1325098--3/17/2006--Quintana_Maritime

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Discussion and Analysis of Financial Condition and Results of Operations Revolving Credit Facility Restrictive Covenants Management s Discussion and Analysis of Financial Condition and Results of Operations Revolving Credit Facility Our earnings may be adversely affected if we do not successfully employ our vessels on medium- or long-term time charters or take advantage of favorable opportunities in the spot market. We may have difficulty properly managing our planned growth through acquisitions of additional vessels. We cannot assure you that we will be able to borrow further amounts under our revolving credit facility, which we may need to fund the acquisition of additional vessels. Restrictive covenants in our revolving credit facility impose, and any future debt facilities will impose, financial and other restrictions on us. Management s Discussion and Analysis of Financial Condition and Results of Operations Revolving Credit Facility Financial Covenants. Servicing future indebtedness would limit funds available for other purposes, such as the payment of dividends. Unless we set aside reserves for vessel replacement, at the end of a vessel s useful life our revenue will decline. Purchasing and operating secondhand vessels may result in increased operating costs and reduced fleet utilization. When our time charters end, we may not be able to replace them promptly or with profitable ones. Charterers may default on time charters that provide for above-market rates. Contracts of affreightment may result in losses. The international dry-bulk shipping industry is highly competitive, and we may not be able to compete successfully for charters with new entrants or established companies with greater resources. We may be unable to retain key management personnel and other employees in the shipping industry, which may negatively impact the effectiveness of our management and results of operations. Risks associated with operating oceangoing vessels could negatively affect our business and reputation, which could adversely affect our revenues and stock price. The operation of dry-bulk carriers has certain unique operational risks. Our vessels may suffer damage and we may face unexpected costs, which could adversely affect our cash flow and financial condition. The shipping industry has inherent operational risks that may not be adequately covered by our insurance. If we acquire additional dry-bulk carriers and those vessels are not delivered on time or are delivered with significant defects, our earnings and financial condition could suffer. The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings. We may earn United States source income that is subject to tax, thereby reducing our earnings. Summary of Significant Accounting Policies Income Taxes. U.S. tax authorities could treat us as a passive foreign investment company, which could have adverse U.S. federal income tax consequences to U.S. holders. The enactment of proposed legislation could affect whether dividends paid by us constitute qualified dividend income eligible for a preferential rate of federal income taxation. Because we expect to generate all of our revenues in U.S. Dollars but may incur a portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations. We depend upon a limited number of customers for a large part of our revenues and the loss of one or more of these customers could adversely affect our financial performance. We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make dividend payments. As we expand our business, we may need to improve our operating and financial systems and will need to recruit suitable employees and crew for our vessels. The international dry-bulk shipping sector is extremely cyclical and volatile; these factors may lead to reductions and volatility in our charter hire rates, vessel values and results of operations. Charter hire rates in the dry-bulk sector are above historical averages and future growth will depend on continued economic growth in the world economy that exceeds the capacity of the growing world fleet s ability to match it. We may not be able to draw down the full amount under our revolving credit facility if the market value of our vessels declines. We may breach some of the covenants under our revolving credit facility if the market price of our vessels, which are currently near historically high levels, declines. Our substantial operations outside the United States expose us to political, governmental and economic instability, which could harm our operations. Seasonal fluctuations in industry demand could adversely affect our operating results and the amount of available cash with which we can pay dividends. We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flow and net income. We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports. Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow. Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings. Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business. An economic slowdown in Asia could have a material adverse effect on our business, financial position and results of operations.

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1325098--3/17/2006--Quintana_Maritime_LTD