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered affect us. In the past, political conflicts, particularly in the Arabian Gulf, resulted in attacks on vessels, mining of waterways and other efforts to disrupt shipping in the area. For example, in October 2002, the vessel Limburg was attacked by terrorists in Yemen. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Following the terrorist attack in New York City on September 11, 2001, and the military response of the United States, including the recent conflict in Iraq, the likelihood of future acts of terrorism may increase, and our vessels may face higher risks of being attacked. In addition, future hostilities or other political instability in regions where our vessels trade could affect our trade patterns and adversely affect our operations and performance. Furthermore, future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an

9

Table of Contents

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

Terrorist attacks, or the perception that LPG or LNG facilities and LPG or LNG carriers are potential terrorist targets, could materially and adversely affect the continued supply of LPG and LNG to the United States and to other countries. Concern that LPG and LNG facilities may be targeted for attack by terrorists has contributed to a significant community and environmental resistance to the construction of a number of LNG facilities, primarily in North America. If a terrorist incident involving a gas facility or gas carrier did occur, the incident may adversely affect necessary LPG facilities or LNG facilities currently in operation.

Risks Related To Our Business

Because we have a limited operating history, our limited historical financial and operating data may not be a reliable indicator of our prospects and future performance and may not be sufficient to evaluate our business plan

We have a limited operating history. The consolidated financial statements included in this report on Form 20-F reflect the historical business activities of our vessel-owning companies both before and after their acquisition by us. Our consolidated financial statements have been presented as if the vessel-owning companies were our consolidated subsidiaries as of the dates indicated in our consolidated financial statements and using the combined historical carrying costs of the assets and the liabilities of such vessel-owning companies. Our consolidated financial statements cover only the period from October 12, 2004 to December 31, 2004 and the year ended December 31, 2005. Accordingly, we have only a limited operating history upon which you can evaluate our prospects and future performance. These periods covered by our consolidated financial statements may be too short to determine whether our business will succeed. Our prospects may be adversely affected by the risks, expenses and difficulties frequently encountered in the operation of a new business in an evolving and competitive industry.

Dependence on our relationship with the Vafias Group and Stealth Maritime

We currently do not have any salaried employees, although we intend to continue to reimburse our fleet manager, Stealth Maritime, for the salaries of our CEO and CFO. As of March 31, 2006, Stealth Maritime has served as the technical manager for one of the vessels in our fleet while subcontracting the technical management of the remaining vessels in our fleet to third party managers. We are accordingly dependent upon our fleet manager, Stealth Maritime, for the administration, chartering and operations supervision of our fleet. Stealth Maritime is a privately-owned company controlled by the Vafias Group and about which there is little public information. We depend on our relationship with the Vafias Group for:

	•	our recognition and acceptance in the LPG carrier sector, including our ability to attract charterers;

	•	relations with charterers and charter brokers;

	•	operational expertise; and

	•	management experience.

The loss of Stealth Maritime's services or its failure to perform its obligations to us properly for financial or other reasons could materially and adversely affect our business and the results of our operations. Although we may have rights against Stealth Maritime if it defaults on its obligations to us, you will have no recourse against Stealth Maritime. In addition, we cannot assure you that we will be able to find a replacement manager on terms as favorable as those currently in place with Stealth Maritime. Further, we expect that we will need to seek approval from our lenders to change our manager.

We depend on third party managers to manage our fleet

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

10

Table of Contents

to perform their obligations could materially and adversely affect the results of our operations. Although we may have rights against these managers if they default on their obligations, you will have no recourse against these parties. In addition, we cannot assure you that we will be able to find replacement technical managers on terms as favorable as those currently in place. Further, we expect that we will need to seek approval from our lenders to change these third party managers.

We may enter into certain significant transactions with companies affiliated with the Vafias Group which may result in conflicts of interests

In addition to our management contract with Stealth Maritime, a company controlled by the Vafias Group and the Vafias family, of which our CEO is a member, we may enter into other transactions with companies affiliated with the Vafias Group. Such transactions could create conflicts of interest that could adversely affect our business or your interests as stockholders of our common stock, as well as our financial position and results of operations, as well as our future prospects.

Our directors and officers may in the future hold direct or indirect interests in companies that compete with us

Our directors and officers each have a history of involvement in the shipping industry and may in the future, directly or indirectly, hold investments in companies that compete with us. In that case, they may face conflicts between their own interests and their obligations to us.

Stealth Maritime and companies affiliated with Stealth Maritime may acquire vessels that compete with our fleet

It is possible that Stealth Maritime or companies affiliated with Stealth Maritime could, in the future, agree to manage vessels that compete directly with ours. As long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier, which Stealth Maritime, its principals or any of their controlled affiliates may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. Were we, however, to decline any such opportunity offered to us or if we do not have the resources or desire to accept any such opportunity, Stealth Maritime could retain and manage the vessel. Furthermore, this right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. In such cases, they could compete with our fleet and may face conflicts between their own interests and their obligations to us. In addition, in the future, we may also consider diversifying into wet, dry or other gas shipping sectors. Any such vessels would be in competition with Stealth Maritime and companies affiliated with Stealth Maritime. Stealth Maritime might be faced with conflicts of interest with respect to their own interests and their obligations to us that could adversely affect our business and your interests as stockholders.

As our current charters expire, new charters at attractive rates may not be available which would have an adverse impact on our revenues and financial condition

Charter rates for LPG carriers are currently at their highest levels in recent years. In the remainder of 2006 and in 2007, we expect to derive the greater part of our revenues from period charters, including time and bareboat charters. When these current charters expire, it may not be possible to re-charter these vessels at similar rates and as a result, we may have to accept lesser rates or experience off-hire time for our vessels, which may adversely impact our revenues and financial condition.

We are dependent on the ability of our charterers to honor their commitments to us for all our revenues

We derive all our revenues from the payment of hire by charterers. If our charterers encounter financial difficulties and cannot pay us, or otherwise refuse to pay us, our recourse against them may be limited or may not be able to be undertaken in a timely fashion. Non-payment by charterers would have a material adverse effect on our revenues.

11

Table of Contents

As our fleet continues to grow in size, we will need to improve our operations and financial systems, staff and crew; if we cannot improve these systems or recruit suitable employees, our business and results of operations may be adversely affected

We have rapidly expanded our fleet in the past twelve months, and our current operating and financial systems may not be adequate as we implement our plan to continue to expand the size of our fleet, and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our technical managers to recruit suitable additional seafarers and shoreside administrative and management personnel. We cannot assure you that Stealth Maritime and those technical managers will be able to continue to hire suitable employees as we expand our fleet. Our LPG carriers require a technically skilled staff with specialized training. If the technical managers' crewing agents are unable to employ such technically skilled staff, they may not be able to adequately staff our vessels. If Stealth Maritime is unable to operate our financial and operations systems effectively or our technical managers are unable to recruit suitable employees as we expand our fleet, our results of operation may be adversely affected.

We depend upon a few significant customers for a large part of our revenues. The loss of one or more of these customers could adversely affect our financial performance

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

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

The acquisition of additional vessels imposes significant additional responsibilities on our management and staff, and may necessitate that we, and they, increase the number of personnel.

We intend to continue to grow our fleet. We may not be able to identify suitable vessels, acquire vessels on advantageous terms or obtain financing for such acquisitions. Our growth will depend on:

	•	locating and acquiring suitable vessels;

	•	identifying and completing acquisitions or joint ventures;

	•	integrating any acquired business successfully with our existing operations;

	•	expanding our customer base;

	•	managing our expansion; and

	•	obtaining required financing.

Growing our business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtaining additional qualified personnel and managing relationships with customers and our commercial and technical managers and integrating newly acquired vessels into existing infrastructures. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection therewith.

We may be unable to attract and retain key management personnel and other employees in the LPG carrier industry, which may negatively affect the effectiveness of our management and our results of operation

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

12

Table of Contents

addition, Harry Vafias is a member of the Vafias family, which controls the Vafias Group, which in turn controls Stealth Maritime, our fleet manager. Our success will depend upon our and Stealth Maritime's ability to hire and retain qualified managers to oversee our operations. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not have employment agreements directly with our CEO or Chief Financial Officer, who are technically employees of Stealth Maritime, our fleet manager, although under our management agreement with Stealth Maritime, our relationship with each of our CEO and Chief Financial Officer is governed by terms substantially similar to those typically included in employment agreements. We do not intend to maintain ‘‘key man’’ life insurance on any of our officers.

Our CEO has limited experience running a public company

While our CEO, Harry Vafias, age 28, has been actively involved in the management and operation of vessels for several years as an employee of the Vafias Group, he has not had prior experience as a CEO of a public company. Mr. Vafias will have to rely on the experience of the Vafias Group for the management of our vessels, as well as the advice and oversight of the Board of Directors, in his role as our CEO.

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

We have recently incurred additional debt to acquire more vessels and the need to service the indebtedness may impact our profitability and cash available for growth of our fleet, working capital and dividends. Additionally, an increase in the present interest rate levels may increase the cost of servicing our indebtedness with similar results.

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

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

Our loan agreements or other financing arrangements contain restrictive covenants that may limit our liquidity and corporate activities

Our loan agreements impose, and our future financing arrangements may impose, operating and financial restrictions on us. These restrictions may limit our ability to:

	•	incur additional indebtedness;

	•	create liens on our assets;

	•	sell capital stock of our subsidiaries;

	•	make investments;

	•	engage in mergers or acquisitions;

	•	pay dividends; and

	•	make capital expenditures.

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

	•	maintain an aggregate minimum cash balance with Fortis Bank of at least $3.0 million;

	•	ensure that our ratio of our total liabilities less total stockholders' equity to total assets does not exceed 0.80 to 1.0 at any time; and

13

Table of Contents

	•	maintain a ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan of at least 1.25 to 1.

As of December 31, 2005, our ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan was 1.90 to 1.

The DnB NOR Bank loan agreement requires us to maintain a ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan of at least 1.25 to 1. Under the DnB NOR Bank loan agreement, we are also required to ensure that the ratio of our total net debt to the total value of our adjusted assets less cash does not exceed 0.80 to 1.0 at any time and that the ratio of our consolidated EBITDA to our consolidated gross interest expense be at least 2.5.

As of December 31, 2005, our ratio of the aggregate market value of the vessels securing the loan to the principal amount of the loan was 1.66 to 1, the ratio of our total net debt to the total value of our adjusted assets less cash was 0.31 to 1.0 and the ratio of our consolidated EBITDA to our consolidated gross interest expense was 7.5.

As a result of the restrictions in our loan agreements, or similar restrictions in our future financing arrangements with respect to future vessels which we have yet to identify, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours, and we cannot guarantee that we will be able to obtain their permission when needed. This may prevent us from taking actions that we believe are in our best interest.

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

Our ability to obtain additional debt financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operation and our ability to implement our business strategy.

Because we generate all of our revenues in United States dollars but incur a significant portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations

We generate all of our revenues in United States dollars and a portion, depending on the trade routes, of our vessels' expenses in currencies other than United States dollars. This difference could lead to fluctuations in net income due to changes in the value of the United States dollar relative to the other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the United States dollar falls in value can increase, decreasing our net income. We have not hedged these risks. Our operating results could suffer as a result.

In the highly competitive international LPG carrier market, we may not be able to compete for charters with new entrants or established companies with greater resources

We deploy our vessels in a highly competitive market that is capital intensive. Competition arises primarily from other vessel owners, some of which have substantially greater resources than we do. Competition for the transportation of LPG can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its managers to the charterers. Competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer more competitive prices and fleets.

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

Unlike many other shipping companies, which may carry drybulk, crude oil and oil products, we currently depend primarily on the transport of LPG. Substantially all of our revenue is derived from a

14

Table of Contents

single source — the seaborne transport of LPG — and our lack of a diversified business model could adversely affect us if the LPG seaborne transport business fails to perform to our expectations.

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

In the future, we may expand into dry, wet or other gas shipping sectors if opportunities arise. We have limited experience in these sectors and an inability to successfully execute such expansion plans could:

	•	be costly;

	•	distract us from our LPG carrier business; and

	•	divert management resources,

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

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

Our examination of secondhand vessels, which may not include physical inspection prior to purchase, does not provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties on secondhand vessels.

In general, the costs of maintaining a vessel in good operating condition increase with its age. The average age of the 24 LPG carriers in our fleet is approximately 10.8 years. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we cannot be certain that the sales prices will equal at least their carrying values at that time.

The shipping industry has inherent operational risks that may not be adequately covered by our insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance coverage, insurance and war risk insurance for our fleet. We can give no assurance that we are adequately insured against all risks. We may not be able to obtain adequate insurance coverage for our fleet in the future. The insurers may not pay particular claims. Even if our insurance coverage is adequate, we may not be able to timely obtain a replacement vessel in the event of a loss. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs or lower our revenue.

Our existing major stockholder effectively controls the outcome of matters on which our stockholders are entitled to vote and his interests may be different from yours

Our current major stockholder, a company controlled by our CEO, owns approximately 42.9% of our outstanding common stock and effectively controls the outcome of matters on which our stockholders are entitled to vote, including the election of our entire Board of Directors and other significant corporate actions. The interests of this stockholder may be different from your interests.

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

Under the United States Internal Revenue Code of 1986, as amended, or the Code, 50% of the gross shipping income of vessel owning or chartering corporations, such as our subsidiaries, that is

15

Table of Contents

attributable to transportation that begins or ends, but does not both begin and end, in the United States is characterized as United States shipping income. United States shipping income is subject to either a (i) 4% United States federal income tax without allowance for deductions or (ii) taxation at the standard United States federal income tax rates (and potentially to a 30% branch profits tax), unless derived by a corporation that qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder.

Generally, our subsidiaries will qualify for this exemption for a taxable year if our shares are treated as ‘‘primarily and regularly traded’’ on an established securities market in the United States. Our shares of common stock will be so treated if (i) the aggregate number of our shares of common stock traded during such year on an established securities market in the United States exceeds the aggregate number of our shares of common stock traded during that year on established securities markets in any other single country, (ii) either (x) our shares of common stock are regularly quoted during such year by dealers making a market in our shares or (y) trades in our shares of common stock are effected, other than in de minimis quantities, on an established securities market in the United States on at least 60 days during such taxable year and the aggregate number of our shares of common stock traded on an established securities market in the United States during such year equals at least 10% of the average number of our shares of common stock outstanding during such taxable year and (iii) our shares of common stock are not ‘‘closely held’’ during such taxable year. For these purposes, our shares of common stock will be treated as closely held during a taxable year if, for more than one-half the number of days in such taxable year, one or more persons each of whom owns either directly or under applicable attribution rules, at least 5% of our shares of common stock, own, in the aggregate, 50% or more of our shares of common stock, unless we can establish, in accordance with applicable documentation requirements, that a sufficient number of the shares of common stock in the closely-held block are owned, directly or indirectly, by persons that are residents of foreign jurisdictions that provide United States shipping companies with an exemption from tax that is equivalent to that provided by Section 883 to preclude other stockholders in the closely-held block from owning 50% or more of the closely-held block of shares of common stock.

We believe that it may currently be the case, and may be the case in the future, that, one or more persons each of whom owns, either directly or under applicable attribution rules, at least 5% of our shares of common stock own, in the aggregate, 50% or more of our shares of common stock. In such circumstances, we and our subsidiaries may qualify for the exemption provided in Section 883 of the Code only if enough of the closely-held block of our shares of common stock was owned or treated as owned by ‘‘qualified stockholders’’ so it could not be the case that, for more than half of the days in our taxable year, the shares of common stock in the closely-held block not owned or treated as owned by qualified stockholders represented 50% or more of our shares of common stock. For these purposes, a ‘‘qualified stockholder’’ includes an individual that owns or is treated as owning shares of our common stock and is a resident of a jurisdiction that provides an exemption that is equivalent to that provided by Section 883 of the Code and certain other persons; provided in each case that such individual or other person complies with certain documentation and certification requirements set forth in the Section 883 regulations and designed to establish status as a qualified stockholder.

Our CEO, who currently, under applicable constructive ownership rules owns approximately 42.9% of our shares of common stock has entered into an agreement with us regarding his compliance, and the compliance by certain entities that he controls and through which he owns our shares, with the certification procedures designed to establish status as a qualified stockholder. In certain circumstances, his compliance and the compliance of such entities he controls with the terms of that agreement may enable us and our subsidiaries to qualify for the benefits of Section 883 even where persons each of whom owns, either directly or under applicable attribution rules, 5% or more of our shares own, in the aggregate, more than 50% of our outstanding shares. There can be no assurance, however, that his compliance and the compliance of such entities he controls with the terms of that agreement will enable us or our subsidiaries to qualify for the benefits of Section 883.

The entities that own our vessels that we acquired through stock acquisitions in 2005 may not qualify for the benefits of Section 883 for 2005, with the result that United States federal tax, as

16

Table of Contents

described below, may apply if such vessels made voyages in 2005 that began or ended in the United States. We do not believe that such vessels made such a voyage.

If our subsidiaries do not qualify for the exemption under Section 883 of the Code for any taxable year, they would be subject for those years to the 4% United States federal income tax on their gross United States shipping income or, in certain circumstances to net income taxation at the standard United States federal income tax rates (and potentially also to a 30% branch profits tax). The imposition of such tax could have a negative effect on our business and would result in decreased earnings available for distribution to our stockholders.

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

A foreign corporation will be treated as a ‘‘passive foreign investment company,’’ or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of ‘‘passive income’’ or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of ‘‘passive income.’’ For purposes of these tests, ‘‘passive income’’ includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute ‘‘passive income’’ and working capital and similar assets held pending investment in vessels will generally be treated as an asset which produces passive income. United States stockholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

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

There is, however, no direct legal authority under the PFIC rules addressing our current and proposed method of operation. Accordingly, no assurance can be given that the United States Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we have been, are or will become a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

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

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States stockholders would face adverse United States tax consequences. Under the PFIC rules, unless those stockholders make an election available under the Code (which election could itself have adverse consequences for such stockholders, as discussed below under Item 10 ‘‘Tax Considerations — United States Federal Income Taxation of United States Holders’’), such stockholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our shares of common stock, as if the excess distribution or gain had been recognized ratably over the stockholder's holding period of our shares of common stock. See Item 10 ‘‘Tax Considerations — United States Federal Income Tax Considerations — United States Federal Income Taxation of United States Holders’’ for a

17

Table of Contents

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

We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Stockholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public stockholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction.

It may be difficult to enforce service of process and enforcement of judgments against us and our officers and directors

We are a Marshall Islands company, and our executive offices are located outside of the United States in Athens, Greece. All but one of our directors and officers reside outside of the United States, and most of our assets and their assets are located outside the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in the United States courts against us or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws.

There is also substantial doubt that the courts of the Marshall Islands or Greece would enter judgments in original actions brought in those courts predicated on United States, federal or state securities laws.

Risks Related To Our Shares of Common Stock

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

We intend to declare and pay dividends to stockholders quarterly in amounts our Board of Directors determines are appropriate. We made a dividend payment of $0.1875 per share in January 2006. However, we could incur expenses, obligations or liabilities that would reduce or eliminate the cash we have available for distribution as dividends. Our loan agreements, including the loan agreements with Fortis Bank and DnB NOR Bank, or other financing arrangements, as well as Marshall Islands law, may also restrict or prohibit our declaration and payment of dividends under some circumstances. There can be no assurance that we will pay regular quarterly dividends in the future. Such dividends as we do pay may be in amounts less than the $0.1875 per share dividend we declared and paid in January 2006.

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

In addition, the declaration and payment of dividends will be subject at all times to the discretion of our Board of Directors. The timing and amount of dividends will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements or other financing arrangements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends.

18

Table of Contents

Anti-takeover provisions in our organizational documents could make it difficult for our stockholders to replace or remove our current Board of Directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock

Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our stockholders to change the composition of our Board of Directors in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable.

These provisions include:

	•	authorizing our Board of Directors to issue ‘‘blank check’’ preferred stock without stockholder approval;

	•	providing for a classified Board of Directors with staggered three-year terms;

	•	prohibiting cumulative voting in the election of directors;

	•	authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of 80% of the outstanding shares of our common stock entitled to vote for the directors;

	•	limiting the persons who may call special meetings of stockholders;

	•	establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and

	•	prohibiting certain transactions with interested stockholders.

These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

Item 4.	Information on the Company

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

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

Business Overview

We own a fleet of LPG carriers providing international seaborne transportation services to LPG producers and users. We carry various petroleum gas products in liquefied form, including propane, butane, butadiene, isopropane, propylene and vinyl chloride monomer, which are all byproducts of the production of crude oil and natural gas. We believe that we have established a reputation as a safe, cost efficient operator of modern and well-maintained LPG carriers. We also believe that these attributes, together with our strategic focus on meeting our customers’ chartering needs, has contributed to our ability to attract leading charterers as our customers and to our success in obtaining charter renewals. We are managed by Stealth Maritime, a privately owned company controlled by the Vafias Group.

19

Table of Contents

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

Our fleet as of March 31, 2006

Year Built

Vessel Size (cbm)

Type of LPG Carrier

Delivery Date

Employment Status

Expiration of Charter

Monthly Charter Rate

Gas Cathar(1)

2001

7,517

fully- pressurized

October 2005

time charter

August 2007

$

365,000

Gas Marathon

1995

6,572

fully- pressurized

November 2005

bareboat

October 2007

220,000

Gas Chios

1991

6,562

fully- pressurized

October 2005

time charter

March 2007

300,000

Gas Amazon

1992

6,526

fully- pressurized

May 2005

time charter

May 2006

420,000

Gas Monarch(2)

1997

5,018

fully- pressurized

December 2005

time charter

June 2007

295,000

Gas Emperor

1995

5,013

fully- pressurized

February 2005

time charter

June 2007

245,000

Birgit Kosan

1995

5,012

fully- pressurized

April 2005

bareboat

April 2007

190,000

Catterick

1995

5,001

fully- pressurized

November 2005

time charter

February 2007

300,000

Gas Sincerity

2000

4,123

fully- pressurized

November 2005

time charter

July 2006

285,000

Gas Spirit(3)

2001

4,112

fully- pressurized

December 2005

time charter

June 2007

195,000

Feisty Gas(4)

2001

4,111

fully- pressurized

December 2005

time charter

August 2006

199,000

Gas Courchevel

1991

4,109

semi- refrigerated

November 2004

time charter

August 2006

395,000

Gas Prophet

1996

3,556

fully- pressurized

October 2004

spot

—

—

Gas Shanghai

1999

3,526

fully- pressurized

December 2004

spot

—

—

Gas Czar(5)

1995

3,510

fully- pressurized

February 2006

time charter

November 2007

171,250

Gas Legacy

1998

3,500

fully- pressurized

October 2005

time charter

April 2007

250,000

Gas Fortune

1995

3,500

fully- pressurized

February 2006

time charter

December 2006

184,000

Gas Eternity

1998

3,500

fully- pressurized

March 2006

spot

—

—

Gas Arctic(6)

1992

3,434

semi-refrigerated

April 2005

bareboat

April 2009

190,000

Gas Ice(6)

1991

3,434

semi- refrigerated

April 2005

bareboat

April 2008

174,250

Gas Crystal

1990

3,211

semi- refrigerated

November 2005

spot

—

—

Gas Oracle

1990

3,014

fully- pressurized

December 2005

time charter

May 2006

118,000

Gas Prodigy

1995

3,014

fully- pressurized

October 2005

time charter

December 2006

219,000

Gas Tiny

1991

1,320

semi- refrigerated

October 2004

time charter

December 2006

120,000

TOTAL

102,195

(1)	After August 2006, the vessel will be employed for a further one year period at a rate of $355,000.

(2)	As of February 24, 2005, the Sweet Dream was renamed the Gas Monarch.

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

(4)	As of April 3, 2006, the Feisty Gas was renamed the Gas Zael.

(5)	After November 2006, the rate for the vessel for the period between December 2006 and November 2007 will be agreed no later than the commencement of the charter extension for the 12 months and will range between a minimum of $190,000 and a maximum of $210,000.

(6)	These vessels are iceclass ships. Iceclass ships are capable of stable operations in extreme conditions and have ice-pushing capabilities.

20

Table of Contents

Commercial and Technical Management of Our Fleet

We have a five year management agreement with Stealth Maritime which expires in December 2009 under which Stealth Maritime will be responsible for the administration of our affairs and the commercial and technical management of our fleet. Under the agreement, we pay Stealth Maritime a management fee of $390 (based on an exchange rate of €1.00:US$1.25) per vessel operating under a voyage or time charter per day on a monthly basis in advance, pro rated for the calendar days we own the vessels. We pay a fee of $125 (based on an exchange rate of €1.00:US$1.25) per vessel per day for each of our vessels operating on bareboat charter. The management fee will be adjusted quarterly based on the United States dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We are also obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime will also earn a fee equal to 1.0% of the contract price of any vessel bought or sold by them on our behalf. In addition, as long as Stealth Maritime is our fleet manager, Stealth Maritime has granted us a right of first refusal to acquire any LPG carrier, which Stealth Maritime may acquire in the future. In addition, Stealth Maritime has agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to us. This right of first refusal does not prohibit Stealth Maritime from managing vessels owned by unaffiliated third parties in competition with us. Additional vessels that we may acquire in the future may be managed by Stealth Maritime, which is an affiliate of the Vafias Group, or by other unaffiliated management companies. In addition, we reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. During the year ended December 31, 2005, such compensation was in the aggregate amount of €513,559 (US$608,156, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) on an annualized basis. Of this amount, €188,862 ($223,651, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) was paid to our CEO and Chief Financial Officer since our CEO was paid for only four months of service and our Chief Financial Officer for only six months of service provided to us during the year ended December 31, 2005.

Stealth Maritime currently subcontracts the technical management of the vessels in our fleet, other than the Gas Eternity, which Stealth Maritime has technically managed as of March 31, 2006, to either V.Ships, a ship management company based in Cyprus, Tesma, a ship management company based in Singapore, Hanseatic Shipping Co. Ltd., or Hanseatic Shipping, a privately owned ship management company in Cyprus or Swan Shipping Corporation (Manila), or Swan Shipping, a ship management company based in the Philippines. These four technical managers, which Stealth Maritime will continue to supervise, are responsible for the day-to-day activities of those vessels including the operation, crewing, maintenance and repair of our ships; they also must ensure that our vessels’ operations comply with environmental and other regulatory requirements. V.Ships is an international ship management company with offices in 26 countries. It services a fleet of over 600 vessels of all major vessel types. Since 2001, V.Ships has been the largest provider of independent ship management and related marine services to the shipping industry in the world. Tesma (Singapore) is one of the technical competence centers of Tesma Holding, a Danish alliance network of professional ship management companies currently providing full technical service to over 70 vessels and providing crews to over 150 vessels. Hanseatic Shipping has more than 230 ships in management including containerships, bulk carriers, oil tankers, gas carriers, RoRos and multi-purpose ships. Hanseatic Shipping was the first off-shore ship management company in Cyprus and played an active role in establishing Cyprus as a leading ship management center. Swan Shipping, originally a joint venture company between Southwest Maritime Corporation of Manila and Navix Marine (S) Pte. Ltd. of Singapore, has been involved in ship management operations in the Philippines since 1995 and has provided full technical management services to 17 LPG carriers. The technical management agreements with V.Ships (Cyprus), Tesma (Singapore), Hanseatic Shipping and Swan Shipping may be terminated at any time upon three months' notice.

21

Table of Contents

The following chart illustrates the management of our fleet:

*	As of March 31, 2006, Stealth Maritime has served as the technical manager for one of our vessels, the Gas Eternity.

Crewing and Employees

We have no salaried employees, although we reimburse our fleet manager, Stealth Maritime, for the salaries of our CEO and CFO. Stealth Maritime ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that our vessels employ experienced and competent personnel.

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

Chartering of the Fleet

We, through Stealth Maritime, manage the employment of our fleet. We deploy our fleet between period charters, including time and bareboat charters which can last up to several years, and spot market charters (through voyage charters and short-term time charters), which generally last from one to six months, subject to market conditions. Period charters and short-term time charters are for a fixed period of time. A voyage charter is generally a contract to carry a specific cargo from a loading port to a discharging port for an agreed-upon total charge.

Vessels operating on period charter provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. As a result, during the time our LPG carriers are committed on period charters, we will be unable, during periods of improving charter markets, to take advantage of improved charter rates as we could if our LPG carriers were employed only on spot charters. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in LPG charter rates although we are then exposed to the risk of declining LPG carrier charter rates, which may have a materially adverse impact on our financial performance. If we commit vessels to period charters, future spot market rates may be higher or lower than those rates at which we have period chartered our vessels.

Customers

Our assessment of a charterer's financial condition and reliability is an important factor in negotiating employment for our vessels. Principal charterers include producers of LPG products, such as national, major and other independent energy companies and energy traders, and industrial users of those products. Our largest customer is Petredec Ltd., and our other customers include Dow Chemical

22

Table of Contents

Company, Finaval SpA, Petrobras and Shell. For the year ended December 31, 2005, approximately 69% of our revenue was derived from our top five charterers as follows:

Customer				Year Ended December 31, 2005
Petredec					32	%
Dow Chemical					11	%
Finaval					9	%
Petrobras					9	%
Shell					8	%

Environmental and other Regulations

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

A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (United States Coast Guard, harbor master or equivalent), classification societies, flag state administration (country of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses and certificates for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels.

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that will emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations; however, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, such future requirements may limit our ability to do business, increase our operating costs, force the early retirement of our vessels, and/or affect their resale value, all of which could have a material adverse effect on our financial condition and results of operations.

Environmental Regulation — International Maritime Organization (‘‘IMO’’)

Our vessels are subject to standards imposed by the International Maritime Organization, or ‘‘IMO’’ (the United Nations agency for maritime safety and the prevention of pollution by ships). In order to operate in the navigable waters of the IMO's member states, liquefied gas carriers must have an IMO Certificate of Fitness demonstrating compliance with construction codes for liquefied gas carriers. These codes, and similar regulations in individual member states, address fire and explosion risks posed by the transport of liquefied gases. Collectively, these standards and regulations impose detailed requirements relating to the design and arrangement of cargo tanks, vents, and pipes; construction materials and compatibility; cargo pressure; and temperature control.

In addition, we are subject to international conventions that regulate pollution in international waters and a signatory's territorial waters. Under the IMO regulations, gas carriers that comply with the IMO certification requirements are deemed to satisfy the requirements of Annex II of the International Convention for the Prevention of Pollution from Ships (‘‘MARPOL’’) applicable to transportation of chemicals at sea, which would otherwise apply to certain liquefied gases. The IMO revised the Annex II regulations that restrict discharges of ‘‘noxious liquid substances’’ during cleaning or deballasting operations. The revisions are scheduled to take effect in January 2007. As interpreted by the IMO at meetings in April 2005, these revisions will not impose further restriction on the types of substances gas carriers may carry under their gas carrier code certificates of fitness, nor will they

23

Table of Contents

require changes in the manner in which product tanks must be cleaned. In September 1997, the IMO adopted MARPOL Annex VI to address air pollution from ships. Annex VI was ratified in May 2004, and became effective in May 2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibit deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. Annex VI has been ratified by some, but not all IMO member states. Vessels that are subject to Annex VI must, if built before the effective date, obtain an International Air Pollution Prevention Certificate evidencing compliance with Annex VI not later than either the first dry docking after May 19, 2005, but no later than May 19, 2008. All vessels subject to Annex VI and built after May 19, 2005 must also have this Certificate. Options for implementing the requirements of Annex VI include use of low sulfur fuels, modifications to vessel engines, or the addition of post combustion emission controls. We have obtained International Oil Pollution Prevention Certificates for all of our vessels, and believe that maintaining compliance with Annex VI will not have an adverse financial impact on the operation of our vessels.

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

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

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA applies to discharges of any oil from a vessel, including discharges of fuel and lubricants from an LPG carrier. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its two hundred nautical mile exclusive economic zone. Although our gas carriers will not be carrying oil in bulk as cargo, and will therefore not be subject to liability under the provisions of OPA 90 (except in the case of a discharge of fuel oil or bunkers), gas carriers are considered ‘‘vessels’’ for purposes of OPA financial responsibility requirements discussed below.

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

	•	natural resources damage and the costs of assessment thereof;

	•	real and personal property damage;

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

	•	lost profits or impairment of earning capacity due to property or natural resources damage; and

	•	net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

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

24

Table of Contents

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

We currently maintain, for each of our vessels, pollution liability coverage insurance in the amount of $1 billion per incident. In addition, we carry hull and machinery and protection and indemnity insurance to cover the risks of fire and explosion. Given the relatively small amount of bunkers our vessels carry, we believe that a spill of oil from the vessels would not be catastrophic. However, under certain circumstances, fire and explosion could result in a catastrophic loss. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. If the damages from a catastrophic spill exceeded our insurance coverage, it would a severe effect on us and could possibly result in our insolvency.

OPA requires owners and operators of vessels to establish and maintain with the United States Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under the OPA. In December 1994, the United States Coast Guard implemented regulations requiring evidence of financial responsibility in the amount of $1,500 per gross ton, which includes the OPA limitation on liability of $1,200 per gross ton and the United States Comprehensive Environmental Response, Compensation, and Liability Act liability limit of $300 per gross ton. Under the United States Coast Guard regulations implementing OPA, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance, or guaranty. Under the OPA regulations, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessels in the fleet having the greatest maximum liability under OPA.

The United States Coast Guard's regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA 90 laws, including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses.

The United States Coast Guard's financial responsibility regulations may also be satisfied by evidence of surety bond, guaranty or by self-insurance. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the United States Coast Guard regulations by providing a financial guaranty evidencing sufficient self-insurance.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states, which have enacted such legislation, have not yet issued implementing regulations defining vessels owners' responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.

Environmental Regulation — Other Environmental Initiatives

The European Union is considering legislation that will affect the operation of vessels and the liability of owners for oil pollution. It is difficult to predict what legislation, if any, may be promulgated by the European Union or any other country or authority.

25

Table of Contents

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the Maritime Transportation Security Act of 2002, or MTSA, came into effect in the United States. To implement certain portions of the MTSA, in July 2003, the United States Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea, or SOLAS, created a new chapter of the convention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security or, ISPS, Code. Among the various requirements are:

	•	on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications;

	•	on-board installation of ship security alert systems;

	•	the development of vessel security plans; and

	•	compliance with flag state security certification requirements.

The United States Coast Guard regulations, intended to align with international maritime security standards, exempt non-United States vessels from MTSA vessel security measures provided such vessels have on board, by July 1, 2004, a valid International Ship Security Certificate (ISSC) that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code and ensure that our vessels attain compliance with all applicable security requirements within the prescribed time periods. We do not believe these additional requirements will have a material financial impact on our operations.

Classification and inspection

All our vessels are certified as being ‘‘in class’’ by Bureau Veritas, NKK, Det Norske Veritas, the American Bureau of Shipping and RINA SpA. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel. Every vessel’s hull and machinery is ‘‘classed’’ by a classification society authorized by its country of registry. The classification society certifies that the vessel has been built and maintained in accordance with the rules of such classification society and complies with applicable rules and regulations of the country of registry of the vessel and the international conventions of which that country is a member. Each vessel is inspected by a surveyor of the classification society every year, an annual survey, every two to three years, an intermediate survey, and every four to five years, a special survey. Vessels also may be required, as part of the intermediate survey process, to be dry-docked every 30 to 36 months for inspection of the underwater parts of the vessel and for necessary repair related to such inspection.

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

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

Most vessels are also drydocked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a ‘‘recommendation’’ which must be rectified by the ship owner within prescribed time limits.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as ‘‘in class’’ by a classification society which is a member of the International Association of

26

Table of Contents

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

Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

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

We also arranged increased value insurance for most of the vessels. Under the increased value insurance in case of total loss of the vessel we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the Hull and Machinery policy. Increased value insurance also covers excess liabilities which are not recoverable in full by the Hull and Machinery policies by reason of under insurance.

Protection and Indemnity Insurance

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

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

Competition

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

27

Table of Contents

average age of 10.8 years thus we believe we are well positioned from a competitive standpoint in terms of our vessels meeting the ongoing needs of increasingly discerning charterers. Also we now have the largest single-owned fleet in our sector which also in our view positions us well from the standpoint of charterers and competitors alike. However we believe the LPG shipping sector will continue to be highly competitive, and driven by both energy production and consumption. However due to our rapid expansion during 2005 we believe we have enhanced our competitive position within the industry and that we have increasingly gained the respect of our customer base.

Employees

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

Properties

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

Item 4A.	Unresolved Staff Comments

None.

Item 5.	Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Annual Report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under Item 3 "Key Information—Risk Factors" and elsewhere in this Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

Incorporated under the laws of the Republic of the Marshall Islands in December 2004, we are involved in providing international seaborne transportation services to LPG producers and users. We carry various petroleum gas products in liquefied form, including propane, butane, butadiene, isopropane, propylene and vinyl chloride monomer, which are all byproducts of the production of crude oil and natural gas. As of December 31, 2004, our fleet consisted of four LPG carriers, the first of which was delivered in October 2004. As of December 31, 2005, our fleet consisted of 21 vessels and has since grown to 24 vessels. We generated revenues from our LPG transportation business only during the period from October 12 through December 31 in 2004. As a result, comparisons of our results of operations for the years ended December 31, 2005 with the period ended December 31, 2004 are not meaningful or indicative of our future operating results. We took delivery of 17 LPG carriers in the year ended December 31, 2005. In October 2005, we completed an initial public offering of our shares of common stock in the United States and our shares of common stock began trading on the Nasdaq National Market.

We, through Stealth Maritime, manage the employment of our fleet. We intend to continue to deploy our fleet under period charters including time and bareboat charters, which can last up to several years, and spot market or voyage charters, which generally last from one to six months, as market conditions warrant. Period charters and short term time charters are for a fixed period of time.

	•	Charters and revenues.    Under a time charter, the charterer pays a fixed rate per day over the term of the charter; a time charter, including a short term time charter, may provide for rate adjustments and profit sharing. Under a bareboat charter, the charterer pays us a fixed rate for its use of our ship for the term of the charter. Under a voyage charter, we agree to transport a specified cargo from a loading port to a discharging port for a fixed amount.

28

Table of Contents

	•	Charters and expenses.    Under a time charter, we are responsible for the vessel's operating costs (crew, provisions, stores, lubricants, insurance, maintenance and repairs) incurred during the term of the charter, while the charterer pays voyage expenses (port, canal and fuel costs) that are unique to each particular voyage. Under a bareboat charter, the charterer is responsible for all vessel operating expenses and voyage expenses incurred during the term of the charter. Under a voyage or spot charter, we are responsible for both the vessel operating expenses and the voyage expenses incurred in performing the charter.

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

Factors Affecting Our Results of Operations

We believe that the important measures for analyzing trends in the results of our operations consist of the following:

	•	Calendar days.    We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenue and the amount of expense that we record during that period.

	•	Voyage days.    We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with major repairs, drydockings or special or intermediate surveys. The shipping industry uses voyage days (also referred to as available days) to measure the number of days in a period during which vessels actually generate revenues.

	•	Fleet utilization.    We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our calendar days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades or drydockings and other surveys.

	•	Cyclicality.    The international gas carrier market, including the transport of LPG, is cyclical with attendant volatility in profitability, charter rates and vessel values, resulting from changes in the supply of, and demand for, LPG carrier capacity.

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

	•	Seasonality.    The LPG carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues may be stronger in fiscal quarters ended December 31 and March 31 and relatively weaker during the fiscal quarters ended June 30 and September 30.

Basis of Presentation and General Information

Voyage Revenues

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

29

Table of Contents

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

Vessels operating on period charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot charter market during periods characterized by favorable market conditions. As a result, during the time our LPG carriers are committed on period charters we will be unable, during periods of improving charter markets, to take advantage of improving charter rates as we could if our LPG carriers were employed only on spot charters. Vessels operating in the spot charter market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improving charter rates, although we are then exposed to the risk of declining LPG carrier charter rates, which may have a materially adverse impact on our financial performance. If we commit vessels to time charters, future spot market rates may be higher or lower than those rates at which we have time chartered our vessels.

Voyage Expenses

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

Time Charter Equivalent

A standard maritime industry performance measure used to evaluate performance is the daily time charter equivalent, or daily TCE. Daily TCE revenues are voyage revenues minus voyage expenses divided by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter, as well as commissions. We believe that the daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of LPG carriers on time charter or on the spot market and presents a more accurate representation of the revenues generated by our LPG carriers. Our average daily TCE rate was $7,919 for the year ended December 31, 2005 and was $5,377 during the period ended December 31, 2004. The reasons for these changes are discussed below under ‘‘Results of operations— Year ended December 31, 2005 and the period from October 12, 2004 through December 31, 2004’’.

Vessel Operating Expenses

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

Management Fees

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

30

Table of Contents

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

General and Administrative Expenses

We incur general and administrative expenses which include our onshore vessel related expenses such as legal, accounting and professional expenses and other general vessel expenses. Our general and administrative expenses also include our direct compensation expenses and the value of non-cash executive services provided through, and other expenses arising from, our management agreement with Stealth Maritime, our directors' compensation and the value of the lease expense for the space we rent from Stealth Maritime.

Depreciation

We depreciate our LPG carriers on a straight-line basis over their estimated useful lives determined to be 30 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less the estimated scrap value of the vessels. We expense costs associated with drydockings and special and intermediate surveys as incurred.

Interest Expense

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

Results of operations

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

The average number of vessels in our fleet was 11.9 in the year ended December 31, 2005 compared to 2.3 in the period from October 12, 2004 through December 31, 2004, or the 2004 period.

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

The growth in revenue reflects principally the growth in the average number of vessels in our fleet from 2.3 vessels in the 2004 period to 11.9 vessels for the year ended December 31, 2005. During the year ended December 31, 2005, our fleet operated under time charters for a total of 4,105 days and under spot charters for a total of 183 days for a total of 4,288 voyage days and a fleet utilization of 99.9%. During the year ended December 31, 2005, the Gas Arctic, the Gas Ice, the Birgit Kosan and the Gas Marathon were employed on bareboat charters, which generally are for lower monthly amounts but in connection with which we are not responsible for voyage or operating expenses.

31

Table of Contents

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

VESSEL OPERATING EXPENSES — Vessel operating expenses were $9,095,576 for the year ended December 31, 2005 and were $759,010 in the 2004 period, reflecting an increase in crew wages and related expenses incurred as a result of the increase in the average number of vessels in our fleet compared to the 2004 period.

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

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

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

INTEREST AND FINANCE COSTS, NET — Net interest and finance costs were $2,685,207 for the year ended December 31, 2005, resulting primarily from indebtedness incurred to fund vessel acquisitions. We had no indebtedness outstanding in the 2004 period.

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

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

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

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

Liquidity and Capital Resources

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

We believe that, unless there is a major and sustained downturn in market conditions, our internally generated cash flows and the borrowings under our existing credit facilities will be sufficient to fund the operations of our fleet, including working capital requirements.

32

Table of Contents

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

Cash Flows

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

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

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

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

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

Revenue and Expenses.    Revenue and expenses resulting from each voyage or period time charter are accounted for on an accrual basis. Period charter revenues are recognized over the term of the charter as service is provided. Period charter revenues received in advance are recorded as liabilities until charter service is rendered. Under a voyage charter, the revenues and associated voyage costs are recognized on a pro-rata basis over the duration of the voyage. Voyage expenses comprise commissions, bunkers and port expenses. The impact of our method of recognizing voyage

33

Table of Contents

costs on a pro-rata basis is not materially different from a method of recognizing such costs as incurred. We will modify our policy in future periods in the event the difference between the two methods becomes material.

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

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

Impairment of long-lived assets.    We evaluate the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, we review certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. We determine undiscounted projected net operating cash flows for each vessel and compare it to the vessel carrying value. In the event that impairment occurred, we would determine the fair value of the related asset and we record a charge to operations calculated by comparing the asset's carrying value to the estimated fair market value. We estimate fair market value primarily through the use of third party valuations performed on an individual vessel basis.

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

Drydock costs.    Our vessels are required to be drydocked for major repairs and maintenance that cannot be performed while the vessel is operating approximately every 30 to 60 months. Costs expected to be incurred as part of the drydock include actual costs incurred at the drydock yard, cost of fuel consumed between the vessel's last discharge port prior to the drydock and the time the vessel leaves the drydock yard, cost of hiring riding crews to effect repairs on a ship and parts used in making such repairs that are reasonably made in anticipation of reducing the duration or cost of the drydock, cost of travel, lodging and subsistence of our personnel sent to the drydock site to supervise; and the cost of hiring a third party to oversee a drydock.

Allowance for doubtful accounts.    Revenue is based on contracted charter parties and although our business is with customers who we believe to be of the highest standard, there is always the possibility of dispute over terms and payment of freight. In such circumstances, we assess the recoverability of amounts outstanding and we estimate a provision if there is a possibility of non-recoverability. Although we believe our provisions to be based on fair judgment at the time of their creation, it is possible that an amount under dispute is not recovered and the estimated provision for doubtful recoverability is inadequate.

Vessels Acquisitions.    Our vessels are stated at cost, which consists of the contract price less discounts and any material expenses incurred upon acquisition (initial repairs, improvements, acquisition and expenditures made to prepare the vessel for its initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, and otherwise are charged to expenses as incurred.

We record all identified tangible and intangible assets associated with the acquisition of a vessel or liabilities at fair value. Where vessels are acquired with existing time charters, we allocate the

34

Table of Contents

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

Recent Accounting Pronouncements

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

In December 2004, the FASB issued SFAS No. 123R that will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123R replaces SFAS No. 123, ‘‘Accounting for Stock-Based Compensation’’, and supersedes APB 25. This Statement will be effective as of the beginning of the first annual reporting period that begins after June 15, 2005.

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

In May 2005, the FASB issued SFAS No. 154, ‘‘Accounting Changes and Error Corrections’’ which replaces Accounting Principles Board Opinion No. 20 ‘‘Accounting Changes’’ and SFAS No. 3, ‘‘Reporting Accounting Changes in Interim Financial Statements.’’ This statement applies to all voluntary changes in accounting principle and changes resulting from adoption of a new accounting pronouncement that does not specify transition requirements. SFAS 154 requires retrospective application to prior periods' financial statements for changes in accounting principle unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS 154 is effective for the accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 with early implementation permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this statement was issued. SFAS 154 is effective for us as of January 1, 2006 and is not expected to have a material impact on our financial statements.

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

35

Table of Contents

remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of FAS 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends FAS 140, to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

FAS No. 155 generally is effective for all financial instruments acquired or issued after the beginning of a company's first fiscal year that begins after September 15, 2006. The adoption of SFAS No. 155 is not expected to have a material impact on our financial statements.

Loan Agreements

We entered into a loan agreement dated March 16, 2005 with Fortis Bank in which it agreed, subject to certain funding conditions, to provide a credit facility of up to $54.0 million principally to partially finance or refinance the acquisition of our vessels. The borrowers under this loan agreement included our subsidiaries. The loan was fully drawn in May 2005. The interest rate under the loan agreement is the sum of LIBOR and a margin. The margin varies with the ratio of the outstanding balance of the loan to the aggregate market value of the vessels subject to mortgage in that period. If the ratio is equal to or lower than 60%, the interest rate will be 0.9% over LIBOR. If the ratio is higher than 60% but lower or equal to 70%, the interest rate will be 0.975% over LIBOR. If the ratio is higher than 70%, the interest rate will be 1.05% over LIBOR. We paid a non-refundable fee of $162,000 upon the signing of the loan agreement.

On June 10, 2005, the $3,580,500 portion of the Fortis Bank loan attributable to the Gas Prodigy was prepaid and Fortis Bank's security interest in the Gas Prodigy was released. As of December 31, 2005, $47,706,000 was outstanding under the loan agreement. We are obligated to repay the principal and interest under the credit facility through 2013 in 32 consecutive quarterly installments; our first installment payment was made in August 2005. Our quarterly installments of principal will be in an amount of $1,356,750 with a balloon installment of $7,003,500 due on the earlier of the eighth anniversary of the delivery date of the last ship or on May 30, 2013. In the event that one of the vessels securing the loan is sold or becomes a total loss, we will be obligated to prepay the relevant portion of the credit facility.

We entered into a loan agreement dated December 5, 2005 with DnB NOR Bank ASA in which it agreed to provide a credit facility of up to $50.0 million to partially finance or refinance the acquisition of the Gas Marathon, the Gas Sincerity, the Gas Cathar, the Gas Legacy, the Sweet Dream (renamed in February 2006 as the Gas Monarch) and the Gas Oracle. The DnB NOR Bank ASA loan was supplemented in February 2006 by a $14.0 million supplemental agreement dated February 27, 2006, increasing the full amount of available credit under that facility to $64.0 million. The $14.0 million was used to partially finance the acquisition of the Gas Czar and the Gas Eternity. The borrowers under this loan agreement were our ship-owning subsidiaries of the six vessels. As supplemented by the supplemental agreement, we are obligated to repay the principal and interest under the credit facility beginning in June 2006 through December 2015 in two semi-annual payments of $4,608,000 each, four semi-annual payments of $3,072,000 each, and 14 semi-annual payments of $2,304,000 each, plus a balloon payment of $10,240,000 payable together with the final installment. Under the terms of the DnB NOR Bank loan, as supplemented, the interest rate is the sum of LIBOR and a margin. The margin varies with the ratio of the outstanding balance of the loan to the aggregate market value of the vessels subject to mortgage in that period. If the ratio is equal to or lower than 130%, the interest rate will be 0.85% over LIBOR. If the ratio is between 130% and 150%, the interest rate will be 0.75% over LIBOR. If the ratio is equal to or higher than 150%, the interest rate will be 0.70% over LIBOR. We paid a non-refundable fee of $95,000 upon the signing of the DnB NOR Bank ASA loan agreement and a non-refundable fee of $28,000 upon the signing of the DnB NOR Bank supplemental agreement.

36

Table of Contents

Capital Expenditures

During the period ended December 31, 2004, four vessels acquired at a cost of $29.6 million by the Vafias Group were contributed to us by the Vafias Group for nominal consideration, and became part of our fleet. In addition, in 2004, deposits totaling $1.9 million were placed by the Vafias Group on the Gas Arctic and the Gas Ice, which were delivered in April 2005.

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

Research and development, patents and licenses

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

Trend information

Our results of operations depend primarily on the charterhire rates that we are able to realize. Charterhire rates paid for LPG carriers are primarily a function of the underlying balance between vessel supply and demand. The demand for LPG carrier capacity is determined by the underlying demand for LPG, ammonia and petrochemical gases, which are transported in LPG carriers, which in turn is influenced by trends in the global economy. The recent expansion of the supply of LPG commodities has been driven by the increased production of LNG, of which LPG is a byproduct. Although there can be no assurances, absent a major and sustained downturn in market conditions or significant unforeseeable changes in supply and demand of LPG vessels, charter rates are expected to remain relatively strong for the remainder of 2006.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

Contractual obligations as of December 31, 2005 were:

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

(1)

As of December 31, 2005, $47,706,000 principal amount was outstanding under the Fortis Bank loan agreement and $50,000,000 principal amount was outstanding under the DnB NOR Bank Loan. The original DnB NOR Bank loan was amended in February 2006 by a $14.0 million supplemental agreement increasing the full amount of available credit under that facility to $64.0 million. The following principal amounts under the Fortis Loan and the DnB NOR Bank Loan, as supplemented, are payable by us during the periods indicated: $14,643 payable within one year of December 31, 2005, $23,142 payable between one and three years of December 31, 2005, $20,070 payable between three and five years of December 31, 2005 and $53,851 payable more than five years after December 31, 2005.

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

37

Table of Contents

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

(3)

Under our management agreement with Stealth Maritime, we pay it $125 per vessel per day for vessels on bareboat charter and $390 per vessel per day for vessels not on bareboat charter. Following our acquisition of 17 vessels during the year ended December 31, 2005 and an additional three vessels in 2006, and based on the payment of a management fee of $390 per vessel per day, we expect to pay at least $2,602,000 per year to Stealth Maritime as management fees under the management agreement. We also will pay 1.25% of the gross freight, demurrage and charter hire collected from employment of our ships and 1% of the contract price of any vessels bought or sold on our behalf. In addition, we will reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. Such compensation is expected to be in the aggregate amount of €717,000 (US$850,000, based on the exchange rate of €1.00US:$1.1842 in effect on December 29, 2005) in the year 2006 on an annualized basis.

(4)	We lease office space from the Vafias Group. The initial lease term is three years beginning January 3, 2005 with three consecutive options to renew for a one-year term at our option thereafter.

(5)	In October 2005, we entered into a three year cancelable operating lease for an armored car. The initial term of the lease terminates in October 2008. During the period October 15, 2005 through December 31, 2005, our lease expense was $8,340.

(6)

The total purchase price for the two LPG carriers, the Gas Czar and the Gas Eternity, covered by the vessel agreements, is $22.7 million of which we paid an advance deposit of $983,000 on the Gas Czar during the year ended December 31, 2005. We took delivery of the Gas Czar in February 2006 and the Gas Eternity in March 2006 and paid the $21.7 million balance of the purchase prices that were due on delivery. Of that amount, $14.0 million was financed with additional indebtedness drawn down under the loan agreement with DnB NOR Bank. We entered into a memorandum of agreement on February 14, 2006 to acquire the Gas Fortune for a purchase price of $9.5 million, which was paid and delivered in February 2006.

Item 6.	Directors, Senior Management and Employees

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

Name				Age(1)				Positions				Year First Elected				Year Term Expires
Harry N. Vafias				28				President, CEO and Class III Director(2)					2005				2006
Andrew J. Simmons				50				Chief Financial Officer					—				—
Michael G. Jolliffe				56				Chairman of the Board, Class II Director					2005				2007
Thanassis J. Martinos				56				Class I Director					2005				2008
Miranda Xafa				52				Class III Director(3)					2005				2006
Markos Drakos				46				Class III Director(4)					2006				2006
Nikolaos Markomichelakis				43				Operations Manager(5)					—				—
George Koliopoulos				53				Technical Manager(5)					—				—

(1)	As of December 31, 2005.

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

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

(4)	Mr. Drakos was elected to the Board of Directors by the unanimous written consent of the Board of Directors on February 10, 2006, as a Class III Director and Chairman of the Audit Committee. As a Class III director, his term expires in 2006. Mr. Drakos will be put forward for re-election at the annual shareholder meeting scheduled for May 18, 2006.

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

Certain biographical information about each of these individuals is set forth below.

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

38

Table of Contents

of the world's largest ship brokering and shipping service groups. From 2000 until 2004, he worked at Brave Maritime and Stealth Maritime, companies providing comprehensive ship management services, where Mr. Vafias headed the operations and chartering departments of Stealth Maritime and served as manager for the sale and purchase departments of both Brave Maritime and Stealth Maritime. Mr. Vafias graduated from City University Business School in the City of London in 1999 with a B.A. in Management Science and from Metropolitan University in 2000 with a Masters degree in Shipping, Trade and Transport.

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

Michael G. Jolliffe is Chairman of our Board of Directors. He is a director of a number of companies in shipping, oil, textiles, telecommunications and other industries. He is Deputy Chairman of Tsakos Energy Navigation Limited, an oil and product tanker shipping company listed on the New York Stock Exchange. Mr. Jolliffe is also Vice-Chairman of both Klonatex S.A. and Naoussa Spinning Mills S.A., two companies quoted on the Athens Stock Exchange that together form the third largest integrated textiles company in Europe. Mr. Jolliffe is a Director of Lannet S.A., Greece's second largest telephone company, which is also quoted on the Athens Stock Exchange. Mr. Jolliffe is also Chairman of Wigham-Richardson Shipbrokers Ltd, one of the oldest established shipbroking companies in the City of London, and of Shipping Spares Repairs and Supplies Ltd, an Agency Company based in Piraeus, Greece. He is also joint president of Hanjin Euorbulk Ltd., a joint venture broking company with Hanjin Shipping of Korea. Additionally, Mr. Jolliffe is the President of Eurotrans Hermes Hellas S.A., the Greek agent of the Skoda Group for trams, buses and trains.

Thanassis J. Martinos is a member of our Board of Directors. He has had over 35 years of experience in the shipping industry having served as Co-Managing Director of Thenamaris Ships Management, a ship management company with over three decades of experience servicing major oil companies, traders and government agencies. Since 1991, Mr. Martinos has been the Managing Director of Eastern Mediterranean Maritime Ltd., a ship management company specializing in the management of tankers and dry bulk carriers that presently operates a fleet that exceeds 2.8 million dwt. Mr. Martinos holds a B.S. in Economics from Athens University.

Miranda Xafa is a member of our Board of Directors. Ms. Xafa is currently the Alternate Executive Director at the Board of the International Monetary Fund where she serves as the representative for countries such as Italy, Greece and Portugal. She previously worked as a staff member at the International Monetary Fund where she focused on the design and monitoring of stabilization programs, focusing particularly on Latin America. Ms. Xafa also served as chief economic advisor under Prime Minister Constantin Mitsotakis in Athens, Greece from 1991 to 1993. Following her service to the Prime Minister, Ms. Xafa worked at Salomon Brothers in London, initially as an emerging markets strategist and subsequently as an Athens based market analyst covering Greek and global economic prospects. Ms. Xafa has also served as an adviser to the management of Piraeus Bank and was a director on the board of S&B Industrial Minerals, a public international group of companies listed on the Athens Stock Exchange that is primarily involved in the mining, processing and trade of industrial materials and ores. Ms. Xafa holds both a Masters degree and a Ph.D. in economics from the University of Pennsylvania. She has taught economics at the University of Pennsylvania and Princeton University and is the author of several published articles on international trade policy, the Latin American debt crisis and European monetary unification.

39

Table of Contents

Markos Drakos is a member of our Board of Directors and Chairman of our Audit Committee. In 1998, Mr. Drakos co-founded Touche Ross & Co., later renamed Deloitte & Touche, Nicosia and served as co-managing partner of the company’s Nicosia office in Cyprus until 2002. Following the December 2002 reorganization of Deloitte & Touche, Nicosia, Mr. Drakos founded Markos Drakos Consultants Group, a consulting company, which served as successor to the consulting, special services and international business division of Deloitte & Touche, Nicosia. From 2000 until 2003, Mr. Drakos also served as Vice Chairman of the Cyprus Telecommunications Authority, the leading telecommunications company in Cyprus. Mr. Drakos has also served as a member of the Offshore, Shipping & Foreign Investment Committee of the Institute of Certified Public Accountants of Cyprus. Mr. Drakos received a Bachelor of Science degree in Economics from the London School of Economics and is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Institute of Certified Public Accountants of Cyprus.

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

George Koliopoulos is the Technical Manager of Stealth Maritime. Mr. Koliopoulos has had over 33 years of experience in the shipping industry having served as an Engineer with Sinergasia Shipbrokers Ltd. in London and as Superintendent Engineer at Varnima Corporation Int. S.A., where he was responsible for the operations, maintenance, engine and hull repairs, installations, drydockings and class surveys and claims of three tanker vessels. Mr. Koliopoulos served for 10 years with Anangel Maritime Services Inc. as both group leader to one of the company's Technical Departments and as a member of the team responsible for the final specifications, negotiations and plan approvals for the newbuilding projects of Panamax and Capesize vessels in Korea and Japan. Mr. Koliopoulos is currently the Technical Manager of Stealth Maritime where he is responsible for all the technical matters concerning bulk carriers, oil tankers and all newbuildings on order in addition to negotiating specifications with shipyards for recently ordered LPG carriers in Japan. Mr. Koliopoulos attended Sunderland Polytechnic in the United Kingdom where he received a diploma in Naval Architecture and Portsmouth Polytechnic in the United Kingdom where he received a B.A. in Mechanical Engineering.

Board Practices

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

Committees of the Board of Directors.

The Board of Directors has established an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. The members of each committee are Messrs. Jolliffe, Martinos, Drakos and Ms. Xafa.

Audit Committee

The Audit Committee is governed by a written charter, which is approved and annually adopted by the Board. The Board has determined that the members of the Audit Committee meet the

40

Table of Contents

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

The Audit Committee is appointed by the Board and is responsible for, among other matters overseeing the:

	•	integrity of the Company’s financial statements, including its system of internal controls;

	•	the Company’s compliance with legal and regulatory requirements;

	•	the independent auditor’s qualifications and independence; and the

	•	performance of the Company’s independent audit function and independent auditors,

as well preparing an Audit Committee Report as required by the SEC to be included in the Company’s annual proxy statement.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is appointed by the Board and is responsible for, among other matters:

	•	reviewing the Board structure, size and composition and making recommendations to the Board with regard to any adjustments that are deemed necessary;

	•	identifying candidates for the approval of the Board to fill Board vacancies as and when they arise as well as developing plans for succession, in particular, of the chairman and executive officers;

	•	overseeing the Board’s annual evaluation of its own performance and the performance of other Board committees; and

	•	developing and recommending to the Board for adoption a set of Corporate Governance Guidelines applicable to the Company and to periodically review the same.

Compensation Committee

The Compensation Committee is appointed by the Board and is responsible for, among other matters:

	•	establishing and periodically reviewing the Company’s compensation programs;

	•	reviewing the performance of directors, officers and employees of the Company who are eligible for awards and benefits under any plan or program and adjust compensation arrangements as appropriate based on performance;

	•	reviewing and monitoring management development and succession plans and activities; and

	•	reporting on compensation arrangements and incentive grants to the Board.

Compensation of Directors and Senior Management

We did not pay any compensation to members of senior management or our directors in 2004. For the year ended December 31, 2005, each of the independent directors received fees in the amount of $35,000 per annum pro rated for the number of days in 2005 for which we were a public company, plus reimbursement for their out-of-pocket expenses. Beginning February 2006, the Chairman of our Board of Directors will receive annual fees of $70,000, plus reimbursement for his out-of-pocket expenses, while each of our other independent directors will continue to receive fees of $35,000 per annum, plus reimbursement of their out-of-pocket expenses. Executive directors received no compensation for their services as directors. In addition, we reimbursed Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. During the year ended December 31, 2005, such compensation was in the aggregate amount of €513,559 (US$608,156, based

41

Table of Contents

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

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

Share ownership.    The shares of common stock beneficially owned by our directors and senior managers and/or companies affiliated with these individuals are disclosed in ‘‘Item 7. Major Shareholders and Related Party Transactions’’ below.

Equity Compensation Plan

We have an equity compensation plan, which we refer to as the Plan. As of April 17, 2006, we have not made any grants under the Plan. The Plan is generally administered by the Compensation Committee of our board of directors, except that the full board may act at any time to administer the Plan, and authority to administer any aspect of the Plan may be delegated by our board of directors or by the Compensation Committee to an executive officer or any other person. The Plan allows the plan administrator to grant awards of shares of our common stock or the right to receive or purchase shares of our common stock (including options to purchase common stock, restricted stock and stock units, bonus stock, performance stock, and stock appreciation rights) to our employees, directors or other persons or entities providing significant services to us or our subsidiaries, and further provides the plan administrator the authority to reprice outstanding stock options or other awards. The actual terms of an award, including the number of shares of common stock relating to the award, any exercise or purchase price, any vesting, forfeiture or transfer restrictions, the time or times of exercisability for, or delivery of, shares of common stock, are to be determined by the plan administrator and set forth in a written award agreement with the participant.

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

The Plan permits the plan administrator to make an equitable adjustment to the number, kind and exercise price per share of awards in the event of our recapitalization, reorganization, merger, spin-off, share exchange, dividend of common stock, liquidation, dissolution or other similar transaction or events. In addition, the plan administrator may make adjustments in the terms and conditions of any awards in recognition of any unusual or nonrecurring events. Our board of directors may, at any time, alter, amend, suspend or discontinue the Plan. The Plan will automatically terminate ten years after it has been most recently approved by our stockholders.

Item 7.	Major Shareholders and Related Party Transactions

It is our policy that transactions with related parties are entered into on terms no less favorable to us than would exist if these transactions were entered into with unrelated third parties on an arm’s length basis.

Management affiliations

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

42

Table of Contents

Management and other fees

We pay Stealth Maritime a management fee of $390 (based on an exchange rate of €1.00:US$1.25) per vessel operating under a voyage or time charter per day on a monthly basis in advance, pro rated for the calendar days we own the vessels. We pay a fee of $125 (based on an exchange rate of €1.00:US$1.25) per vessel per day for each of our vessels operating on bareboat charter. The management fee is adjusted quarterly based on the United States Dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We are also obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime also earns a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold by them on our behalf. We believe that the amounts we pay to Stealth Maritime are no more than amounts that we would pay to an unaffiliated ship manager. In addition, we reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. During the year ended December 31, 2005, such compensation was in the aggregate amount of €513,559 (US$608,156, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) on an annualized basis. Of this amount, €188,862 ($223,651, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) was paid to our CEO and Chief Financial Officer since our CEO was paid for only four months of service and our Chief Financial Officer for only six months of service provided to us during the year ended December 31, 2005. For the year ended December 31, 2005, aggregate payments made to Stealth Maritime amounted to $1,473,080.

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

The initial term of our management agreement with Stealth Maritime expires in 2009 but may be extended on a year to year basis unless written six-months written notice is provided prior to the expiration of the initial term. We believe that the amounts we pay to Stealth Maritime are no more than amounts that we would pay to an unaffiliated ship manager.

Chartering commissions

We pay a chartering commission to Stealth Maritime equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels.

Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our outstanding shares of common stock as of March 31, 2006 by:

	•	each person or entity that we know beneficially owns 5% or more of our shares of common stock;

	•	our chief executive officer and our other members of senior management;

	•	each of our directors; and

	•	all of our current directors and executive officers as a group.

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

43

Table of Contents

14,000,000 shares of common stock outstanding as of March 31, 2006. Information for certain holders is based on their latest filings with the Securities and Exchange Commission or information delivered to us.

				Shares Beneficially Owned
Name of Beneficial Owner				Number				Percentage
Principal Stockholders
Flawless Management Inc.(1)					6,000,000				42.9	%
331 Kiffissias Avenue
Erithrea 14561
Athens, Greece
Wellington Management Company, LLP(2)					1,356,300				9.69	%
75 State Street
Boston, MA 02109
Executive Officers and Directors
Harry N. Vafias(3)					6,000,000				42.9	%
Andrew J. Simmons					—				—
Michael G. Jolliffe					—				—
Thanassis J. Martinos					—				—
Miranda Xafa					—				—
Markos Drakos(4)					—				—
All executive officers and directors as a group (6 persons)					6,000,000				42.9	%

(1)	According to a Schedule 13G dated February 13, 2006 jointly filed by Flawless Management Inc. and Harry N. Vafias, Flawless Management Inc. beneficially owns 6,000,000 shares of common stock and has sole voting power and sole dispositive power with respect to all such shares. Harry N. Vafias, our CEO, President and Director, is the sole stockholder of Flawless Management Inc.

(2)	According to a Schedule 13G dated February 14, 2006, Wellington Management Company, LLP beneficially owns 1,356,300 shares of common stock and has shared voting power with respect to 803,700 such shares and shared dispositive power with respect to all such shares. The shares of common stock are owned of record by clients of Wellington Management Company, LLP, an investment advisor.

(3)	By virtue of the shares owned indirectly through Flawless Management Inc.

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

We effected a registered public offering of our shares of common stock and our shares of common stock began trading on the Nasdaq National Market in October 2005. Accordingly, certain of our principal shareholders acquired their shares of common stock either at or subsequent to this time. Our major shareholders have the same voting rights as our other shareholders. As of April 12, 2006, we had approximately seven shareholders of record. Six of the shareholders of record were located in the United States and held in the aggregate 8,000,000 shares of common stock representing approximately 57.1% of our outstanding shares of common stock. However, the six United States shareholders of record include CEDEFAST, which, as nominee for the Depository Trust Company, is the record holder of 7,998,557 shares of common stock. Accordingly, we believe that the shares held by CEDEFAST include shares of common stock beneficially owned by both holders in the United States and non-United States beneficial owners. As a result, these numbers may not accurately represent the number of beneficial owners in the United States. We are not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the company.

Item 8.	Financial Information

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

44

Table of Contents

Significant Changes.    No significant change has occurred since the date of the annual financial statements included in this Annual Report on Form 20-F.

Legal Proceedings.    To our knowledge, we are not currently a party to any material lawsuit that, if adversely determined, would have a material adverse effect on our financial position, results of operations or liquidity. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.

Dividend Policy.    While we cannot assure you that we will do so, and subject to the limitations discussed below, we currently intend to declare and pay quarterly dividends from our net profits to stockholders each February, May, August and November in amounts the Board of Directors determines are appropriate.

Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, including the loan agreements with Fortis Bank and DnB NOR Bank, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. The payment of dividends is not guaranteed or assured, and may be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends depends on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the LPG carrier market, our earnings would be adversely affected thus limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend.

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

Item 9.	The Offer and Listing

Our shares of common stock are quoted on the Nasdaq National Market.

Trading on the Nasdaq National Market

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

				High				Low
2005
October 2005				$	14.59			$	12.10
November 2005					13.25				10.8
December 2005					12.85				11.71
2006
First Quarter
January 2006				$	14.18			$	12.50
February 2006					13.10				10.90
March 2006					14.30				12.05
April 2006 (through April 17, 2006)					14.25				13.75

45

Table of Contents

Item 10.	Additional Information

Description of Capital Stock

Under our articles of incorporation, our authorized capital stock consists of 100,000,000 shares of common stock, $.01 par value per share, of which 14,000,000 shares are issued and outstanding and fully paid, and 5,000,000 shares of blank check preferred stock, $.01 par value per share. All of our shares of stock are in registered form. As of March 31, 2006, there were 14,000,000 outstanding shares of common stock and no outstanding options.

Common Stock

As of December 31, 2005, we had 14,000,000 shares of common stock outstanding, out of 100,000,000 shares authorized to be issued. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for dividends. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. All outstanding shares of common stock are, and the shares to be sold in this offering when issued and paid for will be, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any shares of preferred stock which we may issue in the future.

Our Articles of Incorporation and Bylaws.

Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act, or BCA. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.

Under our bylaws, annual stockholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called by the Board of Directors. Our Board of Directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting.

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

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

Dividends.    While we cannot assure you that we will do so, and subject to the limitations discussed below, we currently intend to declare and pay regular cash dividends on a quarterly basis from our net profits, in amounts the Board of Directors may from time to time determine are appropriate. However, we may have to make provisions for vessel acquisitions and other liabilities that would reduce or eliminate the cash available for distribution as dividends. We declared and paid a dividend per share of $0.1875 in January 2006. There can be no assurance that we will pay regular quarterly dividends in the future. Such dividends as we do pay may be in amounts less than the $0.1875 per share dividend we declared and paid in January 2006.

Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, restrictions in our loan agreements, including the loan agreements with Fortis Bank and DnB NOR Bank, or other financing arrangements, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. The

46

Table of Contents

payment of dividends is not guaranteed or assured, and may be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the LPG carrier market, our earnings would be negatively affected thus limiting our ability to pay dividends. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment thereof.

Dissenters' Rights of Appraisal and Payment.    Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the circuit court in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.

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

Anti-takeover Provisions of our Charter Documents.    Several provisions of our articles of incorporation and bylaws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a stockholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock

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

Classified Board of Directors

Our articles of incorporation provide for a Board of Directors serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay stockholders who do not agree with the policies of the Board of Directors from removing a majority of the Board of Directors for two years.

Election and Removal of Directors

Our articles of incorporation and bylaws prohibit cumulative voting in the election of directors. Our bylaws require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

47

Table of Contents

Calling of Special Meetings of Stockholders

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

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary.

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

Business Combinations

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

	•	persons who are the beneficial owners of 15% or more of the outstanding voting stock of the corporation; and

	•	persons who are affiliates or associates of the corporation and who hold 15% or more of the corporation's outstanding voting stock at any time within three years before the date on which the person's status as an interested stockholder is determined.

Subject to certain exceptions, a business combination includes, among other things:

	•	certain mergers or consolidations of the corporation or any direct or indirect majority-owned subsidiary of the company;

	•	the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation, determined on a consolidated basis, or the aggregate value of all the outstanding stock of the corporation;

	•	certain transactions that result in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

	•	any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation that is owned directly or indirectly by the interested stockholder; and

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

These provisions of our articles of incorporation do not apply to a business combination if:

	•	before a person becomes an interested stockholder, the board of directors of the corporation approves the business combination or transaction in which the stockholder became an interested stockholder;

48

Table of Contents

	•	upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than certain excluded shares; or

	•	following a transaction in which the person became an interested stockholder, the business combination is (a) approved by the board of directors of the corporation and (b) authorized at a regular or special meeting of stockholders, and not by written consent, by the vote of the holders of at least two-thirds of the voting stock of the corporation not owned by the stockholder.

Material Contracts

The following is a summary of each material contract that we entered into outside the ordinary course of business during the two year period immediately preceding the date of this Annual Report. Such summaries are not intended to be complete and reference is made to the contracts themselves, which are included as exhibits to this Annual Report:

	(a)	Amended and Restated Management Agreement dated as of June 20, 2005 between the Company and Stealth Maritime S.A. for an initial term of five years. Pursuant to our management agreement with Stealth Maritime, Stealth Maritime is responsible for the administration of our affairs and the commercial and technical management of our fleet. Under the agreement, we pay Stealth Maritime a management fee of $390 per day (based on an exchange rate of €1.00:US$1.25) per vessel operating under a voyage or time charter (and $125 per vessel per day for any vessel on bareboat charter) in advance on a monthly basis, pro rated for the calendar days we own the vessels. The management fee is adjusted quarterly based on the United States Dollar/Euro exchange rate as published by Bloomberg LP two days prior to the end of the previous calendar quarter. We are also obligated to pay Stealth Maritime a fee equal to 1.25% of the gross freight, demurrage and charter hire collected from the employment of our vessels. Stealth Maritime will also earn a fee equal to 1.0% calculated on the price as stated in the relevant memorandum of agreement for any vessel bought or sold by them on our behalf. We currently reimburse Stealth Maritime for its payment of the compensation to our CEO and Chief Financial Officer. During the year ended December 31, 2005, such compensation was in the aggregate amount of €513,559 (US$608,156, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) on an annualized basis. Of this amount, €188,862 ($223,651, based on the exchange rate of €1.00:US$1.1842 in effect on December 29, 2005) was paid to our CEO and Chief Financial Officer since our CEO was paid for only four months of service and our Chief Financial Officer for only six months of service provided to us during the year ended December 31, 2005.

	(b)	Right of First Refusal Agreement dated as of August 26, 2005 among the Company, Harry N. Vafias and Stealth Maritime S.A. Under the Right of First Refusal Agreement, Stealth Maritime granted the Company a right of first refusal to acquire any LPG carrier which Stealth Maritime may acquire in the future. In addition, under the agreement, Stealth Maritime agreed that it will not charter-in any LPG carrier without first offering the opportunity to charter-in such vessel to the Company. Under the agreement, Stealth Maritime is not prohibited from managing vessels owned by unaffiliated third parties in competition with us. The agreement is effective for as long as Stealth Maritime (or any entity with respect to which Harry Vafias is an executive officer, director or principal shareholder) manages vessels owned or chartered in by the Company and Harry Vafias is the executive officer or director of the Company.

	(c)	Loan Agreement dated as of March 16, 2005 between Matrix Gas Trading Ltd., Gaz de Brazil, Inc., VCM Trading Ltd., Geneve Butane Inc., LPGone Ltd., Semichlaus Exports Ltd., Ventspils Gases Ltd., Pacific Gases Ltd., Aracruz Trading Ltd., Industrial Materials Inc. and the Company, as joint and several borrowers, and Fortis Bank (Nederland) N.V., as lender

49

Table of Contents

		relating to a $54.0 million loan facility for the partial financing of four vessels and the partial refinancing of six vessels, including the Gas Prodigy. On June 10, 2005, the portion of the loan attributable to the Gas Prodigy was prepaid and the security interest in the Gas Prodigy was released. This facility had an outstanding balance as of December 31, 2005 of $47,706,000 million, repayable in a further 30 quarterly installments of amounts ranging from $1.36 million, plus a final payment of $7.0 million due on the earlier of the eighth anniversary of the delivery date of the last ship or on May 30, 2013. The loan is secured by liens on the nine ships and bears interest at LIBOR plus a margin which varies according to the outstanding balance of the loan to the aggregate market value of the vessels subject to a mortgage in that period.

	(d)	Loan Agreement dated as of December 5, 2005 between Empire Spirit Ltd., Independent Trader Ltd., Triathlon Inc., Soleil Trust Inc., Jungle Investment Limited and Northern Yield Shipping Limited, as joint and several borrowers, and DnB NOR Bank ASA, as lender relating to a $50.0 million loan facility, and as supplemented by a $14.0 million Supplemental Agreement dated as of February 27, 2006, increasing the full amount of available credit under the facility to $64.0 million. As amended by the supplemental agreement, we are obligated to repay the principal and interest under the credit facility beginning in June 2006 through December 2015 in two semi-annual payments of $4,608,000 each, four semi-annual payments of $3,072,000 each, and 14 semi-annual payments of $2,304,000 each, plus a balloon payment of $10,240,000 payable together with the final installment. Under the terms of the DnB NOR Bank loan, as supplemented, the interest rate is the sum of LIBOR and a margin. The margin varies with the ratio of the outstanding balance of the loan to the aggregate market value of the vessels subject to mortgage in that period. If the ratio is equal to or lower than 130%, the interest rate will be 0.85% over LIBOR. If the ratio is between 130% and 150%, the interest rate will be 0.75% over LIBOR. If the ratio is equal to or higher than 150%, the interest rate will be 0.70% over LIBOR. We paid a non-refundable fee of $95,000 upon the signing of the DnB NOR Bank ASA loan agreement and a non-refundable fee of $28,000 upon the signing of the DnB NOR Bank supplemental agreement.

Exchange controls

Under Marshall Island law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common stock.

TAX CONSIDERATIONS

Marshall Islands Tax Considerations

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

United States Federal Income Tax Considerations

Except as otherwise noted, this discussion is based on the assumption that we will not maintain an office or other fixed place of business within the United States. We have no current intention of maintaining such an office. References in this discussion to ‘‘we’’ and ‘‘us’’ are to StealthGas Inc. and its subsidiaries on a consolidated basis, unless the context otherwise requires.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: In General

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

50

Table of Contents

derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as ‘‘shipping income,’’ to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as ‘‘United States-source shipping income.’’

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

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

In the absence of exemption from tax under Section 883, our gross United States-source shipping income, unless determined to be effectively connected with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed without allowance for deductions as described below.

Exemption of Operating Income from United States Federal Income Taxation

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

	(1)	we are organized in a foreign country (our ‘‘country of organization’’) that grants an ‘‘equivalent exemption’’ to corporations organized in the United States; and

	(2)	either

	(A)	more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are ‘‘residents’’ of our country of organization or of another foreign country that grants an ‘‘equivalent exemption’’ to corporations organized in the United States, which we refer to as the ‘‘50% Ownership Test’’; or

	(B)	our stock is ‘‘primarily and regularly traded on an established securities market’’ in our country of organization, in another country that grants an ‘‘equivalent exemption’’ to United States corporations, or in the United States, which we refer to as the ‘‘Publicly-Traded Test.’’

We believe, based on Revenue Ruling 2001-48, 2001-2 C.B. 324, and, in the case of the Marshall Islands, an exchange of notes between the United States and the Marshall Islands, 1990-2 C.B. 321, and, in the case of Malta, an exchange of notes between the United States and Malta, 1997-1 C.B. 314, (each an ‘‘Exchange of Notes’’) that the Marshall Islands and Malta, the jurisdictions in which we and our ship-owning subsidiaries are incorporated, grant an ‘‘equivalent exemption’’ to United States corporations. Based on advice received from Marshall Islands counsel, we believe that the Marshall Islands continues to honor the Exchange of Notes and that, since the date the Exchange of Notes was entered into, the tax law of the Marshall Islands has not changed so as to be inconsistent with the Exchange of Notes with the United States. Therefore, we believe that we will be exempt from United States federal income taxation with respect to our United States-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. For periods subsequent to our initial public offering it may be difficult to satisfy the 50% Ownership Test due to the widely-held ownership of our stock. Our ability to satisfy the Publicly-Traded Test is discussed below.

The Section 883 regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be ‘‘primarily traded’’ on an established securities market in a particular country if the

51

Table of Contents

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

Under the regulations, our common stock will be considered to be ‘‘regularly traded’’ on an established securities market if one or more classes of our stock representing more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on the market. We refer to this as the listing threshold. Since our common stock is the sole class of stock listed on the Nasdaq National Market, we will satisfy the listing requirement.

It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of the stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. We believe we will satisfy the trading frequency and trading volume tests. Even if this were not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied if, as we believe to be the case with our common stock, such class of stock is traded on an established market in the United States and such stock is regularly quoted by dealers making a market in such stock.

Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of our stock will not be considered to be ‘‘regularly traded’’ on an established securities market for any taxable year in which 50% or more of such class of our outstanding shares of the stock is owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of our outstanding stock, which we refer to as the ‘‘5 Percent Override Rule.’’

For purposes of being able to determine the persons who own 5% or more of our stock, or ‘‘5% Stockholders,’’ the regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the ‘‘SEC,’’ as having a 5% or more beneficial interest in our common stock. The regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Stockholder for such purposes.

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

Our CEO, who is treated under applicable ownership attribution rules as owning approximately 42.9% of our shares of common stock, has entered into an agreement with us regarding his compliance, and the compliance by certain entities that he controls and through which he owns our shares, with the certification requirements designed to substantiate status as qualified stockholders. In certain circumstances, his compliance and the compliance of such entities he controls with the terms of that agreement may enable us and our subsidiaries to qualify for the benefits of Section 883 even where persons each of whom owns, either directly or under applicable attribution rules, 5% or more of

52

Table of Contents

our shares own, in the aggregate, more than 50% of our outstanding shares. There can be no assurance, however, that his compliance and the compliance of such entities he controls with the terms of that agreement will enable us or our subsidiaries to qualify for the benefits of Section 883.

The entities that own our vessels that we are acquired in 2005 through stock acquisitions may not qualify for the benefits of Section 883 for 2005, with the result that United States federal tax, as described below, may apply if such vessels made voyages in 2005 that began or ended in the United States. We do not believe that such vessels made such a voyage.

To the extent the benefits of Section 883 are unavailable, our United States-source shipping income, to the extent not considered to be ‘‘effectively connected’’ with the conduct of a United States trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, we expect that no more than 50% of our shipping income would be treated as being derived from United States-sources, we expect that the maximum effective rate of United States federal income tax on our gross shipping income would never exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 exemption are unavailable and our United States-source shipping income is considered to be ‘‘effectively connected’’ with the conduct of a United States trade or business, as described below, any such ‘‘effectively connected’’ United States-source shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject to the 30% ‘‘branch profits’’ taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our United States trade or business.

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

	•	we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and

	•	substantially all (at least 90%) of our United States-source shipping income, other than leasing income, is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not intend to have, or permit circumstances that would result in having, any vessel operating to the United States on a regularly scheduled basis.

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

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

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

For these purposes, leasing income is treated as attributable to a fixed place of business where such place of business is a material factor in the realization of such income and such income is realized in the ordinary course of business carried on through such fixed place of business. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our United States-source shipping income is ‘‘effectively connected’’ with the conduct of a United States trade or business.

United States Taxation of Gain on Sale of Vessels

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

53

Table of Contents

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

United States Federal Income Taxation of United States Holders

As used herein, the term ‘‘United States Holder’’ means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

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

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a United States Holder will generally constitute dividends, which may be taxable as ordinary income or ‘‘qualified dividend income’’ as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder's tax basis in his common stock on a dollar for dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as ‘‘passive income’’ (or ‘‘passive category income’’ for taxable years beginning after December 31, 2006) or, in the case of certain types of United States Holders, ‘‘financial services income’’ (which will be treated as ‘‘general category income’’ income for taxable years beginning after December 31, 2006) for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a United States Holder who is an individual, trust or estate (a ‘‘United States Individual Holder’’) should be treated as ‘‘qualified dividend income’’ that is taxable to such United States Individual Holders at preferential tax rates (through 2008) provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the Nasdaq National Market); (2) we are not a passive foreign investment company, or PFIC, for the taxable year during which the dividend is paid or the immediately preceding taxable year (we do not believe we are, have been or will be a PFIC); and (3) the United States Individual Holder owns the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend. Special rules may apply to any ‘‘extraordinary dividend’’. Generally, an extraordinary dividend is a dividend in an amount which is equal to or in excess of ten percent of a stockholder's adjusted basis (or fair market value in certain circumstances) in a share of common stock paid by us. If we pay an ‘‘extraordinary dividend’’ on our common stock that is treated as ‘‘qualified dividend income,’’ then any loss derived by a United States Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a United States Individual Holder. Any dividends paid by us which are not eligible for these preferential rates will be taxed to a United States Individual Holder at the standard ordinary income rates. Legislation has proposed which, if enacted into law in its present form, would likely preclude, prospectively from the date of enactment, our dividends from being treated as ‘‘qualified dividend income’’ eligible for the preferential tax rates described above.

54

Table of Contents

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a PFIC for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder's tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States-source income or loss, as applicable, for United States foreign tax credit purposes. A United States Holder's ability to deduct capital losses is subject to certain limitations.

PFIC Status and Significant Tax Consequences

Special United States federal income tax rules apply to a United States Holder that holds stock in a foreign corporation classified as a PFIC for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a United States Holder if, for any taxable year in which such holder held our common stock, either:

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

	•	at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income.

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

Based on our current operations and future projections, we do not believe that we have been or are, and we do not expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing PFIC status, the Internal Revenue Service or a court could disagree with our position. In addition, although we currently intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

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

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

55

Table of Contents

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder we refer to as an ‘‘Electing Holder,’’ the Electing Holder must report each year for United States federal income tax purposes his pro-rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the common stock will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common stock and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common stock. A United States Holder would make a QEF election with respect to any year that our company is a PFIC by filing one copy of IRS Form 8621 with his United States federal income tax return and a second copy in accordance with the instructions to such form. If we were aware that we were to be treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary information in order to make the qualified electing fund election described above.

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

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

Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election

If we were to be treated as a PFIC for any taxable year, a United States Holder who does not make either a QEF election or a ‘‘mark-to-market’’ election for that year, whom we refer to as a ‘‘Non-Electing Holder,’’ would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock in a taxable year in excess of 125 percent of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock), and (2) any gain realized on the sale, exchange or other disposition of our common stock. Under these special rules:

	•	the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;

	•	the amount allocated to the current taxable year would be taxed as ordinary income; and

	•	the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition

56

Table of Contents

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

Other PFIC Elections.

Under recently issued temporary regulations, if a United States Holder held our stock during a period when we were treated as a PFIC but the United States Holder did not have a QEF election in effect with respect to us, then in the event that we failed to qualify as a PFIC for a subsequent taxable year, the United States Holder could elect to cease to be subject to the rules described above with respect to those shares by making a ‘‘deemed sale’’ or, in certain circumstances, a ‘‘deemed dividend’’ election with respect to our stock. If the United States Holder makes a deemed sale election, the United States Holder will be treated, for purposes of applying the rules described above under the heading ‘‘Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election’’, as having disposed of our stock for its fair market value on the last day of the last taxable year for which we qualified as a PFIC (the ‘‘termination date’’). The United States Holder would increase his, her or its basis in such common stock by the amount of the gain on the deemed sale described in the preceding sentence. Following a deemed sale election, the United States Holder would not be treated, for purposes of the PFIC rules, as having owned the common stock during a period prior to the termination date when we qualified as a PFIC.

If we were treated as a ‘‘controlled foreign corporation’’ for United States federal income tax purposes for the taxable year that included the termination date, then a United States Holder could make a ‘‘deemed dividend’’ election with respect to our common stock. If a deemed dividend election is made, the United States Holder is required to include in income as a dividend his, her or its pro rata share (based on all of our stock held by the United States Holder, directly or under applicable attribution rules, on the termination date) of our post-1986 earnings and profits as of the close of the taxable year that includes the termination date (taking only earnings and profits accumulated in taxable years in which we were a PFIC into account). The deemed dividend described in the preceding sentence is treated as an excess distribution for purposes of the rules described above under the heading ‘‘Taxation of United States Holders Not making a Timely QEF or Mark-to-Market Election’’. The United States Holder would increase his, her or its basis in our stock by the amount of the deemed dividend. Following a deemed dividend election, the United States Holder would not be treated, for purposes of the PFIC rules, as having owned the stock during a period prior to the termination date when we qualified as a PFIC. For purposes of determining whether the deemed dividend election is available, we generally will be treated as a controlled foreign corporation for a taxable year when, at any time during that year, United States persons, each of whom owns, directly or under applicable attribution rules, shares having 10% or more of the total voting power of our stock, in the aggregate own, directly or under applicable attribution rules, shares representing more than 50% of the voting power or value of our stock.

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

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

A beneficial owner of common stock that is not a United States Holder and is not treated as a partnership for United States federal income tax purposes is referred to herein as a ‘‘Non-United States Holder.’’

Dividends on Common Stock

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

57

Table of Contents

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

Sale, Exchange or Other Disposition of Common Stock

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

	•	the gain is effectively connected with the Non-United States Holder's conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States; or

	•	the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

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

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to a noncorporate United States holder will be subject to information reporting requirements and backup withholding tax if such holder:

	•	fails to provide an accurate taxpayer identification number;

	•	is notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or

	•	in certain circumstances, fails to comply with applicable certification requirements.

Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If a holder sells our common stock to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the holder certifies that it is a non-United States person, under penalties of perjury, or the holder otherwise establishes an exemption. If a holder sells our common stock through a non-United States office of a non-United States broker and the sales proceeds are paid outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if a holder sells our common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding tax is not an additional tax. Rather, a holder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed such stockholder's income tax liability by filing a refund claim with the Internal Revenue Service.

58

Table of Contents

Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information as a foreign private issuer with the SEC. You may inspect and copy our public filings without charge at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates from the Public Reference Section of the Commission at its principal office at 100 F Street, N.E., Washington, D.C. 20549. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.

Item 11.	Quantitative and Qualitative Disclosures About Market Risk

Our risk management policy

Our policy is to continuously monitor our exposure to business risks, including the impact of changes in interest rates, currency rates, and bunker prices on earnings and cash flows. We intend to assess these risks and, when appropriate, enter into derivative contracts with credit-worthy counter parties to minimize our exposure to the risks.

Interest rate risk

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

Foreign exchange rate fluctuation

We generate all of our revenues in United States dollars and incur less than 10% of our expenses in currencies other than United States dollars. For accounting purposes, expenses incurred in Euros are converted into United States dollars at the exchange rate prevailing on the date of each transaction. At December 31, 2005, less than 10% of our outstanding accounts payable was denominated in currencies other than the United States dollar (mainly in Euros). We have not hedged currency exchange risks and our operating results could be adversely affected as a result.

Item 12.	Description of Securities Other than Equity Securities

Not Applicable.

59

Table of Contents

PART II

Item 13.	Defaults, Dividend Arrearages and Delinquencies

Not Applicable.

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

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

We used approximately $100.5 million of the net proceeds of the offering to acquire nine LPG carriers, which we purchased from the Vafias Group. Other proceeds have been used for working capital and for other general corporate purposes.

Item 15.	Controls and Procedures

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

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

Item 16A.	Audit Committee Financial Expert

The Board has determined that Markos Drakos is an Audit Committee financial expert as defined by the U.S. Securities and Exchange Commission and meets the applicable independence requirements of the U.S. Securities and Exchange Commission and the Nasdaq Stock Market.

Item 16B.	Code of Ethics

The Company has adopted a code of ethics that applies to all officers, directors and employees of the Company. A copy of the Company’s code of ethics is available on the Company’s website. No waivers from the code of ethics have been granted to any person during the year ended December 31, 2005.

60

Table of Contents

Item 16C.	Principal Accountant Fees and Services

Auditors’ remuneration

				2005 (in thousands)				2004 (in thousands)
Audit fees				$	651			$	—
Further assurance/audit related fees					—				—
Tax fees					—				—
Other fees					—				—
Total				$	651			$	—

Audit fees

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

Further assurance/audit related fees

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

Tax fees

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

Other fees

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

Non-audit services:    The US Sarbanes-Oxley Act of 2002 identifies certain categories of non-audit services which are no longer to be performed by the external auditor. We have incorporated that prohibition into our own policy regarding services from the external auditor. The list of prohibited non-audit services may only be varied by the Audit Committee.

The external auditor is permitted to undertake some non-audit services, for example due diligence activities associated with potential acquisitions or disposals of businesses by the Company, but these services and their associated fees, must be approved in advance by the Committee. Where such services are considered recurring in nature, approval may be sought for the full financial year at the beginning of that year. Approval for other permitted non-audit services has to be sought on an ad hoc basis. Where no Committee meeting is scheduled within an appropriate time frame, the approval is sought from the Chairman of the Committee subject to confirmation at the next meeting.

Item 16D.	Exemptions from the Listing Standards for Audit Committees

None

Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None

61

Table of Contents

PART III

Item 17.	Financial Statements

Not Applicable

Item 18.	Financial Statements

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

Item 19.	Exhibits

Number				Description
1.1				Amended and Restated Articles of Incorporation of the Company*
1.2				Amended and Restated Bylaws of the Company*
4.1				Amended and Restated Management Agreement between the Company and Stealth Maritime S.A.*
4.2				Form of Right of First Refusal among the Company, Harry Vafias and Stealth Maritime S.A.*
4.3				Form of Equity Compensation Plan*
4.4				Loan Agreement with Fortis Bank (Nederland) N.V. and Deed of Release of Security and Obligations*
4.5				Loan Agreement with DnB Nor Bank ASA
4.6				Supplemental Agreement with DnB Nor Bank ASA
8				Subsidiaries of the Company
12.1				Certification of the Chief Executive Officer
12.2				Certification of the Chief Financial Officer
13.1				Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002
13.2				Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002

*	Previously filed as an exhibit to the Company’s Registration Statement on Form F-1 (File No. 333-127905) filed with the SEC and hereby incorporated by reference to such Registration Statement.

62

Table of Contents

SIGNATURES 

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

STEALTHGAS INC.
/s/ Harry N. Vafias
Harry N. Vafias President and Chief Executive Officer
Date:   April 19, 2006

63

Index to consolidated financial statements

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

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
of StealthGas Inc.

We have audited the accompanying consolidated balance sheets of StealthGas Inc. and subsidiaries (the Company') as of December 31, 2004 and 2005, and the related consolidated statements of income, stockholders' equity, and cash flows for the period from October 12, 2004 to December 31, 2004 and the year ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of StealthGas Inc. and subsidiaries at December 31, 2004 and 2005, and the results of their operations and their cash flows for the period from October 12, 2004 to December 31, 2004 and the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

As described in Note 2 to the financial statements, the historical consolidated financial statements at December 31, 2004 have been retroactively restated as if the vessels under common control with the Vafias Group were consolidated subsidiaries for all periods presented in accordance with the guidance in FASB statement No. 141 "Business Combinations" and EITF 02-05 "Definition of Common Control' in relation to FASB Statement No. 141."

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

Athens, Greece

F-2

Table of Contents

StealthGas Inc.
Consolidated Balance Sheets
December 31, 2004 (restated) and December 31, 2005
(Expressed in United States Dollars)

				Note				December 31, 2004 (restated)				December 31, 2005
Assets
Current assets
Cash and cash equivalents								$	—			$	23,210,243
Receivables from related party					3				1,162,470				—
Trade receivables									19,623				13,330
Inventories					4				124,846				399,624
Advances and prepayments									9,130				161,094
Fair value of above market acquired time charters					9				—				597,754
Restricted cash									—				1,634,203
Total current assets								$	1,316,069			$	26,016,248
Non current assets
Advances for vessels acquisitions					5				1,905,282				983,000
Vessels, net					6				37,396,018				229,763,864
Deferred finance charges					7				—				215,656
Total non current assets								$	39,301,300			$	230,962,520
Total assets								$	40,617,369			$	256,978,768
Liabilities and Stockholders' Equity
Current liabilities
Overdraft facility									—				200,000
Payable to related party					3				—				1,549,837
Trade accounts payable									495,925				984,997
Other accrued liabilities					8				360,818				1,635,040
Fair value of below market acquired time charters					9				1,842,857				1,443,989
Deferred income					10				534,413				2,284,578
Current portion of long-term debt					11				—				12,627,000
Total current liabilities								$	3,234,013			$	20,725,441
Non current liabilities
Derivative liability					12				—				67,000
Long-term debt					11				—				85,079,000
Total liabilities								$	3,234,013			$	105,871,441
Stockholders' equity
Capital stock 100,000,000 shares authorized; 14,000,000 shares outstanding with a par value of $.01					13				60,000				140,000
Additional paid-in capital					14				36,792,148				145,883,121
Retained earnings									531,208				5,084,206
Total stockholders' equity								$	37,383,356			$	151,107,327
Total liabilities and stockholders' equity								$	40,617,369			$	256,978,768

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

F-3

Table of Contents

StealthGas Inc.
Consolidated statements of income
For the period ended December 31, 2004 (restated) and year ended December 31, 2005
(Expressed in United States Dollars)

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

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

F-4

Table of Contents

StealthGas Inc.
Consolidated statement of cash flows
For the period ended December 31, 2004 (restated) and year ended December 31, 2005
(Expressed in United States Dollars)

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

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

F-5

Table of Contents

StealthGas Inc.
Consolidated statement of changes in stockholders’ equity
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

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

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

F-6

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

1.	Basis of Presentation and General Information

The accompanying consolidated financial statements include the accounts of StealthGas Inc. and its wholly owned subsidiaries (collectively, the ‘‘Company’’) which, as of December 31, 2005 owned a fleet of twenty-one liquefied petroleum gas carriers providing worldwide marine transportation services under long, medium or short-term charters. StealthGas Inc. was formed under the laws of Marshall Islands on December 22, 2004.

As of December 31, 2004, under the direction of Stealth Maritime Corporation S.A., the shareholders of the vessel owning companies contributed all of their issued and outstanding shares of common stock to StealthGas Inc. and StealthGas Inc. became the sole owner of all the outstanding shares of all the subsidiaries mentioned in note 1a. below. The transaction described above constitutes a reorganization of companies under common control, and has been accounted for in a manner similar to a pooling of interests, as each ship-owning company was, indirectly, wholly owned by and under the common control of the Vafias Group prior to the transfer of ownership of the companies to StealthGas Inc. Accordingly, the consolidated financial statements of the Company have been presented as if the ship-owning companies were consolidated subsidiaries of the Company as of the dates indicated and using the combined historical carrying costs of the assets and the liabilities of the ship-owning companies listed in note 1a below.

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

(a)	Ship-owning companies originally acquired by StealthGas Inc in 2004:

Name of Company

Vessel Name

Acquisition Date

cbm

VCM Trading Ltd.

Gas Prophet

October 12, 2004

3,516.44

LPGONE Ltd.

Gas Tiny

October 29, 2004

1,319.96

Geneve Butane Inc

Gas Courchevel

November 24, 2004

4,102.00

Matrix Gas Trading Ltd.

Gas Shanghai

December 7, 2004

3,525.92

F-7

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

1.	Basis of Presentation and General Information - Continued

(b)	Ship-owning companies acquired by StealthGas Inc. in 2005:

Name of Company

Vessel Name

Acquisition Date

cbm

Pacific Gases Ltd.

Gas Emperor

February 2, 2005

5,009.07

Semichlaus Exports Ltd.

Gas Ice

April 7, 2005

3,434.08

Ventspils Gases Ltd.

Gas Arctic

April 7, 2005

3,434.08

Industrial Materials Inc.

Birgit Kosan

April 11, 2005

5,013.33

Aracruz Trading Ltd.

Gas Amazon

May 19, 2005

6,562.41

Soleil Trust Inc.

Gas Sincerity

November 14, 2005

4,128.98

East Propane Inc.

Catterick

November 24, 2005

5,001.41

Petchem Trading Inc.

Gas Spirit

December 16, 2005

4,112.18

Malibu Gas Inc.

Feisty Gas

December 16, 2005

4,111.24

(c)	Vafias’ Group of LPG carriers:

Name of Company

Vessel Name

Acquisition Date

cbm

Gaz De Brazil Inc.

Gas Prodigy

October 15, 2004

3,014.59

Independent Trader Ltd.

Gas Oracle

April 26, 2005

3,014.59

Continent Gas Inc.

Gas Chios

May 20, 2005

6,562.09

Empire Spirit Ltd.

Sweet Dream

May 31, 2005

5,018.35

Jungle Investment Limited

Gas Cathar

July 27, 2005

7,517.18

East Technologies Ltd.

Gas Crystal

July 28, 2005

3,211.04

Quicksilver Shipping Limited

Gas Legacy

August 26, 2005

3,513.79

Triathlon Gas Inc.

Gas Marathon

October 3, 2005

6,572.20

During the fourth quarter of 2005, the above ship-owning companies were acquired by the Company with share purchase agreements except for the vessels Gas Crystal, Gas Legacy and Gas Marathon which were sold as assets to the newly formed subsidiaries of the Company, called Iceland Ltd., Northern Yield Shipping Ltd. and Triathlon Inc.

(d)	Ship-owning company with advance on vessel delivered in year 2006:

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

Name of Company				Vessel Name				cbm
Balkan Holding Inc.				Islas Gas tbr. Gas Czar					3,509.65

The Company’s vessels are managed by Stealth Maritime Corporation S.A. - Liberia (the ‘‘Manager’’), a related party. The Manager is a company incorporated in Liberia and registered in Greece on May 17, 1999 under the provisions of law 89/1967, 378/1968 and article 25 of law 27/75 as amended by the article 4 of law 2234/94. (See Note 3).

F-8

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

1.	Basis of Presentation and General Information - Continued

During 2004 and 2005, six charterers individually accounted for more than 10% of the Company’s voyage revenues as follows:

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

2.	Significant Accounting Policies

Principles of Consolidation:    The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (‘‘US GAAP’’) and include the accounts of the StealthGas Inc. and its wholly owned subsidiaries referred to in note 1(a), 1(b) and 1(c) above. All significant inter-company balances and transactions have been eliminated upon consolidation.

Use of Estimates:    The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

Foreign Currency Translation:    The functional currency of the Company and each of its subsidiaries is the U.S. Dollar because the Company's vessels operate in international shipping markets, which utilize the U.S. Dollar as the functional currency. The accounting books of the Company are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated to reflect the current exchange rates. Resulting gains or losses are separately reflected in the accompanying consolidated statements of income.

Cash and Cash Equivalents:    The Company considers highly liquid investments such as time deposits and certificates of deposit with original maturity of three months or less to be cash equivalents.

Restricted Cash:    Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments.

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

F-9

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

2.	Significant Accounting Policies - Continued

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

Segmented Reporting:    The Company has determined that it operates in one reportable segment, the sea transportation of liquefied gas.

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

Vessels Acquisitions:    Vessels are stated at cost, which consists of the contract price less discounts and any material expenses incurred upon acquisition (initial repairs, improvements, acquisition and expenditures made to prepare the vessel for its initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, and otherwise are charged to expenses as incurred.

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

Impairment of Long-lived Assets:    The Company follows SFAS No.144 ‘‘Accounting for the Impairment or Disposal of Long-lived Assets’’ in 2004, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss for an asset held for use should be recognized when the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount. Measurement of the impairment loss is based on the fair value of the asset as provided by third parties. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company's vessels.

Vessels' Depreciation:    The cost of each of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful life, after considering the estimated residual value. Management estimates the useful life of each of the Company's vessels to be 30 years from the date of their construction.

Accounting for Special Survey and Dry-docking Costs:    Special survey and dry-docking costs and all non-capitalizable repair and maintenance expenses are expensed in the year incurred.

Financing Costs:    Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing is made.

F-10

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

2.	Significant Accounting Policies - Continued

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

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

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

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

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

Earnings per Share:    Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. The Company had no dilutive securities outstanding at December 31, 2004 and 2005.

Income Taxes:    The Company is not liable for any income tax on its net income derived from shipping operations because the countries in which the subsidiaries ship-owning companies are incorporated do net levy tax on income, but rather a tonnage tax on the vessel. (Note 18)

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

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

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

F-11

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

2.	Significant Accounting Policies - Continued

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

In December 2004, the FASB issued SFAS No. 123R that will require compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS 123R replaces SFAS No. 123, ‘‘Accounting for Stock-Based Compensation’’, and supersedes APB 25.

Entities that used the fair-value-based method for either recognition or disclosure under SFAS No. 123 will apply this revised Statement using a modified version of prospective application. Under this transition method, for the portion of outstanding awards for which the requisite service has not yet been rendered, compensation cost is recognized on or after required effective date based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures. SFAS No. 123R will be effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The adoption of SFAS 123R did not have an impact on the company’s financial statement.

In May 2005, the FASB issued SFAS No. 154, ‘‘Accounting Changes and Error Corrections’’ which replaces Accounting Principles Board Opinion No. 20 ‘‘Accounting Changes’’ and SFAS No. 3, ‘‘Reporting Accounting Changes in Interim Financial Statements.’’ This statement applies to all voluntary changes in accounting principle and changes resulting from adoption of a new accounting pronouncement that does not specify transition requirements. SFAS 154 requires retrospective application to prior periods' financial statements for changes in accounting principle unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change.

Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS 154 is effective for the accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 with early implementation permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this statement was issued. SFAS 154 is effective for us as of January 1, 2006 and is not expected to have a material impact on our financial statements.

3.	Transactions with Related Party

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

F-12

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

3.	Transactions with Related Party - Continued

The Manager also acts as a sales and purchase broker of the Company in exchange for a commission fee equal to 1% of the gross sale or purchase price of vessels or companies. For the year ended December 31, 2005, an amount of $1,955,450 ($350,500 for the period ended December 31, 2004) was capitalized to the cost of the vessels.

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

The Manager maintained and handled the cash generated from the vessels’ operations up to March 21, 2005. Subsequently, bank accounts were opened in the name of StealthGas Inc. for all the vessels owned. The current account balance with the Manager at December 31, 2005 was a payable of $1,549,837 (a receivable of $1,162,470 for the period ended December 31, 2004) which represents revenues collected less payments made by the Manager on behalf of the ship-owning companies.

4.	Inventories

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

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

5.	Advances for Vessels Acquisitions

The amount shown in the accompanying consolidated balance sheet for the period ended December 31, 2005 amounting to $ 983,000 represents advance payments to sellers of the vessel discussed in note 1(d). The total purchase price of this vessel is $ 9,830,000.

6.	Vessels

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

F-13

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

6.	Vessels - Continued

Vessel costs are analyzed as follows:

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

7.	Deferred Finance Charges

Deferred finance charges amounting to $215,656 represent fees paid to the lenders for obtaining the related loans, net of amortization, and were recorded as a contra to debt in accordance with the company accounting policy. The amortization of financing costs amounted to $41,344 for the year ended December 31, 2005 and is included in Interest and finance costs, net in the accompanying consolidated income statements.

F-14

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

8.	Accrued Liabilities

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

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

9.	Fair value of acquired time charter

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

Vessel				End of Time Charter				Fair value of acquired time Charter				Total accumulated amortization for the year ended 12.31.2005				Unamortized balance at year ended 12.31.2005
Fair value of acquired time charter - Asset
Gas Sincerity				July 2006					(265,000	)			51,681				(213,319	)
Catterick				January 2006					(421,000	)			36,565				(384,435	)
Total									(686,000	)			88,246				(597,754	)
Fair value of acquired time charter - Liability
Gas Prodigy				March 2006					2,150,000				(1,781,429	)			368,571
Gas Oracle				May 2006					700,000				(461,741	)			238,259
Gas Spirit				June 2006					406,000				(31,071	)			374,929
Feisty Gas				August 2006					491,000				(28,770	)			462,230
Total									3,747,000				(2,303,011	)			1,443,989
Grand Total									3,061,000				(2,214,765	)			846,235

10.	Deferred Income

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

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

F-15

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

11.	Long-term Debt

(a)    In March 2005, the Company entered into a $54,000,000 loan agreement with Fortis Bank (the ‘‘Fortis Loan’’). On June 10, 2005, on August 19, 2005 and on November 19, 2005 the amounts of $3,580,500, $1,356,750 and $1,356,750 respectively, were repaid, leaving an outstanding balance of $47,706,000. The term loan was fully drawn down on May 17, 2005 and is repayable in 32 equal consecutive quarterly installments from August 2005 through May 2013, of $1,356,750 plus a balloon payment of $7,003,500 payable together with the last installment. The term loan charges interest at LIBOR plus 0.90% and is secured by a first priority mortgage over the vessels involved plus the assignment of the vessels’ insurances, earnings and the vessels’ operating and retention accounts.

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

The amount outstanding at December 31, 2005 of $47,706,000 bore an average interest rate (including the margin) of 4.66%.

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

(b)    In December 2005, the Company entered into a $50,000,000 loan agreement with DnB NOR bank (the ‘‘DnB Loan’’). The term loan was fully drawn down in two tranches, an amount of $28,000,000 was drawn down on December 7, 2005, and an amount of $22,000,000 was drawn down on December 8, 2005, and is repayable from June 2006 through December 2015. This loan will be repaid in two semi-annual instalments of $3,600,000 each, four semi-annual installments of $2,400,000 each, and fourteen semi-annual installments of $1,800,000 each plus a balloon payment of $8,000,000 payable together with the last installment. The term loan charges interest at LIBOR plus 0.70% and is secured by a first priority mortgage over the vessels involved plus the assignment of the vessels’ insurances, earnings and the vessels’ operating and retention accounts, and the guarantee of StealthGas Inc.

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

The amount outstanding at December 31, 2005 was $54,000,000 and bore an average interest rate (including the margin) of 5.35%.

Accrued bank loan expenses for the year ended December 31, 2005 amounted to $178,313 and is included in interest and finance costs, net in the accompanying consolidated statements of income.

F-16

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

11.	Long-term Debt - Continued

The annual principal payments to be made, for both loans, after December 31, 2005 are as follows:

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

(c)    On May 23, 2005, Empire Spirit Ltd. (the owner of Sweet Dream) and Independent Trader Ltd. (the owner of Gas Oracle) entered into a $14,000,000 loan agreement with Den Norske Bank. The total loan amount had been drawn down at June 01, 2005 since both vessels had been delivered. The loan is repayable in 20 equal consecutive semi-annual installments from December 1, 2005 through May 31, 2015 of $550,000 plus a balloon payment of $3,000,000 payable together with the last installment. The loan can be prepaid, without premium or penalty, at any time giving not less than five days prior written notice to the bank.

The term loan charges interest at LIBOR plus a margin and is secured by a first priority mortgage over the vessels involved plus the personal guarantee of the majority shareholder, the assignment of the vessels’ insurances, earnings and the vessels’ operating and retention accounts.

The term loan contains financial covenants requiring the Company to ensure that the aggregate market value of the mortgaged vessels at all times exceed 125% of the amount outstanding under the term loan.

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

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

The term loan charges interest at LIBOR plus a 0.90% and is secured by a first preferred mortgage over the vessels involved plus the corporate guarantee of Brave Maritime Co. Inc., the assignment of the vessels’ insurances, earnings and the vessels’ operating and retention accounts.

The term loan contains financial covenants requiring the Company to ensure that the aggregate market value of the mortgaged vessels at all times exceed 125% of the amount outstanding under the term loan.

Bank loan interest expense for the year ended December 31, 2005 amounted to $175,804 and has been calculated using an average interest rate of 4.64% and is included in Interest and Finance Costs, net in the accompanying consolidated statements of income. The actual interest rate at December 31, 2005 (LIBOR plus 0.90% margin) was 4.64%.

F-17

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

11.	Long-term Debt - Continued

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

12.	Interest Rate Swap Agreement

On March 31, 2005, the Company entered into an agreement to enter into an interest rate swap on the ‘‘Fortis Loan’’. The initial amount of the swap will be $22,549,000 amortizing to $4,764,250 over its six-year life commencing May 30, 2007, If the United States dollar three month LIBOR is less than 7.5%, the fixed rate is 4.55%. If the United States dollar three month LIBOR is equal to or higher than 7.5%, then the fixed rate will be the United States dollar three month LIBOR, As of December 31, 2005, the fair value of the instrument was $67,000 (liability).

13.	Common Stock

On August 26, 2005, the Company effected a 60,000-for-one stock split. All share and per share data give retroactive effect to the stock split. On October 5, 2005 the Company completed its initial public offering. It issued eight million additional shares bringing the total number of shares outstanding to fourteen million. The holders of the shares are entitled to one vote on all matters submitted to a vote of stockholders and to receive all dividends, if any.

14.	Additional Paid-in Capital

The amount shown in the accompanying consolidated balance sheets, as additional paid-in capital, represents payments made by the stockholders for the acquisitions of the Company's vessels.

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

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

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

The paid in capital and retained earnings of the Vafias Group represents the repayment to the shareholder of the Vafias Group of LPG Carriers, the capital contributed by them of $54,898,497 and the losses of $16,947 of the companies whose vessels were sold to subsidiaries of StealthGas Inc.

F-18

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

15.	Dividends Paid

On July 4, 2005, the Company proposed and approved a dividend to its sole shareholder of $10 million which was paid on July 13, 2005.

16.	Earnings per Common Share

Basic and diluted earnings per common share are computed as follows:

				Period ended December 31, 2004 (restated)				Year ended December 31, 2005
Income:
Net income					531,208				14,536,051
Basic and Diluted earnings per share:
Weighted average common shares - outstanding					6,000,000				7,906,849
Basic and Diluted earnings per share:					0.09				1.84

17.	Voyage Expenses and Vessel Operating Expenses

The amounts in the accompanying consolidated statements of operations are analyzed as follows:

Voyage Expenses				Period ended December 31, 2004 (restated)				Year ended December 31, 2005
Port expenses					83,671				504,224
Bunkers					183,107				1,020,946
Commissions charged by third parties					49,684				688,640
Commissions charged by related party					21,741				436,201
Other voyage expenses					3,000				38,144
Total					341,203				2,688,155

Vessels' Operating Expenses				Period ended December 31, 2004 (restated)				Year ended December 31, 2005
Crew wages and related costs					426,800				5,095,177
Insurance					54,445				729,552
Repairs and maintenance					34,892				753,726
Spares and consumable stores					196,403				1,878,675
Miscellaneous expenses					46,470				638,446
Total					759,010				9,095,576

F-19

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

18.	Income Taxes

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

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

In addition, upon completion of the public offering of the Company’s shares, the management of the Company believes that by virtue of a special rule applicable to situations where the ship-operating companies are beneficiary owned by a publicly traded company like the Company, the more than 50% beneficial ownership requirement can also be satisfied based on the trading volume and the anticipated widely-held ownership of the Company’s shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside the Company’s control.

19.	Financial Instruments

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

20.	Commitments and Contingencies

	•	From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any current legal proceedings or claims.

F-20

Table of Contents

StealthGas Inc.
Notes to the consolidated financial statements
For the period ended December 31, 2004 (restated) and the year ended December 31, 2005
(Expressed in United States Dollars)

20.	Commitments and Contingencies - Continued

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

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

21.	Subsequent Events

	•	On January 6, 2006 the Company’s Board of Directors declared a cash dividend of $0.1875 cents per common share, payable on the January 25, 2006 to stockholders of record on the January 17, 2006.

	•	The Company reached an agreement in principle with DnB NOR Bank to increase its facility an additional $14,000,000 for a total of $64 million to finance the acquisition of the Gas Czar and the Gas Eternity, each expected to be delivered during February/March 2006.

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

	•	On January 23, 2006, the Company entered into an agreement to enter into an interest rate swap on the "DnB Loan". The initial amount of the swap will be $22,500,000 amortizing to $4,410,000 over its ten-year life commencing March 9, 2006. If the United States dollar six month LIBOR is less than or equal to 5.75%, the fixed rate is 4.52%. If the United States dollar six month LIBOR is higher than 5.75%, then the fixed rate will be the United States dollar six month LIBOR less 1.23%.

	•	On February 14, 2006, the Company entered into separate memorandum of agreement to acquire one additional vessel named ‘‘Gas Fortune’’ for a contract price of $9,500,000 which was delivered on February 24, 2006.

F-21

Table of Contents

Exhibit List

	1	Amended and Restated Articles of Incorporation of the Company*

	1	Amended and Restated Bylaws of the Company*

	4.1	Amended and Restated Management Agreement between the Company and Stealth Maritime S.A.*

	4.2	Form of Right of First Refusal among the Company, Harry Vafias and Stealth Maritime S.A.*

	4.3	Form of Equity Compensation Plan*

	4.4	Loan Agreement with Fortis Bank (Nederland) N.V. and Deed of Release of Security and Obligations*

	4.5	Loan Agreement with DnB Nor Bank ASA

	4.6	Supplemental Agreement with DnB Nor Bank ASA

	8	Subsidiaries of the Company

	12.1	Certification of the Chief Executive Officer

	12.2	Certification of the Chief Financial Officer

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

	13.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002

*	Previously filed as an exhibit to the Company’s Registration Statement on Form F-1 (File No. 333-127905 ) filed with the SEC and hereby incorporated by reference to such Registration Statement.

EX-4.5

                              Date 5 December 2005

                               EMPIRE SPIRIT LTD.
                             INDEPENDENT TRADER LTD.
                                 TRIATHLON INC.
                                SOLEIL TRUST INC.
                          JUNGLE INVESTMENT LIMITED AND
                         NORTHERN YIELD SHIPPING LIMITED
                         as joint and several borrowers

                                     - and -

                                DNB NOR BANK ASA
                                    as Lender

                                   ----------

                                 LOAN AGREEMENT

                                   ----------

 relating to a US$50,000,000 facility to refinance part of the acquisition cost
   of the LPG carriers "GAS MARATHON", "GAS SINCERITY", "GAS CATHAR" and "GAS
 LEGACY" and to refinance the existing indebtedness secured on the LPG carriers
                         "SWEET DREAM" and "GAS ORACLE"

                            WATSON, FARLEY & WILLIAMS
                                     PIRAEUS



                                      INDEX

CLAUSE                                                                      PAGE
- ------                                                                      ----
1    INTERPRETATION                                                           1
2    FACILITY                                                                17
3    DRAWDOWN                                                                17
4    INTEREST                                                                18
5    INTEREST PERIODS                                                        20
6    DEFAULT INTEREST                                                        20
7    REPAYMENT AND PREPAYMENT                                                21
8    CONDITIONS PRECEDENT                                                    23
9    REPRESENTATIONS AND WARRANTIES                                          25
10   GENERAL UNDERTAKINGS                                                    27
11   CORPORATE UNDERTAKINGS                                                  30
12   INSURANCE                                                               30
13   SHIP COVENANTS                                                          34
14   SECURITY COVER                                                          38
15   PAYMENTS AND CALCULATIONS                                               40
16   APPLICATION OF RECEIPTS                                                 40
17   APPLICATION OF EARNINGS                                                 41
18   EVENTS OF DEFAULT                                                       42
19   FEES AND EXPENSES                                                       45
20   INDEMNITIES                                                             46
21   NO SET-OFF OR TAX DEDUCTION                                             48
22   ILLEGALITY, ETC                                                         49
23   INCREASED COSTS                                                         49
24   SET-OFF                                                                 50



25   TRANSFERS AND CHANGES IN LENDING OFFICE                                 51
26   VARIATIONS AND WAIVERS                                                  51
27   NOTICES                                                                 52
28   JOINT AND SEVERAL LIABILITY                                             53
29   SUPPLEMENTAL                                                            54
30   LAW AND JURISDICTION                                                    55
SCHEDULE 1 DRAWDOWN NOTICE                                                   56
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS                                     57
EXECUTION PAGE                                                               62



THIS AGREEMENT is made on 5 December 2005

BETWEEN

(1)    EMPIRE SPIRIT LTD., INDEPENDENT TRADER LTD. TRIATHLON INC., SOLEIL TRUST
       INC., JUNGLE INVESTMENT LIMITED and NORTHERN YIELD SHIPPING LIMITED as
       joint and several borrowers (together, the "BORROWERS" and each a
       "BORROWER"); and

(2)    DNB NOR BANK ASA of Norway acting through its office at 20 St Dunstan's
       Hill, London EC3R 8HY, England as "LENDER".

BACKGROUND

(A)    The Lender has agreed to make available to the Borrowers a loan facility
       of up to $50,000,000 divided into two tranches for the purposes and in
       the amounts referred to below:

       (1)  the first tranche, to be in the amount equal to the lesser of (i)
            $36,000,000 and (ii) an amount equal to 65 per cent. of the lesser
            of (A) the aggregate Market Values of the New Ships and (B) the
            aggregate Purchase Price of the New Ships, shall be made available
            in up to four advances for the purpose of refinancing part of the
            Purchase Price of each New Ship; and

       (2)  the second tranche, to be in the amount of $14,000,000 shall be made
            available in a single advance to refinance the existing indebtedness
            secured on m.vs. "SWEET DREAM" and "GAS ORACLE".

(B)    The Borrowers may, if they wish, from time to time hedge their exposure
       under this Agreement to interest rate fluctuations by entering into
       interest rate swap transactions with the Lender.

IT IS AGREED as follows:

1      INTERPRETATION

1.1    DEFINITIONS. Subject to Clause 1.5, in this Agreement:

       "ACCOUNTS SECURITY DEED" means a deed creating security in respect of the
       Earnings Accounts and the Retention Account in favour of the Lender, in
       such form as the Lender may approve or require;

       "ADVANCE" means the principal amount of each borrowing by the Borrowers
       under this Agreement;

       "APPROVED MANAGER" means, in the case of:

       (a)  "GAS ORACLE" ,"GAS CATHAR", "GAS MARATHON" and "GAS SINCERITY",
            Hanseatic Shipping Co. Ltd. whose principal office is at Hanseatic
            House 111, Spyrou Araouzou Street, Limassol 3601, Cyprus;

       (b)  "SWEET DREAM", Samos Steamship Co. whose principal office is at
            Zefirou Street, P. Faliro, 175 64, Greece; and



       (c)  "GAS LEGACY", Swan Shipping Corporation whose principal office is at
            3F S&L Building, 1500 Roxas Boulevard, Ermita, Manila

       or any other company which the Lender may approve from time to time as
       the commercial and/or technical manager of the Ships (or any of them);

       "ASSET COVER RATIO" means, at any relevant time, the ratio of (i) the
       average of the Loan outstanding for the 90 days immediately prior to and
       including a Margin Calculation Date less the aggregate of any amounts
       standing to the credit of the Earnings Accounts on that Margin
       Calculation Date to (ii) the aggregate Market Value of the Ships subject
       to a Mortgage on that Margin Calculation Date;

       "AVAILABILITY PERIOD" means the period commencing on the date of this
       Agreement and ending on:

       (d)  (i) in respect of Tranche A, 31 December 2005 and (ii) in respect of
            Tranche B, 31 January 2006 (or, in either case, such later date as
            the Lender may agree with the Borrowers, such agreement not to be
            unreasonably withheld by the Lender); or

       (b)  if earlier, the date on which the Commitment is fully borrowed,
            cancelled or terminated;

       "BAREBOAT CHARTERER" means:

       (a)  in the case of "GAS MARATHON", the Gas Marathon Bareboat Charterer;
            and

       (b)  in the case of "SWEET DREAM", the Sweet Dream Bareboat Charterer,

       and, in the plural, means both of them;

       "BAREBOAT CHARTERS" means, together, the Gas Marathon Bareboat Charter
       and the Sweet Dream Bareboat Charter and, in the singular, means either
       of them;

       "BORROWERS" means, together, Empire, Independent, Triathlon, Soleil,
       Jungle and Yield and in the singular means any of them;

       "BUMI" means Bumi Aramda Navigation Son. BHD, a company incorporated in
       Malaysia with its principal place of business at 1st Floor, Rumah Rohas,
       61 Jalan Raju Abdullah, Kamping Baru, 50300 Kuala Lumpur;

       "BUSINESS DAY" means a day on which banks are open in London and, in
       respect of a day on which a payment is required to be made under a
       Finance Document, also in New York City;

       "CEDRIC" means Cedric Finance Inc., a corporation incorporated and
       existing under the laws of the Marshall Islands and having its registered
       address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
       Marshall Islands;

       "CHARTER" means, in relation to a Ship, any time charter or other
       contract for its employment (other than the Gas Marathon Bareboat
       Charter, the Sweet Dream Bareboat Charter and the Gas Oracle Charter) for
       a term of at least 13 months, or capable of exceeding 13 months, whether
       or not already in existence at the date of this Agreement, to be
       performed at any time during the Security Period;


                                        2



       "CHARTER ASSIGNMENT" means in relation to a Ship, a specific assignment
       of the rights of the relevant Borrower under any Charter pursuant to
       Clause 13.15 and any guarantee of such Charter, to be executed by the
       Borrower owning that Ship in favour of the Lender in such form as the
       Lender may approve or require;

       "COMMITMENT" means $50,000,000, as that amount may be reduced, cancelled
       or terminated in accordance with this Agreement;

       "CONFIRMATION" and "EARLY TERMINATION DATE", in relation to any
       continuing Transaction, have the meanings given in the Master Agreement;

       "CONTRACTUAL CURRENCY" has the meaning given in Clause 20.4;

       "CORPORATE GUARANTEE" means the guarantee of the obligations of the
       Borrowers under this Agreement and the Finance Documents executed or to
       be executed by the Corporate Guarantor in favour of the Lender in such
       form as the Lender may approve or require;

       "CORPORATE GUARANTOR" means STEALTHGAS INC., a company incorporated and
       existing under the laws of the Marshall Islands and having its registered
       office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
       the Marshall Islands, MH96960;

       "DEED OF COVENANT" means in relation to each of "GAS CATHAR" and "SWEET
       DREAM", a deed of covenant collateral to the Mortgage relating to that
       Ship, executed or to be executed by the Owner of such Ship in favour of
       the Lender, in such form as the Lender may approve or require and in the
       plural means both of them;

       "DOLLARS" and "$" means the lawful currency for the time being of the
       United States of America;

       "DRAWDOWN DATE" means, in relation to Tranche A and an Advance under
       Tranche B, the date requested by the Borrowers for Tranche A or, as the
       case may be, the relevant Advance to be made, or (as the context
       requires) the date on which Tranche A or, as the case may be, the
       relevant Advance is actually made;

       "DRAWDOWN NOTICE" means a notice in the form set out in Schedule 1 (or in
       any other form which the Lender approves or reasonably requires);

       "DREW" means Drew International Inc., a corporation incorporated and
       existing under the laws of the Marshall Islands and having its registered
       address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
       Marshall Islands;

       "EARNINGS" means, in relation to a Ship, all moneys whatsoever which are
       now, or later become, payable (actually or contingently) to the Borrower
       owning the Ship and which arise out of the use or operation of the Ship,
       including (but not limited to):

       (a)  all freight, hire and passage moneys, compensation payable to the
            Borrower owning the Ship in the event of requisition of the Ship for
            hire, remuneration for salvage and towage services, demurrage and
            detention moneys and damages for breach (or payments for variation
            or termination) of any charterparty or other contract for the
            employment of the Ship;

       (b)  all moneys which are at any time payable under Insurances in respect
            of loss of earnings; and


                                        3



       (c)  if and whenever the Ship is employed on terms whereby any moneys
            falling within paragraphs (a) or (b) are pooled or shared with any
            other person, that proportion of the net receipts of the relevant
            pooling or sharing arrangement which is attributable to the Ship;

       "EARNINGS ACCOUNT" means, in relation to a Ship, an account in the name
       of the Borrower owning that Ship with the Lender in England designated
       "[name of Borrower] - Earnings Account" or any other account (with that
       or another office of the Lender) which is designated by the Lender as an
       Earnings Account for the purposes of this Agreement, and in the plural
       means all of them;

       "EMPIRE" means Empire Spirit Ltd, a corporation incorporated and existing
       under the laws of the Marshall Islands and having its registered address
       at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the
       Marshall Islands;

       "ENVIRONMENTAL CLAIM" means:

       (a)  any claim by any governmental, judicial or regulatory authority
            which arises out of an Environmental Incident or an alleged
            Environmental Incident or which relates to any Environmental Law; or

       (e)  any claim by any other person which relates to an Environmental
            Incident or to an alleged Environmental Incident,

       and "CLAIM" means a claim for damages, compensation, fines, penalties or
       any other payment of any kind, whether or not similar to the foregoing;
       an order or direction to take, or not to take, certain action or to
       desist from or suspend certain action; and any form of enforcement or
       regulatory action, including the arrest or attachment of any asset;

       "ENVIRONMENTAL INCIDENT" means:

       (a)  any release of Environmentally Sensitive Material from a Ship; or

       (b)  any incident in which Environmentally Sensitive Material is released
            from a vessel other than a Ship and which involves a collision
            between a Ship and such other vessel or some other incident of
            navigation or operation, in either case, in connection with which a
            Ship is actually or potentially liable to be arrested, attached,
            detained or injuncted and/or a Ship and/or any Vessel and/or any
            operator or manager of the Ship is at fault or allegedly at fault or
            otherwise liable to any legal or administrative action; or

       (c)  any other incident in which Environmentally Sensitive Material is
            released otherwise than from a Ship and in connection with which a
            Ship is actually or potentially liable to be arrested and/or where
            any Vessel and/or any operator or manager of a Ship is at fault or
            allegedly at fault or otherwise liable to any legal or
            administrative action;

       "ENVIRONMENTAL LAW" means any law relating to pollution or protection of
       the environment, to the carriage of Environmentally Sensitive Material or
       to actual or threatened releases of Environmentally Sensitive Material;

       "ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products and any
       other substance (including any chemical, gas or other hazardous or
       noxious substance) which is (or is capable of being or becoming)
       polluting, toxic or hazardous;


                                        4



       "EVENT OF DEFAULT" means any of the events or circumstances described in
       Clause 18.1;

       "EXISTING LOAN AGREEMENT" means a loan agreement dated 23 May 2005 and
       made between (i) Empire and Independent as joint and several borrowers
       and (ii) the Lender as lender in respect of a loan facility of
       $14,000,000;

       "FINANCE DOCUMENTS" means:

       (a)  this Agreement;

       (b)  the Corporate Guarantee;

       (c)  the Master Agreement;

       (d)  the Mortgages;

       (e)  the Deeds of Covenant;

       (f)  the General Assignments;

       (g)  the Master Agreement Assignment;

       (h)  the Accounts Security Deed;

       (i)  the Shares Pledges;

       (j)  the Gas Marathon Tripartite Agreement;

       (k)  the Gas Oracle Charter Assignment;

       (l)  the Sweet Dream Bareboat Charter Assignment;

       (m)  any Charter Assignment; and

       (n)  any other document (whether creating a Security Interest or not)
            which is executed at any time by any Borrower or any other person as
            security for, or to establish any form of subordination or
            priorities arrangement in relation to, any amount payable to the
            Lender under this Agreement or any of the other documents referred
            to in this definition;

       "FINANCIAL INDEBTEDNESS" means, in relation to a person (the "DEBTOR"), a
       liability of the debtor:

       (a)  for principal, interest or any other sum payable in respect of any
            moneys borrowed or raised by the debtor;

       (b)  under any loan stock, bond, note or other security issued by the
            debtor;

       (c)  under any acceptance credit, guarantee or letter of credit facility
            made available to the debtor;

       (d)  under a financial lease, a deferred purchase consideration
            arrangement or any other agreement having the commercial effect of a
            borrowing or raising of money by the debtor;


                                        5



       (e)  under any foreign exchange transaction any interest or currency swap
            or any other kind of derivative transaction entered into by the
            debtor or, if the agreement under which any such transaction is
            entered into requires netting of mutual liabilities, the liability
            of the debtor for the net amount; or

       (f)  under a guarantee, indemnity or similar obligation entered into by
            the debtor in respect of a liability of another person which would
            fall within (a) to (e) if the references to the debtor referred to
            the other person;

       "GAS MARATHON BAREBOAT CHARTER" means the bareboat charterparty agreement
       dated 12 August 2005 and entered into between the Gas Marathon Bareboat
       Charterer and Brave Maritime Corporation Inc. which has been novated to
       Triathlon by a novation agreement entered or to be entered into between
       Triathlon, the Gas Marathon Bareboat Charterer and Brave Maritime
       Corporation Inc. in relation to "GAS MARATHON";

       "GAS MARATHON BAREBOAT CHARTER PERIOD" means the period during which "GAS
       MARATHON" is operating under the Gas Marathon Bareboat Charter;

       "GAS MARATHON BAREBOAT CHARTERER" means Petredec S.A., a company
       incorporated and existing under the laws of Bermuda;

       "GAS MARATHON TRIPARTITE AGREEMENT" means an agreement dealing with
       (inter alia) the operation of "GAS MARATHON" during the Gas Marathon
       Bareboat Charter Period, made or to be made between (i) Triathlon, (ii)
       the Gas Marathon Bareboat Charterer and (iii) the Lender, in such form as
       the Lender may approve or require;

       "GAS ORACLE CHARTER" means the time charter party dated 14 August 2000 as
       amended by Addendum 1 dated 8 March 2001, Addendum 2 dated 20 November
       2001, Addendum 3 dated 15 March 2002, Addendum 4 dated 12 March 2003 and
       Addendum 5 dated 9 April 2004, and entered into between Bumi as original
       owner and KSS as time charterer in relation to "GAS ORACLE", as novated
       to Independent as new owner pursuant to the terms of a novation agreement
       dated 24 March 2005 and entered into by (i) Bumi, (ii) KSS and (iii)
       Independent;

       "GAS ORACLE CHARTER ASSIGNMENT" means in relation to "GAS ORACLE", a
       specific assignment of the rights of Independent under the Gas Oracle
       Charter, to be executed by Independent in favour of the Lender, in such
       form as the Lender may approve or require;

       "GENERAL ASSIGNMENT" means, in relation to each Ship, a general
       assignment of the Earnings, the Insurances and any Requisition
       Compensation of that Ship, in such form as the Lender may approve or
       require, and in the plural means all of them;

       "INDEPENDENT" means Independent Trader Ltd, a corporation incorporated
       and existing under the laws of the Marshall Islands and having its
       registered address at Trust Company Complex, Ajeltake Road, Ajeltake
       Island, Majuro, the Marshall Islands;

       "INSURANCES" means, in relation to a Ship:

       (a)  all policies and contracts of insurance, including entries of the
            Ship in any protection and indemnity or war risks association, which
            are effected in respect of the Ship, her Earnings or otherwise in
            relation to her; and

       (b)  all rights and other assets relating to, or derived from, any of the
            foregoing, including any rights to a return of a premium;


                                        6



       "INTEREST PERIOD" means a period determined in accordance with Clause 5;

       "ISM CODE" means, in relation to its application to each Borrower, its
       Ship and its operation:

       (a)  'The International Management Code for the Safe Operation of Ships
            and for Pollution Prevention', currently known or referred to as the
            'ISM Code', adopted by the Assembly of the International Maritime
            Organisation by Resolution A.741(18) on 4 November 1993 and
            incorporated on 19 November 1994 into chapter IX of the
            International Convention for the Safety of Life at Sea 1974 (SOLAS
            1974); and

       (b)  all further resolutions, circulars, codes, guidelines, regulations
            and recommendations which are now or in the future issued by or on
            behalf of the International Maritime Organisation or any other
            entity with responsibility for implementing the ISM Code, including
            without limitation, the 'Guidelines on implementation or
            administering of the International Safety Management (ISM) Code by
            Administrations' produced by the International Maritime
            Organisations pursuant to Resolution A.788(19) adopted on 25
            November 1995,

       as the same may be amended, supplemented or replaced from time to time;

       "ISM CODE DOCUMENTATION" includes:

       (a)  the document of compliance (DOC) and safety management certificate
            (SMC) issued pursuant to the ISM Code in relation to each Ship
            within the periods specified by the ISM Code; and

       (b)  all other documents and data which are relevant to the ISM SMS and
            its implementation and verification which the Lender may require;
            and

       (c)  any other documents which are prepared or which are otherwise
            relevant to establish and maintain a Ship's or the owner of that
            Ship's compliance with the ISM Code which the Lender may require;

       "ISM SMS" means the safety management system for each Ship which is
       required to be developed, implemented and maintained under the ISM Code;

       "JUNGLE" means Jungle Investment Limited, a company incorporated and
       existing under the laws of Malta and having its registered address at
       147/1 St. Lucia Street, Valletta, Malta;

       "KSS" means KSS Line Ltd, a company organised and existing under the laws
       of South Korea with its principal place of business at 9th Floor, Gwanhun
       Building, 198-42, Gwanhun-dong, Jonyno-gu, Seoul, Korea;

       "LENDER" means DnB NOR Bank ASA, acting through its office at 20 St.
       Dunstan's Hill, London EC3R 8HY, England (or through another branch
       notified to the Borrower under Clause 25.6) or its successor or assign;

       "LIBOR" means, for an Interest Period:

       (a)  the rate per annum equal to the offered quotation for deposits in
            Dollars for a period equal to, or as near as possible equal to, the
            relevant Interest Period which appears on Telerate Page 3750 at or
            about 11.00 a.m. (London time) on the second Business Day prior to
            the commencement of that Interest Period (and, for the purposes of
            this


                                        7



            Agreement, "Telerate Page 3750" means the display designated as
            "Page 3750" on the Telerate Service or such other page as may
            replace Page 3750 on that service for the purpose of displaying
            rates comparable to that rate) or on such other service as may be
            nominated by the British Bankers' Association as the information
            vendor for the purpose of displaying the British Bankers'
            Association Interest Settlement Rates for Dollars; or

       (b)  in relation to an Interest Period of any other duration or if no
            rate is quoted on Telerate Page 3750, the rate per annum determined
            by the Lender to be the arithmetic mean (rounded upwards, if
            necessary, to the nearest one-sixteenth of one per cent.) of the
            rates per annum determined by the Lender as the rate at which
            deposits in Dollars are offered to the Lender by leading banks in
            the London Interbank Market at the Lender's request at or about
            11.00 a.m. (Rotterdam time) on the Quotation Date for that Interest
            Period for a period equal to that Interest Period and for delivery
            on the first Business Day of it;

       "LOAN" means the principal amount for the time being outstanding under
       this Agreement;

       "MAJOR CASUALTY" means, in relation to a Ship, any casualty to the Ship
       in respect of which the claim or the aggregate of the claims against all
       insurers, before adjustment for any relevant franchise or deductible,
       exceeds $500,000 or the equivalent in any other currency;

       "MARGIN" means:

       (a)  at all times until the earlier of (i) the final Drawdown Date and
            (ii) the last day of the Availability Period in respect of Tranche
            B, 0.70 per cent. per annum; and

       (f)  at all times thereafter when the Security Cover Ratio is:

            (i)   equal to or lower than 130 per cent., 0.85 per cent. per
                  annum;

            (i)   higher than 130 per cent. and lower than 150 per cent., 0.75
                  per cent. per annum; and

            (ii)  equal to or higher than 150 per cent., 0.70 per cent. per
                  annum;

       "MARGIN CALCULATION DATE" has the meaning given to it in Clause 4.12;

       "MARKET VALUE" means the market value of a Ship at any date determined in
       accordance with Clause 14.3;

       "MASTER AGREEMENT" means the master agreement (on the 1992 ISDA
       (Multicurrency - Crossborder) form) made or to be made between the
       Borrowers and the Lender and includes all Transactions from time to time
       entered into and Confirmations from time to time exchanged thereunder;

       "MASTER AGREEMENT ASSIGNMENT" means the assignment of the Master
       Agreement in favour of the Lender executed or to be executed by the
       Borrowers, in such form as the Lender may approve or require;

       "MOA" means in relation to each New Ship, the memorandum of agreement
       made between the Owner of such New Ship as buyer and the company referred
       to therein as the seller and, in the plural, means all of them;

       "MORTGAGE" means:


                                        8



       (a)  in the case of "SWEET DREAM", a first priority Bahamas statutory
            mortgage executed or to be executed by Empire in favour of the
            Lender;

       (b)  in the case of "GAS ORACLE", a first preferred Marshall Islands
            mortgage, to be executed by Independent in favour of the Lender;

       (c)  in the case of "GAS CATHAR", a first priority Maltese statutory
            mortgage, executed or to be executed by Jungle in favour of the
            Lender;

       (d)  in the case of "GAS LEGACY", a first priority Cyprus statutory
            mortgage, executed or to be executed by Yield in favour of the
            Lender;

       (e)  in the case of "GAS SINCERITY", a first preferred Panamanian
            mortgage, executed or to be executed by Soleil in favour of the
            Lender; and

       (f)  in the case of "GAS MARATHON", a first preferred Panamanian
            mortgage, executed or to be executed by Triathlon in favour of the
            Lender,

       each to be in such form as the Lender may approve or require and in the
       plural means all of them;

       "NEGOTIATION PERIOD" has the meaning given in Clause 4.6;

       "NEW SHIPS" means:

       (a)  the 1995-built LPG carrier of 6,500 cubic metres registered under
            Panama flag in the ownership of Triathlon with the name "GAS
            MARATHON" ("GAS MARATHON");

       (b)  the 2000-built LPG carrier of 4,100 cubic metres registered under
            Panama flag in the ownership of Soleil with the name "GAS SINCERITY"
            ("GAS SINCERITY");

       (c)  the 2001-built LPG carrier of 7,500 cubic metres registered under
            Malta flag in the ownership of Jungle with the name "GAS CATHAR"
            ("GAS CATHAR"); and

       (d)  the 1998-built LPG carrier of 3,514 cubic metres registered under
            Cyprus flag in the ownership of Yield with the name "GAS LEGACY"
            ("GAS LEGACY");

       "OWNER" means, in relation to each Ship, the Borrower whose name is set
       out below opposite to such Ship:

       NAME OF SHIP         OWNER
       ---------------   -----------
       "GAS ORACLE"      Independent

       "SWEET DREAM"     Empire

       "GAS MARATHON"    Triathlon

       "GAS SINCERITY"   Soleil

       "GAS CATHAR"      Jungle


                                        9



       "GAS LEGACY" Yield

       and, in the plural means all of them;

       "PAYMENT CURRENCY" has the meaning given in Clause 20.4;

       "PERMITTED SECURITY INTERESTS" means:

       (a)  Security Interests created by the Finance Documents;

       (b)  liens for unpaid master's and crew's wages in accordance with usual
            maritime practice;

       (c)  liens for salvage;

       (d)  liens arising by operation of law for not more than 2 months'
            prepaid hire under any charter in relation to a Ship not prohibited
            by this Agreement;

       (e)  liens for master's disbursements incurred in the ordinary course of
            trading and any other lien arising by operation of law or otherwise
            in the ordinary course of the operation, repair or maintenance of a
            Ship, provided such liens do not secure amounts more than 30 days
            overdue (unless the overdue amount is being contested by the
            Borrower in good faith by appropriate steps) and subject, in the
            case of liens for repair or maintenance, to Clause 13.12(g);

       (f)  any Security Interest created in favour of a plaintiff or defendant
            in any proceedings or arbitration as security for costs and expenses
            where the Borrower is actively prosecuting or defending such
            proceedings or arbitration in good faith; and

       (g)  Security Interests arising by operation of law in respect of taxes
            which are not overdue for payment or in respect of taxes being
            contested in good faith by appropriate steps and in respect of which
            appropriate reserves have been made;

       "PERTINENT DOCUMENT" means:

       (a)  any Finance Document;

       (b)  any policy or contract of insurance contemplated by or referred to
            in Clause 12 or any other provision of this Agreement or another
            Finance Document;

       (c)  any other document contemplated by or referred to in any Finance
            Document; and

       (d)  any document which has been or is at any time sent by or to the
            Lender in contemplation of or in connection with any Finance
            Document or any policy, contract or document falling within
            paragraphs (b) or (c);

       "PERTINENT JURISDICTION", in relation to a company, means:

       (a)  England and Wales;

       (b)  the country under the laws of which the company is incorporated or
            formed;

       (c)  a country in which the company's central management and control is
            or has recently been exercised;


                                       10



       (d)  a country in which the overall net income of the company is subject
            to corporation tax, income tax or any similar tax;

       (e)  a country in which assets of the company (other than securities
            issued by, or loans to, related companies) having a substantial
            value are situated, in which the company maintains a permanent place
            of business, or in which a Security Interest created by the company
            must or should be registered in order to ensure its validity or
            priority; and

       (f)  a country the courts of which have jurisdiction to make a winding
            up, administration or similar order in relation to the company or
            which would have such jurisdiction if their assistance were
            requested by the courts of a country referred to in paragraphs (b)
            or (c) above;

       "PERTINENT MATTER" means:

       (a)  any transaction or matter contemplated by, arising out of, or in
            connection with a Pertinent Document; or

       (b)  any statement relating to a Pertinent Document or to a transaction
            or matter falling within paragraph (a),

       and covers any such transaction, matter or statement, whether entered
       into, arising or made at any time before the signing of this Agreement or
       on or at any time after that signing;

       "POTENTIAL EVENT OF DEFAULT" means an event or circumstance which, with
       the giving of any notice, the lapse of time, a determination of the
       Lender and/or the satisfaction of any other condition, would constitute
       an Event of Default;

       "PURCHASE PRICE" means, in relation to a New Ship, the aggregate amount
       paid or to be paid by the relevant Borrower to the seller of that New
       Ship pursuant to the MOA which relates thereto;

       "QUINTA" means Quinta Trading Co., a corporation incorporated and
       existing under the laws of the Marshall Islands and having its registered
       address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
       Marshall Islands;

       "QUOTATION DATE" means, in relation to any Interest Period (or any other
       period for which an interest rate is to be determined under any provision
       of a Finance Document), the day on which quotations would ordinarily be
       given by leading banks in the London Interbank Market for deposits in the
       currency in relation to which such rate is to be determined for delivery
       on the first day of that Interest Period or other period;

       "REINA" means Reina Properties Corp., a corporation incorporated and
       existing under the laws of the Marshall Islands and having its registered
       address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
       Marshall Islands;

       "RELEVANT PERSON" has the meaning given in Clause 18.7;

       "REPAYMENT DATE" means a date on which a repayment is required to be made
       under Clause 7;


                                       11



       "REQUISITION COMPENSATION" includes all compensation or other moneys
       payable by reason of any act or event such as is referred to in paragraph
       (b) of the definition of "Total Loss";

       "RETENTION ACCOUNT" means an account in the joint names of the Borrowers
       with the Lender in England designated "Empire et al US$50m facility -
       Retention Account" or any other account (with that or another office of
       the Lender) which is designated by the Lender as the Retention Account
       for the purposes of this Agreement;

       "SECURED LIABILITIES" means all liabilities which the Borrowers, the
       Security Parties or any of them have, at the date of this Agreement or at
       any later time or times, under or in connection with any Finance Document
       or any judgment relating to any Finance Document; and for this purpose,
       there shall be disregarded any total or partial discharge of these
       liabilities, or variation of their terms, which is effected by, or in
       connection with, any bankruptcy, liquidation, arrangement or other
       procedure under the insolvency laws of any country;

       "SECURITY COVER RATIO" means at any time, the ratio of:

       (a)  the aggregate of:

            (iii)  the aggregate Market Values of the Ships then subject to a
                   Mortgage; and

            (iv)   the net realisable value of any additional security
                   previously provided under Clause 14 of this Agreement; to

       (b)  the aggregate of the Loan and any Swap Exposure at any relevant
            time;

       "SECURITY INTEREST" means:

       (a)  a mortgage, charge (whether fixed or floating) or pledge, any
            maritime or other lien or any other security interest of any kind;

       (b)  the security rights of a plaintiff under an action in rem; and

       (c)  any arrangement entered into by a person (A) the effect of which is
            to place another person (B) in a position which is similar, in
            economic terms, to the position in which B would have been had he
            held a security interest over an asset of A; but this paragraph (c)
            does not apply to a right of set off or combination of accounts
            conferred by the standard terms of business of a bank or financial
            institution;

       "SECURITY PARTY" means each of the Corporate Guarantor and each
       Shareholder and any other person (except the Lender) who, as a surety or
       mortgagor, as a party to any subordination or priorities arrangement, or
       in any similar capacity, executes a document falling within the last
       paragraph of the definition of "Finance Documents";

       "SECURITY PERIOD" means the period commencing on the date of this
       Agreement and ending on the date on which the Lender notifies the
       Borrowers and the Security Parties that:

       (a)  all amounts which have become due for payment by any Borrower or any
            Security Party under the Finance Documents have been paid;

       (b)  no amount is owing or has accrued (without yet having become due for
            payment) under any Finance Document;


                                       12



       (c)  neither any Borrower nor any Security Party has any future or
            contingent liability under Clause 19, 20, or 21 or any other
            provision of this Agreement or another Finance Document; and

       (d)  the Lender does not consider that there is a significant risk that
            any payment or transaction under a Finance Document would be set
            aside, or would have to be reversed or adjusted, in any present or
            possible future bankruptcy of a Borrower or a Security Party or in
            any present or possible future proceeding relating to a Finance
            Document or any asset covered (or previously covered) by a Security
            Interest created by a Finance Document;

       "SHARES PLEDGE" means, in relation to a Borrower, the pledge of all the
       shares of and in that Borrower, executed or to be executed by the
       relevant Shareholder in favour of the Lender in such form as the Lender
       may approve or require and, in the plural, means all of them.

       "SHAREHOLDER" means:

       (a)  in the case of Independent, Reina;

       (b)  in the case of Empire, Quinta;

       (c)  in the case of Triathlon, Stealthgas;

       (d)  in the case of Soleil, Stealthgas;

       (e)  in the case of Jungle, Drew; and

       (f)  in the case of Yield, Cedric,

       and in the plural means all of them;

       "SHIPS" means, together, the New Ships and:

       (a)  the 1990-built LPG Carrier of 3,000 cubic metres registered under
            Marshall Islands flag in the ownership of Independent with the name
            "GAS ORACLE" ("GAS ORACLE"); and

       (b)  the 1997-built LPG Carrier of 5,000 cubic metres registered under
            Bahamas flag in the ownership of Empire with the name "SWEET DREAM"
            ("SWEET DREAM"),

       and, in the singular, means any of them;

       "SOLEIL" means Soleil Trust Inc., a corporation incorporated and existing
       under the laws of Marshall Islands and having its registered address at
       Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
       Islands;

       "STEALTHGAS" means Stealthgas Inc., a company incorporated and existing
       under the laws of the Marshall Islands and having its registered office
       at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the
       Marshall Islands, MH96960;

       "SWAP EXPOSURE" means, as at any relevant date the aggregate net amount
       in Dollars which would be payable by the Borrowers to the Lender under
       (and calculated in accordance with) section 6(e) (Payments on Early
       Termination) of the Master Agreement if an Early Termination Date had
       occurred on the relevant date in relation to all continuing Transactions
       entered into between the Borrowers and the Lender;


                                       13



       "SWEET DREAM BAREBOAT CHARTER" means the bareboat charterparty agreement
       dated 1 March 2005 and entered into between the Sweet Dream Bareboat
       Charterer and Empire in relation to "SWEET DREAM";

       "SWEET DREAM BAREBOAT CHARTER ASSIGNMENT" means, in relation to "SWEET
       DREAM", a specific assignment of the rights of Empire under the Sweet
       Dream Bareboat Charter, to be executed by Empire in favour of the Lender
       in such form as the Lender may approve or require;

       "SWEET DREAM BAREBOAT CHARTER PERIOD" means, the period during which
       "SWEET DREAM" is operating under the Sweet Dream Bareboat Charter;

       "SWEET DREAM BAREBOAT CHARTERER" means Reo Investments S.A., a company
       incorporated and existing under the law of the Republic of Liberia and
       having its registered address at 80 Broad Street, Monrovia, Liberia;

       "TOTAL LOSS" means in relation to a Ship:

       (a)  actual, constructive, compromised, agreed or arranged total loss of
            the Ship;

       (b)  any expropriation, confiscation, requisition or acquisition of the
            Ship, whether for full consideration, a consideration less than its
            proper value, a nominal consideration or without any consideration,
            which is effected by any government or official authority or by any
            person or persons claiming to be or to represent a government or
            official authority (excluding a requisition for hire for a fixed
            period not exceeding 1 year without any right to an extension)
            unless it is within 1 month redelivered to the full control of the
            Borrower owning the Ship;

       (c)  any arrest, capture, seizure or detention of the Ship (including any
            hijacking or theft) unless it is within 30 days redelivered to the
            full control of the Borrower owning the Ship;

       "TOTAL LOSS DATE" means in relation to a Ship:

       (a)  in the case of an actual loss of the Ship, the date on which it
            occurred or, if that is unknown, the date when the Ship was last
            heard of;

       (b)  in the case of a constructive, compromised, agreed or arranged total
            loss of the Ship, the earliest of:

            (i)   the date on which a notice of abandonment is given to the
                  insurers; and

            (ii)  the date of any compromise, arrangement or agreement made by
                  or on behalf of Borrower owning the Ship with the Ship's
                  insurers in which the insurers agree to treat the Ship as a
                  total loss; and

       (c)  in the case of any other type of total loss, on the date (or the
            most likely date) on which it appears to the Lender that the event
            constituting the total loss occurred;

       "TRANCHE" means each of Tranche A and Tranche B and in the plural means
       both of them;


                                       14



       "TRANCHE A" means an amount of Fourteen million Dollars ($14,000,000) to
       be made available by the Lender to the Borrowers in a single Advance in
       accordance with Clauses 2.2 and 3.2;

       "TRANCHE B" means an amount being equal to the lesser of (a) $36,000,000
       and (b) an amount equal to 65 per cent. of the lesser of (i) the
       aggregate Market Values of the New Ships and (ii) the aggregate Purchase
       Price of the New Ship to be made available by the Lender to the Borrowers
       in up to four Advances in accordance with Clauses 2.2 and 3.2;

       "TRANSACTION" has the meaning given in the Master Agreement;

       "TRIATHLON" means Triathlon Inc., a corporation incorporated and existing
       under the laws of Marshall Islands and having its registered address at
       Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
       Islands; and

       "YIELD" means Northern Yield Shipping Limited, a company incorporated and
       existing under the laws of Cyprus and having its registered address at
       Agias Elenis 6, Agias Elenis Building, 3rd Floor, flag/office 24,
       Nicosia, Cyprus.

1.2    CONSTRUCTION OF CERTAIN TERMS. In this Agreement:

       "APPROVED" means, for the purposes of Clause 12, approved in writing by
       the Lender;

       "ASSET" includes every kind of property, asset, interest or right,
       including any present, future or contingent right to any revenues or
       other payment;

       "COMPANY" includes any partnership, joint venture and unincorporated
       association;

       "CONSENT" includes an authorisation, consent, approval, resolution,
       licence, exemption, filing, registration, notarisation and legalisation;

       "CONTINGENT LIABILITY" means a liability which is not certain to arise
       and/or the amount of which remains unascertained;

       "DOCUMENT" includes a deed; also a letter or fax;

       "EXCESS RISKS" means, in relation to a Ship, the proportion of claims for
       general average, salvage and salvage charges not recoverable under the
       hull and machinery policies in respect of the Ship in consequence of its
       insured value being less than the value at which the Ship is assessed for
       the purpose of such claims;

       "EXPENSE" means any kind of cost, charge or expense (including all legal
       costs, charges and expenses) and any applicable value added or other tax;

       "LAW" includes any order or decree, any form of delegated legislation,
       any treaty or international convention and any regulation or resolution
       of the Council of the European Union, the European Commission, the United
       Nations or its Security Council;

       "LEGAL OR ADMINISTRATIVE ACTION" means any legal proceeding or
       arbitration and any administrative or regulatory action or investigation;

       "LIABILITY" includes every kind of debt or liability (present or future,
       certain or contingent), whether incurred as principal or surety or
       otherwise;


                                       15



       "MONTHS" shall be construed in accordance with Clause 1.3;

       "OBLIGATORY INSURANCES" means, in relation to a Ship, all insurances
       effected, or which the Borrower owning the Ship is obliged to effect,
       under Clause 12 or any other provision of this Agreement or another
       Finance Document;

       "PARENT COMPANY" has the meaning given in Clause 1.4;

       "PERSON" includes any company; any state, political sub-division of a
       state and local or municipal authority; and any international
       organisation;

       "POLICY", in relation to any insurance, includes a slip, cover note,
       certificate of entry or other document evidencing the contract of
       insurance or its terms;

       "PROTECTION AND INDEMNITY RISKS" means the usual risks covered by a
       protection and indemnity association managed in London, including
       pollution risks and the proportion (if any) of any sums payable to any
       other person or persons in case of collision which are not recoverable
       under the hull and machinery policies by reason of the incorporation in
       them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause
       8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute
       Amended Running Down Clause (1/10/71) or any equivalent provision;

       "REGULATION" includes any regulation, rule, official directive, request
       or guideline whether or not having the force of law of any governmental,
       intergovernmental or supranational body, agency, department or
       regulatory, self-regulatory or other authority or organisation;

       "SUBSIDIARY" has the meaning given in Clause 1.4;

       "TAX" includes any present or future tax, duty, impost, levy or charge of
       any kind which is imposed by any state, any political sub-division of a
       state or any local or municipal authority (including any such imposed in
       connection with exchange controls), and any connected penalty, interest
       or fine; and

       "WAR RISKS" includes the risk of mines and all risks excluded by clause
       23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the
       Institute Time Clauses (Hulls)(1/11/1995).

1.3    MEANING OF "MONTH". A period of one or more "MONTHS" ends on the day in
       the relevant calendar month numerically corresponding to the day of the
       calendar month on which the period started ("THE NUMERICALLY
       CORRESPONDING DAY"), but:

(a)    on the Business Day following the numerically corresponding day if the
       numerically corresponding day is not a Business Day or, if there is no
       later Business Day in the same calendar month, on the Business Day
       preceding the numerically corresponding day; or

(b)    on the last Business Day in the relevant calendar month, if the period
       started on the last Business Day in a calendar month or if the last
       calendar month of the period has no numerically corresponding days,

       and "MONTH" and "MONTHLY" shall be construed accordingly.

1.4    MEANING OF "SUBSIDIARY". A company (S) is a subsidiary of another company
       (P) if:


                                       16



(a)    a majority of the issued shares in S (or a majority of the issued shares
       in S which carry unlimited rights to capital and income distributions)
       are directly owned by P or are indirectly attributable to P; or

(b)    P has direct or indirect control over a majority of the voting rights
       attaching to the issued shares of S; or

(c)    P has the direct or indirect power to appoint or remove a majority of the
       directors of S; or

(d)    P otherwise has the direct or indirect power to ensure that the affairs
       of S are conducted in accordance with the wishes of P,

       and any company of which S is a subsidiary is a parent company of S.

1.5    GENERAL INTERPRETATION. In this Agreement:

(a)    references in Clause 1.1 to a Finance Document or any other document
       being in the form of a particular appendix include references to that
       form with any modifications to that form which the Lender approves or
       reasonably requires;

(b)    references to, or to a provision of, a Finance Document or any other
       document are references to it as amended or supplemented, whether before
       the date of this Agreement or otherwise;

(c)    references to, or to a provision of, any law include any amendment,
       extension, re-enactment or replacement, whether made before the date of
       this Agreement or otherwise;

(d)    words denoting the singular number shall include the plural and vice
       versa; and

(e)    Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6    HEADINGS. In interpreting a Finance Document or any provision of a
       Finance Document, all clause, sub-clause and other headings in that and
       any other Finance Document shall be entirely disregarded.

2      FACILITY

2.1    AMOUNT OF FACILITY. Subject to the other provisions of this Agreement,
       the Lender shall advance to the Borrowers in up to five Advances a loan
       facility of up to $50,000,000 divided in two tranches for the purposes
       and in the amounts referred to below:

(a)    $14,000,000, to refinance the existing indebtedness owed by Empire and
       Independent to the Lender under the Existing Loan Agreement; and

(b)    an amount equal to the lesser of (i) $36,000,000 and (ii) an amount equal
       to 65 per cent. of the lesser of (A) the aggregate Market Value of the
       New Ships and (B) the aggregate Purchase Price of the New Ships.

2.2    PURPOSE OF ADVANCES. The Borrowers undertake with the Lender to use each
       Advance only for the purpose stated in the preamble to this Agreement.

3      DRAWDOWN

3.1    REQUEST FOR ADVANCE. Subject to the following conditions, the Borrowers
       may request an Advance or, as the case may be, Tranche A to be made by
       ensuring that the Lender


                                       17



       receives a completed Drawdown Notice not later than 11.00 a.m. (London
       time) 3 Business Days prior to the intended Drawdown Date.

3.2    AVAILABILITY. The conditions referred to in Clause 3.1 are that:

(a)    a Drawdown Date has to be a Business Day during the Availability Period;

(b)    Tranche A shall be made available in a single Advance and shall be
       applied in refinancing the existing Financial Indebtedness of Empire and
       Independent to the Lender under the Existing Loan Agreement;

(c)    each Advance under Tranche B shall relate to a different Ship;

(d)    no Advance made under Tranche B shall exceed 65 per cent. of the lesser
       of (i) the Market Value of the New Ship to which it relates on the
       Drawdown Date of the Advance which shall be used to refinance part of the
       Purchase Price of the New Ship and (ii) the Purchase Price of that New
       Ship; and

(e)    the aggregate amount of the Advances shall not exceed the Commitment.

3.3    DRAWDOWN NOTICE IRREVOCABLE. A Drawdown Notice must be signed by a
       director or other authorised person of a Borrower; and once served, a
       Drawdown Notice cannot be revoked without the prior consent of the
       Lender.

3.4    DISBURSEMENT OF ADVANCE. Subject to the provisions of this Agreement, the
       Lender shall on each Drawdown Date make available the relevant Advance
       or, as the case may be, Tranche A to the Borrowers; and payment to the
       Borrowers shall be made to the account which the Borrowers specify in the
       relevant Drawdown Notice.

3.5    DISBURSEMENT OF ADVANCE TO THIRD PARTY. The payment of an Advance or, as
       the case may be, Tranche A by the Lender under Clause 3.4 shall
       constitute the making of the Advance or Tranche A and the Borrowers shall
       at that time become indebted, as principal and direct obligors, to the
       Lender in an amount equal to that Advance or, as the case may be, Tranche
       A.

4      INTEREST

4.1    PAYMENT OF NORMAL INTEREST. Subject to the provisions of this Agreement,
       interest on the Loan in respect of each Interest Period shall be paid by
       the Borrowers on the last day of that Interest Period.

4.2    NORMAL RATE OF INTEREST. Subject to the provisions of this Agreement, the
       rate of interest on the Loan in respect of an Interest Period shall be
       the aggregate of the applicable Margin and LIBOR for that Interest
       Period.

4.3    PAYMENT OF ACCRUED INTEREST. In the case of an Interest Period longer
       than 3 months, accrued interest shall be paid every 3 months during that
       Interest Period and on the last day of that Interest Period.

4.4    NOTIFICATION OF MARKET DISRUPTION. The Lender shall promptly notify the
       Borrowers if no rate is quoted on Telerate Page 3750 or if for any reason
       the Lender is unable to obtain Dollars in the London Interbank Market in
       order to fund the Loan (or any part of it) during any Interest Period,
       stating the circumstances which have caused such notice to be given.


                                       18



4.5    SUSPENSION OF DRAWDOWN. If the Lender's notice under Clause 4.4 is served
       before a Tranche or an Advance is made, the Lender's obligation to make
       the Tranche or, as the case may be, the Advance shall be suspended while
       the circumstances referred to in the Lender's notice continue.

4.6    NEGOTIATION OF ALTERNATIVE RATE OF INTEREST. If the Lender's notice under
       Clause 4.4 is served after a Tranche or an Advance is made, the Borrowers
       and the Lender shall use reasonable endeavours to agree, within the 30
       days after the date on which the Lender serves its notice under Clause
       4.4 (the "NEGOTIATION PERIOD"), an alternative interest rate or (as the
       case may be) an alternative basis for the Lender to fund or continue to
       fund the Loan during the Interest Period concerned.

4.7    APPLICATION OF AGREED ALTERNATIVE RATE OF INTEREST. Any alternative
       interest rate or an alternative basis which is agreed during the
       Negotiation Period shall take effect in accordance with the terms agreed.

4.8    ALTERNATIVE RATE OF INTEREST IN ABSENCE OF AGREEMENT. If an alternative
       interest rate or alternative basis is not agreed within the Negotiation
       Period, and the relevant circumstances are continuing at the end of the
       Negotiation Period, then the Lender shall set an interest period and
       interest rate representing the cost of funding of the Lender in Dollars
       or in any available currency of the Loan plus the applicable Margin; and
       the procedure provided for by this Clause 4.8 shall be repeated if the
       relevant circumstances are continuing at the end of the interest period
       so set by the Lender.

4.9    NOTICE OF PREPAYMENT. If the Borrowers do not agree with an interest rate
       set by the Lender under Clause 4.8, the Borrowers may give the Lender not
       less than 10 Business Days' notice of their intention to prepay at the
       end of the interest period set by the Lender.

4.10   PREPAYMENT. A notice under Clause 4.9 shall be irrevocable; and on the
       last Business Day of the interest period set by the Lender, the Borrowers
       shall prepay (without premium or penalty) the Loan, together with accrued
       interest thereon at the applicable rate plus the applicable Margin.

4.11   APPLICATION OF PREPAYMENT. The provisions of Clause 7 shall apply in
       relation to the prepayment.

4.12   CALCULATION OF ASSET COVER RATIO. The Lender shall calculate the Asset
       Cover Value Ratio on the Drawdown Date applicable to the final Advance in
       respect of Tranche B and every 12 months thereafter (each a "MARGIN
       CALCULATION DATE") for the purposes of calculating the Margin and shall
       advise the Borrowers in writing, within 10 Business Days of each Margin
       Calculation Date, of the Margin which will apply for the 12-month period
       commencing on the relevant Margin Calculation Date PROVIDED THAT in
       respect of each Margin Calculation Date other than the first Margin
       Calculation Date, the Lender shall only be obliged to advise the
       Borrowers of the Margin which will apply for the 12-month period
       commencing on the relevant Margin Calculation Date if that Margin will be
       different to the Margin which applies immediately prior to the relevant
       Margin Calculation Date.

       For the purposes of calculating the Asset Cover Ratio pursuant to this
       Clause 4.12, the Market Value of the Ships shall be determined no more
       than 30 days prior to the relevant Margin Calculation Date.


                                       19



5      INTEREST PERIODS

5.1    COMMENCEMENT OF INTEREST PERIODS. The first Interest Period applicable to
       Tranche A or an Advance shall commence on the Drawdown Date relative to
       Tranche A or, as case may be, that Advance and each subsequent Interest
       Period shall commence on the expiry of the preceding Interest Period.

5.2    DURATION OF NORMAL INTEREST PERIODS. Subject to Clauses 5.3 and 5.4, each
       Interest Period shall be:

(a)    1, 2, 3, 6, 9 or 12 months as notified by the Borrowers to the Lender not
       later than 11.00 a.m. (London time) 3 Business Days before the
       commencement of the Interest Period;

(b)    the first Interest Period in relation to Tranche A (or the first Advance
       under Tranche B (if such Advance is drawn down before Tranche A)) shall
       commence on the Drawdown Date relative thereto and each subsequent
       Interest Period in respect of Tranche A or, as the case may be, such
       Advance shall commence on the expiry of the preceding Interest Period
       relating thereto;

(c)    the first Interest Period in relation to Tranche A (if such Tranche is
       drawn down after the first Advance under Tranche B) or, as the case may
       be, each Advance under Tranche B shall commence on the Drawdown Date
       relative thereto and shall expire on the last day of the Interest Period
       which is then current for Tranche A or the Advance or Advances under
       Tranche B which are then outstanding and thereafter the Interest Periods
       in relation to Tranche A and the Advances under Tranche B which are
       outstanding at the relevant time shall commence and expire on the same
       dates and shall be consolidated to form one Interest Period;

(d)    3 months, if the Borrowers fail to notify the Lender by the time
       specified in paragraph (a); or

(e)    such other longer period as the Lender may agree with the Borrowers.

5.3    DURATION OF INTEREST PERIODS FOR REPAYMENT INSTALMENTS. In respect of an
       amount due to be repaid under Clause 7 on a particular Repayment Date, an
       Interest Period shall end on that Repayment Date.

5.4    NON-AVAILABILITY OF MATCHING DEPOSITS FOR INTEREST PERIOD SELECTED. If,
       after the Borrowers have selected and the Lender has agreed an Interest
       Period longer than 3 months, the Lender notifies the Borrowers by 11.00
       a.m. (London time) on the third Business Day before the commencement of
       the Interest Period that it is not satisfied that deposits in Dollars for
       a period equal to the Interest Period will be available to it in the
       London Interbank Market when the Interest Period commences, the Interest
       Period shall be of 3 months.

6      DEFAULT INTEREST

6.1    PAYMENT OF DEFAULT INTEREST ON OVERDUE AMOUNTS. The Borrowers shall pay
       interest in accordance with the following provisions of this Clause 6 on
       any amount payable by the Borrowers under any Finance Document which the
       Lender does not receive on or before the relevant date, that is:

(a)    the date on which the Finance Documents provide that such amount is due
       for payment; or


                                       20



(b)    if a Finance Document provides that such amount is payable on demand, the
       date on which the demand is served; or

(c)    if such amount has become immediately due and payable under Clause 18.4,
       the date on which it became immediately due and payable.

6.2    DEFAULT RATE OF INTEREST. Interest shall accrue on an overdue amount from
       (and including) the relevant date until the date of actual payment (as
       well after as before judgment) at the rate per annum determined by the
       Lender to be 1.5 per cent. above:

(a)    in the case of an overdue amount of principal, the higher of the rates
       set out at Clauses 6.3(a) and (b); or

(b)    in the case of any other overdue amount, the rate set out at Clause
       6.3(b).

6.3    CALCULATION OF DEFAULT RATE OF INTEREST. The rates referred to in Clause
       6.2 are:

(a)    the rate applicable to the overdue principal amount immediately prior to
       the relevant date (but only for any unexpired part of any then current
       Interest Period applicable to it);

(b)    the applicable Margin plus, in respect of successive periods of any
       duration (including at call) up to 3 months which the Lender may select
       from time to time:

       (i)    LIBOR; or

       (ii)   if the Lender determines that Dollar deposits for any such period
              are not being made available to it by leading banks in the London
              Interbank Market in the ordinary course of business, a rate from
              time to time determined by the Lender by reference to the cost of
              funds to it from such other sources as the Lender may from time to
              time determine.

6.4    NOTIFICATION OF INTEREST PERIODS AND DEFAULT RATES. The Lender shall
       promptly notify the Borrowers of each interest rate determined by it
       under Clause 6.3 and of each period selected by it for the purposes of
       paragraph (b) of that Clause; but this shall not be taken to imply that
       the Borrowers are liable to pay such interest only with effect from the
       date of the Lender's notification.

6.5    PAYMENT OF ACCRUED DEFAULT INTEREST. Subject to the other provisions of
       this Agreement, any interest due under this Clause shall be paid on the
       last day of the period by reference to which it was determined.

6.6    COMPOUNDING OF DEFAULT INTEREST. Any such interest which is not paid at
       the end of the period by reference to which it was determined shall
       thereupon be compounded.

6.7    APPLICATION TO MASTER AGREEMENT. For the avoidance of doubt this Clause 6
       does not apply to any amount payable under the Master Agreement in
       respect of any continuing Transaction as to which section 2(e) (Default
       Interest, Other Amounts) of the Master Agreement shall apply.

7      REPAYMENT AND PREPAYMENT

7.1    AMOUNT OF REPAYMENT INSTALMENTS. The Borrowers shall repay the Loan by:

(a)    20 consecutive six-monthly instalments of:


                                       21



       (i)    in the case of the first and second instalments, $3,600,000 each;

       (ii)   in the case of the third to sixth instalments (inclusive),
              $2,400,000 each; and

       (iii)  in the case of the seventh to twentieth instalments (inclusive),
              $1,800,000 each; and

(b)    a balloon instalment of $8,000,000 (as such amount may be increased
       through the operation of Clause 7.11, the "BALLOON INSTALMENT").

7.2    REPAYMENT DATES.

(a)    The first instalment shall be repaid on the date falling 6 months after
       the earlier of:

       (i)    the Drawdown Date relating to Tranche A or the first Advance under
              Tranche B (whichever is drawn down earlier under this Agreement);
              and

       (ii)   31 January 2006 (or such later date as the Lender may agree with
              the Borrowers); and

(b)    the last instalment, along with the Balloon Instalment, shall be repaid
       on the earlier of:

       (i)    the date falling on the tenth anniversary of the Drawdown Date
              relating to Tranche A or the first Advance under Tranche B
              (whichever is drawn down earlier under this Agreement); and

       (ii)   31 January 2016 (or such later date as the Lender may agree with
              the Borrowers).

7.3    FINAL REPAYMENT DATE. On the final Repayment Date, the Borrowers shall
       additionally pay to the Lender all other sums then accrued or owing under
       any Finance Document.

7.4    VOLUNTARY PREPAYMENT. Subject to the following conditions, the Borrowers
       may prepay the whole or any part of the Loan on the last day of an
       Interest Period.

7.5    CONDITIONS FOR VOLUNTARY PREPAYMENT. The conditions referred to in Clause
       7.4 are that:

(a)    a partial prepayment shall be $500,000 or a multiple of $500,000;

(b)    the Lender has received from the Borrowers at least 5 days' prior written
       notice specifying the amount to be prepaid and the date on which the
       prepayment is to be made; and

(c)    the Borrowers have provided evidence satisfactory to the Lender that any
       consent required by any Borrower or any Security Party in connection with
       the prepayment has been obtained and remains in force, and that any
       regulation relevant to this Agreement which affects any Borrower or any
       Security Party has been complied with.

7.6    EFFECT OF NOTICE OF PREPAYMENT. A prepayment notice may not be withdrawn
       or amended without the consent of the Lender and the amount specified in
       the prepayment notice shall become due and payable by the Borrowers on
       the date for prepayment specified in the prepayment notice.


                                       22



7.7    MANDATORY PREPAYMENT. Without prejudice to the provisions of Clause 14,
       the Borrowers shall be obliged to prepay the Relevant Percentage of the
       Loan if a Ship is sold or becomes a Total Loss:

(a)    in the case of a sale, on or before the date on which the sale is
       completed by delivery of the Ship to the buyer; or

(b)    in the case of a Total Loss, on the earlier of the date falling 120 days
       after the Total Loss Date and the date of receipt by the Lender of the
       proceeds of insurance relating to such Total Loss,

       and in this Clause 7.7 "RELEVANT PERCENTAGE" means the percentage which
       the Market Value of such Ship bears to the aggregate Market Values of
       such of the Ships as is subject to a Mortgage on (in the case of the sale
       of such Ship) the date such Ship is delivered to the buyer thereof or (in
       the case of a Total Loss of such Ship) the Total Loss Date in respect
       thereof.

7.8    AMOUNTS PAYABLE ON PREPAYMENT. A prepayment shall be made together with
       accrued interest (and any other amount payable under Clause 20 or
       otherwise) in respect of the amount prepaid and, if the prepayment is not
       made on the last day of an Interest Period together with any sums payable
       under Clause 20.1(b) but without premium or penalty.

7.9    APPLICATION OF PARTIAL PREPAYMENT. Each partial prepayment shall be
       applied pro rata against the repayment instalments, including, without
       limitation, the balloon instalment, specified in Clause 7.1.

7.10   NO REBORROWING. No amount prepaid may be reborrowed.

7.11   DEFERRAL OPTION. The Borrowers may elect to defer the repayment of up to
       one third of any three repayment instalments falling due after the
       Repayment Date in relation to the seventh repayment instalment subject to
       the following terms and conditions:

(a)    the Borrowers shall have sent to the Lender a notice at least 10 days
       prior to the Repayment Date relative to the repayment instalment the
       payment of part of which the Borrowers are electing to defer specifying
       the amount to be deferred (which amount shall not exceed one third of the
       relevant repayment instalment);

(b)    no Event of Default has occurred or is continuing either at the date of
       the Borrowers' said request or on the Repayment Date on which the
       deferred instalment was due and payable; and

(c)    each part of a repayment instalment which is deferred (which shall not
       exceed, when added to the parts of all other repayment instalments which
       have been deferred, $1,800,000 in aggregate) shall be added to the
       Balloon Instalment which shall be increased by such amount.

8      CONDITIONS PRECEDENT

8.1    DOCUMENTS, FEES AND NO DEFAULT. The Lender's obligation to make Tranche A
       or an Advance is subject to the following conditions precedent:

(a)    that, on or before the service of the Drawdown Notice in respect of the
       first Tranche or Advance to be drawn down under this Agreement, the
       Lender receives the documents described in Part A of Schedule 2, in form
       and substance satisfactory to it and its lawyers;


                                       23



(b)    that, on the each Drawdown Date but prior to the making of Tranche A or,
       as the case may be, the relevant Advance under Tranche B, the Lender
       receives the documents described in Part B of Schedule 2 in relation to
       Tranche A or, as the case may be, that Advance, in form and substance
       satisfactory to it and its lawyers;

(c)    that, on the Drawdown Date relating to Tranche A and the Drawdown Date
       relating to the Advance under Tranche B which shall be used to refinance
       part of the Purchase Price of "GAS MARATHON" but prior to the making of
       Tranche A or, as the case may be, such Advance, the Lender receives (in
       addition to those documents described in Part B of Schedule 2 in relation
       to the applicable Ship (being, in the case of Tranche A, "SWEET DREAM"
       and, in the case of the Advance to refinance part of the Purchase Price
       of "GAS MARATHON", "GAS MARATHON") the documents described in Part C of
       Schedule 2, in form and substance satisfactory to it and its lawyers;

(d)    that, on the Drawdown Date relating to Tranche A but prior to the making
       of Tranche A, the Lender receives (in addition to those documents
       described in Part B of Schedule 2 in relation to "GAS ORACLE") the
       documents described in Part D of Schedule 2, in a form and substance
       satisfactory to it and its lawyers;

(e)    that, on the date of this Agreement, the Lender receives the arrangement
       fee referred to in Clause 19.1 and has received payment of the expenses
       referred to in Clause 19.2; and

(f)    that both at the date of each Drawdown Notice and at each Drawdown Date:

       (i)    no Event of Default or Potential Event of Default has occurred and
              is continuing or would result from the borrowing of the relevant
              Tranche or Advance;

       (ii)   the representations and warranties in Clause 9.1 and those of any
              Borrower or any Security Party which are set out in the other
              Finance Documents would be true and not misleading if repeated on
              each of those dates with reference to the circumstances then
              existing; and

       (iii)  none of the circumstances contemplated by Clause 4.4 has occurred
              and is continuing; and

(g)    that, if the ratio set out in Clause 14.1 were applied immediately
       following the making of the relevant Tranche or Advance, the Borrowers
       would not be obliged to provide additional security or prepay part of the
       Loan under that Clause; and

(h)    that the Lender has received, and found to be acceptable to it, any
       further opinions, consents, agreements and documents in connection with
       the Finance Documents which the Lender may request by notice to the
       Borrowers prior to the relevant Drawdown Date.

8.2    WAIVERS OF CONDITIONS PRECEDENT. If the Lender, at its discretion,
       permits a Tranche or an Advance to be borrowed before certain of the
       conditions referred to in Clause 8.1 are satisfied, the Borrowers shall
       ensure that those conditions are satisfied within 5 Business Days after
       the relevant Drawdown Date (or such longer period as the Lender may
       specify).


                                       24



9      REPRESENTATIONS AND WARRANTIES

9.1    GENERAL. Each Borrower represents and warrants to the Lender as follows.

9.2    STATUS. Each Borrower is duly incorporated and validly existing and in
       good standing under the laws of its country of incorporation.

9.3    SHARE CAPITAL AND OWNERSHIP. Each Borrower has an authorised and issued
       share capital of:

(a)    in the case of each of Empire, Independent, Triathlon and Soleil, 100
       bearer and/or registered shares of no par value, all of which shares have
       been issued in bearer form;

(b)    in the case of Jungle, 2000 shares of LM1 each, 500 shares of which have
       been issued 20 per cent. paid up; and

(c)    in the case of Yield, 1000 registered shares of CY(pound)1 each, all of
       which shares have been issued,

       and the legal title and beneficial ownership of all such issued shares is
       held, free of any Security Interest or other claim, by the relevant
       Shareholder.

9.4    CORPORATE POWER. Each Borrower, has the corporate capacity, and has taken
       all corporate action and obtained all consents necessary for it:

(a)    to register its Ship in its name under the relevant flag;

(b)    to execute the Finance Documents to which that Borrower is a party; and

(c)    to borrow under this Agreement, to enter into Transactions under the
       Master Agreement and to make all the payments contemplated by, and to
       comply with, those Finance Documents to which that Borrower is a party
       and the Master Agreement.

9.5    CONSENTS IN FORCE. All the consents referred to in Clause 9.4 remain in
       force and nothing has occurred which makes any of them liable to
       revocation.

9.6    LEGAL VALIDITY; EFFECTIVE SECURITY INTERESTS. The Finance Documents to
       which each Borrower is a party, do now or, as the case may be, will, upon
       execution and delivery (and, where applicable, registration as provided
       for in the Finance Documents):

(a)    constitute that Borrower's legal, valid and binding obligations
       enforceable against that Borrower in accordance with their respective
       terms; and

(b)    create legal, valid and binding Security Interests enforceable in
       accordance with their respective terms over all the assets to which they,
       by their terms, relate,

       subject to any relevant insolvency laws affecting creditors' rights
       generally.

9.7    NO THIRD PARTY SECURITY INTERESTS. Without limiting the generality of
       Clause 9.6, at the time of the execution and delivery of each Finance
       Document:

(a)    each Borrower which is a party to that Finance Document will have the
       right to create all the Security Interests which that Finance Document
       purports to create; and


                                       25



(b)    no third party will have any Security Interest (except for Permitted
       Security Interests) or any other interest, right or claim over, in or in
       relation to any asset to which any such Security Interest, by its terms,
       relates.

9.8    NO CONFLICTS. The execution by each Borrower of each Finance Document to
       which it is a party, and the borrowing by that Borrower of the Loan, and
       its compliance with each Finance Document to which it is a party will not
       involve or lead to a contravention of:

(a)    any law or regulation; or

(b)    the constitutional documents of that Borrower; or

(c)    any contractual or other obligation or restriction which is binding on
       that Borrower or any of its assets.

9.9    NO WITHHOLDING TAXES. All payments which each Borrower is liable to make
       under the Finance Documents to which it is a party may be made without
       deduction or withholding for or on account of any tax payable under any
       law of any Pertinent Jurisdiction.

9.10   NO DEFAULT. No Event of Default or Potential Event of Default has
       occurred and is continuing.

9.11   INFORMATION. All information which has been provided in writing by or on
       behalf of the Borrowers or any Security Party to the Lender in connection
       with any Finance Document satisfied the requirements of Clause 10.5; all
       audited and unaudited accounts which have been so provided satisfied the
       requirements of Clause 10.7; and there has been no material adverse
       change in the financial position or state of affairs of any Borrower from
       that disclosed in the latest of those accounts.

9.12   NO LITIGATION. No legal or administrative action involving any Borrower
       (including action relating to any alleged or actual breach of the ISM
       Code) has been commenced or taken or, to any Borrower's knowledge, is
       likely to be commenced or taken.

9.13   VALIDITY AND COMPLETENESS OF MOAS, ETC. Each MOA, the Gas Oracle Charter
       and each Bareboat Charter constitutes valid, binding and enforceable
       obligations of the parties thereto respectively in accordance with their
       terms, and:

(a)    each copy of an MOA, the Gas Oracle Charter and each Bareboat Charter
       delivered to the Lender before the date of this Agreement is a true and
       complete copy thereof (including, without limitation, any addenda
       thereto); and

(b)    no amendments or additions to any MOA, the Gas Oracle Charter or either
       Bareboat Charter have been agreed nor has any Borrower or any other party
       waived any of their respective rights under an MOA, the Gas Oracle
       Charter or either Bareboat Charter.

9.14   NO REBATES ETC. There is no agreement or understanding to allow or pay
       any rebate, premium, commission discount or other benefit or payment
       (howsoever described) to any Borrower, any seller of a New Ship or any
       third party in connection with the purchase by any Borrower of a New Ship
       other than as disclosed to the Lender in writing on or prior to the date
       of this Agreement.

9.15   COMPLIANCE WITH CERTAIN UNDERTAKINGS. At the date of this Agreement, the
       Borrowers are in compliance with Clauses 10.2, 10.4, 10.9 and 10.13.


                                       26



9.16   TAXES PAID. Each Borrower has paid all taxes applicable to, or imposed on
       or in relation to that Borrower, its business and the Ship owned by it.

9.17   ISM CODE COMPLIANCE. All requirements of the ISM Code as they relate to
       the Borrowers, the Approved Manager, each Bareboat Charterer and each
       Ship have been complied with.

10     GENERAL UNDERTAKINGS

10.1   GENERAL. Each Borrower undertakes with the Lender to comply with the
       following provisions of this Clause 10 at all times during the Security
       Period, except as the Lender may otherwise permit.

10.2   TITLE; NEGATIVE PLEDGE. Each Borrower will:

(a)    hold the legal title to, and own the entire beneficial interest in the
       Ship owned by it, her Insurances and Earnings, free from all Security
       Interests and other interests and rights of every kind, except for those
       created by the Finance Documents and the effect of assignments contained
       in the Finance Documents and except for Permitted Security Interests; and

(b)    not create or permit to arise any Security Interest (except for Permitted
       Security Interests) over any other asset, present or future including,
       but not limited to, the Borrowers' rights against the Lender under the
       Master Agreement or all or any part of the Borrowers' interest in any
       amount payable to the Borrowers by the Lender under the Master Agreement.

10.3   NO DISPOSAL OF ASSETS. No Borrower will transfer, lease or otherwise
       dispose of:

(a)    all or a substantial part of its assets, whether by one transaction or a
       number of transactions, whether related or not; or

(b)    any debt payable to it or any other right (present, future or contingent
       right) to receive a payment, including any right to damages or
       compensation.

10.4   NO OTHER LIABILITIES OR OBLIGATIONS TO BE INCURRED. No Borrower will
       incur any liability or obligation except liabilities and obligations:

(a)    under the Finance Documents to which it is a party; and

(b)    liabilities or obligations reasonably incurred in the ordinary course of
       operating and chartering the Ship owned by it.

10.5   INFORMATION PROVIDED TO BE ACCURATE. All financial and other information
       which is provided in writing by or on behalf of a Borrower under or in
       connection with any Finance Document will be true and not misleading and
       will not omit any material fact or consideration.

10.6   PROVISION OF FINANCIAL STATEMENTS. The Borrowers will send to the Lender:

(a)    as soon as possible, but in no event later than 120 days after the end of
       each financial year the audited accounts of the Borrowers and the audited
       consolidated accounts of the Corporate Guarantor; and


                                       27



(b)    as soon as possible, but in no event later than 60 days after the end of
       each quarterly period in each financial year of that Borrower, the
       unaudited quarterly accounts of that Borrower and the unaudited quarterly
       consolidated accounts of the Corporate Guarantor,

       in each case together with a certificate in the form set out in Schedule
       3 signed by a director of each Borrower confirming that the Borrowers are
       as at the date of that certificate in compliance with the covenants
       specified in this Agreement and the Security Documents to which these are
       a party and confirming that no Event of Default or Potential Event of
       Default has occurred.

10.7   FORM OF FINANCIAL STATEMENTS. All accounts and financial statements
       (audited and unaudited) delivered under Clause 10.6 will:

(a)    be prepared in accordance with all applicable laws and generally accepted
       accounting principles consistently applied;

(b)    give a true and fair view of the state of affairs of the relevant parties
       at the date of those accounts and of their profit for the period to which
       those accounts relate; and

(c)    fully disclose or provide for all significant liabilities of the relevant
       Borrower.

10.8   SHAREHOLDER AND CREDITOR NOTICES. Each Borrower will send to the Lender,
       at the same time as they are despatched, copies of all communications
       which are despatched to that Borrower's shareholders or creditors or any
       class of them.

10.9   CONSENTS. Each Borrower will maintain in force and promptly obtain or
       renew, and will promptly send certified copies to the Lender of, all
       consents required:

(a)    for that Borrower to perform its obligations under any Finance Document;

(b)    for the validity or enforceability of any Finance Document to which it is
       a party; and

(c)    for that Borrower to continue to own and operate the Ship owned by it,
       and

(d)    for that Borrower to continue to perform its obligations under the
       Bareboat Charter to which it is a party or the Gas Oracle Charter as the
       case may be,

       and that Borrower will comply with the terms of all such consents.

10.10  MAINTENANCE OF SECURITY INTERESTS. Each Borrower will:

(a)    at its own cost, do all that it reasonably can to ensure that any Finance
       Document validly creates the obligations and the Security Interests which
       it purports to create; and

(b)    without limiting the generality of paragraph (a), at its own cost,
       promptly register, file, record or enrol any Finance Document with any
       court or authority in all Pertinent Jurisdictions, pay any stamp,
       registration or similar tax in all Pertinent Jurisdictions in respect of
       any Finance Document, give any notice or take any other step which may be
       or has become necessary or desirable for any Finance Document to be
       valid, enforceable or admissible in evidence or to ensure or protect the
       priority of any Security Interest which it creates.

10.11  NOTIFICATION OF LITIGATION. Each Borrower will provide the Lender with
       details of any legal or administrative action involving that Borrower,
       any Security Party, the Approved Manager or the Ship owned by it, her
       Earnings or her Insurances and, in the case of


                                       28



       Empire and Triathlon, the Bareboat Charter to which it is a party, as
       soon as such action is instituted or it becomes apparent to that Borrower
       that it is likely to be instituted, unless it is clear that the legal or
       administrative action cannot be considered material in the context of any
       Finance Document.

10.12  NO AMENDMENT TO BAREBOAT CHARTERS, ETC. No Borrower will agree to any
       amendment or supplement to, or waive or fail to enforce, the Bareboat
       Charter or the Gas Oracle Charter to which it is a party or any of its
       respective provisions.

10.13  PRINCIPAL PLACE OF BUSINESS. Each Borrower will maintain its place of
       business, and keep its corporate documents and records, at the address
       stated at the commencement of this Agreement; and no Borrower will
       establish, or do anything as a result of which it would be deemed to
       have, a place of business in the United Kingdom or the United States of
       America.

10.14  CONFIRMATION OF NO DEFAULT. Each Borrower will, within 2 Business Days
       after service by the Lender of a written request, serve on the Lender a
       notice which is signed by the director of that Borrower and which:

(a)    states that no Event of Default or Potential Event of Default has
       occurred; or

(b)    states that no Event of Default or Potential Event of Default has
       occurred, except for a specified event or matter, of which all material
       details are given.

10.15  NOTIFICATION OF DEFAULT. Each Borrower will notify the Lender as soon as
       that Borrower becomes aware of:

(a)    the occurrence of an Event of Default or a Potential Event of Default; or

(b)    any matter which indicates that an Event of Default or a Potential Event
       of Default may have occurred,

       and will keep the Lender fully up-to-date with all developments.

10.16  PROVISION OF FURTHER INFORMATION. Each Borrower will as soon as
       practicable after receiving the request, provide the Lender with any
       additional financial or other information relating to:

(a)    any Borrower, any Ship, any Earnings, or any Insurances, a Bareboat
       Charterer, the Gas Oracle Charterer or the Corporate Guarantor; or

(b)    to any other matter relevant to, or to any provision of, a Finance
       Document,

       which may be reasonably requested by the Lender at any time.

10.17  MINIMUM CASH BALANCE. On each Drawdown Date and on the first day of each
       Interest Period (and in respect of any Interest Period of more than 6
       months, six-monthly), the Borrowers shall pay into the Retention Account
       an amount equal to all interest payable on each Tranche, each Advance or
       the Loan during such Interest Period (or in the case of an Interest
       Period exceeding 6 months, during the following 6 months or up to the end
       of such Interest Period, whichever is shorter).


                                       29



11     CORPORATE UNDERTAKINGS

11.1   GENERAL. Each Borrower also undertakes with the Lender to comply, or
       procure compliance as the case may be, with the following provisions of
       this Clause 11 at all times during the Security Period except as the
       Lender may otherwise permit.

11.2   MAINTENANCE OF STATUS. Each Borrower will maintain its separate corporate
       existence and remain in good standing under the laws of its country of
       incorporation.

11.3   NEGATIVE UNDERTAKINGS. No Borrower will:

(a)    carry on any business other than the ownership, chartering and operation
       of the Ship owned by it; or

(b)    following the occurrence of an Event of Default pay any dividend or make
       any other form of distribution or effect any form of redemption, purchase
       or return of share capital; or

(c)    provide any form of credit or financial assistance to:

       (i)    a person who is directly or indirectly interested in that
              Borrower's share or loan capital; or

       (ii)   any company in or with which such a person is directly or
              indirectly interested or connected,

       or enter into any transaction with or involving such a person or company
       on terms which are, in any respect, less favourable to that Borrower than
       those which it could obtain in a bargain made at arms' length;

(d)    open or maintain any account with any bank or financial institution
       except accounts with the Lender for the purposes of the Finance
       Documents;

(e)    issue, allot or grant any person a right to any shares in its capital or
       repurchase or reduce its issued share capital;

(f)    acquire any shares or other securities other than US or UK Treasury bills
       and certificates of deposit issued by major North American or European
       banks, or enter into any transaction in a derivative (other than any
       Transactions under the Master Agreement);

(g)    enter into any form of amalgamation, merger or de-merger or any form of
       reconstruction or reorganisation; or

(h)    permit any immediate or without change in ownership of the shares from
       that existing as at the date of this Agreement.

12     INSURANCE

12.1   GENERAL. Each Borrower also undertakes with the Lender to comply, or as
       the case may be, procure compliance, with the following provisions of
       this Clause 12 at all times during the Security Period except as the
       Lender may otherwise permit.

12.2   MAINTENANCE OF OBLIGATORY INSURANCES. Each Borrower shall keep the Ship
       owned by it insured at the expense of that Borrower against:


                                       30



(a)    fire and usual marine risks (including hull and machinery and excess
       risks);

(b)    war risks;

(c)    protection and indemnity risks; and

(d)    any other risks against which the Lender considers, having regard to
       practices and other circumstances prevailing at the relevant time, it
       would in the opinion of the Lender be reasonable for that Borrower to
       insure and which are specified by the Lender by notice to that Borrower.

12.3   TERMS OF OBLIGATORY INSURANCES. Each Borrower shall effect such
       insurances:

(a)    in Dollars;

(b)    in the case of fire and usual marine risks and war risks, in an amount on
       an agreed value basis at least the greater of (i) such amount, which when
       aggregated with the amount for which any other Ship then subject to a
       Mortgage is insured, is equal to 110 per cent. of the aggregate of the
       Loan and the Swap Exposure and (ii) the market value of the Ship owned by
       it; and

(c)    in the case of oil pollution liability risks, for an aggregate amount
       equal to the highest level of cover from time to time available under
       basic protection and indemnity club entry (with the international group
       of protection and indemnity clubs) and in the international marine
       insurance market (currently $1,000,000,000);

(d)    in relation to protection and indemnity risks in respect of the full
       tonnage of the Ship owned by it;

(e)    on approved terms; and

(f)    through approved brokers and with approved insurance companies and/or
       underwriters or, in the case of war risks and protection and indemnity
       risks, in approved war risks and protection and indemnity risks
       associations.

12.4   FURTHER PROTECTIONS FOR THE LENDER. In addition to the terms set out in
       Clause 12.3, each Borrower shall procure that the obligatory insurances
       shall:

(a)    whenever the Lender requires, name (or be amended to name) the Lender as
       additional named assured for its rights and interests, warranted no
       operational interest and with full waiver of rights of subrogation
       against the Lender, but without the Lender thereby being liable to pay
       (but having the right to pay) premiums, calls or other assessments in
       respect of such insurance;

(b)    name the Lender as loss payee with such directions for payment as the
       Lender may specify;

(c)    provide that all payments by or on behalf of the insurers under the
       obligatory insurances to the Lender shall be made without set-off,
       counterclaim or deductions or condition whatsoever;

(d)    provide that such obligatory insurances shall be primary without right of
       contribution from other insurances which may be carried by the Lender;


                                       31



(e)    provide that the Lender may make proof of loss if any of the Borrowers
       fails to do so.

12.5   RENEWAL OF OBLIGATORY INSURANCES. Each Borrower shall:

(a)    at least 7 days before the expiry of any obligatory insurance effected by
       it:

       (i)    notify the Lender of the brokers (or other insurers) and any
              protection and indemnity or war risks association through or with
              whom that Borrower proposes to renew that obligatory insurance and
              of the proposed terms of renewal; and

       (ii)   obtain the Lender's approval to the matters referred to in
              paragraph (i);

(b)    at least 7 days before the expiry of any obligatory insurance effected by
       it, renew that obligatory insurance in accordance with the Lender's
       approval pursuant to paragraph (a); and

(c)    procure that the approved brokers and/or the war risks and protection and
       indemnity associations with which such a renewal is effected shall
       promptly after the renewal notify the Lender in writing of the terms and
       conditions of the renewal.

12.6   COPIES OF POLICIES; LETTERS OF UNDERTAKING. Each Borrower shall ensure
       that all approved brokers provide the Lender with pro forma copies of all
       policies relating to the obligatory insurances which they are to effect
       or renew and of a letter or letters or undertaking in a form required by
       the Lender and including undertakings by the approved brokers that:

(a)    they will have endorsed on each policy, immediately upon issue, a loss
       payable clause and a notice of assignment complying with the provisions
       of Clause 12.4;

(b)    they will hold such policies, and the benefit of such insurances, to the
       order of the Lender in accordance with the said loss payable clause;

(c)    they will advise the Lender immediately of any material change to the
       terms of the obligatory insurances;

(d)    they will notify the Lender, not less than 10 days before the expiry of
       the obligatory insurances, in the event of their not having received
       notice of renewal instructions from that Borrower or its agents and, in
       the event of their receiving instructions to renew, they will promptly
       notify the Lender of the terms of the instructions; and

(e)    they will not set off against any sum recoverable in respect of a claim
       relating to the Ship owned by that Borrower under such obligatory
       insurances any premiums or other amounts due to them or any other person
       whether in respect of that Ship or otherwise, they waive any lien on the
       policies, or any sums received under them, which they might have in
       respect of such premiums or other amounts, and they will not cancel such
       obligatory insurances by reason of non-payment of such premiums or other
       amounts, and will arrange for a separate policy to be issued in respect
       of that Ship forthwith upon being so requested by the Lender.

12.7   COPIES OF CERTIFICATES OF ENTRY. Each Borrower shall ensure that any
       protection and indemnity and/or war risks associations in which the Ship
       owned by it is entered provides the Lender with:

(a)    a certified copy of the certificate of entry for that Ship;


                                       32



(b)    a letter or letters of undertaking in such form as may be required or
       approved by the Lender; and

(c)    (if applicable to, or required in respect of, the relevant Ship) a
       certified copy of each certificate of financial responsibility for
       pollution by oil or other Environmentally Sensitive Material issued by
       the relevant certifying authority in relation to that Ship.

12.8   DEPOSIT OF ORIGINAL POLICIES. Each Borrower shall ensure that all
       policies relating to obligatory insurances effected by it are deposited
       with the approved brokers through which the insurances are effected or
       renewed.

12.9   PAYMENT OF PREMIUMS. Each Borrower shall punctually pay all premiums or
       other sums payable in respect of the obligatory insurances effected by it
       and produce all relevant receipts when so required by the Lender.

12.10  GUARANTEES. Each Borrower shall ensure that any guarantees required by a
       protection and indemnity or war risks association are promptly issued and
       remain in full force and effect.

12.11  COMPLIANCE WITH TERMS OF INSURANCES. No Borrower shall do nor omit to do
       (nor permit to be done or not to be done) any act or thing which would or
       might render any obligatory insurance invalid, void, voidable or
       unenforceable or render any sum payable under an obligatory insurance
       repayable in whole or in part; and, in particular:

(a)    each Borrower shall take all necessary action and comply with all
       requirements which may from time to time be applicable to the obligatory
       insurances, and (without limiting the obligation contained in Clause
       12.7(c)) ensure that the obligatory insurances are not made subject to
       any exclusions or qualifications to which the Lender has not given its
       prior approval;

(b)    No Borrower shall make any changes relating to the classification or
       classification society or manager or operator of the Ship owned by it
       approved by the underwriters of the obligatory insurances;

(c)    each Borrower shall make (and promptly supply copies to the Lender of)
       all quarterly or other voyage declarations which may be required by the
       protection and indemnity risks association in which the Ship owned by it
       is entered to maintain cover for trading to the United States of America
       and Exclusive Economic Zone (as defined in the United States Oil
       Pollution Act 1990 or any other applicable legislation); and

(d)    No Borrower shall employ the Ship owned by it, nor allow it to be
       employed, otherwise than in conformity with the terms and conditions of
       the obligatory insurances, without first obtaining the consent of the
       insurers and complying with any requirements (as to extra premium or
       otherwise) which the insurers specify.

12.12  ALTERATION TO TERMS OF INSURANCES. No Borrower shall either make or agree
       to any alteration to the terms of any obligatory insurance nor waive any
       right relating to any obligatory insurance.

12.13  SETTLEMENT OF CLAIMS. No Borrower shall settle, compromise or abandon any
       claim under any obligatory insurance for Total Loss or for a Major
       Casualty, and shall do all things necessary and provide all documents,
       evidence and information to enable the Lender to collect or recover any
       moneys which at any time become payable in respect of the obligatory
       insurances.


                                       33



12.14  PROVISION OF COPIES OF COMMUNICATIONS. Each Borrower shall provide the
       Lender, promptly following the Lender's reasonable request, copies of all
       written communications between that Borrower and:

(a)    the approved brokers; and

(b)    the approved protection and indemnity and/or war risks associations; and

(c)    the approved insurance companies and/or underwriters, which relate
       directly or indirectly to:

       (i)  that Borrower's obligations relating to the obligatory insurances
            including, without limitation, all requisite declarations and
            payments of additional premiums or calls; and

       (ii) any credit arrangements made between that Borrower and any of the
            persons referred to in paragraphs (a) or (b) relating wholly or
            partly to the effecting or maintenance of the obligatory insurances.

12.15  PROVISION OF INFORMATION. In addition, each Borrower shall promptly
       provide the Lender (or any persons which it may designate) with any
       information which the Lender (or any such designated person) requests for
       the purpose of:

(a)    obtaining or preparing any report from an independent marine insurance
       broker as to the adequacy of the obligatory insurances effected or
       proposed to be effected; and/or

(b)    effecting, maintaining or renewing any such insurances as are referred to
       in Clause 12.16 below or dealing with or considering any matters relating
       to any such insurances,

       and the Borrowers shall, forthwith upon demand, indemnify the Lender in
       respect of all fees and other expenses incurred by or for the account of
       the Lender in connection with any such report as is referred to in
       paragraph (a).

12.16  MORTGAGEE'S INTEREST AND ADDITIONAL PERILS. The Lender shall be entitled
       from time to time to effect, maintain and renew a mortgagee's interest
       additional perils insurance in respect of each Ship, a mortgagee's
       political risks insurance and a mortgagee's interest marine insurance
       each in an amount equal to 110 per cent. of the aggregate of the Loan and
       the Swap Exposure from time to time and on such terms, through such
       insurers and generally in such manner as the Lender may from time to time
       consider appropriate and the Borrowers shall upon demand fully indemnify
       the Lender in respect of all premiums and other expenses which are
       incurred in connection with or with a view to effecting, maintaining or
       renewing any such insurance or dealing with, or considering, any matter
       arising out of any insurance.

13     SHIP COVENANTS

13.1   GENERAL. Each Borrower also undertakes with the Lender to comply with, or
       to procure compliance with (as the case may be), with the following
       provisions of this Clause 13 at all times during the Security Period,
       except as the Lender may otherwise permit, such permission in the case of
       Clause 13.2 and 13.12(e) to be in writing.

13.2   SHIP'S NAME AND REGISTRATION. Each Borrower shall keep the Ship owned by
       it registered in its name under:


                                       34



(a)    in the case of "SWEET DREAM", Bahamas flag;

(b)    in the case of "GAS ORACLE", Marshall Islands flag;

(c)    in the case of "GAS CATHAR", Malta flag;

(d)    in the case of "GAS LEGACY", Cyprus flag; and

(e)    in the case of each of "GAS SINCERITY" and "GAS MARATHON", Panama flag

       and shall not do or allow to be done anything as a result of which such
       registration might be cancelled or imperilled; and shall not change the
       name or port of registry of the Ship owned by it.

13.3   REPAIR AND CLASSIFICATION. Each Borrower shall keep the Ship owned by it
       in a good and safe condition and state of repair:

(a)    consistent with first-class ship ownership and management practice;

(b)    so as to maintain that Ship's present class (being the highest
       classification available for a vessel of the same type, age and
       specification as the Ship with a classification society acceptable to the
       Lender which is a member of the International Association of
       Classification Societies) free of overdue recommendations and conditions
       affecting the Ship's class; and

(c)    so as to comply with all laws and regulations applicable to vessels
       registered at ports in the flag state relevant to that Ship or to vessels
       trading to any jurisdiction to which that Ship may trade from time to
       time, including but not limited to the ISM Code.

13.4   MODIFICATION. No Borrower shall make or allow any modification or repairs
       to, or replacement of, any Ship or equipment installed on any Ship which
       would or might materially alter the structure, type or performance
       characteristics of any Ship or materially reduce its value.

13.5   REMOVAL OF PARTS. No Borrower shall remove or allow the removal of any
       material part of any Ship, or any item of equipment installed on any
       Ship, unless the part or item so removed is forthwith replaced by a
       suitable part or item which is in the same condition as or better
       condition than the part or item removed, is free from any Security
       Interest or any right in favour of any person other than the Lender and
       becomes on installation on the relevant Ship the property of the relevant
       Borrower and subject to the security constituted by the relevant Mortgage
       PROVIDED THAT a Borrower may install equipment owned by a third party if
       the equipment can be removed without any risk of damage to the Ship owned
       by it.

13.6   SURVEYS. Each Borrower shall submit the Ship owned by it regularly to all
       periodical or other surveys which may be required for classification
       purposes and, if so required by the Lender provide the Lender, with
       copies of all survey reports.

13.7   INSPECTION. Each Borrower shall permit the Lender (by surveyors or other
       persons appointed by it for that purpose) to board the Ship owned by it
       at all reasonable times to inspect its condition or to satisfy themselves
       about proposed or executed repairs and shall afford all proper facilities
       for such inspections.

13.8   PREVENTION OF AND RELEASE FROM ARREST. Each Borrower shall promptly
       discharge:


                                       35



(a)    all liabilities which give or may give rise to maritime or possessory
       liens on or claims enforceable against the Ship owned by it, her Earnings
       or her Insurances;

(b)    all taxes, dues and other amounts charged in respect of the Ship owned by
       it, her Earnings or her Insurances; and

(c)    all other outgoings whatsoever in respect of the Ship owned by it, her
       Earnings or her Insurances,

       and, forthwith upon receiving notice of the arrest of the Ship owned by
       it, or of its detention in exercise or purported exercise of any lien or
       claim, that Borrower shall procure its release by providing bail or
       otherwise as the circumstances may require.

13.9   COMPLIANCE WITH LAWS ETC. Each Borrower shall:

(a)    comply, or procure compliance with the ISM Code, all Environmental Laws
       and all other laws or regulations relating to the Ship owned by it, its
       ownership, operation and management or to the business of that Borrower;

(b)    not employ the Ship owned by it nor allow its employment in any manner
       contrary to any law or regulation in any relevant jurisdiction including
       but not limited to the ISM Code; and

(c)    in the event of hostilities in any part of the world (whether war is
       declared or not), not cause or permit the Ship owned by it to enter or
       trade to any zone which is declared a war zone by any government or by
       the Ship's war risks insurers unless the prior written consent of the
       Lender has been given and that Borrower has (at its expense) effected any
       special, additional or modified insurance cover and provided the Lender
       with evidence that its Ship maintains sufficient cover to enter into and
       trade to the war zone.

13.10  PROVISION OF INFORMATION. Each Borrower shall promptly provide the Lender
       with any information which it requests regarding:

(a)    the Ship owned by it, its employment, position and engagements;

(b)    the Earnings and payments and amounts due to the master and crew of the
       Ship owned by it;

(c)    any expenses incurred, or likely to be incurred, in connection with the
       operation, maintenance or repair of the Ship owned by it and any payments
       made in respect of that Ship;

(d)    any towages and salvages;

(e)    its compliance, the Approved Manager's compliance, the compliance of the
       Ship owned by it and, in the case of each of "SWEET DREAM" and "GAS
       MARATHON", the compliance by the Bareboat Charterer of that Ship, with
       the ISM Code,

       and, upon the Lender's request, provide copies of any current charter
       relating to the Ship owned by it, of any current charter guarantee and of
       the Ship's Document of Compliance.

13.11  NOTIFICATION OF CERTAIN EVENTS. Each Borrower shall immediately notify
       the Lender by fax, confirmed forthwith, by letter of:


                                       36



(a)    any casualty which is or is likely to be or to become a Major Casualty;

(b)    any occurrence as a result of which the Ship owned by it has become or
       is, by the passing of time or otherwise, likely to become a Total Loss;

(c)    any requirement or recommendation made by any insurer or classification
       society or by any competent authority which is not immediately complied
       with;

(d)    any arrest or detention of the Ship owned by it, any exercise or
       purported exercise of any lien on that Ship or its Earnings or any
       requisition of that Ship for hire;

(e)    any intended dry docking of the Ship owned by it which will, or is
       reasonably expected to, last more than 14 days;

(f)    any Environmental Claim made against that Borrower or in connection with
       the Ship owned by it, or any Environmental Incident;

(g)    any claim for breach of the ISM Code being made against that Borrower,
       the Approved Manager or either Bareboat Charterer (as the case may be) or
       otherwise in connection with the Ship owned by it; or

(h)    any other matter, event or incident, actual or threatened, the effect of
       which will or could lead to the ISM Code not being complied with,

       and that Borrower shall keep the Lender advised in writing on a regular
       basis and in such detail as the Lender shall require of that Borrower's,
       the Approved Manager's, the relevant Bareboat Charterer's or any other
       person's response to any of those events or matters.

13.12  RESTRICTIONS ON CHARTERING, APPOINTMENT OF MANAGERS ETC. No Borrower
       shall, in relation to the Ship owned by it:

(a)    (other than in the case of each of "SWEET DREAM" and "GAS MARATHON",
       pursuant to the Bareboat Charter relative to each such Ship), let that
       Ship on demise charter for any period;

(b)    (other than in the case of "GAS ORACLE" pursuant to the Gas Oracle
       Charter), enter into any time or consecutive voyage charter in respect of
       that Ship for a term which exceeds, or which by virtue of any optional
       extensions may exceed, 18 months;

(c)    enter into any charter in relation to that Ship under which more than 2
       months' hire (or the equivalent) is payable in advance;

(d)    charter that Ship otherwise than on bona fide arm's length terms at the
       time when that Ship is fixed;

(e)    appoint a manager of that Ship other than the Approved Manager or agree
       to any alteration to the terms of the Approved Manager's appointment;

(f)    de-activate or lay up that Ship; or

(g)    put that Ship into the possession of any person for the purpose of work
       being done upon her in an amount exceeding or likely to exceed $500,000
       (or the equivalent in any other currency) unless that person has first
       given to the Lender and in terms satisfactory to it a


                                       37



       written undertaking not to exercise any lien on that Ship or the Earnings
       for the cost of such work or any other reason.

13.13  NOTICE OF MORTGAGE. Each Borrower shall:

(a)    keep the relevant Mortgage registered against the Ship owned by it as a
       valid first priority or, as the case may be, first preferred mortgage;
       and

(b)    carry on board that Ship a certified copy of the relevant Mortgage and
       place and maintain in a conspicuous place in the navigation room and the
       Master's cabin of that Ship a framed printed notice stating that that
       Ship is mortgaged by that Borrower to the Lender.

13.14  SHARING OF EARNINGS. No Borrower shall enter into any agreement or
       arrangement for the sharing of any Earnings (other than with any other
       Security Party).

13.15  TIME CHARTER ASSIGNMENT. If any Borrower enters into any Charter (subject
       to obtaining the consent of the Lender in accordance with Clause
       13.12(b)), the relevant Borrower shall, at the request of the Lender,
       execute in favour of the Lender a Charter Assignment in relation to such
       Charter, and shall deliver to the Lender such other documents equivalent
       to those referred to at paragraphs 3, 4 and 5 of Part A of Schedule 2
       hereof as the Lender may require.

13.16  COMPLIANCE WITH INSURANCE AND SHIP COVENANTS. The Borrowers shall procure
       the performance by each Bareboat Charterer of all the covenants and
       undertakings to be observed, performed and complied with, by or on behalf
       of that Bareboat Charterer under Clause 12 (other than Clause 12.16) and
       Clause 13 and, to the extent that the Bareboat Charterer duly performs
       and discharges its obligations set out in this Clause 13.16 or to the
       further extent that the Bareboat Charterer, by its performance of the
       Bareboat Charter to which it is a party, performs and discharges further
       obligations of the Borrowers contained in the Finance Documents, then
       such performance and discharge shall, to that extent, be deemed due
       performance and discharge of the Borrowers' obligations under the Finance
       Documents.

13.17  FREQUENCY OF VALUATIONS. The Borrowers acknowledge and agree that, for
       the purpose of ascertaining the Market Values of the Ships for use in the
       calculation of the Asset Cover Ratio pursuant to Clause 4.12, the Lender
       may commission valuations of the Ships in accordance with Clause 14.3 up
       to once per annum.

14     SECURITY COVER

14.1   MINIMUM REQUIRED SECURITY COVER. Clause 14.2 applies if the Lender
       notifies the Borrowers that the Security Cover Ratio is below 1.25 to 1.

14.2   PROVISION OF ADDITIONAL SECURITY; PREPAYMENT. If the Lender serves a
       notice on the Borrowers under Clause 14.1, the Borrowers shall, within 1
       month after the date on which the Lender's notice is served, either:

(a)    provide, or ensure that a third party provides, additional security
       which, in the reasonable opinion of the Lender, has a net realisable
       value at least equal to the shortfall in the Security Cover Ratio and is
       documented in such terms as the Lender may approve or require; or

(b)    prepay such part (at least) of the Loan as will eliminate the shortfall
       in the Security Cover Ratio.


                                       38



14.3   VALUATION OF SHIPS. The market value of a Ship at any date is that shown
       by the arithmetic average of two valuations, each prepared:

(a)    in Dollars;

(b)    as at a date not more than 14 days previously;

(c)    by one of the following independent sale and purchase shipbrokers:

       (i)   Arrow Shipbroking;

       (ii)  Fearnleys AS;

       (iii) H. Clarkson & Company Limited; and

       (iv)  Galbraith's Limited,

       which the Borrower has appointed and the Lender has approved for the
       purpose;

(d)    with or without physical inspection of the relevant Ship (as the Lender
       may require);

(e)    on the basis of a sale for prompt delivery for cash on normal arm's
       length commercial terms as between a willing seller and a willing buyer,
       free of any existing charter or other contract of employment; and

(f)    after deducting the estimated amount of the usual and reasonable expenses
       which would be incurred in connection with the sale,

       PROVIDED THAT if such two valuations differ by more than 15 per cent.
       then the Lender will obtain a third independent valuation from a third
       independent shipbroker from those listed in Clause 14.3(c) and the market
       value of the relevant Ship shall be the arithmetic mean of such 3
       valuations.

14.4   VALUE OF ADDITIONAL VESSEL SECURITY. The net realisable value of any
       additional security which is provided under Clause 14.2 and which
       consists of a Security Interest over a vessel shall be that shown by a
       valuation complying with the requirements of Clause 14.3.

14.5   VALUATIONS BINDING. Any valuation under Clause 14.2, 14.3 or 14.4 shall
       be binding and conclusive as regards the Borrowers, as shall be any
       valuation which the Lender makes of any additional security which does
       not consist of or include a Security Interest.

14.6   PROVISION OF INFORMATION. The Borrowers shall promptly provide the Lender
       and any shipbroker or expert acting under Clause 13.17, 14.3 or 14.4 with
       any information which the Lender or the shipbroker or expert may request
       for the purposes of the valuation; and, if the Borrowers fail to provide
       the information by the date specified in the request, the valuation may
       be made on any basis and assumptions which the shipbroker or the Lender
       (or the expert appointed by it) considers prudent.

14.7   PAYMENT OF VALUATION EXPENSES. Without prejudice to the generality of the
       Borrowers' obligations under Clauses 19.2, 19.3 and 20.3, the Borrowers
       shall, on demand, pay the Lender the amount of the fees and expenses of
       any shipbroker or expert instructed by the Lender under this Clause and
       Clause 13.17 and all legal and other expenses incurred by the Lender in
       connection with any matter arising out of this Clause and Clause 13.17.


                                       39



14.8   APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to any
       prepayment pursuant to Clause 14.2(b).

15     PAYMENTS AND CALCULATIONS

15.1   CURRENCY AND METHOD OF PAYMENTS. All payments to be made by any Borrower
       to the Lender under a Finance Document shall be made to the Lender:

(a)    by not later than 11.00 a.m. (New York City time) on the due date;

(b)    in same day Dollar funds settled through the New York Clearing House
       Interbank Payments System (or in such other Dollar funds and/or settled
       in such other manner as the Lender shall specify as being customary at
       the time for the settlement of international transactions of the type
       contemplated by this Agreement); and

(c)    to the account of the Lender at The Bank of New York of 1290 Avenue of
       Americas, Floor 5, New York NY 10104, U.S.A. (SWIFT address: IRVTUS3N;
       Account No. 890-0429-585), or to such other account with such other bank
       as the Lender may from time to time notify to the Borrowers.

15.2   PAYMENT ON NON-BUSINESS DAY. If any payment by any Borrower under a
       Finance Document would otherwise fall due on a day which is not a
       Business Day:

(a)    the due date shall be extended to the next succeeding Business Day; or

(b)    if the next succeeding Business Day falls in the next calendar month, the
       due date shall be brought forward to the immediately preceding Business
       Day,

       and interest shall be payable during any extension under paragraph (a) at
       the rate payable on the original due date.

15.3   BASIS FOR CALCULATION OF PERIODIC PAYMENTS. All interest and any other
       payments under any Finance Document which are of an annual or periodic
       nature shall accrue from day to day and shall be calculated on the basis
       of the actual number of days elapsed and a 360 day year.

15.4   LENDER ACCOUNTS. The Lender shall maintain an account showing the amounts
       advanced by the Lender and all other sums owing to the Lender from the
       Borrowers and each Security Party under the Finance Documents and all
       payments in respect of those amounts made by the Borrowers and any
       Security Party.

15.5   ACCOUNTS PRIMA FACIE EVIDENCE. If the account maintained under Clauses
       15.4 shows an amount to be owing by a Borrower or a Security Party to the
       Lender, that account shall be prima facie evidence that that amount is
       owing to the Lender.

16     APPLICATION OF RECEIPTS

16.1   NORMAL ORDER OF APPLICATION. Except as any Finance Document may otherwise
       provide, any sums which are received or recovered by the Lender under or
       by virtue of any Finance Document shall be applied:

(a)    FIRST: in or towards satisfaction of any amounts then due and payable
       under the Finance Documents (or any of them) in such order of application
       and/or such proportions as the Lender may specify by notice to the
       Borrowers and the Security Parties;


                                       40



(b)    SECONDLY: in retention of an amount equal to any amount not then due and
       payable under any Finance Document but which the Lender, by notice to the
       Borrowers and the Security Parties, states in its opinion will or may
       become due and payable in the future and, upon those amounts becoming due
       and payable, in or towards satisfaction of them in accordance with the
       provisions of this Clause; and

(c)    THIRDLY: any surplus shall be paid to the Borrowers or to any other
       person appearing to be entitled to it.

16.2   VARIATION OF ORDER OF APPLICATION. The Lender may, at its reasonable
       discretion, by notice to the Borrowers and the Security Parties, provide
       for a different manner of application from that set out in Clause 16.1
       either as regards a specified sum or sums or as regards sums in a
       specified category or categories.

16.3   NOTICE OF VARIATION OF ORDER OF APPLICATION. The Lender may give notices
       under Clause 16.2 from time to time; and such a notice may be stated to
       apply not only to sums which may be received or recovered in the future,
       but also to any sum which has been received or recovered on or after the
       third Business Day before the date on which the notice is served.

16.4   APPROPRIATION RIGHTS OVERRIDDEN. This Clause 16 and any notice which the
       Lender gives under Clause 16.2 shall override any right of appropriation
       possessed, and any appropriation made, by any Borrower or any Security
       Party.

17     APPLICATION OF EARNINGS

17.1   PAYMENT OF EARNINGS. Each Borrower undertakes with the Lender to ensure
       that, throughout the Security Period:

(a)    (subject only to the provisions of the General Assignments to which that
       Borrower is a party), all the Earnings of the Ship owned by it are paid
       to the relevant Earnings Account; and

(b)    all payments by the Lender to a Borrower under each Transaction are paid
       to the Earnings Accounts (or any of them).

17.2   RELEASE OF SURPLUS EARNINGS. Subject to no Event of Default or Potential
       Event of Default then having occurred (after which the provisions of the
       Accounts Security Deed apply), Earnings for the time being credited to
       the Earnings Accounts shall be freely available to the Borrowers to be
       used firstly to pay the costs of operation of the Ships and then, as to
       any remaining surpluses, for any other purposes permitted by the terms of
       this Agreement.

17.3   INTEREST ACCRUED ON EARNINGS AND RETENTION ACCOUNTS. Any credit balances
       on each Earnings Account and the Retention Account shall bear interest at
       the rate from time to time offered by the Lender to its customers for
       Dollar deposits of similar amounts and for periods similar to those for
       which such balances appear to the Lender likely to remain on the relevant
       Account.

17.4   RELEASE OF ACCRUED INTEREST. Interest accruing under Clause 17.3 shall be
       credited to the Earnings Accounts (or any of them) monthly unless an
       Event of Default or Potential Event of Default has occurred.

17.5   LOCATION OF ACCOUNTS. Each Borrower shall promptly:


                                       41



(a)    comply with any requirement of the Lender as to the location or
       re-location of an Earnings Account or the Retention Account (or any of
       them); and

(b)    execute any documents which the Lender specifies to create or maintain in
       favour of the Lender a Security Interest over (and/or rights of set-off,
       consolidation or other rights in relation to) an Earnings Account and the
       Retention Account.

17.6   DEBITS FOR EXPENSES ETC. The Lender shall be entitled (but not obliged)
       from time to time to debit the Earnings Accounts without prior notice in
       order to discharge any amount due and payable to it under Clause 19 or 20
       or payment of which it has become entitled to demand under Clause 19 or
       20.

17.7   BORROWERS' OBLIGATIONS UNAFFECTED. The provisions of this Clause 17 do
       not affect:

(a)    the liability of the Borrowers to make payments of principal and interest
       on the due dates; or

(b)    either other liability or obligation of the Borrowers or any Security
       Party under any Finance Document.

18     EVENTS OF DEFAULT

18.1   EVENTS OF DEFAULT. An Event of Default occurs if:

(a)    any Borrower or any Security Party fails to pay when due or (if so
       payable) on demand any sum payable under a Finance Document or under any
       document relating to a Finance Document; or

(b)    any breach occurs of Clause 8.2, 10.2, 10.3, 10.17, 11.2, 11.3 or 14.1;
       or

(c)    any breach by any Borrower or any Security Party occurs of any provision
       of a Finance Document (other than a breach covered by paragraph (a) or
       (b)) if, in the opinion of the Lender, such default is capable of remedy
       and such default continues unremedied 10 days after written notice from
       the Lender requesting action to remedy the same; or

(d)    (subject to any applicable grace period specified in any Finance
       Document) any breach by any of the Borrowers or any Security Party occurs
       of any provision of a Finance Document (other than a breach caused by
       paragraph (a), (b) or (c)); or

(e)    any representation, warranty or statement made by, or by an officer of, a
       Borrower or a Security Party in a Finance Document or in the Drawdown
       Notice or any other notice or document relating to a Finance Document is
       untrue or misleading when it is made; or

(f)    any of the following occurs in relation to any Financial Indebtedness of
       a Relevant Person:

       (i)    any Financial Indebtedness of a Relevant Person is not paid when
              due or, if so payable, on demand; or

       (ii)   any Financial Indebtedness of a Relevant Person becomes due and
              payable or capable of being declared due and payable prior to its
              stated maturity date as a consequence of any event of default; or


                                       42



       (iii)  a lease, hire purchase agreement or charter creating any Financial
              Indebtedness of a Relevant Person is terminated by the lessor or
              owner or becomes capable of being terminated as a consequence of
              any termination event; or

       (iv)   any overdraft, loan, note issuance, acceptance credit, letter of
              credit, guarantee, foreign exchange or other facility, or any swap
              or other derivative contract or transaction, relating to any
              Financial Indebtedness of a Relevant Person ceases to be available
              or becomes capable of being terminated as a result of any event of
              default, or cash cover is required, or becomes capable of being
              required, in respect of such a facility as a result of any event
              of default; or

       (v)    any Security Interest securing any Financial Indebtedness of a
              Relevant Person becomes enforceable; or

(g)    any of the following occurs in relation to a Relevant Person:

       (i)     a Relevant Person becomes, in the reasonable opinion of the
               Lender, unable to pay its debts as they fall due; or

       (ii)    any assets of a Relevant Person are subject to any form of
               execution, attachment, arrest, sequestration or distress in
               respect of a sum of, or sums aggregating, $500,000 or more or
               the equivalent in another currency and such execution,
               attachment, arrest, sequestration or distress is not withdrawn
               within 14 days of its commencement; or

       (iii)   any administrative or other receiver is appointed over any asset
               of a Relevant Person; or

       (iv)    a Relevant Person makes any formal declaration of bankruptcy or
               any formal statement to the effect that it is insolvent or
               likely to become insolvent, or a winding up or administration
               order is made in relation to a Relevant Person, or the members
               or directors of a Relevant Person pass a resolution to the
               effect that it should be wound up, placed in administration or
               cease to carry on business, save that this paragraph does not
               apply to a fully solvent winding up of a Relevant Person other
               than a Borrower which is, or is to be, effected for the purposes
               of an amalgamation or reconstruction previously approved by the
               Lender and effected not later than 3 months after the
               commencement of the winding up; or

       (v)     a petition is presented in any Pertinent Jurisdiction for the
               winding up or administration, or the appointment of a
               provisional liquidator, of a Relevant Person unless the petition
               is being contested in good faith and on substantial grounds and
               is dismissed or withdrawn within 30 days of the presentation of
               the petition; or

       (vi)    a Relevant Person petitions a court, or presents any proposal
               for, any form of judicial or non-judicial suspension or deferral
               of payments, reorganisation of its debt (or certain of its debt)
               or arrangement with all or a substantial proportion (by number
               or value) of its creditors or of any class of them or any such
               suspension or deferral of payments, reorganisation or
               arrangement is effected by court order, contract or otherwise;
               or

       (vii)   any meeting of the members or directors of a Relevant Person is
               summoned for the purpose of considering a resolution or proposal
               to authorise or take any action of a type described in
               paragraphs (iii), (iv), (v) or (vi); or


                                       43



       (viii)  in a Pertinent Jurisdiction other than England, any event occurs
               or any procedure is commenced which, in the opinion of the
               Lender, is similar to any of the foregoing; or

(h)    any Borrower ceases or suspends carrying on its business or a part of its
       business which, in the opinion of the Lender, is material in the context
       of this Agreement; or

(i)    it becomes unlawful in any Pertinent Jurisdiction or impossible:

       (i)   for any Borrower or any Security Party to discharge any liability
             under a Finance Document or to comply with any other obligation
             which the Lender considers material under a Finance Document; or

       (ii)  for the Lender to exercise or enforce any right under, or to
             enforce any Security Interest created by, a Finance Document; or

(j)    any consent necessary to enable any Borrower or either Bareboat Charterer
       to own, operate or charter the Ship owned or chartered by it (as the case
       may be) or to enable any Borrower or any Security Party to comply with
       any provision which the Lender considers material of a Finance Document,
       a Bareboat Charter is not granted, expires without being renewed, is
       revoked or becomes liable to revocation or any condition of such a
       consent is not fulfilled; or

(k)    any provision which the Lender considers, in its reasonable opinion,
       material of a Finance Document proves to have been or becomes invalid or
       unenforceable, or a Security Interest created by a Finance Document
       proves to have been or becomes invalid or unenforceable or such a
       Security Interest proves to have ranked after, or loses its priority to,
       another Security Interest or any other third party claim or interest; or

(l)    the security constituted by a Finance Document is in any way imperilled
       or in jeopardy; or

(m)    an Event of Default (as defined in Section 14 of the Master Agreement)
       occurs;

(n)    the Master Agreement is terminated, cancelled, suspended, rescinded or
       revoked or otherwise ceases to remain in full force and effect for any
       reason except with the consent of the Lender; or

(o)    any other event occurs or any other circumstances arise or develop
       including, without limitation:

       (i)   a change in the financial position, state of affairs or prospects
             of any Borrower, the ultimate beneficial shareholder of each
             Borrower or the Corporate Guarantor; or

       (ii)  any accident or other event involving any Ship or another vessel
             owned, chartered or operated by a Relevant Person,

       in the light of which the Lender reasonably considers that there is a
       significant risk that the Borrowers or the Corporate Guarantor are, or
       will later become, unable to discharge their liabilities under the
       Finance Documents as they fall due.

18.2   ACTIONS FOLLOWING AN EVENT OF DEFAULT. On, or at any time after, the
       occurrence of an Event of Default the Lender may:


                                       44



(a)    serve on the Borrowers a notice stating that all obligations of the
       Lender to the Borrowers under this Agreement are terminated; and/or

(b)    serve on the Borrowers a notice stating that the Loan, all accrued
       interest and all other amounts accrued or owing under this Agreement are
       immediately due and payable or are due and payable on demand; and/or

(c)    take any other action which, as a result of the Event of Default or any
       notice served under paragraph (a) or (b), the Lender is entitled to take
       under any Finance Document or any applicable law.

18.3   TERMINATION OF COMMITMENT. On the service of a notice under Clause
       18.2(a) the Commitment, and all other obligations of the Lender to the
       Borrowers under this Agreement, shall terminate.

18.4   ACCELERATION OF LOAN. On the service of a notice under Clause 18.2(b),
       the Loan, all accrued interest and all other amounts accrued or owing
       from the Borrowers or any Security Party under this Agreement and every
       other Finance Document shall become immediately due and payable or, as
       the case may be, payable on demand.

18.5   MULTIPLE NOTICES; ACTION WITHOUT NOTICE. The Lender may serve notices
       Clauses 18.2(a) and (b) simultaneously or on different dates and it may
       take any action referred to in Clause 18.2 if no such notice is served or
       simultaneously with or at any time after the service of both or either of
       such notices.

18.6   EXCLUSION OF LENDER LIABILITY. Neither the Lender nor any receiver or
       manager appointed by the Lender, shall have any liability to a Borrower
       or a Security Party:

(a)    for any loss caused by an exercise of rights under, or enforcement of a
       Security Interest created by, a Finance Document or by any failure or
       delay to exercise such a right or to enforce such a Security Interest; or

(b)    as mortgagee in possession or otherwise, for any income or principal
       amount which might have been produced by or realised from any asset
       comprised in such a Security Interest or for any reduction (however
       caused) in the value of such an asset,

       except that this does not exempt the Lender or a receiver or manager from
       liability for losses shown to have been caused directly and mainly by the
       dishonesty or the wilful misconduct of the Lender's own officers and
       employees or (as the case may be) such receiver's or manager's own
       partners or employees.

18.7   RELEVANT PERSONS. In this Clause 18 a "RELEVANT PERSON" means a Borrower,
       a Security Party, and any company which is a subsidiary of the Corporate
       Guarantor or a Borrower.

18.8   INTERPRETATION. In Clause 18.1(f) references to an event of default or a
       termination event include any event, howsoever described, which is
       similar to an event of default in a facility agreement or a termination
       event in a finance lease; and in Clause 18.1(g) "PETITION" includes an
       application.

19     FEES AND EXPENSES

19.1   ARRANGEMENT FEE. The Borrowers shall pay to the Lender on the date of
       this Agreement, a non-refundable arrangement fee of $95,000.


                                       45



19.2   COSTS OF NEGOTIATION, PREPARATION ETC. The Borrowers shall pay to the
       Lender in a timely manner the amount of all expenses incurred by the
       Lender in connection with the negotiation, preparation, execution or
       registration of any Finance Document or any related document or with any
       transaction contemplated by a Finance Document or a related document.

19.3   COSTS OF VARIATIONS, AMENDMENTS, ENFORCEMENT ETC. The Borrowers shall pay
       to the Lender, on the Lender's demand, the amount of all expenses
       incurred by the Lender in connection with:

(a)    any amendment or supplement to a Finance Document, or any proposal for
       such an amendment to be made;

(b)    any consent or waiver by the Lender concerned under or in connection with
       a Finance Document, or any request for such a consent or waiver;

(c)    the valuation of any security provided or offered under Clause 14 or any
       other matter relating to such security; or

(d)    any step taken by the Lender with a view to the protection, exercise or
       enforcement of any right or Security Interest created by a Finance
       Document or for any similar purpose.

       There shall be recoverable under paragraph (d) the full amount of all
       legal expenses, whether or not such as would be allowed under rules of
       court or any taxation or other procedure carried out under such rules.

19.4   DOCUMENTARY TAXES. The Borrowers shall promptly pay any tax payable on or
       by reference to any Finance Document, and shall, on the Lender's demand,
       fully indemnify the Lender against any claims, expenses, liabilities and
       losses resulting from any failure or delay by the Borrowers to pay such a
       tax.

19.5   CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
       Lender, which states that a specified amount, or aggregate amount, is due
       to the Lender under this Clause 19 and which indicates (without
       necessarily specifying a detailed breakdown) the matters in respect of
       which the amount, or aggregate amount, is due shall be prima facie
       evidence that the amount, or aggregate amount, is due.

20     INDEMNITIES

20.1   INDEMNITIES REGARDING BORROWING AND REPAYMENT OF LOAN. The Borrowers
       shall fully indemnify made or brought against the Lender on its demand in
       respect of all claims, expenses, liabilities and losses which are
       incurred by the Lender, or which the Lender reasonably and with due
       diligence estimates that it will incur, as a result of or in connection
       with:

(a)    a Tranche or an Advance not being borrowed on the date specified in the
       Drawdown Notice for any reason other than a default by the Lender;

(b)    the receipt or recovery of all or any part of the Loan or an overdue sum
       otherwise than on the last day of an Interest Period or other relevant
       period;

(c)    any failure (for whatever reason) by the Borrowers to make payment of any
       amount due under a Finance Document on the due date or, if so payable, on
       demand (after giving


                                       46



       credit for any default interest paid by the Borrowers on the amount
       concerned under Clause 6);

(d)    the occurrence and/or continuance of an Event of Default or a Potential
       Event of Default and/or the acceleration of repayment of the Loan under
       Clause 18,

       and in respect of any tax (other than tax on its overall net income) for
       which the Lender is liable in connection with any amount paid or payable
       to the Lender (whether for its own account or otherwise) under any
       Finance Document.

20.2   BREAKAGE COSTS. Without limiting its generality, Clause 20.1 covers any
       claim, expense, liability or loss, including a loss of a prospective
       profit, incurred by the Lender:

(a)    in liquidating or employing deposits from third parties acquired or
       arranged to fund or maintain all or any part of the Loan and/or any
       overdue amount (or an aggregate amount which includes the Loan or any
       overdue amount); and

(b)    in terminating, or otherwise in connection with, any interest and/or
       currency swap or any other transaction entered into (whether with another
       legal entity or with another office or department of the Lender) to hedge
       any exposure arising under this Agreement or a number of transactions of
       which this Agreement is one.

20.3   MISCELLANEOUS INDEMNITIES. The Borrowers shall fully indemnify the Lender
       on its demand in respect of all claims, expenses, liabilities and losses
       which may be made or brought against or incurred by the Lender, in any
       country, as a result of or in connection with:

(a)    any action taken, or omitted or neglected to be taken, under or in
       connection with any Finance Document by the Lender or by any receiver
       appointed under a Finance Document;

(b)    any other Pertinent Matter,

       other than claims, expenses, liabilities and losses which are shown to
       have been directly and mainly caused by the dishonesty or wilful
       misconduct of the officers or employees of the Lender.

       Without prejudice to its generality, this Clause 20.3 covers any claims,
       expenses, liabilities and losses which arise, or are asserted, under or
       in connection with any law relating to safety at sea, the ISM Code or any
       Environmental Law.

20.4   CURRENCY INDEMNITY. If any sum due from any Borrower or any Security
       Party to the Lender under a Finance Document or under any order or
       judgment relating to a Finance Document has to be converted from the
       currency in which the Finance Document provided for the sum to be paid
       (the "CONTRACTUAL CURRENCY") into another currency (the "PAYMENT
       CURRENCY") for the purpose of:

(a)    making or lodging any claim or proof against any Borrower or any Security
       Party, whether in its liquidation, any arrangement involving it or
       otherwise; or

(b)    obtaining an order or judgment from any court or other tribunal; or

(c)    enforcing any such order or judgment,


                                       47



       the Borrowers shall indemnify the Lender against the loss arising when
       the amount of the payment actually received by the Lender is converted at
       the available rate of exchange into the Contractual Currency.

       In this Clause 20.4, the "AVAILABLE RATE OF EXCHANGE" means the rate at
       which the Lender is able at the opening of business (London time) on the
       Business Day after it receives the sum concerned to purchase the
       Contractual Currency with the Payment Currency.

       This Clause 20.4 creates a separate liability of the Borrowers which is
       distinct from their other liabilities under the Finance Documents and
       which shall not be merged in any judgment or order relating to those
       other liabilities.

20.5   APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 20.4
       does not apply in respect of sums due from the Borrowers to the Lender
       under or in connection with the Master Agreement as to which sums the
       provisions of Section 8 (Contractual Currency) of the Master Agreement
       shall apply.

20.6   CERTIFICATION OF AMOUNTS. A notice which is signed by 2 officers of the
       Lender, which states that a specified amount, or aggregate amount, is due
       to the Lender under this Clause 20 and which indicates (without
       necessarily specifying a detailed breakdown) the matters in respect of
       which the amount, or aggregate amount, is due shall be prima facie
       evidence that the amount, or aggregate amount, is due.

21     NO SET-OFF OR TAX DEDUCTION

21.1   NO DEDUCTIONS. All amounts due from the Borrowers under a Finance
       Document shall be paid:

(a)    without any form of set-off, cross-claim or condition; and

(b)    free and clear of any tax deduction except a tax deduction which a
       Borrower is required by law to make.

21.2   GROSSING-UP FOR TAXES. If a Borrower is required by law to make a tax
       deduction from any payment:

(a)    that Borrower shall notify the Lender as soon as it becomes aware of the
       requirement;

(b)    that Borrower shall pay the tax deducted to the appropriate taxation
       authority promptly, and in any event before any fine or penalty arises;
       and

(c)    the amount due in respect of the payment shall be increased by the amount
       necessary to ensure that the Lender receives and retains (free from any
       liability relating to the tax deduction) a net amount which, after the
       tax deduction, is equal to the full amount which it would otherwise have
       received.

21.3   EVIDENCE OF PAYMENT OF TAXES. Within one month after making any tax
       deduction, the Borrower concerned shall deliver to the Lender documentary
       evidence satisfactory to the Lender that the tax had been paid to the
       appropriate taxation authority.

21.4   EXCLUSION OF TAX ON OVERALL NET INCOME. In this Clause 21 "TAX DEDUCTION"
       means any deduction or withholding for or on account of any present or
       future tax except tax on the Lender's overall net income.


                                       48



21.5   APPLICATION OF MASTER AGREEMENT. For the avoidance of doubt, Clause 21
       does not apply in respect of sums due from the Borrowers to the Lender
       under or in connection with the Master Agreement as to which sums the
       provisions of Section 2(d) (Deduction or Withholding for Tax) of the
       Master Agreement shall apply.

22     ILLEGALITY, ETC

22.1   ILLEGALITY. This Clause 22 applies if the Lender notifies the Borrowers
       that it has become, or will with effect from a specified date, become:

(a)    unlawful or prohibited as a result of the introduction of a new law, an
       amendment to an existing law or a change in the manner in which an
       existing law is or will be interpreted or applied; or

(b)    contrary to, or inconsistent with, any regulation,

       for the Lender to maintain or give effect to any of its obligations under
       this Agreement in the manner contemplated by this Agreement.

22.2   NOTIFICATION AND EFFECT OF ILLEGALITY. On the Lender notifying the
       Borrowers under Clause 22.1, the Commitment shall terminate; and
       thereupon or, if later, on the date specified in the Lender's notice
       under Clause 22.1 as the date on which the notified event would become
       effective the Borrowers shall prepay the Loan in full in accordance with
       Clause 7.

22.3   MITIGATION. If circumstances arise which would result in a notification
       under Clause 22.1 then, without in any way limiting the rights of the
       Lender under Clause 22.3, the Lender shall use reasonable endeavours to
       transfer its obligations, liabilities and rights under this Agreement and
       the Finance Documents to another office or financial institution not
       affected by the circumstances but the Lender shall not be under any
       obligation to take any such action if, in its opinion, to do would or
       might:

(a)    have an adverse effect on its business, operations or financial
       condition; or

(b)    involve it in any activity which is unlawful or prohibited or any
       activity that is contrary to, or inconsistent with, any regulation; or

(c)    involve it in any expense (unless indemnified to its satisfaction) or tax
       disadvantage.

23     INCREASED COSTS

23.1   INCREASED COSTS. This Clause 23 applies if the Lender notifies the
       Borrowers that it considers that as a result of:

(a)    the introduction or alteration after the date of this Agreement of a law
       or an alteration after the date of this Agreement in the manner in which
       a law is interpreted or applied (disregarding any effect which relates to
       the application to payments under this Agreement of a tax on the Lender's
       overall net income); or

(b)    complying with any regulation (including any which relates to capital
       adequacy or liquidity controls or which affects the manner in which the
       Lender allocates capital resources to its obligations under this
       Agreement) which is introduced, or altered, or the interpretation or
       application of which is altered, after the date of this Agreement,


                                       49



       the Lender (or a parent company of it) has incurred or will incur an
       "INCREASED COST".

23.2   MEANING OF "INCREASED COST". In this Clause 23, "INCREASED COST" means:

(a)    an additional or increased cost incurred as a result of, or in connection
       with, the Lender having entered into, or being a party to, this Agreement
       or having taken an assignment of rights under this Agreement, of funding
       or maintaining the Commitment or performing its obligations under this
       Agreement, or of having outstanding all or any part of the Loan or other
       unpaid sums; or

(b)    a reduction in the amount of any payment to the Lender under this
       Agreement or in the effective return which such a payment represents to
       the Lender or on its capital;

(c)    an additional or increased cost of funding all or maintaining all or any
       of the advances comprised in a class of advances formed by or including
       the Loan or (as the case may require) the proportion of that cost
       attributable to the Loan; or

(d)    a liability to make a payment, or a return foregone, which is calculated
       by reference to any amounts received or receivable by the Lender under
       this Agreement,

       but not an item attributable to a change in the rate of tax on the
       overall net income of the Lender (or a parent company of it) or an item
       covered by the indemnity for tax in Clause 20.1 or by Clause 21.

       For the purposes of this Clause 23.2 the Lender may in good faith
       allocate or spread costs and/or losses among its assets and liabilities
       (or any class of its assets and liabilities) on such basis as it
       considers appropriate.

23.3   PAYMENT OF INCREASED COSTS. The Borrowers shall pay to the Lender, on its
       demand, the amounts which the Lender from time to time notifies the
       Borrowers that it has specified to be necessary to compensate it for the
       increased cost.

23.4   NOTICE OF PREPAYMENT. If the Borrowers are not willing to continue to
       compensate the Lender for the increased cost under Clause 23.3, the
       Borrowers may give the Lender not less than 14 days' notice of their
       intention to prepay the Loan at the end of an Interest Period.

23.5   PREPAYMENT. A notice under Clause 23.4 shall be irrevocable; and on the
       date specified in the Borrowers' notice of intended prepayment, the
       Commitment shall terminate and the Borrowers shall prepay (without
       premium or penalty) the Loan, together with accrued interest thereon at
       the applicable rate plus the applicable Margin.

23.6   APPLICATION OF PREPAYMENT. Clause 7 shall apply in relation to the
       prepayment.

24     SET-OFF

24.1   APPLICATION OF CREDIT BALANCES. The Lender may without prior notice:

(a)    apply any balance (whether or not then due) which at any time stands to
       the credit of any account in the name of a Borrower at any office in any
       country of the Lender in or towards satisfaction of any sum then due from
       that Borrower to the Lender under any of the Finance Documents; and

(b)    for that purpose:


                                       50



       (i)    break, or alter the maturity of, all or any part of a deposit of
              that Borrower;

       (ii)   convert or translate all or any part of a deposit or other credit
              balance into Dollars; and

       (iii)  enter into any other transaction or make any entry with regard to
              the credit balance which the Lender considers appropriate.

24.2   EXISTING RIGHTS UNAFFECTED. The Lender shall not be obliged to exercise
       any of its rights under Clause 24.1; and those rights shall be without
       prejudice and in addition to any right of set-off, combination of
       accounts, charge, lien or other right or remedy to which the Lender is
       entitled (whether under the general law or any document).

24.3   NO SECURITY INTEREST. This Clause 24 gives the Lender a contractual right
       of set-off only, and does not create any equitable charge or other
       Security Interest over any credit balance of the Borrower.

25     TRANSFERS AND CHANGES IN LENDING OFFICE

25.1   TRANSFER BY BORROWERS. No Borrower may, without the consent of the Lender
       transfer any of its rights or obligations under any Finance Document.

25.2   ASSIGNMENT BY LENDER. The Lender may assign all or any of the rights and
       interests which it has under or by virtue of the Finance Documents
       without the consent of any Borrower.

25.3   RIGHTS OF ASSIGNEE. In respect of any breach of a warranty, undertaking,
       condition or other provision of a Finance Document, or any
       misrepresentation made in or in connection with a Finance Document, a
       direct or indirect assignee of any of the Lender's rights or interests
       under or by virtue of the Finance Documents shall be entitled to recover
       damages by reference to the loss incurred by that assignee as a result of
       the breach or misrepresentation irrespective of whether the Lender would
       have incurred a loss of that kind or amount.

25.4   SUB-PARTICIPATION; SUBROGATION ASSIGNMENT. The Lender may sub-participate
       all or any part of its rights and/or obligations under or in connection
       with the Finance Documents without the consent of, or any notice to, any
       Borrower; and the Lender may assign, in any manner and terms agreed by
       it, all or any part of those rights to an insurer or surety who has
       become subrogated to them.

25.5   DISCLOSURE OF INFORMATION. The Lender may disclose to a potential
       assignee or sub-participant any information which the Lender has received
       in relation to any Borrower, any Security Party or their affairs under or
       in connection with any Finance Document, unless the information is
       clearly of a confidential nature.

25.6   CHANGE OF LENDING OFFICE. The Lender may change its lending office by
       giving notice to the Borrowers and the change shall become effective on
       the later of:

(a)    the date on which the Borrowers receive the notice; and

(b)    the date, if any, specified in the notice as the date on which the change
       will come into effect.

26     VARIATIONS AND WAIVERS


                                       51



26.1   VARIATIONS, WAIVERS ETC. BY LENDER. A document shall be effective to
       vary, waive, suspend or limit any provision of a Finance Document, or the
       Lender's rights or remedies under such a provision or the general law,
       only if the document is signed, or specifically agreed to by fax, by the
       Borrowers and the Lender and, if the document relates to a Finance
       Document to which a Security Party is party, by that Security Party.

26.2   EXCLUSION OF OTHER OR IMPLIED VARIATIONS. Except for a document which
       satisfies the requirements of Clause 26.1, no document, and no act,
       course of conduct, failure or neglect to act, delay or acquiescence on
       the part of the Lender (or any person acting on its behalf) shall result
       in the Lender (or any person acting on its behalf) being taken to have
       varied, waived, suspended or limited, or being precluded (permanently or
       temporarily) from enforcing, relying on or exercising:

(a)    a provision of this Agreement or another Finance Document; or

(b)    an Event of Default; or

(c)    a breach by a Borrower or a Security Party of an obligation under a
       Finance Document or the general law; or

(d)    any right or remedy conferred by any Finance Document or by the general
       law;

       and there shall not be implied into any Finance Document any term or
       condition requiring any such provision to be enforced, or such right or
       remedy to be exercised, within a certain or reasonable time.

27     NOTICES

27.1   GENERAL. Unless otherwise specifically provided, any notice under or in
       connection with any Finance Document shall be given by letter or fax; and
       references in the Finance Documents to written notices, notices in
       writing and notices signed by particular persons shall be construed
       accordingly.

27.2   ADDRESSES FOR COMMUNICATIONS. A notice shall be sent:

(a)    to a Borrower: 331 Kiffisias Avenue
                      Kiffisia 145 61
                      Greece

                      Fax No: +30 210 625 2817

(b)    to the Lender: DnB NOR Bank ASA
                      20 St. Dunstan's Hill
                      London
                      EC3R 8HY
                      England

                      Fax No: +44 207 626 5956
                      Attn: Shipping Department

       or to such other address as the relevant party may notify the other.

27.3   EFFECTIVE DATE OF NOTICES. Subject to Clauses 27.4 and 27.5:


                                       52



(a)    a notice which is delivered personally or posted shall be deemed to be
       served, and shall take effect, at the time when it is delivered; and

(b)    a notice which is sent by fax shall be deemed to be served, and shall
       take effect, 2 hours after its transmission is completed.

27.4   SERVICE OUTSIDE BUSINESS HOURS. However, if under Clause 27.3 a notice
       would be deemed to be served:

(a)    on a day which is not a business day in the place of receipt; or

(b)    on such a business day, but after 5 p.m. local time,

       the notice shall (subject to Clause 27.5) be deemed to be served, and
       shall take effect, at 9 a.m. on the next day which is such a business
       day.

27.5   ILLEGIBLE NOTICES. Clauses 27.3 and 27.4 do not apply if the recipient of
       a notice notifies the sender within 1 hour after the time at which the
       notice would otherwise be deemed to be served that the notice has been
       received in a form which is illegible in a material respect.

27.6   ENGLISH LANGUAGE. Any notice under or in connection with a Finance
       Document shall be in English.

27.7   VALID NOTICES. A notice under or in connection with a Finance Document
       shall not be invalid by reason that its contents or the manner of serving
       it do not comply with the requirements of this Agreement or, where
       appropriate, any other Finance Document under which it is served if:

(a)    the failure to serve it in accordance with the requirements of this
       Agreement or other Finance Document, as the case may be, has not caused
       any party to suffer any significant loss or prejudice; or

(b)    in the case of incorrect and/or incomplete contents, it should have been
       reasonably clear to the party on which the notice was served what the
       correct or missing particulars should have been.

27.8   MEANING OF "NOTICE". In this Clause 28 "NOTICE" includes any demand,
       consent, authorisation, approval, instruction, waiver or other
       communication.

28     JOINT AND SEVERAL LIABILITY

28.1   GENERAL. All liabilities and obligations of the Borrowers under this
       Agreement shall, whether expressed to be so or not, be several and, if
       and to the extent consistent with Clause 28.2, joint.

28.2   NO IMPAIRMENT OF BORROWER'S OBLIGATIONS. The liabilities and obligations
       of a Borrower shall not be impaired by:

(a)    this Agreement being or later becoming void, unenforceable or illegal as
       regards the other Borrower;

(b)    the Lender entering into any rescheduling, refinancing or other
       arrangement of any kind with the other Borrower;


                                       53



(c)    the Lender releasing the other Borrower or any Security Interest created
       by a Finance Document; or

(d)    any combination of the foregoing.

28.3   PRINCIPAL DEBTORS. Each Borrower declares that it is and will, throughout
       the Security Period, remain a principal debtor for all amounts owing
       under this Agreement and the Finance Documents and no Borrower shall in
       any circumstances be construed to be a surety for the obligations of the
       other Borrower under this Agreement.

28.4   SUBORDINATION. Subject to Clause 28.5, during the Security Period, no
       Borrower shall:

(a)    claim any amount which may be due to it from the other Borrower whether
       in respect of a payment made, or matter arising out of, this Agreement or
       any Finance Document, or any matter unconnected with this Agreement or
       any Finance Document; or

(b)    take or enforce any form of security from the other Borrower for such an
       amount, or in any other way seek to have recourse in respect of such an
       amount against any asset of the other Borrower; or

(c)    set off such an amount against any sum due from it to the other Borrower;
       or

(d)    prove or claim for such an amount in any liquidation, administration,
       arrangement or similar procedure involving the other Borrower or other
       Security Party; or

(e)    exercise or assert any combination of the foregoing.

28.5   BORROWER'S REQUIRED ACTION. If during the Security Period, the Lender, by
       notice to a Borrower, requires it to take any action referred to in
       paragraphs (a) to (d) of Clause 28.4, in relation to the other Borrower,
       that Borrower shall take that action as soon as practicable after
       receiving the Lender's notice.

29     SUPPLEMENTAL

29.1   RIGHTS CUMULATIVE, NON-EXCLUSIVE. The rights and remedies which the
       Finance Documents give to the Lender are:

(a)    cumulative;

(b)    may be exercised as often as appears expedient; and

(c)    shall not, unless a Finance Document explicitly and specifically states
       so, be taken to exclude or limit any right or remedy conferred by any
       law.

29.2   SEVERABILITY OF PROVISIONS. If any provision of a Finance Document is or
       subsequently becomes void, unenforceable or illegal, that shall not
       affect the validity, enforceability or legality of the other provisions
       of that Finance Document or of the provisions of any other Finance
       Document.

29.3   COUNTERPARTS. A Finance Document may be executed in any number of
       counterparts.

29.4   THIRD PARTY RIGHTS. A person who is not a party to this Agreement has no
       right under the Contracts (Rights of Third Parties) Act 1999 to enforce
       or to enjoy the benefit of any term of this Agreement.


                                       54



30     LAW AND JURISDICTION

30.1   ENGLISH LAW. This Agreement shall be governed by, and construed in
       accordance with, English law.

30.2   EXCLUSIVE ENGLISH JURISDICTION. Subject to Clause 30.3, the courts of
       England shall have exclusive jurisdiction to settle any disputes which
       may arise out of or in connection with this Agreement.

30.3   CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF THE LENDER. Clause 30.2 is
       for the exclusive benefit of the Lender, which reserves the rights:

(a)    to commence proceedings in relation to any matter which arises out of or
       in connection with this Agreement in the courts of any country other than
       England and which have or claim jurisdiction to that matter; and

(b)    to commence such proceedings in the courts of any such country or
       countries concurrently with or in addition to proceedings in England or
       without commencing proceedings in England. No Borrower shall commence any
       proceedings in any country other than England in relation to a matter
       which arises out of or in connection with this Agreement.

30.4   PROCESS AGENT. Each Borrower irrevocably appoints Richards Butler at its
       registered office for the time being, presently at Beaufort House, 15 St.
       Botolph Street, London EC3A 7EE, England, to act as its agent to receive
       and accept on its behalf any process or other document relating to any
       proceedings in the English courts which are connected with this
       Agreement.

30.5   LENDER'S RIGHTS UNAFFECTED. Nothing in this Clause 30 shall exclude or
       limit any right which the Lender may have (whether under the law of any
       country, an international convention or otherwise) with regard to the
       bringing of proceedings, the service of process, the recognition or
       enforcement of a judgment or any similar or related matter in any
       jurisdiction.

30.6   MEANING OF "PROCEEDINGS". In this Clause 30, "PROCEEDINGS" means
       proceedings of any kind, including an application for a provisional or
       protective measure.

THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.


                                       55



                                   SCHEDULE 1

                                 DRAWDOWN NOTICE

To: DnB NOR Bank ASA
    20 St. Dunstan's Hill
    London
    EC3R 8HY
    England

Attention: Client Services

                                                                            2005

                                 DRAWDOWN NOTICE

We refer to the loan agreement (the "LOAN AGREEMENT") dated [_] December 2005
and made between us, as Borrowers, and you, as Lender, in connection with a
facility of up to US$50,000,000. Terms defined in the Loan Agreement have their
defined meanings when used in this Drawdown Notice.

1      We request to borrow [Tranche A]/[an Advance under Tranche B in relation
       to "[_]"] as follows:

(a)    Amount: US$[_];

(b)    Drawdown Date: [_];

(c)    Duration of the first Interest Period shall be [_] months;

(d)    Payment instructions : account in our name and numbered [_] with [_] of
       [_].

2      We represent and warrant that:

(a)    the representations and warranties in Clause 9 of the Loan Agreement
       would remain true and not misleading if repeated on the date of this
       notice with reference to the circumstances now existing;

(b)    no Event of Default or Potential Event of Default has occurred or will
       result from the borrowing of the Loan.

3      This notice cannot be revoked without the prior consent of the Lender.


                               [Name of Signatory]
                      -------------------------------------
                                    Director
                              for and on behalf of
                               EMPIRE SPIRIT LTD.
                             INDEPENDENT TRADER LTD.
                                 TRIATHLON INC.
                                SOLEIL TRUST INC.
                          JUNGLE INVESTMENT LIMITED AND
                         NORTHERN YIELD SHIPPING LIMITED


                                       56



                                   SCHEDULE 2

                          CONDITION PRECEDENT DOCUMENTS

                                     PART A

The following are the documents referred to in Clause 8.1(a).

1      A duly executed original of each Finance Document (and of each document
       required to be delivered by each Finance Document) other than those
       referred to in Part B, Part C or Part D.

2      Copies of the constitutional documents of each Borrower and each Security
       Party).

3      Copies of resolutions of the shareholders and directors of each Borrower
       and each Security Party authorising the execution of each of the Finance
       Documents to which that Borrower or that Security Party is a party and,
       in the case of a Borrower, authorising named officers to give the
       Drawdown Notices and other notices under this Agreement.

4      The original of any power of attorney under which any Finance Document is
       executed on behalf of the Borrower or a Security Party.

5      Copies of all consents which any Borrower or any Security Party requires
       to enter into, or make any payment under, any Finance Document.

6      The originals of any mandates or other documents required in connection
       with the opening or operation of the Earnings Accounts and the Retention
       Account and all other information required by the Lender in relation to
       its "know your customer" regulations (whether in connection with the
       opening of the Earnings Accounts, the Retention Account or otherwise).

7      Copies of the MOAs, the Gas Oracle Charter, each Bareboat Charter and all
       addenda thereto and of all documents signed or issued by the Borrowers or
       other parties thereto under or in connection with any of them.

8      Documentary evidence that the agent for service of process named in
       Clause 30 has accepted its appointment.

9      If the Lender so requires, in respect of any of the documents referred to
       above, a certified English translation prepared by a translator approved
       by the Lender.


                                       57



                                     PART B

In this Part B of Schedule 2, "RELEVANT SHIP" means (a) in the case of Tranche
A, each of "SWEET DREAM" and "GAS ORACLE" and (b) in the case of any Advance
under Tranche B, the Ship which is to be refinanced by the Advance being drawn
down on the relevant Drawdown Date.

The following are the documents referred to in Clause 8.1(b).

1      A duly executed original of the Mortgage, the General Assignment and, if
       applicable, the Deed of Covenant (and of each document to be delivered by
       each of them) relating to the Relevant Ship.

2      Documentary evidence that:

(a)    the Relevant Ship is definitively and permanently or provisionally
       registered in the name of the relevant Borrower under the relevant flag
       as specified in Clause 13.2;

(b)    the Relevant Ship is in the absolute and unencumbered ownership of the
       relevant Borrower save as contemplated by the Finance Documents;

(c)    the Relevant Ship maintains the class as set out in Clause 13.3(b) with
       the relevant Classification Society free of all overdue recommendations
       and conditions of such Classification Society;

(d)    the Mortgage relating to the Relevant Ship has been duly registered
       against that Ship as a valid first preferred or priority (as the case may
       be) ship mortgage in accordance with the laws of the relevant flag state;
       and

(e)    the Relevant Ship is insured in accordance with the provisions of this
       Agreement and all requirements therein in respect of insurances have been
       complied with.

3      Documents establishing that the Relevant Ship will, as from the relevant
       Drawdown Date, be managed by the applicable Approved Manager on terms
       acceptable to the Lender, together with:

(a)    a letter of undertaking executed by the Approved Manager in favour of the
       Lender in the terms required by the Lender agreeing certain matters in
       relation to the management of the Relevant Ship and subordinating the
       rights of the Approved Manager against the relevant Borrower to the
       rights of the Lender under the Finance Documents; and

(b)    copies of the Approved Manager's Document of Compliance and of the
       Relevant Ship's Safety Management Certificate (together with any other
       details of the applicable safety management system which the Lender
       requires).

4      Satisfactory valuations of the Relevant Ship addressed to the Lender,
       stated to be for the purposes of this Agreement and dated not earlier
       than 30 days before the Drawdown Date for the Tranche or Advance relevant
       to that Ship, to be prepared in accordance with the provisions of Clause
       14.3 by 2 of the shipbrokers referred to in Clause 14.3 by 2 of the
       shipbrokers referred to in Clause 14.3.

5      Favourable legal opinions from lawyers appointed by the Lender on such
       matters concerning the laws of the Bahamas, Panama, the Marshall Islands,
       Cyprus, Malta and such other relevant jurisdiction as the Lender may
       require.


                                       58



                                     PART C

In this Part C of Schedule 2, "RELEVANT SHIP" means the Ship to be refinanced by
the Tranche or Advance being drawn down on the relevant Drawdown Date.

The following are the documents referred to in Clause 8.1(c).

1      If the Relevant Ship is "SWEET DREAM":

(a)    a duly executed original of the Sweet Dream Bareboat Charter Assignment
       (and of each document to be delivered pursuant thereto); and

(b)    documentary evidence that such Ship continues to operate under the Sweet
       Dream Bareboat Charter.

2      If the Relevant Ship is "GAS MARATHON":

(a)    documentary evidence that "GAS MARATHON" has been unconditionally
       delivered by Triathlon to, and accepted by, the Gas Marathon Bareboat
       Charterer for operation under the Gas Marathon Bareboat Charter;

(c)    a duly executed original of the Gas Marathon Tripartite Deed (and of each
       document to be delivered pursuant thereto);

(d)    copies of the constitutional documents of the Gas Marathon Bareboat
       Charterer;

(e)    copies of resolutions of the directors of the Gas Marathon Bareboat
       Charterer authorising the execution of the Gas Marathon Tripartite
       Agreement; and

(f)    the original power of attorney under which the Gas Marathon Tripartite
       Agreement is executed on behalf of the Gas Marathon Bareboat Charterer.

4      Favourable legal opinions from lawyers appointed by the Lender on such
       matters concerning the laws of Bermuda and such other relevant
       jurisdiction as the Lender may require.

                                     PART D

The following are the documents referred to in Clause 8.1(d).

1      A duly executed original of the Gas Oracle Charter Assignment (and of
       each document to be delivered pursuant thereto).

2      A copy of the Gas Oracle Charter and any addenda thereto.

Each copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director or the secretary (or equivalent officer) of a
Borrower.


                                       59



                                   SCHEDULE 3

                             COMPLIANCE CERTIFICATE

We, [_] and [_], being directors of Empire Spirit Ltd., Independent Trader Ltd.,
Triathlon Inc., Soleil Trust Inc., Jungle Investment Limited and Northern Yield
Shipping Limited respectively (such companies together being the "BORROWERS"),
hereby confirm that at the date of this certificate:

(a)    each Borrower is in compliance with (i) the covenants specified in the
       loan agreement dated [_] November 2005 and made between (i) the Borrowers
       and (ii) DnB NOR Bank ASA (the "LOAN AGREEMENT") and (ii) the covenants
       specified in each Security Document (as defined in the Loan Agreement) to
       which a Borrower is a party; and

(b)    [no Event of Default or Potential Event of Default has occurred]/[no
       Event of Default or Potential Event has occurred other than [_]].


- ------------------------------------   -----------------------------------------
Director                               Director
for and on behalf of                   for and on behalf of
EMPIRE SPIRIT LTD.                     INDEPENDENT TRADER LTD.


- ------------------------------------   -----------------------------------------
Director                               Director
for and on behalf of                   for and on behalf of
TRIATHLON INC.                         SOLEIL TRUST INC.


- ------------------------------------   -----------------------------------------
Director                               Director
for and on behalf of                   for and on behalf of
JUNGLE INVESTMENT LIMITED              NORTHERN YIELD SHIPPING LIMITED


                                       60



                                 EXECUTION PAGE

BORROWERS


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
EMPIRE SPIRIT LTD.                   )


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
INDEPENDENT TRADER LTD.              )


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
TRIATHLON INC.                       )


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
SOLEIL TRUST INC.                    )


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
JUNGLE INVESTMENT LIMITED            )


SIGNED by P. Vetsikas                ) /s/Panteus Vetsikas
for and on behalf of                 ) -----------------------------------------
NORTHERN YIELD                       )
SHIPPING LIMITED                     )

LENDER


SIGNED by Maria Chrysallayarpide     ) /s/Maria Chrysallayarpide
for and on behalf of                 ) -----------------------------------------
DNB NOR BANK ASA                     )


                                       61




Witness to all                       ) /s/George Paleokrassas
the above signatures:                ) -----------------------------------------

Name: George Paleokrassas
      Solicitor

Address: Waston, Farley & Williams
         2 Defteras Merarchias
         Piraeus 185 36 - Greece


                                       62

EX-4.6

                              Date 27 February 2006

                               EMPIRE SPIRIT LTD.
                             INDEPENDENT TRADER LTD.
                                 TRIATHLON INC.
                                SOLEIL TRUST INC.
                          JUNGLE INVESTMENT LIMITED AND
                         NORTHERN YIELD SHIPPING LIMITED
                         as joint and several Borrowers

                                     -and-

                                DNB NOR BANK ASA
                                    as Lender

                                   ----------

                             SUPPLEMENTAL AGREEMENT

                                   ----------

                      in relation to a Loan Agreement dated
                       5 December 2005 for a loan facility
                       of (originally) up to US$50,000,000

                            WATSON, FARLEY & WILLIAMS
                                     PIRAEUS



CLAUSE                                                                      PAGE
- ------                                                                      ----
1    INTERPRETATION                                                           1
2    AGREEMENT OF THE LENDER                                                  5
3    CONDITIONS PRECEDENT                                                     5
4    REPRESENTATIONS AND WARRANTIES                                           8
5    AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS                 9
6    FURTHER ASSURANCES                                                      12
7    FEES AND EXPENSES                                                       13
8    NOTICES                                                                 13
9    SUPPLEMENTAL                                                            13
10   LAW AND JURISDICTION                                                    14
EXECUTION PAGES                                                              15



THIS AGREEMENT is made on 27 February 2006

BETWEEN

(1)   EMPIRE SPIRIT LTD., INDEPENDENT TRADER LTD., TRIATHLON INC., SOLEIL TRUST
      INC., JUNGLE INVESTMENT LIMITED and NORTHERN YIELD SHIPPING LIMITED
      (together, the "BORROWERS" and each a "BORROWER"); and

(2)   DNB NOR BANK ASA of Norway acting through its office at 20 St Dunstan's
      Hill, London EC3R 8HY, England as "LENDER".

BACKGROUND

(A)   By a loan agreement dated 5 December 2005 and made between (i) the
      Borrowers and (ii) the Lender, the Lender has made available to the
      Borrowers a loan facility of (originally) US$50,000,000 (which represents
      the outstanding principal amount of the said loan at the date of this
      Agreement).

(B)   The Borrowers have made a request to the Lender that it makes available a
      further tranche (divided into two advances) under the Loan Agreement of up
      to US$14,000,000 in aggregate which shall be on-lent by the Borrowers to
      two affiliated companies of the Borrowers, Balkan Holding Inc. and Balcan
      Profit Limited, to assist such companies in refinancing part of the
      acquisition cost of the LPG carriers "GAS CZAR" and "GAS ETERNITY".

(C)   This Agreement sets out the terms and conditions on which the Lender
      agrees, with effect on and from the Effective Date, at the request of the
      Borrowers to make available Tranche C to the Borrowers and the
      consequential amendments to the Loan Agreement and the other Finance
      Documents.

IT IS AGREED as follows:

1     INTERPRETATION

1.1   DEFINED EXPRESSIONS. Words and expressions defined in the Loan Agreement
      and the other Finance Documents shall have the same meanings when used in
      this Agreement unless the context otherwise requires.

1.2   DEFINITIONS. In this Agreement, unless the contrary intention appears:

      "ADDITIONAL GUARANTEE" means, in relation to each Additional Guarantor,
      the guarantee of the obligations of the Borrowers under the Loan Agreement
      and the Finance Documents to be made by that Additional Guarantor in
      favour of the Lender in such form as the Lender may approve or require
      and, in the plural, means both of them;

      "ADDITIONAL GUARANTORS" means each of Balkan and Balcan Profit and, in the
      plural, means both of them;

      "ADDITIONAL SHARES PLEDGE" means, in relation to each Additional
      Guarantor, the pledge of all the shares of and in that Additional
      Guarantor, executed or to be executed by the Corporate Guarantor in favour
      of the Lender in such form as the Lender may approve or require and, in
      the plural, means both of them;

      "ADDITIONAL SHIP" means each of "GAS CZAR" and "GAS ETERNITY" and in the
      plural, means both of them;



      "ADDITIONAL SHIP ACCOUNT SECURITY DEED" means, in relation to each
      Additional Ship, a deed creating security in respect of the relevant
      Additional Ship Earnings Account in such form as the Lender may approve or
      require and, in the plural, means both of them;

      "ADDITIONAL SHIP EARNINGS ACCOUNT" means, in relation to an Additional
      Ship, an account in the name of the Additional Guarantor owning that
      Additional Ship with the Lender in England designated "[name of Additional
      Guarantor] - Earnings Account" or any other account (with that or another
      office of the Lender) which is designated by the Lender as an Earnings
      Account for the purposes of the Loan Agreement and, in the plural, means
      both of them;

      "ADDITIONAL SHIP FINANCE DOCUMENTS" means, together:

      (a)  the Additional Guarantees;

      (b)  the Additional Shares Pledge;

      (c)  the Additional Ship Account Security Deeds;

      (d)  the Additional Ship General Assignments;

      (e)  the Additional Ship Mortgages;

      (f)  the Gas Czar Charter Assignment; and

      (g)  the Gas Eternity Deed of Covenant,

      and, in the singular, means any of them;

      "ADDITIONAL SHIP GENERAL ASSIGNMENT" means, in relation to each Additional
      Ship, a first priority general assignment of the Earnings, the Insurances
      and any Requisition Compensation of that Additional Ship, in such form as
      the Lender may approve or require and, in the plural, means both of them;

      "ADDITIONAL SHIP MOA" means in relation to:

      (a)  "GAS CZAR", a memorandum of agreement dated 22 December 2005 made
           between Islas Gas Carriers, Inc. as seller and Balkan (as nominee of
           the Corporate Guarantor) as buyer for a purchase price of $9,830,000;
           and

      (b)  "GAS ETERNITY", a memorandum of agreement dated 22 June 2005 made
           between Gass (as nominee of Brave Maritime Corporation Inc.) as
           seller and Balcan Profit as buyer for a purchase price of
           $12,912,500,

      and, in the plural, means both of them;

      "ADDITIONAL SHIP MORTGAGE" means each of the Gas Czar Mortgage and the Gas
      Eternity Mortgage and, in the plural, means both of them;

      "AMENDMENT DEED OF COVENANT" means, in respect of "GAS CATHAR", an
      amendment to the Deed of Covenant in respect of that Ship in such form as
      the Lender may approve or require;

      "AMENDMENT MORTGAGE" means, in respect of each of "GAS CATHAR", "GAS
      MARATHON" and "GAS SINCERITY" an amendment mortgage to the Mortgage in
      respect of the relevant Ship in such form as the Lender may approve or
      require and in the plural, means all of them;


                                        2



      "APPROVED FLAG" means, in relation to:

      (a)  "GAS CZAR", Marshall Islands flag; and

      (b)  "GAS ETERNITY", Cyprus flag,

      or, in either case, such other flag as the Lender may approve as the flag
      on which an Additional Ship may be registered;

      "BALCAN PROFIT" means Balcan Profit Limited, a company incorporated in
      Malta having its registered office at 147/1 St. Lucia Street, Valletta,
      Malta;

      "BALKAN" means Balkan Holding Inc. a corporation incorporated in the
      Marshall Islands having its registered office at Trust Company Complex,
      Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

      "EFFECTIVE DATE" means the date on which all the conditions precedent
      referred to in Clauses 3.2 and 3.3 have been fulfilled by the Borrowers,
      to be a Business Day not later than 28 February 2006 (or such later date
      as the Lender may agree with the Borrowers);

      "EXISTING SHIPS" means, together, the New Ships, "GAS ORACLE" and "GAS
      MONARCH";

      "GAS CZAR" means the 1995-built LPG carrier of 3,500 cubic metres
      currently registered in the ownership of Islas Gas Carriers, Inc. under
      the Philippines flag with the name "ISLAS GAS" which is to be purchased by
      Balkan pursuant to the Additional Ship MOA relative to "GAS CZAR" and to
      be registered in its ownership under the Marshall Islands flag with the
      name "GAS CZAR";

      "GAS CZAR ADDITIONAL ADVANCE" means (a) an amount equal to 65 per cent. of
      the lesser of (i) the Market Value of "GAS CZAR" and (ii) the Purchase
      Price of "GAS CZAR" or (b) if such Advance is the second Tranche C
      Additional Advance to be drawn down, an amount equal to the lesser of (i)
      an amount which when aggregated with the first Tranche C Additional
      Advance is equal to $14,000,000 and (ii) the lesser of the amounts
      referred to in paragraph (a), to be made available to the Borrowers under
      the Loan Agreement (as amended and supplemented by this Agreement) in
      accordance with Clauses 2.2 and 3.2 of the Loan Agreement and upon the
      terms and conditions specified in this Agreement;

      "GAS CZAR CHARTER" means a time charterparty in respect of "GAS CZAR"
      dated 10 December 2003 (as supplemented and amended) and made between
      Islas Gas Carriers, Inc. and Shell Gas Trading (Asia-Pacific) Inc. (as the
      same has been novated to Balkan pursuant to a novation agreement dated 9
      February 2006;

      "GAS CZAR CHARTER ASSIGNMENT" means a specific assignment of the rights of
      Balkan under the Gas Czar Charter executed or to be executed by Balkan in
      favour of the Lender in such form as the Lender may approve or require;

      "GAS CZAR MORTGAGE" means a first preferred Marshall Islands mortgage in
      respect of "GAS CZAR" made or to be made by Balkan in favour of the Lender
      in such form as the Lender may approve or require;

      "GAS ETERNITY" means the 1998-built LPG carrier of 3,500 cubic metres
      currently registered in the ownership of Gass under Cyprus flag with the
      name "GAS ETERNITY" which is to be purchased by Balcan Profit pursuant to
      the Additional Ship MOA relative to "GAS ETERNITY" and to be registered in
      its ownership under Cyprus flag with the same name;


                                        3



      "GAS ETERNITY ADDITIONAL ADVANCE" means (a) an amount equal to 65 per
      cent. of the lesser of (i) the Market Value of "GAS ETERNITY" and (ii) the
      Purchase Price of "GAS ETERNITY" or (b) if such Advance is the second
      Tranche C Additional Advance to be drawn down, an amount equal to the
      lesser of (i) an amount which when aggregated with the first Tranche C
      Additional Advance is equal to $14,000,000 and (ii) the lesser of the
      amounts referred to in paragraph (a), to be made available to the
      Borrowers under the Loan Agreement (as amended and supplemented by this
      Agreement) in accordance with Clauses 2.2 and 3.2 of the Loan Agreement
      and upon the terms and conditions specified in this Agreement;

      "GAS ETERNITY DEED OF COVENANT" means a deed of covenant collateral to the
      Gas Eternity Mortgage made or to be made by Balcan Profit in favour of the
      Lender in such form as the Lender may approve or require;

      "GAS ETERNITY MORTGAGE" means the first priority Cyprus statutory mortgage
      in respect of "GAS ETERNITY" made or to be made by Balcan Profit in favour
      of the Lender in such form as the Lender may approve or require;

      "GASS" means Gass Success Limited, a company incorporated in Malta having
      its registered office at 147/1 St. Lucia Street, Valletta, Malta;

      "LOAN AGREEMENT" means the loan agreement dated 5 December 2005 referred
      to in Recital (A);

      "MELVYN" means Melvyn Services Company, a corporation incorporated in the
      Marshall Islands having its registered office at Trust Company Complex,
      Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

      "MORTGAGE ADDENDUM" means, in respect of "GAS ORACLE", an addendum to the
      Mortgage in respect of that Ship in such form as the Lender may approve or
      require;

      "NEW DEED OF COVENANT" means, in relation to each of "GAS LEGACY" and "GAS
      MONARCH", a deed of covenant collateral to the New Mortgage in respect of
      such Ship in such form as the Lender may approve or require and, in the
      plural, means both of them;

      "NEW FINANCE DOCUMENTS" means, together:

      (a)  the Additional Ship Finance Documents;

      (b)  the New Deeds of Covenant;

      (c)  the New Mortgages;

      (d)  the Amendment Mortgages;

      (e)  the Amendment Deed of Covenant; and

      (f)  the Mortgage Addendum,

      and, in the singular, means any of them;

      "NEW MORTGAGE" means, in relation to:

      (a)  "GAS LEGACY", a first priority Cyprus statutory mortgage in respect
           of that Ship; and

      (b)  "GAS MONARCH", a first priority Bahamas statutory mortgage in respect
           of that Ship,


                                        4



      executed or to be executed by the Owner of the relevant Ship in favour of
      the Lender in such form as the Lender may approve or require and, in the
      plural, means both of them;

      "ORIGINAL LOAN" means an amount of up to $50,000,000 or (as the context
      requires) the aggregate principal amount of Tranche A and Tranche B
      advanced and outstanding at any relevant time under the Loan Agreement;

      "TRANCHE C" means an amount equal to the lesser of (a) $14,000,000 and (b)
      an amount equal to 65 per cent. of the lesser of (i) the aggregate Market
      Value of the Additional Ships and (ii) the aggregate Purchase Price of the
      Additional Ships to be made available by the Lender to the Borrowers (who
      shall on-lend the same to the Additional Guarantors) in up to two Advances
      in accordance with clauses 2.2 and 3.2 of the Loan Agreement and upon the
      terms and conditions specified in this Agreement;

      "TRANCHE C ADDITIONAL ADVANCE" means each of the Gas Czar Additional
      Advance and the Gas Eternity Additional Advance and, in the plural, means
      both of them; and

      "TRANCHE C ADDITIONAL ADVANCE DRAWDOWN DATE" means, in respect of each
      Tranche C Additional Advance, the date requested by the Borrowers for that
      Tranche C Additional Advance to be made, or (as the context requires) the
      date on which that Tranche C Additional Advance is actually made.

1.3   APPLICATION OF CONSTRUCTION AND INTERPRETATION PROVISIONS OF LOAN
      AGREEMENT. Clauses 1.2, 1.3, 1.4 and 1.5 of the Loan Agreement apply, with
      any necessary modifications, to this Agreement.

2     AGREEMENT OF THE LENDER

2.1   AGREEMENT OF THE LENDER. The Lender agrees, subject to and upon the terms
      and conditions of this Agreement, to make available Tranche C to the
      Borrowers under the Loan Agreement.

2.2   EFFECTIVE DATE. The agreement of the Lender contained in Clauses 2.1 shall
      have effect on and from the Effective Date.

3     CONDITIONS PRECEDENT

3.1   GENERAL. The agreement of the Lender contained in Clauses 2.1 is subject
      to the fulfilment of the conditions precedent in Clauses 3.2 and 3.3.

3.2   CONDITIONS PRECEDENT TO FIRST TRANCHE C ADDITIONAL ADVANCE. The conditions
      referred to in Clause 3.1 are that the Lender shall have received the
      following documents and evidence in all respects in form and substance
      satisfactory to the Lender and its lawyers on or before the Effective Date
      (or such later date as the Lender may agree with the Borrowers):

(a)   documents of the kind specified in paragraphs 3, 4 and 5 of Schedule 2,
      Part A of the Loan Agreement in relation to each Borrower updated with
      appropriate modifications to refer to this Agreement;

(b)   documents of the kind specified in paragraph 3, 4 and 5 of Schedule 2,
      Part A of the Loan Agreement in relation to each Additional Guarantor and
      the Corporate Guarantor authorising (inter alia) the execution of the New
      Finance Documents to which each Additional Guarantor and the Corporate
      Guarantor is a party;

(c)   originals of this Agreement, the Additional Ship Finance Documents
      relating to the Additional Ship to be financed by the first Tranche C
      Additional Advance, the New


                                        5



      Deeds of Covenants, the New Mortgages, the Amendment Mortgages, the
      Amendment Deed of Covenant and the Mortgage Addendum duly executed by the
      parties thereto;

(d)   the originals of any mandates or other documents required in connection
      with the opening or operation of each Additional Ship Earnings Account and
      all other information required by the Lender in relation to its "know your
      customer" regulations (whether in connection with the opening of the
      Additional Ship Earnings Accounts or otherwise);

(e)   copies of the MOAs and the Gas Czar Charter (and all addenda thereto) and
      of all documents signed or issued by the Additional Guarantors or the
      other parties thereto under or in connection with any of them;

(f)   documentary evidence that:

      (i)    the Relevant Additional Ship (being, for the purposes of this
             Clause 3.2, the Additional Ship being financed by the first Tranche
             C Additional Advance) has been duly delivered to, and accepted by,
             the relevant Additional Guarantor in accordance with the relevant
             Additional Ship MOA and the full purchase price payable under that
             MOA (in addition to the part thereof being financed by the first
             Tranche C Additional Advance) has been duly paid;

      (ii)   the Relevant Additional Ship is definitively and permanently or
             provisionally registered in the name of the relevant Additional
             Guarantor under the relevant Approved Flag;

      (iii)  the Relevant Ship is in the absolute and unencumbered ownership of
             the relevant Additional Guarantor save as contemplated by the New
             Finance Documents relative to that Relevant Ship;

      (iv)   the Relevant Ship maintains the class as set out in clause 13.3(b)
             of the Loan Agreement with the relevant Classification Society free
             of all overdue recommendations and conditions of such
             Classification Society;

      (v)    the Additional Ship Mortgage relating to the Relevant Ship (and, if
             the Relevant Ship is "GAS ETERNITY", the Gas Eternity Deed of
             Covenant) has been duly registered against that Ship as a valid
             first preferred or priority (as the case may be) ship mortgage and,
             if applicable collateral deed of covenant, in accordance with the
             laws of the relevant flag state; and

      (vi)   the Relevant Ship is insured in accordance with the provisions of
             New Finance Documents relative to it and all requirements therein
             in respect of insurances have been complied with;

(g)   documents establishing that the Relevant Ship will, as from the first
      Tranche C Additional Advance Drawdown Date, be managed by the applicable
      Approved Manager on terms acceptable to the Lender, together with:

      (i)  a letter of undertaking executed by the Approved Manager in favour of
           the Lender in the terms required by the Lender agreeing certain
           matters in relation to the management of the Relevant Ship and
           subordinating the rights of the Approved Manager against the relevant
           Additional Guarantor to the rights of the Lender under the Finance
           Documents; and

      (ii) copies of the Approved Manager's Document of Compliance and of the
           Relevant Ship's Safety Management Certificate (together with any
           other details of the applicable safety management system which the
           Lender requires);


                                        6



(h)   satisfactory valuations of the Relevant Ship addressed to the Lender,
      stated to be for the purposes of this Agreement and dated not earlier than
      30 days before the relevant Tranche C Additional Advance Drawdown Date to
      be prepared in accordance with the provisions of clause 14.3 of the Loan
      Agreement by 2 of the shipbrokers referred to in clause 14.3 of the Loan
      Agreement;

(i)   the endorsement at the end of this Agreement signed by the Corporate
      Guarantor and each Shareholder;

(j)   documentary evidence that:

      (i)    the New Mortgage and the New Deed of Covenant relative to "GAS
             LEGACY" have been duly registered against "GAS LEGACY" as
             respectively a valid first priority statutory mortgage and
             collateral deed of covenant in accordance with the laws of Cyprus;

      (ii)   the New Mortgage relative to "GAS MONARCH" has been duly registered
             against "GAS MONARCH" as a valid first priority statutory mortgage
             in accordance with the laws of the Bahamas;

      (iii)  the Mortgage Addendum has been duly recorded against "GAS ORACLE"
             as a valid addendum to the Mortgage in respect of "GAS ORACLE" in
             accordance with the laws of the Marshall Islands;

      (iv)   the Amendment Mortgage in respect of each of "GAS MARATHON" and
             "GAS SINCERITY" has been duly registered against the relevant Ship
             as a valid amendment to the Mortgage in respect of that Ship in
             accordance with the laws of Panama; and

      (v)    the Amendment Mortgage in respect of "GAS CATHAR" has been duly
             registered against that Ship as a valid amendment to the Mortgage
             in respect of that Ship in accordance with the laws of Malta;

(k)   favourable legal opinions from lawyers appointed by the Lender on such
      matters concerning the laws of Liberia, Marshall Islands, Cyprus, Malta
      and Panama and such other relevant jurisdictions as the Lender may
      require;

(l)   the Lender shall have received the arrangement fee referred to in Clause
      7.1;

(m)   documentary evidence that the agent for service of process named in clause
      30 of the Loan Agreement has accepted its appointment; and

(n)   any further opinions, consents, agreements and documents in connection
      with this Agreement and the Finance Documents which the Lender may request
      by notice to the Borrowers prior to the Effective Date.

3.3   CONDITIONS PRECEDENT TO SECOND TRANCHE C ADDITIONAL ADVANCE. The
      conditions referred to in Clause 3.1 are that the Lender shall have
      received the following documents and evidence in all respects in form and
      substance satisfactory to the Lender and its lawyers on or before the
      Effective Date (or such later date as the Lender may agree with the
      Borrowers):

(a)   originals of the Additional Ship Finance Documents relating to the
      Additional Ship to be financed by the second Tranche C Additional Advance
      duly executed by the parties thereto;

(b)   documentary evidence that:


                                        7



      (i)    the Relevant Additional Ship (being, for the purposes of this
             Clause 3.3, the Additional Ship being financed by the second
             Tranche C Additional Advance) has been duly delivered to, and
             accepted by, the relevant Additional Guarantor in accordance with
             the relevant Additional Ship MOA and the full purchase price
             payable under that MOA (in addition to the part thereof financed by
             the second Tranche C Additional Advance) has been duly paid;

      (ii)   the Relevant Ship is in the absolute and unencumbered ownership of
             the relevant Additional Guarantor save as contemplated by the New
             Finance Documents relative to that Relevant Ship;

      (iii)  the Relevant Ship maintains the class as set out in clause 13.3(b)
             of the Loan Agreement with the relevant Classification Society free
             of all overdue recommendations and conditions of such
             Classification Society;

      (iv)   the Additional Ship Mortgage relating to the Relevant Ship (and, if
             the Relevant Ship is "GAS ETERNITY", the Gas Eternity Deed of
             Covenant) has been duly registered against that Ship as a valid
             first preferred or priority (as the case may be) ship mortgage and,
             if applicable collateral deed of covenant, in accordance with the
             laws of the relevant flag state; and

      (v)    the Relevant Ship is insured in accordance with the provisions of
             New Finance Documents relative to it and all requirements therein
             in respect of insurances have been complied with;

(c)   documents establishing that the Relevant Ship will, as from the second
      Tranche C Additional Advance Drawdown Date, be managed by the applicable
      Approved Manager on terms acceptable to the Lender, together with:

      (i)    a letter of undertaking executed by the Approved Manager in favour
             of the Lender in the terms required by the Lender agreeing certain
             matters in relation to the management of the Relevant Ship and
             subordinating the rights of the Approved Manager against the
             relevant Additional Guarantor to the rights of the Lender under the
             Finance Documents; and

      (ii)   copies of the Approved Manager's Document of Compliance and of the
             Relevant Ship's Safety Management Certificate (together with any
             other details of the applicable safety management system which the
             Lender requires);

(d)   satisfactory valuations of the Relevant Ship addressed to the Lender,
      stated to be for the purposes of this Agreement and dated not earlier than
      30 days before the relevant Tranche C Additional Advance Drawdown Date to
      be prepared in accordance with the provisions of clause 14.3 of the Loan
      Agreement by 2 of the shipbrokers referred to in clause 14.3 of the Loan
      Agreement;

(e)   favourable legal opinions from lawyers appointed by the Lender on such
      matters concerning the laws of Liberia, Marshall Islands, Cyprus, Malta
      and Panama and such other relevant jurisdictions as the Lender may
      require; and

(f)   any further opinions, consents, agreements and documents in connection
      with this Agreement and the Finance Documents which the Lender may request
      by notice to the Borrowers prior to the Effective Date.

4     REPRESENTATIONS AND WARRANTIES

4.1   REPETITION OF LOAN AGREEMENT REPRESENTATIONS AND WARRANTIES. Each Borrower
      represents and warrants to the Lender that the representations and
      warranties in clause 9 of the Loan Agreement, as amended and supplemented
      by this Agreement and updated


                                        8



      with appropriate modifications to refer to this Agreement, remain true and
      not misleading if repeated on the date of this Agreement with reference to
      the circumstances now existing.

4.2   REPETITION OF FINANCE DOCUMENT REPRESENTATIONS AND WARRANTIES. Each
      Borrower represents and warrants to the Lender that the representations
      and warranties in the Finance Documents (other than the Loan Agreement) to
      which it is a party, as amended and supplemented by this Agreement and
      updated with appropriate modifications to refer to this Agreement remain
      true and not misleading if repeated on the date of this Agreement with
      reference to the circumstances now existing.

5     AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS

5.1   SPECIFIC AMENDMENTS TO LOAN AGREEMENT. With effect on and from the
      Effective Date the Loan Agreement shall be, and shall be deemed by this
      Agreement to be, amended as follows:

(a)   by adding in Clause 1.1 thereof each of the definitions in Clause 1.1 of
      this Agreement (other than the definitions of "EFFECTIVE DATE", "LOAN
      AGREEMENT" and "TRANCHE C ADDITIONAL ADVANCE DRAWDOWN DATE");

(b)   by deleting sub-paragraph (b) in the definition of "Approved Manager" in
      clause 1.1 thereof in its entirety and replacing it with:

      "(b)" GAS MONARCH", Tesma Singapore Pte. Ltd. whose principal office is at
      30 Old Toh Tuck Road, #05-04 Sembawang Kimtrans Logistics Centre,
      Singapore 597654, Singapore";

(c)   by deleting the reference to "GAS LEGACY" in sub-paragraph (c) of the
      definition of "Approved Manager" in Clause 1.1 thereof and adding in its
      place "each of "GAS CZAR" and "GAS LEGACY,";

(d)   by adding a new sub-paragraph (d) in the definition of "Approved Manager"
      in Clause 1.1 thereof as follows:

      "(d)  "GAS ETERNITY", Stealth Maritime Corporation S.A. whose registered
            office is at 80 Broad Street, Monrovia, Liberia";

(e)   by adding a new sub-paragraph (iii) in paragraph (a) of the definition of
      "Availability Period" in Clause 1.1 thereof as follows:

      "(iii)  in respect of Tranche C, 28 February 2006";

(f)   by replacing the references to "Borrower" in the second and fourth lines
      of the definition of "Charter Assignment" in Clause 1.1 thereof with the
      words "Owner";

(g)   by adding in the first line of the definition of "Deed of Covenant" in
      Clause 1.1 thereof after the words "GAS CATHAR", the words ", "GAS
      ETERNITY"";

(h)   by replacing the references to "Borrower" in the first and second lines of
      the definition of "Earnings Account" in Clause 1.1 thereof with the word
      "Owner";

(i)   by adding in the third line of the definition of "Charter" in Clause 1.1
      thereof after the reference to "Gas Oracle Charter", the words "and the
      Gas Czar Charter";

(j)   by substituting the figure "$50,000,000" with "$64,000,000" in the
      definition of "Commitment" in Clause 1.1 thereof;


                                        9



(k)   by construing all references in the Loan Agreement and the other Finance
      Documents to the Deed of Covenant relative to "GAS CATHAR" to mean that
      Deed of Covenant as amended by the Amendment Deed of Covenant;

(l)   by adding in the first line of the definition of "Drawdown Date" in Clause
      1.1 thereof after the reference to "Tranche B" the words "or Tranche C";

(m)   by construing the definition of "Finance Documents" in Clause 1.1 thereof
      as if the same included reference to each New Finance Document;

(n)   by construing all references in the Loan Agreement and the other Finance
      Documents to the Mortgages relative to the Existing Ships to mean:

      (i)    in the case of each of "GAS LEGACY" and "GAS MONARCH", the New
             Mortgage relative to that Existing Ship;

      (ii)   in the case of each of "GAS CATHAR", "GAS MARATHON" and "GAS
             SINCERITY", the Mortgage relative to such Ship as amended by the
             Amendment Mortgage relative thereto;

      (iii)  in the case of "GAS ORACLE", the Mortgage relative to such Ship as
             amended by the Mortgage Addendum;

(o)   in the definition of "Margin" in Clause 1.1 thereof:

      (i)    replacing the reference to "Tranche B" in the second line of
             sub-paragraph (a) with "Tranche C"; and

      (ii)   replacing the reference to "Security Cover Ratio" in the first line
             of sub-paragraph (b) with "Asset Cover Ratio";

(p)   by construing the definition of "Mortgage" in Clause 1.1 thereof to
      include reference to each Additional Ship Mortgage;

(q)   by adding in the first line of the definition of "Owner" in Clause 1.1
      thereof after the word "Borrower" the words "or, as the case may be, the
      additional Guarantor";

(r)   by adding in the left hand column in the definition of "Owner" in Clause
      1.1 thereof reference to "GAS CZAR" and "GAS ETERNITY" and adding opposite
      the names of such Additional Ships in the right hand column reference
      respectively to Balkan and Balcan Profit;

(s)   by deleting the definition of "Purchase Price" in Clause 1.1 thereof and
      replacing it with:

      ""PURCHASE PRICE" means, in relation to a New Ship and an Additional Ship,
      the aggregate amount paid or to be paid by the relevant Borrower or, as
      the case may be, the relevant Additional Guarantor to the seller of that
      New Ship or that Additional Ship pursuant to the MOA or the Additional
      Ship MOA which relates thereto;"

(t)   by adding in the first line of the definition of "Security Party" in
      Clause 1.1 thereof after the reference to "Corporate Guarantor" the words
      ", each Additional Guarantor";

(u)   by adding new sub-paragraphs (g) and (h) in the definition of
      "Shareholder" in Clause 1.1 thereof as follows:

      "(g)  in the case of Balkan, Stealthgas; and

      (h)   in the case of Balcan Profit, Melvyn;";


                                       10



(v)   by adding a new sub-paragraph (c) in the definition of "Ships" in Clause
      1.2 thereof as follows:

      "(c)  the Additional Ships,";

(w)   by construing all references to "SWEET DREAM" in the Loan Agreement and
      other Finance Documents as "GAS MONARCH" (being the new name of such
      Ship);

(x)   by construing the definition of "Tranche" in Clause 1.2 thereof as if the
      same included reference to Tranche C;

(y)   by deleting the words and figures in Clause 2.1 thereof "five Advances a
      loan facility of up to $50,000,000 divided in two tranches" and replacing
      them with "seven Advances a loan facility of up to $64,000,000 divided in
      three tranches";

(z)   by adding a new sub-paragraph (c) in Clause 2.1 thereof as follows:

      "(c)  an amount equal to the lesser of (i) $14,000,000 and (ii) an amount
            equal to 65 per cent of the lesser of (A) the aggregate Market Value
            of the Additional Ships and (B) the aggregate Purchase Price of the
            Additional Ships":

(aa)  by adding in Clause 3.2(c) after the reference to "Tranche B", the words
      "and Tranche C";

(bb)  by adding a new paragraph (e) in Clause 3.2 (and re-constituting the
      existing paragraph (e) as paragraph (f)) as follows:

      "(e)  neither Advance made under Tranche C shall exceed 65 per cent. of
            the lesser of (i) the Market Value of the Additional Ship to which
            it relates on the Drawdown Date of that Advance and (ii) the
            Purchase Price of that Additional Ship; and";

(cc)  by replacing the reference to "Tranche B" in the second line of Clause
      4.12 thereof with "Tranche C";

(dd)  by adding a new paragraph (d) in Clause 5.2 thereof (and reconstituting
      the existing paragraphs (d) and (e) as respectively paragraphs (e) and
      (f)) as follows:

      "(d)  the first Interest Period in relation to each Advance under Tranche
            C shall commence on the Drawdown Date relative thereto and shall
            expire on the last day of the Interest Period which is then current
            for Tranches A and B (as consolidated pursuant to Clause 5.2(c)) and
            thereafter Interest Periods in relation to Tranches A and B and the
            Advances under Tranche C which are outstanding at the relevant time
            shall commence and expire on the same dates and shall be
            consolidated to form one Interest Period;";

(ee)  by deleting sub-paragraphs (i), (ii) and (iii) of Clause 7.1(a) and Clause
      7.1(b) in their entirety and replacing them with the following:

            "(i)   in the case of the first and second instalments, $4,608,000
                   each;

            (ii)   in the case of the third to sixth instalments (inclusive),
                   $3,072,000 each;

            (iii)  in the case of the seventh to twentieth instalments
                   (inclusive), $2,304,000 each; and

      (b)   a balloon instalment of $10,240,000 (as such amount may be increased
            through the operation of Clause 7.11, the "BALLOON INSTALMENT").";


                                       11



(ff)  by deleting sub-paragraphs (i) and (ii) of Clause 7.2(a) thereof in their
      entirety and replacing them with:

      "(i)   the Drawdown Date relating to the first Advance under Tranche C;
             and

      (ii)   28 February 2006 (or such later date as the Lender may agree with
             the Borrowers); and";

(gg)  by deleting sub-paragraphs (i) and (ii) of Clause 7.2(b) thereof in their
      entirety and replacing them with:

      "(i) the date falling on the tenth anniversary of the Drawdown Date
      relating to the first Advance under Tranche C; and

      (ii) 28 February 2016 (or such later date as the Lender may agree with the
      Borrowers).";

(hh)  by replacing the figure "$1,800,000" in the third line of Clause 7.11(c)
      thereof with "$2,300,000"; and

(ii)  by construing references throughout to "this Agreement", "hereunder" and
      other like expressions as if the same referred to the Loan Agreement as
      amended and supplemented by this Agreement.

5.2   AMENDMENTS TO FINANCE DOCUMENTS. With effect on and from the Effective
      Date each of the Finance Documents other than the Loan Agreement, shall
      be, and shall be deemed by this Agreement to be, amended as follows:

(a)   the definition of, and references throughout each of the Finance Documents
      to, the Loan Agreement and any of the other Finance Documents shall be
      construed as if the same referred to the Loan Agreement and those Finance
      Documents as amended and supplemented by this Agreement;

(b)   by construing references throughout each of the Finance Documents to "this
      Agreement", "this Deed", "hereunder" and other like expressions as if the
      same referred to such Finance Documents as amended and supplemented by
      this Agreement.

5.3   FINANCE DOCUMENTS TO REMAIN IN FULL FORCE AND EFFECT. The Finance
      Documents shall remain in full force and effect as amended and
      supplemented by:

(a)   the amendments to the Finance Documents contained or referred to in
      Clauses 5.1 and 5.2 ; and

(b)   such further or consequential modifications as may be necessary to give
      full effect to the terms of this Agreement,

6     FURTHER ASSURANCES

6.1   BORROWERS' OBLIGATION TO EXECUTE FURTHER DOCUMENTS ETC. The Borrowers
      shall, and shall procure that any other party to any Security Document
      shall:

(a)   execute and deliver to the Lender (or as it may direct) any assignment,
      mortgage, power of attorney, proxy or other document, governed by the law
      of England or such other country as the Lender may, in any particular
      case, specify;

(b)   effect any registration or notarisation, give any notice or take any other
      step,


                                       12



      which the Lender may, by notice to the Borrowers or other party, specify
      for any of the purposes described in Clause 6.2 or for any similar or
      related purpose.

6.2   PURPOSES OF FURTHER ASSURANCES. Those purposes are:

(a)   validly and effectively to create any Security Interest or right of any
      kind which the Lender intended should be created by or pursuant to the
      Loan Agreement or any other Security Document, each as amended and
      supplemented by this Agreement; and

(b)   implementing the terms and provisions of this Agreement.

6.3   TERMS OF FURTHER ASSURANCES. The Lender may specify the terms of any
      document to be executed by a Borrower or any other party under Clause 6.1,
      and those terms may include any covenants, powers and provisions which the
      Lender considers appropriate to protect its interests.

6.4   OBLIGATION TO COMPLY WITH NOTICE. Each Borrower or any other party shall
      comply with a notice under Clause 6.1 by the date specified in the notice.

6.5   ADDITIONAL CORPORATE ACTION. At the same time as a Borrower or any other
      party delivers to the Lender any document executed under Clause 6.1(a), a
      Borrower or any other party shall also deliver to the Lender a certificate
      signed by 2 of that Borrower's or that other party's directors which
      shall:

(a)   set out the text of a resolution of that Borrower's or that other party's
      directors specifically authorising the execution of the document specified
      by the Lender; and

(b)   state that either the resolution was duly passed at a meeting of the
      directors validly convened and held throughout which a quorum of directors
      entitled to vote on the resolution was present or that the resolution has
      been signed by all the directors and is valid under that Borrower's or
      that other party's articles of association or other constitutional
      documents.

7     FEES AND EXPENSES

7.1   ARRANGEMENT FEE. The Borrowers shall pay to the Lender on the date of this
      Agreement an arrangement fee of $28,000.

7.2   EXPENSES. The provisions of clause 18 (Fees and Expenses) of the Loan
      Agreement, as amended and supplemented by this Agreement, shall apply to
      this Agreement as if they were expressly incorporated in this Agreement
      with any necessary modifications.

8     NOTICES

8.1   GENERAL. The provisions of clause 27 (Notices) of the Loan Agreement, as
      amended and supplemented by this Agreement, shall apply to this Agreement
      as if they were expressly incorporated in this Agreement with any
      necessary modifications.

9     SUPPLEMENTAL

9.1   COUNTERPARTS. This Agreement may be executed in any number of
      counterparts.

9.2   THIRD PARTY RIGHTS. A person who is not a party to this Agreement has no
      right under the Contracts (Rights of Third Parties) Act 1999 to enforce or
      to enjoy the benefit of any term of this Agreement.


                                       13



10    LAW AND JURISDICTION

10.1  GOVERNING LAW. This Agreement shall be governed by and construed in
      accordance with English law.

10.2  INCORPORATION OF THE LOAN AGREEMENT PROVISIONS. The provisions of clause
      30 (Law and Jurisdiction) of the Loan Agreement, as amended and
      supplemented by this Agreement, shall apply to this Agreement as if they
      were expressly incorporated in this Agreement with any necessary
      modifications.

THIS AGREEMENT has been duly executed as a Deed on the date stated at the
beginning of this Agreement.


                                       14



                                 EXECUTION PAGES

BORROWERS


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
by EMPIRE SPIRIT LTD.                  ) ---------------------------------------
acting by Panteus Vetsikas             )
its duly authorised attorney-in-fact   )


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
By INDEPENDENT TRADER                  ) ---------------------------------------
LTD. acting by Panteus Vetsikas        )
its duly authorised attorney-in-fact   )


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
by TRIATHLON INC.                      ) ---------------------------------------
acting by Panteus Vetsikas             )
its duly authorised attorney-in-fact   )


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
by SOLEIL TRUST INC.                   ) ---------------------------------------
acting by Panteus Vetsikas             )
its duly authorised attorney-in-fact   )


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
by JUNGLE INVESTMENT                   ) ---------------------------------------
LIMITED                                )
acting by Panteus Vetsikas             )
its duly authorised attorney-in-fact   )


EXECUTED as a DEED                     ) /s/Panteus Vetsikas
by NORTHERN YIELD                      ) ---------------------------------------
SHIPPING LIMITED                       )
acting by  Panteus Vetsikas            )
its duly authorised attorney-in-fact   )

LENDER


EXECUTED as a DEED                     ) /s/ George Paleokrassas
by DNB NOR BANK ASA                    ) ---------------------------------------
acting by George Paleokrassas          )
its duly authorised attorney-in-fact   )


Witness to all the above               )
signatures:                            )

Name: Vassiliki Georgopoulos
      Solicitor

Address: Watson, Farley & Williams
         2 Defteras Merarchias
         Piraeus 185 36 - Greece


                                       15



We hereby confirm and acknowledge we have read and understood the terms and
conditions of the above Supplemental Agreement and agree in all respects to the
same and confirm that the Finance Documents to which we are a party shall remain
in full force and effect and shall continue to stand as security for the
obligations of the Borrowers under the Loan Agreement (as amended by the
Supplemental Agreement) and shall, without limitation, secure the Loan (as
increased or to be increased by the amount of Tranche C).

for and on behalf of                     for and on behalf of
CEDRIC FINANCE INC.                      QUINTA TRADING CO.


/s/Panteus Vetsikas                      /s/Panteus Vetsikas
- -------------------------------------    ---------------------------------------


for and on behalf of                     for and on behalf of
DREW INTERNATIONAL INC.                  REINA PROPERTIES CORP.


/s/Panteus Vetsikas                      /s/Panteus Vetsikas
- -------------------------------------    ---------------------------------------


for and on behalf of
STEALTHGAS INC.


/s/Panteus Vetsikas
- -------------------------------------


                                       16

EX-8

Table of Contents

Exhibit 8

Subsidiaries of StealthGas Inc.

Access Consultants Co.

Alexis Shipholding S.A.

Aracruz Trading Ltd.

Atlas Investments S.A.

Aubine Services Ltd.

Balcan Profit Limited

Balkan Holding Inc.

Baroness Holdings Inc.

Cedric Finance Inc.

Celidon Investments Inc.

Continent Gas Inc.

Delora Trading Company

Drew International Inc.

East Propane Inc.

Empire Spirit Ltd.

Fairdeal Enterprises Corp.

Floyd Properties Co.

Gaz de Brazil Inc.

Geneve Butane Inc.

Grazia Maritime Ltd.

Heather Trading S.A.

Iceland Limited

Independent Trader Ltd.

Industrial Gases Inc.

Industrial Materials Inc.

Jungle Investment Limited

Kalinda Shipmanagement Ltd.

Leader Investments Inc.

Lpgone Ltd.

Lyonet Holdings Corp.

Matrix Gas Trading Ltd.

Melvyn Services Company

Neutron Marine Corp.

Northern Yield Shipping Limited

Ocean Blue Limited

Odelyn Enterprises Co.

Oswald Trading Limited

Oxford Gas Ltd.

Pacific Gases Ltd.

Petchem Trading Inc.

Quinta Trading Co.

Reina Properties Corp.

Sabrina Enterprises S.A.

Scope International Inc.

Semichlaus Exports Ltd.

Soleil Trust Inc.

Somer Shipmanagement S.A.

Stellar Management Limited

Transgalaxy Inc.

Triathlon Inc.

VCM Trading Ltd.

Ventspils Gases Ltd.

EX-12.1

Table of Contents

Exhibit 12.1

CERTIFICATIONS

I, Harry N. Vafias, certify that:

1.    I have reviewed this annual report on Form 20-F of StealthGas Inc.;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of StealthGas Inc. as of, and for, the periods presented in this annual report;

4.    StealthGas Inc.’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to StealthGas Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)    [Omitted];

(c)    evaluated the effectiveness of StealthGas Inc.’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(d)    disclosed in this report any change in StealthGas Inc.’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.    StealthGas Inc.’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect StealthGas Inc.’s ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in StealthGas Inc.’s internal control over financial reporting.

Date: April 19, 2006
/s/ Harry N. Vafias
Harry N. Vafias President and Chief Executive Officer

EX-12.2

Table of Contents

Exhibit 12.2

CERTIFICATIONS

I, Andrew J. Simmons, certify that:

1.    I have reviewed this annual report on Form 20-F of StealthGas Inc.;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of StealthGas Inc. as of, and for, the periods presented in this annual report;

4.    StealthGas Inc.’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to StealthGas Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)    [Omitted];

(c)    evaluated the effectiveness of StealthGas Inc.’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(d)    disclosed in this report any change in StealthGas Inc.’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.    StealthGas Inc.’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect StealthGas Inc.’s ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in StealthGas Inc.’s internal control over financial reporting.

Date: April 19, 2006
/s/ Andrew J. Simmons
Andrew J. Simmons Chief Financial Officer

EX-13.1

Table of Contents

Exhibit 13.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of StealthGas Inc. (the ‘‘Company’’) for the fiscal year ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), the undersigned officer of the Company hereby certifies to the undersigned’s knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

	1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 19, 2006

/s/ Harry N. Vafias
Harry N. Vafias President and Chief Executive Officer

EX-13.2

Table of Contents

Exhibit 13.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of StealthGas Inc. (the ‘‘Company’’) for the fiscal year ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), the undersigned officer of the Company hereby certifies to the undersigned’s knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

	1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 19, 2006

/s/ Andrew J. Simmons
Andrew J. Simmons Chief Financial Officer