UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2009~~2010

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

For the transition period from to

Commission File Number 000-53656

III to I Maritime Partners Cayman I, L.P.

(Exact name of registrant as specified in its charter)

	Cayman Islands		98-0516465
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	5580 Peterson Lane Suite 155 Dallas, Texas		75240
	(Address of principal executive offices)		(Zip Code)

(972) 392-5400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class To be so registered	Name of each exchange on which each class is to be registered
	None	None

Securities registered pursuant to Section 12(g) of the Act:

Class A Limited Partner Units ~~(Title of Class)~~

(Title of Class)

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ¨ No ¨x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” , “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

No market currently exists for the limited and general partnership interests of the registrant.

Documents incorporated by reference: None.

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

INDEX

		Page Number
	Forward-Looking Statements	34
	Part I
Item 1.	Business	45
Item 1A.	Risk Factors	1820
Item 2.	Properties	3435
Item 3.	Legal Proceedings	3435
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3435
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3637
Item 8.	Financial Statements and Supplementary Data	5860
	Report of Independent Registered Public Accounting Firm	5961
	Consolidated Balance Sheets as of December 31, 2009 and 2008	60
	Consolidated Balance Sheets as of December 31, 2010 and 2009	62
	Consolidated Statements of Operations for years ended December 31, 2009 and 2008	61
	Consolidated Statements of Operations for years ended December 31, 2010 and 2009	63
	Consolidated Statements of Partners’ Equity for the years ended December 31, 2009 and 2008	62
	Consolidated Statements of Partners’ Equity for the years ended December 31, 2010 and 2009	64
	Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008	63
	Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009	65
	Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009 and 2008	64
	Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2010 and 2009	66
	Notes to Consolidated Financial Statements	6567
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8796
Item 9A(T).	Controls and Procedures	8796
Item 9B.	Other Information	87
Item 9B	Other Information	97
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	8798
Item 11.	Executive Compensation	8899
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90101
Item 13.	Certain Relationships and Related Transactions, and Director Independence	91102
Item 14.	Principal Accounting Fees and Services	96109
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	96109

Forward-Looking Statements

Certain statements contained or incorporated by reference in this Form 10-K including without limitation statements containing the words “believe,” “anticipate,” “attainable,” “forecast,” “will,” “may,” “expect(ation),” “envision,” “project,” “budget,” “objective,” “goal,” “target(ing),” “estimate,” “could,” “should,” “would,” “conceivable,” “intend,” “possible,” “prospects,” “foresee,” “look(ing) for,” “look to,” and words of similar import, are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements appear in a number of places and include statements with respect to, among other things:

forecasts about our ability to make cash distributions on the units;

· planned capital expenditures and availability of capital resources to fund capital expenditures;

future supply of, and demand for, products that will be shipped, supplied or otherwise supported by our vessels;

expected demand in the maritime shipping industry in general and for our vessels in particular;

our ability to maximize the use of our vessels;

· expected delivery of the anchor handling tug supply ships and the chemical tanker;

estimated future maintenance capital expenditures;

· the absence of future geopolitical disputes or other disturbances;

increasing emphasis on environmental and safety concerns;

our future financial condition or results of operations and our future revenues and expenses;

our business strategy and other plans and objectives for future operations;

forecasts about our ability to make cash distributions on the units; and

any statements contained herein that are not statements of historical fact.

These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Accordingly, our actual results or performance may differ significantly, positively or negatively, from forward-looking statements. Unanticipated events and circumstances are likely to occur. Important factors that could cause our actual results of operations or financial condition to differ include, but are not limited to:

· inability to ~~raise~~negotiate ~~sufficient~~a ~~debt~~deferral orof ~~equity~~the ~~capital~~principal torepayment ~~secure~~terms ~~delivery~~ of ~~the~~our ~~remaining~~debt ~~vessels~~obligations ~~for~~or ~~which~~otherwise weresolve ~~are~~our ~~obligated~~defaults orunder ~~intend~~such toloans ~~purchase~~on ~~and~~favorable toterms ~~provide~~or ~~capital~~at ~~for operations~~all;

· ~~fluctuations~~inability into ~~charter~~raise ~~rates~~sufficient debt or equity capital to pay remaining capital contribution obligations, service our debt obligations and provide for operations;

insufficient cash from operations;

fluctuations in charter rates;

political and financial unrest in our areas of operation;

a decline in the demand for petroleum products or other products shipped, supplied or otherwise supported by our vessels;

· intense competition in the anchor handling tug supply ~~ship,~~vessel or multipurpose bulk carrier ~~or chemical tanker~~ industries;

the occurrence of marine accidents or other hazards;

fluctuations in currency exchange rates and/or interest rates;

· delays or cost overruns in the construction of new vessels;

changes in international trade agreements;

adverse developments in the marine transportation business; and

other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings, including those set forth in this Form 10-K under Item 1A. Risk Factors.

All forward-looking statements included in this Form 10-K and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I

Item 1. Business

In accordance with the Securities and Exchange Commission’s (“SEC”) “Plain English” guidelines, this Annual Report on Form 10-K (this “Form 10-K”) has been written in the first person. In this document, the words “we,” “our,” “ours” and “us” refer only to III to I Maritime Partners Cayman I, L.P. and its consolidated subsidiaries or to III to I Maritime Partners Cayman I, L.P. or an individual subsidiary and not to any other person.

Our functional currency is the U.S. dollar (“USD”). However, the functional currency of many of our subsidiaries is the Euro (“EUR”). All amounts are stated in USD, and where the amount relates to a subsidiary whose functional currency is the Euro, the amount has been restated in EUR following the USD amount. Amounts related to future payments which are payable in EUR have been stated in USD and translated using the exchange rate as of December 31, ~~2009~~2010. Amounts shown in narrative statements related to payments made in the past have been translated using the exchange rate on the date the transaction occurred. When comparisons are made between balance sheet dates, the appropriate exchange rate for the given balance sheet date is used. When comparisons are made related to income statement amounts, the average exchange rate for the given period is used.

Company Overview

We own and operate maritime vessels primarily serving the international offshore energy industry. Our ~~primary~~ focus is on anchor-handling tug supply (“AHTS”) vessels which support offshore exploration, development and production, but we also ~~purchased~~own a non-controlling interest in two multipurpose bulk carrier vessels (“mini-bulkers”) ~~and have entered into an agreement to purchase a chemical tanker~~. We are also authorized to engage in other activities if III to I International Maritime Solutions Cayman Inc., a Cayman Islands corporation (“General Partner”), believes such activities will benefit our core business of shipping operations.

We were formed on October 18, 2006 and, to date, have had limited operating revenues and operating history~~. Previously~~, wewith ~~had~~deliveries ~~devoted~~of ~~substantially all~~ our ~~efforts~~ toAHTS ~~financial~~vessels ~~planning,~~taking ~~raising~~place ~~capital,~~throughout ~~debt~~2009 ~~financing, management oversight of ship construction~~ and ~~preparation for the operation and chartering of the ships being constructed~~2010. As of December 31, ~~2009~~2010, ~~delivery~~each of ~~three of our AHTS vessels had occurred from~~ the ~~shipyard,~~nine ~~Fincantieri~~special ~~Cantieri~~purpose ~~Navali Italiani~~entities ~~SpA~~ (“~~Fincantieri~~SPVs”) ~~in Italy~~, ~~and~~each weof ~~had~~which ~~contracts~~holds toone ~~purchase~~of ~~six additional~~the ~~new~~nine AHTS vessels ~~currently~~(each ~~under~~an ~~construction~~“AHTS bySPV”, ~~Fincantieri. Delivery~~and oftogether ~~our~~the ~~first three~~ “AHTS ~~vessels~~SPVs”), ~~UOS~~had ~~Atlantis,~~taken ~~UOS~~delivery ~~Challenger~~of ~~and~~its ~~UOS Columbia,~~respective ~~occurred~~AHTS onvessel ~~February~~from ~~27,~~the ~~2009~~shipyard, ~~May~~Fincantieri ~~28,~~Cantieri ~~2009~~Navali ~~and~~Italiani ~~October~~SpA 5,(“Fincantieri”) ~~2009~~in Italy, ~~respectively,~~ ~~with~~and ~~the~~most ~~AHTS~~of our vessels ~~immediately~~were ~~placed~~operating inunder ~~service~~charters. ~~With these~~Effective ~~vessels~~July ~~delivered~~1, ~~and~~2011, ~~operating~~we ~~under~~transferred ~~charters,~~ our ~~operations~~entire ~~have~~interest ~~begun to~~in ~~shift~~three ~~focus~~of ~~from~~our ~~development~~AHTS ~~stage to vessel operations~~vessels, ~~therefore~~and weapproximately ~~are no longer~~ a ~~development~~39% ~~stage~~interest ~~company~~in asa ~~defined~~fourth byvessel, through the ~~topic~~transfer ~~Development Stage Entities~~ of ~~Financial~~ ~~Accounting~~our ~~Standards~~ownership ~~Board~~in ~~Accounting~~the ~~Standards~~respective ~~Codification~~AHTS ~~(“FASB ASC”)~~SPVs, ~~FASB~~leaving ~~ASC~~us ~~915. Since~~with ~~December 31,~~five ~~2009,~~majority weowned ~~have~~AHTS ~~taken~~vessels ~~delivery of~~and ~~three~~a ~~additional~~sixth AHTS ~~vessels,~~vessel ~~for~~in which we ~~are~~hold ~~currently~~a ~~seeking charters. Because~~non-controlling ofinterest ~~our limited operating history, we have retained experienced management companies to manage the operations~~ of ~~our vessels~~approximately 36%.

The vessels which make up our AHTS vessel fleet are relatively large, high horsepower AHTS vessels capable of supporting intermediate depth and deepwater exploration, development, and drilling operations. Our vessels operate in a fleet of twelve AHTS vessels, and these twelve vessels represent approximately 12.5% of the worldwide fleet of such vessels based on the total fleet size of similarly capable vessels according to data from Platou, which are international ship and offshore brokers and investment bankers. As such, our revenues, net earnings and cash flows from operations are dependent upon activity in the offshore drilling industry, which is primarily driven by the long-term worldwide demand for oil. However, the industry is also subject to economic issues of a temporary and/or localized nature as well.

Our vessels operate as part of a fleet of twelve AHTS vessels, three of which are now wholly owned by a group of affiliated entities involved in the international shipping industry that are owned or controlled by Hartmann AG, a German corporation headquartered in Leer, Germany (the “Hartmann Group”) and three of which are owned by our affiliate, FLTC Fund I. Entities of the Hartmann Group are also our partner in five of our vessels and the three vessels of FLTC Fund I.

Principal Offices

Our principal corporate offices are located at 5580 Peterson Lane, Suite 155, Dallas, Texas 75240. Our telephone number is 972-392-5400.

SEC Reporting

We file annual, quarterly and current reports and other materials with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC.

We also provide electronic access to our periodic and current reports on our website, www.~~3to1IMS~~3to1ims.com. These reports are available on our website as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. The information contained on our website or any other website is not incorporated by reference into this Form 10-K and does not constitute a part of this report. A copy of this Form 10-K will be provided without charge upon written request to Investor Relations at the above address.

We first exceeded 500 Class A limited partners on July 30, 2008, and because we had more than 500 Class A limited partners as of December 31, 2008, we were required to register our Class A Units with the SEC pursuant to the provisions of Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”). The sale by our Class A limited partners of our Class A Units is restricted pursuant to the terms of our Partnership Agreement, and there is currently no public market for such Class A Units nor is it anticipated that such a market will develop. We are authorized to issue Class A, Class B, Class C and Class D limited partner units as well as general partner units. To date we have issued Class A, Class B and Class D limited partner units and general partner units.

Formation History and Operating Structure

WeThe ~~were formed~~partnership inis ~~October~~a ~~2006~~Cayman asIslands an exempted limited partnership ~~under~~formed ~~the~~in ~~laws~~October of2006 ~~the Cayman Islands,~~ with III to I International Maritime Solutions Cayman, Inc., a ~~company~~ ~~limited~~Cayman byIslands ~~shares~~exempted ~~formed~~company ~~under~~with ~~the~~limited ~~laws of the Cayman Islands~~liability, ~~serving~~ as our general partner. Under the law of the Cayman Islands, the reference to “limited by shares” means that the liability of shareholders in our general partner is limited to the amount, if any, unpaid on their shares. This unpaid amount can be called upon at any time, but the ~~member~~shareholder cannot be obliged to contribute any more than that amount. Our general partner has just one shareholder, who has met its liability amount in full.

Initially, we owned approximately 96% of the units of I-A Suresh Capital Maritime Partners Limited, a limited liability company formed under the laws of Cyprus (our “Cyprus Subsidiary”). On April 28, 2009, we underwent a reorganization in order to simplify our ownership structure, streamline the calculation of allocations and distributions by incorporating economic rights in our Partnership Agreement that formerly resided in the organizational documents of our Cyprus Subsidiary and to simplify the financial statements by eliminating the non-controlling interest component related to the Cyprus Subsidiary. Pursuant to the reorganization, one of the non-controlling unitholders in our Cyprus Subsidiary contributed its units in the Cyprus Subsidiary for our then newly created Class D units. Our general partner, the other non-controlling unitholder, contributed its units in the Cyprus Subsidiary in exchange for the contribution by the other unitholder and the adoption of the Second Amended and Restated Agreement of Limited Partnership. Pursuant to our current Partnership Agreement and the equity contribution agreement, the parties agreed to treat the contribution and issuance of the Class D units as effective on April 1, 2009. As a result of the reorganization, we now own 100% of our Cyprus Subsidiary. Please note that, in an effort to utilize terminology consistent with that used for domestic limited liability companies, we have used the terms “units” and “unitholders” above for purposes of describing the equity interests and equity holders, respectively, in connection with our Cyprus Subsidiary. However, unlike a domestic limited liability company, for purposes of describing the equity interests and holders thereof in a Cyprus limited liability company, the respective use of the terms “shares” and “shareholders” is consistent with Cyprus law, and we have used the terms “shares” and “shareholders” in all relevant documentation when necessary to describe the respective equity interests and holders thereof of our Cyprus Subsidiary.

In accordance with FASB ASC 810, Consolidation - Non-controlling Interest in a Subsidiary, we ~~have~~ treated the acquisition of the non-controlling interest in our Cyprus Subsidiary as an equity transaction, and ~~have~~ recorded a decrease in the equity of the Class D unitholders and of the general partner equal to the negative carrying value of the non-controlling interest attributable to the acquired interests effective April 1, 2009. The table below reflects the carrying value of our General Partner, Class D and non-controlling interests as of December 31, 2009 and March 31, 2009. The excess of the fair value of the Class D units over the negative carrying value has also been allocated solely to the Class D limited partners, resulting in no affect on the financial statements of such excess.

				Class D
	General			Limited			Non-controlling
	Partner			Partners			Interest
Balance at March 31, 2009	$	864,290		$	—		$	17,350,044
Transfer of non-controlling interest in Cyprus Subsidiary		(48,314	)		(48,314	)		96,628
Contributions, net of syndication costs		(31,274	)		(3,846	)		8,166,398
Distributions		—			—			(71,025	)
Net loss		(270,564	)		(53,093	)		(2,528,153	)
Forward currency exchange contract		—			—			1,274,808
Foreign currency translation adjustment		—			—			1,265,750
Balance at December 31, 2009	$	514,138		$	(105,253	)	$	25,554,450

Suresh Capital Maritime Partners Germany GmbH (our “German Subsidiary”), a German limited liability company and a wholly-owned subsidiary of our Cyprus Subsidiary, was formed for the purpose of acquiring, managing and operating our vessels. Through our German Subsidiary we own a 75% limited partner interest in nine special purpose entities (each an “SPV”) with the remaining interest owned by Reederei Hartmann GmbH & Co. KG (“Reederei Hartmann”), a Hartmann Group company, and affiliates of Reederei Hartmann. The Hartmann Group is a group of affiliated entities involved in the international shipping industry that are owned or controlled by Hartmann AG, a German corporation headquartered in Leer, Germany. Each of these nine SPVs is run by the general partner, ATL Offshore GmbH (“ATL”), also a member of the Hartmann Group. While ATL serves as the general partner of each of these nine SPVs, it does not own any portion of such SPVs and thus does not participate in the results or assets of such SPVs.

We also acquired a 49% non-controlling interest in two SPVs, each of which owns and operates a mini-bulker, with the remaining 51% ownership held by affiliates of each of Reederei Hesse GmbH & Co. KG (“Reederei Hesse”), whom we have retained to manage the operations of our mini-bulkers, and the Hartmann Group. Each SPV is a German limited partnership, Kommanditgesellschaft, which owns or will own one AHTS vessel or one mini-bulker, as applicable.

Additionally, Kronos Shipping I, Ltd (“Kronos”), our wholly-owned subsidiary, was formed during 2008 to acquire, manage and operate the chemical tanker that we currently have an option to purchase. In light of the global downturn in the economy and the resulting decrease in charter rates for chemical tankers, and product tankers in general, we are currently re-evaluating our intentions with respect to the chemical tanker, and believe it is unlikely that we will complete the acquisition of the tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments and an adjustment to the overall contract price.

We previously owned three additional SPVs that each held a contract to purchase an additional AHTS vessel. However, these SPVs were sold to our affiliate, FLTC Fund I, in December 2007 for their approximate carrying value. Additional information is included in this Form 10-K under Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption entitled Sale of Certain AHTS SPVs.

~~For~~Suresh Capital Maritime Partners Germany, GmbH (our “German Subsidiary”), a ~~chart~~ ~~showing~~German ~~the~~limited ~~ownership~~liability ~~structure~~company and a wholly-owned subsidiary of our ~~subsidiaries~~Cyprus asSubsidiary, was formed for the purpose of ~~March~~acquiring, 31managing and operating our vessels. In May 2007, we acquired a 75% limited partnership interest in the 12 AHTS SPVs, each of which is organized as a Kommanditgesellschaft (“KG”), a German limited partnership, in order to secure a position in 12 AHTS vessels available from the Fincantieri Shipyards in Italy with expected deliveries through 2010. Each of these AHTS SPVs has a general partner, ~~see~~ ~~below~~ATL Offshore GmbH (“ATL”), also a member of the Hartmann Group. While ATL serves as the general partner of each of the AHTS SPVs, it does not own any portion of such AHTS SPVs and thus does not participate in the results or assets of such AHTS SPVs. The remaining 25% of each AHTS SPV is owned by Reederei Hartmann GmbH & Co. KG (“Reederei Hartmann”), one of a group of affiliated entities involved in the international shipping industry that are owned or controlled by the Hartmann Group. In December 2007 and January 2008, we sold our interest in three of the 12 AHTS SPVs to our affiliate, FLTC Fund I (“FLTC Fund I’s AHTS SPVs”). Effective July 1, 2011, we transferred our entire interest in three of our AHTS SPVs, and approximately a 39% interest in a fourth SPV to Reederei Hartmann and its affiliate Hartmann Offshore GmbH & Co., KG (“Hartmann Offshore”), (“Hartmann’s AHTS SPVs”), leaving us with five majority owned AHTS SPVs and a sixth AHTS SPV in which we hold a non-controlling interest of approximately 36% (“our AHTS SPVs”). The twelve AHTS SPVs together and their respective vessels are referred to in this report as the “Fleet”. The foregoing transfer effectuated on July 1, 2011 shall be referred to herein as the “Hartmann Transfer”.

*We ~~See~~also ~~charts~~acquired ona ~~the~~49% ~~following~~non-controlling ~~page~~interest ~~for~~in two additional ~~detail~~SPVs, ~~regarding~~each ~~the~~of ~~ship~~which ~~management~~owns ~~arrangements~~and ~~for~~operates a mini-bulker, with the ~~AHTS~~remaining ~~vessels~~51% ~~and~~ownership ~~the~~held ~~mini-bulkers~~by affiliates of each of Reederei Hesse GmbH & Co. KG (“Reederei Hesse”), aswho ~~well~~was asretained to manage the ~~ownership~~operations of the mini-~~bulker~~bulkers, ~~SPVs~~and the Hartmann Group.

Additionally, Kronos Shipping I, Ltd (“Kronos”), our wholly-owned subsidiary, was formed during 2008 to acquire, manage and operate a chemical tanker that we obtained an option to purchase. In light of the global downturn in the economy and the resulting decrease in charter rates for chemical tankers and decreases in the value of similar vessels, we elected to abandon our option to purchase the chemical tanker on April 9, 2010.

We have subcontracted the commercial management of our AHTS vessels by entering into ship management agreements with Hartmann Offshore with respect to the AHTS vessels, while Reederei Hesse was retained to provide management services for the mini-bulkers in which we own an interest. The commercial management of each AHTS vessel was subcontracted by Hartmann Offshore to United Offshore Support GmbH & Co. KG, an affiliate of Hartmann Offshore and a member of the Hartmann Group (“UOS”), while the commercial management of the mini-bulkers was subcontracted by Reederei Hesse to Maritime Transport + Logistik GmbH & Co. KG, a Hartmann Group company (“MTL”). Under the ship management agreements, the applicable management companies are responsible for coordinating all commercial and technical management of the vessels including crewing, maintenance, repair and dry docking. We and the other owners of each applicable vessel are responsible for the costs associated with the ship management agreements and have certain approval rights for major decisions. Under these agreements, each applicable management company is paid based on a percentage of net daily earnings.

Our vessels may be employed under a variety of contracts, including both spot market and time charters of varying durations, voyage charters and affreightment contracts. We generally remain responsible for paying the vessel’s operating expenses which include the cost of crewing, insuring, repairing and maintaining the vessel and payment of broker’s commissions. When a charter expires, the commercial manager will assess market conditions in the industry and determine whether to seek to re-employ the vessel under a time or spot market charter, voyage charter or affreightment contract.

For a chart showing the ownership structure of our subsidiaries as of December 31, 2010, see below.

See charts on the following page for additional detail regarding the ship management arrangements for the AHTS vessels and the mini-bulkers, as well as the ownership of the mini-bulker SPVs. Note that since December 31, 2010, we have transferred all of our interest in three of the nine original AHTS SPVs and approximately 39% of an additional AHTS SPV.

We have subcontracted the commercial management of our vessels by entering into ship management agreements with Hartmann Offshore GmbH (“Hartmann Offshore”), another Hartmann Group company, with respect to all nine of the AHTS vessels while Reederei Hesse was retained to provide management services for our mini-bulkers. The commercial management of each AHTS vessel was subcontracted by Hartmann Offshore to United Offshore Support GmbH & Co. KG, an affiliate of Hartmann Offshore and a member of the Hartmann Group (“UOS”), while the commercial management of the mini-bulkers was subcontracted by Reederei Hesse to Maritime Transport + Logistik GmbH & Co. KG, a Hartmann Group company (“MTL”). Additionally, if we decide to purchase the chemical tanker, we intend to retain Bernhard Schulte Shipmanagement (the “Schulte Group”), a maritime services company, to manage the operations of the chemical tanker. The chemical tanker is part of a pool of tankers managed by Bernhard Schulte (Hellas) SPLLC, the tanker division of the Schulte Group (“Hanseatic Tankers Pool”). The Hanseatic Tankers Pool is a group of over 20 product and chemical tankers operated in a pool to build name recognition. Under the ship management agreements, the applicable management companies are responsible for coordinating all commercial and technical management of the vessels including crewing, maintenance, repair and dry docking. We and the other owners of each applicable vessel are responsible for the costs associated with the ship management agreements and have certain approval rights for major decisions. Under these agreements, each applicable management company will be paid based on a percentage of net daily earnings.

Our vessels may be employed under a variety of contracts, including both spot market and time charters of varying durations, voyage charters and affreightment contracts. We remain responsible for paying the vessel’s operating expenses which include the cost of crewing, insuring, repairing and maintaining the vessel and payment of broker’s commissions. When a charter expires, the commercial manager will assess market conditions in the industry and determine whether to seek to re-employ the vessel under a time or spot market charter, voyage charter or affreightment contract.

Our Ships

Our fleet currently consists of six AHTS vessels and two mini-bulkers. We have contracts to acquire three additional AHTS vessels currently under construction and have an option to acquire a chemical tanker. A brief description of each type of vessel, including details of our planned fleet is provided below.

Anchor Handling Tug Supply Ships

We acquired our first three AHTS vessels in February 2009, May 2009, and October 2009, and acquired an additional AHTS vessel in February 2010 and two in March 2010, from Fincantieri Shipyards (“Fincantieri”) in Italy. We have contracts to purchase three additional new AHTS vessels currently under construction by Fincantieri with delivery of the remaining three AHTS vessels scheduled for April 2010, although we expect delays of one to three months. Each of these contracts sets forth the terms of our purchase of a newly constructed AHTS vessel, and the prices for such vessels range from $53,259,995 (EUR 37,159,000) to $61,051,414 (EUR 42,595,000) for a total commitment for all nine AHTS vessels of $516,488,222 (EUR 360,349,000), with such prices to be paid in multiple installments upon the completion of various construction milestones. Each agreement specifies a delivery date for the vessel being constructed, and contains a liquidated damages provision typically imposing daily fees ranging from $7,167 (EUR 5,000) to $21,500 (EUR 15,000) resulting from delivery delays beyond the fifteen day grace period from the date specified in the contracts, including any amendments thereto. Each such shipbuilding contract also sets forth the agreed-upon characteristics for the applicable ship, including cargo capacity, speed, fuel consumption and propulsion machinery, and each agreement contains liquidated damages provisions which specify the agreed damages to be paid by the builder in the event the completed vessel fails to satisfy any of such characteristics as prescribed by the shipbuilding contract. Our AHTS vessels will support offshore deep sea oil and gas drilling in any of the following locations: the North Sea, Gulf of Mexico, Mediterranean Sea, Indian Ocean, Brazil, Africa, Southeast Asia and Australia.

~~Additionally, each~~Recent ~~AHTS vessel SPV (“AHTS SPV”) has entered into a contract with Hartmann~~Developments Offshore, whereby Hartmann Offshore supervises and manages the technical aspects and the construction of the vessel to be acquired by the applicable AHTS SPV. For each AHTS SPV, two contracts are in place during the construction of the AHTS vessel, one of which covers the technical and commercial management of the vessel (the “Technical Management Contracts”) and the other which covers the supervision of the construction of the vessel, the assessment of the builder’s adherence to the specifications and the assessment of any modifications pertaining to the vessel (the “Construction Supervision Contracts”). Under the Technical Management Contracts, Hartmann Offshore receives fees of $716,650 (EUR 500,000) payable in four equal installments, each due at (i) the beginning of steel cutting, (ii) installation of the main engines, (iii) launching of the vessel and (iv) delivery of the completed vessel. Hartmann Offshore subcontracted the commercial management duties under the Technical Management Contracts to UOS. Under the Construction Supervision Contracts, Hartmann Offshore receives fees of $358,325 (EUR 250,000) payable in two equal installments, each due at installation of the main engines and delivery of the completed vessel. Additionally, Hartmann Offshore shall be reimbursed for travel costs and other reasonable out of pocket expenses.

~~Our~~As ~~AHTS vessels~~discussed ~~are~~in ~~built~~greater todetail ~~deploy~~in Item 7. Management’s Discussion and ~~recover~~Analysis ~~mooring~~of ~~systems~~Financial ~~for~~Condition ~~deepwater~~and ~~drilling rigs~~Results of Operations of this annual report on Form 10-K, under the caption Liquidity and Capital Resources and in Item 8. ~~These~~ ~~are~~Financial ~~highly~~Statements ~~specialized~~and ~~vessels~~Supplementary ~~designed~~Data under Note 2. Going Concern in our Notes to ~~have~~Consolidated 16Financial Statements,~~320~~ ~~BHP~~ we failed to make certain quarterly payments due during March 2011 under our Loan, Guarantee Facility and Credit Facility Agreement entered into on December 19, 2008 (~~brake~~the ~~horsepower~~“Senior Loan”) with Norddeutsche Landesbank Girozentrale (“Nord/LB”), ~~450~~through ~~ton~~which ~~main~~we ~~winch~~financed ~~capacity~~our ~~and~~AHTS ~~190~~vessel ~~ton~~acquisitions. The BPfailure to make these quarterly payments constituted an event of default under the Senior Loan (~~bollard pull~~“Event of Default”). ~~With~~In ~~dynamic~~addition ~~positioning~~to ~~capabilities~~our ~~and~~Senior ~~high~~Loan ~~cargo~~with ~~capacities~~Nord/LB, ~~these~~ ~~powerful~~we ~~vessels~~entered ~~double~~into asa ~~rig~~Working ~~and~~Capital ~~platform~~Facility ~~supply~~with ~~vessels~~Nord/LB ~~that~~on ~~are capable~~December of6, ~~supporting~~2010 ~~various~~(the ~~deepwater~~“Working ~~operations~~Capital Facility”, and, collectively with the Senior Loan the “Nord/LB Loans”). ~~State~~Due to the Event of Default, Nord/LB has the ~~art electronics~~right ~~allow~~to ~~these~~declare ~~vessels~~the entire amount of the Nord/LB Loans to ~~monitor~~be immediately due and ~~maintain~~payable ~~equipment~~by ~~throughout~~written ~~all modes~~notice to us. As of ~~service~~the date of this Form 10-K, Nord/LB has not notified us of any such intent to accelerate the amounts outstanding under the Nord/LB Loans.

~~Each~~The ~~AHTS SPV~~Event ~~has~~of ~~entered~~Default ~~into~~was apreceded ~~management~~by ~~agreement~~the ~~with~~political ~~Hartmann~~and ~~Offshore~~financial orunrest ~~its nominee~~in ~~whose~~Egypt. Prior ~~performance~~to isthe ~~guaranteed~~unrest byin ~~Hartmann~~Egypt, ~~Offshore. Such management~~we ~~agreements~~were ~~commence~~already ~~upon~~experiencing tight liquidity related to the delivery of six vessels in the ~~applicable~~AHTS ~~ship~~fleet ~~and terminate~~over ~~when~~a ~~the~~short ~~ship~~time isspan ~~sold~~during 2010, some of which did not immediately enter into charters. ~~Under~~ The ~~these~~situation ~~management~~in ~~agreements,~~Egypt ~~the ship~~resulted ~~manager~~in ~~provides~~delayed acharter ~~full~~payments ~~range~~to four of ~~management~~the ~~services~~AHTS SPVs in the Fleet, ~~including~~as ~~but~~these ~~not limited~~AHTS toSPVs ~~the~~are ~~following:~~engaged in charters with companies with substantial ties to Egypt.

·As ~~Crew~~a ~~management~~result ~~services~~of the foregoing, ~~whereby~~we are working to restructure our debt obligations. In this regard, we are negotiating with Nord/LB to defer some principal payments under the ~~ship~~Nord/LB ~~manager~~Loans ~~shall~~or ~~provide~~otherwise ~~suitable~~resolve ~~qualified~~the ~~crew~~Event ~~for~~of Default. The Senior Loan includes complex terms and guarantees by third parties which have added complexity to the ~~applicable~~discussions, ~~vessel~~lengthening the process. While we continue to work with Nord/LB on resolving the Event of Default and our liquidity issues, there can be no assurances that Nord/LB will ultimately agree to a deferral or any other resolution of the Event of Default on terms that are acceptable to us or at all, or that we will be able to otherwise resolve our liquidity concerns to enable us to repay this overdue payments. Although Nord/LB has not moved to do so over the course of the past months, in ~~accordance~~the event Nord/LB were to accelerate all of the outstanding indebtedness under the Nord/LB Loans, we would be unable to repay such amounts and would, as a result, be subject to the remedies available to Nord/LB under the agreements, which include among other remedies the right to foreclose on the vessels pursuant to the mortgages on the vessels entered into in connection with ~~international~~the ~~standards;~~Nord/LB Loans. Due to the co-borrowing terms under the Nord/LB Loans, the potential liability includes that related to the AHTS SPVs owned by the Hartmann Group and our affiliate, FLTC Fund I.

In addition to resolving the cash flow shortfall which led to the Nord/LB overdue payments, we are pursuing alternative sources of liquidity through the issuance of debt or equity securities, and are exploring various alternatives in this regard. We may also sell additional AHTS vessels, or enter into sale-leaseback or other equivalent transactions to raise liquidity. However, there can be no assurances that we will be able to raise any such additional funds or sell any additional vessels on terms acceptable to us or at all.

Our interest in our AHTS SPVs is held through our German Subsidiary. Effective July 1, 2011, we have entered into an agreement (the “Hartmann Transfer Agreement”) at our German Subsidiary through which loans payable by our German Subsidiary were satisfied pursuant to the Hartmann Transfer. Under the Hartmann Transfer Agreement, we documented the Hartmann Transfer in exchange for the satisfaction of loans from Reederei Hartmann and its affiliate Captain Alfred Hartmann (“Capt. Alfred Hartmann”), the related interest on the loans, as well as certain expenses related to the loans. Reederei Hartmann, Hartmann Offshore, and Capt. Alfred Hartmann are affiliates of the Hartmann Group. The loans and the Hartmann Transfer are further discussed under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the sub-caption entitled RHKG Loan Agreements and Hartmann Loan Agreement and Hartmann Transfer Agreement under the caption Financing Arrangements in the Liquidity and Capital Resources section. The outcome of the Hartmann Transfer Agreement is that effective July 1, 2011 we own a 75% interest in five AHTS SPVs, and a non-controlling interest of approximately 36% in one AHTS SPV. The Hartmann Transfer Agreement resulted in satisfaction of loans payable and accrued expenses totaling $47,577,410 (EUR 33,378,287), which represents the purchase price received for the interest in the AHTS SPVs transferred. We expect that the gain recognized will be between $18,834,400 and $21,732,000 (EUR 13,000,000 and EUR 15,000,000), based on a net book value of $27,229,085 (EUR 18,794,233) and the exchange rate as of July 1, 2011.

Our Vessels

Our fleet, effective as of July 1, 2011, consists of five AHTS vessels, as well as an approximate 36% interest in a sixth vessel. A brief description of each type of vessel, including details of our fleet, is provided below.

Anchor Handling Tug Supply Vessels

An AHTS vessel is an offshore supply and support vessel specially designed to provide anchor handling services and tow offshore platforms, barges and production modules or vessels. The AHTS vessel is also used in general supply service for all kinds of offshore platforms, transporting both wet and dry cargo in addition to deck cargo. The delivery of the nine AHTS vessels which constituted our ownership prior to the July 1, 2011 transaction discussed above occurred throughout 2009 and 2010 as shown below:

AHTS SPV	Vessel Name	Date Delivered	Delivered Cost
6160 – MS Juist	UOS Atlantis	February 27, 2009	€	40,360,378	$	51,439,302
6161 – MS Norderney	UOS Challenger	May 28, 2009	€	41,271,034	$	57,568,966
6162 – Isle of Baltrum	UOS Columbia	October 2, 2009	€	40,912,722	$	59,675,296	*
6163 – Isle of Langeoog	UOS Discovery	February 16, 2010	€	41,324,006	$	56,221,311	*
6168 – Isle of Amrum	UOS Endeavour	March 11, 2010	€	45,125,123	$	61,446,880	*
6169 – Isle of Sylt	UOS Enterprise	July 2, 2010	€	45,490,482	$	56,239,883
6171 – Isle of Wangerooge	UOS Explorer	March 15, 2010	€	46,132,138	$	63,542,407	**
6172 – Isle of Neuwerk	UOS Freedom	June 29, 2010	€	46,229,277	$	57,023,813
6173 – Isle of Usedom	UOS Liberty	June 23, 2010	€	47,204,091	$	58,023,268

*	Ownership subsequently transferred to the Hartmann Group effective as of July 1, 2011

**	Controlling ownership subsequently transferred to the Hartmann Group effective as of July 1, 2011

Our AHTS vessels are built to deploy and recover mooring systems for deepwater drilling rigs, and our vessels fall into the large, higher horsepower category of AHTS vessels. These are highly specialized vessels designed to have 16,320 BHP (brake horsepower), 450 ton main winch capacity and at least 190 ton BP (bollard pull). With dynamic positioning capabilities and high cargo capacities, these powerful vessels double as rig and platform supply vessels that are capable of supporting various deepwater operations. State of the art electronics allow these vessels to monitor and maintain equipment throughout all modes of service.

Currently, our AHTS vessels support offshore deep sea oil and gas drilling in the following locations, and are generally available to work worldwide with the exception of United States waters: the North Sea, South Atlantic Ocean, Mediterranean Sea, Indian Ocean, Brazil, Africa, Southeast Asia and Australia.

Additionally, each AHTS SPV entered into a contract with Hartmann Offshore, whereby Hartmann Offshore supervised and managed the technical aspects of the construction of the vessel acquired by the applicable AHTS SPV. For each AHTS SPV, two contracts were in place during the construction of the AHTS vessel, one of which covered the technical and commercial management of the vessel (the “Technical Management Contracts”) and the other which covered the supervision of the construction of the vessel, the assessment of the builder’s adherence to the specifications and the assessment of any modifications pertaining to the vessel (the “Construction Supervision Contracts”). Under the Technical Management Contracts, Hartmann Offshore received fees of $662,650 (EUR 500,000) for each of the nine vessels payable in four equal installments, each due at (i) the beginning of steel cutting, (ii) installation of the main engines, (iii) launching of the vessel and (iv) delivery of the completed vessel. Hartmann Offshore subcontracted the commercial management duties under the Technical Management Contracts to UOS. Under the Construction Supervision Contracts for each vessel, Hartmann Offshore received fees of $331,325 (EUR 250,000) which were payable in two equal installments, each due at installation of the main engines and delivery of the completed vessel. These costs are included in the delivered cost of each vessel above. Additionally, Hartmann Offshore was reimbursed for travel costs and other reasonable out of pocket expenses.

Each AHTS SPV entered into a management agreement with Hartmann Offshore or its nominee whose performance is guaranteed by Hartmann Offshore. Such management agreements commenced upon delivery of the applicable vessel and terminate when the vessel is sold. Under these management agreements, the ship manager provides a full range of management services, including but not limited to the following:

Crew management services, whereby the ship manager shall identify suitable qualified crew for the applicable vessel in accordance with international standards;

Technical management services relating to the operation and maintenance of the applicable vessel;

Commercial management services with respect to the chartering of the applicable vessel (Hartmann Offshore subcontracted these services to UOS);

· Arrangement of insurance policies with respect to the vessel, if so instructed by the owners of the ~~ship~~vessel;

Supervision of the sale and purchase of the applicable vessel, including the supervision of the performance of any sale or purchase agreement, the identification of potential purchasers and the negotiation of the purchase agreement;

Supply of necessary provisions for the vessel; and

Arranging for the provision of bunker fuel as required for the vessel’s trade.

Pursuant to each such ship management agreement, Hartmann Offshore is paid a fee to manage the day to day operations of the vessels, which ~~shall~~is be 4% of the net daily earnings of the applicable vessel, subject to a maximum and minimum of $2,400 and $750, respectively, per day. The Hartmann Group currently operates and/or manages more than ~~170~~190 vessels, including containerships, bulkers, tankers, liquefied petroleum gas (“LPG”) carriers and multipurpose ~~ships~~ vessels.

Our AHTS vessels ~~will~~ operate under time charter leasing arrangements with oil companies under either short-term “spot market” charters, which are measured in days or weeks, or long-term charters, which are typically ~~range~~measured in months and years. Our charters have typically ranged from ~~one~~four months to three years, including renewal options. Under these arrangements, our AHTS SPVs ~~will typically~~are beusually responsible for vessel operating expenses such as crew wages, class costs, insurance on the vessel and routine maintenance, as well as management fees as described below. AOur ~~vessel~~vessels’s net daily earnings ~~will~~ consist of the revenue earned under ~~that~~ vessel’s charters less ~~that~~ vessel’s operating expenses, which ~~would~~does not include interest expense onor ~~acquisition~~depreciation ~~debt~~expense. ~~A brief~~During ~~description~~the ofyears ~~the~~ended ~~current~~December ~~AHTS~~31, ~~vessels~~2010 and ~~their~~2009, our average net daily ~~earning~~earnings ~~during 2009~~were $8,170 isand ~~set~~$7,789, ~~forth below~~respectively. For a more detailed explanation of ~~their~~our vessel net daily earnings ~~to date~~, including ainformation ~~description~~for ofeach ~~various revenues received other than day rates and expenses~~vessel, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption entitled AHTS Vessel Net Daily Earnings in the Overview section.

10In Egypt, Brazil, Australia and other areas in which we operate or may operate in the future, the oil companies for whom we are ultimately hired to perform services typically require us to enter into charter agreements with third-party intermediaries located in the respective area of operations. The oil company pays the third-party intermediary, who in turn pays our AHTS SPV for the work performed. In Egypt, all of our charters are each contracted with local, third-party intermediaries. While these intermediaries sometimes provide benefits, such as familiarity with local business practices, during the recent unrest in Egypt, the presence of these locally-based, third-party intermediaries has resulted in additional complexity and led and may continue to lead to delays in collections of amounts receivable from such parties. Continued or renewed unrest could lead to further instability in the business climate, causing further delays in payments, and/or potentially leading to our inability to collect amounts due or disruption or termination of these charter arrangements.

·In March 2009, we entered into an agreement with UOS ~~Atlantis~~(“AHTS –Pool ~~Our~~Agreement”) ~~first~~to participate in a revenue pool (the “UOS AHTS ~~vessel,~~Pool”) comprised of the Fleet (the “Pool Members”). The agreement names UOS ~~Atlantis~~as the “Pool Manager,” ~~was~~with ~~placed~~responsibility infor ~~service~~the ~~upon~~management ~~delivery~~and onaccounting ~~February~~of ~~27,~~the ~~2009,~~pool and ~~began~~also ~~operating~~for ~~under~~monitoring Pool Members’ compliance with the AHTS Pool Agreement. Under the AHTS Pool Agreement, each of our AHTS SPVs has agreed to pool its ~~current~~returns from employment of the vessel less voyage expenses (“Voyage Results”) with the other Pool Members to more evenly distribute the risks resulting from the fluctuation in charter onrates ~~March~~in ~~15,~~the ~~2009~~offshore chartering business. The ~~Our~~majority ~~net~~of ~~daily~~the ~~earnings~~costs ~~for~~of ~~UOS~~operating ~~Atlantis~~each ~~averaged~~AHTS ~~$9,345~~vessel ~~for~~are not shared under the ~~year~~AHTS ~~ended~~Pool ~~December~~Agreement 31but are instead borne by each AHTS SPV, ~~2009~~such as crew cost, fuel cost, and other vessel operating costs.

· UOS Challenger – Our second AHTS vessel, UOS Challenger, was placed in service upon delivery on May 28, 2009, and began operating under its current charter on June 24, 2009. Our net daily earnings (deficit) for UOS Challenger averaged ($2,543) for the year ended December 31, 2009.12

· UOS Columbia – Our third AHTS vessel, UOS Columbia, was placed in service upon delivery on October 5, 2009 in the North Sea spot market. Our net daily earnings (deficit) for UOS Columbia averaged ($18,515), based on the date the AHTS vessel was placed in service through December 31, 2009.

· UOS Discovery – Our fourth AHTS vessel, UOS Discovery, was delivered on February 16, 2010, and is currently not under charter.

· UOS Endeavour – Our fifth AHTS vessel, UOS Endeavour, was delivered on March 11, 2010, and is currently not under charter.

· UOS Explorer – Our sixth AHTS vessel, UOS Explorer, was delivered on March 15, 2010, and is currently not under charter.

Our commercial manager, UOS, is currently pursuing opportunities for our vessels. The remaining three AHTS vessels are currently scheduled for delivery during April 2010, although delays in delivery of one or two months are expected. If the current environment were to continue or worsen, and we were unable to achieve adequate utilization of our vessels, the delivery of the additional vessels and the associated operating costs and debt service will negatively impact our financial results.

In March 2009, we entered into an agreement with UOS (“AHTS Pool Agreement”) to participate in a revenue pool comprised of our nine AHTS SPVs and three AHTS SPVs owned by our affiliate, FLTC Fund I (the “Pool Members,” together the “UOS AHTS Pool”). The agreement names UOS as the “Pool Manager,” with responsibility for the management and accounting of the pool and also for monitoring Pool Members’ compliance with the AHTS Pool Agreement. Under the AHTS Pool Agreement, each of our AHTS SPVs has agreed to pool its returns from employment of the vessel less voyage expenses (“Voyage Results”) with the other Pool Members to achieve an even distribution of the risks resulting from the fluctuation in the offshore chartering business. The AHTS Pool Agreement will have no effect on our consolidated revenues until such time as one of the FLTC Fund I vessels is placed in service, which is expected to be May 2010.

Multipurpose Bulk Carrier Vessels

A bulk carrier, bulk freighter or bulker is a merchant ship specially designed to transport bulk cargo such as grains, fertilizer, quick lime, soda ash, forest and paper products and cement in its cargo holds. A mini-bulker is a single hold bulk carrier with maximum cargo capacity of 10,000 metric tons or less.

We acquired a non-controlling interest in two new mini-bulkers which were acquired from Nanjing Huatai Co. Limited in China in August and December 2007, respectively. Each of ~~our~~the mini-bulkers is managed by Reederei Hesse as technical manager and MTL as commercial manager, and is held in a separate SPV, of which we indirectly own 49% with the remaining 51% owned by affiliates of the Hartmann Group and Reederei Hesse. Pursuant to each ship management agreement, the managers currently receive 42% of the net daily earnings of the applicable vessel. ~~Our~~The mini-bulkers currently operate in liner services between the Baltic area and Northern Spain, Portugal, the Mediterranean Sea, Greece, Turkey and Israel.

Chemical/Product Tanker Ships

A chemical tanker is a type of tanker designed to transport bulk cargos like chemicals, clean petroleum products and vegoils. The Schulte Group paid deposits of $8,300,000 to Nantong Mingde Heavy Industry Stock Co., Ltd. and Jiangxi Topsky Technology Co., Ltd., the sellers of a chemical tanker currently under construction. In connection with our potential acquisition of such chemical tanker, we paid $3,000,000 to the Schulte Group and agreed to repay $5,300,000 to Conway Shipping, Ltd. (“Conway”), an affiliate of the Schulte Group owned by certain members of the Schulte family, to whom the Schulte Group’s rights in the chemical tanker were subsequently transferred. The $5,300,000 that we have agreed to repay Conway represents a portion of the first construction installment due to the sellers of the chemical tanker that was previously advanced by the Schulte Group in connection with the acquisition of the chemical tanker.

If acquired, the operations of the chemical tanker would be managed by the Schulte Group. The Schulte Group provides shore and ship-based maritime and engineering expertise and manages a large fleet of ships. If acquired, the chemical tanker would be held in a separate SPV owned by Kronos. We may, in the future, sell or assign the chemical tanker or the rights to acquire it, or we may elect to abandon the purchase of the chemical tanker thereby incurring certain liquidated damages. Under our current agreement with Conway, the liquidated damages would total $3,000,000 payable to Conway and would be settled from funds we have already paid as deposits on the potential tanker acquisition, and we would not be required to repay the $5,300,000 owed to Conway.

At the present time, we are re-evaluating our intentions with respect to the chemical tanker, and believe it is unlikely that we will complete the acquisition of the tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments, and an adjustment to the overall contract price. We have therefore recorded an impairment to the deposit on asset acquisition on our balance sheet to reduce the carrying value of this asset, resulting in the recognition of a loss on impairment of $9,874,907. If we do formally forfeit our option to acquire the tanker, we expect to recognize gain on the extinguishment of debt of $5,300,000 in a future period, as under the terms described above, we would not be required to repay the $5,300,000 to Conway. The net result of this would be a loss of approximately $4,574,907, which in the end represents liquidating damages of $3,000,000 plus our capitalized costs approximating $1,574,907.

Additional information related to the Schulte Group, Conway and Kronos is included in this Form 10-K in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption entitled Financing Arrangements in the Liquidity and Capital Resources.

The decision to sell, assign or acquire the vessel will include an evaluation of, but not limited to, the following:

· World economy;

· Demand and supply of cargoes and trades;

· Demand for product and chemical tankers;

· Supply of product and chemical tankers;

· Freight rates for product and chemical tankers with less than 30,000 deadweight tonnage; and

· Secondhand price projections.

The expected/actual construction commencement date and expected/actual completion date, as applicable, for each of the vessels are as follows:

Type of Vessel	Hull No.	Vessel Name	Construction Commencement Date	Expected Delivery Date
2 Multipurpose Bulk	MPP 1	MS Laakdiep	Delivered	Delivered
Carriers	MPP 2	MS Larensediep	Delivered	Delivered
9 Anchor Handling Tug	6160	UOS Atlantis	Delivered	Delivered
Supply Vessels	6161	UOS Challenger	Delivered	Delivered
	6162	UOS Columbia	Delivered	Delivered
	6163	UOS Discovery	Delivered	Delivered
	6168	UOS Endeavor	Delivered	Delivered
	6169	UOS Enterprise	Oct-08	Apr-10
	6171	UOS Explorer	Delivered	Delivered
	6172	UOS Freedom	Mar-08	Apr-10
	6173	UOS Liberty	Nov-08	Apr-10
1 Chemical Tanker	MD2007-11-12	Anthos	Jun-10	Oct-11

The expected construction commencement and delivery dates set forth above are based on current information from the shipbuilders. These dates are estimates and may change prior to vessel completion.

Transactions with Affiliates and Related Parties

The table below sets forth the material agreements under which our affiliates and other related parties provide services to us and/or receive fees or other payments at December 31, 2010. The agreements in the table are categorized as either “Vessel Construction Phase Contracts,” “Vessel Operating Phase Contracts” or “Non-Vessel Specific Contracts.” Vessel Construction Phase Contracts relate to matters during the period when the applicable vessel iswas still under construction, while Vessel Operating Phase Contracts are agreements relating to matters after the applicable vessel ~~has~~was ~~been~~ delivered. Non-Vessel Specific Contracts are more general in nature and do not specifically relate to any vessel or related stage of construction or operation.

Agreement	Counterparty Receiving Fees/Payments	Relationship of Counterparty	Aggregate Payments
Vessel Construction Phase Contracts
Contract for Financial Services (9 total)	Suresh Capital Consulting & Finance Ltd.; Maritime Funding Group LLC; Churada Investments	Under common control with Suresh Capital Partners, LLC, one of our limited partners	$~~716~~662,650 (EUR 500,000) per AHTS vessel; $65,~~449~~963,850 (EUR 4,500,000) total(1)
Contract for Construction Supervision (9 total)	Hartmann Offshore GmbH	Non-controlling interest holder in our AHTS SPVs	$~~358~~331,325 (EUR 250,000) per AHTS vessel; $32,~~224~~981,925 (EUR 2,250,000) total(2)
Contract for Technical and Commercial Management (9 total)	Hartmann Offshore GmbH; commercial management subcontracted to United Offshore Support GmbH & Co. KG	Non-controlling interest holders in our AHTS SPVs	$~~716~~662,650 (EUR 500,000) per AHTS vessel; $65,~~449~~963,850 (EUR 4,500,000) total(3)
Vessel Operating Phase Contracts
Standard Ship Management Agreement (9 total)	Hartmann Offshore GmbH; commercial management subcontracted to United Offshore Support GmbH & Co. KG	Non-controlling interest holders in our AHTS SPVs	See details below(4)
Contract Carrier Agreement (2 total)	Reederei Hesse GmbH & Co.; commercial management subcontracted to MTL Maritime Transport + Logistik GmbH & Co. KG	Under common control with the majority interest holders in the SPVs which own the mini-bulkers	See details below(5)
Pool Agreement AHTS-Moss 424	ATL Offshore GmbH & Co. “Isle of Fehmarn” KG; ATL Offshore GmbH & Co. “Isle of Memmert” KG; ATL Offshore GmbH & Co. “Isle of Mellum” KG	Subsidiaries of our affiliate, FLTC Fund I	See details below(6)

Mutual Indemnity Agreement	ATL Offshore GmbH & Co. “Isle of Fehmarn” KG; ATL Offshore GmbH & Co. “Isle of Memmert” KG; ATL Offshore GmbH & Co. “Isle of Mellum” KG	Subsidiaries of our affiliate, FLTC Fund I	See details below(7)
Vessel Operating Phase Contracts
Non-Vessel Specific Contracts
Standard Ship Management Agreement (9 total)	Hartmann Offshore GmbH; commercial management subcontracted to United Offshore Support GmbH & Co. KG	Non-controlling interest holders in our AHTS SPVs(4)	See details below(5)
Second Amended and Restated Agreement of Limited Partnership	III to I International Maritime Solutions Cayman, Inc.; Suresh Capital Partners, LLC; The Maritime Funding Group, Inc. Irrevocable trust	Our general partner; Our Class D limited partners	See details below(8)
Contract Carrier Agreement (2 total)	Reederei Hesse GmbH & Co.; commercial management subcontracted to MTL Maritime Transport + Logistik GmbH & Co. KG	Under common control with the majority interest holders in the SPVs which own the mini-bulkers	See details below(6)
Second Amended and Restated Agreement to Perform Administrative and Professional Services	Dental Community Management, Inc.	Owned in part by Jason M. Morton, a director and the Chief Financial Officer of our general partner	$1,200,000/year
Pool Agreement AHTS-Moss 424	ATL Offshore GmbH & Co. “Isle of Fehmarn” KG; ATL Offshore GmbH & Co. “Isle of Memmert” KG; ATL Offshore GmbH & Co. “Isle of Mellum” KG	Subsidiaries of our affiliate, FLTC Fund I	See details below(7)
Mutual Indemnity Agreement	ATL Offshore GmbH & Co. “Isle of Fehmarn” KG; ATL Offshore GmbH & Co. “Isle of Memmert” KG; ATL Offshore GmbH & Co. “Isle of Mellum” KG	Subsidiaries of our affiliate, FLTC Fund I	See details below(8)

(1) This amount represents the total amount due under the contract. There are four equal payments of EUR 125,000 due under each of these contracts based on predetermined progress points, the first being the date steel cutting begins, the second being the installation of the main engines, the third being the launching of the vessel and the fourth being the delivery of the vessel. It is anticipated that $4,658,225 (EUR 3,250,000) will be paid for financial services during the year ended December 31, 2010. During the year ended December 31, 2009, no financial services fees were paid due to cash flow issues. For a detailed description of these agreements, see Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption The German Subsidiary Financial Services Agreements.

(2) This amount represents the total amount due under the contract. There are two equal payments of EUR 125,000 due under each of these contracts based on predetermined progress points, the first being the installation of the main engines and the second being the delivery of the vessel. It is anticipated that $1,254,138 (EUR 875,000) will be paid during the year ended December 31, 2010 for construction supervision. During the year ended December 31, 2009, $1,612,463 ($1,125,000) was paid for construction supervision. See Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption Payment of Construction Administrative and Technical and Commercial Management Fees.

(3) This amount represents the total amount due under the contract. There are four equal payments of EUR 125,000 due under each of these contracts based on predetermined progress points, the first being the date steel cutting begins, the second being the installation of the main engines, the third being the launching of the vessel and the fourth being the delivery of the vessel. It is anticipated that $1,612,463 (EUR 1,125,000) will be paid during the year ended December 31, 2010 for technical and commercial management. During the year ended December 31, 2009, $2,508,275 (EUR 1,750,000) was paid for technical and commercial management. See Item 1. Business under the caption Our Ships.

(4) It is not practicable to accurately quantify the annual fees to be payable pursuant to these agreements, as the amounts payable pursuant to these agreements are based on a percentage (4%) of the net daily earnings of the relevant vessel, subject to a maximum and minimum of $2,400 and $750, respectively, per day. See Item 1. Business under the caption Our Ships.

(5) It is not practicable to accurately quantify the annual fees payable pursuant to these agreements, as the amounts payable pursuant to these agreements are based on a percentage (4%) of the net daily earnings of the relevant vessel. See Item 1. Business under the caption Our Ships.

Non-Vessel Specific Contracts
Second Amended and Restated Agreement of Limited Partnership	III to I International Maritime Solutions Cayman, Inc.; Suresh Capital Partners, LLC; The Maritime Funding Group, Inc. Irrevocable trust	Our general partner; Our Class D limited partners	See details below(9)

Second Amended and Restated Agreement to Perform Administrative and Professional Services	Dental Community Management, Inc.	Owned in part by Jason M. Morton, a director and the Chief Financial Officer of our general partner	$1,200,000/year

(61) ItThis isamount ~~not~~represents ~~practicable~~the tototal ~~quantify~~amount due under the ~~annual~~collective ~~fees~~contract. ~~payable~~There ~~pursuant~~were tofour ~~this~~equal ~~agreement~~payments of EUR 125,000 asdue under each of these contracts based on predetermined progress points, the ~~amounts~~first ~~allocable~~being tothe ~~each~~date ~~vessel~~steel incutting began, the ~~pool~~second ~~will~~being ~~vary~~the ~~depending~~installation onof the ~~aggregate~~main ~~revenues~~engines, ~~generated~~the bythird being the ~~vessels’~~launching ~~operations.~~of ~~For~~the avessel ~~detailed~~and ~~description~~the fourth being the delivery of ~~this~~the ~~agreement~~vessel. We incurred $1,159,638 ~~see~~(EUR ~~Item~~875,000) and $2,866,600 (EUR 2,000,000) for financial services during the year ended December 31, 2010 and 2009, respectively. We paid $1,987,950 (EUR 1,500,000) for financial services during the year ended December 31, 2010. ~~Business~~There ~~under~~were no payments during the ~~caption~~year ~~Our~~ended ~~Ships~~December ~~and~~31, 2009. The remaining $2,319,275 (EUR 1,750,000) is accrued under "due to related party" on our Balance Sheet. For a detailed description of these agreements, see Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption The ~~AHTS~~German ~~Vessel~~Subsidiary ~~Pooling~~Financial ~~Agreement~~Services Agreements.

(72) ItThis isamount ~~not~~represents ~~practicable~~the tototal ~~quantify~~amount ~~the~~under ~~annual~~each ~~amounts~~contract. ~~payable~~There ~~pursuant~~were totwo ~~this~~equal ~~agreement~~payments of EUR 125,000 asdue under each of these contracts based on predetermined progress points, the ~~amounts~~first ~~payable~~being ~~thereunder~~at ~~are~~the ~~contingent~~installation ~~obligations~~of ~~arising~~the ~~pursuant~~main toengines and the ~~indemnification~~second ~~provisions~~at ~~contained~~the ~~therein~~delivery of the vessel. ~~For~~During athe ~~detailed~~year ~~description~~ended ofDecember ~~this~~31, ~~agreement~~2010 and 2009, ~~see~~$1,159,638 (EUR 875,000) and $1,612,463 (EUR 1,125,000), respectively, was paid for construction supervision. See Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption ~~Cross-Collateralization~~Payment of ~~Nord/LB~~Construction ~~Loan~~Administrative ~~Facility~~and Technical and Commercial Management Fees.

(83) ~~Pursuant~~This toamount represents the ~~terms~~total ofamount ~~our~~under ~~Partnership~~each ~~Agreement,~~contract. ~~our~~There ~~general~~were ~~partner~~four ~~and~~equal ~~Class~~payments Dof ~~limited~~EUR ~~partners~~125,000 ~~are~~due ~~entitled~~under toeach ~~receive a portion~~ of ~~distributions~~these ~~that~~contracts ~~would~~based ~~otherwise~~on bepredetermined ~~distributed~~progress topoints, ~~certain~~the offirst ~~our~~being ~~other~~the ~~limited~~date ~~partners.~~steel ~~Additional~~cutting ~~information~~began, isthe ~~provided~~second inat ~~our~~the ~~Second~~installation ~~Amended and Restated Agreement~~ of ~~Limited~~the ~~Partnership~~main engines, ~~included~~the asthird ~~Exhibit~~at ~~3.4~~the tolaunching ~~this~~of ~~Form~~the ~~10-K,~~vessel and inthe ~~Item~~fourth ~~1A.~~upon ~~Risk Factors under~~ the ~~caption~~delivery ~~entitled There may be conflicts~~ of ~~interest~~the ~~as a result of our general partner’s carried interest~~vessel. ~~Because~~During ~~any amounts received by our general partner or our Class D limited partners pursuant to our Partnership Agreement depend on~~ the ~~amounts~~year ~~that~~ended ~~are~~December ~~actually~~31, ~~distributable~~2010 toand ~~our~~2009, ~~limited partners~~$1,490,963 it(EUR is1,125,000) ~~not~~and ~~practicable~~$2,508,275 to(EUR ~~accurately~~1,750,000), ~~quantify~~respectively, ~~the~~was ~~amounts to be~~ paid tofor ~~our~~technical ~~general partner~~ and ~~Class~~commercial Dmanagement. ~~limited~~See ~~partners~~Item ~~for~~1. aBusiness ~~given~~under ~~period~~the ~~pursuant~~caption toOur ~~this agreement~~Vessels.

~~Because we~~(4) ~~have~~Pursuant ~~entered~~to ~~into~~ the ~~foregoing~~Hartmann ~~agreements~~Transfer ~~with~~Agreement, ~~certain~~only offive ~~our~~(5) ~~affiliates~~ship ~~and other~~management ~~related parties, these~~ agreements ~~were~~are ~~not~~applicable ~~negotiated~~to atour ~~arms’~~AHTS ~~length~~SPVs and ~~therefore~~ ~~may~~one ~~not~~(1) beship onmanagement ~~terms~~agreement ~~that~~is ~~are~~applicable ~~as fair~~ to usan asAHTS ~~might~~SPV bein ~~obtained~~which ~~by entering~~we ~~into such agreements with non-affiliated third parties. See Item 1A. Risk Factors under the caption entitled We~~ have ~~entered~~a ~~into~~minority ~~contracts with our affiliates that were not negotiated at arms-length~~interest.

(5)

It is not practicable to accurately quantify the annual fees to be payable pursuant to these agreements, as the amounts payable pursuant to these agreements are based on a percentage (4%) of the net daily earnings of the relevant vessel, subject to a maximum and minimum of $2,400 and $750, respectively, per day. For the years ended December 31, 2010 and 2009, $2,367,595 (EUR 1,782,962) and $752,271 (EUR 539,417) were paid under these agreements. See Item 1. Business under the caption Our Vessels.

(6)	It is not practicable to accurately quantify the annual fees payable pursuant to these agreements, as the amounts payable pursuant to these agreements are based on a percentage (2%) of the net daily earnings of the relevant vessel. See Item 1. Business under the caption Our Vessels.

(7)

It is not practicable to quantify the annual fees payable pursuant to this agreement, as the amounts allocable to each vessel in the pool will vary depending on the aggregate revenues generated by the vessels’ operations. For a detailed description of this agreement, see Item 1. Business under the caption Our Vessels and Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption The AHTS Vessel Pooling Agreement.

(8)

It is not practicable to quantify the annual amounts payable pursuant to this agreement, as the amounts payable thereunder are contingent obligations arising pursuant to the indemnification provisions contained therein. For a detailed description of this agreement, see Item 13. Certain Relationships and Related Transactions, and Director Independence under the caption Cross-Collateralization of Nord/LB Loan Facility.

(9)

Pursuant to the terms of our Partnership Agreement, our general partner and Class D limited partners are entitled to receive a portion of distributions that would otherwise be distributed to certain of our other limited partners. Additional information is provided in our Second Amended and Restated Agreement of Limited Partnership, included as Exhibit 3.4 to this Form 10-K, and in Item 1A. Risk Factors under the caption entitled There may be conflicts of interest as a result of our general partner’s carried interest. Because any amounts received by our general partner or our Class D limited partners pursuant to our Partnership Agreement depend on the amounts that are actually distributable to our limited partners, it is not practicable to accurately quantify the amounts to be paid to our general partner and Class D limited partners for a given period pursuant to this agreement.

Because we have entered into the foregoing agreements with certain of our affiliates and other related parties, these agreements were not negotiated at arm’s length and therefore may not be on terms that are as fair to us as might be obtained by entering into such agreements with non-affiliated third parties. See Item 1A. Risk Factors under the caption entitled We have entered into contracts with our affiliates that were not negotiated at arms-length.

Insurance

The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters and property losses caused by adverse weather conditions, mechanical failures, human error, war, terrorism and other circumstances and events. In addition, the transportation of crude oil and other contaminants is subject to the risk of spills and business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts.

Environmental legislation, imposing potentially unlimited liability upon owners, operators and bareboat charterers for oil pollution incidents, has made insurance more expensive for ship owners and operators. We believe that our current insurance coverage, maintained at the SPV level, is adequate to protect us against the principal accident-related risks that we face in the conduct of our business. However, there can be no assurances that all losses will be covered adequately or that insurance coverage will remain available on commercially reasonable terms or at all. See Item 1A. Risk Factors under the caption entitled Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

Permits and Authorizations

We are required by various governmental and quasi-governmental agencies to obtain permits, licenses and certifications with respect to our vessels. The kinds of permits, licenses and certificates required depend upon several factors, including the commodity transported, waters in which the vessel operates, nationality of the vessel’s crew and age of the vessel. We expect to continue to be able to obtain all permits, licenses and certificates currently required to permit our vessels to operate. However, we may not be able to obtain the necessary permits or, if able, may not be able to obtain such permits without incurring unreasonable expenses and/or lengthy delays. In addition, laws and regulations, environmental or otherwise, may be changed or adopted which could limit our ability to do business or increase our costs of doing business.

1516

Regulations

Government regulations significantly affect the ownership and operation of our vessels. We are subject to international conventions in addition to national, state, provinces and local laws and regulations in force in the countries in which our vessels operate or are registered.General

Government regulations significantly affect the ownership and operation of our vessels. We are subject to international conventions in addition to national, state, province and local laws and regulations in force in the countries in which our vessels operate or are registered.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include local port authorities, classification societies, flag state administrations and charterers. Certain of these entities require us to obtain permits, licenses and certifications for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend the operation of one or more of our vessels.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with international regulations. We believe the operation of our vessels is in compliance with applicable environmental laws and regulations applicable to us as of the date of this Form 10-K.

International Maritime Organization

The International Maritime Organization (“IMO”) has negotiated international conventions that impose liability for oil pollution in international waters and a signatory’s territorial waters. The IMO adopted Annex VI to the International Convention for the Prevention of Pollution from Ships (“Annex VI”) to address air pollution from ships effective May 2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts, prohibits deliberate emissions of ozone content fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. As of December 31, ~~2009~~2010, we believe our vessels were in compliance with Annex VI.

The operation of our vessels is also affected by the requirements set forth in the IMO’s Management Code for the Safe Operation of Ships and Pollution Prevention (“ISM Code”). The ISM Code requires ship owners 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 dealing with emergencies. Failure to comply with the ISM Code may subject us to increased liability, decreased insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports.

See Item 1A. Risk Factors under the caption entitled We are subject to regulations and environmental laws that could require significant expenditures and affect our cash flows and net income.

Employees

As of December 31, ~~2009~~2010, our AHTS SPVs employed ~~138~~ 372 seafarers. Management considers relations with its employees to be satisfactory.

Industry Overview

Shipping is a global industry with prospects closely tied to the level of economic activity in the world. The maritime shipping industry is fundamental to international trade because it is currently the only practicable and cost effective means of transporting large volumes of many essential commodities and finished goods. There are five main segments in the shipping industry:

tankers, which carry such cargo as crude oil and petroleum products;

bulk carriers, which carry items such as coal and grain;

containerships, which carry only containers;

gas tankers, which carry mostly LPG and liquefied natural gas (“LNG”); and

offshore support vessels, including AHTS vessels and platform supply vessels.

Our primary industry focus is in offshore support vessels~~. However~~; however, we also purchased a non-controlling interest in two mini-bulkers ~~and may acquire a chemical tanker~~.

16The offshore support vessel industry is engaged in supporting various stages of exploration, development and production of oil and gas from offshore locations. Therefore, the supply and demand characteristics of the broader oil and gas industries are central to the development of the offshore support vessel market. In general, global economic growth generates rising demand for power and fuel. Offshore exploration, drilling and production are crucial to satisfying this demand. We believe that these broader market dynamics combined with the age of the existing global fleet and the demand for sophisticated vessels should continue to provide employment opportunities for our vessels; however, global economic contraction or continued stagnant growth may reduce the demand for power and fuel, in turn reducing the demand for our vessels. As a result, we may have increased difficulty chartering our vessels at profitable day rates, or at all.

The offshore support vessel industry is engaged in supporting various stages of exploration, development and production of oil and gas from offshore locations. Therefore, the supply and demand characteristics of the broader oil and gas industries are central to the development of the offshore support vessel market. In general, global economic growth generates rising demand for power and fuel. Offshore exploration, drilling and production are crucial to satisfying this demand. We believe that these broader market dynamics combined with the age of the existing global fleet and the demand for sophisticated vessels should provide substantial employment opportunities for our vessels; however, global economic contraction or stagnant growth may reduce the demand for power and fuel, in turn reducing the demand for our vessels. As a result, we may be unable to charter our vessels at profitable day rates or at all.

The following table outlines the development of an offshore oil field and is broken down into three distinct phases, each requiring the use of AHTS vessels:

	Term	Activities	Key Factors	Support Services
Exploration	3-5 years	· Collection, analysis and interpretation of seismic data · Discovery of oil and gas reserves	· Oil price levels · Proven reserve replenishment	· Refueling · Transportation of crew and supplies · Rig relocations
Development	2-4 years	· Construction and installation of production infrastructure in preparation for production	· Current and planned platform construction	· Anchor handling · Transportation of bulk and deck cargo · Towing · Transportation of crew and supplies
Production	10-55 years	· Management of production of oil and gas · Maintenance	· Production volumes	· Anchor handling · Transportation of bulk and deck cargo · Transportation of crew and supplies · Inspection and maintenance support services

Competition

Competition for charters is intense and based on price; vessel location, size, age, condition, acceptability and quality; and on the vessel operator’s quality and reputation. Historically, the majority of AHTS vessel owners were focused on regional markets; however, expansion and joint ventures have enabled the larger owner groups to establish a global presence. The principal markets for AHTS vessels follow offshore exploration and development and include: the Gulf of Mexico, the North Sea, the Indian Ocean, Southeast Asia, Australia, Africa, Brazil and the Middle East.

With respect to mini-bulkers, the fleet ownership is even more diverse than the AHTS fleet, as are the principal markets for such vessels. Mini-bulkers are able to operate virtually anywhere, and are not as dependent on offshore exploration and development. However, it is not uncommon for owners of such vessels to establish and operate liner services in certain geographic areas, depending on the cargos to be shipped. For both AHTS vessels and mini-bulkers, vessel migration between operating locations may be limited by, among other things, mobilization costs, vessel suitability and government statutes prohibiting foreign-flagged vessels from operating in certain waters.

Item 1A. Risk Factors

Investing in us involves a degree of risk, including the risks described below. Our financial condition and operating results have been, and will continue to be, affected by a wide variety of risk factors, many of which are beyond our control, that could have adverse effects on our financial condition and profitability during any particular period. Additional risks and uncertainties not currently known or deemed to be immaterial may also materially and adversely affect our business operations. If any of the following risks were to actually occur, our business, financial condition or results of operations could be materially and adversely affected. Limited partner units are inherently different from the capital stock of a corporation, although many of our business risks are similar to those that would be faced by a corporation engaged in a similar business.

Risks Relating to Our Business

There are operational risks inherent to the shipping industry.

The operation of any vessel involves the inherent risk of catastrophic marine disasters, adverse weather and sea conditions, mechanical failure, collisions, property losses to ships and business interruption due to political action in countries other than the United States. Any such event may result in a reduction in our investment returns or an increase in costs. We currently insure our vessels for their estimated market value against damage or loss, including war, terrorism acts and other risks. In addition, the operations of our vessels are covered by workers’ compensation, maritime employer’s liability, general liability and other insurance customary in the shipping industry. We intend to obtain similar coverage for all future vessels; however, there can be no assurances that such insurance coverage can be maintained on current vessels, obtained on future vessels or that such coverage will be adequate should we incur a significant loss.

We depend on our management companies and certain affiliates to assist us in our business operations.

Each of our vessels is or will be owned by an individual SPV, which is single ship operating offshore entity. Each AHTS SPV is run by the general partner, ATL, which is an affiliate of the Hartmann Group. The mini-bulker SPVs, ATL Reederei GmbH & Co. MS “Larensediep” KG and Hesse Schiffahrts GmbH & Co. MS “Markasit” KG, are run by ATL Reederei GmbH and Hesse Schiffahrts GmbH, respectively, as the general partner. Additionally, in order to provide added certainty with respect to our operations, we entered into ship management agreements for technical and commercial management with Hartmann Offshore with respect to the AHTS vessels and Reederei Hesse with respect to the mini-bulkers. The commercial management of each AHTS vessel was subcontracted by Hartmann Offshore to UOS while the commercial management of the mini-bulkers was subcontracted by Reederei Hesse to MTL. Additionally, we intend to retain the Schulte Group to manage the operations of the chemical tanker that we may acquire, which would operate in the Hanseatic Tankers Pool. Under these ship management agreements, the applicable management company or its affiliates will provide certain management services including identifying crews and chartering the ships to customers. In addition, Reederei Hartmann and its affiliates are non-controlling owners of 25% of each AHTS SPV, and affiliates of the Hartmann Group and Reederei Hesse collectively own 51% of each mini-bulker SPV.

In addition, our ownership of each SPV owning an AHTS vessel or mini-bulker is held through our Cyprus Subsidiary. The holders of our Class D units have certain rights to approve certain of our actions with respect to vessels held through our Cyprus Subsidiary.

If our relationships with these third parties are terminated, we may not be able to establish relationships with other persons experienced with the operation of international shipping vessels, and our operations could suffer. In addition, the terms of our relationship with any replacement third party may be less favorable to us. In addition, the economic interests of these third parties may not always be aligned with our interests and they may not always act in our best interests.

We have entered into contracts with our affiliates and other related parties that were not negotiated at arms-length.

We have entered into various contracts with our affiliates and other related parties that were not negotiated as arms-length transactions. Additional information is provided in this Form 10-K in Item 1. Business under the section entitled Transactions with Affiliates and Related Parties. As a result, the terms of such agreements may not be as favorable to us as if they had been negotiated with unrelated parties.

~~The bankruptcy of our management companies, shipyards, charter parties or financing sources could have a material adverse effect on our operations.~~Competition

~~As indicated~~Competition ~~above,~~for wecharters ~~depend~~for onAHTS ~~our~~vessels ~~management~~is ~~companies~~intense toand ~~manage~~based ~~our vessel operations. We also depend~~ on ~~the~~price; ~~shipyards~~vessel ~~that~~location, ~~construct~~size, ~~our~~age, ~~ships~~condition, ~~to deliver~~acceptability ~~these~~and ~~vessels~~quality; ~~in a timely manner~~ and on the ~~ability of our charter parties to pay us the agreed upon charter rates for each applicable~~ vessel ~~pursuant~~ tooperator’s ~~the~~quality ~~relevant charter agreement. Additionally, we depend on our third party financing sources to provide the capital necessary to acquire~~ and ~~operate~~ ~~our vessels~~reputation. IfHistorically, in the ~~future,~~majority ~~any~~ of ~~these~~AHTS ~~entities~~vessel owners were ~~the subject~~focused ofon aregional ~~bankruptcy~~markets; ~~or other insolvency proceeding~~however, ~~they~~expansion ~~might~~and bejoint ~~unable~~ventures ~~to perform~~have ~~their~~enabled ~~respective obligations under~~ the ~~management~~larger ~~agreements~~owner orgroups ~~loan documents,~~to asestablish ~~applicable,~~a ~~which~~global ~~could~~presence. The ~~result~~principal inmarkets afor ~~material~~AHTS ~~adverse~~vessels ~~effect~~follow onoffshore ~~our results~~exploration ofand ~~operations~~development and ~~prohibit~~include: ~~us from completing~~ the ~~planned~~Gulf ~~acquisition~~ of ~~additional~~ ~~vessels. In addition~~Mexico, wethe ~~may~~North beSea, ~~unable~~the toIndian ~~recover~~Ocean, ~~any~~Southeast ~~amounts advanced~~Asia, toAustralia, ~~such~~Africa, ~~parties~~Brazil ~~for~~and the ~~construction~~Middle ~~of the vessels or otherwise~~East.

~~Our operations~~With respect to mini-bulkers, ~~growth~~the Fleet ownership is even more diverse than the AHTS fleet, ~~investment~~as ~~returns~~are the principal markets for such vessels. Mini-bulkers are able to operate virtually anywhere, and ~~stability~~are innot ~~the~~as ~~value~~dependent on offshore exploration and development. However, it is not uncommon for owners of ~~our~~ such vessels ~~depend~~to establish and operate liner services in certain geographic areas, depending on the ~~demand~~cargos ~~for~~to ~~offshore~~be ~~oil~~shipped. For ~~and~~both ~~gas~~AHTS ~~drilling~~vessels and ~~capital spending~~mini-bulkers, vessel migration between operating locations may be limited by, ~~the~~among ~~oil~~other things, mobilization costs, vessel suitability and ~~gas~~government ~~industry~~statutes prohibiting foreign-flagged vessels from operating in certain waters.

The majority of the vessels we plan to acquire are AHTS vessels, which are primarily used for the installation, maintenance and movement of oil and gas platforms. With a majority of our vessels focused on the oil and gas business, our operations, growth, investment returns, and the stability in the value of our AHTS vessels, which represent the majority of our assets, depend on the demand for offshore oil and gas drilling and the related level of capital spending by oil and gas exploration and production companies who are the principal users of our AHTS vessels. The charter rates of such vessels are highly dependent on the level of capital spending by oil and gas companies. The level of capital spending is substantially related to the demand for oil and gas and prevailing oil and gas prices, each of which can be affected by many factors, including the following:

· fluctuations in the actual or projected price of oil and gas;

· global and regional demand and perceptions about future demand;

· the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to control oil production levels and pricing, as well as the level of production by non-OPEC countries;

· significant weather events or conditions;

· governmental restrictions placed on exploration and production of natural resources;

· refining capacity and its geographical location;

· political and economic uncertainties, particularly in oil and gas consuming regions, which could reduce energy consumption or its growth;

· increases in the production of oil and gas in areas linked by pipelines to consuming areas;

· extension of existing or development of new pipeline systems;

· conversion of existing non-oil or gas pipelines to oil or gas pipelines;

· decreases in the consumption of oil or gas due to increases in its price relative to other energy sources;

· development or increased use of alternative fuel sources;

· advances in exploration and development technology; and

· the cost of exploration for and production of oil and gas that can be affected by environmental regulations.

The current global economic climate contributed to a significant decline in oil and gas prices and related infrastructure investments. Further declines could result in decreased revenues and/or profitability.

The current global economic downturn resulted in a significant decline in oil and gas prices and a reduction in the level of oil and gas infrastructure, exploration and development investments, which in turn have resulted in reduced demand for AHTS vessels and similar offshore support vessels. While the price of oil rose during 2009, the instability in the market and further declines could result in decreased revenues and/or profitability, and/or the impairment in the value of our AHTS vessels. While the first three of our AHTS vessels that were delivered are currently operating under time charters, the latest three vessels are currently idle and seeking charters. A prolonged period of depressed oil and gas prices could cause us to have difficulty locating suitable charter parties for our AHTS vessels, or we may be compelled to charter our AHTS vessels at lower rates, which could result in decreased revenues and/or profitability and result in losses due to idle vessels. Additionally, such conditions could cause downward pressure on the value of our AHTS vessels, and we could be required to record an impairment of our assets on our balance sheet, and recognize the associated loss in our results of operations.

~~Our investment~~Item ~~returns will be reduced by fees, interest and incentive distributions payable to third parties~~1A. Risk Factors

WeInvesting ~~are obligated~~in tous ~~pay~~involves ~~certain~~a ~~fees~~degree of risk, ~~interest~~including the risks described below. Our financial condition and ~~incentive~~operating ~~distributions~~results have been, and will continue to ~~various third~~be, ~~parties~~affected by a wide variety of risk factors, ~~including~~many ~~but~~of which are beyond our control, that could have adverse effects on our financial condition and profitability during any particular period. Additional risks and uncertainties not ~~limited~~currently known or currently deemed to ~~our~~be ~~lenders~~immaterial may also materially and ~~the~~adversely ~~managers~~affect our business operations. If any of the following risks were to actually occur, our ~~vessels.~~ ~~These~~business, ~~fees~~financial condition or results of operations could be materially and ~~incentive~~adversely ~~distributions~~affected. Limited ~~will~~partner ~~reduce~~units are inherently different from the capital stock of a corporation, although many of our ~~investment returns~~business risks are similar to those that would be faced by a corporation engaged in a similar business.

Delays in deliveries of our newbuilding vessels could harm our operating results.

The three remaining new AHTS vessels we have agreed to acquire are scheduled to be delivered during April 2010, although we expect delays of one to three months. Additionally, if we decide to purchase the chemical tanker, it is expected to be delivered in October 2011. The delivery of the new vessels could be delayed as a result of work stoppages or labor disputes, changes in regulations, hostilities, political instability or any number of other occurrences, including our inability to finance any remaining purchase price of such new vessels. Delays in the delivery of these vessels, other new vessels we may order or secondhand vessels we may agree to acquire, could delay our receipt of revenues for such vessels and could adversely affect our anticipated results of operations.

We have a history of operating losses, and we expect to incur operating losses in the future.

We have incurred operating losses in each year since our inception. Our net operating loss was $14,669,578 and $2,700,954 for the fiscal years ended December 31, 2009 and 2008, respectively. Because a significant portion of our efforts still entail debt financing, raising capital, management oversight of ship construction and preparing for the operation and chartering of the ships being constructed and because [three] of the vessels already delivered are not currently chartered, we expect to continue to incur operating losses until all of our vessels have been delivered and are operating under charter agreements, and we cannot be certain that we will ever achieve profitability.

We have entered into a revenue pooling agreement with three SPVs owned by our affiliate, FLTC Fund I, which could negatively affect our operating revenues.

In March 2009, we entered into an agreement with United Offshore Support GmbH & Co. KG (“UOS”) and three SPVs owned by our affiliate, FLTC Fund I (the “AHTS Pool Agreement”). Pursuant to the AHTS Pool Agreement, we have agreed to participate in a revenue pool comprised of our nine AHTS SPVs and three AHTS SPVs owned by our affiliate, FLTC Fund I (the “Pool Members”). Under the AHTS Pool Agreement, each Pool Member has agreed to pool its returns from the employment of its AHTS vessel (less voyage expenses) with the other Pool Members to achieve an even distribution of the risks resulting from the fluctuation in the offshore chartering business. As a result, if the vessels owned by our AHTS SPVs are chartered at higher average rates than the vessels owned by the three SPVs of FLTC Fund I, then our AHTS SPVs could receive less operating revenue than they would otherwise receive in the absence of the AHTS Pool Agreement.

We may have difficulty properly managing our growth through acquisitions of vessels.

Our success will depend upon the operations of the shipyards building any newbuilding vessels we may order, including the three AHTS vessels and chemical tanker we currently have under contract. During periods in which charter hire rates are high, vessel values are generally high as well. As a result, it may be difficult to consummate further vessel acquisitions at favorable prices. If charter rates drop we may not be able to renegotiate the purchase prices for our vessels and therefore would be required to pay above market value for such remaining vessels. This could result our recording an impairment in the value of our assets on our balance sheet, and recognition of the associated losses in our results of operations. In addition, growing any business by acquisition presents numerous risks such as managing relationships with customers and integrating newly acquired assets into existing infrastructure. We cannot give any assurances that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future growth plans. In addition, due to the long-term nature of the vessel purchase agreements, we may be required to accept vessels when ready for delivery which may be at times that charter rates are low or that no charters are available for such vessels.

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.

Our business and the operation of our SPVs and their vessels are materially affected by environmental regulation in the form of international, national, state or province and local laws and regulations; conventions; and standards in force in the international waters and jurisdictions in which our vessels operate, as well as in the country or countries of their registration. These regulations include those that govern the management and disposal of hazardous substances and wastes, cleanup of oil spills and other contaminations, air emissions, water discharges and ballast water management. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such requirements or the impact thereof on the resale price or useful life of our vessels. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of doing business, which may materially and adversely affect our operations. Our operating entities will be required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to operations. Many environmental requirements are designed to reduce the risk of pollution, such as oil spills, and our compliance with these requirements can be costly.

Environmental requirements can also (i) affect the resale value or useful lives of our vessels; (ii) require ship modifications or operational changes or restrictions; (iii) lead to decreased availability of insurance coverage for environmental matters or (iv) result in the denial of access to certain jurisdictional waters or ports or detention in certain ports. Under local, national and foreign laws as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations and natural resource damages liability, in the event that there is a release of petroleum or other hazardous material from our vessels, or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of hazardous materials associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including seizure or detention of our vessels.

The operation of our vessels will also be affected by the requirements set forth in the ISM Code. The ISM Code requires ship owners 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 dealing with emergencies. Failure to comply with the ISM Code may subject us to increased liability, decreased insurance coverage for the affected ships and result in denial of access to, or detention in, certain ports.

In addition, in complying with existing environmental laws and regulations and those that may be adopted, we may incur significant costs in meeting new maintenance and inspection requirements. New restrictions on air emissions from our vessels could increase operating costs from developing contingency arrangements for potential spills or reduce our ability to obtain insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future. These regulations could require us to incur significant capital expenditures on our vessels to keep them in compliance or even require us to scrap or sell certain vessels altogether. Substantial violations of applicable requirements could have a material adverse impact on our financial condition, results of operations and ability to make distributions to our partners.

Maritime claimants could arrest our vessels, which could interrupt our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against our vessels for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder 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 flows and require us to pay large sums of money to have the arrest lifted. In addition, in some jurisdictions, claimants can arrest other vessels owned or controlled by the same owner, which could result in the loss of more than one of our vessels at the same time.

The operational managers of any ships we acquire may be unable to attract and retain expert ship captains and other key management and technical personnel.

The success of our business depends upon the continued service of expert ship captains and other officers and key personnel, and the ability of our ship managers or any other of our operational managers to attract, retain and motivate highly qualified personnel to crew our vessels. The loss of the services of a number of these highly skilled personnel, our managers’ inability to recruit replacements for such personnel or their ability to attract, retain and motivate highly qualified personnel could harm our investments.

The shipping industry is highly competitive and the increased competition could result in reduced profitability.

Contracts for vessels are generally awarded on a competitive basis and competition in the market is strong. The primary factors companies use for determining who to hire include the availability and capability of vessels, ability to meet the customer’s schedule, price, reputation, quality of service and experience. Some of our competitors may have greater financial resources and larger operations than we do. As a result, they may be able to make vessels available more quickly and efficiently. In addition, excess shipping capacity exerts downward pressure on charter rates. Excess capacity can occur when newly constructed vessels enter the market and when vessels are mobilized between markets. Our competitors that have greater financial resources may be able to withstand the effects of declines in charter rates for a longer period of time.

We may become dependent on spot charters in the volatile shipping markets, which may result in decreased revenues and/or profitability.

Although the first three of our AHTS vessels that have been delivered are currently operating under time charters, the latest three delivered vessels are currently idle and seeking charters. In the future, these idle vessels and any of our currently-chartered vessels may operate under spot charters. Our commercial manager, UOS, is currently seeking opportunities for our vessels. The spot market is highly competitive and rates within this market are subject to volatile fluctuations, while time charters provide income at pre-determined rates over more extended periods of time. If we decide to spot charter our vessels, we may not be able to keep all our vessels fully employed in these short-term markets. Additionally, it is uncertain whether future spot rates will be sufficient to enable our vessels to be operated profitably. A significant decrease in charter rates could affect the value of our fleet and could adversely affect our profitability and cash flows, resulting in an impairment of our ability to pay debt service to our lenders, capital contributions to our SPVs, and distributions to our partners.

There are risks associated with operating internationally.

We anticipate that the majority of our investment returns will be generated by international shipping operations. Our international operations and the international operations of our ships are vulnerable to the usual risks inherent in doing business in countries other than the United States. Such risks include but are not limited to:

· political and economic instability;

· differing business cultures and legal regimes;

· piracy and terrorism;

· possible vessel seizures, nationalization of assets and other governmental actions;

· the ability to recruit and retain highly skilled captains and other crew personnel for overseas operations;

· price fluctuations and market volatility;

· inflation rates;

· currency fluctuations and revaluations;

· government involvement in and control over economies;

· differing auditing and financial reporting standards;

· differing tax regimes and changes in tax treaties;

· less developed corporate laws regarding fiduciary duties and investor protections;

· controls on foreign operations and limitations on repatriation of funds generated from such operations; and

· import and export restrictions.

The current global economic turmoil and the continued threat of piracy, terrorist activity and other acts of war or hostility have significantly increased the risk of political, economic and social instability in some of the geographic areas in which we operate. It is possible that future acts of piracy or terrorism may be directed against us or involve our vessels.

Fluctuations in the value of the Euro versus the U.S. dollar could have a material adverse effect on our results of operations.

Many of our transactions are denominated in EUR such as payments to our Cyprus Subsidiary, purchase of our AHTS vessels and normal operating transactions of the SPVs. In addition, it is typical that chartering arrangements for AHTS vessels are denominated in USD. If the value of the EUR rises against the USD, we may be required to raise additional funds to cover the increased cost of these payments resulting in increased dilution to the partners or default on capital commitments. The net profits, if any, of our operations will be denominated in EUR. If the value of the EUR declines against the USD, such profits, if any, will be reduced due to the conversion of our subsidiary financial statements into our functional currency of USD. As a result, our operating results could be affected if the value of the EUR fluctuates against the USD during the time in which we are required to make capital commitment payments or attempt to distribute funds to our partners. We have and may in the future purchase a variety of financial instruments in order to hedge against such currency fluctuations, but there can be no assurance that instruments suitable for currency hedging will be available or effective in managing our risks associated with currency fluctuations.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

The operation of shipping vessels is inherently risky. Although each SPV carries insurance, all risks may not be adequately insured against and any particular claim may not be paid. We may not be able to procure adequate insurance coverage at commercially reasonable rates in the future. In the past, stricter regulations in the shipping industry have led to higher costs for insurance, particularly for insurance covering environmental damage or pollution. New regulations could lead to similar increases or even make a specific type of insurance unavailable. In addition, certain actions we take could cause our insurance to become voidable by the insurers.

Risks Related to the Partnership

~~We need~~If towe cannot raise substantial additional ~~funds~~capital inor ~~the~~negotiate ~~future~~deferrals toon ~~complete the planned acquisition of all~~ our ~~vessels~~debt, ~~and~~you ~~fund~~could ~~operations.~~lose Asyour aentire ~~result,~~investment ~~an ownership interest~~ in ~~the~~our partnership ~~could be substantially diluted~~.

~~We currently~~As ~~anticipate~~discussed ~~the~~in ~~need~~greater ~~for~~detail ~~approximately~~in ~~$58,371,143~~Item 8. ~~(EUR~~Financial ~~40,725,000)~~Statements ~~to facilitate our remaining AHTS acquisition commitments~~ and ~~provide~~Supplementary ~~sufficient operating~~Data ~~capital~~under ~~based~~Note ~~on capital contributions through March 15, 2010~~2. ~~Additionally,~~ ifGoing weConcern ~~acquire~~in ~~the~~our ~~chemical~~Notes ~~tanker, we will need~~ to ~~raise~~Consolidated ~~an additional~~Financial ~~amount~~Statements ofand ~~approximately $15,000,000. These additional funds could be obtained, if at all,~~ in ~~the~~Item ~~form of debt or equity financing~~7. InManagement’s ~~the~~Discussion ~~event~~and ~~such additional~~Analysis ~~funds~~of ~~are~~Financial ~~raised~~Condition ~~through~~and ~~the~~Results ~~sale~~ of ~~equity~~Operations ~~interests~~under in the ~~partnership,~~ ~~the percentage interest of all partners could be significantly diluted. Such additional equity interests could be as offerings of Class A~~caption, B,Liquidity ~~C or~~and DCapital ~~units in the partnership~~Resources, ~~or,~~we asfailed ato ~~newly~~make ~~created~~certain ~~class~~quarterly ofpayments ~~limited~~due ~~partner units~~during ~~and~~March ~~could~~2011 beunder ~~issued~~our atSenior aLoan. The ~~different~~failure ~~price or have allocation or distribution participation percentage rights as~~ to ~~specific~~make ~~assets~~these orquarterly ~~income streams~~payments ~~that~~constituted ~~are~~an ~~different~~Event ~~than the rights~~ of ~~the other units~~Default. Due Into ~~addition,~~ such ~~debt~~ orEvent ~~equity~~of ~~financing~~Default ~~could~~and ~~occur in~~ the ~~Cyprus~~related ~~Subsidiary~~cross-default orunder ~~any other subsidiary, which could have~~ the ~~effect~~Working ofCapital ~~lowering~~Facility, ~~our~~Nord/LB ~~ownership~~has ~~interest in~~ the ~~Cyprus~~right ~~Subsidiary, German Subsidiary or SPVs. If we are unable~~ to ~~raise sufficient~~declare ~~funds from debt or equity financing, we may not be able to complete~~ the ~~purchase~~entire amount of the ~~remaining~~Nord/LB ~~vessels~~Loans ~~from~~to ~~Fincantieri, and the shipyard may~~ be ~~entitled~~ toimmediately ~~keep~~due ~~any progress payments on such vessels as well as assess additional charges~~ and ~~penalties~~payable ~~for~~by ~~non-performance~~written ~~under~~notice ~~the~~to ~~shipbuilding contracts~~us. As Inof ~~addition,~~ the ~~banks~~date ~~may~~of ~~foreclose~~this onForm ~~our~~10-K, ~~existing~~Nord/LB ~~vessels~~has ornot ~~other assets~~notified orus ~~we may lose some~~ of ~~our~~any ~~ownership~~such inintent ~~the AHTS vessels~~ to ~~Reederei Hartmann.~~accelerate Ifthe ~~any~~amounts ofoutstanding ~~these~~under ~~things~~the ~~happen,~~Nord/LB ~~our business, financial condition and results of operations would be adversely and materially affected~~Loans.

InThe ~~connection with~~Event of Default was preceded by the ~~credit~~political ~~facility~~and ~~with~~financial ~~Norddeutsche~~unrest ~~Landesbank~~in ~~Girozentrale (“Nord/LB”)~~Egypt. Prior to the unrest in Egypt, ~~Nord/LB~~we ~~has requested~~were aalready ~~change~~experiencing tight liquidity related to the delivery of six vessels in the ~~form~~AHTS fleet over a short time span during 2010, some of ~~collateral~~which ~~from~~did ~~Reederei~~not ~~Hartmann~~immediately ~~under~~enter ~~the Hartmann~~into ~~Guarantee~~charters. The ~~and~~situation ~~has~~in ~~delayed~~Egypt ~~funding~~resulted ~~certain~~in ~~progress~~delayed charter payments to ~~Fincantieri~~ onfour ~~our~~of ~~remaining~~the AHTS ~~vessels~~SPVs in the Fleet, as these AHTS SPVs are engaged in charters with companies with substantial ties to Egypt.

As a result of ~~December~~ ~~31,~~the ~~2009~~foregoing, ~~the~~we ~~terms~~are ofworking ~~the~~to ~~Hartmann~~restructure ~~Guarantee~~our ~~were~~debt ~~being~~obligations. In ~~renegotiated between~~this ~~Reederei~~regard, ~~Hartmann~~we ~~and~~are negotiating with Nord/LB. ~~The~~along ~~main~~with ~~subject~~FLTC ofFund ~~the~~I ~~negotiations~~to ~~was the~~defer ~~form~~some ofprincipal ~~collateral~~payments ~~to be provided~~ under the ~~guarantee by Reederei Hartmann to~~ Nord/LB. ~~Nord/LB~~Loans ~~had~~or ~~delayed~~otherwise ~~draws~~resolve on the ~~Pre-Delivery~~Event ~~Facility~~of ~~under~~Default. The ~~the~~ Senior Loan, ~~resulting~~includes incomplex ~~our~~terms ~~being~~and ~~unable~~guarantees toby ~~make~~third ~~timely~~parties ~~progress~~which ~~payments~~have ~~to Fincantieri.~~added ~~Due~~complexity to the ~~delay~~discussions, alengthening ~~number~~the ofprocess. While ~~progress~~we ~~payments~~continue ~~which were otherwise due~~ to bework ~~paid~~with toNord/LB ~~Fincantieri~~on ~~under~~resolving the ~~shipbuilding~~Event ~~contracts~~of ~~with respect~~Default toand ~~the~~our ~~remaining~~liquidity ~~vessels~~issues, tothere can be ~~delivered~~no ~~had~~assurances ~~not~~that ~~been~~Nord/LB ~~paid.~~will Asultimately agree to a ~~result, we~~deferral ~~were~~or ~~not~~any inother ~~compliance~~resolution ~~with~~of the ~~terms~~Event of ~~the~~Default ~~remaining~~on ~~shipbuilding~~terms ~~contracts and~~that ~~Fincantieri~~are ~~would~~acceptable ~~have~~to ~~had~~us ~~the~~or ~~right~~at toall, ~~cease~~or ~~construction~~that ~~activities~~we onwill ~~the remaining~~be ~~vessels.~~able ~~However,~~to ~~Fincantieri~~otherwise ~~acknowledged~~resolve ~~the~~our ~~delay~~liquidity ~~and~~concerns ~~indicated~~ to enable us ~~that~~to itrepay ~~does~~this ~~not~~overdue ~~intend~~payments. Although toNord/LB ~~cease~~has ~~construction~~not ~~pending~~done ~~resolutions~~so over the course of ~~these matters.~~the Inpast ~~addition~~months, ~~Fincantieri~~in ~~has~~the ~~not~~event ~~taken~~Nord/LB ~~any~~were ~~action~~to ~~under~~accelerate all of the ~~shipbuilding~~ ~~contracts~~outstanding toindebtedness ~~demand~~under ~~payment.~~the AsNord/LB aLoans, ~~result~~we ofwould ~~these~~be ~~missed~~unable ~~payments, we~~to ~~were~~repay ~~not~~such inamounts ~~compliance~~and ~~with~~would, ~~certain~~as ~~covenants~~a ofresult, ~~our~~be ~~Senior~~subject ~~Loan~~to ~~with~~the remedies available to Nord/LB as ofunder ~~December~~the 31agreements, ~~2009,~~which ~~however~~include ~~such~~among ~~non-compliance~~other ~~did~~remedies ~~not~~the ~~represent~~right anto ~~event of~~foreclose ~~default~~on ~~under~~the vessels pursuant to the ~~terms~~mortgages ofon the ~~loan~~vessels ~~document.~~entered into in connection with the Nord/LB isLoans. Due ~~aware~~to ~~that~~ the ~~payments~~ ~~have~~co-borrowing ~~not~~terms ~~been~~under ~~made~~the Nord/LB Loans, ~~and~~any ~~has~~remedied ~~not~~actions ~~taken~~by ~~any~~Nord/LB ~~action~~could ~~under~~involve the ~~Senior~~AHTS ~~Loan related~~SPVs toowned by the ~~non-compliance~~Hartmann Group and our affiliate, FLTC Fund I.

~~The resolution~~In addition to ~~this~~resolving ~~situation is ongoing, and involves~~ the ~~granting~~cash offlow ~~loans~~shortfall ~~from Reederei~~which ~~Hartmann~~led to ~~our German Subsidiary (“RHKG Loan Agreements”) and~~ the ~~amendment~~ Event of ~~the~~Default, ~~shipbuilding~~we ~~contracts~~are topursuing ~~postpone~~alternative ~~the~~sources ~~installment payments due under the contracts until delivery~~ of ~~the~~liquidity ~~applicable~~through ~~AHTS vessel and to provide for interest due to Fincantieri on~~ the ~~outstanding~~issuance ~~installment payments due at a rate based on the three-month EURIBOR plus 2%, currently 3.00%. In connection with certain~~ of ~~the~~debt ~~RHKG~~or ~~Loan~~equity ~~Agreements~~securities, ~~which~~and are ~~fully~~exploring ~~described~~various ~~below~~alternatives in ~~Item~~ 7.this ~~Management’s~~regard, ~~Discussion~~including ~~and~~but ~~Analysis~~not oflimited ~~Financial~~to ~~Condition~~selling ~~and~~some ~~Results~~ of ~~Operations, under~~ the ~~caption~~our ~~entitled~~AHTS ~~RHKG~~vessels. We ~~Loan~~may ~~Agreements~~also inseek ~~the Financing Arrangements section, RHKG obtained the funds for their loan~~ to ~~our German~~sell ~~Subsidiary~~additional ~~pursuant~~AHTS ~~to a loan on nearly identical terms from the Fincantieri~~vessels, ~~the~~or ~~shipyard constructing the vessels. It is anticipated that RHKG will~~ enter into ~~similar~~sale-leaseback ~~loan~~or ~~agreements~~other ~~with~~equivalent ~~our~~transactions ~~three~~to ~~remaining~~raise ~~AHTS SPVs that have not taken delivery of their respective AHTS vessels~~liquidity. However, nothere ~~assurances~~ can be ~~given~~no assurances that ~~Fincantieri~~we will ~~continue~~be toable ~~loan RHKG the funds necessary~~ to ~~secure~~ ~~delivery~~raise ofany ~~these~~such ~~final~~additional ~~three~~funds ~~vessels,~~ or ~~that~~sell ~~RHKG~~any ~~will~~additional ~~continue~~vessels ~~to loan our German Subsidiary such funds~~ on terms acceptable ~~terms~~to us or at all.

2320

We ~~are also~~need pursuing potential additional financing from Nord/LB via an increase of the amount guaranteed by SACE under the Senior Loan, but the outcome of this effort is unknown as of the date of filing. If obtained, we anticipate that this financing would allow us to ~~repay~~raise ~~the~~substantial ~~RHKG~~additional ~~Loan~~funds ~~Agreements, either~~ in ~~full or partially, via a distribution from~~ the ~~AHTS~~future ~~SPV~~ to ~~our~~fund German Subsidiary, which would then use those funds to effect repayment of all or part of the RHKG Loan Agreement balances. If we are unable to obtain this additional financing, or if we are unable to further achieve a distribution to our ~~German~~capital ~~Subsidiary allowing~~commitments ~~us to repay the RHKG Loan Agreements or a portion thereof, it could impact the timing of distributions to investors due to likely differences~~ in ~~terms~~ ~~between~~our ~~the~~AHTS ~~RHKG~~SPVs ~~Loan Agreements~~ and ~~any~~other ~~potential~~capital ~~additional Nord/LB financing~~needs. As ~~The RHKG Loan Agreements call for~~ a ~~five year repayment term and the reserving of dividends from the AHTS SPV’s for this purpose. The current Nord/LB financing has a significantly longer payment term of ten to twelve years~~result, ~~and the~~your ~~terms~~ownership ~~regarding~~interest ~~restrictions~~in ~~on our use of dividends from~~ the ~~AHTS~~partnership ~~SPVs~~could ~~are less prohibitive than those under the RHKG Loan Agreements. However, there can~~ be nosubstantially ~~assurances that the terms of any additional advances under the potential additional Nord/LB financing will be the same as the current terms~~diluted.

In ~~the event~~addition weto ~~are~~our ~~unable~~capital toneeds ~~resolve~~as ~~the~~described ~~issues~~in ~~with~~the ~~Nord/LB~~preceding torisk ~~fund~~factor, ~~amounts~~we ~~under~~currently anticipate the ~~Senior~~ ~~Loan~~need ~~sufficient~~for approximately $45,199,356 (EUR 34,105,000) to ~~make~~fulfill ~~these~~our ~~progress~~remaining ~~payments~~capital orcontribution ifcommitments ~~Fincantieri~~to orour ~~RHKG are~~AHTS ~~unwilling~~SPVs. These oradditional ~~unable~~funds tocould ~~loan~~be ~~the~~obtained, ~~remaining~~if ~~amounts~~at ~~necessary~~all, ~~for~~in ~~delivery~~the form of ~~the~~ ~~remaining~~debt ~~three~~or ~~vessels~~equity financing, ~~and~~or wethrough ~~are~~the ~~unable~~withholding toof ~~raise~~distributions ~~the~~which ~~necessary~~would ~~funds~~otherwise ~~from other~~be ~~sources,~~payable weto ~~may~~our ~~not~~German beSubsidiary ~~able~~ to ~~fund~~satisfy ~~the~~our remaining ~~payments~~capital ~~necessary~~contribution ~~to effect~~commitments. In ~~delivery~~the ofevent ~~the~~such ~~remaining~~additional ~~vessels.~~funds Ifare ~~that~~raised ~~were~~through tothe ~~occur,~~sale weof ~~would~~equity beinterests in ~~default~~ of the ~~shipbuilding~~partnership, ~~contracts~~the ~~and~~percentage ~~our~~interest ~~Senior~~of ~~Loan~~all ~~documents.~~partners Incould ~~the event~~be wesignificantly ~~were~~diluted. Such toadditional ~~default~~equity oninterests ~~the~~could ~~Senior~~be ~~Loan~~as ~~agreement,~~offerings ~~Nord/LB~~of ~~could~~Class ~~foreclose on~~A, ~~our~~B, ~~vessels~~C or ~~avail~~D ~~itself~~units ofin the ~~other~~partnership, ~~rights~~or, ~~and~~as ~~remedies~~a ~~contained~~newly increated ~~the Senior~~class ~~Loan~~of ~~documents.~~limited Ifpartner weunits ~~were~~and tocould ~~default~~be onissued ~~the~~at ~~shipbuilding~~a ~~contracts, Fincantieri~~different ~~could~~price ~~cease~~or ~~construction~~have onallocation ~~the~~or ~~vessels,~~distribution ~~and~~participation ~~could~~percentage ~~seek~~rights ~~payment~~as ~~for completed~~to ~~work,~~specific ~~plus~~assets aor 10income ~~percent~~streams ~~profit~~that onare ~~the~~different ~~remaining~~than ~~work~~the torights ~~complete~~of the ~~vessel~~ other units. In Ifaddition, ~~Reederei~~such ~~Hartmann~~debt ~~were~~or toequity ~~provide~~financing ~~funds~~could tooccur in the ~~SPV~~Cyprus ~~pursuant~~Subsidiary toor ~~the Hartmann~~any ~~Guarantee~~other tosubsidiary, ~~cover~~which ~~the~~could ~~payments~~have ~~due~~the ~~other~~effect ~~than~~of aslowering aour ~~further~~ownership ~~loan~~interest ~~under~~ in the ~~RHKG~~Cyprus ~~Loan~~Subsidiary, ~~Agreements~~German ~~and~~Subsidiary or SPVs. If we ~~were~~are unable to ~~fund~~raise ~~our~~sufficient ~~remaining~~funds ~~capital~~from bydebt ~~the date~~or ofequity ~~delivery~~financing, ofwe ~~the~~may ~~respective~~be ~~vessels,~~unable ~~Reederei~~to ~~Hartmann~~fund ~~could~~continuing ~~take~~operations. In ~~over~~ addition, the ~~unfunded~~banks ~~portion~~may offoreclose on our ~~equity~~existing ~~interest~~vessels inor ~~(i)~~other ~~the~~assets ~~AHTS~~or ~~SPVs~~we ~~and~~may ~~(ii)~~lose ~~the mini-bulker~~some ~~SPVs~~of ~~pursuant~~our toownership in the ~~applicable~~AHTS ~~“Sale~~vessels ~~and~~to ~~Assignment~~Reederei Hartmann. If any of athese ~~Limited Share”~~things ~~agreement~~happen, inour ~~each case~~business, byfinancial condition and ~~between~~results ~~the~~of ~~German~~operations ~~Subsidiary~~would be adversely and ~~Reederei~~ ~~Hartmann~~materially affected.

We depend upon the ability of the entities through which we operate to distribute funds to us in order to be able to make any payments to unit holders.

We do not expect to have any significant assets at our parent limited partnership level other than equity securities in our direct and indirect subsidiaries, including the SPVs. As a result, our ability to make distributions and other payments to our partners depends upon the operations of the SPVs and their ability to distribute funds to us. In connection with the credit facility with Nord/LB and Reederei Hartmann’s $45,932,786 (EUR 32,046,875) corporate guarantee thereunder, the German Subsidiary entered into (i) the Share Transfer Agreement SCMP (“Share Transfer Agreement”), (ii) two “Sale and Assignment of a Limited Share” agreements allowing Reederei Hartmann to increase its equity interest in the mini-bulker SPVs, in each case if such corporate guarantee is drawn, and (iii) the RHKG Loan Agreements, which could allow Reederei Hartmann to increase its equity interest in the AHTS SPVs if we default in our repayment obligations. Additionally, in connection with the RHKG Loan Agreements, the ability of our German Subsidiary and SPVs to make these distributions is restricted, as the funds generated by the AHTS SPVs are held in escrow pending the satisfaction of capital funding requirements of all AHTS SPVs and the repayment of the loans under the RHKG Loan Agreements. In addition, the ability of our SPVs and German Subsidiary to make these distributions could be affected by a claim or action by a third party, including a creditor, or the terms of its organizational documents or laws of its jurisdiction of formation. Additional information related to the Nord/LB financing is included in this Form 10-K under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption entitled Financing Arrangements in the Liquidity and Capital Resources section.

We have a limited operating history, and neither the partnership nor the general partner has significant experience in the shipping industry.

The partnership and the general partner were organized in 2006 and have ~~little~~ limited operating history. Prior to the formation of the partnership and the general partner, the management of the general partner did not have any experience in the shipping industry. All ~~Only~~of ~~eight~~the ofAHTS vessels in the ~~eleven~~Fleet and the mini-bulker vessels in ~~our~~which ~~current~~we ~~fleet~~ hold a noncontrolling interest have been delivered to the relevant SPV as of the date of this Form 10-K, with ~~the~~ ~~first of~~ the ~~two~~ mini-bulkers being delivered in ~~August~~ 2007 and the ~~first of the~~ AHTS vessels being delivered in ~~February~~ 2009. and 2010. This lack of experience and limited operating history causes a lack of extended historical financial and operational data making it more difficult to evaluate our business, forecast future revenues and other operating results and assess the merits and risks of ownership of our partnership units. This lack of information increases the risk of partners’ investments. Moreover, risks and uncertainties frequently encountered by companies with a limited operating history should be considered and evaluated. These risks and difficulties include challenges in accurate financial planning as a result of limited historical data and uncertainties resulting from the relatively limited time period for implementation and evaluation of our business strategies as compared to older companies with longer operating histories. Our failure to successfully address these risks and difficulties could materially harm our business, financial condition and results of operations.

We may not make cash distributions, either because our business plan is not successful, our cash flows are not sufficient to cover our operating expenses and debt repayment obligations or we decide to reinvest our income.

We ~~may~~will be unable to make cash distributions to our partners iffor so long as the income from our operations and investments ~~does~~continues ~~not~~to ~~exceed~~be less than our operating costs and debt repayment obligations. Also, funds generated by all of our AHTS SPVs ~~shall~~are be held in escrow and may not be distributed until the capital funding requirements of each AHTS SPV have been satisfied ~~and funds generated by our SPVs which are parties to the RHKG Loan Agreements are prohibited from being distributed until the repayment of the RHKG loan attributable to such SPV~~. In addition, the general partner may retain income from our investments to reinvest rather than make distributions to the partners. We are not obligated to make distributions to the limited partners except for their pro rata share of any distributions that we make in the discretion of the general partner and upon liquidation of the partnership.

The structure of our operations through the Cyprus Subsidiary outlined herein is subject to changes due to tax, financial or other reasons. Any such changes could adversely affect the partnership, our results of operations and limited partners’ investments.

We currently own and operate our vessels through the Cyprus Subsidiary. We chose this structure based upon tax, financial and other issues relating to the partnership and our operations. However, the structure may change significantly in the future due to the termination or amendment of any existing or anticipated contract, changes in or revised assumptions with respect to tax law, additional fundraising or debt issuance or for any number of other reasons. Subject to the rights of other parties involved in our structure, the general partner has the ability to change the operating structure for any reason. Any such changes in the structure could adversely affect our rights and obligations, results of operations and limited partners’ investments. ~~In addition, we have not yet determined the ultimate structure for the potential acquisition of the chemical tanker.~~ Should we acquire ~~the chemical tanker or~~ any other vessels, the tax effects of the ownership, operation and sale of such vessels may be materially different than those outlined herein.

We own and operate our vessels through majority owned entities and ~~often~~ rely on third parties to operate our vessels.

We own and operate our vessels through offshore entities that are managed by persons that we do not employ. The success of our operations depends on the ~~decisions~~performance of third parties who manage our vessel operations, including our ship managers. Our relationships are contractual in nature and such contracts may be terminated under certain circumstances. If our relationships with these third parties are terminated, we may or may not be able to establish relationships on the same or similar terms with other persons experienced or qualified to operate such vessels.

Our intended use of debt financing at various levels of our organizational structure magnifies the risk of loss and our exposure to adverse economic conditions.

We ~~utilize~~ utilized substantial debt financing to fund our operations ~~and~~through ~~expect this to continue~~2011. In addition to the current loans, notes and credit facilities, in the future we may borrow funds through the partnership, Cyprus Subsidiary, German Subsidiary, SPVs or elsewhere to finance the ~~construction, acquisition,~~ management and operation of our vessels and shipping activity. and provide for operating reserves. Consequently, the entity level at which we borrow and the associated interest rates will affect our operating results and potential profit. Additional information regarding our credit facilities is provided in this Form 10-K under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption entitled Financing Arrangements in the Liquidity and Capital Resources section.

25There are limitations on our use of leverage at the AHTS SPV level associated with the terms of the Nord/LB financing. These limitations require us to obtain the consent of the senior lender, Nord/LB before adding additional leverage in any of the AHTS SPVs. Our debt under the Nord/LB Senior Loan and Working Capital Facility as of December 31, 2010 totals $401,074,421 (EUR 302,629,156), all of which is reflected in current liabilities due to the Event of Default discussed in detail above in Item 1. Business, under the caption, Recent Developments.

~~There~~In ~~are limitations~~addition onto ~~our~~the ~~use~~existing ofcredit ~~leverage~~facilities atand ~~the~~loans, ~~AHTS~~we ~~SPV~~may ~~level~~enter ~~associated~~into ~~with~~other ~~the terms~~agreements ofwith ~~the~~one ~~Nord/LB~~or ~~financing.~~more ~~There~~banks ~~are~~or ~~also~~other ~~limitations~~financial oninstitutions ~~our~~and ~~use~~other ~~of leverage~~lenders inregarding our ~~wholly~~borrowings ~~owned~~and ~~subsidiary~~will ~~Kronos~~usually ~~related~~mortgage to the ~~terms~~assets of ~~the Deutsche~~each ~~Schiffsbank~~such ~~facility,~~entity ~~which~~as ~~would~~collateral befor ~~drawn~~the ~~upon~~loans, inincluding the ~~event~~vessels ~~we exercise~~owned ~~our~~by ~~option~~such toentities. We ~~purchase~~may ~~the~~seek ~~chemical~~standby ~~tanker.~~or ~~These~~permanent ~~limitations~~financing ~~would require~~from usone toor ~~obtain~~more ~~the~~banks; ~~consent~~borrow offunds ~~the~~from ~~senior~~institutions, ~~lender~~foreign or domestic, ~~Nord/LB~~by ~~and~~means ~~Deutsche Schiffsbank~~of privately placed notes, ~~respectively~~bonds, ~~before~~or ~~adding~~debentures; ~~additional~~and ~~leverage~~enter ininto ~~either~~other type of financing arrangements that the ~~AHTS SPVs~~general orpartner ~~Kronos~~considers appropriate. The ~~Our~~amounts ~~debt~~available asfor ofborrowing ~~December~~under ~~31,~~the ~~2009~~existing ~~totals~~credit ~~$158,386,070,~~facilities ~~the current~~and ~~portion~~other ofborrowing ~~which~~available isto ~~$17~~us,~~858~~ if any,~~391.~~ ~~This~~may ~~amount~~not ~~includes~~be ~~the~~sufficient ~~original principal~~to ~~balances~~pay offor ~~the~~our ~~respective~~operating ~~loans~~activities and ~~any~~other ~~interest~~necessary ~~accrued~~activities. In onthe ~~those balances~~event ~~through~~we ~~December~~are 31not able to raise sufficient debt or other financing, ~~2009~~we may not be able to fund our operations or service our existing debt obligations. As ~~Interest~~a ~~due~~result, onwe ~~those~~will ~~loans~~be isrequired ~~rolled~~to ~~into~~ raise additional amounts from the ~~loan~~sale ~~renewal~~of ~~amounts~~debt or equity from other sources. In addition, ~~typically~~the banks may foreclose on aour ~~quarterly~~existing ~~basis,~~vessels ~~upon~~or ~~which~~other ~~additional interest~~assets ~~then~~or ~~accrues~~we may lose some ownership in our AHTS vessels and/or the mini-bulkers to Reederei Hartmann.

~~In addition~~Because toour ~~the~~operational ~~existing~~strategy ~~credit~~includes ~~facilities,~~substantial wecapital ~~may~~leverage, ~~enter~~our ~~into~~operations ~~other~~are ~~agreements with~~subject ~~one~~to orincreased ~~more~~exposure ~~banks~~to oradverse ~~other~~economic ~~financial~~factors ~~institutions regarding our borrowings and will usually mortgage the assets of each~~ such ~~entity~~ as ~~collateral~~increases ~~for~~in ~~the loans,~~interest ~~including the vessels owned by such entities. We may seek standby or permanent financing from one or more banks; borrow funds from institutions~~rates, ~~foreign~~ ordownturns ~~domestic,~~in bythe ~~means~~economy ~~of privately placed notes~~ or ~~debentures;~~further ~~and~~deterioration ~~enter into~~in ~~other~~economic ~~type of financing arrangements that the general partner considers appropriate~~conditions. ~~The amounts available for borrowing under the existing credit facilities and other borrowing available to us~~ Similarly, ~~if any, are not sufficient to pay for the acquisition of all of our vessels, our operating activities and other necessary activities. In the event~~ we ~~are~~may ~~not~~be ~~able~~unable to ~~raise~~generate sufficient ~~debt~~ orcash ~~other~~flows ~~financing, we may not be able~~ to ~~fund~~meet ~~our~~principal ~~operations~~ and ~~acquisition~~ ofinterest ~~our~~payments ~~remaining~~on ~~vessels~~our ~~under contract~~indebtedness. ~~As a result~~ Accordingly, weour ~~will~~results ~~be required to raise additional amounts from the sale~~ of ~~debt~~operations orand ~~equity~~financial ~~from~~condition ~~other sources.~~could Inbe ~~addition,~~severely ~~the banks may foreclose on our existing vessels or other assets or we may lose some ownership in our AHTS vessels and/or the mini-bulkers to Reederei Hartmann~~impaired.

~~Because our~~The ~~operational~~cross-collateralization ~~strategy~~of ~~includes substantial capital leverage,~~ our ~~operations will~~AHTS bevessels ~~subject~~with tothe ~~increased~~vessels ~~exposure~~of tothe ~~adverse~~Hartmann ~~economic~~Group ~~factors~~and ~~such~~those ~~as increases~~of inFLTC ~~interest~~Fund ~~rates,~~I ~~downturns~~pursuant into the ~~economy~~Fleet orfinancing ~~further~~arrangement ~~deterioration~~ contained in ~~economic~~the ~~conditions.~~Nord/LB ~~Similarly,~~Loans wecould ~~may~~result bein ~~unable~~foreclosure toon ~~generate~~our ~~sufficient~~AHTS ~~cash flows~~vessels toresulting ~~meet~~from ~~principal~~the ~~and~~default ~~interest~~of ~~payments~~the onHartmann ~~our~~Group ~~indebtedness.~~or ~~Accordingly, our~~FLTC ~~results~~Fund ofI ~~operations~~under ~~and~~its ~~financial~~financing ~~condition~~arrangements ~~could~~with ~~be severely impaired~~Nord/LB.

~~The cross-collateralization~~In oforder ~~our~~to ~~AHTS~~obtain ~~vessels~~more ~~with~~favorable financing terms under the Nord/LB ~~vessels~~Loans, ofwe agreed to a fleet financing arrangement whereby such facility is secured by the Fleet. As a result, if FLTC Fund I ~~pursuant~~ toor the ~~fleet~~Hartmann ~~financing~~Group ~~arrangement~~were ~~contained~~to indefault under the ~~credit~~financing ~~facility~~ arrangements with Nord/LB, Nord/LB could ~~result~~potentially inforeclose on one or more of our AHTS vessels notwithstanding the absence of a default by us under the Nord/LB Loans. In the event of such a foreclosure on one or more of our AHTS vessels, ~~resulting~~we would seek restitution from the ~~default~~ ofHartmann Group and FLTC Fund I; ~~under~~however, ~~its~~there ~~financing~~are ~~arrangements~~no ~~with Nord/LB~~assurances that we would be able to collect all or any portion of such amounts if demanded.

In order to obtain more favorable financing terms under the credit facility with Nord/LB, we agreed to a fleet financing arrangement whereby such credit facility would be secured by three AHTS vessels owned by our affiliate, FLTC Fund I, and our nine AHTS vessels. As a result, if FLTC Fund I were to default under its financing arrangements with Nord/LB, Nord/LB could potentially foreclose on one or more of our AHTS vessels notwithstanding the absence of a default by us under the Nord/LB credit facility. In the event of such a foreclosure on one or more of our AHTS vessels, we would seek restitution from FLTC Fund I; however, there are no assurances that we would be able to obtain all or a portion of any such amounts demanded.22

We have entered into a mutual indemnity agreement with three AHTS SPVs owned by our affiliate, FLTC Fund I, which could cause us to incur substantial indemnification obligations to such AHTS SPVs.

In connection with the cross-collateralization of our AHTS vessels (some of which are now owned by the Hartmann Group) with the AHTS vessels of FLTC Fund I pursuant to the Nord/LB ~~credit facility~~Loans, we entered into a mutual indemnity agreement in May 2009 with the ~~three AHTS SPVs owned by~~ FLTC Fund I’s AHTS SPVs (the “AHTS Mutual Indemnity Agreement”). Pursuant to the AHTS Mutual Indemnity Agreement, weeach of our AHTS SPVs (some of which are now owned by the Hartmann Group) agreed to indemnify the AHTS ~~SPVs~~SPV’s ~~owned by~~ FLTC Fund I for all liabilities suffered by such AHTS SPVs arising out of or associated with any breach by us (or resulting from any payment or performance by such AHTS SPVs in order to avoid a breach by us) under the ~~credit~~Senior ~~facility~~Loan with Nord/LB or the AHTS Mutual Indemnity Agreement. In the event we become obligated to make payments to the AHTS SPVs owned by FLTC Fund I pursuant to the indemnification provisions of the AHTS Mutual Indemnity Agreement, our results of operations and financial condition could be severely impaired.

Tax laws and regulations may change, and such changes could adversely affect our partners’ investments.

There have been numerous tax laws and regulations that have been enacted or changed in recent years. These changes have affected many substantive provisions of the tax laws. In addition, certain tax laws will expire if not renewed by appropriate legislative bodies. Some tax laws with foreign governments are set forth in tax treaties that may be amended or terminated. The impact and interpretation of tax laws and regulations by courts and tax regulators may change without warning or may not be fully understood at this time. In formulating our operational structure, we made certain assumptions with respect to tax laws in the United States, Germany, Cyprus and the Cayman Islands as well as tax treaties among these countries. However, those assumptions may not be accurate and future changes in tax laws and regulations may alter the tax treatment of an investment in the partnership dramatically. In addition, our operations in the territorial waters of any country may subject our operations to such country’s tax laws. In the event our assumptions concerning tax matters prove to be incorrect, an investment in the limited partner units may suffer significant adverse effects. In addition, we may not be able to achieve an efficient tax structure and our results of operations could be subject to higher than anticipated rates of taxation, unanticipated classification of income and substantial penalties and interest.

Parties who have or are considering investing in our limited partner units should conduct a thorough review of the tax treatment of their ownership of limited partner units with their tax advisor. The partnership and the general partner cannot advise limited partners with respect to the tax implications of an investment in the partnership.

Our limited partners may be liable for taxes with respect to their allocated portion of partnership income and gains, even if such limited partners do not actually receive distributions of such allocated amounts.

Each limited partner will be liable for any taxes owed related to their allocable share of any taxable income or gains realized by the partnership, even if no distributions are actually made to such limited partner. Pursuant to the terms of our Partnership Agreement, we are required to make annual cash distributions to our partners to the extent there is available cash in an amount estimated to cover the income taxes owed on such allocable income or gains. However, each partner should be aware that the amount of income taxes owed on allocated taxable income may exceed the cash available for distribution by the partnership resulting in an out-of-pocket tax expense to the partners, even if no distributions are made to such partners. In addition, the sale or transfer of partnership units or the sale or other disposition of our assets may result in adverse United States federal income tax consequences to the partners. If the U.S. Internal Revenue Service (“IRS”) audits the partnership and determines that we underreported our income, each partner may be assessed unpaid income taxes on their allocation of such underreported income, including penalties and interest.

If ~~our~~ ~~units are traded~~ our units are traded on an established securities market or the substantial equivalent thereof, we would lose our status as a partnership for tax purposes and would be taxed as a corporation.

We have elected to be taxed as a partnership. While we were required to register our partnership’s Class A units with the SEC pursuant to the Exchange Act, we do not intend to list the partnership units for trading on any securities exchange or the equivalent thereof. In addition, the Partnership Agreement substantially prohibits the transfer of the partnership units. If the partnership units became traded on an established securities exchange or were deemed to be regularly tradable on a secondary market or substantial equivalent thereof, we would become subject to U.S. federal income tax as a corporation. We would then have to pay taxes on our income at potentially higher rates and our partners would have to pay additional taxes on distributions.

The partnership and the general partner are not registered under the Investment Company Act of 1940 and certain other statutes and, accordingly, our partners will not be able to rely on the protections afforded by these statutes.

We are not registered under the Investment Company Act of 1940, as amended (“Investment Company Act”), which provides certain protections to investors and imposes certain restrictions on registered investment companies including restrictions with respect to capital structure, operations, transactions with affiliates and other matters. Since we are not registered under the Investment Company Act, none of these restrictions are applicable to us. The general partner is not registered as a broker-dealer under the Exchange Act or with the National Association of Securities Dealers, Inc. (“NASD”), and consequently, is not subject to the record keeping and specific business practice provisions of the Exchange Act or NASD. In addition, our general partner is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”), and consequently, is not subject to the record keeping, disclosure and other obligations specified in the Advisers Act.

If either the partnership or any of our subsidiaries were treated as a “passive foreign investment company,” certain adverse U.S. federal income tax consequences could result to U.S. tax persons owning partnership units.

~~It is anticipated that the partnership and the Cyprus Subsidiary will be treated as partnerships for U.S. federal income tax purposes.~~ The general partner ~~intends~~ has elected to treat the partnership ~~and the Cyprus Subsidiary~~ as ~~partnerships~~a partnership for U.S. federal income tax purposes~~; provided~~, ~~however,~~and following the reorganization of the Cyprus Subsidiary in 2009, the Cyprus Subsidiary ~~will~~elected to be treated as an entity disregarded as separate from the partnership. If either the partnership or the Cyprus Subsidiary is recharacterized by the IRS as a foreign corporation, it is possible that either the partnership or the Cyprus Subsidiary could be treated as a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes.

A foreign corporation will be treated as a PFIC for U.S. federal income tax purposes if at least 75% of its gross income for any taxable year consists of certain types of “passive income” or 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, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that 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.” U.S. tax persons owning an equity interest in a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to income derived by the PFIC, distributions received from the PFIC and gains, if any, derived from the sale or other disposition of ownership interests in the PFIC. If either the partnership or the Cyprus Subsidiary is treated as a PFIC or owns an interest in an entity treated as a PFIC for any taxable year, we will provide information to U.S. tax persons owning partnership units to enable them to make certain elections to alleviate certain of the adverse U.S. federal income tax consequences that would arise as a result of holding an interest in a PFIC.

While there are legal uncertainties involved in this determination, and we have not received and do not intend to seek an opinion of counsel or the IRS, the general partner believes that the German Subsidiary should not be treated as a PFIC based on the operations in the AHTS SPVs. We currently intend for each AHTS SPV to ~~hire~~ continue hiring its crew and ~~operate~~operating its ~~ship~~vessel under a day rate arrangement. However, if the vessels were rented to third parties who operated and staffed the vessels (a “bare boat charter”), the rental income from such vessel would likely be considered “passive income” and as a result, the German Subsidiary could possibly be treated as a PFIC if either the income or assets test described above is satisfied. There is no assurance that the nature of our assets, income and operations will not change in the future or that we can avoid being treated as a PFIC in the future.

If either the partnership or any of the subsidiaries of the partnership were treated as a Controlled Foreign Corporation, certain adverse U.S. federal income tax consequences could result to certain U.S. tax persons owning partnership units.

ItThe ~~is anticipated that the partnership and the Cyprus Subsidiary will be treated as partnerships for U.S. federal income tax purposes, and the~~ general partner has ~~treated~~ ~~the~~elected ~~partnership~~to ~~and~~treat the ~~Cyprus~~partnership ~~Subsidiary~~ as ~~partnerships~~a partnership for U.S. federal income tax purposes~~; provided~~, ~~however,~~and asfollowing ~~a result of~~ the reorganization of the Cyprus Subsidiary in 2009, the Cyprus Subsidiary ~~will~~elected to be treated as an entity disregarded as separate from the partnership. If either the partnership or the Cyprus Subsidiary is recharacterized by the IRS as a foreign corporation, it is possible that either the partnership or the Cyprus Subsidiary could be treated as a “controlled foreign corporation” (“CFC”) for U.S. federal income tax purposes.

A foreign corporation, more than 50% of whose vote or value is owned by “U.S. Shareholders,” is a CFC. For this purpose, a U.S. Shareholder is a U.S. tax person owning directly, indirectly or constructively 10% or more of the foreign corporation’s total combined voting power. If a foreign corporation is a CFC, every person who is a U.S. Shareholder of such corporation and who directly or indirectly owns stock in such corporation on the last day of the taxable year in which the foreign corporation is a CFC, must include in his gross income his pro rata share of the CFC’s “subpart F income” for such year and “increases in investments in U.S. property” made by the CFC during its tax year. Generally, subpart F income includes passive income earned by a CFC as well as certain types of sales, services or insurance income. The definition of passive income for CFC purposes is the same as passive income for PFIC purposes discussed above. Under the existing entity structure, while the general partner does not anticipate that the partnership will have U.S. tax persons owning a 10% or more interest in the partnership, no assurance can be given that we will not have such holders or that we or one or more of our subsidiaries will not be considered a CFC; provided, however, following the reorganization of the Cyprus Subsidiary, it is anticipated that the partnership will likely have U.S. Tax Persons owning units in the partnership that may be treated as U.S. Shareholders of any subsidiary of the partnership that is a foreign corporation which could result in such subsidiary being treated as a CFC. Additionally, if we or our subsidiaries are classified as a CFC, a U.S. tax person that directly, indirectly or constructively owns less than 10% of the value of the partnership’s units, and, with respect to a subsidiary of the partnership classified as a CFC, has no other direct, indirect or constructive ownership in such CFC, would not be subject to U.S. federal income tax under the CFC rules; but, they might be considered to own an equity interest in a PFIC.24

28A foreign corporation, more than 50% of whose vote or value is owned by “U.S. Shareholders,” is a CFC. For this purpose, a U.S. Shareholder is a U.S. tax person owning directly, indirectly or constructively 10% or more of the foreign corporation’s total combined voting power. If a foreign corporation is a CFC, every person who is a U.S. Shareholder of such corporation and who directly or indirectly owns stock in such corporation on the last day of the taxable year in which the foreign corporation is a CFC, must include in his gross income his pro rata share of the CFC’s “subpart F income” for such year and “increases in investments in U.S. property” made by the CFC during its tax year. Generally, subpart F income includes passive income earned by a CFC as well as certain types of sales, services or insurance income. The definition of passive income for CFC purposes is the same as passive income for PFIC purposes discussed above. Following the reorganization of the Cyprus Subsidiary, the partnership will in the future likely have U.S. Tax Persons owning units in the partnership that may be treated as U.S. Shareholders of any subsidiary of the partnership that is a foreign corporation, which could result in such subsidiary being treated as a CFC. Additionally, if we or our subsidiaries are classified as a CFC, a U.S. tax person that directly, indirectly or constructively owns less than 10% of the value of the partnership’s units, and, with respect to a subsidiary of the partnership classified as a CFC, has no other direct, indirect or constructive ownership in such CFC, would not be subject to U.S. federal income tax under the CFC rules; but, they might be considered to own an equity interest in a PFIC.

We have ~~and~~made ~~may incur~~ substantial capital commitments to the AHTS SPVs that own our vessels. The failure to make any such capital contributions, when and if called, could result in a loss of partial ownership of such AHTS SPVs and cause severe financial results.

In order to ~~outfit~~operate our AHTS vessels ~~for operation~~ and establish adequate ~~operational~~ reserves, we are committed to provide capital contributions to ~~the~~our AHTS SPVs in an aggregate amount of up to an additional $5845,~~371~~199,~~143~~356 (EUR 4034,~~725~~105,000) based on capital contributions through ~~March~~July 1531, ~~2010~~2011 upon the request of the general partner of the AHTS SPVs. In addition to our being liable to our AHTS SPVs for this commitment, even absent the general partner calling for the outstanding capital contribution, we could be liable to third parties under German law up to the full amount of our capital contribution commitment. A portion of our satisfied capital contribution was funded through loans. We may not be able to raise or borrow future contribution amounts. The failure to fulfill such capital commitments could result in a loss of partial ownership of such SPVs, which could have a material adverse effect on our operating results and financial condition resulting in the partial or complete loss of an investment in the partnership.

While our initial business strategy iswas to invest in new vessels, our Partnership Agreement authorizes the general partner to make investments in anything related to the shipping industry.

We were formed for the primary purpose of acquiring, managing and operating vessels including AHTS vessels, heavy lift vessels, break bulk vessels, tankers and other specialty vessels initially through the Cyprus Subsidiary. However, pursuant to the Partnership Agreement, the general partner has broad discretion to acquire shipping assets directly or indirectly in any manner in the shipping industry. In the event the general partner elects to complete the acquisitions of shipping related assets other than through the Cyprus Subsidiary or otherwise, our business plan and investment returns may be different than those outlined herein.

Our financing arrangements contain restrictive covenants that limit our liquidity and ability to make distributions.

Our existing credit facilities and other financing arrangements impose operational and financial restrictions on us. In addition, future financing arrangements may impose similar or additional restrictions. Examples of these restrictions include, but are not limited to, limitations on our ability to:

make distributions to our partners;

incur additional indebtedness;

create additional liens on our assets;

make investments or loans;

engage in mergers or acquisitions;

· make distributions to our partners;

ship certain types of cargo;

enter into certain types of charter agreements;

maintain unrestricted cash reserves; and

make capital expenditures.

Our failure to comply with the terms of the existing credit facilities or any other financing arrangements we enter into could lead to defaults, in which case our lenders could accelerate our indebtedness and foreclose on our vessels or other assets securing such loans. The loss of any vessels or other assets would have a material adverse effect on our operating results and financial condition.

Our potential exit strategies are subject to market uncertainties.

The feasibility and terms of any proposed exit strategies for our investments will depend on factors that are not within the control of the general partner or the partnership including fluctuations in market conditions, status of capital markets, effect of applicable legislation and political and economic conditions. Consequently, the precise timing of the disposition of an investment and the manner of disposition are impossible to predict, and no assurance can be given that such disposition will be achieved on favorable terms, if at all.

An investment in our partnership units is not and will not be liquid and our limited partners will not be able to sell their units.

Our limited partners will not be able to sell or transfer partnership units without the approval of the general partner. In addition, any transfer of units may be made only if the transfer is registered or exempt from registration under the Securities Act of 1933 (“Securities Act”) and other applicable state securities laws. There currently is not a market for the units, and we do not expect a market to exist in the foreseeable future. Our limited partners will not be able to liquidate their investment in their partnership units in the event of an emergency or for any other reason. Additionally, partnership units may not be accepted as collateral for loans. The duration of the partnership is perpetual and there is no guarantee the partnership will liquidate within any specified time frame, although the partnership may be dissolved upon the approval of the partners holding at least eighty percent (80%) of the Class A, B, C and general partner units.

We are a Cayman Islands limited partnership, and the Cayman Islands do not have a well developed body of partnership law.

Our affairs are governed by our formation documents, Partnership Agreement and the business laws of the Cayman Islands. The provisions of such laws may be similar to provisions of partnership laws of a number of states in the United States; however, there have been few, if any, judicial cases in the Cayman Islands interpreting such laws. The rights and fiduciary responsibilities of the general partner and limited partners under the law of the Cayman Islands are not as clearly established as the rights and fiduciary responsibilities of such partners under statutes or judicial precedent in existence in certain U.S. jurisdictions. As a result, our partners may have more difficulty in protecting their interests in the face of actions by management or the general partner than would partners of a partnership formed in a U.S. jurisdiction.

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

We are a Cayman Islands limited partnership and almost all of our assets will be located outside of the United States. Our operating structure also includes Cyprus and German entities. As a result, it may be difficult enforcing, both in and outside of the United States, judgments obtained in the U.S. courts against us, including actions based upon the civil liability provisions of U.S. federal or state securities laws. There is also substantial doubt that the courts of the Cayman Islands, Cyprus, Germany or any other foreign jurisdiction would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws.

Our Partnership Agreement permits us to issue additional units without our partners’ approval, which would dilute existing unitholders’ interest.

Our Partnership Agreement permits our general partner to create additional classes of units and issue additional units without any additional approval from our limited partners. We are permitted, without any further approval of the limited partners, to issue additional classes of units at any time in the future which may be pari passu with or junior to the existing units, but which may not, unless approved by the limited partners, be senior to the General Partner, Class A, Class B, Class C or Class D units with respect to right and timing of payment; provided, that any additional class of units shall not be considered senior solely as a result of it being issued at a different price or with allocation or distribution participation percentage rights as to specific assets or income streams that are different than the rights of the General Partner, Class A, Class B, Class C or Class D units. The issuance of additional units may dilute the value of the interests of the existing unitholders in our net assets and dilute the interests of unitholders in distributions by us.

The issuance of additional partnership units may result in adverse tax consequences to purchasers of such additional partnership units.

The issuance of additional units to prospective purchasers could result in adverse tax consequences to the purchasers of such additional units if the fair market value of the assets of the partnership has significantly increased at the time of the issuance of such additional units. Under the Partnership Agreement, purchasers of additional units may receive disproportionate allocations of items of income and gain in the year of issuance of such additional units if the partnership determines to adjust the book value of the assets of the partnership as permitted by the capital account maintenance rules contained in Treasury Regulations. However, the IRS may take the position that the issuance of such additional units should result in a currently taxable capital shift to the purchaser of such additional units.

If the partnership is deemed to be an investment company under the Investment Company Act, we will not be able to execute our business strategy.

Because we can operate in a manner similar to venture capital funds, there is a risk that the SEC or a court might conclude that we fall within the definition of an “investment company,” and unless an exemption is available, we would be required to register under the Investment Company Act. Compliance with the Investment Company Act as a registered investment company would cause us to significantly alter our business strategy of participating in the management and development of affiliated entities, impair our ability to operate as planned and harm our business. In addition, our contracts might become voidable and a court could appoint a receiver to take control of and liquidate our business.

The SEC has adopted Rule 3a-1 that provides an exemption from registration as an investment company if an entity meets both an asset and income test and is not otherwise primarily engaged in an investment company business. Such investment company business would consist of such acts as holding itself out to the public as such or by taking controlling interests in entities with a view to realizing profits through subsequent sales of these interests. An entity satisfies the asset test of Rule 3a-1 if it has no more than 45% of the value of its total assets, adjusted to exclude U.S. Government securities and cash, in the form of securities other than interests in majority-owned subsidiaries and entities which it primarily and actively controls. An entity satisfies the income test of Rule 3a-1 if it has derived no more than 45% of its net income for its last four fiscal quarters combined from securities other than interests in majority owned subsidiaries and primarily and actively controlled entities.

Our business strategy and activities involve taking mainly majority ownership and primary controlling interests in partner entities with a view of participating actively in their management and development. We believe that this strategy and the scope of our business activities would not cause us to fall within the definition of an investment company or, if so, provide us with a basis for an exclusion from the definition of an investment company under the Investment Company Act. We cannot assure investors that our organizational structure and business strategy will preclude regulation under the Investment Company Act, and we may need to take specific actions that would not otherwise be in our best interests to avoid such regulation.

If we fell under the definition of an investment company and were unable to rely on an available exemption or obtain an order of the SEC granting an exemption, we would have to register under the Investment Company Act and comply with substantive requirements applicable to registered investment companies. These requirements include:

limitations on our ability to borrow;

limitations on our capital structure;

restrictions on acquisitions of interests in associated companies;

prohibitions on transactions with affiliates;

restrictions on specific investments; and

compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations.

Certain rules and regulations under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code of 1986, as amended (“the Code”) could significantly change our operations and prevent us from executing our business model.

The rules under ERISA and the Code are broadly construed and may change by the issuance of new guidance or new interpretations of existing rules. Depending on how such rules are construed or change, such rules could adversely affect investment in the partnership.

There are numerous rules under ERISA and the Code that apply to employee benefit plans and their fiduciaries. On a fairly regular basis, new rules under ERISA and the Code are issued by the applicable regulatory authorities. In addition, the courts and regulators regularly issue other binding and non-binding guidance regarding the application of these rules. Often this guidance is based on a specific fact pattern which could be analogous to one or more of the features of the partnership and our investments. The impact and interpretation of these rules by courts and regulators may change without warning or may not be fully understood at this time. In formulating our organizational structure, we have attempted to comply with these rules in good faith; however, these rules and some of the guidance related thereto create uncertainty as to whether certain features involving the partnership are in compliance with ERISA and the Code. In the event our compliance efforts concerning these rules prove to be insufficient or incorrect, an investment in the partnership units may suffer significant adverse effects. In particular, the fiduciaries of the partnership and a “benefit plan investor” could be required by the courts and/or regulators to unwind any transaction that results in a violation of ERISA and/or the Code and pay penalties in connection with the transaction such as penalties for the breach of fiduciary duties under ERISA and excise taxes for the engagement in prohibited transactions under the Code. Moreover, depending on the extent to which the partnership and “benefit plan investors” may be required to unwind a transaction, it may not be in our best interest to remain as a going concern.

If our assets are deemed to be “plan assets,” we may not be able to execute our business strategy.

If our ownership of “benefit plan investors” were to equal or exceed 25% of any class and we were unable to comply with the venture capital operating company requirements, our assets could be deemed “plan assets” which could adversely affect our operations, administration and the duties, obligations, liabilities and remuneration of the general partner. As a result of our acceptance of a limited number of ERISA partners to date and our desire to avoid having our assets deemed to be “plan assets,” our Partnership Agreement includes certain ERISA provisions to provide us with some means of avoiding having our assets deemed to be “plan assets.” These provisions may not enable us to avoid having our assets deemed to be “plan assets.”

All of our business decisions will be made by the general partner.

Control of our business and affairs is vested exclusively in the general partner. The limited partners have no contractual right to participate in our management, except that the limited partners have the right to remove the general partner under limited circumstances and the Class D partners have certain limited approval rights with respect to actions taken through our Cyprus Subsidiary. The general partner may transfer all of its General Partner units, and thereby substitute another person as the general partner, without the approval of the limited partners.

There may be conflicts of interest as a result of the general partner’s ability to engage in other business and investment activities.

The general partner and its affiliates are permitted to engage in other business and investment activities outside of the partnership. The general partner will receive reimbursements from us for various expenses and certain affiliates of the general partner will receive payments from us in connection with our operations. The general partner and certain of its affiliates will receive compensation from us or our operations regardless of our profitability. The general partner may contract for goods and services on our behalf in non arm’s-length transactions with affiliates of the general partner. Additionally, certain officers and/or directors of the general partner will also devote substantial business time and efforts to other entities organized in the future by the general partner or its affiliates. For example, certain officers and directors of the general partner serve in similar capacities with respect to FLTC Fund I, an affiliate of the general partner, which is engaged in a similar line of business to ours. FLTC Fund I is also a co-borrower under the Nord/LB credit facility. Additionally, we pay monthly fees to Dental Community Management, Inc. “DCMI”, which is owned in part by the chief financial officer of our general partner, in exchange for DCMI’s performance of certain administrative and professional services on our behalf.

There may be conflicts of interest as a result of the general partner’s limitation of liability and indemnification under our Partnership Agreement.

Under the terms of our Partnership Agreement and to the extent not expressly inconsistent with applicable law, the general partner shall not be liable, responsible or accountable for any damages, losses, claims, liabilities, expenses, judgments, fines, demands or other amounts, or in any other manner whatsoever to us, any partner or any other person or entity for any action taken or for the failure to take any action on our behalf within the reasonable scope of the authority conferred on the general partner under our Partnership Agreement or by law, unless the act or inaction giving rise to a claim against the general partner is determined to have constituted actual fraud, gross negligence, willful misconduct or recklessness against the partnership.

Furthermore, under the terms of our Partnership Agreement and to the extent not expressly inconsistent with applicable law, the partnership, its receiver, its trustee and its successors or assigns, shall indemnify the general partner against and save it harmless from any claim, demand, judgment or liability, and against and from any loss, cost, fee, fine, damage or expense (including, without limitation, attorneys’ fees and court costs), that may be made or imposed upon the general partner by reason of or arising with respect to (i) any act performed for or on our behalf or in furtherance of our business, (ii) any inaction on the part of the general partner, (iii) any liabilities arising under any foreign, federal and state securities laws to the extent permitted under applicable law, (iv) any liabilities arising under any and all other laws as in effect from time to time, or (v) the general partner’s status as a partner or as an employee, consultant or agent of the partnership or any affiliate thereof, and regardless of whether brought by a third-party, by a partner or by or on behalf of the partnership.

There may be conflicts of interest as a result of the diversity of our limited partners.

Our limited partners may include U.S. taxable and tax-exempt entities and institutions from jurisdictions outside of the United States. Such limited partners may have conflicting investment, tax and other interests with respect to their interests in the partnership. The conflicting interests of individual limited partners may relate to or arise from, among other things, the nature of our ~~ship~~vessel investments, structuring of the acquisition of assets and timing of the disposition of such assets. As a consequence, conflicts of interest may arise in connection with decisions made by our general partner, including with respect to the nature or structuring of ~~ship~~vessel investments, that may be more beneficial for one limited partner than for another limited partner, especially with respect to limited partners’ individual tax situations. In selecting and structuring appropriate asset acquisitions, the general partner will consider the business strategy and tax objectives of the partnership and the partners as a whole, not the individual business strategy, tax or other objectives of any limited partner.

There may be conflicts of interest as a result of our general partner’s carried interest.

Pursuant to the terms of our Partnership Agreement, our general partner is entitled to receive a portion of distributions that would otherwise be distributed to our limited partners. Our general partner paid $100 per unit for the general partner units it purchased, which are entitled to their pro rata portion of any allocations and distributions alongside our Class A, B and C units. However, in addition to this pro rata right, our general partner is entitled to a portion of all amounts which would otherwise be distributable to our Class A limited partners, or “carried interest.” This carried interest is payable in connection with our general partner’s actions as general partner and is not in respect of any capital contributed by the general partner. Because of our general partner’s carried interest, our general partner might not always be aligned with the interests of our limited partners due to the possibility that our general partner may be inclined to make riskier or more speculative investments on our behalf than would be the case in the absence of such carried interests. However, the incentive of our general partner to make any such risky or speculative investments may be tempered by reason of the capital investments of our general partner and its affiliates and by the fact that losses will reduce our performance as well as the amount of any distributions to our general partner.

There may be conflicts of interest as a result of our legal representation.

Our attorneys have acted as counsel to the partnership in connection with various activities and as counsel to our general partner and certain of its affiliates. The partnership will generally engage common legal counsel to represent such parties in a particular transaction, including a transaction in which different parties may have conflicting interests. Although separate counsel may be engaged from time to time in the sole discretion of our general partner, our general partner believes the advantages of having a common counsel for the partnership, time and cost savings and other efficiencies usually outweigh the disadvantages.

Dissolution of the partnership may have adverse consequences.

The partnership may be dissolved at any time by the general partner. Dissolution of the partnership could occur at a time that would be disadvantageous to our limited partners upon the approval of partners holding at least 80% of our partnership units (other than Class D units). The partnership units may be materially and adversely affected by our dissolution and our limited partners may sustain economic losses, including adverse U.S. federal income tax consequences, from such dissolution. Upon dissolution or termination of the partnership, the proceeds realized from the liquidation of assets, if any, will be distributed to our limited partners after the satisfaction of the claims of our creditors and the establishment of any reserves that the general partner deems necessary for any contingent or unforeseen liabilities or obligations. Accordingly, our limited partners’ ability to recover all or any portion of their investment under such circumstances will depend upon the amount of funds realized and claims to be satisfied in connection with the dissolution.

Risks Relating to Our Business

There are operational risks inherent to the shipping industry.

The operation of any vessel involves the inherent risk of catastrophic marine disasters, adverse weather and sea conditions, mechanical failure, collisions, property losses to vessels and business interruption due to political action in countries other than the United States. Any such event may result in a reduction in our investment returns or an increase in costs. We currently insure our vessels for their estimated market value against damage or loss, including war, terrorism acts and other risks. In addition, the operations of our vessels are covered by workers’ compensation, maritime employer’s liability, general liability and other insurance customary in the shipping industry. We intend to maintain this coverage for all vessels; however, there can be no assurances that such insurance coverage can be maintained on current vessels, or that such coverage will be adequate should we incur a significant loss.

We depend on our management companies and certain affiliates to assist us in our business operations.

Each of our vessels is or will be owned by an individual SPV, which is single vessel operating offshore entity. Each AHTS SPV is run by the general partner, ATL, which is an affiliate of the Hartmann Group. The two mini-bulker SPVs, Hesse Schiffahrts GmbH & Co. MS “Markasit” KG and ATL Reederei GmbH & Co. MS “Larensediep” KG, are run by their respective general partners, Hesse Schiffahrts GmbH and ATL Reederei GmbH & Co. KG. Additionally, in order to provide added certainty with respect to our operations, we entered into ship management agreements for technical and commercial management with Hartmann Offshore with respect to the AHTS vessels and Reederei Hesse with respect to the mini-bulkers. The commercial management of each AHTS vessel was subcontracted by Hartmann Offshore to UOS while the commercial management of the mini-bulkers was subcontracted by Reederei Hesse to MTL. Under these ship management agreements, the applicable management company or its affiliates will provide certain management services including identifying crews and chartering the vessels to customers. In addition, Reederei Hartmann and its affiliates are non-controlling owners of 25% of each our AHTS SPVs, and own controlling interests in the Hartmann AHTS SPVs, and affiliates of the Hartmann Group and Reederei Hesse collectively own 51% of each mini-bulker SPV.

For a more detailed description of these relationships and agreements, see Item 13. Certain Relationships and Related Transactions.

We have entered into contracts with our affiliates and other related parties that were not negotiated at arm’s-length.

The bankruptcy of our management companies, charter parties or financing sources could have a material adverse effect on our operations.

As indicated above, we depend on our management companies to manage our vessel operations. We also depend on the ability of our charter parties to pay us the agreed upon charter rates for each applicable vessel pursuant to the relevant charter agreement. Additionally, we depend on our third party financing sources to provide the capital necessary to acquire and operate our vessels. If, in the future, any of these entities were the subject of a bankruptcy or other insolvency proceeding, they might be unable to perform their respective obligations under the management agreements or loan documents, as applicable, which could result in a material adverse effect on our results of operations.

Our operations, growth, investment returns, and stability in the value of our vessels depend on the demand for offshore oil and gas drilling and capital spending by the oil and gas industry.

All of our vessels are AHTS vessels, which are primarily used for the installation, maintenance and movement of oil and gas platforms. All of our vessels focused on the oil and gas business, our operations, growth, investment returns, and the stability in the value of our AHTS vessels, which represent the majority of our assets, depend on the demand for offshore oil and gas drilling and the related level of capital spending by oil and gas exploration and production companies who are the principal users of our AHTS vessels. The charter rates of such vessels are highly dependent on the level of capital spending by oil and gas companies. The level of capital spending is substantially related to the demand for oil and gas and prevailing oil and gas prices, each of which can be affected by many factors, including the following:

fluctuations in the actual or projected price of oil and gas;

global and regional demand and perceptions about future demand;

the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to control oil production levels and pricing, as well as the level of production by non-OPEC countries;

significant weather events or conditions;

governmental restrictions placed on exploration and production of natural resources;

refining capacity and its geographical location;

political and economic uncertainties, particularly in oil and gas consuming regions, which could reduce energy consumption or its growth;

increases in the production of oil and gas in areas linked by pipelines to consuming areas;

extension of existing or development of new pipeline systems;

conversion of existing non-oil or gas pipelines to oil or gas pipelines;

decreases in the consumption of oil or gas due to increases in its price relative to other energy sources;

development or increased use of alternative fuel sources;

advances in exploration and development technology; and

the cost of exploration for and production of oil and gas that can be affected by environmental regulations.

The current global economic climate contributed to significant volatility in oil and gas prices which led to instability in amounts expended on related infrastructure investments. Further volatility could result in continued instability in infrastructure investments, leading to decreased revenues and/or profitability.

The current global economic downturn has produced a significant decline initially in oil and gas prices and a reduction in the level of oil and gas infrastructure, exploration and development investments, which in turn resulted in reduced demand for AHTS vessels and similar offshore support vessels. While the price of oil rose during 2010, the continued instability in the market and/or further declines could result in decreased revenues and/or profitability, and/or the impairment in the value of our AHTS vessels. A prolonged period of depressed or volatile oil and gas prices could cause us to have difficulty locating suitable charter parties for our AHTS vessels or achieving consistent utilization, or we may be compelled to charter our AHTS vessels at lower rates, which could result in decreased revenues and/or profitability and result in losses due to idle vessels. Additionally, such conditions could cause downward pressure on the value of our AHTS vessels, and we could be required to record an impairment of our assets on our balance sheet, and recognize the associated loss in our results of operations.

Our investment returns will be reduced by fees, interest and incentive distributions payable to third parties.

We are obligated to pay certain fees, interest and incentive distributions to various third parties, including but not limited to our lenders and the ship managers of our vessels. These fees and incentive distributions will reduce our investment returns.

We have a history of operating losses, and we expect to incur operating losses in the future.

We have incurred operating losses in each year since our inception. Our net operating loss was $4,501,309 and $14,669,578 for the fiscal years ended December 31, 2010 and 2009, respectively. Because a significant portion of our efforts still entail debt financing, including exploring capital markets to complete the funding of our capital contribution obligations to our AHTS SPVs, we expect to continue to incur operating losses until we achieve more consistent utilization of our AHTS vessels at rates at or above break even, and we cannot be certain that we will ever achieve profitability.

We have entered into a revenue pooling agreement with three AHTS SPVs owned by the Hartmann Group, and three AHTS SPVs owned by our affiliate, FLTC Fund I, which could negatively affect our operating revenues.

In March 2009, we entered into the AHTS Pool Agreement with UOS and three AHTS SPVs owned by our affiliate, FLTC Fund I. In July 2011, we transferred our entire 75% interest in three of our AHTS SPVs and an approximate 39% interest in a fourth AHTS SPV to affiliates of the Hartmann Group, which AHTS SPVs will continue as members of the AHTS Pool Agreement. Pursuant to this agreement, we participate in a revenue pool with the Pool Members, which are comprised of our five AHTS SPVs, one AHTS SPV in which we hold a non-controlling interest, three AHTS SPVs owned by members of the Hartmann Group, and three AHTS SPVs owned by our affiliate, FLTC Fund I. Under the AHTS Pool Agreement, each Pool Member pools its returns from the employment of its AHTS vessel (less voyage expenses) with the other Pool Members to achieve an even distribution of the risks resulting from the fluctuations in the offshore chartering business. As a result, if the vessels owned by our AHTS SPVs are chartered at higher average rates than the vessels owned by the other Pool Members, then our AHTS SPVs could receive less operating revenue than they would otherwise receive in the absence of the AHTS Pool Agreement.

We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income.

Our business and the operation of our AHTS SPVs and their vessels are materially affected by environmental regulation in the form of international, national, state or province and local laws and regulations; conventions; and standards in force in the international waters and jurisdictions in which our vessels operate, as well as in the country or countries of their registration. These regulations include those that govern the management and disposal of hazardous substances and wastes, cleanup of oil spills and other contaminations, air emissions, water discharges and ballast water management. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such requirements or the impact thereof on the resale price or useful life of our vessels. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of doing business, which may materially and adversely affect our operations. Our operating entities are and will continue to be required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to operations.

Environmental requirements can also (i) affect the resale value or useful lives of our vessels; (ii) require vessel modifications or operational changes or restrictions; (iii) lead to decreased availability of insurance coverage for environmental matters or (iv) result in the denial of access to certain jurisdictional waters or ports or detention in certain ports. Under local, national and foreign laws as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations and natural resource damages liability, in the event that there is a release of petroleum or other hazardous material from our vessels, or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of hazardous materials associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including seizure or detention of our vessels.

The operation of our vessels is also affected by the requirements set forth in the ISM Code. The ISM Code requires ship owners 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 dealing with emergencies. Failure to comply with the ISM Code may subject us to increased liability, decreased insurance coverage for the affected vessels and result in denial of access to, or detention in, certain ports.

Maritime claimants could arrest our vessels, which could interrupt our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against our vessels for unsatisfied debts, or claims for damages. In many jurisdictions, a maritime lien holder 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 flows and require us to pay large sums of money to have the arrest lifted. In addition, in some jurisdictions, claimants can arrest other vessels owned or controlled by the same owner, which could result in the loss of more than one of our vessels at the same time.

The operational managers of our vessels may be unable to attract and retain expert ship captains and other key management and technical personnel.

The success of our business depends upon the continued service of expert ship captains and other officers and key personnel, and the ability of our ship managers or any other of our operational managers to continue to attract, retain and motivate highly qualified personnel to crew our vessels. The loss of the services of a number of these highly skilled personnel, our managers’ inability to recruit replacements for such personnel, or their ability to attract, retain and motivate highly qualified personnel could harm our investments.

The shipping industry is highly competitive and the increased competition could result in reduced profitability.

We may become dependent on spot charters in the volatile shipping markets, which may result in decreased revenues and/or profitability.

The spot market is highly competitive and rates within this market are subject to volatile fluctuations, while time charters provide income at pre-determined rates over more extended periods of time. If at any time we do not have long-term charters for some or all of our vessels, we may not be able to keep all our vessels fully employed in these short-term markets. Additionally, it is uncertain whether future spot rates will be sufficient to enable our vessels to be operated profitably or to adequately support our debt obligations. A significant decrease in charter rates could affect the value of our fleet and could adversely affect our profitability and cash flows, resulting in an impairment of our ability to pay debt service to our lenders, capital contributions to our AHTS SPVs, and distributions to our partners.

There are risks associated with operating internationally.

We anticipate that the majority of our investment returns will be generated by international shipping operations. Our international operations and the international operations of our vessels are vulnerable to the usual risks inherent in doing business in countries other than the United States. Such risks include but are not limited to:

political and economic instability in the areas in which we operate or could operate, including the potential for civil unrest and/or war;

differing business cultures and legal regimes;

piracy and terrorism;

possible vessel seizures, nationalization of assets and other governmental actions;

the ability to recruit and retain highly skilled captains and other crew personnel for overseas operations;

price fluctuations and market volatility;

inflation rates;

currency fluctuations and revaluations;

government involvement in and control over economies;

differing auditing and financial reporting standards;

differing tax regimes and changes in tax treaties;

less developed corporate laws regarding fiduciary duties and investor protections;

controls on foreign operations and limitations on repatriation of funds generated from such operations; and

import and export restrictions.

Currently, four of the vessels in the UOS AHTS Pool, which include certain of our vessels, operate in the waters off the coast of Egypt and are chartered to companies with operations in Egypt, where significant political unrest has led to instability in business operations.

Currently, four of the vessels in the UOS AHTS Pool, two of which are our vessels, one which is owned by the Hartmann Group, and one which belongs to our affiliate, FLTC Fund I, are chartered to locally-based, third-party intermediaries with ties to Egypt. The political, financial and civil unrest in Egypt affected the timeliness of payments under these charters in early 2011. Renewed unrest could lead to further instability in the business climate in Egypt, causing further delays in payments and/or potentially leading to our inability to collect these amounts or disruption or termination of these charters, which could materially affect the utilization of our fleet leading to significant operating losses.

Fluctuations in the value of the Euro versus the U.S. dollar could have a material adverse effect on our results of operations.

Many of our transactions are denominated in EUR such as payments for crew cost, interest and principal redemptions on our Senior Loan with Nord/LB which was entered into on December 19, 2008, and many of our AHTS vessel normal operating transactions. In addition, it is typical that chartering arrangements for AHTS vessels are denominated in USD. If the value of the EUR rises against the USD, we may be required to raise additional funds to cover the increased cost of these payments resulting in increased dilution to the partners or default on capital commitments. The net profits, if any, of our operations will be denominated in EUR. If the value of the EUR declines against the USD, such profits, if any, will be reduced due to the conversion of our subsidiary financial statements into our functional currency of USD. As a result, our operating results could be affected if the value of the EUR fluctuates against the USD during the time in which we are required to make capital commitment payments or attempt to distribute funds to our partners. We have and may in the future purchase a variety of financial instruments in order to hedge against such currency fluctuations, but there can be no assurance that instruments suitable for currency hedging will be available or effective in managing our risks associated with currency fluctuations.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

Item 2. Properties

Our most significant assets are and will continue to be the vessels we own ~~and plan to acquire~~, each of which is described in this Form 10-K under Item 1. Business. Additionally, in connection with our service agreement with DCMI, DCMI allows us to use the 2,697 square feet of office space located at 5580 Peterson Lane in Dallas, Texas, which comprises a portion of the leased space governed by a master lease agreement with Peterson Place Partners, Ltd. This office space serves as our principal corporate office in Dallas, Texas, and is currently adequate to accommodate our office needs. Functions performed in the Dallas office include overall corporate management, planning and strategy, corporate finance, investor relations, governmental affairs and accounting, tax, treasury, information technology, legal and human resources support functions.

Item 3. Legal Proceedings

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. No director, executive officers or affiliate of ours or owner of record or beneficially of more than five percent of any class of our limited partner units is a party adverse to us or has a material interest adverse to us in any proceeding. In the opinion of management, as of December 31, ~~2009~~2010, there were no threatened or pending legal matters that would have a material impact on our consolidated results of operations, financial position or cash flows.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our limited partnership units are not publicly traded. There is no market for these units and it is unlikely that a market will develop. As of ~~March~~August 2231, ~~2010~~2011, the number of units outstanding and number of partners were as follows:

Title of Class	Number of Partners		Number of Units
General Partners		1		9,900
Class A Limited Partners		~~661~~665		~~614~~616,~~216~~635
Class B Limited Partners		47		84,313
Class C Limited Partners		—-		—-
Class D Limited Partners		2		2,000
		711		710,429
		715		712,848

~~Dividends are~~To ~~not~~date, no dividends have been paid on ~~the~~any of our limited partnership units. At the general partner’s discretion, we may, from time-to time, distribute excess cash flows or capital proceeds to the partners in the event that such funds exist or are earned. Our distribution provisions can be found in our Second Amended and Restated Agreement of Limited Partnership, included as Exhibit 3.4 to this Form 10-K. No distributions were made to our limited partners during the years ended December 31, ~~2009~~2010 and ~~2008~~2009, and we do not anticipate paying distributions during ~~2010~~2011. Distributions can only be paid after all operating costs, working capital reserves, and debt service. Additionally, certain provisions of our debt instruments restrict the amount of potential cash available for distribution. Please refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption Financing Arrangements in the Liquidity and Capital Resources section.

During the time period beginning on our formation on October 18, 2006 and ending on December 31, ~~2009~~2010, we issued and sold approximately ~~708~~710,~~457~~348 General Partner, Class A and Class B limited partnership units to our partners at a purchase price of $100.00 per unit. Out of these units, 9,900 were General Partner units issued to our general partner, ~~612~~616,~~244~~135 were Class A limited partner units and 84,313 were Class B limited partner units. We also issued 2,000 Class D limited partner units in exchange for certain securities of our Cyprus Subsidiary.

During the quarter ended December 31, 2009, we issued and sold approximately 6,626 Class A limited partner units to our partners at a purchase price of $100.00 per unit. No General Partner, Class B, or Class D units were sold or issued during the quarter.

Exemption from registration for Sales of Restricted Securities

None of these sales were registered with the SEC. Each of these sales were deemed to be exempt from registration under the Securities Act pursuant to Section 4(2) and Rule 506 of Regulation D thereof, as transactions by an issuer not involving a public offering. No underwriting discounts or commissions were paid in these transactions and we conducted no general solicitation in connection with the offer or sale of the securities. The purchasers of the securities in each transaction were accredited investors as defined in Regulation D, and such purchasers made representations to us regarding their status as accredited investors and their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. Registration of sales to accredited investors is preempted from state regulation by Section 18 of the Securities Act, though states may require the filing of notices, a fee and other administrative documentation. All purchasers were provided a private placement memorandum containing all material information concerning the partnership and the offering. All purchases were made with cash and the total amount of cash consideration for those securities was approximately $70,645,720.

Issuer Purchases of Equity Securities

We did not repurchase any of our partnership units during the fourth quarter of fiscal 2009.

During the quarter ended December 31, 2010, we issued and sold 250 Class A limited partner units to our partners at a purchase price of $100.00 per unit. No General Partner, Class B, or Class D units were sold or issued during the quarter ended December 31, 2010.

Exemption from Registration for Sales of Restricted Securities

Issuer Purchases of Equity Securities

We did not repurchase any of our partnership units during the year ended December 31, 2010.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is a discussion of our historical consolidated financial condition and operating results for the fiscal years ended December 31, ~~2009~~2010 and ~~2008.~~ 2009. This report should be read in conjunction with our audited consolidated financial statements and related notes as presented elsewhere in this report.

The discussion includes forward-looking statements. As such, the cautionary language applicable to such forward-looking statements described above in Forward-Looking Statements is incorporated by reference into this section. Forward-looking statements are management’s best estimates, and actual results could differ substantially from those estimates. Among the factors that could cause actual results to differ materially are those discussed in this Form 10-K under Item 1A. Risk Factors.

Our functional currency is the U.S. dollar (“USD”). However, the functional currency of many of our subsidiaries is the Euro (“EUR”). All amounts are stated in USD, and where the amount relates to a subsidiary, the amount has been ~~restated~~translated in EUR following the USD amount. Amounts related to future payments which are payable in EUR have been stated in USD and translated using the exchange rate as of December 31, ~~2009~~2010. Amounts shown in narrative statements related to payments made in the past have been translated using the exchange rate on the date the transaction occurred. When comparisons are made between balance sheet dates, the appropriate exchange rate for the given balance sheet date is used. When comparisons are made related to income statement amounts, the average exchange rate for the given period is used.

Overview

The partnership is a Cayman Islands exempted limited partnership formed in October 2006 with III to I International Maritime Solutions Cayman, Inc., a Cayman Islands exempted company with limited liability, as our general partner. Through our subsidiaries, as of December 31, 2010, we ~~own~~owned ~~majority~~controlling interests in nine anchor-handling tug supply (“AHTS”) vessels, ~~six of which are in operation,~~ and non-controlling interests in two multipurpose bulk carrier vessels (“mini-bulkers”) ~~currently in operation. The first three AHTS vessels were delivered in 2009~~, ~~with~~all ~~three~~of ~~more~~which ~~AHTS~~are ~~vessels~~currently ~~being delivered so far~~ in ~~2010~~ operation.

~~The average~~As ~~charter~~discussed ~~rate~~in ~~per~~greater ~~day~~detail ~~based~~later onin ~~contracts~~this ~~currently~~item under in ~~place~~the assection ~~of December~~entitled ~~31,~~Liquidity ~~2009~~and ~~was~~Capital ~~$32,333~~Resources ~~per~~under ~~day.~~the ~~Our~~heading ~~first~~Recent ~~AHTS vessel~~Developments, ~~UOS~~we ~~Atlantis,~~failed ~~was delivered~~to inmake ~~February~~certain ~~2009.~~quarterly ~~The~~payments ~~vessel~~due ~~was~~during ~~placed~~March in2011 ~~operation~~under ~~through~~our ~~a one-year~~senior ~~charter~~loan ~~through~~facility ~~March~~entered ~~2010.~~into Onon ~~November~~December 419, ~~2009,~~2008 anwith ~~extension~~Norddeutsche ofLandesbank ~~this charter~~Girozentrale ~~was executed~~(“Nord/LB”), ~~resulting~~through inwhich anwe ~~adjustment~~financed toour ~~the~~AHTS ~~rate~~vessel ~~and~~acquisitions an(“Senior ~~extension~~Loan”). The ~~of the~~failure ~~term~~to ofmake ~~the~~these ~~contract~~quarterly ~~through~~payments ~~March~~constitutes ~~14,~~an ~~2011.~~event ~~The~~of ~~new~~default ~~rate~~under ~~was~~the ~~retroactive~~Senior ~~to September~~Loan ~~16,~~(“Event ~~2009~~of Default”). In ~~Our~~addition ~~second~~to ~~AHTS~~our ~~vessel,~~Senior ~~UOS~~Loan ~~Challenger~~with Nord/LB, ~~was~~we ~~delivered~~entered ininto ~~May 2009.~~a Itworking ~~began~~capital ~~operating~~facility inwith ~~June~~Nord/LB ~~2009~~on ~~under~~December a6, ~~charter~~2010 ~~agreement~~(“Working ~~with~~Capital aFacility”) ~~term~~and ~~of approximately~~together ~~seven months~~ with anthe ~~option~~Senior ~~for~~Loan, anthe ~~additional~~(“Nord/LB 18Loans”). Due ~~months,~~to ~~which~~the ~~was exercised~~Event onof ~~December~~Default ~~16,~~and ~~2009.~~a ~~Our~~cross-default ~~third~~provision ~~AHTS~~in ~~vessel,~~the ~~UOS~~Working ~~Columbia~~Capital Facility, ~~was delivered~~Nord/LB inhas ~~October~~the ~~2009,~~right ~~and~~to ~~was~~declare ~~placed into~~ the ~~North~~entire ~~Sea~~amount ~~spot~~of ~~market,~~the ~~where it~~Nord/LB ~~completed~~Loans ~~two~~to ~~short-term~~be ~~charters~~immediately ~~over~~due ~~its~~and ~~first~~payable ~~sixty~~by ~~days~~written innotice ~~operation,~~to ~~one for~~us. We ~~seven~~are ~~days~~continuing ~~and~~to ~~one~~negotiate ~~for~~with ~~one~~Nord/LB ~~day.~~to ~~The~~defer ~~vessel~~some ~~then~~principal ~~began~~payments ~~operating~~ under the ~~first~~ ofNord/LB ~~two~~loans ~~short-term~~or ~~charters,~~otherwise resolve the ~~second~~Event of ~~which~~Default. As ~~began~~of inthe ~~mid-February~~date asof ~~a three~~this ~~month~~Form ~~charter~~10-K, ~~with~~Nord/LB ~~options~~has ~~for~~not ~~one~~notified ~~three~~us ~~month~~of ~~extension~~any ~~and~~such ~~ninety one-day~~intent ~~extensions.~~to ~~The~~accelerate ~~last~~the ~~three~~amounts ~~AHTS~~outstanding ~~vessels~~under ~~were~~the ~~delivered~~Nord/LB ~~one in February 2010 and two in March 2010, and are currently seeking charters~~Loans.

~~Each~~Effective ~~of the~~July ~~entities~~1, ~~holding~~2011, ~~one~~we agreed to transfer our 75% interest in three of our AHTS ~~vessels~~SPVs ~~(each~~and ana “portion of our interest in one AHTS SPV”) ~~has~~to ~~entered into~~Reederei aHartmann ~~ship~~GmbH ~~management~~Co. ~~agreement~~& ~~with~~KG (“Reederei Hartmann”), ~~Offshore~~our ~~for~~partner in the ~~management~~AHTS of SPVs, and its ~~respective~~affiliate ~~vessel~~Hartmann Offshore GmbH & Co., ~~Each~~KG of(“Hartmann ~~our~~Offshore”) ~~mini-bulkers~~in issatisfaction ~~managed~~of byloans ~~Reederei~~from ~~Hesse.~~ Reederei ~~Hesse~~Hartmann and ~~their~~Captain ~~affiliates~~Alfred ~~and~~Hartmann ~~affiliates~~(“Capt. Hartmann”), who is the chairman of the board for Hartmann ~~Group collectively~~AG, ~~own~~which ~~the~~is ~~remaining~~a ~~ownership~~member of ~~each~~the ofHartmann Group, the ~~mini-bulkers.~~related ~~In addition~~interest toon ~~our~~the ~~AHTS~~loans, ~~vessels~~as ~~and~~well ~~mini-bulker~~as ~~acquisitions,~~certain weexpenses ~~have~~related ~~advanced funds~~to ~~for~~the loans (“Hartmann Transfer Agreement”). The loans and the ~~potential~~Hartmann ~~purchase~~Transfer ofAgreement aare ~~chemical~~further ~~tanker~~discussed tobelow beunder ~~held~~this initem aunder ~~separate special~~the ~~purpose~~sub-caption ~~entity~~entitled ~~(“SPV”)~~RHKG ~~which~~Loan ~~will~~Agreement beand ~~owned~~Hartmann byLoan ~~Kronos~~Agreement ~~Shipping~~and I,Related ~~Ltd. (“Kronos”).~~Hartmann IfTransfer Agreement under the ~~acquisition~~caption ofFinancing Arrangements in the ~~chemical~~Liquidity ~~tanker~~and Capital Resources section. The outcome of this transaction is ~~completed~~that effective July 1, 2011, we ~~intend~~own ~~to retain~~a ~~Bernhard~~75% ~~Schulte~~interest ~~Shipmanagement~~in ~~(“Schulte~~five ~~Group”)~~AHTS toSPVs, ~~manage~~and ~~the operations~~a non-controlling interest of ~~our~~approximately ~~chemical~~36% ~~tanker~~in asone ~~part~~AHTS ofSPV. The aHartmann ~~fleet~~Transfer Agreement resulted in satisfaction of ~~like-kind~~loans ~~vessels~~payable and accrued expenses totaling $47,577,410 (EUR 33,378,287), which represents the purchase price received for the interest in the ~~Hanseatic~~ ~~Tanker~~AHTS ~~Pool~~SPVs transferred.

In light of the global downturn in the economy and the resulting decrease in charter rates for chemical tankers, and product tankers in general, we are currently re-evaluating our intentions with respect to the chemical tanker, and believe it is unlikely that we will complete the acquisition of the tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments and an adjustment to the overall contract price. We have therefore recognized an impairment to the deposit on asset acquisition on our balance sheet to reduce the carrying value of this asset, resulting in the recognition of a loss on impairment of $9,874,907. If we do formally forfeit our option to acquire the tanker, we expect to recognize gain on the extinguishment of debt of $5,300,000 in a future period. The net result of this would be a loss of approximately $4,574,907, which in the end represents liquidating damages of $3,000,000 plus our capitalized costs approximating $1,574,907. Please refer to the caption Chemical Tanker Transaction/Schulte Group Facility/Kronos under Financing Arrangements in the Liquidity and Capital Resources section for additional information regarding the potential acquisition of the chemical tanker.

With the first six AHTS vessels delivered and the first three operating under charters, our operations have begun to shift focus from development stage to vessel operations, and we are therefore no longer a development stage company as defined the Development Stage Entities topic of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), FASB ASC 915.

The mini-bulkers are merchant ships specially designed to transport bulk cargo and typically operate under short-term leases in established liner services between the Baltic area and Northern Spain, Portugal, the Mediterranean Sea, Greece, Turkey and Israel where the operator has established long-term partners.

The AHTS vessel industry supports the exploration, development and production stages of offshore oil and gas drilling. Our AHTS vessels are specialized vessels built to tow deepwater drilling rigs into position and deploy and recover the mooring systems for the rig. The vessels may also be used for rig and platform supply, transportation of bulk and deck cargo and in emergency situations such as fire-fighting, evacuation of personnel or oil recovery operations. The market for our AHTS vessels, which we anticipate will represent the majority of our operations, is dependent upon the numerous factors which drive demand for offshore oil and gas exploration and development. This demand is ultimately tied to oil and gas prices that are determined by the supply and demand relationship for oil.

Our AHTS vessels could support offshore deep sea oil and gas drilling in any of the following locations: the North Sea, Gulf of Mexico, Mediterranean Sea, Brazil, Indian Ocean, West Africa, Southeast Asia and Australia. They will generally be available to work worldwide, with the exception of the United States due to Jones Act restrictions. Once in operation, we anticipate that our AHTS vessels will earn revenue through time charter leasing arrangements with oil companies under either short-term “spot market” charters, which are measured in days or weeks, or long-term charters, which typically range from one to three years.

In March 2009, we entered into an agreement (“AHTS Pool Agreement”) with United Offshore Support GmbH & Co. KG (“UOS”), an affiliate of Hartmann Offshore and a member of the Hartmann Group, to participate in a revenue pool comprised of our nine AHTS SPVs and three AHTS SPVs owned by our affiliate, FLTC Fund I (the “Pool Members,” together the “UOS AHTS Pool”). The agreement names UOS as the “Pool Manager,” with responsibility for the management and accounting of the pool and also for monitoring Pool Members’ compliance with the AHTS Pool Agreement. Under the AHTS Pool Agreement, each of our AHTS SPVs has agreed to pool its revenue less voyage expenses (“Voyage Results”) with the other Pool Members to achieve an even distribution of the risks resulting from the fluctuation in the offshore chartering business. The AHTS Pool Agreement will have no effect on our consolidated revenues until such time as one of the FLTC Fund I vessels is placed in service, which is expected to occur in May 2010. Under these arrangements, our AHTS SPVs will typically be responsible for their individual vessel operating expenses such as crew costs, class costs, insurance on the vessel and routine maintenance. Class costs represent the cost of maintaining our vessels to the level which permits them to obtain annual quality certificates applicable to the AHTS vessel class, mandatory inspections every two and one half years and dry docking, which is mandatory every five years. Crew costs represent the cost of employing the crews, including wages, which operate the vessel.

AHTS Vessel Net Daily Earnings

Our AHTS vessels will operate under time charter leasing arrangements with oil companies under either short-term “spot market” charters, which are measured in days or weeks, or long-term charters, which typically range from one to three years, including renewal options. Under these arrangements, our AHTS SPVs will typically be responsible for vessel operating expenses such as crew wages, class costs, insurance on the vessel and routine maintenance, as well as management fees as described below. A vessel’s net daily earnings will consist of the revenue earned under that vessel’s charters less that vessel’s operating expenses, which would not include interest expense on acquisition debt. A description of the current AHTS vessels and their net daily earning during 2009, is set forth below.

~~· UOS Atlantis – Our first~~ AHTS vessel, UOS Atlantis, was placed in service upon delivery on February 27, 2009, and began operating under its current charter on March 15, 2009. Our net daily earnings for UOS Atlantis averaged $9,345 for the year ended December 31, 2009, based on the date the vessel was placed in service through December 31, 2009. Included in this vessel’s revenue is a mobilization fee of $100,000, which is a one-time fee due under the charter contract for the initial mobilization of the vessel to its charter destination, as well as approximately $60,000 related to the sale of the fuel on board the vessel to the charterer at the time of delivery of the vessel into its charter. Included in this vessel’s operating expenses are management fees paid to Hartmann Offshore totaling $405,361 for the year ended December 31, 2009. Also included in current results are expenses related to damage to the vessel’s propeller sustained in July while the vessel was in port totaling $590,191.Vessels

·The ~~UOS Challenger – Our second~~ AHTS vessel, ~~UOS~~industry ~~Challenger,~~supports ~~was~~the ~~placed in service upon delivery on May 28~~exploration, ~~2009,~~development and ~~began~~production ~~operating~~stages ~~under~~of ~~its~~offshore ~~current~~oil ~~charter~~and ongas ~~June 24, 2009~~drilling. Our ~~net~~AHTS ~~daily~~vessels ~~earnings~~are ~~(deficit)~~specialized ~~for~~vessels ~~UOS~~built ~~Challenger~~to ~~averaged~~tow ~~($2,543)~~deepwater ~~for~~drilling ~~the~~rigs ~~year~~into ~~ended~~position ~~December~~and ~~31,~~deploy ~~2009,~~and ~~based~~recover on the ~~date~~mooring ~~the~~systems ~~AHTS~~for ~~vessel~~the ~~was~~rig. The ~~placed~~vessels inmay ~~service~~also ~~through~~be ~~December~~used ~~31,~~for ~~2009.~~rig ~~Included~~and inplatform ~~this~~supply, ~~vessel’s~~transportation ~~revenue~~of isbulk aand ~~mobilization~~deck ~~fee~~cargo ofand ~~approximately $650,000. Included~~ in ~~this~~emergency ~~vessel’s~~situations ~~operating~~such ~~expenses~~as ~~are~~fire-fighting, ~~management~~evacuation ~~fees~~of ~~paid~~personnel toor ~~Hartmann~~oil ~~Offshore~~recovery ~~totaling~~operations. The ~~$316,819~~market for ~~the~~our ~~year~~AHTS ~~ended December 31~~vessels, ~~2009.~~which ~~Also~~currently ~~included~~represents ~~are~~the ~~charges~~majority ~~related~~of toour ~~repairs~~operations, ~~resulting~~is ~~from~~dependent ~~damage~~upon to the ~~AHTS~~numerous ~~vessel’s~~factors ~~main~~which ~~winch~~drive ~~sustained~~demand ~~during~~for ~~regular~~offshore ~~operations,~~oil and ~~compensation~~gas ~~due~~exploration toand ~~the~~development. This ~~charterer~~demand ~~related~~is toultimately ~~days~~tied ~~the~~to ~~vessel~~oil ~~was~~and ~~unavailable~~gas toprices ~~the~~that ~~charterer~~are ~~while~~determined ~~the~~by ~~repairs on~~ the ~~main~~supply ~~winch~~and ~~were~~demand ~~made,~~relationship ~~totaling $760,519~~ for ~~the year ended December 31, 2009~~oil.

~~· UOS Columbia –~~ Our ~~third~~first three AHTS ~~vessel,~~vessels ~~UOS~~were ~~Columbia,~~delivered ~~was placed~~ in ~~service upon delivery on October 5,~~ 2009 ~~in the North Sea spot market. During its first sixty days of operations~~, ~~it performed under two spot charters, one for one week~~ and ~~one~~our ~~for~~remaining ~~one~~AHTS ~~day.~~vessels Onwere ~~December~~delivered ~~10, 2009, it began operating under the first of two short-term charters, where it performed towing services, completing this charter~~ in ~~mid-January~~2010. Our ~~The~~AHTS ~~vessel~~vessels ~~continues~~could tosupport ~~operate~~offshore ~~under~~deep ~~its~~sea ~~second~~oil ~~short-term~~and ~~charter,~~gas ~~which~~activity ~~began~~worldwide ~~in early February for a three month term,~~ with the ~~potential~~exception ~~for~~of ~~one~~United ~~three~~States ~~month~~waters ~~extension~~due ~~and~~to ~~ninety~~Jones ~~one-day~~Act ~~extensions~~restrictions. Our ~~net~~vessels ~~daily~~currently ~~earnings~~work ~~(deficit) for UOS Columbia averaged ($18,515), based on the date the AHTS vessel was placed~~ in service through December 31, 2009. Included in this vessel’s revenue is a mobilization fee of approximately $300,000. Included in this vessel’s operating expenses are management fees paid to Hartmann Offshore totaling $30,091 for the ~~year~~North ~~ended December 31~~Sea, ~~2009.~~South ~~Also~~Atlantic ~~included in the results of operations is $810~~Ocean,~~118~~ ofMediterranean ~~revenue from the sale of the fuel on board the vessel at the time of the vessel’s delivery into its charters~~Sea, ~~which is offset by the fuel expense of $1~~Brazil,~~075,232,~~ ~~with~~Southeast ~~the~~Asia ~~net~~and ~~fuel cost contributing to the deficit~~Australia.

·Our ~~UOS~~AHTS ~~Discovery~~vessels –generally ~~Our~~operate ~~fourth~~under ~~AHTS~~time ~~vessel,~~charter ~~UOS~~leasing ~~Discovery~~arrangements with oil companies under either short-term “spot market” charters, ~~was~~which ~~delivered~~are onmeasured ~~February~~in 16days or weeks, ~~2010~~or longer-term charters, ~~and~~which isare ~~currently~~typically ~~not~~measured ~~under~~in ~~charter~~months or years. Our charters have typically ranged from four months to three years, including renewal options.

·All of our vessels are currently under charter with durations varying from four months to two years. The UOS ~~Endeavour~~Atlantis –and ~~Our~~UOS ~~fifth~~Challenger, the first two vessels delivered to our fleet, are under charters in Brazil set to begin between August 1 and October 1, 2011. The UOS Atlantis is currently working in the North Sea spot market, after being replaced in its charter earlier in the year by one of the other vessels in the UOS AHTS Pool (defined below). The UOS Challenger filled in for another vessel, in the UOS ~~Endeavour~~AHTS Pool for three weeks during June 2011, ~~was~~and ~~delivered~~is oncurrently ~~March~~idle 11awaiting entry into the Brazil charter. The average charter rate per day of our active non-spot charters at December 31, 2010 and 2009 was $33,040 and is$36,000 ~~currently~~per ~~not~~day, ~~under~~respectively. The average non-spot charter rate per day, factoring in the utilization of our vessels, was $26,055 and $33,057 per day, respectively, for the years ended December 31, 2010 and 2009.

·During ~~UOS~~the ~~Explorer~~year –ended ~~Our~~December ~~sixth AHTS vessel~~31, ~~UOS Explorer~~2010, ~~was~~our ~~delivered~~vessels onworking ~~March~~in ~~15,~~the ~~2010,~~spot ~~and~~market ~~is currently not under charter.~~included:

~~Our commercial~~· ~~manager,~~ UOS Endeavour, iswhich ~~currently~~worked ~~pursuing~~in ~~opportunities~~the ~~with~~North ~~charterers~~Sea ~~for our~~spot ~~idle~~market ~~vessels. The~~until ~~remaining~~late ~~three~~February ~~AHTS~~2011, ~~vessels~~and ~~are~~has ~~currently~~since ~~scheduled for~~entered ~~delivery~~into ~~during~~a ~~April~~non-spot ~~2010,~~charter ~~although delays~~ in ~~delivery of one or two months are expected for~~ the ~~last~~Falkland ~~three vessels~~Islands.

UOS Discovery, which worked in the Australasia spot market through late August, at which point it was repositioned in a non-spot charter in the same area.

UOS Liberty, which worked in the spot market through mid-October 2010, and has since been repositioned to a non-spot charter in Brazil.

The average spot charter rate per day experienced by our vessels in the spot market was $31,600 and $23,748, respectively, for the years ended December 31, 2010 and 2009. The average spot charter rate per day, factoring in the utilization to consider the effect of off-hire days experienced by the vessels in the spot market during the years ended December 31, 2010 and 2009 was $13,692 and $7,307, respectively.

Each of the special purpose entities (“SPVs”) holding one of our AHTS vessels (each an “AHTS SPV”) has entered into a ship management agreement with Hartmann Offshore for the management of its respective vessel. The commercial management of the vessel under this agreement has been sub-contracted to United Offshore Support GmbH & Co. KG (“UOS”). Affiliates of the Hartmann Group, which is a group of affiliated entities (the “Hartmann Group”) involved in the international shipping industry that are owned or controlled by Hartmann AG, a German corporation headquartered in Leer, Germany, collectively own the remaining ownership of our AHTS vessels. Both Hartmann Offshore and UOS are also affiliates of the Hartmann Group.

~~The current~~In March 2009, we entered into an agreement (the “AHTS ~~market~~Pool ~~reflects~~Agreement”) ~~day~~with ~~rates~~UOS, ~~which~~to ~~are~~participate ~~significantly~~in ~~off~~a revenue pool (the ~~high~~“UOS ~~day rates~~AHTS ~~experienced~~Pool”) which at the ~~peak~~time was comprised of ~~the~~our ~~market~~nine ~~during~~AHTS ~~2007. This~~SPVs ~~can~~and ~~be traced~~three toAHTS SPVs owned by our affiliate, FLTC Fund I (collectively, the ~~weakening~~“Pool ofMembers”). Following the ~~economy~~July ~~over~~1, 2011 Hartmann Transfer Agreement, the ~~past~~pool 24is ~~months~~now comprised of our five AHTS SPVs, ~~combined~~the ~~with~~ four AHTS SPV wholly-owned or majority owned by the ~~contraction~~Hartmann inGroup (including the ~~credit~~AHTS ~~markets.~~SPV in which we hold a noncontrolling interest), and three AHTS SPVs owned by our affiliate, FLTC ~~Both~~Fund ofI. The ~~these~~agreement ~~factors~~names ~~have negatively~~UOS ~~impacted~~as ~~budgets~~the “Pool Manager,” with responsibility for ~~exploration~~the management and ~~development,~~accounting ~~especially outside~~ of the ~~major~~pool ~~oil~~and ~~companies. If~~also ~~economic~~for ~~expectations~~monitoring ~~rise~~Pool orMembers’ compliance with the ~~price~~ ofAHTS ~~oil~~Pool ~~increases~~Agreement. Under ~~significantly~~the AHTS Pool Agreement, weeach ~~would~~of ~~expect~~our ~~day~~AHTS ~~rates~~SPVs has agreed to ~~firm~~ pool its revenue less voyage expenses (“Voyage Results”) with the other Pool Members to more evenly distribute the risks resulting from the fluctuation in charter rates in the offshore chartering business. ~~However~~ Under these arrangements, weour doAHTS ~~not~~SPVs ~~expect~~are ~~significant~~responsible ~~strengthening~~for oftheir ~~day rates~~individual ~~until~~vessel operating expenses such as crew costs, class costs, insurance on the ~~credit~~vessel ~~markets~~and ~~fully~~routine ~~recover~~maintenance, ~~allowing~~as ~~both~~well as management fees as described below. Class costs represent the ~~major~~cost ~~oil companies~~of ~~and~~maintaining our vessels to the ~~smaller~~level ~~second-tier~~which ~~oil~~permits ~~companies~~them to ~~expand~~obtain ~~their~~annual ~~exploration~~ quality certificates applicable to the AHTS vessel class, mandatory inspections every two and ~~development~~one ~~budgets~~half years and dry docking, which is mandatory every five years. Crew costs represent the cost of employing the crews, including wages, which operate the vessel.

If the current environment were to continue or worsen, and we were unable to achieve adequate utilization of our vessels, the delivery of the additional vessels and the associated operating costs and debt service will negatively impact our financial results.

~~Results of~~AHTS ~~Operations~~Vessel Net Daily Earnings

	Years Ended December 31,
	2009			2008
Time charter revenue	$	19,415,498		$	—
Operating expenses:
Vessel operating expenses		19,484,824			—
Loss on impairment of deposit on asset acquisition		9,874,907			—
Professional fees		3,151,608			1,499,873
Brokerage and representation fees		725,980			656,250
Other operating expenses		847,757			544,831
Total operating expenses		34,085,076			2,700,954
Operating loss		(14,669,578	)		(2,700,954	)
Other income (expense):
Interest income		999,078			2,768,138
Interest expense		(3,660,121	)		(1,005,205	)
Loss on interest rate swaps		(9,272,915	)		—
Foreign currency transaction gain (loss)		335,094			(2,129,747	)
Equity in income (loss) of unconsolidated entities		(640,124	)		46,770
Total other income (expense)		(12,238,988	)		(320,044	)
Net loss		(26,908,566	)		(3,020,998	)
Net loss attributable to the non-controlling interest		2,675,378			247,818
Net loss attributable to III to I Maritime Partners Cayman I, L.P.		(24,233,188	)		(2,773,180	)
Less general partner's interest in net loss		(348,831	)		(48,712	)
Limited partner interest in net loss	$	(23,884,357	)	$	(2,724,468	)
Net loss per general partner unit:
Basic and diluted	$	(35.23	)	$	(4.92	)
Weighted average general partner units outstanding		9,900			9,900
Net loss per limited partner unit:
Basic and diluted	$	(35.23	)	$	(4.92	)
Weighted average limited partner units outstanding		677,864			553,741

A vessel’s net daily earnings consists of the revenue earned under that vessel’s charters, less that vessel’s operating expenses, which does not include interest expense on acquisition debt. Results are adjusted for increases (decreases) in revenue resulting from the pooling agreement. Information regarding our AHTS vessels as of December 31, 2010 and a description of their activity and their net daily earnings (deficit) during the years ended December 31, 2010 and 2009, is set forth in the table below.

Net daily earnings (deficit)

Years ended

AHTS SPV

AHTS Vessel

Date

Delivered

Charter Information

Operating

Region as of

December 31,

2010

December 31,

2010

December 31,

2009

MS Juist

UOS Atlantis

February 27, 2009

The UOS Atlantis operated under its initial charter and extensions thereon in Egypt from its delivery through March 2011. In mid-March, UOS Atlantis went into the North Sea spot market through mid-August, when it entered into a four month charter in Brazil.

Egypt

16,924

16,913

MS Norderney

UOS Challenger

May 28, 2009

UOS Challenger operated under its initial charter and extensions thereon through December 31, 2010. It had two short term jobs during 2011 to date, and it entered into a four month charter in Brazil in mid-August.

Gulf of Mexico

18,484

5,647

Isle of Baltrum

UOS Columbia

October 2, 2009

UOS Columbia performed under short term charters during late 2009 and early 2010, followed by two longer term charters through late 2010. Most of its work was done in the Indian Ocean area. It was not under charter as of December 31, 2010, and since that date has performed under two one-month charters in the Australasia area which have been extended through November 2011.

Uncommitted

14,689

(10,125

)

Isle of Langeoog

UOS Discovery

February 16, 2010

UOS Discovery has operated generally in the Australasia area since its delivery. Its initial charters were short term charters, and in September 2010 it began operating under a charter which continued through February 2011. It is currently under charter in the Australasia area through the end of 2011, with potential extensions through April 2012.

Australia

(2,182

)

Isle of Amrum

UOS Endeavour

March 11, 2010

The UOS Endeavour operated in the North Sea spot market from its delivery through early 2011. In February 2011, UOS Endeavour was re-positioned to the South Atlantic for a six-month charter.

North Sea

4,945

Isle of Sylt

UOS Enterprise

July 2, 2010

UOS Enterprise did not enter into a charter immediately upon its delivery. It began operating in October 2010 under a nine-month charter with provision for three, three-month extensions, under which it continues to operate.

Egypt

380

Isle of Wangerooge

UOS Explorer

March 15, 2010

UOS Explorer did not enter into a charter immediately upon its delivery. It was under charter from June to September 2010, and following that period began operating in October 2010 under a two-year charter with provision for two one-year extensions.

Egypt

5,368

Isle of Neuwerk

UOS Freedom

June 29, 2010

UOS Freedom did not enter into charter immediately upon its delivery, but began operating in September 2010 under a nine-month charter with provision for three, three-month extensions, under which it continues to operate.

Egypt

428

Isle of Usedom

UOS Liberty

June 23, 2010

UOS Liberty worked in the North Sea spot market from its delivery through September 2010, and began operating in October 2010 under a nine-month charter with provision for one three-month extension, under which it continues to operate.

Brazil

884

~~Year Ended~~The wide variance in average net daily earnings between vessels in the table above is primarily due to vessels delivered in 2010 not being chartered immediately upon their delivery from the shipyard, or otherwise having insufficient utilization during the given period. The combined results of our nine AHTS vessels in service for the year ended December 31, 2010 and our three AHTS vessels in service for the year ended December 31, 2009, ~~Compared~~resulted in average net daily earnings of $8,170 and $7,789, respectively. The daily earnings are based on a total of 2,563 and 617 days in service for the years ended December 31, 2010 and 2009, respectively, which is based on the total days in service of all of the vessels combined, during each such year. Included in vessel operating expense is $2,367,596 and $752,271 of vessel management fees to ~~Year~~Hartmann ~~Ended~~Offshore during the years ended December 31, ~~2008~~2010 and 2009, respectively. In addition to vessel operating expenses, which are included in the net daily earnings, we recognized $20,586,202 and $4,869,284 of depreciation expense for the years ended December 31, 2010 and 2009, respectively.

Our commercial manager, UOS, is currently pursuing opportunities with charterers for those vessels nearing the end of their current charters. The current AHTS market continues to reflect day rates which are significantly off the high day rates experienced at the peak of the market during 2007. This can be traced to the weakening of the global economy and the resulting decrease in the price of oil, combined with the contraction in the credit markets, which resulted in reduced credit availability for the second tier oil companies. All of these factors negatively impacted budgets for exploration and development, especially outside of the major oil companies. Although the price of oil continues to stabilize and has recently increased, current economic instability, combined with political instability worldwide, could threaten the stabilizing trend we have seen over the past nine months. Assuming that economic conditions remain at current levels, we still do not expect significant strengthening of day rates until the credit markets fully recover, allowing both the major oil companies and the smaller second-tier oil companies to expand their exploration and development budgets.

If the economic environment were to reverse its trend toward recovery and instead worsen, and we were unable to achieve adequate utilization of our vessels and/or experience day rates below break-even levels, the combination of idle capacity and a decline in day rates would negatively impact our liquidity and our financial results given the debt service costs of our vessels and other obligations.

Other Vessel Investments

In addition to our AHTS vessels, we have an equity investment in two mini-bulkers. These mini-bulkers are merchant ships specially designed to transport bulk cargo and typically operate under short-term leases in established liner services between the Baltic area and Northern Spain, Portugal, the Mediterranean Sea, Greece, Turkey and Israel where the operator has established long-term partners. Each of the mini-bulkers is managed by Reederei Hesse. Reederei Hesse and its affiliates and affiliates of the Hartmann Group collectively own the controlling interest of the mini-bulkers.

In addition to our AHTS vessels acquisitions and mini-bulker investments, we had previously advanced funds for the potential purchase of a chemical tanker to be held in a separate special purpose entity which would have been owned by Kronos Shipping I, Ltd. (“Kronos”). In light of the global downturn in the economy and the resulting decrease in charter rates for chemical tankers and decreases in the value of such vessels, we formally forfeited our option to acquire the tanker. Please refer to Chemical Tanker Transaction/Schulte Group Facility/Kronos under Financing Arrangements for more information regarding this transaction.

Results of Operations

	Years Ended December 31,
	2010			2009

Time charter revenue	$	63,525,360		$	19,415,498

Operating expenses:
Vessel operating expenses		42,585,940			14,615,540
Depreciation expense		20,586,202			4,869,284
Loss on impairment of deposit on asset acquisition		-			9,874,907
Professional fees		2,408,918			3,151,608
Brokerage and representation fees		-			725,980
Other operating expenses		2,445,609			847,757
Total operating expenses		68,026,669			34,085,076

Operating loss		(4,501,309	)		(14,669,578	)

Other income (expense):
Other income		109,717			32,632
Impairment of loan receivable from affliliate		(17,465,326	)		-
Interest income		387,001			966,446
Gain on extinguishment of debt		5,300,000			-
Interest expense		(19,473,318	)		(3,660,121	)
Net loss on interest rate swaps		(13,643,935	)		(9,272,915	)
Foreign currency transaction (loss) gain		(1,137,375	)		335,094
Equity in loss of unconsolidated entities		(571,845	)		(640,124	)
Total other expense		(46,495,081	)		(12,238,988	)

Net loss		(50,996,390	)		(26,908,566	)
Net loss attributable to the
non-controlling interest		12,762,391			2,675,378
Net loss attributable to III to I Maritime
Partners Cayman I, L.P.		(38,233,999	)		(24,233,188	)
Less general partner interest in net loss		(459,409	)		(348,831	)
Limited partner interest in net loss	$	(37,774,590	)	$	(23,884,357	)

Net loss per general partner unit:
Basic and diluted	$	(46.40	)	$	(35.23	)
Weighted average general partner units outstanding		9,900			9,900

Net loss per Class A limited partner unit:
Basic and diluted	$	(54.42	)	$	(35.23	)
Weighted average Class A limited partner units outstanding		614,667			592,044

Net loss per Class B limited partner unit:
Basic and diluted	$	(51.27	)	$	(35.23	)
Weighted average Class B limited partner units outstanding		84,313			84,313

Net loss per Class D limited partner unit:
Basic and diluted	$	-		$	(35.23	)
Weighted average Class D limited partner units outstanding		2,000			1,507

For the Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

Revenues

Revenues primarily consist of charter revenue earned by our ~~delivered~~ AHTS vessels.

Revenues increased approximately $44,110,000, or 227%, from approximately $19,415,000 for the year ended December 31, 2009 compared to approximately $63,525,000 for the year ended December 31, ~~2008,~~2010. This ~~when~~increase weis ~~had~~due noto ~~revenue.~~our ~~This increase~~having ~~represents~~all ~~revenue~~nine ~~earned~~vessels onin ~~our~~service ~~first~~for ~~three~~a ~~AHTS~~longer ~~vessels~~duration during the year ended December 31, ~~which~~2010, ~~began operation~~in ~~under~~contrast ~~charters~~with only three vessels in ~~March,~~service ~~June~~during ~~and~~the ~~October~~year ~~2009~~ended December 31, ~~respectively~~ 2009.

Vessel Operating Expenses

Vessel operating expenses consist of expenses related to the operation of our vessels, and ~~include depreciation but~~ do not include interest expense. The largest line items in our vessel operating expenses for the year ended December 31, 2010 are costs related to crewing our vessels, including crew wages and related costs, and fuel costs. We expect that our fuel costs will decline in the ~~Senior~~ ~~Loan~~future, orsince the ~~RHKG~~costs ~~Loan~~of ~~Agreements~~initial fueling are typically borne by us, and once our vessels are under charter, they will typically be borne by the charterer.

~~The vessel~~Vessel operating expenses ofincreased approximately $1927,~~485~~970,000 ~~for the year ended December 31~~, ~~2009~~or ~~represent operating costs for our first three AHTS vessels placed in service on February 27~~191%, ~~2009,~~from ~~May~~approximately 28$14, ~~2009 and October 5~~616,000 ~~2009. We did not have any vessel operating expenses prior to the first AHTS vessel being placed in operation. Vessel operating expenses~~ for the year ended December 31, 2009 ~~include~~compared to approximately $242,~~485~~586,000 offor ~~charges~~the ~~related~~year toended ~~vessel~~December ~~repairs~~31, ~~the majority~~2010. This ofincrease ~~which~~ is ~~related~~due to ~~the~~our ~~accidental~~having ~~loss~~all ofnine ~~the~~vessels ~~main~~in ~~working~~service ~~wire~~for ~~of UOS~~a ~~Challenger~~longer duration during ~~operations, damage to~~ the ~~main~~year ~~winch~~ended ofDecember ~~UOS~~31, ~~Challenger also sustained during operations~~2010, ~~and~~in ~~damage~~contrast towith ~~the~~only ~~propeller~~three ofvessels ~~UOS Atlantis sustained~~ in aservice ~~collision~~during ~~with an underwater object while~~ the ~~vessel~~year ~~was~~ended inDecember ~~port~~31, 2009. We The ~~received~~increases ~~a payment of $250,000~~ from aour ~~claim~~additional ~~under~~vessels ~~the~~in ~~loss~~service ofwere ~~hire~~partially ~~insurance for~~offset ~~UOS~~by ~~Atlantis.~~a Wedecrease ~~have~~in ~~filed~~certain ~~claims~~repair ~~related~~costs toof ~~the~~approximately ~~other incidents~~$2,554,000, ~~but~~which ~~we are~~was ~~not~~related ~~sufficiently~~primarily ~~far~~to ~~along~~damage ~~in our claims process~~ to ~~accurately~~the ~~estimate~~main ~~the amount~~winch of ~~compensation,~~the ifUOS ~~any,~~Challenger ~~that~~sustained ~~would~~during beoperations ~~payable~~in ~~under the various policies~~2009.

~~Loss~~Depreciation ~~on impairment of deposit on asset acquisition~~Expense

~~The~~Depreciation ~~loss on~~expense ~~impairment~~increased ~~of deposit on asset acquisition of~~ approximately $915,~~875~~717,000 ~~is due to recognition of an impairment in the value of the chemical tanker option held through Kronos in accordance with FASB ASC 360~~, ~~Property,~~or ~~Plant and Equipment. The impairment loss is indicative of our current belief that we are unlikely to complete our acquisition of the tanker~~323%, ~~and~~from ~~the~~approximately ~~deposit made and capitalized costs will be forfeited. If we do formally forfeit our option to acquire the tanker, we expect to recognize gain on the extinguishment of debt of~~ $54,~~300~~869,000 infor athe ~~future~~year ~~period.~~ended ~~The~~December ~~net~~31, ~~result~~2009 ofcompared ~~this~~to ~~would be a loss of~~ approximately $420,~~575~~586,000, ~~which~~for in the ~~end~~year ~~represents~~ended ~~liquidating~~December ~~damages of $3~~31,~~000,000~~ ~~plus our capitalized costs approximating $1,575,000~~2010.

These increases are due to our having nine vessels in operation during the current year ended December 31, 2010, whereas during the year ended December 31, 2009, only three of our AHTS vessels had been delivered.

Professional Fees

Professional fees consist of legal, accounting, audit, tax, management and consulting fees.

The ~~increase~~ decrease in professional fees of approximately $1743,~~652,~~000, or ~~110~~24%, from approximately $13,~~500~~152,000 for the year ended December 31, ~~2008~~2009 compared to approximately $32,~~152~~409,000 for the year ended December 31, ~~2009~~2010, was due to ~~an increase~~expenses inincurred ~~legal~~during ~~and consulting fees related to our consent solicitation, amendment of our limited partnership agreement, restructuring of our Cyprus Subsidiary, preparation for~~ the ~~filing~~year ofended ~~our~~December ~~initial registration statement and other matters~~31, ~~including~~2009 ~~the~~related ~~formation~~to of our ~~wholly~~restructuring ~~owned subsidiary, Kronos,~~ and ~~responding to SEC inquiries regarding~~ our initial registration statement ~~and legal~~with ~~and~~the ~~consulting work related to financing options for our additional capital needs. These factors accounted for approximately $812~~SEC,~~000~~ ofwhich ~~the increase.~~was ~~Increases~~filed in ~~audit~~April ~~and consulting fees of approximately $320,000 were related to the increased regulatory environment to which we are subject~~2009. ~~Additionally,~~ This ~~the~~amount ~~fees~~includes ~~charged~~decreases ~~related~~in tolegal ~~our administrative~~ and professional ~~services~~ ~~agreement~~fees ~~with Dental Community Management, Inc. (“DCMI”), which maintains our books and records and handles all our business activities, accounted for $620,000~~ of ~~the increase. Their monthly fee was~~ $25648,000 ~~through April 2008~~, ~~$60,000 per month from May to December 2008~~ and ~~$100,000~~a ~~per~~decrease ~~month thereafter. The increases~~ in ~~the~~audit fee to DCMI relate to significant increases in all areas of our business, including the complexity of the regulatory environment under which we operate, the management services provided by DCMI personnel in relation to our regulatory environment, and ~~our~~tax ~~business~~consulting ~~activities as the AHTS vessels are placed in service. These differences were partially offset by decreases to our financing~~ fees of approximately $~~100~~95,000.

41We expect that our legal and professional fees will increase over the next year as our regulatory and compliance costs increase, both due to our status as an SEC registrant and due to the increasing activity of our vessels and increased activity surrounding the funding of our remaining capital contribution obligations through debt and/or equity sources.

Brokerage and Representation Fees

Brokerage and representation fees consist of fees paid to providers of our ~~ship~~vessel ~~brokerage,~~ acquisition representation and consulting services. The last payment under our current agreement, which iswas related to the acquisition of the AHTS vessels, ~~was~~fell due during the fourth quarter of 2009.

~~Our brokerage~~As ~~and~~a ~~representation~~result ~~fees~~of the expiration of our agreement related to consulting services in negotiations for the ~~year~~acquisition ~~ended~~of ~~December~~the 31AHTS vessels in 2009, ~~2008~~we ~~as compared~~incurred tono ~~that~~brokerage and professional fees for the year ended December 31, ~~2009~~2010 ~~increased~~as bycompared to approximately $70726,000, ~~due~~for ~~to our retaining a consultant to assist in negotiations surrounding~~ the ~~acquisition~~year ofended ~~the~~December ~~remaining~~31, ~~vessels~~2009.

Other Operating Expenses

Other operating expenses consist of commissions paid related to the chartering of our vessels, office and administrative expenses, travel expenses and bank fees that are not directly related to financing arrangements.

The increase in other operating expenses of approximately $~~303~~1,598,000, or 56188%, from approximately $~~545~~848,000 for the year ended December 31, ~~2008~~2009 to approximately $~~848~~2,446,000 for the year ended December 31, ~~2009~~2010, was due to an increase of approximately $547,000 in due from charters allowance for doubtful accounts, which is related to our charters in Australia, Mexico and Brazil. Also, there was an increase of approximately $669,000 in commissions related to the chartering of our vessels, and an increase of approximately $~~344~~466,000, in office and ~~an increase~~miscellaneous incosts, including bank fees ~~and~~unrelated ~~miscellaneous~~to ~~and~~financing ~~office~~arrangements, ~~costs~~which ofincreased ~~approximately $100,000.~~due ~~These~~to increasing operations. The increases were offset by adecreases ~~decrease~~ in travel and other ~~administrative~~ costs of approximately $~~141~~84,000 due to decreases in travel expense and other expenses of our construction supervision team.

Other Income (Expense)

Other income (expense) consists of income and expense not related to operating the vessel contracts.

The increase in other income of approximately $77,000 or 233% from approximately $33,000 of other income for the year ended December 31, 2009 to approximately $110,000 of other income for the year ended December 31, 2010, was due to an increase in rebates.

Impairment of loan receivable from affiliate

A 100% reserve was placed against the FLTC Fund I Note Receivable, defined below, for approximately $17,465,000, related to the Event of Default. Please see the section entitled Liquidity and Capital Resources later in this item for additional information regarding the Event of Default and the FLTC Fund I Note Receivable.

Interest Income

Interest income is earned on balances in various operating and money market accounts in which our funds are held. In Asthe past as funds ~~are~~were raised, they ~~are~~were deposited in operating accounts in the United States and in interest bearing accounts in foreign countries. Amounts necessary for operations and payment of upcoming AHTS vessel construction installments ~~are~~were held in these accounts. As ~~In the past, as~~ construction payments came due, funds held were moved to the restricted cash accounts and pledged as collateral for the loans that funded the AHTS vessel construction payments to the shipyard, Fincantieri ~~Cantieri Navali Italiani SpA (“Fincantieri”)~~. As the balance of these pledged funds grew, so too did the interest earned on the funds. During year ended December 31, 2009, funds held in these pledged accounts were utilized to repay the loans under the credit facility (“Berenberg Facility”) with Berenberg Bank related to the AHTS vessel construction payments, and our interest income decreased. Interest was also earned on short-term loans to a related party.

~~Interest income~~During ~~decreased approximately $1,769,000, or 64%, from approximately $2,768,000 for~~ the year ended December 31, ~~2008 to approximately $999~~2009,~~000~~ ~~for~~ the ~~year ended~~pledged ~~December 31, 2009. The decrease was due to a decrease in~~ funds ~~held~~were ~~in interest~~released ~~bearing~~and ~~pledged accounts due to repayment of~~ the related loans were repaid with the pledged funds, ~~and a decrease~~ in ~~interest~~mid-2009. Interest ~~income~~was ~~from~~also ~~our~~earned ~~related~~on ~~party~~short-term ~~notes receivable,~~loans ~~which~~to ~~were~~a ~~repaid~~related ~~during the second and third quarters of 2009~~party.

Interest income decreased approximately $579,000, or 60%, from approximately $966,000 for the year ended December 31, 2009 to approximately $387,000 for the year ended December 31, 2010. The decrease was due to a decrease in funds held in interest bearing pledged accounts due to repayment of the related loans with the pledged funds in mid-2009, and a decrease in interest income from our related party notes receivable, which were repaid to us during the second and third quarters of 2009.

Interest Expense

Interest expense was incurred on the ~~senior~~Nord/LB Loans, two related party loans, and loan ~~facility~~agreements entered into with Reederei Hartmann (“~~Senior~~RHKG Loan Agreements”) ~~with Norddeutsche~~and ~~Landesbank~~its ~~Girozentrale~~affiliate Captain Alfred Hartmann (“~~Nord/LB~~Hartmann Loan Agreement”) ~~which~~and ~~was~~Hartmann ~~entered~~Asia ~~into~~Holding ~~on December~~PTE, 19Ltd. (“Hartmann Asia”), ~~2008~~a member of the Hartmann Group and an affiliate of the non-controlling interest holders of our AHTS SPVs, (the “Hartmann Asia Loan Agreement”), and ~~two~~various other fees related ~~party~~thereto, ~~loans~~discussed ~~which~~further ~~were~~under ~~entered~~Financing ~~into~~Arrangements ~~during~~ under the ~~fourth~~Liquidity ~~quarter~~and Capital Resources section of ~~2008~~this Item 7. InManagement’s ~~addition,~~Discussion ~~loss~~and onAnalysis of Financial Condition and Results of Operations. The amount included in interest ~~rate~~expense ~~swaps~~is ~~has~~the ~~been recognized~~amount ~~related~~incurred less the amount allocated to our ~~entering~~assets ~~into~~under ~~interest~~construction ~~rate~~plus ~~swap~~the ~~agreements~~amortization ~~related~~of to debt issuance costs. Each of our assets under construction was allocated a portion of the ~~Senior~~total ~~Loan~~interest incurred on ~~our~~all ~~AHTS~~of ~~vessels.~~our ~~The~~debt ~~underlying~~instruments ~~Senior~~for ~~Loan~~the ~~agreements~~period ~~are at~~based ~~variable~~on ~~rates,~~the ~~while~~product of the ~~swap~~weighted-average ~~agreements~~accumulated ~~serve~~expenditures toand ~~fix~~the weighted-average interest rate for the period. The amount of interest ~~rates through~~allocated ~~2019~~to our assets under construction was capitalized rather than expensed.

The increase in interest expense of approximately $2,655,000, from approximately $1,005,000 for the year ended December 31, 2008 to approximately $3,660,000 for the year ended December 31, 2009, was primarily due to the drawdowns on our Senior Loan facility related to the delivery of our AHTS vessels, which were delivered in February, May and October 2009. The amount included in expense is the amount incurred less the amount allocated to our assets under construction. Each of our assets under construction is allocated a portion of the total interest incurred on all of our debt instruments for the period based on the product of the weighted average accumulated expenditures and the weighted average interest rate for the period. The agency and commitment fees related to the Senior Loan, the guarantee fees due under the guarantee provided by Reederei Hartmann, and interest expense related to a loan from a related party and amortization expense on the deferred loan costs also contributed to the increase in interest expense.44

42The increase in interest expense of approximately $15,813,000, or 432%, from approximately $3,660,000 for the year ended December 31, 2009 to approximately $19,473,000 for the year ended December 31, 2010, was due to the delivery of additional vessels and related interest expense under our Nord/LB Loans and related matured interest rate swaps, and the RHKG Loan Agreements, Hartmann Loan Agreement, and the Hartmann Asia Loan Agreement in addition to the interest expense paid to the shipyard on the late payment of construction installments. The agency and commitment fees related to the Senior Loan and the guarantee fees due under the guarantee provided by Reederei Hartmann also contributed to the increase.

Loss on ~~interest~~Interest ~~rate swaps~~Rate Swaps

The increase in the loss on interest rate swaps of approximately $4,371,000 or 47%, from $9,273,000 for the year ended December 31, 2009 to $13,644,000 for the year ended December 31, 2010 is due to the recognition of ~~loss~~changes ~~related~~in tothe value of the interest rate swap agreements related to the ~~Nord/LB~~Senior ~~senior~~Loan ~~loan~~ facility for our nine AHTS ~~vessels~~ SPVs, which values fluctuate with interest rate expectations, among other factors. If interest rates are expected to rise, it would be reasonable to expect an increase in the valuation of the interest rate swaps, and thus a decrease in the loss on the interest rate swaps from period to period. The reverse is also true. If interest rates are expected to fall, a decrease in the valuation of the interest rate swaps would be likely and therefore an increase in the loss on the interest rate swaps would be recognized. These instruments have not been designated for hedge accounting, and therefore the entire change in the fair value of the positions from period to period ~~of approximately $9,273,000~~ is recorded in our results of operations as loss on interest rate swaps. The agreements are effective from 2010 through 2019, and are currently recorded as a derivative liability totaling approximately $922,~~530~~429,000, due to the relatively low variable rates being experienced as compared with the fixed rates under the swap agreements.

We entered into the interest rate swap agreements to mitigate the uncertainty in interest costs under the variable rate under our Senior Loan. The losses recognized for the change in fair value of our swap positions from period to period are indicative of the comparison between the fixed interest rate under our swap agreement to the variable rate under our Nord/LB facility, the valuation of which is influenced by current expectations regarding when, if at all, and by how much, if any, the variable interest rate under our Senior Loan with Nord/LB will increase.

Foreign Currency Transaction Gain (Loss)

Foreign currency transaction gain (loss) isincludes the amount of gain or loss realized when the cash balances held by our subsidiaries in ~~EUR~~currencies byother ~~our~~than ~~Cayman~~their ~~partnership~~functional currency are converted to ~~our~~ their functional currency, ~~USD,~~ on each balance sheet date. and when the subsidiaries have transaction in currencies other than their functional currency. Also included are amounts related to recording the current fair value of currency forward exchange contracts which are not designated as cash flow hedges and the ineffective portion of currency forward exchange contracts for periods in which ~~are~~they were designated as cash flow hedges, and gains and losses from maturing of currency forward exchange contracts whether or not they are designated as hedges.

~~The change~~Over inthe ~~our~~year ended December 31, 2010, we had a foreign currency transaction ~~gain~~loss of approximately (~~loss~~$1,137,000), ~~from~~as ~~the~~compared ~~year~~to ~~ended December~~a ~~31,~~foreign ~~2008~~currency totransaction gain of approximately $335,000 for the year ended December 31, 2009,. This change was primarily caused by ~~a continuation~~the ~~of a period of~~ relatively high volatility inof exchange rates. A ~~One factor~~portion ~~with~~of ~~respect~~the tochange ~~changes~~ in ~~the~~our foreign currency transaction gain (loss) ~~was~~ ~~due~~is related to the ~~revaluing~~recording of the current fair value of our ~~EUR~~currency ~~denominated~~forward ~~bank~~exchange ~~accounts~~contracts ~~and~~which ~~restricted~~ are not designated as cash ~~balances~~flow ~~held~~hedges, inunder ~~foreign~~which ~~countries~~we have contracted to ~~USD~~sell ~~using~~Euros and purchase US dollars at pre-agreed upon prices in the ~~current~~future. The ~~prevailing~~ affect of the change in value of these contracts is offset by the recording of our currency forward exchange ~~rate~~contracts which are no longer designated as hedges under which we have contracted to sell US dollars and purchase Euros at pre-agreed upon prices in the ~~end~~future. The change in value of ~~each~~these ~~month~~two groups of contracts from period to period is recognized in our results of operations. The net losses recognized between these two groups of contracts for the year ended December 31, 2010 are related primarily to the strengthening of the Euro against the US dollar during the year ended December 31, 2010, and the fact that the price at which we agreed to sell US Dollars and purchase Euros is less favorable to us than those currently expected to be available in the market at the future execution dates.

~~In addition,~~Future ~~our~~fluctuations ~~entrance into currency forward exchange contracts related to our anticipated USD revenue, under which we locked~~ in ~~the future~~ rates ~~at which amounts representing portions of our anticipated USD revenue~~ will befurther ~~converted to~~affect ~~EUR, were~~ the ~~primary~~recognition ~~factors resulting in the increase~~ of ~~$2,465,000~~gains inand ~~the net~~losses ~~foreign~~under ~~currency~~these ~~transaction gain for the year ended December 31, 2009 compared to that for the year ended December 31, 2008~~contracts.

Equity in Loss of Unconsolidated Entities

Equity in loss of unconsolidated entities represents our share of the net income or loss reported for the operations of the ~~bulk~~mini-bulker ~~carrier~~ vessels in which we own a ~~minority~~ non-controlling interest.

The increase of approximately $687,000 in the loss recognized from the year ended December 31, 2008 compared to the year ended December 31, 2009 is due to fluctuations in the activity of the vessels, which is fairly sensitive to the current economic environment.45

~~Non-controlling Interest~~The decrease of approximately $68,000 or 11%, in the loss recognized from the operations of the bulk carrier vessels, from a loss of $640,000 for the year ended December 31, 2009 to a loss of $572,000 for the year ended December 31, 2010, represents normal fluctuations in the activity of the vessels combined with a slight recovery in the markets in which these vessels operate compared to the steep downturn in that market in late 2008 and 2009.

Non-controlling ~~interest~~ ~~represents the amount of income or loss allocable to other parties where their share has been included in our consolidated results of operations.~~interest

~~The comparative~~Non-controlling ~~effect~~interest onrepresents ~~our~~the ~~allocation~~amount of net income or loss allocable to ~~the~~other ~~non-controlling interest~~parties ~~holders~~where ~~between~~their ~~the~~share ~~year~~has ~~ended~~been ~~December~~included ~~31, 2008 and the year ended December 31, 2009, was primarily due to the difference~~ in ~~income~~our ~~for~~consolidated ~~the~~results ~~periods presented~~of operations.

The comparative effect on our allocation of net income or loss to the non-controlling interest holders between the year ended December 31, 2009 and the year ended December 31, 2010, was primarily due to the difference in net income or loss for the periods presented.

Liquidity and Capital Resources

As of December 31, ~~2009~~2010, we had cash of $187,~~267~~030,~~260~~642. Since inception through December 31, ~~2009~~2010, we have raised approximately $66,~~671~~154,~~485~~178, net of syndication costs of approximately $34,~~974~~880,~~235~~642, through the private placement of our limited partner units. The ~~As discussed above, the~~ funds from the offering were utilized primarily to ~~collateralize loans, the proceeds of which were used~~ to pay the first two of five installments to the shipyard, Fincantieri ~~for~~Cantieri ~~the~~Navali ~~construction~~Italiani ofSpA ~~our~~(“Fincantieri”) ~~AHTS~~in ~~vessels~~Italy, ~~fund~~ for the ~~potential~~construction ~~acquisition~~ of ~~the~~our ~~chemical~~AHTS ~~tanker,~~vessels and to pay for related expenditures as shown in our consolidated financial statements. The payments to Fincantieri were made via draws on our Berenberg Facility attributable to each AHTS SPV which then paid Fincantieri. The pledged funds have now been utilized to repay the loans under the Berenberg Facility. The net result of this is that the majority of the funds raised were ultimately used to pay the first two of five installments to Fincantieri for the construction of the AHTS vessels.

43As delivery of the AHTS vessels approached, funds were drawn under the RHKG Loan Agreements and the Hartmann Loan Agreement to fulfill a portion of our outstanding capital contributions in seven of our nine AHTS SPVs. Upon the deliveries of the AHTS vessels, funds were drawn on the Senior Loan. Those funds were used to pay outstanding installments on each vessel to Fincantieri. The remaining funds, where available, were utilized to pay for outfitting costs for the AHTS vessels and to provide operating reserves for the AHTS SPVs. The balance of the outstanding installments to Fincantieri, where outstanding amounts existed, and vessel outfitting costs and operating reserves for the AHTS SPVs, were funded from the capital contributions made by our non-controlling interest and us, either through capital contributions from our limited partners or through the proceeds from draws under the RHKG Loan Agreements and Hartmann Loan Agreement. In addition to these financing arrangements, we entered into the Hartmann Asia Loan Agreement on August 31, 2010 to provide liquidity for operating activities to our AHTS SPV Isle of Usedom, and the other eight AHTS SPVs via loans between the AHTS SPVs. During October 2010, we increased our borrowings under the Hartmann Asia Loan Agreement, and the additional proceeds were used by our AHTS SPVs to make loans to one of FLTC Fund I’s AHTS SPVs (“FLTC Fund I Notes Receivable”) to effect an equitable distribution of the proceeds available under the Senior Loan among all twelve AHTS SPVs given the 75% of net vessel investment cost limitation on the total proceeds available under the Senior Loan.

~~Upon~~In ~~the deliveries~~December of2010, ~~UOS~~following ~~Atlantis,~~delivery ~~UOS~~of ~~Challenger,~~all ~~and~~twelve ~~UOS~~AHTS ~~Columbia~~vessels (the “Fleet”), ~~funds~~we ~~were~~entered ~~drawn on~~into the ~~Senior~~Working ~~Loan.~~Capital ~~The~~Facility ~~funds~~with ~~were~~Nord/LB ~~used~~ to ~~effect~~assist ~~the~~in ~~delivery~~start-up costs of the recently delivered vessels~~. For~~ given the ~~first~~inconsistent ~~two~~utilization ~~vessels,~~experienced ~~the~~during ~~outstanding~~that ~~balances~~time onperiod. The ~~loans~~terms ~~from~~of ~~Reederei Hartmann~~the ~~were~~Working ~~repaid,~~Capital ~~and~~Facility ~~the~~require ~~fifth~~that ~~and~~we ~~final~~pursue ~~installments~~the onsale of two of the Fleet’s vessels ~~were paid~~on toa ~~Fincantieri.~~best ~~For~~efforts ~~UOS~~basis ~~Columbia~~by December 30, 2011, unless additional capital contributions or the ~~funds~~granting ~~were~~of ~~used~~one toor ~~pay~~more shareholder loans in the ~~third~~minimum amount of $8, ~~fourth~~283,125 ~~and~~(EUR ~~fifth~~6,250,000) ~~installments~~is made to ~~Fincantieri.~~our InAHTS ~~each~~SPVs ~~case~~by December 31, ~~the~~2011. We ~~remaining~~are ~~funds were~~currently ~~utilized~~reviewing topotential ~~pay~~offers ~~for~~in ~~outfitting~~conjunction ~~costs~~with ~~for~~market ~~the~~conditions ~~AHTS~~to ~~vessels~~determine ~~and~~the tobest ~~provide operating~~course ~~reserves~~of action for the ~~AHTS~~Fleet ~~SPVs~~overall related to this “best efforts” provision.

Operating Cash Flows

Operating activities ~~used~~produced a net use of cash of approximately $216,~~658~~106,000 for the year ended December 31, ~~2009~~ 2010, as compared to net cash ~~provided~~used of approximately $12,~~036~~658,000 for the year ended December 31, ~~2008~~2009, for an increase in net cash used of approximately $313,~~694~~448,000. Net cash used in operations increased between periods primarily due to our additional vessel deliveries and related costs, as well as increases in accounts receivable due from charterers. During the year ended December 31, 2009, accounts payable and ~~cash~~accrued ~~lost~~expenses inincreased ~~operations.~~approximately ~~These~~$9,311,000 ~~increases were~~related ~~partially~~to ~~offset~~our byvessels ~~additional~~under construction, whereas accounts payable and accrued expenses ~~from~~increased approximately $153,000 during the year ended December 31, 2010, indicating the use of cash to pay accrued expenses upon delivery of our AHTS vessels. These effects were offset somewhat by increases in ~~operation~~ accrued interest payable, aswhich ~~well~~is asrelated ~~additional~~to ~~accruals~~increased ~~associated~~borrowings ~~with~~between ~~our~~the ~~reorganization~~two ~~and registration~~periods in connection with ~~the~~our ~~SEC~~additional delivered vessels.

Investing Cash Flows

Investing activities used cash of approximately $88329,~~154~~501,000 for the year ended December 31, ~~2009~~2010, as compared to $3888,~~142~~154,000 for the year ended December 31, ~~2008~~2009, for an increase in net cash used of approximately $50241,~~012~~347,000. This was due primarily to the use of approximately $~~104~~304,~~116~~313,000 for advances for vessel acquisitions and construction costs induring ~~2009~~the inyear ~~excess~~ended ofDecember ~~that~~31, ~~used in 2008~~2010, the majority of which was related to the deliveries of ~~our~~the ~~three~~last six AHTS vessels, the UOS Discovery, UOS Endeavour, UOS Explorer, UOS Freedom, UOS Liberty and UOS Enterprise in ~~2009.~~February, ~~Additionally~~March, on ~~board~~June ~~equipment~~and ~~totaling~~July ~~approximately~~2010, in comparison to $11132,~~088~~886,000 ~~was~~for ~~purchased~~the three vessels delivered during the year ended December 31, 2009, the UOS Atlantis, UOS Challenger and UOS Columbia, and the construction installments paid on the remaining six vessels. Additionally, ~~During~~during the year ended December 31, ~~2008~~2009, ~~proceeds of~~restricted cash provided approximately $355,~~000~~967,000 ~~were~~toward ~~provided~~investing byactivities, ~~the~~and ~~sale~~due to our use of anthe ~~AHTS~~restricted ~~vessel~~cash in 2009 to ~~FLTC Fund~~fund I.our ~~There~~capital ~~were~~contributions noto ~~corresponding~~the ~~dispositions~~AHTS ~~during~~SPVs, ~~the~~we ~~year~~no ~~ended~~longer ~~December 31,~~hold ~~2009.~~restricted cash. These factors were partially offset by decreases in the purchase of on board equipment of $2,565,000, and a decrease of $947,000 in amounts due from related parties ~~between~~comparing the two periods,. In ~~and~~the afourth ~~decrease~~quarter inof ~~restricted~~2010, ~~cash~~our AHTS SPVs loaned one of FLTC Fund I’s AHTS SPV’s approximately $6817,~~870~~465,000 ~~from~~to ~~the~~achieve ~~recording~~an equitable distribution of the ~~release~~proceeds byavailable ~~Berenberg~~under ~~Bank~~the ~~of pledged~~Senior ~~cash~~Loan ~~for~~among ~~loans~~all ~~related~~twelve toAHTS SPVs given the ~~nine~~75% ~~AHTS~~of ~~vessels,~~net ~~resulting~~vessel ininvestment cost limitation on the ~~recognition~~ oftotal ~~cash~~proceeds ~~provided~~available byunder ~~investing~~the ~~activities~~Senior Loan. The note receivable is fully reserved.

Financing Cash Flows

Net cash provided by financing activities was approximately $~~104~~335,~~131~~109,000 for the year ended December 31, ~~2009~~2010 as compared to approximately $35104,~~698~~131,000 for the year ended December 31, ~~2008~~2009. The ~~difference~~increase of $230,978,000 is primarily related to increased financing activity with the deliveries of ~~our~~the ~~three~~remaining AHTS vessels. The indeliveries ~~2009~~of UOS Discovery, UOS Endeavour, UOS Explorer, UOS Freedom, UOS Liberty and UOS Enterprise and the related proceeds drawn on the Senior Loan of $~~150~~278,~~701~~691,000, and athe ~~loan~~proceeds ~~from~~drawn under the RHKG Loan Agreements and the Hartmann ~~Reederei~~Loan ~~related~~Agreement through which we funded our capital contributions to the ~~delivery of~~AHTS ~~the~~SPVs ~~third~~Langeoog, ~~vessel~~Amrum, Sylt, Wangerooge, Neuwerk and Usedom of $731,~~618~~920,000. ~~Additionally,~~occurred during the year ended December 31, ~~2008~~2010, in comparison with $3150,~~783~~701,000 ~~was~~of ~~used~~Senior Loan proceeds drawn in the same period of 2009 for ~~deferred~~the ~~loan~~deliveries ~~fees~~of UOS Atlantis, UOS Challenger and inUOS ~~2009~~Columbia, and only $107,618,000 ~~was~~ ~~used.~~drawn ~~These~~under ~~effects~~the ~~were~~applicable ~~partially~~RHKG ~~offset~~Loan byAgreement ~~the~~through ~~net~~which ~~repayments~~we onfunded ~~the Berenberg~~our ~~Facility~~capital ~~related~~contribution to ~~our~~the ~~nine~~ AHTS ~~vessels~~SPV Isle of ~~$51~~Baltrum. In addition,~~796,000~~ ~~and~~during ~~repayment of~~the ~~related~~year ~~party~~ended ~~loans~~December ~~which~~31, ~~funded~~2010, ~~the~~proceeds ~~fourth~~of ~~installments~~$26,400,000 towere ~~the~~drawn ~~shipyard~~under ~~for UOS~~our ~~Atlantis~~Hartmann ~~and~~Asia ~~UOS~~Loan ~~Challenger~~Agreement, ~~totaling~~ $113,~~328~~097,000. Inwas ~~addition,~~drawn ~~principal repayments~~under tothe Nord/LB ~~utilized~~Revolving ~~cash~~Credit ofFacility ~~approximately~~(defined below), and $59,~~233~~940,000 was drawn on the Working Capital Facility, and these facilities were not in place during the year ended December 31, 2009.

~~Contributions from~~Also ~~partners~~contributing ~~were~~to ~~approximately~~the increase was a decrease in repayments net of amounts drawn on our related party liabilities of $611,~~230~~308,000. During ~~for~~ the year ended December 31, 2009, cash of approximately $54,451,000 was utilized in net repayments on the Berenberg Facility, and as ~~compared~~we ~~with~~no ~~approximately~~longer utilize the Berenberg Facility, there were no similar repayments in the current year. In addition, during the year ended December 31, 2010, our non-controlling interest contributed $1610,~~355~~798,000 ~~for~~to the AHTS SPVs and received no distributions, and in contrast, only $8,963,000 was received and distributions of $690,000 were recognized to the non-controlling interest during the year ended December 31, ~~2008~~ 2009.

~~Financing Arrangements~~These activities were offset slightly by principal repayments to Nord/LB in respect of the Senior Loan of $25,160,000 during the year ended December 31, 2010, versus only $5,233,000 in principal repayments during the year ended December 31, 2009. Contributions from partners were approximately $389,000 for the year ended December 31, 2010, as compared with approximately $6,230,000 for the year ended December 31, 2009. We paid $1,966,000 in syndication costs for the year ended December 31, 2010 and there were no payments in the year ended December 31, 2009.

Berenberg Facility

In November 2006, we entered into the Berenberg Facility with Berenberg Bank, a German financial institution, allowing for borrowings up to $37,839,120 (EUR 26,400,000). The Berenberg Facility was amended in March and May 2007, increasing the available borrowings to $72,094,990 (EUR 50,300,000) and extending the maturity date to September 2010. The remaining terms of the Berenberg Facility were not materially changed.

Under the Berenberg Facility, we were required to maintain compensating balances as security for the repayment of the borrowings under such facility. The compensating balances were required to be equal to or greater than the amounts drawn by our German Subsidiary and were used to pay deposits on the acquisition and construction of our AHTS vessels. The Berenberg Facility was funded in multiple tranches with each tranche being directly related to a single AHTS vessel.

Interest under the Berenberg Facility was calculated based on the one-month EURIBOR rate plus a margin of 0.35%. The weighted-average effective interest rate as of December 31, 2009 and December 31, 2008 was 0% and 3.97%, respectively. Interest was due quarterly but was rolled into the principal amount instead of being paid. Principal payments were due on each tranche upon the earlier of the delivery date, sale of the related vessel or September 30, 2010.

The compensating balances represented the original tranche balance plus interest earned since the original deposit date. The tranche balance represented the original loan plus all incurred interest which was rolled into the new loans upon maturity which was usually three months. As the interest rate earned on the compensating balances was less than the interest charged on the tranche balance, the compensating balances did not fully offset the outstanding tranche balances.

Upon the deliveries of UOS Atlantis and UOS Challenger, the restricted cash related to the compensating balances was used to repay the majority of the outstanding loans related to the AHTS vessels with operating cash used to complete the repayment. Additionally, in July 2009, we completed repayment of the remaining tranches and accrued interest under the Berenberg Facility utilizing the restricted cash balances combined with approximately $500,000 of cash on hand and contributions from new limited partners. The repayments result in the reduction and then the complete elimination of our restricted cash over the course of the repayments, and a reduction in our current and long-term debt. As of December 31, 2009, there were no borrowings and correspondingly no compensating balances held as restricted cash. As of December 31, 2008, borrowings of $56,255,375 (EUR 39,905,920) were outstanding, and the related compensating balances were $55,967,374 (EUR 39,701,620). We do not intend to utilize the Berenberg Facility in the future.

RHKG Loan Agreements

In late January 2010 and in March 2010, our German Subsidiary entered into four loan agreements with Reederei Hartmann, which is the non-controlling interest holder of our AHTS SPVs (the “RHKG Loan Agreements”). Each of the agreements is related to a corresponding AHTS SPV, and provides for loans equal to the remaining amount of capital outstanding from our German Subsidiary to the AHTS SPV to which the agreement relates. The execution of the agreements and the subsequent recognition of the contribution of capital by the AHTS SPV results in our satisfying the capital contribution in the full amount called for under the Company Agreement of the respective AHTS SPV.

These four agreements relate to the AHTS SPVs Isle of Baltrum, Isle of Langeoog, Isle of Amrum, and Isle of Wangerooge, and under these agreements, loans totaling $31,604,334 (EUR 22,780,000) were made from Reederei Hartmann to our German Subsidiary. In connection with Langeoog, Amrum and Wangerooge, the loan proceeds were paid directly to the respective AHTS SPV, thereby fulfilling the remaining capital contribution obligations of our German Subsidiary with respect to each of those AHTS SPVs. The loan agreement for the AHTS SPV Isle of Baltrum differs slightly from the others in that the event giving rise to our liability is the assumption of the AHTS SPV’s liability to Reederei Hartmann in the amount of $7,752,459 (EUR 5,315,000) as of October 2, 2009, in exchange for being credited with making a capital contribution to Isle of Baltrum in such amount.

Each of the four RHKG Loan Agreements currently in place matures 5 years from the date of signing, with maturity dates therefore falling between January and March 2015 for the agreements currently in place. The agreements each call for interest to be calculated at 6% per annum, due annually at each anniversary date of signing. There is no penalty for pre-payment of all or any portion of the loans prior to the end of the respective loan periods. The terms of the agreements include the granting of a security interest in our interest in the corresponding AHTS SPV, and in the dividends from the AHTS SPV arising from the pro-rata percentage of the loan amount as compared to our total share capital.

Under the RHKG Loan Agreements, if additional financing is granted by Nord/LB to one of the AHTS SPVs to which an RHKG Loan Agreement relates via an increase in the amount guaranteed by SACE under the Senior Loan, the RHKG Loan Agreements state that our German Subsidiary shall use its best endeavors to have the AHTS SPV receiving the proceeds distribute funds from the financing to our German Subsidiary sufficient to allow it to repay the RHKG Loan Agreement.

We are subject to various warranties, representations, and covenants under the RHKG Loan Agreements, such as limitations on our entering into asset dispositions or restructuring arrangements unreasonably detrimental to Reederei Hartmann’s security interest in the AHTS SPVs, and the reserving of distributions received from an involved AHTS SPV for repayment of the related RHKG Loan Agreement.

In connection with each of the loans from RHKG with respect Isle of Langeoog, Isle of Amrum, and Isle of Wangerooge, RHKG obtained the funds for their loan to our German Subsidiary pursuant to a loan on nearly identical terms from Fincantieri, the shipyard constructing the vessels. It is anticipated that RHKG will enter into similar loan agreements with our three remaining AHTS SPVs that have not taken delivery of their respective AHTS vessels. However, no assurances can be given that Fincantieri will continue to loan RHKG the funds necessary to secure delivery of these final three vessels, or that RHKG will continue to loan our German Subsidiary such funds on acceptable terms or at all.

Nord/LB Facility

On December 19, 2008, we entered into a $602,802,981 (EUR 420,570,000) senior loan facility (“Senior Loan”) with Nord/LB as administrative agent and lender, with a term of 12 years from the delivery of each ship. The proceeds from the loan were initially used to fund preconstruction costs (“Pre-Delivery Facility”), outstanding balances due to the shipyard at delivery and working capital requirements of each AHTS SPV. A post-delivery credit facility (“Revolving Credit Facility”) in the amount of $120,560,596 (EUR 84,114,000) can also be used to extend the Senior Loan from 12 to 15 years. However, in no case can the total loans be in excess of 75% of the aggregate investment costs of all vessels, which is defined to include the construction price, building supervision, financing, initial equipment and other costs, of all the ships covered by the Senior Loan. Additionally, the Senior Loan conditions require, among other things, that amounts sufficient to cover operating costs and all amounts due and payable under the Senior Loan for a one year period be secured by each AHTS SPV before any dividends can be considered.

The Senior Loan is a fleet financing arrangement which covers all our AHTS vessels plus three AHTS vessels being purchased by FLTC Fund I. The 12 AHTS vessels serve as the collateral for the Senior Loan. In connection with the Senior Loan, a commitment fee of 0.20% to 0.45% is due semi-annually in arrears as determined by our bank internal rating class based on the unused Senior Loan balance and the elapsed days within the year. An agency fee of $14,333 (EUR 10,000) per ship is due each year payable at the end of each quarter until the delivery of the applicable ship. After the delivery of the applicable AHTS vessel, the agency fee, payable quarterly, is $7,167 (EUR 5,000) per year per vessel until the Senior Loan is paid in full. There is also a financial guarantee for up to 70% of the loan balance issued by SACE S.P.A. of Roma, Italy, which is the Italian export credit and reinsurance agency.

Interest on the borrowings is based upon the EURIBOR, the Euro Interbank Offered Rate. For the portion of the Senior Loan not guaranteed by SACE S.P.A., the applicable interest rate is EURIBOR plus 1.375% per annum plus a fixed funds cost determined prior to each drawdown. For the portion of the Senior Loan that is guaranteed by SACE S.P.A, the applicable interest rate is EURIBOR plus 1.375% per annum. With respect to the Revolving Credit Facility, the applicable interest rate is (i) EURIBOR plus 1.600% per annum or (ii) the lenders’ funding costs, as conclusively to be agreed and determined by the lenders, plus 1.600% per annum. Upon the fifth anniversary of the Senior Loan, each interest rate will be subject to renegotiation. Interest incurred before the delivery of each AHTS vessel will be rolled into the loan balance of the corresponding tranche of the Senior Loan until ship delivery up to a maximum of $1,433,300 (EUR 1,000,000). If interest incurred exceeds $1,433,300 (EUR 1,000,000), the excess interest will be due at each interest payment date which can be every three to six months.

We accepted a drawdown on the Senior Loan on February 25, 2009 related to the delivery of UOS Atlantis totaling $44,689,067 (EUR 35,047,500). On May 28, 2009, UOS Challenger was delivered to our AHTS SPV MS Norderney. In connection with the delivery, we accepted a drawdown on the Senior Loan on May 25, 2009 totaling $49,080,519 (EUR 35,047,500). On October 5, 2009, UOS Columbia was delivered to our SPV Isle of Baltrum, and we accepted a drawdown totaling $51,120,284 (EUR 35,047,500) on the Senior Loan on October 2, 2009 related to the pending delivery. The proceeds from the drawdowns were used to pay the outstanding installments to Fincantieri totaling $33,394,067 (EUR 26,201,700), $37,098,837 (EUR 26,491,600), and $49,179,033 (EUR 33,716,600), respectively. With respect to the first and second vessels, a portion of the proceeds was used to repay the advances from Reederei Hartmann totaling $4,698,317 (EUR 3,686,400) and $5,150,531 (EUR 3,677,900), respectively, plus accrued interest thereon. The remaining cash from each of the drawdowns was used to fund operations and provide cash reserves to the respective SPV for future operations.

At December 31, 2009, a total of $145,468,080 (EUR 101,491,719) was outstanding under the Senior Loan with an effective interest rate of 2.791%. The outstanding balance will be due in full in February 2021. During the year ended December 31, 2009, we incurred interest of $2,546,281 (EUR 1,825,815) related to the drawdowns on the Senior Loan.

Amounts drawn on the Pre-Delivery Facility of the Senior Loan require either that each AHTS SPV is fully funded based on the capital as called for in the AHTS SPV company agreements, or provision of a guarantee acceptable to Nord/LB to provide assurance of repayment of the Pre-Delivery Facility. A guarantee from Reederei Hartmann, our non-controlling interest holder and the 25% owner of the three AHTS SPVs of FLTC Fund I (“Hartmann Guarantee”) in the amount of $45,932,786 (EUR 32,046,875) was outstanding at December 31, 2009. There were no guarantees outstanding at December 31, 2008.

As of December 31, 2009, the terms of the Hartmann Guarantee were being renegotiated between Reederei Hartmann and Nord/LB. The main subject of the negotiations was the form of collateral to be provided under the guarantee by Reederei Hartmann to Nord/LB. Nord/LB had delayed draws on the Pre-Delivery Facility under the Senior Loan, resulting in our being unable to make timely progress payments to Fincantieri. Due to the delay, a number of progress payments which were otherwise due to be paid to Fincantieri under the shipbuilding contracts with respect to the remaining vessels to be delivered had not been paid. As a result, we were not in compliance with the terms of the remaining shipbuilding contracts and Fincantieri would have had the right to cease construction activities on the remaining vessels. However, Fincantieri acknowledged the delay and indicated to us that it does not intend to cease construction pending resolutions of these matters. In addition, Fincantieri has not taken any action under the shipbuilding contracts to demand payment. As a result of these missed payments, we were not in compliance with certain covenants of our Senior Loan with Nord/LB as of December 31, 2009, however such non-compliance did not represent and event of default under the loan document. Nord/LB is aware that the payments have not been made, and has not taken any action under the Senior Loan related to the non-compliance.

The resolution to this situation is ongoing, and involves the granting of loans from Reederei Hartmann to our German Subsidiary under the RHKG Loan Agreements described above and the amendment of the shipbuilding contracts to postpone the installment payments due under the contracts until delivery of the applicable AHTS vessel and to provide for interest due to Fincantieri on the outstanding installment payments due at a rate based on the three-month EURIBOR plus 2%, currently 3.00%. We are also pursuing potential additional financing from Nord/LB via an increase of the amount guaranteed by SACE under the Senior Loan, but the outcome of this effort is unknown as of the date of filing. If obtained, we anticipate that this financing would allow us to repay the RHKG Loan Agreements, either in full or partially, via a distribution from the AHTS SPV to our German Subsidiary, which would then use those funds to effect repayment of all or part of the RHKG Loan Agreement balances. If we are unable to obtain this additional financing, or are unable to further achieve a distribution to our German Subsidiary allowing us to repay the RHKG Loan Agreements or a portion thereof, it could impact the timing of distributions to investors due to likely differences in terms between the RHKG Loan Agreements and any potential additional Nord/LB financing. The RHKG Loan Agreements call for a five year repayment term and the reserving of dividends from the AHTS SPV’s for this purpose. The current Nord/LB financing has a significantly longer payment term of ten to twelve years, and the terms regarding restrictions on our use of dividends from the AHTS SPVs are less prohibitive than those under the RHKG Loan Agreements. However, there can be no assurances that the terms of any additional advances under the potential additional Nord/LB financing will be the same as the current terms.

UOS Discovery was delivered to our AHTS SPV Isle of Langeoog on February 16, 2010. Just prior to the delivery, we funded capital totaling $7,339,130 (EUR 5,350,000) to Isle of Langeoog, using proceeds from the RHKG Loan Agreement for Isle of Langeoog. In anticipation of the delivery, we accepted a drawdown on the Senior Loan on February 15, 2010 totaling $47,790,771 (EUR 35,047,500). Due to the ongoing negotiations mentioned above between us and Fincantieri, at the time of delivery, the third and fourth installments under the shipbuilding contract had not yet been paid under the Pre-Delivery Facility. Therefore, the proceeds from the drawdown were used to pay the third, fourth and fifth installments to Fincantieri totaling $45,873,986 (EUR 33,641,820), and accrued interest on the third and fourth installments. The remaining proceeds were used to provide cash reserves to the respective SPV for remaining outfitting costs and future operations.

~~Additionally, on~~Recent March 11 and March 15, 2010, the UOS Endeavour and the UOS Explorer were delivered to our AHTS SPVs Isle of Amrum and Isle of Wangerooge, respectively. Just prior to delivery, we funded capital to each of the two AHTS SPVs totaling $8,246,150 (EUR 6,050,000) and $8,266,595 (EUR 6,065,000), respectively, using proceeds from the respective RHKG Loan Agreements for Isle of Amrum and Isle of Wangerooge. In anticipation of the deliveries, we accepted drawdowns on the Senior Loan to each AHTS SPV on March 10 and March 12, 2010, respectively, related to the upcoming deliveries each totaling $47,629,553 (EUR 35,047,500) and $47,871,380 (EUR 35,047,500), respectively. As the third and fourth installments under the shipbuilding contracts had not yet been paid, the proceeds from each of the drawdowns were used to pay the third, fourth and fifth installments to Fincantieri totaling $50,233,960 (EUR36,963,915) and $52,283,121 (EUR38,277,415), respectively, and accrued interest due on the delayed installments. The remaining proceeds were used to provide cash reserves to the respective SPV for remaining outfitting costs and future operations.Developments

~~A guarantee~~The ~~commission~~consolidated offinancial 1statements presented in Item 8.~~375%~~ ~~per~~Financial ~~annum~~Statements isand ~~due~~Supplementary Data, have been prepared on the assumption that we will continue as a going concern. As discussed in greater detail in Item 8. Financial Statements and Supplementary Data under Note 2. Going Concern of our Notes to Consolidated Financial Statements, we failed to make certain quarterly payments due during March 2011 under our Senior Loan entered into on December 19, 2008 with Nord/LB, onthrough ~~the~~which ~~loans~~we ~~provided during~~financed ~~the~~our ~~pre-delivery~~AHTS ~~stage~~vessel acquisitions. The failure to make these quarterly payments constitutes an Event of ~~each~~Default ~~ship~~under upthe Senior Loan. In addition to aour ~~loan~~Senior ~~balance~~Loan ofwith ~~$350~~Nord/LB,~~208,000 (EUR~~ ~~240~~we entered into the Working Capital Facility with Nord/LB on December 6,~~000,000)~~ 2010. Due ~~The~~to ~~guarantee~~the ~~commission~~Event isof ~~due~~Default, ~~and~~Nord/LB ~~payable~~has ~~each~~the ~~quarter~~right ~~that construction~~to ~~payments~~declare ~~are~~the ~~outstanding~~entire upamount of the Nord/LB Loans to be immediately due and ~~including~~payable by written notice to us. As of the date ~~the construction~~of ~~payments~~this ~~are~~Form ~~made.~~10-K, AsNord/LB nohas ~~construction~~not ~~payments~~notified ~~have~~us ~~been outstanding~~of ~~under~~any ~~the~~such ~~Pre-Delivery~~intent ~~Facility,~~to noaccelerate ~~related~~the ~~guarantee~~amounts ~~commissions have~~outstanding ~~been~~under ~~incurred~~the Nord/LB Loans.

WeThe ~~are subject~~Event toof ~~various~~Default ~~covenants~~was ~~associated~~preceded ~~with~~by the ~~Senior~~political ~~Loan,~~and ~~associated,~~financial ~~for example,~~unrest ~~with~~in ~~the~~Egypt ~~payment~~during ofFebruary ~~dividends~~2011, which exacerbated the ~~amount~~already oftight ~~capital~~liquidity ~~infusions~~due ~~from outside~~to ~~investors~~several ~~into~~vessels ~~the~~being ~~AHTS~~delivered ~~SPVs,~~in ~~limits~~2010 onand ~~additional~~not ~~financing, restrictions~~immediately ofentering ~~cargo~~into ~~and~~charters. The ~~weapons,~~situation ~~structure~~in ~~and~~Egypt ~~duration~~resulted ofin ~~charters~~delayed ~~related~~charter payments to ~~the~~ ~~ships~~three ~~and~~of ~~the~~our ~~establishment~~AHTS ofSPVs, ~~cash~~as ~~accounts~~these three AHTS SPVs are engaged in charters with ~~Nord/LB~~companies ~~for~~with ~~the~~substantial ~~cash generated~~ties ~~from~~to ~~operations~~Egypt. In addition, one of ~~each~~the AHTS ~~vessel~~SPVs ~~until~~owned ~~the~~by ~~Senior~~FLTC ~~Loan~~Fund I is ~~paid~~also ~~in full~~chartered to a company with substantial ties to Egypt.

~~Chemical Tanker~~As ~~Transaction~~a result of these events, we are working to restructure our debt obligations with Nord/~~Schulte~~LB. In ~~Group~~this ~~Facility~~regard, we are negotiating with Nord/~~Kronos~~LB to defer some principal payments under the Nord/LB Loans or otherwise resolve the Event of Default. The Senior Loan includes complex terms and guarantees by SACE of Roma, Italy, which is the Italian export credit and reinsurance agency (“SACE”), which have added complexity to the discussions, lengthening the process. While we continue to work with Nord/LB on resolving the Event of Default and our liquidity issues, there can be no assurances that Nord/LB will ultimately agree to a deferral or any other resolution of the Event of Default on terms that are acceptable to us or at all, or that we will be able to otherwise resolve our liquidity concerns to enable us to repay this overdue payments. Although Nord/LB has not moved to do so over the course of the past months, in the event Nord/LB were to accelerate all of our indebtedness under the Nord/LB Loans, we would be unable to repay such amounts and be subject to the remedies available to Nord/LB under the agreements, which include among other remedies the right to foreclose on the vessels pursuant to the mortgages on the vessels entered into in connection with the agreements. Due to the co-borrowing terms under the Nord/LB Loans, the potential liability includes that related to the AHTS SPVs owned by our affiliate, FLTC Fund I.

~~On November~~In ~~13,~~addition ~~2007, III~~ to Iresolving ~~IMS~~our ~~Holdings,~~immediate ~~LLC~~cash ~~(“IMS~~flow ~~Holdings”)~~issues, ~~the~~we ~~sole shareholder~~are ofpursuing ~~our~~alternative ~~general~~sources ~~partner,~~of ~~entered~~liquidity ~~into~~through athe ~~Memorandum~~issuance of ~~Agreement (“MOA”)~~debt ~~with~~or ~~the~~equity ~~Schulte~~securities, ~~Group relating~~ to ~~the~~ensure ~~acquisition~~that ofwe ~~the~~are ~~chemical tanker.~~able ~~Pursuant~~ to ~~the~~provide ~~MOA, IMS Holdings placed an order~~ for ~~the~~operations ~~chemical tanker~~and ~~through~~service the ~~Schulte~~debt ~~Group~~obligations ~~for~~of ~~the~~our ~~purchase~~AHTS ~~price of $41~~SPVs,~~500,000~~ and to ~~be paid~~address inthe ~~five~~remaining ~~equal~~capital ~~installments.~~contribution ~~The~~obligations ~~Schulte~~of ~~Group~~our ~~agreed~~German ~~to loan IMS Holdings up to $8~~Subsidiary,~~300,000~~ ~~for~~as ~~the~~defined ~~first installment payment (“Schulte Group Facility”)~~ and todescribed ~~facilitate~~below aunder ~~bank~~Discussion ~~guarantee for the second installment payment~~ of ~~$8,300,000.~~ ~~The~~Short- ~~Schulte~~and ~~Group~~Long-Term ~~has~~Liquidity ~~formed Anthos Shipping Co~~Needs. We ~~Limited~~are ~~(“Anthos”), a~~exploring ~~Cyprus~~various ~~SPV,~~alternatives toin ~~own~~this ~~the chemical tanker~~regard. We ~~The~~may ~~equity~~also ofseek ~~Anthos will be assigned~~ to ~~Kronos~~sell ~~upon~~additional ~~repayment~~AHTS ~~of the loan~~vessels, ~~retirement~~or ofenter ~~the~~into ~~bank~~sale-leaseback ~~guarantee facilitated~~or byother ~~the~~equivalent ~~Schulte~~transactions ~~Group and payment of all fees due~~ to ~~the~~raise ~~Schulte Group~~liquidity. However, ~~Kronos~~there ~~was~~can ~~not~~be ~~formed~~no atassurances ~~the~~that ~~time~~we ~~the~~will ~~MOA~~be ~~was~~able ~~signed;~~to ~~therefore,~~raise ~~the chemical~~any ~~tanker~~such ~~transaction~~additional ~~was~~funds ~~undertaken~~or ~~through~~sell anany ~~affiliate~~additional ofvessels ~~IMS Holdings~~ on ~~behalf~~terms ofacceptable ~~Kronos. As of December 31, 2009 and December 31, 2008, $8,300,000 had been paid toward the option~~ to ~~purchase~~us ~~the~~or ~~chemical~~at ~~tanker~~all.

~~IMS Holdings~~In ~~repaid~~addition ~~$3,000,000~~to on the ~~Schulte~~liquidity ~~Group~~shortfalls ~~Facility~~in ~~through~~our ~~its~~AHTS ~~affiliate to~~SPVs ~~the~~which ~~Schulte~~have ~~Group~~led byto ~~January~~our ~~15,~~efforts ~~2008,~~to innegotiate ~~compliance~~a deferral with ~~the~~Nord/LB ~~terms~~ of the ~~MOA.~~ Asprincipal ofpayments ~~December~~due ~~31,~~under ~~2008,~~the weSenior ~~had advanced $4~~Loan,~~278,164,~~ ~~including~~we ~~accrued interest,~~have toalso ~~IMS~~entered ~~Holdings~~into tothe ~~allow~~Hartmann ~~IMS~~Transfer ~~Holdings~~Agreement toeffective ~~provide~~July ~~funds~~1, to2011. This ~~its affiliate~~is tofurther ~~make~~discussed ~~the~~below ~~required~~under ~~payments~~this toitem ~~the Schulte Group~~ under the ~~MOA~~sub-caption ~~and other~~entitled ~~expenses~~RHKG ~~related~~Loan toAgreement ~~the~~and ~~option~~Hartmann toLoan ~~purchase~~Agreement ~~the~~and ~~chemical~~Related ~~tanker.~~Hartmann ~~An addendum~~Transfer toAgreement under the ~~MOA~~caption ~~was~~Financing ~~executed~~Arrangements in ~~July 2008 to extend~~ the ~~loan~~Liquidity ~~through November~~and ~~30,~~Capital ~~2008,~~Resources ~~extend~~section. The ~~the~~Hartmann ~~time~~Transfer ~~period~~Agreement ~~allowed~~resulted ~~for~~in ~~IMS~~satisfaction ~~Holdings~~of toloans ~~secure financing~~payable and ~~increase~~accrued ~~the~~expenses ~~amount~~totaling ofapproximately ~~possible liquidated damages. As of December 31~~$48, ~~2008~~000,000 nowhich ~~agreement~~represents ~~had~~the ~~been~~purchase ~~reached~~price onreceived afor ~~further extension of~~ the ~~terms~~interest ~~of the MOA, and IMS Holdings was technically~~ in ~~default~~the onAHTS ~~their~~SPVs ~~loan and required to pay liquidating damages~~transferred.

~~Effective April~~Financing 2009, we entered into an agreement whereby all of the rights retained by IMS Holdings’ affiliate, IMS Capital Partners, LLC (“IMS Capital Partners”) and IMS Holdings with respect to the chemical tanker pursuant to the MOA between IMS Holdings and Schulte Group were transferred to Kronos, the new obligor under an amended version of the MOA (“Amended MOA”) between Kronos and Conway Shipping I, Ltd. (“Conway”), an affiliate of the Schulte Group. As consideration for and to give effect to this transfer, we assigned the receivables from IMS Holdings through which the transaction was undertaken to IMS Capital Partners in exchange for the consent of IMS Capital Partners to the execution of the Amended MOA. This amount was credited by Kronos as additional paid in capital, and Kronos accepted the rights to the chemical tanker pursuant to the Amended MOA. The outcome left Kronos as the sole holder of all rights and obligations with respect to the potential acquisition of the chemical tanker and resulted in IMS Capital Partners and IMS Holdings each holding directly offsetting note obligations. By entering into a Note Cancellation Agreement, the note obligations between IMS Holdings and IMS Capital Partners were terminated.Arrangements

RHKG Loan Agreements and Hartmann Loan Agreement and related Hartmann Transfer Agreement

In February and March 2010, our German Subsidiary entered into the RHKG Loan Agreements with Reederei Hartmann. Each of the four agreements is related to a corresponding AHTS SPV, and provided commitments equal to the remaining amount of capital that was outstanding at the time of each agreement from our German Subsidiary to the applicable AHTS SPV. The execution of the agreements and the subsequent recognition of the contribution of capital by each such AHTS SPV resulted in our satisfying the capital contribution in the full amount called for under the Company Agreement of the respective AHTS SPVs, and satisfied the necessary funding under the terms of the Senior Loan, allowing for delivery of the respective vessel.

~~The Amended~~These ~~MOA~~four ~~was~~RHKG ~~entered~~Loan ~~into~~Agreements onrelate ~~April~~to ~~25,~~the ~~2009.~~AHTS ItSPVs ~~extended~~Isle ~~the term~~ of ~~the~~Baltrum, ~~loan and~~Isle ~~bank~~of ~~guarantee~~Langeoog, ~~through~~Isle ~~July~~of 30Amrum, ~~2010,~~and ~~increased~~Isle ~~the~~of ~~interest~~Wangerooge, ~~rate~~ and ~~the possible~~under ~~liquidated~~these ~~damages~~agreements, ~~required~~loans ustotaling to$31,604,334 ~~pay~~(EUR ~~a lump sum amount of $200~~22,780,000) ~~as a~~were ~~fee~~made ~~for~~from ~~providing~~Reederei ~~the~~Hartmann ~~extension~~to ofour ~~the~~German ~~bank~~Subsidiary. In ~~guarantee,~~connection ~~waived~~with ~~any~~the ~~prior default~~AHTS ~~and~~SPVs ~~clarified~~Isle ~~certain~~of ~~other~~Langeoog, ~~terms~~Isle of ~~the~~Amrum ~~original~~and ~~MOA.~~Isle ~~The~~of ~~interest~~Wangerooge, on the ~~Schulte~~loan ~~Group~~proceeds ~~Facility~~were ispaid ~~based~~directly onto the ~~three-month~~respective USAHTS ~~LIBOR~~SPV, ~~rate~~thereby ~~plus~~fulfilling ~~a margin~~the ofremaining ~~4.50%.~~capital ~~Interest~~contribution isobligations ~~due~~of ~~quarterly.~~our AsGerman ~~part~~Subsidiary ofwith ~~the~~respect ~~changes, the parties~~ to ~~the~~each ~~MOA~~of ~~were~~those ~~formally~~AHTS ~~changed~~SPVs. The toloan beagreement ~~between~~for ~~Kronos~~the inAHTS ~~place~~SPV Isle of ~~IMS~~Baltrum ~~Holdings and~~differs ~~Conway~~slightly infrom ~~place of~~ the ~~Schulte~~others ~~Group.~~in Asthat ~~a result of~~ the ~~amended~~event ~~MOA,~~giving ~~the payable~~rise to ~~Schulte~~our ~~Group~~liability ~~and~~is the ~~offsetting~~assumption ~~deposits~~of on the ~~chemical~~AHTS ~~tanker transaction~~SPV’s ~~were~~liability ~~recorded~~to onReederei Hartmann in the ~~books~~amount of ~~Kronos. At December 31~~$7, ~~2009~~752,459 a(EUR ~~total of $~~5,~~300~~315,000) ~~was~~as ~~outstanding~~of ~~under~~October ~~the~~2, ~~Schulte~~2009, ~~loan~~in ~~agreement~~exchange atfor anbeing ~~effective interest~~credited ~~rate~~with ofmaking ~~5.52%.~~a ~~During~~capital ~~the~~contribution ~~year~~to ~~ended~~Isle ~~December 31, 2009, we incurred interest~~ of ~~$297,023~~Baltrum ~~related~~in tosuch ~~the loan~~amount.

InEach ~~light~~ of the ~~global~~four ~~downturn~~RHKG inLoan ~~the~~Agreements ~~economy~~was ~~and~~to ~~the~~mature ~~resulting~~5 ~~decrease~~years infrom ~~charter rates~~the ~~for~~date ~~chemical~~of ~~tankers~~signing, ~~and~~with ~~product~~maturity ~~tankers~~dates intherefore ~~general,~~falling webetween ~~are~~February ~~currently re-evaluating~~and ~~our~~March ~~intentions~~2015. The ~~with~~agreements ~~respect~~called tofor ~~the~~interest ~~chemical~~to ~~tanker,~~be ~~and~~calculated ~~believe~~at ~~it is~~6% ~~unlikely~~per ~~that~~annum, wedue ~~will~~annually ~~complete~~at ~~the~~each ~~acquisition~~anniversary date of ~~the~~signing. The ~~tanker~~first ~~unless~~of ~~the shipyard~~these ~~constructing~~dates ~~the~~was ~~vessel~~to ~~agrees~~fall toon ~~significant~~February ~~concessions~~11, to2011; ~~include timing~~however, ofon ~~construction~~February ~~installments~~10, ~~and~~2011 anwe ~~adjustment~~entered tointo ~~the overall contract price. We have therefore recorded~~ an ~~impairment~~agreement towith ~~the~~RHKG ~~deposit on asset acquisition on our balance sheet~~ to ~~reduce~~defer the ~~carrying~~interest ~~value~~due ofunder ~~the~~these ~~asset~~four ~~to zero.~~loan ~~This~~agreements ~~results~~until inApril ~~the recognition of a loss on impairment of $9~~15,~~874,907~~ 2011. The ~~If we~~due dodate ~~formally~~for ~~forfeit~~the ~~our~~annual ~~option~~interest topayments ~~acquire~~under the ~~tanker,~~RHKG weLoan ~~expect~~Agreements towas ~~recognize gain~~subsequently onextended ~~the~~through ~~extinguishment~~June ~~of debt of $5~~30,~~300,000~~ ~~in a future period. The net result of this would be a loss of approximately $4~~2011,~~574,907,~~ ~~which~~with in the ~~end represents~~payments ~~liquidating~~due ~~damages~~for ofeach ~~$3,000,000~~subsequent ~~plus~~year ~~our~~being ~~capitalized~~unaffected ~~costs approximating~~by ~~$1,574,907~~the deferral.

IfThere ~~the chemical~~was ~~tanker~~no ~~were~~penalty ~~acquired,~~for itpre-payment ~~would~~of beall ~~through~~or ~~assignment~~any portion of the ~~equity~~loans ~~of Anthos~~prior to ~~Kronos upon~~ the ~~fulfillment~~end of the ~~obligations~~respective ofloan ~~the MOA~~periods. The ~~Under~~terms of the ~~current~~ ~~agreement,~~agreements ~~Kronos~~included ~~would fulfill~~ the ~~terms~~granting of ~~the~~a ~~MOA~~security ~~when~~interest ~~the~~in ~~second installment~~our ~~were~~ownership ~~due~~interest toin the ~~shipyard,~~corresponding ~~currently~~AHTS ~~scheduled~~SPV, and in ~~June~~the ~~2010.~~dividends ~~Upon~~from the ~~assignment~~ ofAHTS ~~the~~SPV ~~equity~~arising infrom ~~Anthos~~the topro-rata ~~Kronos,~~percentage ~~Anthos would become a wholly owned subsidiary~~ of ~~Kronos,~~the ~~and~~loan ~~its~~amount ~~operations~~as ~~would~~compared beto ~~reflected on~~ our ~~consolidated financial~~total ~~statements~~share capital.

~~The~~In ~~table below~~connection ~~includes~~with each of the ~~assets~~loans ~~and~~from ~~liabilities~~RHKG ~~recorded~~with onrespect ~~our~~to ~~consolidated~~the ~~balance sheet~~AHTS ~~related~~SPVs toIsle of Langeoog, Isle of Amrum, and Isle of Wangerooge, RHKG obtained the ~~option~~funds for its loan to ~~purchase~~our ~~the~~German ~~equity~~Subsidiary inpursuant ~~Anthos,~~to ~~associated~~a ~~debt with~~loan ~~Deutsche~~on ~~Schiffsbank~~nearly ~~and~~identical ~~other~~terms ~~expenses~~from ofFincantieri, ~~Kronos~~the shipyard constructing the vessels.

	December 31,			December 31,
	2009			2008
Cash and cash equivalents	$	956		$	—
Related party receivable		—			4,278,164
Deferred loan fees		—			222,316
Total assets		956			4,500,480
Accounts payable and other accrued liabilities		97,297			223,547
Due to related party		137,117			144,308
Schulte Group note payable		5,300,000			—
Total liabilities		5,534,414			367,855
Net assets	$	(5,533,458	)	$	4,132,625

On June 17, 2010, our German Subsidiary entered into the Hartmann Loan Agreement with Capt. Hartmann. Pursuant to the Hartmann Loan Agreement, a total of $8,147,896 (EUR 6,620,000) was loaned to our German Subsidiary. The loan proceeds were paid to our AHTS SPVs Isle of Sylt, Isle of Neuwerk, and Isle of Usedom, each of which had not yet had their vessels delivered to them, and resulted in the recognition of capital contributions from our German Subsidiary to each such AHTS SPV totaling $2,338,520 (EUR 1,900,000), $2,584,680 (EUR 2,100,000), and $3,224,696 (EUR 2,620,000), respectively.

These capital contributions funded by the proceeds of the Hartmann Loan allowed us to draw on the Senior Loan facility, and as a result, the vessels UOS Liberty, UOS Freedom, and UOS Enterprise were delivered on June 23, June 29, and July 2, 2010, respectively, to our AHTS SPVs Isle of Usedom, Isle of Neuwerk, and Isle of Sylt.

The Hartmann Loan Agreement was to mature five years from the date of signing. The agreement called for interest to be calculated at 6% per annum, due annually at the anniversary of the date of signing. There was no penalty for pre-payment of all or any portion of the loan prior to the end of the loan period. The terms of the agreement included the granting of a security interest in our ownership interest in the corresponding AHTS SPVs, and in the dividends from the AHTS SPVs arising from the pro-rata percentage of the loan amount as compared to our total share capital.

We were subject to various warranties, representations, and covenants under the RHKG Loan Agreements and the Hartmann Loan Agreement, such as limitations on our entering into asset dispositions or restructuring arrangements unreasonably detrimental to RHKG’s and Hartmann’s security interest in the applicable AHTS SPVs, and the reserving of distributions received from an involved AHTS SPV for repayment of the RHKG Loan Agreements and the Hartmann Loan Agreement.

~~Deutsche Schiffsbank~~At ~~Facility~~December 31, 2010, a total of $38,963,820 (EUR 29,400,000) was outstanding under the RHKG Loan Agreements. During the years ended December 31, 2010 and 2009, we incurred interest expense of $1,623,901 (EUR 1,222,909) and $111,184 (EUR 79,725), respectively, related to the RHKG Loan Agreements. Accrued interest of $1,726,381 (EUR 1,302,634) and $114,270 (EUR 79,725), respectively, was outstanding at December 31, 2010 and 2009.

~~On November~~At ~~20,~~December ~~2008~~31, ~~Kronos entered into a $30~~2010,~~000,000~~ ~~credit facility (“Deutsche Schiffsbank Facility”) with Deutsche Schiffsbank. The Deutsche Schiffsbank Facility also provided for~~ a ~~related~~total ~~guarantee facility~~ of ~~up to~~ $168,~~320~~773,~~000 under~~486 ~~which~~(EUR ~~Deutsche Schiffsbank would issue two separate guarantees in favor of the sellers of the chemical tanker~~6, ~~Nantong Mingde Heavy Industry Stock Co.~~620, ~~Ltd. and Jiangxi Topsky Technology Co., Ltd. (“Nantong Mingde”~~000). ~~The~~was ~~Deutsche Schiffsbank~~outstanding ~~Facility~~under ~~is to be drawn in multiple advances with~~ the ~~proceeds~~Hartmann ~~used to~~Loan ~~fund the construction and acquisition of the chemical tanker~~Agreement. During ~~Anthos is~~ the ~~current~~ ~~owner~~year ofended ~~the~~December ~~contract~~31, ~~to purchase the chemical tanker. Pursuant to the terms of the MOA~~2010, we ~~would~~incurred ~~take~~interest ~~ownership~~expense of ~~Anthos~~$287,162 ~~upon~~(EUR ~~fulfilling~~216,253) ~~the~~related ~~terms~~to of the ~~MOA.~~Hartmann ~~Each~~Loan ~~pre-delivery advance shall be repaid in full upon delivery of the chemical tanker to Anthos~~Agreement, ~~but~~and noaccrued ~~later~~interest ~~than March 31, 2012. Additionally, each delivery advance shall be repaid in 40 installments~~ of $~~500~~286,~~000~~600 ~~each~~(EUR ~~with~~216,253) ~~a balloon~~was ~~installment~~outstanding inunder the ~~amount~~Hartmann ofLoan ~~$10,000,000~~Agreement ~~payable~~ at ~~the~~December ~~time of the final $500,000 installment which can be no later than March~~ 31, ~~2022~~ 2010.

~~Interest on~~Effective ~~the~~July ~~Deutsche~~1, ~~Schiffsbank~~2011, ~~Facility~~we ~~shall~~entered beinto ~~paid~~the Hartmann Transfer Agreement in ~~arrears~~full onsatisfaction of the ~~last~~amounts ~~day~~due ~~of each~~under ~~applicable~~these ~~interest~~loans, ~~period.~~as Inwell ~~the~~as ~~event~~amounts ~~the~~due ~~interest~~under ~~period~~the isHartmann ~~longer~~Loan ~~than six~~discussed ~~months~~below, via the transfer of our entire 75% interest ~~shall~~in bethree ~~paid~~of ~~every~~our ~~six~~AHTS ~~months~~SPVs, ~~during~~Isle ~~such~~of ~~interest~~Baltrum, ~~period and~~Isle onof ~~the~~Langeoog, ~~last~~and ~~day~~Isle of ~~any~~Amrum, ~~such~~and ~~interest~~a ~~period.~~portion ~~Interest~~of onour ~~the~~interest ~~borrowings~~in ~~is based~~one ~~upon~~AHTS ~~LIBOR~~SPV, ~~the~~Isle ~~London~~of ~~Interbank~~Wangerooge, ~~Offered~~to ~~Rate~~Reederei Hartmann, ~~plus~~our ~~1.4%~~partner ~~per~~in ~~annum~~the ~~during each~~AHTS ~~interest~~SPVs, ~~period~~and its affiliate Hartmann Offshore.

~~Pursuant to~~The ~~the~~Hartmann ~~terms~~Transfer ofAgreement includes the ~~Deutsche~~assignment ~~Schiffsbank~~by ~~Facility,~~Capt. anHartmann ~~arrangement fee~~ of ~~$120,000~~ ~~was~~all ~~earned~~claims ~~and~~related ~~due~~to ~~as of~~ the ~~acceptance~~loans ofagainst ~~the~~our ~~financing~~German ~~commitment. Additionally,~~Subsidiary ~~in relation~~ to ~~the~~RHKG ~~advances~~ and the ~~guarantee~~assignment ~~facility,~~by ~~a commitment~~RHKG ~~fee at the rate~~ of ~~0.3%~~certain ~~per annum on the daily undrawn amount~~ of ~~such advance and unutilized amount of~~ the ~~guarantee~~claims ~~facility~~to ~~accrues~~Hartmann ~~from~~Offshore ~~the date of the Deutsche Schiffsbank Facility~~ to ~~and~~facilitate ~~including~~ the ~~date~~allocation of ~~payment thereof. Such fee is payable quarterly in arrears and on~~ the ~~last~~AHTS ~~day~~SPVs oftransferred ~~the~~between ~~commitment period~~RHKG ~~applicable to such advance. Further, a guarantee commission is payable quarterly in arrears at a rate equal to 1.4% per annum on the daily average maximum amount of the liabilities~~ and ~~obligations~~Hartmann ~~of Deutsche Schiffsbank under or pursuant to the guarantees to be issued by Deutsche Schiffsbank in favor of the sellers of the chemical tanker~~Offshore.

~~From~~The ~~the date~~Hartmann ofTransfer ~~transfer~~Agreement ofhas ~~ownership in Anthos to Kronos through~~ the ~~date~~effect of ~~payment~~bringing ~~of the~~our ~~second~~interest ~~installment~~in ~~for~~ the ~~chemical~~AHTS ~~tanker~~SPVs tofrom ~~Nantong~~a ~~Mingde~~75% ~~pursuant~~interest toin ~~the building~~nine ~~contract,~~AHTS ~~the~~SPVs ~~Deutsche~~to ~~Schiffsbank Facility will be secured by~~ a ~~cash collateral~~75% ~~account~~interest ~~with~~in afive ~~balance~~AHTS ~~of at least $7~~SPVs,~~560,000.~~ ~~Additionally,~~an ~~prior~~interest ~~to the delivery~~ of ~~the~~approximately ~~chemical~~36% ~~tanker,~~in ~~the~~Isle ~~Deutsche Schiffsbank Facility shall be secured by an assignment~~ of ~~the~~Wangerooge. The ~~chemical~~Hartmann ~~tanker~~Transfer ~~building~~Agreement ~~contract,~~results ~~the related refund guarantee issued by Bank of China Limited~~ in ~~favor~~satisfaction of ~~Anthos,~~loans apayable ~~pledge of the equity of Kronos~~ and aaccrued ~~guarantee~~expenses bytotaling ~~Anthos.~~$48,358,462 ~~Upon~~(EUR ~~delivery~~33,378,287), ofwhich ~~the~~is ~~chemical tanker,~~ the ~~Deutsche~~purchase ~~Schiffsbank~~price ~~Facility~~received ~~will~~for ~~be secured by a mortgage on~~ the ~~chemical~~ ~~tanker~~interest ~~including~~in the ~~related~~AHTS ~~deed~~SPVs ~~of covenants and deed of share charges~~transferred.

WeThe ~~are subject~~consideration received for the interests in the AHTS SPVs transferred pursuant to ~~various~~the ~~covenants~~Hartmann ~~associated~~Transfer ~~with~~Agreement consists of recognition of repayment of all amounts outstanding under the ~~Deutsche~~loan ~~Schiffsbank~~agreements ~~Facility~~including the related interest, ~~under~~ ~~which~~as wewell ~~must~~as ~~obtain~~recognition ~~consent~~of the satisfaction of ~~Deutsche~~payables ~~Schiffsbank~~related to ~~carry~~certain ~~out transactions~~expenses related to the loans, for total consideration of $48,358,462 (EUR 33,378,287), based on the exchange rate as of July 1, 2011, the effective date of the Hartmann Transfer Agreement. This amount is made up of borrowings under the loans of $42,594,720 (EUR 29,400,000) and payables related to expenses, including interest expense due under the loans, ~~but~~totaling ~~not~~$5,763,742 ~~limited~~(EUR 3,978,287). The amount of interest transferred in the AHTS SPVs pursuant to the Hartmann Transfer Agreement is equal to the capital contribution originally made by our German Subsidiary for the respective interests. For accounting purposes, it is expected that a gain will be recognized on the ~~following:~~transaction equal to our proportion of the losses previously recognized in these AHTS SPVs from inception through the transfer date. We expect that the gain recognized will be between $18,834,000 and $21,732,000 (EUR 13,000,000 and EUR 15,000,000), based on the exchange rate as of July 1, 2011.

·Hartmann ~~payment~~Asia ofLoan ~~dividends by Kronos;~~Agreement

·On ~~capital~~August ~~infusions~~31, ~~from~~2010, ~~outside~~our ~~investors~~AHTS SPV Isle of Usedom entered into ~~Kronos~~the orHartmann ~~its~~Asia ~~subsidiaries;~~Loan Agreement with Hartmann Asia. Pursuant to the Hartmann Asia Loan Agreement, Hartmann Asia loaned a total of $6,000,000 to our AHTS SPV Isle of Usedom. Related to the Hartmann Asia Loan Agreement, an inter-creditor agreement was also entered into between our AHTS SPV Isle of Usedom, Hartmann Asia, and Nord/LB on August 31, 2010, confirming the Hartmann Asia Loan Agreement as subordinate to the Senior Loan.

·On ~~additional~~September ~~financing~~27, 2010, Addendum No. 1 to the Hartmann Asia Loan Agreement was entered into, which increased the loan by $3,400,000, to a total of $9,400,000, and~~/or~~ ~~encumbrances~~extended the maturity date from September 30, 2010 to October 29, 2010. Addendum 2 was entered into on ~~Kronos;~~October 27, 2010, which increased the amount to be loaned under the Hartmann Asia Loan Agreement to $26,400,000, providing an additional $17,000,000 in funds, and extended the maturity date to January 1, 2013.

·The ~~making~~Hartmann ~~loans~~Asia ~~and~~Loan ~~advances~~Agreement calls for interest to be calculated at 6% per annum through December 31, 2010. In January 2011, Addendum 3 was entered into which reduced the interest rate from ~~Kronos~~6% to 4% effective January 1, 2011. There is no penalty for pre-payment of all or any portion of the loan prior to the end of the loan period. The loan proceeds will fund operating activities, including interest and redemption payments to Nord/LB, of the AHTS SPV Isle of Usedom, as well as providing funds for similar purposes to the other AHTS SPVs via loans between the AHTS SPVs.

As we are re-evaluating our intentions, and currently do not expect to complete the acquisition of the chemical tanker unless the shipyard constructing the tanker were to grant significant concessions, we are unlikely to utilize the Deutsche Schiffsbank Facility.

Acquisitions and Dispositions

During January 2008, we sold to FLTC Fund I our interest in three AHTS vessels in exchange for cash approximating the carrying value of our investments; therefore, no gain or loss was recognized on these transactions.

We currently have an agreement to purchase a chemical tanker, which if purchased, would be held through Kronos. As we currently do not expect to complete this acquisition, we have recorded an impairment to the option to purchase the tanker. Please refer to the information above under Item 1. Business under the caption Chemical/ Product Tanker Ships in the section entitled Our Ships.

~~Ongoing~~At ~~Capital Expenditures~~December 31, 2010, a total of $26,400,000 (EUR 19,920,018) was outstanding under the Hartmann Asia Loan Agreement. During the year ended December 31, 2010, we incurred interest expense of $384,311 (EUR 289,413), and accrued interest of $383,559 (EUR 289,413) was outstanding at December 31, 2010.

We had commitments to purchase the six remaining AHTS vessels under construction as of December 31, 2009. The cost of each vessel is denominated in EUR, and amounts in USD related to future payments are determined using the exchange rate as of December 31, 2009. The estimated cost of each of the remaining six AHTS vessels ranges from $53,989,544 (EUR 37,668,000) to $61,051,414 (EUR 42,595,000), for a total commitment for the remaining vessels of $355,692,028 (EUR 248,163,000). Under the AHTS shipbuilding contracts, installments are due in five stages based upon certain milestones being met during construction. Approximately 30% of the total construction costs require deposits, some of which are funded with equity while others will be funded from the Senior Loan or its Pre-Delivery Facility. Amounts drawn on the Pre-Delivery Facility require either (i) that each AHTS SPV is fully funded based on the capital as called for in the applicable SPV agreements or (ii) the provision of a guarantee acceptable to Nord/LB. As of December 31, 2009, we have incurred expenses of $881,006 (EUR 631,727) related to the guarantee. The Hartmann Guarantee in the amount of $45,932,786 (EUR 32,046,875) was outstanding at December 31, 2009.Facility

~~As mentioned~~On ~~above under Nord/LB Facility, as of~~ December 3119, ~~2009~~2008, ~~the~~we ~~terms~~entered ofinto ~~the~~a ~~Hartmann~~Senior ~~Guarantee were~~Loan ~~being~~up ~~renegotiated~~to ~~between~~a ~~Reederei~~maximum ~~Hartmann~~aggregate ~~and~~amount ~~Nord/LB. The main subject~~ of ~~the~~$557,381,421 ~~negotiations~~(EUR ~~was~~420,570,000) ~~the~~with ~~form of collateral to be provided under the guarantee by Reederei Hartmann to~~ Nord/LB. ~~Nord/LB~~as ~~had~~administrative ~~delayed~~agent ~~draws~~and ~~on the Pre-Delivery Facility under the Senior Loan~~lender, ~~resulting~~with ~~in our being unable to make timely progress payments to Fincantieri. Due to the delay,~~ a ~~number~~term of ~~progress~~ ~~payments~~12 ~~which~~years ~~were~~from ~~otherwise due to be paid to Fincantieri under~~ the ~~shipbuilding~~ ~~contracts~~delivery ~~with~~of ~~respect~~each ~~to the remaining vessels to be delivered had not been paid~~vessel. The AsSenior aLoan ~~result,~~is wecomprised ~~were not in compliance with the terms~~ of ~~the remaining~~a ~~shipbuilding~~pre-delivery ~~contracts~~loan ~~and~~up ~~Fincantieri would have had the right~~ to ~~cease~~ ~~construction~~$481,083,900 ~~activities~~(EUR on363,000,000) (the ~~remaining~~“Pre-Delivery ~~vessels. However~~Facility”), ~~Fincantieri acknowledged~~a ~~the~~post-delivery ~~delay~~facility ~~and~~loan ~~indicated~~up to us$557,381,421 ~~that~~(EUR ~~it does not intend to cease construction pending resolutions of these matters. The resolution to this situation is ongoing~~420,570,000) and ~~involves~~a ~~the~~post-delivery ~~granting~~revolving ofcredit ~~loans~~facility ~~from~~loan ~~Reederei~~up ~~Hartmann~~ to ~~our~~$111,476,284 ~~German~~(EUR ~~Subsidiary under RHKG Loan Agreements above~~84, ~~and~~114,000) ~~the~~(“Revolving ~~amendment~~Credit ofFacility”). The ~~the~~proceeds ~~shipbuilding~~from ~~contracts to postpone~~ the ~~installment payments~~Senior ~~due~~Loan ~~under~~were ~~the~~used ~~contracts until delivery of the applicable AHTS vessel and~~ to ~~provide~~fund ~~for~~outstanding ~~interest~~balances due to Fincantieri onat ~~the~~delivery, ~~outstanding~~and ~~installment payments~~any ~~due.~~excess Wewas ~~have~~retained ~~since~~toward ~~drawn~~working oncapital ~~the~~requirements ~~Senior Loan under these arrangements, resulting in the deliveries~~ of ~~UOS~~each ~~Discovery,~~AHTS ~~UOS Endeavour, and UOS Explorer in February and March 2010~~SPV.

~~In addition~~Payments are due quarterly under the Senior Loan, with interest for the applicable period, and the interest rate is adjusted quarterly. The Revolving Credit Facility can be used to ~~our~~extend ~~obligations~~the repayment period for the Senior Loan from 12 to ~~Fincantieri~~15 years, ~~there~~which ~~are~~is ~~agreements~~accomplished ~~between~~through draws under the ~~AHTS~~ ~~SPVs~~Revolving ~~and~~Credit ~~Hartmann~~Facility ~~Offshore~~on ~~for~~a ~~vessel~~quarterly ~~construction~~basis ~~oversight~~which ~~and~~provide ~~commercial~~ funds equal to the difference between a 12 year and ~~technical~~a ~~management~~15 ~~during~~year ~~construction~~principal repayment schedule. However, Asin no case can the total amount outstanding under the Senior Loan be in excess of ~~December~~75% ~~31,~~of ~~2009~~the ~~and December~~aggregate ~~31,~~investment ~~2008~~costs of all vessels, wewhich ~~incurred~~is ~~$291~~defined to include the construction price,~~543~~ building supervision,~~002~~ financing, initial equipment and ~~$80~~other costs,~~860~~ of all the vessels covered by the Senior Loan. Additionally,~~590~~ the Senior Loan conditions require, ~~respectively~~among other things, ~~in connection~~that ~~with~~amounts sufficient to cover operating costs and all amounts due and payable under the Senior Loan for a one year period be secured by each AHTS ~~vessel~~SPV ~~acquisition~~before any dividends can be considered.

The ~~table below~~Senior ~~provides~~Loan ~~details~~is a fleet financing arrangement which covers all five of our ~~remaining~~AHTS ~~capital~~vessels, ~~expenditure~~one ~~obligation~~vessel ~~for~~in ~~each vessel~~which aswe ofhold ~~December~~a ~~31,~~non-controlling ~~2009~~interest, ~~including~~ the ~~potential~~three ~~acquisition~~AHTS vessels wholly owned by entities of the ~~chemical~~ ~~tanker.~~Hartmann Group, plus three AHTS vessels owned by FLTC Fund I. The ~~figures~~Fleet ~~below~~serves ~~include~~as the ~~amounts~~collateral ~~due~~for tothe Senior Loan. In connection with the ~~shipyard~~Senior Loan, ~~estimated~~ ~~vessel~~a ~~outfitting~~commitment ~~upon~~fee ~~delivery~~of 0.20% to 0.45% is due semi-annually in arrears as determined by our internal rating class assigned within Nord/LB based on the unused Senior Loan balance and ~~amounts~~the ~~owed~~elapsed ~~for~~days within the year. An agency fee of $13,253 (EUR 10,000) per vessel ~~construction~~ ~~oversight~~was ~~and~~due ~~commercial~~each ~~and~~year ~~technical~~payable ~~management~~at ~~during construction~~the asend ~~described~~of ~~above~~each quarter until the delivery of the applicable vessel. After ~~The~~the ~~amounts~~delivery ~~below~~of ~~include~~the ~~amounts~~applicable AHTS vessel, the agency fee, payable byquarterly, ~~us and~~is ~~our~~$6,627 ~~non-controlling~~(EUR ~~interest~~5,000) ~~holders~~per year per vessel until the Senior Loan is paid in ~~each~~full. There ~~SPV~~is asalso ~~well~~a asfinancial ~~amounts anticipated~~guarantee for up to be70% ~~funded~~of ~~through~~the ~~our~~loan ~~credit~~balance ~~facilities~~issued by SACE.

				Less than						Over
SPV Name	Vessel Name	Total		1 year		2-3 Years		4-5 Years		5 Years
Anchor Handling Tug Supply Vessels
6163 – Isle of Langeoog	UOS Discovery	$	52,050,003	$	52,050,003	$	—	$	—	$	—
6168 – Isle of Amrum	UOS Endeavour	$	56,806,122	$	56,806,122	$	—	$	—	$	—
6169 – Isle of Sylt	UOS Enterprise	$	56,806,122	$	56,806,122	$	—	$	—	$	—
6171 – Isle of Wangerooge	UOS Explorer	$	58,653,216	$	58,653,216	$	—	$	—	$	—
6172 – Isle of Neuwerk	UOS Freedom	$	58,896,590	$	58,896,590	$	—	$	—	$	—
6173 – Isle of Usedom	UOS Liberty	$	59,157,738	$	59,157,738	$	—	$	—	$	—
Chemical Tanker
MD2007-11-12		$	40,705,068	$	14,272,093	$	26,432,975	$	—	$	—

Interest on the borrowings is based upon the EURIBOR, the Euro Interbank Offered Rate. For the portion of the Senior Loan not guaranteed by SACE, the applicable interest rate is EURIBOR plus 1.375% per annum plus a fixed funds cost determined prior to each drawdown. For the portion of the Senior Loan that is guaranteed by SACE, the applicable interest rate is EURIBOR plus 1.375% per annum. With respect to the Revolving Credit Facility, the applicable interest rate is (i) EURIBOR plus 1.600% per annum or (ii) the lenders’ funding costs, as conclusively to be agreed and determined by the lenders, plus 1.600% per annum. Upon the fifth anniversary of the Senior Loan, each interest rate will be subject to renegotiation.

Amounts drawn on the Pre-Delivery Facility of the Senior Loan, which were intended to fund installments to the shipyard during construction, required either that each AHTS SPV be fully funded based on the capital as called for in the AHTS SPV company agreements, or provision of a guarantee acceptable to Nord/LB to provide assurance of repayment of the Pre-Delivery Facility. A guarantee from Reederei Hartmann, our non-controlling interest holder and the 25% owner of the three AHTS SPVs of FLTC Fund I (“Hartmann Guarantee”) in the amount of $45,932,786 (EUR 32,046,875) was outstanding at December 31, 2009. The Pre-Delivery Facility was not utilized, and there was no amount outstanding under the Hartmann Guarantee at December 31, 2010.

Additionally, each AHTS SPV entered into a contract with the German Subsidiary, whereby the German Subsidiary or its assignee would provide financial services including, but not limited to, the procurement of equity during the building period of the relevant AHTS vessel. Under such agreements, the German Subsidiary would have received fees of $716,650 (EUR 500,000) payable in four equal installments, each due at (i) the beginning of steel cutting, (ii) installation of the main engines, (iii) launching of the vessel and (iv) delivery of the completed vessel. The ~~German~~drawdowns ~~Subsidiary~~accepted ~~subcontracted~~under the ~~requirement~~Senior toLoan ~~provide these services and the right to receive these payments to Suresh Capital Consulting & Finance Ltd., Maritime Funding Group LLC and Churada Investments Limited which~~ are ~~affiliates of SCMH. The table below provides the amounts outstanding under these agreements~~ as ~~of December 31, 2009.~~follows:

							Less than							Over
	AHTS SPV		AHTS Vessel		Date of Drawdown	Proceeds			Amounts paid to Fincantieri
SPV Name		Vessel Name		Total			1 year			2-3 Years		4-5 Years		5 Years
Our AHTS SPVs	MS Juist		UOS Atlantis		February 25, 2009	$	44,689,067		$	38,092,384	(1)
Anchor Handling Tug Supply Vessels
	MS Norderney		UOS Challenger		May 25, 2009	$	49,080,519		$	42,249,368	(1)
6163 – Isle of Langeoog		UOS Discovery		$	179,163		$	179,163		$	—	$	—	$	—
	Isle of Baltrum		UOS Columbia		October 2, 2009	$	51,120,284		$	49,179,033
6168 – Isle of Amrum		UOS Endeavour			179,163			179,163			—		—		—
	Isle of Langeoog		UOS Discovery		February 15, 2010	$	47,790,771		$	46,304,079
6169 – Isle of Sylt		UOS Enterprise			179,163			179,163			—		—		—
	Isle of Amrum		UOS Endeavour		March 10, 2010	$	47,629,553		$	50,840,227
6171 – Isle of Wangerooge		UOS Explorer			179,163			179,163			—		—		—
	Isle of Wangerooge		UOS Explorer		March 12, 2010	$	47,871,380		$	52,817,807
6172 – Isle of Neuwerk		UOS Freedom			179,163			179,163			—		—		—
	Isle of Neuwerk		UOS Freedom		June 25, 2010	$	43,175,015		$	47,626,402
6173 – Isle of Usedom		UOS Liberty			358,325			358,325			—		—		—
	Isle of Usedom		UOS Liberty		June 22, 2010	$	43,413,338		$	47,817,206
Total fees outstanding				$	1,254,140		$	1,254,140		$	—	$	—	$	—
	Isle of Sylt		UOS Enterprise		July 1, 2010	$	42,936,692		$	46,193,217

~~Discussion~~(1) ofAmounts ~~Short-~~paid to Fincantieri for UOS Atlantis and ~~Long-Term~~ ~~Liquidity~~UOS ~~Needs~~Challenger included $4,698,317 and $5,150,531 due to Reederei Hartmann for advances to pay for the 4th installment under the shipbuilding contracts.

~~Our short-~~In ~~and~~each ~~long-term~~case ~~liquidity~~above, ~~needs~~any ~~relate~~remaining ~~primarily~~cash tofrom ~~the~~each ~~funding~~ of ~~our capital expenditure obligations on our vessels. In~~ the ~~case~~drawdowns ofwas ~~our~~used ~~AHTS~~to ~~vessels, we~~fund ~~anticipate~~operations ~~that~~and ~~these~~provide ~~capital~~cash ~~expenditure~~reserves ~~obligations~~to ~~will be funded through~~ the ~~fulfilling~~respective ~~of our capital contribution obligations to our AHTS~~ SPV~~’s,~~ ~~some of~~for ~~which~~future ~~may~~operations. Any beshortfalls ~~funded~~between ~~through~~ the Senior Loan proceeds ofand the ~~RHKG~~amount ~~Loan~~outstanding ~~Agreements discussed~~to ~~above.~~the Weshipyard ~~anticipate~~at ~~that~~delivery ~~the~~were ~~remaining~~funded ~~capital~~with ~~expenditure obligations,~~cash ~~which~~reserves ~~represent~~from the ~~majority~~respective ofAHTS ~~our capital expenditure obligations~~SPV, ~~will~~or bewith ~~funded~~proceeds ~~through~~from ~~our~~borrowings ~~Nord/LB~~between ~~Senior~~the ~~Loan~~AHTS SPVs.

~~Through~~ At December 31, 2010 and 2009, wea ~~have~~total ~~funded~~of ~~payments~~$502,519,233 (EUR 379,173,948) and $145,468,080 (EUR 101,491,719), respectively, was outstanding under the Senior Loan. Of the amount at December 31, 2010, $114,481,126 (EUR 86,381,292) is related to the ~~first~~AHTS ~~two~~SPVs of ~~the~~FLTC ~~five installments~~Fund onI, ~~all~~and the remaining amount of ~~our~~$388,038,107 ~~nine~~(EUR 292,792,656) is related to our AHTS ~~vessels~~SPVs. This ~~marking~~amount ~~the~~bears ~~completion~~a weighted-average interest rate of ~~the initial~~2.873% ~~funding~~and ~~stage~~2.791% as of December 31, ~~which~~2010 and 2009, respectively. Originally, the outstanding balance was ~~funded~~to ~~primarily~~be ~~with~~due ~~equity~~in ~~from~~full ~~limited partners’~~in ~~contributions.~~June ~~Additionally~~2022, ~~these~~but ~~contributions~~due ~~funded~~to the ~~third installment~~Event onof ~~our~~Default, ~~first~~all ~~two~~amounts ~~AHTS~~are ~~vessels,~~reported ~~which~~as ~~were~~current. During ~~delivered~~the inyears ~~February~~ended December 31, 2010 and ~~May~~ 2009., ~~Through~~we ~~the~~incurred ~~RHKG~~interest ~~Loan~~of ~~Agreement~~$8,512,896 ~~entered~~(EUR ~~into~~6,410,776) inand ~~regards~~$2,546,281 (EUR 1,825,815), respectively, related to ~~Isle~~the drawdowns on the Senior Loan. Accrued interest of ~~Baltrum~~ $1,214,068 we(EUR ~~funded~~916,070) ~~our~~and ~~full~~$601,813 ~~capital~~(EUR ~~contribution~~419,879) towas ~~our~~outstanding ~~AHTS~~at ~~SPV~~December ~~Isle~~31, ~~of Baltrum~~2010 and December 31, 2009, respectively.

InDuring ~~order~~the toyear ~~fund~~ended ~~our remaining~~December ~~commitments~~31, ~~to Fincantieri~~2010, we ~~entered~~elected ~~into~~to ~~the~~draw ~~Senior~~on ~~Loan~~the ~~discussed above~~Revolving ~~under~~Credit ~~the~~Facility, ~~caption~~which ~~Financing Arrangements. As~~allows ~~mentioned~~us ~~above~~to ~~under~~make ~~Nord/LB Facility,~~draws ~~as of~~at ~~December~~each ~~31,~~quarterly ~~2009,~~principal ~~the~~redemption ~~terms~~date ofto ~~the~~result ~~Hartmann~~in ~~Guarantee~~a ~~were~~net ~~being renegotiated~~principal ~~between~~payment ~~Reederei~~based ~~Hartmann~~on ~~and~~a ~~Nord/LB..~~loan ~~Upon~~amortization ~~delivery~~ of ~~each~~ ~~AHTS~~15 ~~vessel,~~years weversus ~~will~~the ~~draw~~12 onyears under the Senior Loan. On inJanuary ~~the amount of $50~~24,~~233,582 (EUR~~ 352011,~~047,500).~~ ~~The~~we ~~proceeds~~entered ~~will~~into bean ~~used~~addendum to ~~pay~~ the ~~third~~Senior ~~and~~Loan ~~fourth installments~~(“Addendum ~~under~~No. ~~the~~2”). Addendum ~~shipbuilding~~No. ~~contract~~2 ~~and~~requires ~~the~~that ~~accrued~~twenty ~~interest~~percent ~~thereon~~of if the ~~installment~~annual ~~payments~~earnings ~~are~~after ~~outstanding,~~tax orfor toeach ~~repay~~of ~~the~~our ~~Pre-Delivery~~AHTS ~~Facility for~~SPVs ~~the~~be ~~AHTS~~used ~~vessel~~to ~~for~~make ~~any~~additional prepayments against amounts drawn, ~~fund~~under the ~~fifth~~post ~~installment~~delivery ~~to Fincantieri~~revolving ~~and,~~credit ~~where~~facility ~~amounts~~included ~~are~~in ~~available, fund~~ the ~~outfitting~~Senior ~~of each vessel~~Loan. Annual ~~The~~earnings ~~schedule~~after ~~below~~taxes ~~reflects~~for ~~the~~each ~~anticipated~~AHTS ~~deficit~~SPV inis ~~each~~defined ~~AHTS~~as ~~SPV upon~~annual ~~delivery~~revenue ~~for~~less ~~the~~(i) operating ~~remaining~~expenses ~~six~~of the AHTS ~~vessels~~SPVs, ~~under~~(ii) ~~construction~~debt ~~based~~service onpayments under the ~~remaining~~ ~~capital~~Senior ~~expenditure~~Loan, ~~obligation~~(iii) ~~for~~a ~~the~~distribution ~~vessel~~to asshareholders ~~compared~~of tosuch ~~the anticipated~~AHTS ~~Senior~~SPV ~~Loan~~equal ~~Proceeds~~to asten percent of ~~December~~their 31contributed capital, ~~2009~~and (iv) any taxes paid by such AHTS SPV.

At December 31, 2010, a total of $4,092,052 (EUR 3,087,642) was outstanding under the Revolving Credit Facility. Of this amount, $995,488 (EUR 751,142) is related to the AHTS SPVs of FLTC Fund I, and the remaining amount of $3,096,563 (EUR 2,336,500) is related to our AHTS SPVs, with a weighted-average rate of 3.458%. Originally the outstanding balance was to be due in full in June 2025, but due to the Event of Default, the total amount is reported as current. During the year ended December 31, 2010, we incurred interest of $21,250 (EUR 16,003) related to the drawdowns on the Revolving Credit Facility. Accrued interest of $10,683 (EUR 8,061) was outstanding at December 31, 2010.

We are subject to various covenants for the duration of the Senior Loan, associated, for example, with the amount of capital infusions from outside investors into the AHTS SPVs, limits on additional financing, restrictions of cargo and weapons, directives regarding the structure and duration of charters related to the vessels, and certain restrictions on distributions.

		Remaining
		Capital				Reserves or
		Expenditure		Senior Loan		(Deficit) in SPV
SPV Name	Vessel Name	Obligation		Proceeds		at Delivery (1)
6163 – Isle of Langeoog	UOS Discovery	$	52,050,003	$	50,233,582	$	(1,816,421	)
6168 – Isle of Amrum	UOS Endeavour		56,806,122		50,233,582		(6,572,540	)
6169 – Isle of Sylt	UOS Enterprise		56,806,122		50,233,582		(6,572,540	)
6171 – Isle of Wangerooge	UOS Explorer		58,653,216		50,233,582		(8,419,634	)
6172 – Isle of Neuwerk	UOS Freedom		58,896,590		50,233,582		(8,663,008	)
6173 – Isle of Usedom	UOS Liberty		59,157,738		50,233,582		(8,924,156	)
		$	342,369,791	$	301,401,492

In order to obtain more favorable financing terms under the Senior Loan, we agreed to a fleet financing arrangement whereby the Senior Loan would be secured by, among other things, all twelve of the AHTS vessels, including the three AHTS vessels owned by FLTC Fund I. In connection with this fleet financing arrangement, we entered into a mutual indemnity agreement in May 2009 with the three AHTS SPVs owned by FLTC Fund I (the “AHTS Mutual Indemnity Agreement”). Pursuant to the AHTS Mutual Indemnity Agreement, we agreed to indemnify the AHTS SPVs owned by FLTC Fund I for all liabilities suffered by such AHTS SPVs arising out of or associated with any breach by us (or resulting from any payment or performance by such AHTS SPVs in order to avoid a breach by us) under the Senior Loan with Nord/LB or the AHTS Mutual Indemnity Agreement. Conversely, the AHTS SPVs owned by FLTC Fund I agreed to provide us with reciprocal indemnification obligations pursuant to the AHTS Mutual Indemnity Agreement.

~~(1)~~Nord/LB ~~The~~Working ~~schedule~~Capital above does not include the effect of the contributions of our share capital obligation via the RHKG Loan Agreements to the AHTS SPV’s Isle of Langeoog, Isle of Amrum, and Isle of Wangerooge, as they occurred after December 31, 2009. Through those contributions, the anticipated deficit in those SPVs was funded.Facility

~~We continue~~On toDecember ~~raise~~6, ~~funds~~2010, ~~through~~we ~~private~~entered ~~placement~~into ofthe ~~our~~Working ~~limited~~Capital ~~partner~~Facility ~~units, both~~with toNord/LB. The ~~new~~Working ~~and~~Capital ~~existing~~Facility ~~investors.~~provides ~~Additionally,~~for weavailable ~~have~~proceeds ~~entered~~of ~~into~~$13,253,000 ~~the~~(EUR ~~RHKG Loan~~10,000,000) ~~Agreements~~that ~~described~~can ~~above,~~be ~~through~~drawn ~~which~~in weincrements ~~funded~~of inno ~~February~~less ~~and~~than ~~March 2010~~$3,313,250 ~~the~~(EUR ~~deficits~~2,500,000) ~~noted~~each. The ~~above~~Nord/LB ~~for~~Working ~~our~~Capital ~~AHTS~~Facility ~~SPVs~~carries ~~Isle~~an arrangement fee of ~~Langeoog~~$331,325 ~~Isle~~(EUR of250,000) ~~Amrum~~due prior to the first drawdown, and ~~Isle~~provides offor ~~Wangerooge.~~interest ~~The~~to ~~proceeds~~be ~~from~~paid ~~future~~quarterly ~~fundraising~~to ~~efforts~~Nord/LB ~~through~~at ~~the continued~~EURIBOR ~~offering~~plus of4.5% ~~limited~~per ~~partner~~annum, ~~units~~currently 5.989%, ~~and~~plus ~~from~~a ~~potential~~fixed ~~additional~~costs ~~RHKG Loan~~fee ~~Agreements~~to ifbe wedetermined, ~~are~~with ~~able~~a tofinal ~~secure~~maturity ~~additional~~date ~~financing~~of onwas ~~terms acceptable~~originally toDecember us30, ~~will~~2012, bebut ~~used~~due to ~~fund~~the ~~our~~Event ~~operations~~of ~~and~~Default, tothe ~~complete~~total ~~the funding~~amount ofis ~~our~~reported ~~equity~~as ~~commitments~~current. The ~~under~~facility ~~the~~also ~~agreements~~includes ~~which~~a ~~govern~~commitment ~~the~~fee ~~SPV entities~~of in1% of any undrawn amount, a prepayment fee which ~~the~~is ~~vessels~~a ~~are~~maximum ~~held~~of $79,518 ~~which~~(EUR ~~equity~~60,000), ~~will~~is ~~fund~~secured by the ~~delivery~~same of collateral as the ~~vessels~~Senior Loan, and ~~provide~~incorporates ~~reserves~~various ~~for~~other ~~the~~provisions ~~operations~~stated ofin ~~each~~the ~~SPV~~Senior Loan.

~~Under~~The Working Capital Facility also includes terms which restrict distributions from our AHTS SPVs until full repayment of the working capital facility, and requires that any additional funds received by the AHTS ~~SPV~~SPVs ~~formation~~in ~~documents~~the ~~(“Company~~form ~~Agreements”)~~of debt or equity, weor ~~have~~in ~~committed~~the event of a total loss of one or more of the AHTS vessels, be utilized to ~~contribute~~ ~~capital~~prepay the facility up to ~~these~~the ~~entities~~full ~~totaling~~outstanding ~~$150,496,500~~amount ~~(EUR~~of ~~105,000,000) (“Capital~~the ~~Commitment”)~~facility. The ~~This~~terms ~~amount~~of ~~reflects~~the anfacility ~~increase~~also inrequire ~~our~~that ~~share~~we pursue the sale of two vessels on a best efforts basis by December 30, 2011 unless additional capital ~~commitment~~ ~~for~~contributions or the ~~Isle~~granting of ~~Usedom~~one ~~SPV~~or ~~from~~more shareholder loans in the minimum amount of $148,~~512~~283,~~163~~125 (EUR 106,~~125~~250,000) is made to ~~$40~~ our AHTS SPVs by December 31,~~849~~ 2011. The facility also called for us to enter into an addendum to the Senior Loan,~~050~~ ~~(EUR~~which 28occurred on January 24,~~500,000)~~ 2011. Among the items addressed in ~~order~~the addendum to ~~comply~~the ~~with~~Senior Loan were the ~~terms~~addition of a requirement that twenty percent of annual earnings after tax be used to make additional prepayments against amounts drawn under the post delivery revolving credit facility included in the Senior Loan., ~~Through~~which ~~contributions~~was ~~made~~designed to ~~each~~effectively ~~SPV~~change tothe ~~fund~~principal ~~installments~~amortization ~~to Fincantieri,~~from we12 ~~had~~years ~~funded~~to ~~$67,092,773~~15 ~~(EUR 46~~years,~~810,000)~~ as called for in the terms of ~~December~~the ~~31, 2009~~Working Capital Facility.

~~Were~~At ~~ATL Offshore~~December ~~GmbH~~31, ~~(“ATL”)~~2010, ~~which serves as the general partner of each AHTS SPV and is~~ a ~~member~~total of ~~the Hartmann Group~~$13,253,000 to(EUR ~~call in the remaining unfunded share capital in order to meet obligations of the SPV~~10,000,000) wewas ~~would~~outstanding beunder ~~required pursuant to~~ the ~~Company~~Working ~~Agreements to fund the capital call up to our maximum share of the~~ Capital ~~Commitment~~Facility. Of Ifthis ~~we were unable to fund the capital call from additional limited partner contributions or other means~~amount, ~~such as additional credit facilities~~$3, ~~our fellow limited partner~~313,250 ~~Reederei~~(EUR ~~Hartmann~~2, ~~could fund our unfunded capital under the Company Agreements for each AHTS SPV. As stated above~~500,000) inis ~~connection~~related ~~with~~to the ~~delivery of vessels to our~~ AHTS SPVs ~~Isle~~ of ~~Baltrum,~~ ~~Isle~~FLTC ofFund ~~Langeoog~~I, ~~Isle~~and ofthe ~~Amrum~~remaining ~~and~~amount ~~Isle~~ of ~~Wangerooge~~$9,939,750 we(EUR ~~entered~~7,500,000) ~~into the~~is ~~RHKG~~related ~~Loan Agreements~~ to ~~secure funding for~~ our ~~remaining capital commitments to those~~ AHTS SPVs. The ~~addendum~~effective tointerest ~~the~~rate ~~Share~~at ~~Transfer~~December ~~Agreement executed on February 10~~31, 2010 ~~calls~~was ~~for~~5.989%. During ~~such funding by Reederei Hartmann to give rise to a loan from Reederei Hartmann to our German Subsidiary in connection with~~ the ~~delivery~~ ofyear ~~our~~ended ~~remaining~~December ~~three~~31, ~~AHTS vessels~~2010, ~~resulting~~we inincurred ~~the~~interest ~~funding~~ of ~~our capital~~$22,100 ~~via~~(EUR ~~the loan proceeds for those AHTS SPVs. The terms of the loans are as discussed under RHKG Loan Agreements above~~16,643) ~~and~~related ~~include~~to the ~~granting~~drawdowns ofon ~~a security interest in our interest in~~ the ~~respective~~Working ~~AHTS~~Capital ~~SPV~~Facility, and ~~restrictions~~accrued oninterest ~~the use~~ of ~~dividends from~~$22,057 ~~the~~(EUR ~~AHTS~~16,643) ~~SPV~~was ~~for~~outstanding ~~repayment~~at ofDecember ~~the~~31, ~~RHKG Loan Agreement~~2010. Given ~~In the event~~ that ~~Reederei~~ ~~Hartmann is unable or unwilling to fund our unfunded capital to effect~~ the ~~delivery~~facility ofwas ~~the~~for ~~three remaining AHTS vessels~~$13,253,000 ~~ATL~~(EUR ~~would likely seek to raise capital from other sources~~10,000,000), which ~~could~~is ~~dilute~~equal ~~our ownership, or ATL could seek~~ to ~~sell~~the ~~all~~outstanding orbalance, ~~part~~the offacility ais ~~vessel~~fully ~~or vessels~~drawn. ~~Our limited partners are not subject to additional capital calls under our Agreement of Limited Partnership.~~

Chemical Tanker Transaction/Schulte Group Facility/Kronos

On November 13, 2007, III to I IMS Holdings, LLC (“IMS Holdings”), the sole shareholder of our general partner, entered into a Memorandum of Agreement (“MOA”) with the Schulte Group relating to the acquisition of the chemical tanker. Pursuant to the MOA, the Schulte Group placed an order for the chemical tanker for IMS Holdings for the purchase price of $41,500,000 to be paid in five equal installments. The Schulte Group agreed to loan IMS Holdings up to $8,300,000 for the first installment payment (“Schulte Group Facility”) and to facilitate a bank guarantee for the second installment payment of $8,300,000. The Schulte Group formed Anthos Shipping Co. Limited (“Anthos”), a Cyprus SPV, to own the chemical tanker. The equity of Anthos would have been assigned to Kronos upon repayment of the loan, retirement of the bank guarantee facilitated by the Schulte Group and payment of all fees due to the Schulte Group. Kronos was not formed at the time the MOA was signed; therefore, the chemical tanker transaction was undertaken through an affiliate of IMS Holdings on behalf of Kronos. As of December 31, 2010 and December 31, 2009, $8,300,000 had been paid toward the option to purchase the chemical tanker.

~~The~~IMS ~~table below~~Holdings ~~provides~~repaid a$3,000,000 ~~schedule~~on ofthe ~~unfunded~~Schulte ~~capital~~Group ~~commitments~~Facility ~~for~~through ~~each~~its ~~AHTS~~affiliate ~~SPV~~to as the Schulte Group by January 15, 2008, in compliance with the terms of the MOA. As of December 31, ~~2009~~2008, we had advanced $4,278,164, including accrued interest, to IMS Holdings to allow IMS Holdings to provide funds to its affiliate to make the required payments to the Schulte Group under the MOA and ~~also~~other ~~includes~~expenses related to the ~~information~~option ~~from~~to purchase the ~~table~~chemical ~~above regarding~~tanker. An addendum to the ~~deficit~~MOA ~~resulting~~was ~~from~~executed in July 2008 to extend the ~~difference~~loan ~~between~~through ~~our~~November ~~remaining capital~~30, ~~expenditure~~2008, ~~obligation~~extend the time period allowed for IMS Holdings to secure financing and increase the ~~anticipated~~amount ~~Senior~~of ~~Loan proceeds:~~possible liquidated damages. As of December 31, 2008, no agreement had been reached on a further extension of the terms of the MOA, and IMS Holdings was technically in default on their loan and required to pay liquidating damages.

				Anticipated
		Remaining		Reserves or
		Capital Contribution		(Deficit) in SPV			Anticipated Vessel
SPV Name	Vessel Name	Commitment (1)		at Delivery (2)			Delivery Date
6160 – MS Juist	UOS Atlantis	$	2,142,784		—		February 27, 2009 (delivered)
6161 – MS Norderney	UOS Challenger		3,253,591		—		May 28, 2009 (delivered)
6162 – Isle of Baltrum	UOS Columbia		—		—		October 2, 2009 (delivered)
6163 – Isle of Langeoog	UOS Discovery		7,668,155		(1,816,421	)	February 2010	(3)
6168 – Isle of Amrum	UOS Endeavour		10,807,082		(6,572,540	)	March 2010	(4)
6169 – Isle of Sylt	UOS Enterprise		11,237,072		(6,572,540	)	April 2010
6171 – Isle of Wangerooge	UOS Explorer		10,907,413		(8,419,634	)	March 2010	(4)
6172 – Isle of Neuwerk	UOS Freedom		10,821,415		(8,663,008	)	April 2010
6173 – Isle of Usedom	UOS Liberty		46,739,913		(8,924,156	)	April 2010
		$	103,577,425

Effective April 2009, we entered into an agreement whereby all of the rights retained by IMS Holdings’ affiliate, IMS Capital Partners, LLC (“IMS Capital Partners”) and IMS Holdings with respect to the chemical tanker pursuant to the MOA between IMS Holdings and Schulte Group were transferred to Kronos, the new obligor under an amended version of the MOA (“Amended MOA”) between Kronos and Conway Shipping I, Ltd. (“Conway”), an affiliate of the Schulte Group. As consideration for and to give effect to this transfer, we assigned the receivables from IMS Holdings through which the transaction was undertaken to IMS Capital Partners in exchange for the consent of IMS Capital Partners to the execution of the Amended MOA. This amount was credited by Kronos as additional paid in capital, and Kronos accepted the rights to the chemical tanker pursuant to the Amended MOA. The outcome left Kronos as the sole holder of all rights and obligations with respect to the potential acquisition of the chemical tanker and resulted in IMS Capital Partners and IMS Holdings each holding directly offsetting note obligations. By entering into a Note Cancellation Agreement, the note obligations between IMS Holdings and IMS Capital Partners were terminated.

~~(1)~~The ~~Pursuant~~Amended MOA was entered into on April 25, 2009. It extended the term of the loan and bank guarantee through July 30, 2010, increased the interest rate and the possible liquidated damages, required us to pay a lump sum amount of $200,000 as a fee for providing the ~~AHTS~~extension ~~SPV~~of ~~Agreements~~the bank guarantee, waived any prior default and clarified certain other terms of the ~~non-controlling~~original MOA. The interest ~~holders~~on ~~are~~the ~~committed~~Schulte toGroup ~~contribute~~Facility 25is based on the three-month US LIBOR rate plus a margin of 4.50%. Interest is due quarterly. As part of ~~this~~the ~~amount~~changes, the parties to the MOA were formally changed to be between Kronos in place of IMS Holdings and Conway in place of the Schulte Group. As a result of the amended MOA, the payable to Schulte Group and the offsetting deposits on the chemical tanker transaction were recorded on the books of Kronos.

~~(2)~~In ~~The~~light ~~schedule~~of ~~above~~the ~~does~~global ~~not~~downturn ~~include~~in the ~~effect~~economy ofand the ~~contributions~~resulting ofdecrease in charter rates for chemical tankers, and product tankers in general, we elected to abandon our ~~share~~option ~~capital~~to ~~via~~purchase the ~~RHKG~~chemical ~~Loan~~tanker ~~Agreements~~on April 9, 2010, We recognized an impairment to the ~~AHTS~~deposit ~~SPV’s~~on ~~Isle~~asset acquisition on our balance sheet as of ~~Langeoog~~December 31, ~~Isle~~2009 to reduce the carrying value of ~~Amrum~~this asset, resulting in the recognition of a loss on impairment of $9,874,907. Under the terms of the Amended MOA, we became subject to the $3,000,000 in liquidated damages and ~~Isle~~the principal balance of ~~Wangerooge~~$5,300,000 asdue ~~they~~under ~~occurred~~the ~~after~~facility was extinguished, resulting in recognition of a $5,300,000 gain on the extinguishment of debt. The result is a net loss between these two events of approximately $4,574,907, which in the end represents liquidating damages of $3,000,000, plus the loss of our capitalized costs approximating $1,574,907. In addition, we recognized interest expense on the Schulte Group Facility for the period ended December 31, ~~2009~~2010 totaling $62,946.

~~(3)~~Ongoing ~~This~~Capital ~~vessel was delivered in February 2010.~~Expenditures

Our planned AHTS vessel acquisitions were completed on July 2, 2010 with the acquisition of the UOS Enterprise by our AHTS SPV Isle of Sylt. Under the AHTS shipbuilding contracts, installments were due in five stages based upon certain milestones being met during construction. Approximately 30% of the total construction costs required deposits, some of which were to be funded with equity while others were expected to be funded from the Senior Loan. Amounts drawn on the Pre-Delivery Facility required either (4i) ~~These~~that ~~vessels~~each ~~were~~AHTS ~~delivered~~SPV was fully funded based on the capital as called for in ~~March~~the applicable SPV agreements or (ii) the provision of a guarantee acceptable to Nord/LB. For the year ended December 31, 2010, we have incurred expenses of $275,604 (EUR 207,549), related to the guarantee. The Hartmann Guarantee in the amount of $45,932,786 (EUR 32,046,875) was outstanding at December 31, 2009. The Pre-Delivery Facility was not utilized, and there was no amount outstanding under the Hartmann Guarantee as of December 31, 2010. Amounts incurred under the Hartmann Guarantee totaling $712,959 (EUR 492,103) were fully satisfied effective July 1, 2011 via the Hartmann Transfer Agreement discussed above.

The remaining capital contributions will be utilized by the AHTS SPVs for operations during the construction period, to fund the deficits noted above which relate to the delivery and outfitting of each AHTS vessel upon delivery, and provide working capital to the AHTS SPVs, a portion of which is necessary in order to fulfill the conditions under the Senior Loan (“Senior Loan Conditions”). The capital in excess of the amount required for operations, outfitting and compliance with the Senior Loan Conditions will be called if it is necessary for ATL to call in the capital in order to meet obligations of the AHTS SPV. The factors which would affect such a decision would include the excess loan proceeds available from the funding of the Senior Loan upon delivery of each AHTS vessel, if any, our success in obtaining any additional financing from Nord/LB discussed above, charter coverage, current market day rates, operational requirements such as anticipated dry dockings and unexpected repair costs as well as other factors deemed relevant by ATL regarding each vessel.

In summary, through December 31, 2009, we had contributed capital totaling $67,092,773 (EUR 46,810,000) to the AHTS SPVs primarily with contributions from the sale of limited partner units, which provided funds for the first two installments to Fincantieri and operations to date for the AHTS SPVs. The first three AHTS vessels had been delivered, and the remaining capital obligations of the AHTS SPVs for the vessels totaled $344,878,066 (EUR 240,618,200). We anticipated receiving $301,401,491 (EUR 210,285,000) in loan proceeds through the Senior Loan. The remaining obligations of each AHTS SPV will be funded by both us and Reederei Hartmann from additional capital contributions to the AHTS SPVs, as called for under the Company Agreements.

Subsequent to December 31, 2009, our AHTS SPVs Isle of Langeoog, Isle of Amrum and Isle of Wangerooge took delivery of three additional vessels, the UOS Discovery, UOS Endeavour, and UOS Explorer, respectively. Just prior to delivery, we entered into RHKG Loan Agreements related to the three AHTS SPVs, through which we fully funded our outstanding capital contributions totaling $23,851,875 (EUR 17,465,000). Considering these contributions, our remaining capital contribution obligation to the AHTS SPV’s approximates $58,371,143 (EUR 40,725,000) in order to maintain our 75% ownership of all nine AHTS SPVs. Funding this amount would represent full funding of our obligation under the current Company Agreements for each AHTS SPV.

WeThe doconstruction ~~not anticipate~~installments ~~making~~to ~~distributions in the future until the funding stage is completed and the vessels~~ have been ~~delivered~~paid towith the ~~applicable~~Pre-Delivery ~~AHTS~~Facility ~~SPVs. Additionally,~~were ~~the~~postponed ~~combined~~under ~~terms~~amendments ~~of the Share Transfer Agreement as amended and the RHKG Loan Agreements require the German Subsidiary~~ to ~~reserve distributions from~~ the ~~AHTS~~shipbuilding ~~SPV’s~~contracts ~~for~~until ~~repayment~~delivery of the ~~RHKG~~applicable ~~Loan~~AHTS ~~Agreements~~vessel, and ~~additionally require~~interest ~~that~~was ~~distributions~~paid ~~either~~to ~~outside~~Fincantieri ~~the~~on ~~scope of~~ the ~~RHKG~~outstanding ~~Loan~~installment ~~Agreements or~~payments ~~beyond~~at ~~amounts~~a ~~required~~rate tobased ~~repay~~on the ~~RHKG~~nine-month ~~Loans~~EURIBOR beplus ~~maintained~~2%. As ~~in an escrow account for purpose~~ of ~~funding~~December ~~capital~~31, ~~contributions~~2010 ~~with~~and ~~respect~~December to31, ~~the~~2009, ~~other AHTS SPVs until all such SPVs are fully funded. Our ability to make distributions will therefore be heavily influenced by whether~~ we ~~are~~incurred ~~able~~$522,290,182 ~~to repay~~and ~~the RHKG Loans through the additional Nord/LB financing discussed above or otherwise~~$291,543,002, ~~the dividend restrictions currently in the Senior Loan~~respectively, ~~together with any changes~~ in connection with ~~any additional Nord/LB financing, if obtained, and ultimately on day rates achieved and~~ the ~~results~~AHTS ofvessel ~~operations of our vessels, which will impact our ability to repay our debt and the amounts available for distribution after those repayments and payment of all expenses~~acquisitions.

In addition to the AHTS shipbuilding contracts with Fincantieri, during construction of the vessels there were agreements between the AHTS SPVs and Hartmann Offshore for vessel construction oversight and commercial and technical management during construction. Additionally, each AHTS SPV entered into a contract with the German Subsidiary, whereby the German Subsidiary or its assignee would provide financial services including, but not limited to, the procurement of equity during the building period of the relevant AHTS vessel. Under such agreements, the German Subsidiary would have received fees of $662,650 (EUR 500,000) payable in four equal installments, each due at (i) the beginning of steel cutting, (ii) installation of the main engines, (iii) launching of the vessel and (iv) delivery of the completed vessel. The German Subsidiary subcontracted the requirement to provide these services and the right to receive these payments to Suresh Capital Consulting & Finance Ltd., Maritime Funding Group LLC and Churada Investments Limited which are affiliates of SCMH.

As of December 31, 2010, we had fulfilled our obligations with Fincantieri related to the shipbuilding contracts, and our obligations to Hartmann Offshore for vessel construction oversight and commercial and technical management during construction. There is a remaining amount payable under the financial services agreements with the subcontractor of our German Subsidiary of $2,319,275 (EUR 1,750,000), which is included in "due to related party" on our Balance Sheet as of December 31, 2010.

The delivery of the last three of the twelve AHTS vessels to the AHTS SPVs of FLTC Fund I occurred during September and October 2010, with the last of those three vessels being delivered to FLTC Fund I’s AHTS SPV Isle of Fehmarn on October 27, 2010. Just prior to that delivery, an evaluation was performed of the aggregate investment costs of all twelve AHTS vessels financed under the Senior Loan facility for purposes of determining the extent of restrictions on proceeds available under the Senior Loan, under which total loan proceeds are limited to 75% of the aggregate investment costs. Aggregate investment costs is defined by the Senior Loan to include the construction price, building supervision, financing, initial equipment and other costs, of all the vessels covered by the Senior Loan.

Related to this requirement, our nine AHTS SPVs loaned $17,465,326 (EUR 13,178,394) to one AHTS SPV of FLTC Fund I, which represents the approximate amount by which our nine AHTS SPVs aggregate borrowing under the Nord/LB Loan exceeded 75% of the aggregate investment costs of vessel acquisitions for our nine AHTS SPVs. This loan was made to achieve an equitable distribution of the proceeds available under the Senior Loan among all twelve AHTS SPVs given the 75% of net vessel investment cost limitation on the total proceeds available under the Senior Loan. This loan was funded primarily with the proceeds of the Hartmann Asia Loan Agreement to our AHTS SPV Isle of Usedom, supplemented by operating cash held in the nine AHTS SPVs. The terms of the Hartmann Asia Loan Agreement include interest at a rate of 6% per annum, which rate was amended to 4% per annum as of January 1, 2011, with repayment of outstanding principal and interest due on January 1, 2013.

Discussion of Short- and Long-Term Liquidity Needs

Our short- and long-term liquidity needs in our AHTS SPVs relate primarily to the need for operating capital for our AHTS vessels, funding our debt service obligations, including our Senior Loan with Nord/LB and the past due amounts thereunder, the Working Capital Facility, the Hartmann Asia Loan Agreement, and funding our remaining capital commitments to our AHTS SPVs. In addition to the operations and debt service obligations of our AHTS SPVs, we have operating expenses in our Cayman partnership and our German and Cyprus subsidiaries.

As a result of the Event of Default under the Nord/LB Loans, our primary concern is to resolve the issues with Nord/LB. We are seeking a deferral of principal payments due under the Senior Loan with repayment terms for the deferred payments which we believe would allow our AHTS SPVs sufficient liquidity for operations. However, due to the complexity of the terms of the Senior Loan and the guarantee from SACE, progress toward a resolution under the Nord/LB Loans has been slow. While Nord/LB has not initiated any steps to impose its remedies under the terms of the Senior Loan, which include accelerating the amounts due under the Senior Loan, and continues to negotiate with us for a resolution of the Event of Default, there can be no guarantees that we will be able to negotiate such a deferral or other resolution on terms that are acceptable to us or at all. If we are unable to negotiate a deferral or other resolution with Nord/LB to resolve the Event of Default, we would likely seek other solutions including debt or equity financing in our AHTS SPVs from elsewhere, if available, which Nord/LB would likely be required to approve. However, we cannot be certain that additional funds will be available on terms acceptable to us or at all.

Our primary source of funding for our AHTS vessel operations and our debt service obligations is the results of operations of our AHTS vessels. If the net results of operations are not sufficient due to charter rates below break even, low utilization, unexpected increases in expenses or some combination thereof or other factors, then we would likely first seek debt financing in our AHTS SPVs in the form of additional funding under our line of credit with Nord/LB beyond the amount already agreed to and provided by Nord/LB, or additional financing from elsewhere, which would also likely require the approval of Nord/LB.

If we are unable to negotiate a resolution to the Event of Default with Nord/LB, or if we encounter insufficient net results of operations, and we are unable to secure additional financing for either of these potential scenarios, then ATL Offshore GmbH (“ATL Offshore”), which serves as the general partner of each AHTS SPV and is a member of the Hartmann Group, may decide in its discretion to call in the remaining unfunded share capital in order to meet obligations of the AHTS SPVs pursuant to the AHTS SPV formation documents (“Company Agreements”). If additional capital were called, we would be required to fund the capital call up to our maximum share of the Capital Commitment (defined below) pursuant to the respective Company Agreements. If we were unable to fund the capital call from additional limited partner contributions, we would likely seek additional financing sources or equity investors, which could include the sale of debt or equity securities through either our Cayman Partnership or our Cyprus or German subsidiaries.

If our liquidity from operations were insufficient to fund our obligations, and ATL Offshore were to call additional capital, and we were unable to secure the additional funding for the capital called, our fellow limited partner, Reederei Hartmann, could fund our unfunded portion under the Company Agreements for each AHTS SPV to provide the needed liquidity. In early 2009 as the first of the vessels were being delivered, we entered into an agreement with Reederei Hartmann which set out the terms under which Reederei Hartmann would provide funds to the AHTS SPVs in the event that we had not fulfilled our remaining capital contribution obligation to an AHTS SPV at the time of delivery of its respective vessel (the “Share Transfer Agreement”). The addendum to the Share Transfer Agreement executed on February 10, 2010 calls for funding by Reederei Hartmann to give rise to a loan from Reederei Hartmann to our German Subsidiary. There can be no guarantee that Reederei Hartmann or any member of the Hartmann Group will be willing or able to extend additional debt financing on the same terms or at all for the remaining capital contribution obligations. In the event that Reederei Hartmann is unable or unwilling to fund our unfunded capital to meet the obligations of the AHTS SPVs, ATL Offshore would likely seek to raise capital from other sources, which could dilute our ownership, or ATL Offshore could seek to sell all or partial interest in a vessel or vessels.

Under the Company Agreements, we have committed to contribute capital to these entities totaling $139,156,500 (EUR 105,000,000) (“Capital Commitment”). This amount reflects an increase in our share capital commitment for the Isle of Usedom SPV from $13,418,663 (EUR 10,125,000) to $37,771,050 (EUR 28,500,000) in order to comply with the terms of the Senior Loan. Through contributions made to each AHTS SPV, including amounts we borrowed pursuant to the RHKG Loan Agreements and the Hartmann Loan Agreement, we had funded $93,957,144 (EUR 70,895,000) as of December 31, 2010, leaving our remaining capital contribution obligation of $45,199,356 (EUR 34,105,000). Our limited partners are not subject to additional capital calls under our Second Amended and Restated Agreement of Limited Partnership.

In addition to the operations and debt service obligations of our AHTS SPVs, we have operating expenses in our Cayman partnership and our German and Cyprus subsidiaries. As a result of the Hartmann Transfer Agreement discussed above, the RHKG Loan Agreements and the Hartmann Loan Agreement have been fully satisfied, therefore, our debt service obligations at our German Subsidiary have been extinguished.

Our sources of liquidity include funds from operations of our AHTS SPVs, to the extent we are able to operate them profitably, if at all. Our share of any such profits would first be utilized to fund our remaining Capital Commitment obligations. Additional liquidity may come from proceeds from the continuing private placement of our limited partnership units, and potential funding from sales of additional debt or equity interests in our Cayman partnership or our Cyprus or German subsidiaries.

Outlook for Distributions

Given the Event of Default combined with the terms of the existing financing including the Senior Loan and the Working Capital Facility, as well as the terms of the Hartmann Asia Loan Agreement, our AHTS SPVs are not currently in a position to consider distributions to their respective owners, among them our German Subsidiary.

Beyond these factors, the terms of the Share Transfer Agreement as amended require the German Subsidiary to reserve distributions from the AHTS SPV’s in an escrow account for purposes of funding capital contributions with respect to the other AHTS SPVs until all such SPVs are fully funded. Therefore, we do not anticipate making distributions in the future until this funding stage is completed. Our ability to make distributions thereafter will be heavily influenced by the dividend restrictions currently in the Nord/LB Loans and the Hartmann Asia Loan Agreement, and ultimately will depend on day rates achieved and the results of operations of our vessels, which will impact our ability to repay our debt and the amounts available for distribution after those repayments and payment of all expenses.

Critical Accounting Estimates

The preparation of financial statements in accordance with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our significant accounting policies, which are reviewed by management on a regular basis, are described in Item 8. Financial Statements and Supplementary Data under Note 1. Nature of Partnership’s Business and Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements.

We deem an accounting policy to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of our Consolidated Financial Statements.

Revenue Recognition

Our revenue is earned primarily from time chartering of vessels to charterers based upon daily rates of hire. Our AHTS SPVs participate in the UOS AHTS Pool under which they pool their Voyage Results, which is their revenue less voyage expenses. Revenue from charters is generally recorded when services are rendered, estimates are reasonably determinable and collection is reasonably assured. Revenue is recognized net of price adjustments and other potential adjustments based upon the daily charter rate for the reporting period. Our pooling arrangement under the UOS AHTS Pool ~~will~~has ~~not have any~~ bearing on our ~~revenue~~ ~~until~~revenues ~~such time~~ as ~~one~~two of the three vessels owned by FLTC Fund I isbegan ~~delivered and begins~~ to participate in the UOS AHTS Pool, ~~which~~during isthe ~~expected~~year inended ~~May~~December 31, 2010. ~~After~~ Our ~~such time, our~~ revenue ~~will~~is be recorded taking into account potential pool adjustments for the period. The period in which management estimates revenues have been earned and the extent to which those revenues are deemed collectible, and estimates of any adjustments to revenues, could have a material effect on the net recognized revenue in any given period.

Valuation of Derivative Financial Instruments

We account for derivatives and derivatives classified as hedges in accordance with FASB ASC 815, Derivatives and Hedges. All our derivative and hedge positions are stated at fair value within ~~either~~ current derivative assets, non-current derivative assets, current derivative liabilities or long-term derivative liabilities on our consolidated balance sheet. Realized and unrealized gains and losses related to our foreign currency exchange contracts not classified as hedges are reported in our consolidated statements of operations in foreign currency transaction gain (loss), while those related to foreign currency exchange contracts designated for hedge accounting are included in foreign currency transaction gain (loss) on the consolidated statement of operations with the effective portion of the fair value gains or losses recorded as part of accumulated other comprehensive income (loss) on the consolidated balance sheet. The gain or loss related to our interest rate swap contracts, none of which are classified as hedges, is reported in loss on interest rate swaps.

In order to value the derivatives, management must make estimates regarding the future values of interest and currency exchange rates. Management relies on published forward estimates of EURIBOR rates and currency exchange rates when estimating the fair value of its derivatives. These estimates could materially change from what was available at the balance sheet date.

We evaluate the risk of counterparty default by monitoring the financial condition of the financial institutions and counterparties involved and primarily conducting business with well-established financial institutions. We do not currently anticipate nonperformance by any of our counterparties.

Fixed Assets

Vessels are stated at cost less accumulated depreciation. Vessel costs include acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage. On board equipment represents all the equipment required to operate a vessel. Vessels, net of salvage value, and on board equipment are depreciated on a straight-line basis over their estimated useful lives, which have been determined to be 20 years and 10 years, respectively, from the initial delivery date from the shipyard.

The ~~estimated~~ ~~useful~~costs ~~life was determined based on the historical useful lives~~ of ~~like-kind~~ ~~vessels.~~significant ~~The~~replacements, ~~actual~~renewals ~~useful~~or ~~life~~betterments ~~could~~will be ~~more~~capitalized orover ~~less~~the ~~than~~shorter ~~estimated, and~~of ~~this could result in~~ the ~~vessels~~vessel’s ~~being~~and ~~stated~~equipment’s atremaining ~~values~~useful ~~materially~~lives ~~above~~ or ~~below~~ ~~their~~the ~~actual~~lives ~~value. Factors that could result in a shorter useful life, and thus an actual value~~ of ~~less than~~ the ~~stated~~renewals ~~value, include the unexpected emergence of new technology making our vessels obsolete sooner than expected,~~ or ~~changes~~ ~~in maritime or environmental law which are unpredictable but could result in a shorter than expected useful life for our vessels~~betterments. The Ifnet ~~the~~book ~~useful life is materially less than that estimated for depreciation purposes, it could result in our having to record an impairment to the~~ value of ~~the~~any asset. ~~A similar~~component ~~situation~~being ~~could~~replaced ~~arise~~will ifbe awritten ~~vessel~~off ~~which we have an intention to sell is found to have a fair value less cost to sell lower than its stated value at the time it is reclassified~~ as ~~held~~part ~~for~~of ~~sale,~~vessel ~~due~~operating ~~to a shorter useful life than that estimated in computing depreciation~~expenses. Expenditures ~~In this case we would be required to record an allowance against the asset at the time it is reclassified as held~~ for ~~sale for~~routine ~~the~~maintenance ~~difference between the carrying value~~ and ~~the~~repairs ~~fair~~are ~~value~~expensed ~~less~~as ~~cost to sell~~incurred.

Vessel construction in progress represents the cost of acquiring contracts to build vessels, installments paid to the shipyards, certain other payments made to third parties and capitalized interest costs incurred during the construction of each vessel until the vessel is substantially complete and ready for its intended use.

Impairment of Long-Lived Assets

We assess long-lived assets for recoverability in accordance with FASB ASC 360, Property, Plant and Equipment, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset, which is based on cost less depreciation taken to date, to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs, expenses and other factors. As such, the outcome of the evaluation analysis is subject to management’s estimates, which could differ from actual. This could potentially cause us to fail to record an impairment, when actual circumstances later result in realization of a loss on the asset, or to record an impairment when none actually exists. If these assets are considered to be impaired, the impairment to be recognized is calculated as the excess of the asset’s carrying value over its fair ~~value. As~~ of December 31, 2009, we are re-evaluating our intentions with respect to the chemical tanker, and believe it is unlikely that we will complete the acquisition of the tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments, and an adjustment to the overall contract price. We have therefore recorded an impairment to the deposit on asset acquisition on our balance sheet to reduce the carrying value ~~of this asset to zero, resulting in the recognition of a loss on impairment of $9,874,907~~. ~~No indicators of potential impairment were noted for the year ended December 31, 2008.~~

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our charterers to make required payments. We analyze, review and monitor accounts receivable and the composition of the accounts receivable aging on a quarterly basis. We estimate the allowance based on any specific charter collection issues identified.

New Accounting Pronouncements

In October 2009, the FASB ~~Accounting~~issued ~~Standards Codification~~ASU 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements, which amends ASC 605, Revenue Recognition, to require companies to allocate revenue in multiple-element arrangements based on an element’s estimated selling price if vendor-specific or other third-party evidence of value is not available. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Earlier application is permitted. The adoption of this ASU is not expected to have a material impact on the Partnership’s financial position, results of operations or cash flows.

(Accounting Standards Update (“ASU”) 2009-01)

In June 2009, the FASB issued ASU 2009-01, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which approves the Accounting Standards Codification, or ASC, as the single source of authoritative United States accounting and reporting standards applicable for all non-governmental entities. The ASC, which changes the referencing of financial standards, is effective for interim or annual financial periods ending after September 15, 2009. As the ASC is not intended to change or alter existing U.S. GAAP, it did not have any impact on our consolidated financial position or results of operations. We adopted Update 2009-01 as of September 30, 2009.

Derivatives and Hedging Activities

(Included in ASC 815 “Derivatives and Hedging,” previously SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of SFAS No. 133”)

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment of SFAS No. 133 which amended and expanded the disclosure requirements of SFAS No. 133 to include disclosure of the objectives and strategies related to an entity’s use of derivative instruments, disclosure of how an entity accounts for its derivative instruments and disclosure of the financial impact including the effect on cash flows associated with derivative activity. We adopted SFAS No. 161 as of January 1, 2009 on a prospective basis; accordingly, disclosures related to interim periods prior to the date of adoption have not been presented. The adoption had no impact on our consolidated financial statements, besides the additional disclosures. See Note 5 for additional information.

Disclosure about Fair Value of Financial Instruments

(Included in ASC 825 “Financial Instruments,” previously FSP FAS 107-1 and APB 28-1 “Interim Disclosure about Fair Value of Financial Instruments”)

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosure about Fair Value of Financial Instruments (“FSP 107-1/APB 28-1”). FSP 107-1/APB 28-1 requires interim disclosures regarding the fair values of financial instruments that are within the scope of FAS 107, Disclosures about the Fair Value of Financial Instruments. Additionally, FSP 107-1/APB 28-1 requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes of the methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does not change the accounting treatment for these financial instruments. We adopted this standard in the second quarter of 2009 and the required disclosures are included in Note 7.

Subsequent Events

(Included in ASC 855 “Subsequent Events,” previously SFAS No. 165 “Subsequent Events”)

In May of 2009, the FASB issued new authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the partnership’s consolidated financial statements for periods ending after June 15, 2009 and did not have a significant impact on the partnership’s consolidated financial statements.

Non-controlling Interest

(Included in ASC 810 “Consolidation,” previously SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51”)

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51. SFAS No. 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This accounting standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted SFAS No. 160 as of January 1, 2009. The adoption of SFAS No. 160 did not have a material impact on our consolidated financial statements, but it did change the presentation of the consolidated balance sheet, income statement and other comprehensive income. The presentation changes have been made for all periods presented.

Item 8. Financial Statements and Supplementary Data

				Page Number
		Report of Independent Registered Public Accounting Firm		59
		Consolidated Balance Sheets as of December 31, 2009 and 2008		60
		Consolidated Statements of Operations for years ended December 31, 2009 and 2008		61
		Consolidated Statements of Partners’ Equity for the years ended December 31, 2009 and 2008		62
		Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008		63
		Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009 and 2008		64
		Notes to Consolidated Financial Statements		65

In January 2010, the FASB issued an update to ASC 820, Fair Value Measurements and Disclosures- Improving Disclosures about Fair Value Measurements, which amended the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the Partnership on April 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for the Partnership on April 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements. Please see Item 8. Financial Statements and Supplementary Data under Note 8. Fair Value Measurements in our Notes to Consolidated Financial Statements.

In June 2009, the FASB issued guidance on the consolidation of variable interest entities within ASC 810, Consolidation, which is effective for annual and interim reporting periods beginning after November 15, 2009. The Partnership adopted the new guidance on April 1, 2010. The new guidance replaced the quantitative approach to identify a variable interest entity with a qualitative approach that focuses on an entity’s control and ability to direct the variable interest entity’s activities. The new guidance also requires ongoing assessments of control over such entities, and additional disclosures for variable interests. The adoption of this guidance did not have a material impact on our financial condition, results of operations or cash flows.

Item 8. Financial Statements and Supplementary Data

				Page Number
		Report of Independent Registered Public Accounting Firm		61
		Consolidated Balance Sheets as of December 31, 2010 and 2009		62
		Consolidated Statements of Operations for years ended December 31, 2010 and 2009		63
		Consolidated Statements of Equity for the years ended December 31, 2010 and 2009		64
		Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009		65
		Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2010 and 2009		66
		Notes to Consolidated Financial Statements		67

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

III to I Maritime Partners Cayman I, L.P. and Subsidiaries

We have audited the accompanying consolidated balance sheets of III to I Maritime Partners Cayman I, L.P. and Subsidiaries as of December 31, ~~2009~~2010 and ~~2008~~2009, and the related consolidated statements of operations, ~~partners’~~ equity, cash flows and comprehensive income (loss) for each of the two years then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board of the United States of America. 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 Partnership is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit 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 Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of III to I Maritime Partners Cayman I, L.P. and Subsidiaries as of December 31, ~~2009~~2010 and ~~2008~~2009, and the results of their operations and their cash flows for each of the two years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As disclosed in Note 2 to the financial statements, the Partnership has experienced significant net losses as well as negative cash flows since its inception on October 18, 2006 and is in default of its Senior Loan agreement. This raises substantial doubt about the Partnership’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MCGLADREY & PULLEN, LLP

Dallas, Texas

~~March~~August 31, ~~2010~~ 2011

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III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2009			2008
	2010			2009
ASSETS
Cash	$	187,~~267~~030,~~260~~642		$	218,~~222~~267,~~196~~260
Cash held in escrow		—			314,500
Related party receivables		96,463			1,949,363
Related party receivables		1,949,363			5,940,945
Due from charterers, net		18,356,906			3,263,009
Due from charterers		3,263,009			—
Other receivables		708,398			28,788
Other receivables		28,788			198,133
Receivable related to contingent liability		118,789,864			-
Prepaid assets		~~214~~471,~~490~~535			~~100~~214,~~000~~490
Current derivative assets		2472,~~773,820~~249			—2,773,820
Other current assets		1,~~142~~979,~~499~~089			~~491~~1,~~335~~142,499
Current assets		27147,~~639~~905,~~229~~146			927,~~267~~639,~~109~~229
Vessels		~~168~~502,~~478~~752,~~062~~373			—168,478,062
Vessel construction in progress		~~111,152,161~~-			80111,~~049~~152,~~335~~161
On board equipment		1119,~~912~~537,~~779~~809			~~811~~11,~~255~~912,779
		291,543,002			80,860,590
		522,290,182			291,543,002
Less accumulated depreciation		(525,~~003~~171,~~164~~876	)		—(5,003,164	)
Vessels and equipment, net		~~286~~497,~~539~~118,~~838~~306			80286,~~860~~539,~~590~~838
Investment in unconsolidated entities		2,~~977~~182,~~432~~355			32,~~575~~977,~~462~~432
Restricted cash		—			55,967,374
Deferred loan fees, net		4,051,340			3,554,818
Deferred loan fees, net		3,554,818			3,771,774
Derivative assets, net of current portion		-			2,797,433
Derivative assets, net of current portion		2,797,433			—
Long-term related party receivable		1,052,048			-
Other assets		~~207~~-			~~1,426~~207
Total assets	$	~~323~~652,~~508~~309,~~957~~195		$	~~153~~323,~~443~~508,~~735~~957
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES AND EQUITY
Accounts payable and other accrued liabilities	$	1511,~~400~~331,~~959~~358		$	215,~~653~~400,~~705~~959
Vessel construction installments payable		~~65,019,372~~-			1065,~~381~~019,~~453~~372
Accrued interest payable		~~173~~5,~~608~~061,077			~~322~~173,~~220~~608
Due to related party		~~852~~5,~~663~~247,603			~~850~~852,~~828~~663
Unaccepted equity contributions		—			314,500
Current derivative liabilities		12,120,047			4,522,274
Current derivative liabilities		4,522,274			—
Current portion of long-term debt		440,038,241			17,858,391
Current portion of long-term debt		17,858,391			34,927,967
Current portion of note payable to related party		457,500			-
Current liabilities		103,827,267			49,450,673
Contingent liability related to Nord/LB loans		118,789,864			-
Long-term derivative liabilities		5,007,963			—
Current liabilities		593,045,690			103,827,267
Notes payable to related party		477,500			1,250,000
Long-term derivative liabilities		11,615,111			5,007,963
Long-term debt, net of current portion		140,527,679			21,327,408
Notes payable to related party		154,000			477,500
Total liabilities		249,840,409			72,028,081
Long-term debt, net of current portion		26,400,000			140,527,679
Total liabilities		631,214,801			249,840,409
Commitments and contingencies
III to I Maritime Partners Cayman I, L.P. partners' equity:
III to I Maritime Partners Cayman I, L.P. partners' (deficit) equity:
General partner		514,138			942,557
General partner (units issued and outstanding:
December 31, 2010 - 9,900, December 31, 2009 - 9,900)		42,795			514,138
Class A limited partners (units issued and outstanding:
December 31, 2009 - 612,244, December 31, 2008 - 556,725)		36,459,320			53,153,690
December 31, 2010 - 616,135, December 31, 2009 - 612,244)		2,657,026			36,459,320
Class B limited partners (units issued and outstanding:
December 31, 2009 - 84,313, December 31, 2008 - 84,313)		4,789,036			8,026,114
December 31, 2010 - 84,313, December 31, 2009 - 84,313)		364,461			4,789,036
Class D limited partners (units issued and outstanding:
December 31, 2009 - 2,000, December 31, 2008 - 0)		(105,253	)		—
December 31, 2010 - 2,000, December 31, 2009 - 2,000)		(105,253	)		(105,253	)
Accumulated other comprehensive income		6,456,857			123,166
Accumulated other comprehensive (loss) income		(2,211,860	)		6,456,857
III to I Maritime Partners Cayman I, L.P. partners' equity		48747,~~114,098~~169			6248,~~245~~114,~~527~~098
Non-controlling interest		2520,~~554~~347,~~450~~225			1925,~~170~~554,~~127~~450
Total partners' equity		73,668,548			81,415,654
Total equity		21,094,394			73,668,548
Total liabilities and partners' equity	$	323,508,957		$	153,443,735
Total liabilities and equity	$	652,309,195		$	323,508,957

See Notes to Consolidated Financial Statements.

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III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2009			2008
	2010			2009
Time charter revenue	$	1963,~~415~~525,~~498~~360		$	—19,415,498
Operating expenses:
Vessel operating expenses		1942,~~484~~585,~~824~~940			—14,615,540
Loss on impairment of deposit on asset acquisition		9,874,907			—
Depreciation expense		20,586,202			4,869,284
Professional fees		3,151,608			1,499,873
Loss on impairment of deposit on asset acquisition		-			9,874,907
Brokerage and representation fees		725,980			656,250
Professional fees		2,408,918			3,151,608
Other operating expenses		847,757			544,831
Brokerage and representation fees		-			725,980
Total operating expenses		34,085,076			2,700,954
Other operating expenses		2,445,609			847,757
Operating loss		(14,669,578	)		(2,700,954	)
Total operating expenses		68,026,669			34,085,076
Operating loss		(4,501,309	)		(14,669,578	)
Other income (expense):
Interest income		999,078			2,768,138
Other income		109,717			32,632
Interest expense		(3,660,121	)		(1,005,205	)
Impairment of loan receivable from affliliate		(17,465,326	)		-
Loss on interest rate swaps		(9,272,915	)		—
Interest income		387,001			966,446
Foreign currency transaction gain (loss)		335,094			(2,129,747	)
Gain on extinguishment of debt		5,300,000			-
Equity in income (loss) of unconsolidated entities		(640,124	)		46,770
Interest expense		(19,473,318	)		(3,660,121	)
Total other income (expense)		(12,238,988	)		(320,044	)
Net loss on interest rate swaps		(13,643,935	)		(9,272,915	)
Net loss		(26,908,566	)		(3,020,998	)
Foreign currency transaction (loss) gain		(1,137,375	)		335,094
Net loss attributable to the
Equity in loss of unconsolidated entities		(571,845	)		(640,124	)
non-controlling interest		2,675,378			247,818
Total other expense		(46,495,081	)		(12,238,988	)
Net loss attributable to III to I Maritime
Net loss		(50,996,390	)		(26,908,566	)
Partners Cayman I, L.P.		(24,233,188	)		(2,773,180	)
Net loss attributable to the non-controlling interest		12,762,391			2,675,378
Less general partner's interest in net loss		(348,831	)		(48,712	)
Net loss attributable to III to I Maritime Partners Cayman I, L.P.		(38,233,999	)		(24,233,188	)
Limited partner interest in net loss	$	(23,884,357	)	$	(2,724,468	)
Less general partner interest in net loss		(459,409	)		(348,831	)
Limited partner interest in net loss	$	(37,774,590	)	$	(23,884,357	)
Net loss per general partner unit:
Basic and diluted	$	(3546.2340	)	$	(435.9223	)
Weighted average general partner units outstanding		9,900			9,900
Net loss per limited partner unit:
Net loss per Class A limited partner unit:
Basic and diluted	$	(3554.2342	)	$	(435.9223	)
Weighted average limited partner units outstanding		677,864			553,741
Weighted average Class A limited partner units outstanding		614,667			592,044
Net loss per Class B limited partner unit:
Basic and diluted	$	(51.27	)	$	(35.23	)
Weighted average Class B limited partner units outstanding		84,313			84,313
Net loss per Class D limited partner unit:
Basic and diluted	$	-		$	(35.23	)
Weighted average Class D limited partner units outstanding		2,000			1,507

See Notes to Consolidated Financial Statements.

6163

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~PARTNERS’~~ EQUITY

	III to I Maritime Partners Cayman I, L.P.
	Partners' Equity (Deficit)												Accumulated Other Comprehensive Income (Loss)
													Accumulated
													Foreign			Foreign
				Class A			Class B			Class D			~~Other~~currency			currency
	General			Limited			Limited			Limited			~~Comprehensive~~exchange			~~Non-controlling~~translation			Non-controlling
	Partner			Partners			Partners			Partners			~~Income (Loss)~~contracts			~~Interest~~adjustment			~~Total~~Interest			Total
Balance at January 1, 2008	$	1,020,841		$	44,681,597		$	5,507,244		$	—		$	163,683		$	12,953,730		$	64,327,095
Balance at January 1, 2009	$	942,557		$	53,153,690		$	8,026,114		$	-		$	-		$	123,166		$	19,170,127		$	81,415,654
Contributions, net of syndication costs		(2931,~~572~~274	)		113,~~301~~706,~~184~~146			2(266,~~874,247~~330	)		—(3,846	)		—-			~~8,129,972~~-			228,~~275~~166,~~831~~398			11,571,094
Receivable from partners		—			(460,000	)		—			—			—			—			(460,000	)
Payment on receivable from partners		-			460,000			-			-			-			-			-			460,000
Distributions		—-			—-			—-			—-			—-			~~(739,518~~-	)		(~~739~~689,~~518~~986	)		(689,986	)
Sale to affiliate		—			—			—			—			—			(173,668	)		(173,668	)
Transfer of non-controlling interest in Cyprus Subsidiary		(48,314	)		-			-			(48,314	)		-			-			96,628			-
Net loss		(48348,~~712~~831	)		(220,~~369~~860,~~091~~516	)		(~~355~~2,~~377~~970,748	)		—(53,093	)		—-			~~(247,818~~-	)		(32,~~020~~675,~~998~~378	)		(26,908,566	)
Foreign currency translation adjustment		—			—			—			—			(40,517	)		(752,571	)		(793,088	)
Forward currency exchange contracts		-			-			-			-			3,824,423			-			1,274,808			5,099,231
Balance at December 31, 2008		942,557			53,153,690			8,026,114			—			123,166			19,170,127			81,415,654
Foreign currency translation adjustment		-			-			-			-			-			2,509,268			211,853			2,721,121
Contributions, net of syndication costs		(31,274	)		3,706,146			(266,330	)		(3,846	)		—			8,166,398			11,571,094
Balance at December 31, 2009		514,138			36,459,320			4,789,036			(105,253	)		3,824,423			2,632,434			25,554,450			73,668,548
Payment on receivable from partners		—			460,000			—			—			—			—			460,000
Contributions, net of syndication costs		(11,934	)		(350,651	)		(101,628	)		-			-			-			10,514,036			10,049,823
Distributions		—			—			—			—			—			(689,986	)		(689,986	)
Net loss		(459,409	)		(33,451,643	)		(4,322,947	)		-			-			-			(12,762,391	)		(50,996,390	)
Transfer of non-controlling interest in
Forward currency exchange contracts, net of tax		-			-			-			-			(4,116,583	)		-			(1,372,194	)		(5,488,777	)
Cyprus Subsidiary		(48,314	)		—			—			(48,314	)		—			96,628			—
Foreign currency translation adjustment		-			-			-			-			-			(4,552,134	)		(1,586,676	)		(6,138,810	)
Net loss		(348,831	)		(20,860,516	)		(2,970,748	)		(53,093	)		—			(2,675,378	)		(26,908,566	)
Balance at December 31, 2010	$	42,795		$	2,657,026		$	364,461		$	(105,253	)	$	(292,160	)	$	(1,919,700	)	$	20,347,225		$	21,094,394
Forward currency exchange contracts		—			—			—			—			3,824,423			1,274,808			5,099,231
Foreign currency translation adjustment		—			—			—			—			2,509,268			211,853			2,721,121
Balance at December 31, 2009	$	514,138		$	36,459,320		$	4,789,036		$	(105,253	)	$	6,456,857		$	25,554,450		$	73,668,548

See Notes to Consolidated Financial Statements.

6264

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2009			2008
	2010			2009
Operating activities:
Net loss	$	(2650,~~908~~996,~~566~~390	)	$	(326,~~020~~908,~~998~~566	)
Adjustments to reconcile net loss to net cash
Adjustments to reconcile net loss to net cash used in operating activities:
provided by operating activities:
Depreciation		20,586,202			4,869,284
Depreciation		4,869,284			1,276
Amortization of deferred loan fees		510,666			50,645
Amortization of debt issue costs		50,645			21,544
Foreign currency transaction (gain) loss		(930,071	)		1,788,739
Foreign currency transaction loss		1,788,739			2,129,747
Net (gain) loss on forward currency exchange contracts		507,981			(2,152,897	)
Net gain on forward currency exchange contracts		(2,100,973	)		—
Net loss on interest rate swaps		13,643,935			9,272,915
Net loss on interest rate swap		9,272,915			—
Allowance for due from charterers		572,914			-
Settlement of hedge instruments		(51,924	)		—
Allowance for note receivable due from FLTC Fund I		17,465,326			-
Equity in loss (income) of unconsolidated entities		640,124			(46,770	)
Gain on extinguishment of debt		(5,300,000	)		-
Loss on impairment of deposit on asset acquisition		9,874,907			—
Equity in loss of unconsolidated entities		571,845			640,124
Payment of interest on Berenberg Facility		(5,401,173	)		(84,785	)
Loss on impairment of deposit on asset acquisition		-			9,874,907
Payment of interest on Berenberg Facility		-			(5,401,173	)
Changes in assets and liabilities:
Due from charterers		(315,~~263~~911,~~009~~560	)		—(3,263,009	)
Other receivables		~~171~~(681,~~992~~780	)		~~(198~~171,~~133~~992	)
Prepaid and other assets		(~~757~~1,~~426~~194,921	)		(~~227~~757,~~594~~426	)
Accounts payable and accrued liabilities		9153,~~310,633~~293			29,~~139~~310,~~549~~633
Accrued interest payable		~~(153~~4,~~968~~896,079	)		~~322~~(153,~~220~~968	)
Net cash (used in) provided by operating activities		(2,657,800	)		1,036,056
Net cash used in operating activities		(16,106,481	)		(2,657,800	)
Investing activities:
Net related party receivable		~~(147~~799,~~364~~153	)		(4147,~~395,510~~364	)
Distribution from unconsolidated entities		—			332,305
Receivable due from FLTC Fund I to finance ships		(17,465,326	)		-
Advances for vessel acquisitions		(~~124~~304,~~173~~312,~~802~~577	)		(20132,~~057~~886,~~917~~069	)
Advances for capitalized vessel construction costs		(8,712,267	)		(3,229,749	)
Purchase of on board equipment		(8,522,664	)		(11,087,942	)
Purchase of on board equipment		(11,087,942	)		(811,255	)
Decrease in restricted cash		-			55,967,374
Proceeds from sale to affiliate		—			2,922,775
Net cash used in investing activities		(329,501,414	)		(88,154,001	)
Decrease (increase) in restricted cash		55,967,374			(12,902,482	)
Net cash used in investing activities		(88,154,001	)		(38,141,833	)
Financing activities:
Proceeds from Berenberg Facility		~~2,655,082~~-			172,~~893~~655,~~238~~082
Repayments on Berenberg Facility		~~(54,451,067~~-	)		(254,~~903~~451,~~272~~067	)
Proceeds from senior loan with Nord/LB		150,700,745			—
Proceeds from Nord/LB Sr. Loan		278,690,710			150,700,745
Repayments on senior loan with Nord/LB		(5,232,663	)		—
Repayments on Nord/LB Sr. Loan		(25,159,579	)		(5,232,663	)
Net proceeds from borrowing on Hartmann Loans		7,617,990			—
Proceeds from borrowing on Nord/LB Credit Facility		3,096,563			-
Deferred loan fees		(9,527	)		(3,782,997	)
Net proceeds from borrowing on Nord/LB Working Capital Facility		9,939,750			-
Proceeds from related party note payable		—			1,250,000
Proceeds from RHKG Loan Agreements		23,146,364			7,617,990
Repayment of related party note payable		(11,327,751	)		—
Proceeds from Hartmann Loans		8,773,486			-
Net accounts payable to related party		(9,991	)		865,158
Net proceeds from borrowing on Asia Hartmann Loans		26,400,000			-
Contributions from partners		6,229,772			16,355,000
Deferred loan fees		(1,274,046	)		(9,527	)
Unaccepted equity contributions		(314,500	)		314,500
Proceeds from related party note payable		154,000			-
Syndication costs		—			(1,683,641	)
Repayment of related party note payable		(20,000	)		(11,327,751	)
Contributions from non-controlling interests		8,963,135			8,129,972
Net accounts payable to related party		2,139,913			(9,991	)
Distributions to non-controlling interests		(689,986	)		(739,518	)
Contributions from partners		389,100			6,229,772
Net cash provided by financing activities		104,131,239			35,698,440
Unaccepted equity contributions		-			(314,500	)
Effect of exchange rate changes on cash		2,725,626			(2,358,668	)
Syndication costs		(1,966,064	)		-
Net increase (decrease) in cash		16,045,064			(3,766,005	)
Contributions from non-controlling interests		10,798,474			8,963,135
Cash, beginning of year		2,222,196			5,988,201
Distributions to non-controlling interests		-			(689,986	)
Cash, end of year	$	18,267,260		$	2,222,196
Net cash provided by financing activities		335,108,671			104,131,239
Effect of exchange rate changes on cash		(737,394	)		2,725,626
Net (decrease) increase in cash		(11,236,618	)		16,045,064
Cash, beginning of period		18,267,260			2,222,196
Cash, end of period	$	7,030,642		$	18,267,260
Non-cash financing and investing activities:
Vessel construction installments financed through accounts payable	$	~~65,019,372~~-		$	1065,~~381~~019,~~453~~372
Deposits on asset acquisition financed through assumption of payable	$	~~5,300,000~~-		$	—5,300,000
Syndications costs financed through accounts payable	$	2,847,312		$	—
Construction in progress reclassed to delivered vessels	$	102,776,780		$	41,350,062
Syndication costs financed through accounts payable	$	1,137,751		$	2,847,312
FLTC Fund I contingent receivable and Nord/LB loan added to balance sheet due to cross collateralization	$	118,789,864		$	-

See Notes to Consolidated Financial Statements.

6365

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Years Ended December 31,
	2009			2008
	2010			2009
Net loss	$	(2650,~~908~~996,~~566~~390	)	$	(326,~~020~~908,~~998~~566	)
Foreign currency exchange forward contracts		5,099,231			—
Forward currency exchange contracts		(5,488,777	)		5,099,231
Foreign currency translation adjustment		2(6,~~721~~138,~~121~~810	)		~~(793~~2,~~088~~721,121	)
Comprehensive loss	$	(1962,~~088~~623,~~214~~977	)	$	(319,~~814~~088,~~086~~214	)
Comprehensive loss attributable to non-controlling interest		15,721,261			1,188,717
Comprehensive loss attributable to III to I Maritime Partners Cayman I, L.P. and Subsidiaries	$	(46,902,716	)	$	(17,899,497	)

See Notes to Consolidated Financial Statements.

6466

III TO I MARITIME PARTNERS CAYMAN I, LPL.P. AND SUBSIDIARIES

NOTES TO ~~THE~~ CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

1. Nature of Partnership’s Business and Summary of Significant Accounting Policies

References herein to III to I Maritime Partners Cayman I, L.P. (“Cayman I”) include III to I Maritime Partners Cayman I, L.P. and its consolidated subsidiaries. In accordance with the Securities and Exchange Commission’s (“SEC”) “Plain English” guidelines, these financial statements have been written in the first person. In this document, the words “we,” “our,” “ours” and “us” refer only to III to I Maritime Partners Cayman I, L.P. and its consolidated subsidiaries or to III to I Maritime Partners Cayman I, L.P. or an individual subsidiary and not to any other person.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts of the ~~Company~~Partnership and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of the Business

Cayman I, a Cayman Islands limited partnership, was formed October 18, 2006. Cayman I and its consolidated subsidiaries were formed for the primary purpose of acquiring, managing and operating maritime vessels. Our primary focus is on anchor-handling tug supply (“AHTS”) vessels, but we also purchased a non-controlling interest in two multipurpose bulk carrier vessels (“mini-bulkers”) ~~and entered into an agreement to purchase a chemical tanker~~. We are also authorized to engage in other activities if III to I International Maritime Solutions Cayman Inc., a Cayman Islands corporation (“General Partner”), believes such activities will benefit our core business of shipping operations. We are authorized to issue Class A, Class B, Class C and Class D limited partner units as well as general partner units. To date we have issued Class A, Class B and Class D limited partner units and general partner units. As of December 31, ~~2009~~2010, delivery of ~~three~~our ofnine ~~our~~ AHTS vessels ~~had~~has occurred from the shipyard, Fincantieri Cantieri Navali Italiani SpA (“Fincantieri”) in Italy~~, and we had contracts to purchase six additional new AHTS vessels currently under construction by Fincantieri~~. Delivery of our first three AHTS vessels, UOS Atlantis, UOS Challenger and UOS Columbia, occurred on February 27, 2009, May 28, 2009 and October 5, 2009, respectively, with the AHTS vessels immediately placed in service. With these three vessels delivered and operating under charters, our operations have begun to shift focus from development stage to vessel operations, therefore we are no longer a development stage company as defined by the topic Development Stage Entities of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), FASB ASC 915.

Initially, we owned approximately 96% of the units of I-A Suresh Capital Maritime Partners Limited, a limited liability company formed under the laws of Cyprus (our “Cyprus Subsidiary”). On April 28, 2009, having received the proper approval from our limited partners, we underwent a reorganization in order to simplify our ownership structure, streamline the calculation of allocations and distributions by incorporating economic rights in our Partnership Agreement that formerly resided in the organizational documents of our Cyprus Subsidiary and simplify the financial statements by eliminating the non-controlling interest component related to the Cyprus Subsidiary. As part of the reorganization approval, the reorganization was effective on April 1, 2009. Pursuant to the reorganization, one of the non-controlling unitholders in our Cyprus Subsidiary contributed its units in the Cyprus Subsidiary for newly created Class D units of Cayman I. The newly created Class D units are structured to represent, in total, substantially the same allocation rights in the results of operations and similar rights of control as the interest in the Cyprus Subsidiary which was the consideration for their issuance. Our general partner, the other non-controlling unitholder, contributed its units in the Cyprus Subsidiary in exchange for the contribution by the other unitholder and the adoption of the Second Amended and Restated Agreement of Limited Partnership. As a result of the reorganization, we now own 100% of our Cyprus Subsidiary.

III TO I MARITIME PARTNERS CAYMAN I, LP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

				Class D
	General			Limited			Non-controlling
	Partner			Partners			Interest
Balance at March 31, 2009	$	864,290		$	—		$	17,350,044
Transfer of non-controlling interest in
Cyprus Subsidiary		(48,314	)		(48,314	)		96,628
Contributions, net of syndication costs		(31,274	)		(3,846	)		8,166,398
Distributions		—			—			(71,025	)
Net loss		(270,564	)		(53,093	)		(2,528,153	)
Forward currency exchange contract		—			—			1,274,808
Foreign currency translation adjustment		—			—			1,265,750
Balance at December 31, 2009	$	514,138		$	(105,253	)	$	25,554,450

Suresh Capital Maritime Partners Germany GmbH (“German Subsidiary”), a German limited liability company and a wholly owned subsidiary of the Cyprus Subsidiary, was formed for the purpose of acquiring, managing and operating our maritime vessels.

Through December 31, 2009, we have incurred $9,735,969 in deposits, interest, and capitalized costs and $233,801 in deferred loan fees in connection with our potential acquisition of a chemical tanker, of which $94,863 was reclassed to interest expense per FASB ASC 825 Financial Instruments and the remainder was impaired and is included in loss on impairment of deposit on asset acquisition.. If acquired, the chemical tanker would be held in a separate special purpose entity (“SPV”) owned by our wholly-owned subsidiary, Kronos Shipping I, Ltd. (“Kronos”). The chemical tanker would transport bulk cargos such as chemicals, clean petroleum products and vegoils. As of the current date, we are re-evaluating our intentions with respect to the chemical tanker, and believe it is unlikely that we will complete the acquisition of the tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments, and an adjustment to the overall contract price. See Note 2. Maritime Vessels, for additional information regarding the potential chemical tanker acquisition.67

InIII ~~May 2007,~~TO weI ~~acquired~~MARITIME aPARTNERS ~~75%~~CAYMAN ~~limited partnership interest in 12 SPVs~~I, each a Kommanditgesellschaft (“KG”), German limited partnerships, in order to secure a position in 12 AHTS vessels available from the Fincantieri Shipyards in Italy with expected deliveries through 2010L. ~~The remaining 25% of each SPV is owned by Reederei Hartmann GmbH & Co~~P. KGAND (“Reederei Hartmann”), a Hartmann Group company, and affiliates of Reederei Hartmann. Additionally, Hartmann Offshore GmbH (“Hartmann Offshore”), a Hartmann Group company, was retained to provide management services for our AHTS vessels. Each SPV holds a shipbuilding contract for one AHTS vessel which will be operated through the respective SPV upon delivery. Each SPV was formed for the purpose of acquiring, managing and operating a single maritime vessel. In December 2007 and January 2008, we transferred our interest in three of the 12 AHTS SPVs to our affiliate, FLTC Fund I.SUBSIDIARIES

~~During 2007,~~NOTES weTO ~~also~~CONSOLIDATED ~~acquired~~FINANCIAL a 49% interest in two additional SPVs, each of which acquired and operates one mini-bulker. The operations of each mini-bulker are managed by Reederei Hesse GmbH & Co. KG (“Reederei Hesse”) with the remaining 51% ownership held by affiliates of the manager and the Hartmann Group. See Note 3 for additional information.STATEMENTS

66DECEMBER 31, 2010

~~III~~In TOMay ~~I MARITIME~~2007, ~~PARTNERS~~we ~~CAYMAN~~acquired Ia 75% limited partnership interest in 12 special purpose entities (“SPV”), LPeach an (“AHTS SPV”), each a Kommanditgesellschaft (“KG”), German limited partnerships, in order to secure a position in 12 AHTS vessels (the “Fleet”) available from the Fincantieri Shipyards in Italy with expected deliveries through 2010. The ~~AND~~remaining ~~SUBSIDIARIES~~25% of each AHTS SPV is owned by Reederei Hartmann GmbH & Co. KG (“Reederei Hartmann”), a Hartmann Group company, and affiliates of Reederei Hartmann. Additionally, Hartmann Offshore GmbH & Co. KG (“Hartmann Offshore”), a Hartmann Group company, was retained to provide management services for our AHTS vessels. Each AHTS SPV holds a vessel that was acquired through a shipbuilding contract for one such AHTS vessel which is currently operated through the respective AHTS SPV. Each AHTS SPV was formed for the purpose of acquiring, managing and operating a single maritime vessel. In December 2007 and January 2008, we sold our interest in three of the AHTS SPVs to our affiliate, FLTC Fund I.

~~NOTES~~During ~~TO THE~~2007, ~~CONSOLIDATED~~we ~~FINANCIAL~~also ~~STATEMENTS~~acquired a 49% interest in two additional SPVs, each of which acquired and operates one mini-bulker. The operations of each mini-bulker are managed by Reederei Hesse GmbH & Co. KG (“Reederei Hesse”) with the remaining 51% ownership held by affiliates of the manager and the Hartmann Group. See Note 3. Maritime Vessels for additional information.

Profits and losses are allocated in accordance with the Second Amended and Restated Agreement of Limited Partnership (“Partnership Agreement”), using the hypothetical liquidation at book value method. Distributions, based on available cash flows, are made to the beneficial owners in accordance with the Partnership Agreement. The Partnership Agreement entitles our general partner to a portion of all amounts which would otherwise be distributable to our Class A limited partners from distributions of cash flow provided by operations (but not from distributions of capital proceeds), which portion is equal to (i) ten percent until the limited partners have received returns up to the amount of their capital contributions, (ii) twenty percent until the limited partners have received returns equal to their capital contributions and (iii) thirty percent thereafter. Distributions to our Class B and Class D limited partners are not subject to this provision, and our Class D limited partners retained the rights they held prior to the reorganization discussed above with respect to distributions from our Cyprus Subsidiary. These rights entitle the Class D limited partner to a portion of the distributions in excess of the eight percent preferential return from our Cyprus Subsidiary to Cayman I, if such excess distributions exist.

Our ownership was as follows:

	General Partner					Class A Limited Partners					Class B Limited Partners					Class D Limited Partners
	Units		Ownership Interest			Units		Ownership Interest			Units		Ownership Interest			Units		Ownership Interest			Total Units
October 18, 2006		—-		0.00	%		—-		0.00	%		—-		0.00	%		—-		0.00	%		—-
Additions		9,750		6.94			121,065		86.12			9,763		6.94			—-		0.00			140,578
December 31, 2006		9,750		6.94			121,065		86.12			9,763		6.94			—-		0.00			140,578
Additions		150		0.04			308,265		87.56			43,650		12.40			—-		0.00			352,065
December 31, 2007		9,900		2.01			429,330		87.15			53,413		10.84			—-		0.00			492,643
Additions		—-		0.00			127,395		80.48			30,900		19.52			—-		0.00			158,295
December 31, 2008		9,900		1.52			556,725		85.53			84,313		12.95			—-		0.00			650,938
Additions		—-		0.00			55,519		96.52			—-		0.00			2,000		3.48			57,519
December 31, 2009		9,900		1.40	%		612,244		86.42	%		84,313		11.90	%		2,000		0.28	%		708,457
Additions		-		0.00			3,891		100.00			-		0.00			-		0.00			3,891
December 31, 2010		9,900		1.39	%		616,135		86.49	%		84,313		11.84	%		2,000		0.28	%		712,348

Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements present our consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant intercompany balances and transactions have been eliminated. We consolidate investments in entities in which we have a controlling interest. Investments in unconsolidated entities where we have the ability to exercise significant influence over operating and financial policies (generally 20% to 50% ownership) are accounted for using the equity method.

Business Geographics

Non-U.S. operations accounted for 100% of our revenues ~~and net income or loss~~. Vessels will regularly move between countries in international waters. It is therefore ~~impractible~~impracticable to assign revenues or earnings from operations by geographical area.

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Segment Reporting

Our AHTS vessels, which are currently the only vessels which we consolidate in our operations, serve the same type of customer, participate equally in a common revenue sharing pool, ~~and~~ have similar operations and maintenance requirements, operate in the same regulatory environment and are subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

We maintain deposit accounts with U.S. financial institutions that, at times, exceed the federally insured limits and with foreign financial institutions. Management believes the financial strength of the U.S. and foreign financial institutions minimizes the credit risk related to our deposits. We have not experienced any losses from this credit risk.

III TO I MARITIME PARTNERS CAYMAN I, LP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Cash

~~We consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.~~ Our cash balance will from time to time include amounts which may be subject to the conditions under the agreement with Norddeutsche Landesbank Girozentrale (“Nord/LB”) for the senior loan facility (“Senior Loan”). The Nord/LB ~~senior~~Senior ~~loan~~Loan conditions for each AHTS SPV prohibit us from making distributions unless payment of any ~~delivered~~AHTS vessels’ operating costs and all amounts due and payable under the Senior Loan are secured for a 12 month period via either cash reserves or charter coverage.

Cash Held in Escrow

We maintain balances in an escrow account, which are restricted from release until conditions of the escrow agreement have been met. The escrow account is used to hold investor deposits until subscription agreements have been accepted by the depositor, at which time the conditions of the escrow are fulfilled.

Due from Charterers

Customer obligations due under normal trade terms are recorded as due from ~~charters~~ charterers. An allowance for doubtful accounts would represent our estimate of the amount of probable credit losses existing in our ~~accounts receivable~~due from charterers. We have a limited number of customers with individually large amounts due at any given date. Any unanticipated change in any one of these customers’ credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material effect on the results of operations in the period in which such changes or events occur. We regularly review all ~~aged~~amounts ~~accounts~~due ~~receivables~~from charterers for collectability and establish an allowance as necessary for individual customer balances. As of December 31, ~~2009~~2010, ~~and~~we ~~2008~~had $571,792 (EUR 431,444) recorded as an allowance for doubtful accounts for due from charterers. As of December 31, 2009, we had recorded no allowance for doubtful accounts.

Derivatives

We account for derivatives and derivatives classified as hedges in accordance with FASB ASC 815, Derivatives and Hedging. All our derivative and hedge positions are stated at fair value ~~within current derivative assets, derivative assets, current derivative liabilities or long-term derivative liabilities~~ on our consolidated balance sheet.

Realized and unrealized gains and losses related to our foreign currency exchange contracts not classified as hedges are reported in our consolidated statements of operations in foreign currency transaction gain (loss). ~~Realized~~Gains and ~~unrealized~~ ~~gains and~~ losses related to foreign currency exchange contracts designated for hedge accounting are included in foreign currency transaction gain (loss) on the consolidated statement of operations to the extent they are ineffective, with the effective portion of the fair value gains or losses recorded as part of accumulated other comprehensive income (loss) on the consolidated balance sheet. The gain or loss related to changes in the fair value of our interest rate swap contracts, none of which are classified as hedges, is reported in loss on interest rate swaps on the consolidated statement of operations.

Vessels and Equipment

Vessels and equipment are stated at cost less accumulated depreciation. Vessel costs include acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage. On board equipment represents all the equipment required to operate a vessel. Vessels, net of salvage value, and on board equipment are depreciated on a straight-line basis over their estimated useful lives, which have been determined to be 20 years and 10 years, respectively, from the initial delivery date from the shipyard.

The costs of significant replacements, renewals or betterments will be capitalized over the shorter of the vessel’s and equipment’s remaining useful lives or the lives of the renewals or betterments. The non-depreciated cost of any asset component being replaced will be written off as part of vessel operating expenses. Expenditures for routine maintenance and repairs are expensed as incurred.69

III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

The costs of significant replacements, renewals or betterments will be capitalized over the shorter of the vessel’s and equipment’s remaining useful lives or the lives of the renewals or betterments. The net book value of any asset component being replaced will be written off as part of vessel operating expenses. Expenditures for routine maintenance and repairs are expensed as incurred.

III TO I MARITIME PARTNERS CAYMAN I, LP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long-Lived Assets

We assess long-lived assets for recoverability in accordance with FASB ASC 360, Property, Plant and Equipment, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs, expenses and other factors. If these assets are considered to be impaired, the impairment to be recognized is calculated as the excess of the asset’s carrying value over its estimated fair value. As of December 31, 2009, we ~~are~~evaluated ~~re-evaluating~~ our intentions with respect to the chemical tanker, and ~~believe~~determined ~~it is unlikely~~ that ~~we will complete~~ the ~~acquisition~~ ofasset ~~the~~was ~~tanker unless the shipyard constructing the vessel agrees to significant concessions, to include timing of construction installments, and an adjustment to the overall contract price~~impaired. We ~~have~~ therefore recorded an impairment to the deposit on asset acquisition on our balance sheet to reduce the carrying value of this asset to zero, ~~resulting~~ in December 2009. Due to the ~~recognition~~factors ofdiscussed ain ~~loss on~~Note ~~impairment~~2. ofGoing $9Concern,~~874~~ our long-lived assets,~~907. No~~ ~~indicators~~the ofAHTS ~~potential~~vessels, ~~impairment~~ were ~~noted~~reviewed for ~~the~~impairment ~~year~~as ~~ended~~of December 31, ~~2008~~2010 and no indication of impairment was noted.

Deferred Loan Fees

Costs incurred in connection with the issuance of debt have been capitalized and are being amortized on aan ~~straight-line~~effective interest basis to interest expense over the life of the related debt agreements~~, which does not create a significant difference from the effective interest method~~. Deferred loan fees at December 31, ~~2009~~2010 and December 31, ~~2008~~2009 amounted to $34,~~554~~051,~~818~~340 and $3,~~771~~554,~~774~~818, respectively, net of accumulated amortization of $63568,~~482~~365 and $1163,~~223~~482, respectively.

Non-controlling Interest

The non-controlling interest in our consolidated balance sheet reflects the original investment by non-controlling unitholders in the consolidated subsidiaries along with their proportional share of the earnings or losses of the subsidiaries, which are consolidated in our financial statements, less any distributions received by them from our consolidated subsidiaries. The non-controlling interest also receives a portion of the cumulative foreign currency translation adjustment and syndication costs.

Syndication Costs

Syndication costs are costs or fees incurred for financial services including, but not limited to, the procurement of equity at any level within Cayman I. Such costs are netted against non-controlling interest and partners’ equity in proportion to the ownership of each class of partner. See Note 67. Related Party Transactions for additional information.

Revenue Recognition

Our revenue is earned primarily from time chartering of vessels to charterers based upon daily rates of hire. A time charter is a lease arrangement under which we provide a vessel to a charterer and we are responsible for all crewing, insurance and other operating expenses. Time charters may be long term charters for ~~six~~three or four months to several years, or short-term charters, typically called “spot charters” measured in days or weeks. Our AHTS SPVs participate in a pool arrangement (“UOS AHTS Pool”) with three AHTS SPVs owned by FLTC Fund I ~~(“UOS AHTS Pool”)~~ under which they pool their revenue less voyage expenses (“Voyage Results”). Revenue ~~from~~is ~~charters,~~allocated ~~including~~primarily ~~any~~based ~~mobilization~~on ~~fees,~~each ~~is generally~~vessel’s ~~recorded~~pool ~~when services are rendered~~days, ~~estimates~~which ~~are~~is ~~reasonably determinable~~a ~~and~~measure ~~collection~~of isthe ~~reasonably~~vessel’s ~~assured~~utilization. ~~Revenue~~Pool isdays ~~recognized net~~are ofdefined ~~price~~as ~~adjustments~~days ~~and~~in ~~other~~the ~~potential~~given ~~adjustments~~quarter ~~based~~less ~~upon~~idle ~~the~~days ~~daily charter~~in ~~rate~~excess of 30 days for the ~~reporting period~~year. ~~Our~~Idle ~~pooling~~days ~~arrangement~~are ~~under~~days ~~the UOS~~when ~~AHTS~~a ~~Pool~~vessel ~~will~~is not ~~have~~earning ~~any~~charter ~~bearing~~revenue. Each onvessel’s ~~our~~pool ~~revenue~~points, ~~until~~which ~~such~~is ~~time~~based ason ~~one~~the comparability of the ~~vessels~~capability ~~owned~~and bythe ~~FLTC~~condition ~~Fund~~of Ieach vessel, is ~~delivered~~also ~~and~~factored ~~begins~~into tothe ~~participate~~calculation. To indate, all of the ~~UOS~~ ~~AHTS~~vessels ~~Pool,~~have ~~which~~been isawarded ~~expected~~equal inpool ~~May~~points ~~2010. After~~except ~~such~~the ~~time~~UOS Atlantis, ~~our~~which ~~revenue will~~does benot ~~recorded~~have ~~taking~~the ~~into~~latest ~~account~~dynamic ~~potential~~positioning ~~pool~~capability ~~adjustments~~as ~~for~~it was the ~~period~~ earliest vessel delivered.

Other revenue (i.e. Fuel Revenue, Oil & Lube Revenue, etc) is reported gross according to FASB ASC 605 Revenue Recognition (605.45.45). We are the primary obligor in the arrangement. Whether a supplier or our entity is responsible for providing the product or service desired by the charterer is a strong indicator of our entity’s role in the transaction. If we are responsible for fulfillment, including the acceptability of the products or services ordered or purchased by the charterer, that fact is a strong indicator that we have risks and rewards of a principal in the transaction and that we should record revenue gross based on the amount billed to the charterer. Representations (written or otherwise) made by our entity during marketing and the terms of the sales contract generally will provide evidence as to whether we or the supplier is responsible for fulfilling the ordered product or service. Responsibility for arranging transportation for the product ordered by a charterer is not responsibility for fulfillment. Unmitigated general inventory risk is a strong indicator that we have risks and rewards as a principal in the transaction and, therefore, revenue should be recorded gross based on the amount billed to the charterer.70

69III TO I MARITIME PARTNERS CAYMAN I, L.P. AND SUBSIDIARIES

~~III~~NOTES TO ~~I MARITIME~~CONSOLIDATED ~~PARTNERS~~FINANCIAL ~~CAYMAN I, LP. AND SUBSIDIARIES~~STATEMENTS

~~NOTES~~DECEMBER ~~TO THE~~31, ~~CONSOLIDATED FINANCIAL STATEMENTS~~2010

Revenue from charters is generally recorded when services are rendered, estimates are reasonably determinable and collection is reasonably assured. Revenue is recognized net of price adjustments and other potential adjustments based upon the daily charter rate for the reporting period. Revenue from mobilization fees is recognized ratably over the term of the charter, net of fuel cost incurred in relocating the vessel to the charter location. Our pooling arrangement under the UOS AHTS Pool did not have any bearing on our revenue until the vessels owned by FLTC Fund I began to participate in the UOS AHTS Pool. The first two of FLTC Fund I’s vessels were delivered September 21, 2010 and October 12, 2010, respectively, and began to participate in the UOS AHTS Pool in the fourth quarter 2010. The remaining vessel of FLTC Fund I, which was delivered October 27th, will begin to participate in the pool during the first quarter 2011 due to it not having entered into a charter until 2011.

Two customers represented 58.02% of our revenue for the year ended December 31, 2010. During the year ended December 31, 2009, two customers represented 96.35% of our revenue. Amounts due from these customers represented 52.17% and 76.9% of our amounts due from charterers at December 31, 2010 and December 31, 2009, respectively.

Other revenue (i.e. Fuel Revenue, Oil & Lube Revenue, etc.), which is included in charter revenue, is reported gross according to FASB ASC 605 Revenue Recognition, as we are the primary obligor in the arrangement. Whether a supplier or our entity is responsible for providing the product or service desired by the charterer is a strong indicator of our entity’s role in the transaction. If we are responsible for fulfillment, including the acceptability of the products or services ordered or purchased by the charterer, that fact is a strong indicator that we have risks and rewards of a principal in the transaction and that we should record revenue gross based on the amount billed to the charterer. Representations (written or otherwise) made by our entity during marketing and the terms of the sales contract generally will provide evidence as to whether we or the supplier is responsible for fulfilling the ordered product or service. Due to these indications of our role as primary obligor, the revenue is recorded gross based on the amount billed to the charterer.

Foreign Currency Translation

The functional currency of the majority of our subsidiaries is the Euro (“EUR”). Assets and liabilities of foreign currency-denominated financial statements are translated into the U.S. dollar (“USD”), our functional currency, at the exchange rate as of the balance sheet date. Revenues, costs and expenses are translated at the weighted-average exchange rate for the reporting period. Exchange gain and loss adjustments resulting from the translation of the financial statements are reflected in other comprehensive income (loss) in accordance with FASB ASC 830, Foreign Currency Matters.

During the years ended December 31, ~~2009~~2010 and ~~2008~~2009, we incurred a foreign currency transaction gain (loss) of ($~~335~~1,~~094~~137,375) and ($2335,~~129~~094,~~747),~~ respectively. These amounts include the effect of changes in the valuation of the forward currency exchange contracts as well as translation of ~~our~~certain cash deposit balances held in EUR to USD at the reporting dates.

Included in ~~other~~ accumulated other comprehensive income (loss) at December 31, 2010 and 2009 are the cumulative changes in foreign currency translation adjustments representing a gain (loss) of ($21,~~632~~919,~~434~~700) and $~~123~~2,~~166 for the years ended December 31~~632, ~~2009 and 2008~~434, respectively, which resulted from the translation of our financial statements from the functional currency of EUR to the reporting currency of USD.

We exclude foreign currency transaction gains and losses resulting from intercompany foreign currency transactions that are long-term in nature from the determination of net income (loss).

Income Taxes

We are not subject to U.S. federal or state income taxes. Our taxable income and losses are reported on the income tax returns of the respective partners and non-controlling interests. Based on the current structure and activity of the Cyprus Subsidiary and on current tax laws in Cyprus, the Cyprus Subsidiary is subject to income tax in Cyprus to the extent it has income of its own, which to date it does not. The German Subsidiary is treated as a German corporation for tax purposes and is subject to German corporate income taxes.

German income taxes are accounted for under FASB ASC 740, Income Taxes, which requires an assets and liabilities approach to financial accounting and reporting for deferred income taxes. Deferred income taxes and liabilities are computed for differences between financial statement and tax bases of assets and liabilities that result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances may be established to reduce deferred taxes to the amount expected to be realized. We had no deferred taxes as of December 31, 2009 and 2008.71

InIII ~~June 2006,~~TO ~~the~~I ~~FASB~~MARITIME ~~issued~~PARTNERS ~~Interpretation~~CAYMAN ~~No. 48~~I, ~~Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No~~L. ~~109, which is now under FASB ASC 740, Income Taxes~~P. ~~This~~ ~~interpretation~~AND clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.SUBSIDIARIES

WeNOTES ~~are subject~~TO toCONSOLIDATED ~~foreign~~FINANCIAL income taxes in Cyprus and Germany. Accordingly, all tax years since inception are still subject to audit by the taxing authorities in those jurisdictions. Our AHTS SPVs are subject to the tonnage tax regime in Germany, which results in the AHTS SPVs being taxed on the net tonnage of the AHTS vessels rather than the income generated in the AHTS SPV.STATEMENTS

DECEMBER 31, 2010

German income taxes are accounted for under FASB ASC 740, Income Taxes, which requires an assets and liabilities approach to financial accounting and reporting for deferred income taxes. Deferred income taxes and liabilities are computed for differences between financial statement and tax bases of assets and liabilities that result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances may be established to reduce deferred taxes to the amount expected to be realized. As of December 31, 2010 and 2009, we had $4,947,776 and $818,138 in deferred tax assets due to losses in our German Subsidiary, against which a valuation allowance of $4,947,776 and $818,138 was recorded, respectively.

Our Cyprus Subsidiary is a pass-through entity, and therefore we do not expect income tax liabilities to be incurred at this level. We are subject to foreign income taxes in our German Subsidiary. Accordingly, all tax years since inception are still subject to audit by the taxing authorities in those jurisdictions. Five of our AHTS SPVs are subject to the tonnage tax regime in Germany, which results in those AHTS SPVs being taxed on income determined based on the net tonnage of the AHTS vessels rather than the income generated in the AHTS SPVs. Four of our AHTS SPVs are subject to regular taxation in Germany, which results in those AHTS SPVs being taxed on taxable income determined under German regular taxation. The AHTS SPVs are subject to municipal trade tax in Germany. For those AHTS SPVs which are taxed under German regular taxation, the municipal trade tax carries an effective rate of 2.45% due to an exemption under the trade tax for 80% of income derived from international shipping operations. Those AHTS SPVs which elected to be taxed under the German tonnage tax regime do not qualify for the reduction, and therefore the municipal trade tax carries an effective rate of 12.25%. In addition to the trade tax, our German Subsidiary is subject to corporate income taxation on its share of the pass-through income or loss from the AHTS SPVs, whether such income is determined under the tonnage tax or regular taxation. The effective German corporate tax rate is 15.825%, which is a combination of the corporate income tax rate and the solidarity tax, which is 5.5% thereon.

Our policy is to recognize potential interest and penalties related to income tax matters in income tax expense. We believe we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter.

III TO I MARITIME PARTNERS CAYMAN I, LP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

In January 2010, the FASB issued an update to ASC 820, Fair Value Measurements and Disclosures- Improving Disclosures about Fair Value Measurements, which amended the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (~~Accounting Standards~~quoted ~~Update~~prices in active market for identical assets or liabilities) and Level 2 (~~“ASU”~~significant other observable inputs) ~~2009-01~~of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for us on January 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for us on January 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements. Please see Note 8. Fair Value Measurements.

Derivatives and Hedging Activities

(Included in ASC 815 “Derivatives and Hedging,” previously SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of SFAS No. 133”)

Disclosure about Fair Value of Financial Instruments

(Included in ASC 825 “Financial Instruments,” previously FSP FAS 107-1 and APB 28-1 “Interim Disclosure about Fair Value of Financial Instruments”)

Subsequent Events

(Included in ASC 855 “Subsequent Events,” previously SFAS No. 165 “Subsequent Events”)

In May of 2009, the FASB issued new authoritative accounting guidance under ASC Topic 855, “Subsequent Events,” establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC Topic 855 defines (i) the period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (iii) the disclosures an entity should make about events or transactions that occurred after the balance sheet date. The new authoritative accounting guidance under ASC Topic 855 became effective for the Partnership’s consolidated financial statements for periods ending after June 15, 2009 and did not have a significant impact on the Partnership’s consolidated financial statements.

III TO I MARITIME PARTNERS CAYMAN I, LP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-controlling Interest

(Included in ASC 810 “Consolidation,” previously SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51”)

2. Maritime Vessels

We committed to purchase nine AHTS vessels. As of December 31, 2009, the construction of the first three AHTS vessels was complete and operations had begun. The estimated cost of each AHTS vessel ranges from $53,259,995 (EUR 37,159,000) to $61,051,414 (EUR 42,595,000) for a total commitment for the nine vessels of $516,488,222 (EUR 360,349,000). Under the contracts, installments are due upon certain milestones being met during the construction. Approximately 30% of the total construction costs require deposits, some of which are funded with equity while others have been or will be funded through draws on our credit facility with Berenberg Bank, loans from Reederei Hartmann and our Senior Loan. Amounts drawn on our Senior Loan require either that each AHTS SPV is fully funded based on the capital as called for in the AHTS SPV company agreements, or provision of a guarantee acceptable to Nord/LB. A guarantee from Reederei Hartmann, our non-controlling interest holder and the 25% owner of the three AHTS SPVs of FLTC Fund I, (“Hartmann Guarantee”) in the amount of $45,932,786 (EUR 32,046,875) was outstanding at December 31, 2009. No such guarantee was outstanding at December 31, 2008.

In addition to our AHTS vessels, we entered into an agreement related to the potential acquisition of a chemical tanker. On November 13, 2007, III to I IMS Holdings, LLC (“IMS Holdings”), the sole shareholder of our general partner, entered into a Memorandum of Agreement (“MOA”) with the Schulte Group relating to the acquisition of the chemical tanker. Pursuant to the MOA, IMS Holdings placed an order for the chemical tanker through the Schulte Group for the purchase price of $41,500,000 to be paid in five equal installments. The Schulte Group agreed to loan IMS Holdings up to $8,300,000 for the first installment payment and to facilitate a bank guarantee for the second installment payment of $8,300,000. The Schulte Group formed Anthos Shipping Co. Limited (“Anthos”), a Cyprus SPV, to own the chemical tanker. The equity of Anthos is to be assigned to Kronos upon repayment of the loan, retirement of the bank guarantee and payment of all fees due to the Schulte Group. Kronos was not formed at the time the MOA was signed; therefore, the chemical tanker transaction was undertaken through an affiliate of IMS Holdings, IMS Capital Partners, LLC (“IMS Capital Partners”) on behalf of Kronos.

III TO I MARITIME PARTNERS CAYMAN I, LPL.P. AND SUBSIDIARIES

NOTES TO ~~THE~~ CONSOLIDATED FINANCIAL STATEMENTS

~~Effective April~~DECEMBER 2009, we entered into an agreement whereby all of the rights retained by IMS Capital Partners and IMS Holdings with respect to the chemical tanker pursuant to the MOA between IMS Holdings and Schulte Group were transferred to Kronos, the new obligor under an amended version of the MOA between Kronos and Conway Shipping I, Ltd (“Amended MOA”). As consideration for and to give effect to this transfer, we assigned the receivables from IMS Holdings, through which the transaction was undertaken, to IMS Capital Partners in exchange for the consent of IMS Capital Partners to the execution of the Amended MOA. This amount was credited by Kronos as additional paid in capital, and Kronos accepted the rights to the chemical tanker pursuant to the Amended MOA. The outcome left Kronos as the sole holder of all rights and obligations with respect to the potential acquisition of the chemical tanker and resulted in IMS Capital Partners and IMS Holdings each holding directly offsetting note obligations. By entering into a Note Cancellation Agreement, the note obligations between IMS Holdings and IMS Capital Partners were terminated. Through December 31, 2009, we have incurred costs of $9,735,969 in deposits, interest, and capitalized costs and $233,801 in deferred loan fees in connection with the potential acquisition of the chemical tanker through Anthos, of which $94,863 was reclassed to interest expense per FASB ASC 825 Financial Instruments and the remainder was impaired and is included in loss on impairment of deposit on asset acquisition.2010

In ~~light of~~June 2009, the ~~global~~FASB ~~downturn~~issued inguidance ~~the~~on ~~economy and~~ the ~~resulting~~consolidation ~~decrease~~of invariable ~~charter rates~~interest ~~for~~entities ~~chemical~~within ~~tankers,~~ASC ~~and product tankers in general~~810, ~~we are currently re-evaluating our intentions with respect to the chemical tanker~~Consolidation, ~~and~~which ~~believe it~~ is ~~unlikely~~effective ~~that~~for weannual ~~will~~and ~~complete~~interim ~~the~~reporting ~~acquisition~~periods ofbeginning ~~the~~after ~~tanker~~November 15, ~~unless~~2009. ~~the shipyard~~We ~~constructing~~adopted the ~~vessel~~new ~~agrees~~guidance toon ~~significant concessions~~January 1, to2010. ~~include timing~~The ofnew ~~construction~~guidance ~~installments,~~replaced ~~and~~the anquantitative ~~adjustment~~approach to ~~the~~identify ~~overall~~a ~~contract price. We~~variable ~~have~~interest ~~therefore~~entity ~~recorded~~with ana ~~impairment~~qualitative toapproach ~~the~~that ~~deposit~~focuses on ~~asset acquisition~~an onentity’s ~~our~~control ~~balance~~and ~~sheet~~ability to ~~reduce~~direct the ~~carrying~~variable ~~value~~interest ofentity’s ~~the~~activities. ~~asset~~The ~~to zero. This~~new ~~results~~guidance inalso ~~the~~requires ~~recognition~~ongoing assessments of acontrol ~~loss~~over onsuch ~~impairment of $9~~entities,~~874,907. If~~ weand doadditional ~~formally~~disclosures ~~forfeit~~for ~~our~~variable ~~option~~interests. toThe ~~acquire~~adoption ~~the~~of ~~tanker,~~this ~~we expect~~guidance todid ~~recognize~~not ~~gain~~have ona ~~the~~material ~~extinguishment~~impact ofon ~~debt~~our offinancial $5condition,~~300,000~~ inresults ~~a future period. The net result~~ of ~~this~~operations ~~would~~or becash aflows ~~loss~~and ofdid ~~approximately $4,574,907,~~not ~~which~~result ~~represents~~in ~~liquidating~~any ~~damages~~new ofentities ~~$3,000,000~~being ~~plus~~consolidated ~~our capitalized~~or ~~costs~~de-consolidation ~~approximating~~of ~~$1,574,907~~prior subsidiaries.

~~The table below provides details of our remaining capital expenditure obligation for each vessel as of December 31, 2009, including the potential acquisition of the chemical tanker~~2. ~~The~~ Going

Filing Compare · III TO I MARITIME PARTNERS CAYMAN I LP