TBSI

TBS International Limited

We are an ocean transportation services company that offers worldwide shipping solutions to a diverse client base of industrial shippers. We offer liner, parcel and bulk services and vessel chartering supported by a fleet of multipurpose tweendeckers and handysize and handymax bulk carriers. In addition to providing frequent, regularly scheduled voyages within our shipping network, we offer additional services such as cargo scheduling, loading and discharge that offer a fully integrated shipping solution to our customer. This distinguishes us from traditional dry cargo shipping companies. In the fourth quarter of 2007, we augmented our ocean transportation services by establishing logistics operations that provide fully-integrated cargo and transport management services. Logistics operations are presented separately because of its recent growth.

We have a strong position in various trade lanes in the Far East, South America, North America, the Caribbean, the Middle East and Africa. We offer our services globally in more than 20 countries to over 300 customers through a network of affiliated service companies. We have expanded and upgraded our fleet which now numbers 47 vessels. Additionally, we expect to take delivery of two newbuild vessels in 2009 and four new build vessels in 2010 for which we have arranged funding. Early in 2008, we actively pursued opportunities to build additional Roymar Class ships in China for delivery through 2011. In October, 2008 we suspended these efforts in response to the current shipping market turmoil. Current economic conditions and the decline in demand for shipping services have caused us to suspend any further acquisitions of secondhand vessels.

The global financial crisis has resulted in a reduction in the demand for shipping services and a significant downturn in spot freight and time charter rates. A reduction in the availability of vessel acquisition funding has caused potential buyers to delay, postpone or abandon their vessel acquisition plans.

Management performs impairment analyses of long-lived assets when certain triggering events occur such as: significant decreases in the assets’ market value or changes in the assets’ physical condition, and operating or cash flow losses associated with the use of the long-lived assets, combined with a history of operating or cash flow losses. Impairment is recognized when the estimate of undiscounted future cash flows expected to be generated by the asset is less than its carrying amount. Measurement of the impairment loss is calculated based upon comparison of the fair value to the carrying value of the asset. Historically, both freight rates and vessel values tend to be volatile. The carrying value of our fleet may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate. Our impairment calculations contain uncertainties because they require management to make assumptions for estimated cash flows. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Our analysis showed that there was no impairment of long-lived assets at December 31, 2008. We will continue to monitor the shipping environment and update our impairment analyses.

As of December 31, 2008, due to the economic climate, we concluded there was an indication of possible impairment of our goodwill. Accordingly, we performed an impairment analysis of goodwill, which indicated that there was no impairment at December 31, 2008.

Our loan agreements with our various credit facilities contain both financial and non-financial covenants. Further, mandatory prepayment or delivery of additional security is required in the event that the fair market value of the vessels falls below limits specified in the loan agreements. As of December 31, 2008 we were in compliance with all financial covenants relating to minimum net worth, leverage, fixed interest coverage ratios and minimum cash balance requirements. During March 2009, based on third-party vessel valuations, we did not meet collateral coverage requirements. The credit facilities were modified to waive the collateral coverage and all financial covenants through the fourth quarter 2009.

Management is taking measures to manage our business during the global financial crisis and to position us to take advantage of the eventual recovery. These measures include: eliminating 2008 bonus payments to our executives and employees, freezing salary at 2008 levels, instituting a cost cutting program, prepaying debt, negotiating loan modifications, reducing capital expenditures and scaling back the accelerated steel renewal and reinforcement program.