- Annual and Transition Report (foreign private issuer) (20-F)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 20-F

_________________

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

	OR

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

	OR

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

	For the transition period from to

	OR

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Date of event requiring this shell company report. . . . . . . . . . . . . . .

	Commission file number 001-33976

	OMEGA NAVIGATION ENTERPRISES, INC.
	(Exact name of Registrant as specified in its charter)

	Omega Navigation Enterprises, Inc.
	(Translation of Registrant's name into English)

	Republic of the Marshall Islands
	(Jurisdiction of incorporation or organization)

	61 Vasilissis Sofias Ave , Athens 115 21 Greece
	(Address of principal executive offices)

	George Kassiotis
	Tel: + 30 210 413 9130, Fax: + 30 210 422 0230
	E-mail: gkassiotis@omeganavigation.com
	(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

Title of each class		Name of each exchange on which registered

Class A Common stock, $0.01 par value		NASDAQ Global Market

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2009, there were 16,030,079 shares of Class A common stock of the registrant issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

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

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

x Yes No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x	International Financial Reporting Standards as issued by the International Accounting Standards o

Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

TABLE OF CONTENTS

PART I		1
	ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
	ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE	1
	ITEM 3 - KEY INFORMATION	1
	ITEM 4 - INFORMATION ON THE COMPANY	27
	ITEM 4A – UNRESOLVED STAFF COMMENTS	41
	ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS	41
	ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	62
	ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	66
	ITEM 8 - FINANCIAL INFORMATION	68
	ITEM 9 - THE OFFER AND LISTING	69
	ITEM 10 - ADDITIONAL INFORMATION	69
	ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	77
	ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	79

PART II		79
	ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	79
	ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	79
	ITEM 15 - CONTROLS AND PROCEDURES	80
	ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	80
	ITEM 16 B. CODE OF ETHICS	80
	ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND RELATED SERVICES	80
	ITEM 16D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	80
	ITEM 16E. PURCHASES OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASES	81
	ITEM 16G. CORPORATE GOVERNANCE

PART III		81
	ITEM 17 - FINANCIAL STATEMENTS	81
	ITEM 18 - FINANCIAL STATEMENTS	81
	ITEM 19 -EXHIBITS	81

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this document may constitute forward-looking statements.

The Private Securities Litigation Reform Act of 1995 provides safe harbour protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

Please note in this annual report, "we", "us", "our", the "Company", and "Omega" all refer to Omega Navigation Enterprises, Inc. and its subsidiaries.

Omega Navigation Enterprises, Inc., or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words "believe", "anticipate", "intends", "estimate", "forecast", "project", "plan", "potential", "will", "may", "should", "expect" and similar expressions identify forward-looking statements.

The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, managements examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere herein and in the documents incorporated by reference herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter hire rates and vessel values, changes in the demand for product tanker capacity, changes in the Company's operating expenses, including bunker prices, vessels breakdowns and instances of off-hires, availability of financing and refinancing, drydocking and insurance costs, changes in governmental rules and regulations, changes in income tax legislation or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.

PART I

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3 - KEY INFORMATION

A. Selected Financial Data

The following table sets forth our selected consolidated financial data as of December 31, 2009, 2008, 2007, 2006 and 2005 and for the years ended 2009, 2008, 2007, 2006 and the period from February 28, 2005 (date of inception) through December 31, 2005. We refer you to the notes to our consolidated financial statements for a discussion of the basis on which our consolidated financial statements are presented. The information provided below should be read in conjunction with Item 5 "Operating and Financial Review and Prospects" and the consolidated financial statements, related notes and other financial information included herein.

In September 2006, we decided to dispose of our drybulk carrier fleet and sell it to an unrelated third party. Such operations, which have been eliminated from the ongoing operations and cash flows of the company, are now presented as discontinued operations in the consolidated statements of income.

	As of and for the year ended December 31,
	2009			2008			2007			2006			As of December 31, 2005 and for the period from February 28, 2005 through December 31, 2005

(Expressed in thousands of U.S. Dollars – except share, per share data and average daily results)

INCOME STATEMENT DATA
Continuing operations
Voyage revenues	$	64,456		$	77,713		$	69,890		$	26,867		$	-
Voyage expenses		(1,535	)		(1,032	)		(930	)		(341	)		-
Vessel operating expenses		(17,260	)		(15,486	)		(13,121	)		(5,669	)		-
Depreciation and amortization		(19,173	)		(18,868	)		(17,557	)		(7,236	)		-
Management fees		(1,283	)		(1,243	)		(1,110	)		(568	)		-
Options' premium		-			-			(200	)		(200	)		-

	As of and for the year ended December 31,
	2009			2008			2007			2006			As of December 31, 2005 and for the period from February 28, 2005 through December 31, 2005

General and administrative expenses (including $1,408, $1,355 and $457 of non cash compensation expenses in 2009, 2008 and 2007, respectively)		(6,018	)		(6,085	)		(5,088	)		(2,354	)		(754	)
Foreign currency gains/(losses)		(122	)		44			(90	)		(33	)		3
Income/(Loss) from vessels' operation		19,065			35,043			31,794			10,466			(751	)

Loss on termination of purchase agreement		(3,000	)		-			-			-			-
Loss from Joint Venture companies		(278	)		-			-			-			-
Operating Income /(Loss)		15,787			35,043			31,794			10,466			(751	)

Interest and finance costs		(7,181	)		(14,385	)		(18,579	)		(7,483	)		(1	)
Interest income		138			711			1,821			1,837			12
Change in fair value of warrant		1,127			3,156			1,071			-			-
Loss on derivative instruments		(4,149	)		(13,586	)		(1,221	)		(255	)		-
Income/(loss) from continuing operations	$	5,722		$	10,939		$	14,886		$	4,565		$	(740	)

Discontinued operations
Income/(loss) from discontinued operations of the dry-bulk carrier fleet (including a gain on sale of vessel of $1,012 in 2005, a gain on extinguishment of debt of $5,000 in 2006, and an impairment loss on disposal of the drybulk carrier vessels of $1,686 in 2006).	$	-		$	20		$	(155	)	$	9,563		$	5,118

Net income	$	5,722		$	10,959		$	14,731		$	14,128		$	4,378

Earnings/ (Loss) per share from continuing operations
Earnings/ (Loss) per class A shares basic	$	0.27		$	0.71		$	0.98		$	0.42		$	(0.23	)
Earnings/ (Loss) per class A shares diluted	$	0.27		$	0.69		$	0.95		$	0.42		$	(0.23	)

	As of and for the year ended December 31,
	2009			2008			2007			2006			As of December 31, 2005 and for the period from February 28, 2005 through December 31, 2005

Earnings/ (Loss) per class B shares basic and diluted	$	1.90		$	0.71		$	0.98		$	0.30		$	(0.23	)

Earnings per share from continuing and discontinued operations
Earnings per class A shares basic	$	0.27		$	0.71		$	0.97		$	1.29		$	1.68
Earnings per class A shares diluted	$	0.27		$	0.69		$	0.94		$	1.29		$	1.68
Earnings per class B shares basic and diluted	$	1.90		$	0.71		$	0.97		$	0.93		$	1.39

Weighted average number of Class A common shares basic		14,825,002			12,057,717			12,010,000			8,689,452			10,000
Weighted average number of Class A common shares diluted		15,185,237			12,610,219			12,488,976			8,689,452			10,000
Weighted average number of Class B common shares basic and diluted		825,863			3,140,000			3,140,000			3,140,000			3,140,000

Cash dividends	$	0.50		$	2.00		$	2.00		$	1.00		$	-

BALANCE SHEET DATA
Cash and cash equivalents	$	15,564		$	16,811		$	8,893		$	3,862		$	5,058
Restricted cash (current and non-current)		5,912			5,297			5,498			6,477			500
Total current assets		25,214			18,638			10,838			88,974			5,738
Total fixed assets		494,436			500,221			506,223			350,631			85,491
Total assets		527,433			525,296			522,485			443,831			92,392
Short term debt, sellers' notes and current portion of long-term debt		343,252			138			781			49,133			74,994
Total current liabilities		359,533			14,992			7,440			54,509			77,984
Long-term debt		-			335,112			322,565			188,944			-
Total stockholders' equity	$	167,794		$	166,604		$	184,874		$	200,097		$	14,408

CASH FLOW DATA (Continuing operations)
Net cash provided by operating activities	$	19,561		$	40,055		$	33,956		$	15,002		$	345
Net cash used in investing activities		(18,883	)		(12,820	)		(165,178	)		(358,067	)		-
Net cash provided by/ (used in) financing activities		(1,925	)		(19,317	)		92,875			338,427			8,989

	As of and for the year ended December 31,
	2009			2008			2007			2006			As of December 31, 2005 and for the period from February 28, 2005 through December 31, 2005

CASH FLOW DATA (Continuing and discontinued operations)
Net cash provided by operating activities	$	19,561		$	40,055		$	33,261		$	22,730		$	9,571
Net cash used in investing activities		(18,883	)		(12,820	)		(83,710	)		(358,067	)		(43,364	)
Net cash provided by/ (used in) financing activities		(1,925	)		(19,317	)		55,480			334,141			38,851

FLEET DATA
Panamax tankers
Average number of vessels (2)		6			6			5			2			-
Number of vessels at end of period		6			6			6			4			-
Average age of fleet (in years)		4			3			2			2			-
Ownership days (3)		2,190			2,196			1,989			753			-
Available days (4)		2,158			2,186			1,989			753			-
Operating days (5)		2,142			2,186			1,989			753			-
Fleet utilization (6)		99	%		100	%		100	%		100	%		-
Handysize tankers
Average number of vessels (2)		2			2			2			1			-
Number of vessels at end of period		2			2			2			2			-
Average age of fleet (in years)		3			2			1			0			-
Ownership days (3)		730			732			730			369			-
Available days (4)		730			732			730			369			-
Operating days (5)		729			732			730			369			-
Fleet utilization (6)		100	%		100	%		100	%		100	%		-

AVERAGE DAILY RESULTS
Panamax tankers
Time charter equivalent (TCE) rate (7)	$	22,265		$	25,029		$	25,013		$	25,096		$	-
Daily vessel operating expenses (8)	$	6,097		$	5,406		$	4,959		$	5,191		$	-
Handysize tankers
Time charter equivalent (TCE) rate (7)	$	15,981		$	20,772		$	20,786		$	20,675		$	-
Daily vessel operating expenses (8)	$	5,352		$	4,938		$	4,463		$	4,768		$	-

Non-GAAP financial measures
Adjusted EBITDA (1) (continuing operations)	$	39,088		$	57,068		$	50,422		$	17,702		$	(751	)
Adjusted EBITDA (1) (continuing & discontinued operations)	$	39,088		$	57,088		$	50,395		$	32,578		$	12,260

(1)

Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is a non-GAAP measure and does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP. Our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included here because it is a basis upon which we assess our liquidity position, because it is used by our lenders as a measure of our compliance with certain loan covenants, and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness.

The following tables reconcile net cash from operating activities, as reflected in the consolidated statement of cash flows for the years ended December 31, 2009, 2008, 2007, 2006 and the period from February 28, 2005 (date of inception) through December 31, 2005, to Adjusted EBITDA:

	Year ended December 31,
	2009			2008			2007			2006			For the period from February 28, 2005 through December 31, 2005
Continuing Operations
Net cash from operating activities	$	19,561		$	40,055		$	33,956		$	15,002		$	345
Net increase in current and non current assets		2,030			285			532			973			-
Net increase/ (decrease) in current liabilities excluding bank debt and sellers credit		(1,215	)		466			(886	)		(3,465	)		(1,085	)
Stock based compensation		(1,408	)		(1,355	)		(457	)		-			-
Write off of option's premium		-			-			(200	)		(200	)		-
Change in fair value of warrant		1,127			3,156			1,071			-			-
Loss on termination of purchase agreement		3,000			-			-			-			-
Payments for drydocking costs		1,521			538			-			-			-
Net interest expense		15,532			14,591			16,713			5,588			(11	)
Undistributed losses on Joint Venture companies		(278	)		-			-			-			-
Amortization of financing costs		(782	)		(668	)		(307	)		(196	)		-
Adjusted EBITDA	$	39,088		$	57,068		$	50,422		$	17,702		$	(751	)

	Year ended December 31,
	2009			2008			2007			2006			For the period from February 28, 2005 through December 31, 2005
Continuing and Discontinued operations
Net cash from operating activities	$	19,561		$	40,055		$	33,261		$	22,730		$	9,571
Net increase in current and non current assets		2,030			285			360			987			180
Net increase/ (decrease) in current liabilities excluding bank debt and sellers credit		(1,215	)		486			(134	)		(2,476	)		(2,868	)
Gain/(impairment loss) from sale of vessels		-			-			-			(1,685	)		1,012
Gain on extinguishment of debt		-			-			-			5,000			-
Stock based compensation		(1,408	)		(1,355	)		(457	)		-			-
Write off of option's premium		-			-			(200	)		(200	)		-
Change in fair value of warrant		1,127			3,156			1,071			-			-
Loss on termination of purchase agreement		3,000			-			-			-			-
Payment for drydocking costs		1,521			538			-			-			360
Net interest expense		15,532			14,591			16,841			8,564			4,137
Undistributed losses on Joint Venture companies		(278	)		-			-			-			-
Amortization of financing costs		(782	)		(668	)		(347	)		(342	)		(132	)
Adjusted EBITDA	$	39,088		$	57,088		$	50,395		$	32,578		$	12,260

For loan covenants calculation purposes the amount of Adjusted EBITDA is based on continuing and discontinued operations and it is further adjusted as follows:

Adjusted EBITDA	$	39,088		$	57,088		$	50,395		$	32,578	$	12,260
Gain/(impairment loss) from sale of vessels		-			-			-			1,685		-
Change in fair value of warrant		(1,127	)		(3,156	)		(1,071	)		-		-
Adjusted EBITDA required by debt covenants	$	37,961		$	53,932		$	49,324		$	34,263	$	12,260

(2)

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

(3)

Ownership days are the aggregated number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

(4)

Available days are the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

(5)

Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(6)

We calculate fleet utilization by dividing the number of operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.

(7)

Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by available days for the relevant time period. Time charter equivalent revenue and TCE are not measures of financial performance under U.S. GAAP and may not be comparable to similarly titled measures of other companies. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. The following table reflects the calculation of our TCE rate for the years 2009, 2008, 2007, 2006 and the period from February 28, 2005 (date of inception) through December 31, 2005.

	Year ended December 31,
	2009			2008			2007			2006			For the period from February 28, 2005 through December 31, 2005
	(in thousands of U.S. dollars, except for TCE rate, which is expressed in U.S. dollars, and available days)
Panamax tankers
Voyage revenues	$	52,273		$	62,214		$	54,508		$	19,141		$	-
Less: Voyage expenses		(1,017	)		(829	)		(722	)		(244	)		-
Less: Profit share		(3,208	)		(6,671	)		(4,034	)		-			-
Time charter equivalent revenues	$	48,048		$	54,714		$	49,752		$	18,897		$	-
Available days		2,158			2,186			1,989			753			-
Time charter equivalent (TCE) rate	$	22,265		$	25,029		$	25,013		$	25,096		$	-
Handysize tankers
Voyage revenues	$	12,183		$	15,499		$	15,382		$	7,726		$	-
Less: Voyage expenses		(517	)		(203	)		(208	)		(97	)		-
Less: Profit share		-			(91	)		-			-			-
Time charter equivalent revenues		11,666		$	15,205		$	15,174		$	7,629		$	-
Available days		730			732			730			369			-
Time charter equivalent (TCE) rate	$	15,981		$	20,772		$	20,786		$	20,675		$	-

(8)

Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance (excluding drydocking), the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period. For the year ended December 31, 2007 the balance of vessel operating expenses includes pre-delivery expenses that amounted to $0.8 million for the Panamax product tankers. For the year ended December 31, 2006 the balance of vessel operating expenses includes pre-delivery expenses that amounted to $0.4 million for the Panamax product tankers and $0.4 million for the Handysize product tankers.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons For the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Some of the following risks relate principally to the industry in which we operate and our business in general. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected and the trading price of our securities could decline.

Industry Specific Risk Factors

Charter rates for product tankers have declined significantly from their historic highs and may decrease in the future, which may adversely affect our earnings

The product tanker sector is cyclical with volatility in charter hire rates and industry profitability. The degree of charter hire rate volatility among different types of product tankers has varied widely and after reaching historical highs in mid-2008, declined significantly from those historical high levels. If the shipping industry is depressed in the future when our charters expire or at a time when we may want to sell a vessel, our revenues, earnings, available cash flow and ability to pay dividends, if any, may be adversely affected. In addition, lower charter hire rates likely will cause the value of our vessels to be lower than vessel values during periods of relatively higher charter rates. We cannot assure you that we will be able to successfully charter our vessels in the future or renew our existing charters at rates sufficient to allow us to operate our business profitably, meet our obligations or pay dividends to our shareholders. Our ability to re-charter our vessels on the expiration or termination of our current charters, the charter rates payable under any replacement charters and vessel values will depend upon, among other things, economic conditions in the product tanker market at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for oil and oil products. The factors affecting the supply and demand for product tankers are outside of our control and are unpredictable. The nature, timing, direction and degree of changes in industry conditions are also unpredictable.

The factors that influence the demand for vessel capacity include:

demand for oil and oil products;

supply of oil and oil products;

regional availability of refining capacity;

the globalization of manufacturing;

global and regional economic and political conditions;

developments in international trade;

changes in seaborne and other transportation patterns, including changes in the distances over which cargoes are transported;

environmental and other regulatory developments;

currency exchange rates; and

weather.

The factors that influence the supply of vessel capacity include:

the number of newbuilding deliveries;

the scrapping rate of older vessels;

the price of steel and vessel equipment;

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

the number of vessels that are out of service or used for storage; and

port or canal congestion.

If the number of new vessels delivered exceeds the number of vessels being scrapped and lost, vessel capacity will increase. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline.

The value of our vessels may fluctuate, which may adversely affect our liquidity

Vessel values can fluctuate substantially over time due to a number of different factors, including:

general economic and market conditions affecting the shipping industry;

competition from other shipping companies;

the types and sizes of available vessels;

the availability of other modes of transportation;

increases in the supply of vessel capacity;

the cost of newbuildings;

prevailing charter rates; and

the cost of retrofitting or modifying second hand vessels as a result of charterer requirements, technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.

In addition, as vessels grow older, they generally decline in value. Due to the cyclical nature of the product tanker market, if for any reason we sell vessels at a time when prices have fallen, we could incur a loss and our business, results of operations, cash flows, financial condition and ability to pay dividends could be adversely affected.

The market value of our vessels have declined and may further decrease, which could lead to a default under our credit facilities, the loss of our vessels and/or we may incur a loss if we sell vessels following a decline in their market value

The fair market values of our vessels have generally experienced high volatility and have recently declined significantly. As of December 31, 2009, due to the decline in the market value of our fleet we are not in compliance with certain provisions of our credit facilities and we may not be able to refinance our debt or obtain additional financing. Including the requirement that the market value of the vessels in our fleet is at least 120% to 125% of the aggregate outstanding principal balance of our borrowings under our credit facilities. If we are unable to obtain waivers or modify the terms of the provisions of our loan agreements of which we are currently in breach, and to comply with all other covenants under our credit facilities, our lenders could require us to post additional collateral, enhance our equity and liquidity, increase our interest payments or pay down our indebtedness to a level where we are in compliance with our covenants, sell vessels in our fleet, or they could accelerate our indebtedness, which would impair our ability to continue to conduct our business. In addition, we have also classified as of the date of this annual report all of our outstanding debt as current as a result of our non-compliance with provisions in certain of our loan agreements and cross-default provisions contained in the loan agreements. As of the date of this annual report, the lenders under our loan agreements have not declared the loans in default and we continue to seek to obtain waivers or amendments to these loan agreements. Our outstanding indebtedness that we have classified as current is significantly in excess of our cash and other current assets. If our indebtedness was accelerated in full or in part, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose their liens, which would adversely affect our ability to conduct our business. Furthermore, if we find it necessary to sell our vessels at a time when vessel prices are low, we will recognize losses and a reduction in our earnings, which could affect our ability to raise additional capital necessary for us to comply with our loan agreements. In addition, if we sell one or more of our vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our consolidated financial statements, the sale may be less than the vessel's carrying value on our consolidated financial statements, resulting in a loss and a reduction in earnings. Furthermore, if vessel values fall significantly we may have to record an impairment adjustment in our financial statements which could adversely affect our financial results and ability to pay dividends.

An over-supply of tanker capacity may lead to reductions in charter hire rates and profitability

The market supply of tankers is affected by a number of factors such as demand for energy resources, oil, and petroleum products, waiting days in ports, as well as strong overall economic growth in parts of the world economy including Asia. Furthermore, the extension of refinery capacity in India and the Middle East up to 2011 will exceed the immediate consumption in these areas, and an increase in exports of refined oil products is expected as a result. Factors that tend to decrease tanker supply include the conversion of tankers to non-tanker purposes and the phasing out of single-hull tankers due to legislation and environmental concerns. An over-supply of tanker capacity may result in a reduction of charter hire rates. If a reduction occurs, upon the expiration or termination of our vessels' current charters, we may only be able to recharter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all, which could lead to a material adverse effect on our results of operations and ability to pay dividends.

Rising fuel prices may adversely affect our profits

Upon redelivery of vessels at the end of a period time or trip time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. In addition fuel is a significant, if not the largest, expense that we would incur with respect to vessels operating on voyage charter. As a result, an increase in the price of fuel may adversely affect our profitability. The price and supply of fuel is volatile and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations.

Our substantial operations outside the United States expose us to political, governmental and economic instability, which could harm our operations

Because our operations are primarily conducted outside of the United States, they may be affected by economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered. Future hostilities or political instability in regions where we operate or may operate could have a material adverse effect on the growth of our business, results of operations and financial condition and our ability to pay dividends. In addition, tariffs, trade embargoes and other economic sanctions by the United States or other countries against countries where our vessels trade may limit trading activities with those countries, which could also harm our business, financial condition, results of operations and ability to pay dividends.

A further economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations

Negative changes in economic conditions in any Asia Pacific country, particularly in China, may exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may further reduce global demand for refined petroleum products and have a material adverse effect on our business, financial condition and results of operations, as well as our future prospects. In recent years, China has been one of the world's fastest growing economies in terms of gross domestic product, which has had a significant impact on shipping demand. This rate of growth declined significantly in the second half of 2008 and it is likely that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economic growth in the near future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. Our business, financial condition and results of operations, as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business

We enter into, among other things, charter parties, joint ventures, credit facilities with banks and interest rate swap agreements. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter rates received for specific types of product tankers and various expenses. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, the International Convention for the Prevention of Pollution from Ships of 1975, the International Maritime Organization, or IMO, International Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Clean Air Act, the U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations,

including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. We cannot predict the ultimate cost of complying with these future regulatory obligations, and these costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. For example, we cannot predict the cost of compliance with any new regulation that may be promulgated by the United States as a result of the 2010 BP Deepwater Horizon oil spill in the Gulf of Mexico. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition.

We currently maintain, for each of our vessels, pollution liability coverage insurance of $1 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, it could have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends.

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

The operation of our vessels is affected by the requirements set forth in the IMO International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this annual report, each of our vessels is ISM code-certified.

Our vessels may suffer damage due to the inherent operational risks of the seaborne transportation industry and we may experience unexpected drydocking costs, which may adversely affect our business, financial condition and ability to pay dividends

Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. These hazards may result in death or injury to persons, loss of revenues or property, environmental damage, higher insurance rates, damage to our customer relationships, delay or rerouting. If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels' positions. The loss of earnings while these vessels are forced to wait for space or to steam to more distant drydocking facilities would decrease our earnings.

Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the seaborne transportation industry

We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protection and indemnity insurance, which includes pollution risks, crew insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations, cash flows and financial condition. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates in the future during adverse insurance market conditions.

As a result of the September 11, 2001 attacks, the U.S. response to the attacks and related concern regarding terrorism, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. Accordingly, premiums payable for terrorist coverage have increased substantially and the level of terrorist coverage has been significantly reduced.

In addition, while we carry loss of hire insurance to cover 100% of our fleet, we may not be able to maintain this level of coverage. Accordingly, any loss of a vessel or extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends.

Because we obtain some of our insurance through protection and indemnity associations, we may also be subject to calls in amounts based not only on our own claim records, but also the claim records of other members of the protection and indemnity associations

We may be subject to calls in amounts based not only on our claim records but also the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Labor interruptions could disrupt our business

Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could cause us to default on a charter, interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our vessels.

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

A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government

takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may negatively impact our business, financial condition, results of operations and ability to pay dividends.

Terrorist attacks and international hostilities can affect the seaborne transportation industry, which could adversely affect our business

We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and ability to pay dividends may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political instability, terrorist or other attacks, war or international hostilities. Terrorist attacks in such as the attacks on the United States on September 11, 2001, in London on July 7, 2005 and in Mumbai on November 26, 2008 and the continuing response of the United States and others to these attacks, as well as the threat of future terrorist attacks in the United States or elsewhere, continues to cause uncertainty in the world's financial markets and may affect our business, operating results and financial condition. The continuing presence of United States and other armed forces in Iraq and Afghanistan may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

Terrorist attacks on vessels, such as the October 2002 attack on the M.V. Limburg , a very large crude carrier not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility and turmoil of the financial markets in the United States and globally. Any of these occurrences could have a material adverse impact on our revenues and costs.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our business

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008 and 2009, the frequency of piracy incidents has increased significantly, particularly in the Gulf of Aden off the coast of Somalia. If these piracy attacks result in regions in which our vessels are deployed being characterized by insurers as "war risk" zones or Joint War Committee (JWC) "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and ability to pay dividends.

Disruptions in world financial markets and the resulting governmental action in the United States and in other parts of the world could have a material adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common stock to further decline

The United States and other parts of the world are exhibiting deteriorating economic trends and have been in a recession. For example, the credit markets in the United States have experienced significant contraction, deleveraging and reduced liquidity, and the United States federal government and state governments have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The Commission, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.

Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. The uncertainty surrounding the future of the credit markets in the United States and the rest of the world has resulted in reduced access to credit worldwide.

We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, have caused the trading price of our common shares on the NASDAQ Global Market to decline and could cause the price of our common shares to continue to decline.

Company Specific Risk Factors

We are in breach of financial covenants contained in our credit facilities, and are currently in discussions with our lenders to obtain waivers and amendments of such financial covenants

Our credit facilities, which are secured by mortgages on our vessels, require us to comply with specified collateral coverage ratios and satisfy certain financial covenants. The current low charter hire rates for product tankers and product tanker values, and even lower rates and values experienced over the past year, have affected our ability to comply with these covenants. Unless waived by our lenders, our breach of these covenants provides our lenders with the right to require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, and accelerate our indebtedness and foreclose their liens on our vessels, any of the foregoing of which would impair our ability to continue to conduct our business. In addition, as a result of these breaches, we have, as of the date of this annual report classified our outstanding indebtedness as current.

While our lenders have not declared an event of default under our loan agreements, these breaches give our lenders the right to declare such breaches as events of default, and we are in discussions with our lenders to obtain waivers and amendments of such financial covenants. Charter rates and vessel values, particularly in the product tanker sector, may remain at low levels for an extended period of time or may decrease even further, in which case it may be difficult for us to comply with the existing financial and other covenants in our loan agreements with which we are currently in compliance absent obtaining additional waivers from our lenders or amending the financial covenants and may make it more difficult to negotiate waivers or amendments with respect to our existing breaches. There can be no assurance that our lenders will grant us these waivers. If we fail to comply with the covenants in our loan agreements and our lenders do not provide us with waivers or amendments of such covenants, our lenders could accelerate our indebtedness and foreclose their liens on our vessels, which would impair our ability to continue as a going concern.

Because of the presence of cross default provisions in all of our loan agreements, the refusal of any one lender to grant us a waiver could result in all of our indebtedness being accelerated even if our other lenders have waived covenant defaults under the respective loan agreements. A cross default provision means that if we default on one loan, we would then default on all of our other loans.

If our indebtedness is accelerated, it would be very difficult in the current financing environment for us to refinance our debt or obtain additional financing, and we could lose our vessels if our lenders foreclose their liens. In addition, if the fair value of our vessels, which is calculated using undiscounted cash flows, deteriorates significantly from their currently depressed levels, we may have to record an impairment adjustment to our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital.

Moreover, in connection with any waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements. These restrictions may limit our ability to, among other things, pay dividends, make capital expenditures and/or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness.

Our inability to comply with certain financial covenants under our loan agreements raises substantial doubt as to our ability to continue as a going concern

As discussed above, we are in breach of certain financial covenants contained in our loan agreements as a result of the decline in the product tanker charter market and related decline in vessel values in the product tanker sector. While our lenders have not declared an event of default under our loan agreements, these breaches could constitute a potential event of default and we are currently in discussions with our lenders to obtain waivers and/or amendments of such covenants. If we are unable to obtain waivers, our lenders may choose to accelerate our indebtedness. Therefore, our ability to continue as a going concern is dependent on the support of our lenders and management's ability to successfully generate income in order to meet our obligations as they become due. Our independent registered public accounting firm has issued its opinion with an explanatory paragraph in connection with our financial statements included in this annual report that expresses substantial doubt as to our ability to continue as a going concern. Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of our inability to continue as a going concern. However, there is a material uncertainty related to events or conditions which raises significant doubt as to our ability to continue as a going concern and, therefore, we may be unable to realize our assets and discharge our liabilities in the normal course of business.

As a result of our inability to comply with certain financial covenants under our loan agreements, all of our indebtedness and derivate liabilities were classified as current liabilities as of December 31, 2009

A total of $338.8 million of our indebtedness and $1.6 million of our derivative liabilities, as of December 31, 2009, have been reclassified as current liabilities as a result of our non-compliance with financial covenants contained in our loan agreements. As a result of this classification, we had a working capital deficit of $334.3 million as of December 31, 2009. Consequently, our independent registered public accounting firm included an explanatory paragraph in its opinion on our most recently audited financial statements for the year ended December 31, 2009, that expressed substantial doubt as to our ability to continue as a going concern. Charter rates and vessel values, particularly in the product tanker sector, may remain at low levels for an extended period of time, in which case, it may be difficult for us to comply with financial and other covenants in our loan agreements absent obtaining waivers or amendments of such covenants from our lenders. Furthermore our current working capital needs may affect our ability to finance the acquisition of the newbuildings that are currently under construction. We currently exploring various alternatives including capital raising in order to improve our liquidity, meet short term commitments and manage our overall capital exposure.

Our credit facilities impose operating and financial restrictions on us, and if we receive waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements

In addition to certain financial covenants relating to our financial position, operating performance and liquidity, the restrictions contained in our loan agreements limit our ability to, among other things:

pay dividends to investors or make capital expenditures if we do not repay amounts drawn under the credit facilities, if there is a default under the credit facilities or if the payment of a dividend or capital expenditure would result in a default or breach of a loan covenant;

incur additional indebtedness, including through the issuance of guarantees;

change the flag, class or management of our vessels;

create liens on our assets;

sell or otherwise change the ownership of our vessels;

merge or consolidate with, or transfer all or substantially all of our assets to, another person;

drop below certain minimum cash deposits, as defined in our credit facilities; and/or

receive dividends from certain subsidiaries.

See "Item 5. Operating and Financial Review and Prospectus – Liquidity and Capital Resources – Breach of financial covenants under secured credit facilities." In connection with any waivers or amendments to covenants in our loan agreements that our lenders may provide to us, our lenders may impose additional restrictions on us.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours and we may not be able to obtain our lenders' permission when needed. In addition to the above restrictions, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness. These potential restrictions and requirements may limit our ability to pay dividends, if any, in the future to you, finance our future operations, make acquisitions or pursue business opportunities.

Since the second quarter of 2009 our board of directors has not declared cash dividends as a result of market conditions in the international shipping industry and capital commitments of the Company. We cannot assure you that our board of directors will declare dividends in the future

Since the second quarter of 2009 we have not declared a common stock dividend in order to increase our cash flow and enhance internal growth capabilities. We can give no assurance that dividends will be paid in the future.

Certain provisions of Marshall Islands law may prohibit us from paying dividends

Marshall Islands law generally prohibits the declaration and payment of dividends other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends while a company is insolvent or would be rendered insolvent by the payment of such a dividend. We may not have sufficient surplus in the future to pay dividends.

We will not be able to take advantage of favorable opportunities in the current spot market with respect to vessels employed on medium- to long-term time charters

The majority of the vessels in our fleet, including vessels owned through 50% controlled joint ventures, are employed under medium to long-term time charters, with remaining terms (under existing charter party agreements or under replacement charter party agreements that we have entered into) ranging between 11 and 61 months. Although medium and long-term time charters provide relatively steady streams of revenue, vessels committed to medium and long-term charters may not be available for spot voyages during periods of increasing charter hire rates, when spot voyages might be more profitable. Recently, charter hire rates for product tankers have reached near historically low levels. If our vessels become available for employment in the spot market or under new charters during periods when market prices have fallen, we may have to employ our vessels at depressed market prices, which would lead to reduced or volatile earnings. We cannot assure you that future charter hire rates will enable us to operate our vessels profitably or to pay you dividends.

We depend upon a few significant 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 expect to derive a significant part of our revenue from a small number of customers. For the year 2009, we derived 100% of our revenues from three customers. If one or more of these customers is unable to perform under one or more charters with us and we are not able to find a replacement charter, or if a customer exercises certain rights to terminate the charter, we could suffer a loss of revenues that could materially adversely affect our business, financial condition, results of operations and cash available for distribution as dividends to our shareholders.

Our charterers may terminate or default on their charters, which could adversely affect our results of operations and cash flow

Our charters may terminate earlier than the dates indicated in the section "Our Fleet" in "Item 4 – Information on the Company." The terms of our charters vary as to which events or occurrences will cause a charter to terminate or give the charterer the option to terminate the charter, but these generally include a total or constructive total loss of the related vessel, the requisition for hire of the related vessel or the failure of the related vessel to meet specified performance criteria. In addition, the ability of each of our charterers to perform its obligations under a charter will depend on a number of factors that are beyond our control. These factors may include general economic conditions, the condition of a specific shipping market sector, the charter rates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of a vessel may be considerable and may adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends.

We cannot predict whether our charterers will, upon the expiration of their charters, recharter our vessels on favorable terms or at all. If our charterers decide not to recharter our vessels, we may not be able to recharter them on terms similar to the terms of our current charters or at all. In the future, we may also employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market.

If we receive lower charter rates under replacement charters or are unable to recharter all of our vessels, our business, results of operations, cash flows, financial condition and ability to pay dividends may be adversely affected.

In addition, in depressed market conditions such as those existing in the early part of 2009, our charterers may no longer need a vessel that is currently under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining that capital. Our inability to obtain additional financing or our ability to obtain additional financing at higher than anticipated costs may materially and adversely affect our business, results of operations, cash flows and financial condition and ability to pay dividends.

We depend on our Managers to manage our fleet and the loss of their services could adversely affect our operations

We currently have a total of fourteen employees including our senior executive officers. Currently we subcontract the technical management of the majority of our vessels in our fleet, including crewing, maintenance and repair, to third party technical managers. Therefore, the loss of these technical managers' services or their failure to perform their obligations to us could materially and adversely affect our business, financial condition, results of operations and ability to pay dividends. Furthermore, we may be unable to retain a suitable replacement manager under favorable terms. Further, we expect that we will need to seek approval from our lenders to change our vessels' technical managers.

The ability of our managers to continue providing services for our benefit will depend in part on their own financial strength. Circumstances beyond our control could impair our technical managers' financial strength.

We may have difficulty performing under our existing newbuilding commitments or managing our planned growth through acquisitions of additional vessels

We intend to continue to grow our business through selective acquisitions of additional vessels. Our future growth will primarily depend on:

locating and acquiring suitable vessels;

identifying and consummating acquisitions or joint ventures;

integrating any acquired business successfully with our existing operations;

enlarging our customer base;

managing our expansion; and

obtaining required financing on acceptable terms.

During periods in which charter hire rates are high, vessel values generally are high as well, and it may be difficult to identify vessels for acquisition at favorable prices. In addition, growing any business by acquisition presents numerous risks, such as undisclosed liabilities and obligations, the possibility that indemnification agreements will be unenforceable or insufficient to cover potential losses and difficulties associated with imposing common standards, controls, procedures and policies, obtaining additional qualified personnel, managing relationships with customers and integrating newly acquired assets and operations into existing infrastructure. We cannot give any assurance that we will be successful in executing our growth plans or that we will generate enough funds to purchase our newbuilding vessels or that we will not incur significant expenses and losses in connection with our future growth.

We may also be either unable to finance the newbuilding vessels we have agreed to purchase or the available financing, based on the fair market value of the newbuilding vessels on delivery, maybe inadequate to cover the purchase of the vessels.

Restrictions under our credit facilities could restrict our ability to pay dividends

We may have to limit the amount of dividends that we declare and pay in the future or may not be able to declare and pay dividends at all if we do not repay amounts drawn under our credit facilities if there is a default under the credit facilities, if the declaration or payment of a dividend would result in a default or breach of a loan covenant, or if the aggregate market value of our vessels falls below a certain point in relation to the amounts borrowed under our credit facilities.

We cannot assure you that we will be able to borrow amounts under our credit facilities and restrictive covenants in our credit facilities may impose financial and other restrictions on us

Our ability to borrow amounts under our credit facilities is subject to the execution of definitive documentation relating to the facilities, including security documents, satisfaction of certain customary conditions precedent and compliance with terms and conditions included in the loan documents. Prior to each drawdown, we will be required, among other things, to provide the lenders with acceptable valuations of the vessels in our fleet confirming that they are sufficient to satisfy minimum security requirements. To the extent that we are not able to satisfy these requirements, including as a result of a decline in the value of our vessels, we may not be able to draw down the full amount under our credit facilities without obtaining a waiver or consent from the lenders. We will also not be permitted to borrow amounts under the facilities if we experience a change of control.

Our credit facilities also impose operating and financial restrictions on us. These restrictions may limit our ability to, among other things:

make capital expenditures if we do not repay amounts drawn under the credit facilities, if there is a default under the credit facilities or if the capital expenditure would result in a default or breach of a loan covenant;

incur additional indebtedness, including through the issuance of guarantees;

change the flag, class or management of our vessels;

create liens on our assets;

sell our vessels;

merge or consolidate with, or transfer all or substantially all our assets to, another person; and

enter into a new line of business.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours and we cannot guarantee that we will be able to obtain our lenders' permission when needed. This may limit our ability to pay dividends to you, finance our future operations, make acquisitions or pursue business opportunities.

Servicing future indebtedness would limit funds available for other purposes, such as the payment of dividends

We have financed the purchase of our fleet with secured indebtedness drawn under our credit facilities. While we intend to refinance amounts drawn with the net proceeds of future equity offerings, we cannot assure you that we will be able to do so on terms that are acceptable to us or at all. If we are not able to refinance these amounts with the net proceeds of equity offerings on terms acceptable to us or at all, we will have to dedicate a portion of our cash flow from operations to pay the principal and interest of this indebtedness. If we are not able to satisfy these obligations, we may have to undertake alternative financing plans. The actual or perceived credit quality of our charterers, any defaults by them under our charter contracts, and declines in the market value of our fleet, among other things, may materially affect our ability to obtain alternative financing. In addition, debt service payments and covenants under our senior and junior secured credit facilities or alternative financing may limit funds otherwise available for working capital, capital expenditures and other purposes, such as the payment of dividends. If we are unable to meet our debt obligations, or if we otherwise default under our credit facilities or an alternative financing arrangement, our lenders could declare the debt, together with accrued interest and fees, to be immediately due and payable and foreclose on our fleet, which could result in the acceleration of other indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by other lenders.

Unless we set aside reserves or are able to borrow funds for vessel replacement, at the end of a vessel's useful life our revenue will decline, which would adversely affect our business, results of operations and financial condition

Unless we maintain reserves or are able to borrow funds for vessel replacement we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives, which we expect to range from 18 years to 25 (including vessels owned through joint ventures), depending on the date the vessel is delivered to us, based on a 25 year estimated useful life from the date of the vessel's initial delivery from the shipyard. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations, financial condition and ability to pay dividends will be materially and adversely affected. Any reserves set aside for vessel replacement would not be available for dividends.

Purchasing and operating secondhand vessels may result in increased operating costs and reduced fleet utilization

Our current business strategy includes additional, strategic growth through the acquisition of high quality secondhand vessels. While we have the right to inspect previously owned vessels prior to our purchase of them, such an inspection does not provide us with the same knowledge about their condition that we would have if these vessels had been built for and operated exclusively by us. Secondhand vessels may have conditions or defects that we were not aware of when we bought the vessel and which may require us to incur costly repairs to the vessel. If this were to occur, such hidden defects or problems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Repairs may require us to put a vessel into drydock which would reduce our fleet utilization. Furthermore, we usually do not receive the benefit of warranties on secondhand vessels.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology.

Governmental regulations, safety and other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to some of our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

If the Panamax product tankers that we have agreed to purchase are not delivered on time or delivered with significant defects, our business, results of operations and financial condition could suffer

We have entered into a 50% controlled joint venture for the acquisition of seven Panamax (LR1) product tankers that are currently under construction at Hyundai Mipo Dockyard in South Korea. One of these vessels is scheduled to be delivered in the fourth quarter of 2010, four in 2011 and two vessels in 2012. A delay in the delivery of these vessels to us or the failure of Hyundai Mipo Dockyard to deliver a vessel at all, could adversely affect our business, results of operations and financial condition and the amount of dividends that we pay in the future. The delivery of these vessels could be delayed or certain events may arise which could result in us not taking delivery of a vessel.

If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker market

The operation of tanker vessels and transportation of crude and petroleum products is extremely competitive. Competition arises primarily from other tanker owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater resources. Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker and its operators to the charterers. We will have to compete with other tanker owners, including major oil companies as well as independent tanker companies. Due in part to the highly fragmented market, competitors with greater resources could enter the products tanker and container vessel shipping markets and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer.

Our market share may decrease in the future. We may not be able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do.

We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively impact the effectiveness of our management and results of operations

Our success depends to a significant extent upon the abilities and efforts of our management team. We have entered into employment contracts with our President and Chief Executive Officer, Mr. George Kassiotis, our Chief Operating Officer, Mr. Charilaos Loukopoulos, and our Chief Financial Officer, Mr. Gregory McGrath. Our success will depend upon our ability to hire and retain key members of our management team and to hire new members as may be necessary. The loss of any of these individuals could materially adversely affect our business, results of operations and financial condition and our ability to pay dividends. Difficulty in hiring and retaining replacement personnel could have a similar effect. We do not maintain "key man" life insurance on any of our officers.

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

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

marine disaster;

environmental accidents;

cargo and property losses or damage;

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

piracy.

Any of these circumstances or events could increase our costs or lower our revenues. The loss or damage to any of our vessels will have a material adverse effect on our business, results of operations, financial condition and our ability to pay dividends. In addition to any economic cost, the involvement of our vessels in an environmental disaster may harm our reputation.

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

We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurance includes hull and machinery insurance, war risks insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance, and insurance against loss of hire, which covers business interruptions that result in the loss of use of a vessel. We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance contracts also contain clauses for deductibles, limitations and exclusions which may increase our costs.

The operation of tankers involves certain unique operational risks

The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and a catastrophic spill could exceed the insurance coverage available. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tankers.

If we are unable to adequately maintain or safeguard our vessels we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition and results of operations. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. Our current fleet, including the vessels owned by the 50% controlled joint venture, has an average age of approximately 3.3 years. As our fleet ages, we will incur increased costs. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

Our operating results from our fleet are subject to seasonal fluctuations, which may adversely affect our operating results and ability to pay dividends

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The tanker sector is typically stronger in the fall and winter months in anticipation of increased consumption of oil and petroleum products in the northern hemisphere during the winter months. As a result, our revenues may be weaker during the fiscal quarters ended June 30 and September 30, and, conversely, revenues may be stronger in fiscal quarters ended December 31 and March 31. This seasonality could materially affect our operating results and cash available for dividends in the future.

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

Under the United States Internal Revenue Code of 1986, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as United States source shipping income and such income is subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury regulations promulgated thereunder.

We expect that we and each of our subsidiaries will qualify for this statutory tax exemption and we have taken this position for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption in the future and thereby become subject to United States federal income tax on our United States source income. For example, if beneficial owners of our Class A common stock that own 5% or more of our Class A common stock were to own 50% or more of the outstanding shares of our Class A common stock on more than half the days during the taxable year we might not be able to qualify for the exemption under Code Section 883. However, we may still be able to qualify for the exemption under such circumstances if a sufficient number of five percent or greater shareholders were able to establish that they are "qualified shareholders" for purpose of Section 883 to preclude non-qualified five percent shareholders from owning 50% or more of the outstanding shares of our Class A common stock on more than half of the days in the year. The requirements to establish that one or more of our shareholders is a "qualified shareholder" for purposes of Section 883 are onerous and we cannot assure you that we would be able to obtain the required information from sufficient five percent shareholders. Due to the factual nature of the issues involved, we can give no assurances on our tax-exempt status or that of any of our subsidiaries.

If we or our subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries would be subject for those years to a 4% United States federal income tax on our U.S.-source shipping income. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

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

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

Based on our current and proposed method of operation, we do not believe that we are, have been or will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities does not constitute "passive income," and the assets that we own and operate in connection with the production of that income do not constitute passive assets.

There is, however, no direct legal authority under the PFIC rules addressing our method of operation. We believe there is substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, we note that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States stockholders will face adverse United States tax consequences and information reporting obligations. Under the PFIC rules, unless those stockholders make an election available under the Code (which election could itself have adverse consequences for such stockholders), such stockholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution or gain had been recognized ratably over the stockholder's holding period of our common stock. Please see the section of this annual report entitled "Taxation" under Item 10E for a more comprehensive discussion of the United States federal income tax consequences if we were to be treated as a PFIC.

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

We generate all of our revenues in Dollars but we may incur significant operating expenses in currencies other than Dollars. This difference could lead to fluctuations in net income due to changes in the value of the Dollar relative to the other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the Dollar falls in value can increase, resulting in a decrease in our operating results.

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

We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, or by Marshall Islands law, which regulates the payment of dividends by companies. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to declare or pay dividends. We do not intend to obtain funds from other sources to pay dividends.

We may incur environmental and other liabilities from vessels that we do not own, or that we own through joint-ventures, in our capacity as technical manager, which may adversely affect our results of operations and cash flows

We currently provide technical management services through Omega Mnagement Inc to two of our wholly-own vessels and three of the product tankers we partly own through equal partnership joint ventures. In addition, either directly or through Omega Management, Inc. or other entities affiliated with us, we may provide vessel management services to vessels owned by third parties in the future. Under current environmental and other laws and regulations, we may incur liability for environmental discharges or other accidents involving the vessels, its crew or cargoes as a result of the provision of such management services. Such liabilities may be material, and we cannot assure you we are adequately insured against all such liabilities.

Risks Relating to our Common Shares

The market price of our common shares has fluctuated widely and the market price of our common shares may fluctuate in the future

The market price of our common shares has fluctuated widely since we became a public company in April 2006 and may continue to do so as a result of many factors, including our actual results of operations and perceived prospects, the prospects of our competition and of the shipping industry in general and in particular the product tanker sector, differences between our actual financial and operating results and those expected by investors and analysts, changes in analysts' recommendations or projections, changes in general valuations for companies in the shipping industry, particularly the product tanker sector, changes in general economic or market conditions and broad market fluctuations.

Our common shares have recently traded below $5.00 per share, and the last reported sale price on The NASDAQ Global Market on July 14, 2010 was $1.85 per share. If the market price of our common shares remains below $5.00 per share, under stock exchange rules, our shareholders will not be able to use such shares as collateral for borrowing in margin accounts. This inability to continue to use our common shares as collateral may depress demand as certain investors are restricted from investing in shares priced below $5.00 and lead to sales of such shares creating downward pressure on and increased volatility in the market price of our common shares. In addition, in order to maintain the listing of our common shares on The NASDAQ Global Market, our stock price will need to comply with NASDAQ's minimum share price requirements. Under NASDAQ Rule 5450(a)(1), or the Bid Price Rule, the closing bid price per share of our common shares must be at least $1.00 in order for us to continue our listing on the NASDAQ Stock Exchange. If the closing bid price per share of our common shares falls below $1.00 and we are unable to regain compliance with the Bid Price Rule, we may receive notification from the NASDAQ Stock Exchange that our securities will be subject to delisting. Alternatively, in such an instance, we may be eligible for a grace period if we meet the initial listing standards, with the exception of the bid price, for the NASDAQ Capital Market. However, we will need to submit an application to transfer our securities from the NASDAQ Global Market to the NASDAQ Capital Market. If such application is approved, the NASDAQ Stock Exchange will notify us that we have been granted the grace period.

There may not be an active market for our common shares, which may cause our common shares to trade at a discount and make it difficult to sell the common shares you purchase

We cannot assure you that an active trading market for our common shares will be sustained. We cannot assure you of the price at which our common shares will trade in the public market in the future or that the price of our shares in the public market will reflect our actual financial performance. You may not be able to resell your common shares at or above their current market price. Additionally, a lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of our common shares and limit the number of investors who are able to buy the common shares.

The products tanker and container vessel sectors have been highly unpredictable and volatile. The market price of our common shares may be similarly volatile.

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

Our corporate affairs are governed by our amended and restated articles of incorporation and by-laws and by the Marshall Islands Business Corporations Act, or the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in the United States. The rights of shareholders of the Marshall Islands may differ from the rights of shareholders of companies incorporated in the United States. While the BCA provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we can not predict whether Marshall Islands courts would reach the same conclusions as United States courts. Thus, you may have more difficulty in protecting your interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction which has developed a relatively more substantial body of case law.

Because we are incorporated under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management

We are incorporated under the laws of the Marshall Islands, and all of our assets are located outside of the United States. Our business is operated primarily from our offices in Athens, Greece. In addition, our directors and officers generally are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our directors and officers.

A significant shareholder, owned by our President and Chief Executive Officer, effectively controls the outcome of matters on which our shareholders are entitled to vote

Our significant shareholder, ONE Holdings, which is wholly-owned by our President and Chief Executive Officer, Mr. George Kassiotis, owns, directly or indirectly, approximately 20.5% of our outstanding common shares. While ONE Holdings has no agreement, arrangement or understanding relating to the voting of its shares of our common stock, it may effectively control the outcome of matters on which our shareholders are entitled to vote, including the election of directors, the adoption or amendment of provisions in our certificate of incorporation or bylaws and possible mergers, corporate control contests and other significant corporate transactions. This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, a merger, consolidation, takeover or other business combination. This concentration of ownership could also discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which could in turn have an adverse effect on the market price of our common stock. The interests of ONE Holdings may be different from other shareholder interests.

Future sales of our common stock could cause the market price of our common stock to decline

Sales of a substantial number of additional shares of our common stock in the public market, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

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

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

These provisions include:

authorizing our board of directors to issue "blank check" preferred stock without shareholder approval;

providing for a classified board of directors with staggered, three year terms;

prohibiting cumulative voting in the election of directors;

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

prohibiting shareholder action by written consent unless the written consent is signed by all shareholders entitled to vote on the action;

limiting the persons who may call special meetings of shareholders;

establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings.

In addition, in 2008 our board of directors adopted a shareholder rights plan that allows our board of directors to significantly dilute the shareholdings of any person or group of persons that acquire more than 15% of our total outstanding common stock other than those persons who beneficially owned 15% of the total outstanding common shares on the date the shareholder rights plan was adopted who were permitted to acquire up to an additional 10% of the total outstanding common shares above their share ownership on the date the shareholder rights plan was adopted.

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

ITEM 4 - INFORMATION ON THE COMPANY

A. History and development of the Company

We are Omega Navigation Enterprises, Inc., a holding company incorporated under the laws of the Marshall Islands on February 28, 2005. Prior to our initial public offering we issued 10,000 shares of Class A common stock and 3,140,000 shares of Class B common stock to our shareholders. In April, 2006, we completed our initial public offering and issued an additional 12,000,000 Class A common shares. On April 7, 2009 Class B shares were converted to Class A shares on a one-for-one basis. Our Class A common shares are listed on the NASDAQ Global Market and on the Singapore Exchange Securities Trading Limited. Our executive offices are located at 61 Vasilissis Sofias Ave, Athens 115 21 Greece. Our telephone number is (30) 210 413-9130.

B. Business Overview

The current fleet includes twelve double hull product tankers with a carrying capacity of about 680,000 dwt. Eight of the vessels are fully owned by us and four are owned through equal partnership joint ventures with a wholly owned subsidiary of Glencore International AG.

We wholly own and operate a fleet of six double hull Panamax (LR1) product tankers and two Ice Class 1A double hull Handysize (MR1) product tankers. We also participate in a 50% controlled joint venture, Stone Shipping Ltd ("Stone), that owns and operates, Omega Duke, a double hull Handymax (MR2) product tanker that was delivered in April 2009.

In June 2007, we entered into agreements with Hyundai Mipo Dockyard in South Korea for the construction of five Handysize (MR1) product tankers. These vessels were novated to a 50% controlled joint venture, Megacore Shipping Ltd ("Megacore"), that would own ten Handysize (MR1) vessels to be constructed. In December 2009 an addendum to the shipbuilding contract was signed to suspend construction of one vessel and amend the type of seven out of the nine remaining vessels to Panamax (LR1). The two Handysize (MR1) vessels, Megacore Honami and Megacore Hibiscus were delivered in February 2010 and May 2010 and the seven LR1s are under construction with deliveries scheduled between the fourth quarter 2010 and the first quarter 2012.

In May 2008 we entered into an agreement to purchase one Handymax (MR2) product tanker. On June 2, 2010 this agreement was cancelled and we have entered into a 50% controlled joint venture, Onest Shipping Ltd ("Onest"), to acquire the vessel Alpine Marina that was delivered in July 2010.

We generate revenues by employing the vessels in our fleet on time charters as well as in the spot market. For the eight wholly-owned vessels in our fleet, we provide the commercial management in-house through a wholly-owned subsidiary. For six out of the eight wholly owned vessels in our fleet and one vessel owned through our 50% controlled joint venture we have entered into technical management agreements with unaffiliated third parties. For two out of the eight wholly owned vessels in our fleet and for three vessel owned by the 50% controlled joint ventures, we provide the technical management through our wholly owned subsidiary namely Omega Management Inc.

Our Fleet

Product Tankers

We currently wholly own and operate a fleet of six double hull Panamax (LR1) product tankers (four of which are classed as Ice Class vessels) and two Ice Class 1A double hull Handysize (MR1) product tankers. We also participate in three 50% controlled joint ventures, which own and operate four double hull Handymax/Handysize product tankers ( Omega Duke , Megacore Honami , Megacore Hibiscus and Alpine Marina ), which were delivered in April 2009, February 2010, May 2010 and July 2010. As of December 31, 2009 our fleet, including the vessels owned by the 50% controlled joint venture, had a combined cargo-carrying capacity of 559,358 dwt and an average age of approximately 3.4 years. As of July 15, 2010, our fleet, including the vessels owned by the 50% controlled joint ventures, has a combined cargo capacity of 680,358 dwt and an average age of approximately 3.3 years.

In addition we have entered into a 50% controlled joint venture, Megacore, to acquire seven Panamaxes (LR1) that are currently under construction. One of these vessels is scheduled to be delivered in the fourth quarter 2010, four in 2011 and two in 2012.

Information about the employment of the vessels wholly-owned by us as well as the vessels owned through joint ventures is presented below.

All of the vessels in our fleet are double hull in order to meet the International Maritime Organization regulations banning all single hull tankers by 2010 or 2015, depending on the port or flag state. Our product tankers are designed to transport several different refined petroleum products simultaneously in segregated, coated cargo tanks. These cargoes typically include gasoline, jet fuel, kerosene, naphtha, gas oil and heating oil. Ice class product

tankers are constructed in compliance with Finnish-Swedish Ice Class Rules, with strengthened hulls, a sufficient level of propulsive power for transit through ice-covered routes and specialized machinery and equipment for cold climates. We believe that we are well positioned to take advantage of premium rates associated with the employment of ice class vessels trading on ice capped routes, particularly during periods of severe weather conditions. Ice class tankers can also operate in warmer, non-icy climates alongside other tankers, offering maximum flexibility without significant operational limitations.

Drybulk Carriers

In addition to the product tankers in our current fleet, we owned and operated two Handymax drybulk carriers during 2006 that we sold in January 2007. In September 2006, we decided to dispose of and sell our drybulk carrier fleet to an unrelated third party. Such operations, which have been eliminated from the ongoing operations and cash flows of the company following the sale of the drybulk carrier fleet, are now presented as discontinued operations in the consolidated statement of income for the years ended December 31, 2006, 2007 and 2008 and for the period from February 28, 2005 (date of inception) through December 31, 2005.

The table below provides summary information about the vessels in our fleet as of July 15, 2010 and the terms of their employment:

Vessel	Sister Ships (1)	Year built	Deadweight (dwt)	Type	Delivery date	Daily hire rate (2)		Latest Redelivery
Current fleet
Wholly owned vessels
Omega Lady Sarah	A	2004	71,500	LR1 – Ice Class 1C	Aug-09	$25,500	(3)	Sep-12
Omega Lady Miriam	A	2003	71,500	LR1 – Ice Class 1C	Sep-09	$25,500	(3)	Oct-12
Omega Emmanuel	D	2007	73,000	LR1 – Ice Class 1A	Spot market
Omega Theodore	D	2007	73,000	LR1 – Ice Class 1A	Spot market
Omega King	B	2004	74,999	LR1	Jun-10	$16,000		Jul-11
Omega Queen	B	2004	74,999	LR1	Time charter, on evergreen basis with 2 months termination notice, rate being the monthly average TCE of a pool of 10 similar vessels
Omega Prince	C	2006	36,680	MR1-Ice Class 1A	Time charter, on evergreen basis with 2 months termination notice, rate being the monthly average TCE of a pool of 9 similar vessels.
Omega Princess	C	2006	36,680	MR1-Ice Class 1A
Total dwt			512,358

Vessel	Sister Ships (1)	Year built	Deadweight (dwt)	Type	Delivery date	Daily hire rate (2)		Latest Redelivery

Vessels owned through 50% controlled JV
Omega Duke	G	2009	47,000	MR2	Apr-09	$16,500	(4)	May-14
Alpine Marina	G	2010	47,000	MR2	Jul-10	$14,000	(4)	Jul-15
Megacore Honami	E	2010	37,000	MR1	Feb-10	Confidential		Mar-13
Megacore Hibiscus	E	2010	37,000	MR1	May-10	Spot market
Total dwt			168,000

JV vessels under construction
Hull 2288	F	2010	74,000	LR1	Oct-10
Hull 2291	F	2011	74,000	LR1	Jan-11
Hull 2289	F	2011	74,000	LR1	Jan-11
Hull 2295	F	2011	74,000	LR1	Jul-11
Hull 2296	F	2011	74,000	LR1	Sep-11
Hull 2298	F	2012	74,000	LR1	Feb-12
Hull 2299	F	2012	74,000	LR1	Mar-12
Total dwt			518,000

(1) Each vessel is a sister ship of each other vessel that has the same letter.

(2)	This table shows gross charter rates and does not include brokers' commissions.

(3)	Plus any additional income under profit sharing agreements, according to which charter earnings in excess of $25,500 per day will be divided equally between Omega Navigation and ST Shipping.

(4)	Plus 100% of any trading income in excess of the daily hire.

Our Customers

Our assessment of a charterer's financial condition and reliability is an important factor in negotiating employment for our vessels. For the year ended December 31, 2009, three of our customers accounted for 100% of our voyage revenues. These customers were ST Shipping & Transport (Glencore International AG), D/S Norden A/S and A/S Dampskibsselskabet Torm.

Management of Our Fleet

Our wholly-owned subsidiary, Omega Management, Inc., is responsible for commercially managing the vessels in our fleet, including obtaining employment for our vessels, negotiating charters, and managing relationships. We are responsible for the strategic management of our fleet, including locating, obtaining financing for, purchasing and selling vessels and formulating and implementing our overall business strategy.

The technical management of four of the wholly owned product tankers in our fleet is provided by V. Ships Management Limited, or V. Ships. The technical management of two of the wholly owned product tankers and one of the vessels owned by the 50% controlled joint venture is provided by Bernhard Schulte Ship Management Pvt, Ltd (formerly Eurasia International (L) Limited), and Omega Management Inc is the technical manager of two wholly owned vessels and three vessels owned by the 50% controlled joint ventures. We review the performance of the third party technical managers of our product tankers on a continuous basis and may add or change technical managers from time to time, or assume the technical management internally.

Third party technical managers are responsible for managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, oil majors vetting procedures, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. These services are provided directly by us with respect to our two wholly owned vessels and the three vessels owned through 50% joint venture vessel. We acquire insurance for all product tankers in our fleet, including marine hull and machinery insurance and protection and indemnity insurance (including pollution risks and crew insurance) and war risk insurance.

Under the management agreements, our product tanker managers present us with an annual budget for the following 12 months for each vessel and prepare and present us with their estimate of the working capital requirements of each vessel. The manager requests the funds required to run the vessels for the ensuing month, including the payment of any occasional or extraordinary items of expenditure, such as emergency repair costs, scheduled drydocking and special survey costs as well as additional insurance premiums, bunkers or provisions. We pay each manager on a monthly basis for the operating costs incurred by our product tankers based on an annual budget and adjusted for actual operating costs incurred in that month. The management fees charged by V. Ships for the year ended December 31, 2009, 2008 and 2007 amounted to $1,032,779, $993,362 and $900,094, respectively. The management fees charged by Bernhard Schulte Ship Management Pvt, Ltd for the year ended December 31, 2009, 2008 and 2007 amounted to $250,250, $249,859 and $210,128, respectively.

The International Product Tanker Industry

The international seaborne transportation industry represents the most efficient and we believe safest method of transporting large volumes of crude oil and refined petroleum products such as gasoline, diesel, fuel oil, gas oil and jet fuel, as well as edible oils and chemicals. Over the past five years, seaborne transportation of refined petroleum products has grown substantially, before declining during 2008 and 2009.

Freight rates in the refined petroleum product tanker shipping industry are determined by the supply of product tankers and the demand for crude oil and refined petroleum products transportation. Factors that affect the supply of product tankers and the demand for transportation of crude oil and refined petroleum products include:

Demand:

the supply and demand for refined petroleum products and oil

regional availability of refining capacity;

global and regional economic and political conditions;

the location of regional and global oil refining facilities that affect the distance that refined petroleum products and oil are to be moved by sea;

changes in seaborne and other transportation patterns;

environmental and other legal and regulatory developments;

currency exchange rates;

weather;

competition from alternative sources of energy; and

international sanctions, embargoes, import and export restrictions, nationalizations and wars.

Supply:

the number of newbuilding deliveries;

the phase-out of single hull tankers from certain markets pursuant to national and international laws and regulations;

the scrapping rate of older vessels;

port and canal congestion;

the conversion of tankers to other uses;

the price of steel;

the number of vessels that are out of service; and

environmental concerns and regulations.

Seasonality

The demand for product tankers has historically fluctuated depending on the time of year. Demand for product tankers is influenced by many factors, including general economic conditions, but it is primarily related to demand for petroleum products in the areas of greatest consumption. Accordingly, demand for product tankers generally rises during the winter months and falls during the summer months in the Northern hemisphere. Moreover, these are generalized trading patterns that vary from year to year and there is no guarantee that similar patterns will continue in the future.

Environmental and Other Regulations

Government regulation significantly affects the ownership and operation of our fleet. We are subject to various international conventions, laws and regulations in force in the countries in which our vessels may operate or are registered. Compliance with such laws, regulations and other requirements can entail significant expense, including vessel modification and implementation of certain operating procedures. We cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our

vessels. In addition, we cannot foresee what additional regulations or statutes will be adopted in the future and what costs we may have to incur in the future to comply with such regulations and statutes. The recent oil spill in the Gulf of Mexico may result in additional and more stringent regulations and statutes affecting our industry.

A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the U.S. Coast Guard and harbor masters), classification societies, flag state administration (country of registry) and charterers, particularly terminal operators, and oil companies. Some of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our fleet. Our failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of the vessels in our fleet.

Heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels emphasizing operational safety, quality maintenance, continuous training of our officers and crews and compliance with applicable local, national and international environmental laws and regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations; however, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that results in significant oil pollution or otherwise causes significant adverse environmental impact, such as the 2010 BP Deepwater Horizon oil spill in the Gulf of Mexico, could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization (IMO)

The International Maritime Organization, or IMO (the United Nations agency for maritime safety and the prevention of pollution by ships), has adopted the International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, which has been updated through various amendments (the "MARPOL Convention"). The MARPOL Convention implements environmental standards including oil leakage or spilling, garbage management, as well as the handling and disposal of noxious liquids, harmful substances in packaged forms, sewage and air emissions. These regulations, which have been implemented in many jurisdictions in which our vessels operate, provide, in part, that:

25-year old tankers must be of double-hull construction or of a mid-deck design with double-sided construction, unless:

(1)

they have wing tanks or double-bottom spaces not used for the carriage of oil which cover at least 30% of the length of the cargo tank section of the hull or bottom, or

(2)

they are capable of hydrostatically balanced loading (loading less cargo into a tanker so that in the event of a breach of the hull, water flows into the tanker, displacing oil upwards instead of into the sea);

30-year old tankers must be of double-hull construction or mid-deck design with double-sided construction; and

all tankers will be subject to enhanced inspections.

Also, under IMO regulations, a newbuilding tanker of 5,000 dwt and above must be of double hull construction or a mid-deck design with double-sided construction or be of another approved design ensuring the same level of protection against oil pollution if the tanker:

is the subject of a contract for a major conversion or original construction on or after July 6, 1993;

commences a major conversion or has its keel laid on or after January 6, 1994; or

completes a major conversion or is a newbuilding delivered on or after July 6, 1996.

Effective September 2002, the IMO accelerated its existing timetable for the phase-out of single-hull oil tankers. At that time, these regulations required the phase-out of most single- hull oil tankers by 2015 or earlier, depending on the age of the tanker and whether it has segregated ballast tanks. Currently all of our tankers, including the tankers under construction, are of double hull construction.

Under the regulations, the flag state may allow for some newer single-hull ships registered in its country that conform to certain technical specifications to continue operating until the 25th anniversary of their delivery. Any port state, however, may deny entry of those single-hull tankers that are allowed to operate until their 25th anniversary to ports or offshore terminals. These regulations have been adopted by over 150 nations, including many of the jurisdictions in which our tankers operate.

Ballast Water Requirements

The IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping.

Air Emissions

In September 1997, the IMO adopted Annex VI to the MARPOL Convention to address air pollution from ships. Effective in May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits deliberate emissions of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. We believe that all our vessels are currently compliant in all material respects with these regulations. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and that could adversely affect our business, cash flows, results of operations and financial condition.

In October 2008, the IMO adopted amendments to Annex VI regarding particulate matter, nitrogen oxide and sulfur oxide emission standards which are expected to enter into force on July 1, 2010. The amended Annex VI would reduce air pollution from vessels by, among other things, (i) implementing a progressive reduction of sulfur oxide, emissions from ships, with the global sulfur cap reduced initially to 3.50% (from the current cap of 4.50%), effective from January 1, 2012, then progressively to 0.50%, effective from January 1 2020, subject to a feasibility review to be completed no later than 2018; and (ii) establishing new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. Once these amendments become effective, we may incur costs to comply with these revised standards.

Safety Requirements

The IMO has also adopted the International Convention for the Safety of Life at Sea, or SOLAS Convention, and the International Convention on Load Lines, 1966, or LL Convention, which impose a variety of standards to regulate design and operational features of ships. SOLAS Convention and LL Convention standards are revised periodically. We believe that all our vessels are in substantial compliance with SOLAS Convention and LL Convention standards.

Under Chapter IX of SOLAS, the requirements contained in the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO, the party with operational control of a vessel is required to develop an extensive safety management system that includes, among other things,

the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. In 1994, the ISM Code became mandatory with the adoption of Chapter IX of SOLAS. We intend to rely upon the safety management system that we and our third-party technical managers have developed.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel's management with ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its operator has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents of compliance for their offices and safety management certificates for the vessels in our fleet for which such certificates are required by the IMO. These documents of compliance and safety management certificates are renewed as required.

Noncompliance with the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. For example, the U.S. Coast Guard and European Union (EU) authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and EU ports.

Oil Pollution Liability

Although the U.S. is not a party to these conventions, many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended in 2000, or the CLC. Under this convention and depending on whether the country in which the damage results is a party to the CLC, a vessel's registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses. The limits on liability outlined in the 1992 Protocol use the International Monetary Fund currency unit of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that became effective on November 1, 2003 for vessels of 5,000 to 140,000 gross tons (a unit of measurement for the total enclosed spaces within a vessel), liability will be limited to approximately 4.51 million SDR, or $6.80 million, plus 631 SDR, or $950.74, for each additional gross ton over 5,000. For vessels over 140,000 gross tons, liability will be limited to 89.77 million SDR, or $135.26 million. The exchange rate between SDRs and U.S. Dollars was 0.67 SDR per U.S. dollar on July 13, 2010. The right to limit liability is forfeited under the CLC where the spill is caused by the owner's actual fault and under the 1992 Protocol where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the CLC has not been adopted various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that of the CLC. We believe that our insurance will cover the liability under the plan adopted by the IMO.

The IMO continues to review and introduce new regulations. It is difficult to accurately predict what additional regulations, if any, may be passed by the IMO in the future and what effect, if any, such regulations might have on our operations.

In 2005, the European Union adopted a directive on ship-source pollution, imposing criminal sanctions for intentional, reckless or negligent pollution discharges by ships. The directive could result in criminal liability for pollution from vessels in waters of European countries that adopt implementing legislation. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

United States Requirements

U.S. Oil Pollution Act of 1990 and Comprehensive Environmental Response, Compensation and Liability Act

In 1990, the U.S. Congress enacted OPA to establish an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. OPA affects all owners and operators whose vessels trade with the U.S. or its territories or possessions, or whose vessels operate in the waters of the U.S., which include the U.S. territorial sea and the 200 nautical mile exclusive economic zone around the U.S. The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, imposes liability for clean-up and natural resource damage from the release of hazardous substances (other than oil) whether on land or at sea. Both OPA and CERCLA impact our operations.

Under OPA, vessel owners, operators and bareboat charterers are responsible parties who are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from oil spills from their vessels. These other damages are defined broadly to include:

natural resource damages and related assessment costs;

real and personal property damages;

net loss of taxes, royalties, rents, profits or earnings capacity;

net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards;

loss of profits or impairment of earning capacity due to injury, destruction or loss of real property, personal property and natural resources; and

loss of subsistence use of natural resources.

Under amendments to OPA that became effective on July 11 2006, the liability of responsible parties is limited, with respect to tanker vessels, to the greater of $1,900 per gross ton or $16.0 million per vessel that is over 3,000 gross tons, (subject to periodic adjustment for inflation). The act specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters. In some cases, states that have enacted this type of legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. CERCLA, which applies to owners and operators of vessels, contains a similar liability regime and provides for clean-up, removal and natural resource damages relating to the discharge of hazardous substances (other than oil). Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo or residue and the greater of $300 per gross ton or $0.5 million for any other vessel.

These limits of liability do not apply, however, where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct. These limits also do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA, CERCLA and all applicable state regulations in the ports where our vessels call.

OPA also requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under the act. U.S. Coast Guard regulations currently require evidence of financial responsibility in the amount of $2,200 per gross ton for tankers, coupling the OPA limitation on liability of $1,900 per gross ton with the CERCLA liability limit of $300 per gross ton. Under the regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA regulations, an owner or operator of more than one tanker is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the tanker having the greatest maximum strict liability under OPA and CERCLA. We have provided such evidence and received certificates of financial responsibility from the U.S. Coast Guard for each of our vessels required to have one.

We insure each of our vessels with pollution liability insurance in the maximum commercially available amount of $1.0 billion. A catastrophic spill could exceed the insurance coverage available, in which event there could be a material adverse effect on our business.

Under OPA, with certain limited exceptions, all newly-built or converted vessels operating in U.S. waters must be built with double-hulls, and existing vessels that do not comply with the double-hull requirement will be prohibited from trading in U.S. waters over a 20-year period (1995-2015) based on size, age and place of discharge, unless retrofitted with double-hulls. All of our vessels currently meet the double-hull requirements of OPA.

Owners or operators of tankers operating in the waters of the United States must file vessel response plans with the U.S. Coast Guard, and their tankers are required to operate in compliance with their U.S. Coast Guard approved plans. These response plans must, among other things:

address a "worst case" scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a "worst case discharge";

describe crew training and drills; and

identify a qualified individual with full authority to implement removal actions.

We have obtained vessel response plans approved by the U.S. Coast Guard for our vessels operating in the waters of the U.S.

In addition, most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law.

Additional U.S. Environmental Requirements

The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and 1990 (the "CAA"), requires the U.S. Environmental Protection Agency, or EPA, to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. Our vessels that operate in such port areas are equipped with vapor control systems that satisfy these requirements. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in primarily major metropolitan and/or industrial areas. Several SIPs regulate emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. As indicated above, our vessels operating in covered port areas are already equipped with vapor control systems that satisfy these requirements. Although a risk exists that new regulations could require significant capital expenditures and otherwise increase our costs, we believe, based on the regulations that have been proposed to date, that no material capital expenditures beyond those currently contemplated and no material increase in costs are likely to be required.

The Clean Water Act, or CWA, prohibits the discharge of oil or hazardous substances into navigable waters and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages. The CWA complements the remedies available under the more recent OPA and CERCLA, discussed above.

Effective February 6, 2009, the EPA, regulates the discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. waters using a Vessel General Permit, or VGP, system pursuant to the CWA, in order to combat the risk of harmful foreign organisms that can travel in ballast water carried from foreign ports. A VGP is required for commercial vessels 79 feet in length or longer (other than commercial fishing vessels). Compliance could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.

Ballast water is also addressed under the U.S. National Invasive Species Act, or NISA. U.S. Coast Guard regulations adopted under NISA impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters.

European Union Tanker Restrictions

In response to the MT Prestige oil spill in November 2002, the European Union adopted legislation that prohibits all single-hull tankers from entering into its ports or offshore terminals by 2010 or earlier depending on age. The European Union has also banned all single-hull tankers carrying heavy grades of oil from entering or leaving its ports or offshore terminals or anchoring in areas under its jurisdiction. Commencing in 2005, certain single-hull tankers above 15 years of age will also be restricted from entering or leaving European Union ports or offshore terminals and anchoring in areas under European Union jurisdiction.

The European Union has also adopted legislation that would: (1) strengthen regulation against manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in a six-month period) from European waters and create an obligation of port states to inspect vessels posing a high risk to maritime safety or the marine environment and (2) provide the European Union with greater authority and control over classification societies, including the ability to seek to suspend or revoke the authority of negligent societies. It is difficult to accurately predict what legislation or additional regulations, if any, may be promulgated by the European Union or any other country or authority.

Greenhouse Gas Regulation

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which we refer to as the Kyoto Protocol, entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol. However, the European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from vessels. In the U.S., the EPA has begun the process of declaring greenhouse gases to be dangerous pollutants, which may be followed by future federal regulation of greenhouse gases. Any passage of climate control legislation or other regulatory initiatives by the IMO, EU, the U.S. or other countries where we operate that restrict emissions of greenhouse gases could require us to make significant financial expenditures we cannot predict with certainty at this time.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the U.S. Maritime Transportation Security Act of 2002, or MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed to protect ports and international shipping against terrorism. After July 1, 2004, to trade internationally, a vessel must obtain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel's flag state. Among the various requirements are:

on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;

on-board installation of ship security alert systems, which do not sound on the vessel but only alerts the authorities on shore;

the development of vessel security plans;

ship identification number to be permanently marked on a vessel's hull;

a continuous synopsis record kept onboard showing a vessel's history including, name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and

compliance with flag state security certification requirements.

The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non-U.S. vessels that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel's compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by MTSA, SOLAS and the ISPS Code, and our fleet is in compliance with applicable security requirements.

Inspection by Classification Societies

Every seagoing vessel must be "classed" by a classification society. The classification society certifies that the vessel is "in class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

or maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are quired to be performed as follows:

Annual Surveys : For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.

Intermediate Surveys : Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey.

Class Renewal Surveys : Class renewal surveys, also known as special surveys, are carried out for the ship's hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.

At an owner's application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

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

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

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society which is a member of the International Association of Classification Societies. All our vessels are certified as being "in class" by the American Bureau of Shipping, Lloyds Register of Shipping and Det Norske Veritas. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel.

Risk of Loss and Liability Insurance

General

The operation of any vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of vessels trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the United States market.

While we maintain hull and machinery insurance, war risks insurance, protection and indemnity coverage, increased value insurance and freight, demurrage and defense coverage, we may not be able to achieve or maintain this level of coverage throughout a vessel's useful life. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery and War Risks Insurance

We maintain marine hull and machinery and war risks insurance, which covers the risk of actual or constructive total loss, for all of our vessels. Our vessels are each covered up to at least fair market value with deductibles of $75,000 per vessel per incident. We also maintain increased value coverage for each of our vessels. Under this increased value coverage, in the event of total loss of a vessel, we are entitled to recover amounts not recoverable under our hull and machinery policy due to under-insurance.

Loss of Hire Insurance

We maintain insurance against loss of hire for each of our vessels currently operating under a time charter or a voyage charter for the term of the charter. This insurance generally provides coverage against business interruption for periods of more than 14 days following a loss under our hull and machinery policy or other business interruption. Our loss of hire insurance provides coverage for each covered vessel for up to 90 days during any calendar year.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Clubs, which insure our third party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses resulting from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs."

Our current protection and indemnity insurance coverage for pollution is $1.0 billion per vessel per incident. The 13 P&I Clubs that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities.

The International Group of P&I Clubs exists to arrange collective insurance and reinsurance for P&I Clubs, to represent the views of shipowners and charterers who belong to those Clubs on matters of concern to the shipping industry and to provide a forum for the exchange of information. Each of the constituent P&I Clubs is an independent, non-profit making mutual insurance association or "Club," providing cover for its shipowner and charterer members against liabilities of their respective businesses. Each Club is controlled by its members through a board of directors (or Committee) elected from the membership; the Board (or Committee) retains responsibility for strategic and policy issues but delegates to full-time managers the technical running of the Club.

Although the Clubs compete with each other for business, they have found it beneficial to pool their larger risks under the auspices of the International Group. This pooling is regulated by a contractual agreement which defines the risks that are to be pooled and exactly how these are to be shared between the participating Clubs. The pool provides a mechanism for sharing all claims in excess of $5.0 million up to a limit of about $5.4 billion. For a layer of claims between $50.0 million and $2.03 billion the International Group's Clubs purchase reinsurance from the commercial market. The pooling system provides participating Clubs with reinsurance protection at cost to much higher levels than would normally be available in the commercial reinsurance market.

As a member of a P&I Club, which is a member of the International Group, we are subject to calls payable to the associations based on the group's claim records as well as the claim records of all other members of the individual associations and members of the pool of P&I Club comprising the International Group.

Competition

The international product tanker business fluctuates in line with the main patterns of trade changes in the supply and demand for these refined petroleum products. We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on our reputation as an owner and operator. We compete with other owners of Aframax, Handymax and Panamax product tankers. The sector in which we operate is highly fragmented and is divided among numerous independent product tanker owners.

C. Organizational Structure

We own our wholly-owned vessels through separate wholly-owned subsidiaries that are incorporated in the Marshall Islands and which are listed on Exhibit 8.1 to this annual report. We provide commercial management for all our wholly-owned vessels and technical management for two of the eight wholly-owned vessels through our wholly-owned subsidiary, Omega Management, Inc.

D. Property, plant and equipment

We do not own any real estate property or any other material assets other than the vessels in our fleet. We lease our office space at Athens, Greece, from an unaffiliated third party company, and have annual lease payments for 2009, 2008 and 2007 of Euro 77,225, Euro 53,140 and Euro 47,720, respectively, or approximately $109,027, $78,532 and $65,320, respectively.

ITEM 4A – UNRESOLVED STAFF COMMENTS

None.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following management's discussion and analysis of the results of our operations and our financial condition should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this annual report. This discussion includes forward-looking statements that involve risks and uncertainties. Our

actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, such as those set forth in the "Risk Factors" section and elsewhere in this report. The operating results of the drybulk carriers that were disposed of in January 2007 are presented at the consolidated statement of income as income from discontinued operations of the drybulk carrier fleet.

A. Operating Results

Factors Affecting Our Results of Operations

The principal factors that affect our financial position, results of operations and cash flows include:

charter market rates;

spot market rates

periods of charter hire;

vessel operating expenses and voyage costs, which are incurred primarily in Dollars;

depreciation expenses, which are a function of the cost of our vessels, significant vessel improvement costs and our vessels' estimated useful lives; and

financing costs related to our indebtedness under our credit facilities and derivative agreements.

Voyage Revenues

The primary factors affecting our voyage revenues are driven primarily by the number of vessels in our fleet, the number of days during which our vessels operate and the amount of daily time charter hire rates or spot rates that our vessels earn under charters or spot voyages, that, in turn, are affected by a number of other factors, including:

our decisions relating to vessel acquisitions and disposals;

the amount of time that we spend positioning vessels;

the amount of time that our vessels spend in drydock undergoing repairs;

maintenance and upgrade work;

the age, condition and specifications of our vessels;

levels of supply and demand in the product tanker shipping industry; and

other factors affecting spot market charter rates for product tankers.

Voyage Expenses

We incur voyage expenses that include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on voyage charters because these expenses are for the account of the vessel owner.

As is common in the shipping industry, we pay commissions to third party shipbrokers in connection with the chartering of our vessels. The amount of commissions payable for the product tankers depends on a number of factors, including, among other things, the number of shipbrokers involved in arranging the charter and the amount of commissions charged by brokers related to the charterer.

Vessel Operating Expenses

Vessel operating expenses primarily consist of payments to our technical managers for crew wages and related costs, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses as well as the cost of insurances. Many factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market price for insurances, may also cause these expenses to increase.

General and Administrative Expenses

We incur general and administrative expenses, including our onshore vessel related expenses such as legal and professional expenses, and other general vessel expenses. Our general and administrative expenses also include our payroll expenses, including those relating to our executive officers, rent and compensation cost of restricted shares awarded.

Management Fees

We pay management fees for the technical management of our wholly-owned fleet, which includes managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging the employment and transportation of officers and crew, arranging and supervising dry docking and repairs, purchasing of spares and other consumable stores and other duties related to the operation of our vessels. During 2010 the technical manager of two of our wholly-owned vessels were changed from VShips to Omega Management Inc, which is our wholly-owned subsidiary.

Depreciation and Amortization

We depreciate the cost of our vessels on a straight-line basis over the estimated useful life of each vessel, which is 25 years from the date of initial delivery from the shipyard, after considering the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate at the date of the vessel's delivery.

Interest and Finance Costs, net

We have historically incurred interest expense and financing costs in connection with the debt incurred to partially finance the acquisition of vessels. As of December 31, 2009 and 2008, we had $344.1 and $336.6 million of indebtedness outstanding under our term credit facilities, respectively. As of December 31, 2007, we had $180.0 million of indebtedness outstanding under our term credit facilities, $141.8 million of indebtedness outstanding under our revolving credit facility and $2.4 million of indebtedness outstanding under our bridge loan facility. The amount of outstanding indebtedness of the term credit facilities include credit facilities relating to the financing of the acquisition of the newbuilding vessels that amounted to $61.0, $51.4 and $40.1 million as of December 31, 2009, 2008 and 2007, respectively. Interest and finance costs relating to the amounts drawn under the credit facilities during the construction of the five newbuilding vessels will be capitalized as vessels' cost. For additional information regarding our credit facilities, please see "Liquidity and Capital Resources," below.

Lack of Historical Operating Data for Vessels Before their Acquisition

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is no historical financial due diligence process when we acquire vessels. Accordingly, we do not obtain the historical operating data for the vessels from the sellers because that information is not material to our decision to make acquisitions, nor do we believe it would be helpful to potential investors in our common shares in assessing our business or profitability. Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel's classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the seller typically removes

from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller's technical manager and the seller is automatically terminated and the vessel's trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, we treat the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business. Although vessels are generally acquired free of charter, we may, in the future, acquire some vessels with time charters. Where a vessel has been under a voyage charter, the vessel is delivered to the buyer free of charter, and it is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer's consent and the buyer entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter, because it is a separate service agreement between the vessel owner and the charterer.

When we purchase a vessel and assume or renegotiate a related time charter, we must take the following steps before the vessel will be ready to commence operations:

obtain the charterer's consent to us as the new owner;

obtain the charterer's consent to a new technical manager;

obtain the charterer's consent to a new flag for the vessel;

arrange for a new crew for the vessel;

replace all hired equipment on board, such as gas cylinders and communication equipment;

negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;

register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;

implement a new planned maintenance program for the vessel; and

ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

The following discussion is intended to help you understand how acquisitions of vessels affect our business and results of operations.

Our business is comprised of the following main elements:

employment and operation of our product tanker vessels and, prior to their sale in January 2007, our drybulk carriers; and

management of the financial, general and administrative elements involved in the conduct of our business and ownership of our product tanker vessels and, prior to their sale in January 2007, our drybulk carriers.

The employment and operation of our vessels require the following main components:

vessel maintenance and repair;

crew selection and training;

vessel spares and stores supply;

contingency response planning;

onboard safety procedures auditing;

accounting;

vessel insurance arrangement;

vessel chartering;

vessel hire management;

vessel surveying; and

vessel performance monitoring.

The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires the following main components:

management of our financial resources, including banking relationships, i.e. , administration of bank loans and bank accounts;

management of our accounting system and records and financial reporting;

administration of the legal and regulatory requirements affecting our business and assets; and

management of the relationships with our service providers and customers.

The principal factors that affect our profitability, cash flows and shareholders' return on investment include:

rates and periods of charter hire and spot market rates;

levels of vessel operating expenses;

depreciation expenses; and

financing costs.

Critical Accounting Policies

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

Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application.

Principles of Consolidation : The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity. Under ASC 810-10, "Consolidation," a voting interest entity is an entity in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make financial and operating decisions. The Holding Company consolidates voting interest entities in which it owns all, or at least a majority (generally, greater than 50%) of the voting interest.

Variable interest entities ("VIE") are entities as defined under ASC 810, "Consolidation" that in general either do not have equity investors with voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. A controlling financial interest in a VIE is present when a company absorbs a majority of an entity's expected losses, receives a majority of an entity's expected residual returns, or both. The company with a controlling financial interest, known as the primary beneficiary, is required to consolidate the VIE. The Company evaluates all arrangements that may include a variable interest in an entity to determine if it may be the primary beneficiary, and would be required to include assets, liabilities and operations of a VIE in its consolidated financial statements.

According to ASC 810 "Consolidation", effective for annual periods beginning after November 15, 2009, there are two criteria to determine the primary beneficiary a) The power to direct the activities that most significantly impact the entity's economic performance, and b) the obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. Both criteria should be met in order for an entity to be the primary beneficiary of a VIE. Entities that have identified VIE in the past should re-evaluate their relationships with those entities using the above two criteria.

Revenue recognition : The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using either voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate, or time charters, where a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. If a charter agreement exists, and collection of the related revenue is reasonably assured, revenue is recognized, as it is earned rateably over the duration of the period of each voyage or time charter. A voyage is deemed to commence upon the completion of discharge of the vessel's previous cargo and is deemed to end upon the completion of discharge of the current cargo. Profit sharing represents the Company's portion on the excess of the actual net daily charter rate earned by the Company's charterers from the employment of the Company's vessels over a predetermined base daily charter rate, as agreed between the Company and its charterers; such profit sharing is recognized in revenue when mutually settled. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeded the stipulated time in the voyage charter and is recognized as incurred. Deferred revenue represents cash received on charter agreements prior to the balance sheet date and is related to revenue not meeting the criteria for recognition.

Impairment of long lived assets : The Company applies ASC 360 "Property, Plant and Equipment", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that, long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted projected operating cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. The Company determines the fair value of its assets based on management estimates and assumptions and by making use of available market data and taking into consideration third party valuations.

The Company evaluates the carrying amounts (primarily for vessels and related dry-docking and special survey costs) and periods over which long lived assets are depreciated to determine if events have occurred which would require modification of their carrying values or useful lives.In evaluating useful lives and carrying values of long lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases and overall market conditions. The amount of undiscounted operating cash flows estimated in 2008 for 2009 was not materially different from the actual amount of 2009.

The current economic and market conditions, including the significant disruptions in the global credit markets are having broad effects on participants in a wide variety of industries. Since 2008 the product tanker vessel values have declined both as a result of a slowdown in the availability of global credit and the decrease in charter rates; conditions that the Company considers indicators of a potential impairment.

The Company determines undiscounted projected net operating cash flows for each vessel and compares it to the vessel's carrying value. The projected net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days (based on the most recent 10 years average historical one year time charter rates) over the remaining estimated life of each vessel, net of brokerage commissions, expected outflows for scheduled vessels' maintenance and vessel operating expenses assuming an average annual inflation rate of 3%. In the Company's exercise the fleet utilization is assumed to be 99% for the first 15 years of the life of the vessel and 98% thereafter. Additional off hire is assumed for the periods each vessel is expected to undergo her scheduled maintenance (drydocking and special surveys). The cash flows were based on the conditions that existed at the balance sheet date and were not affected by subsequent decisions.

No impairment loss was identified or recorded for 2009, 2008 or 2007 and the Company has not identified any other facts or circumstances that would require the write down of vessel values. However, the current assumptions used and the estimates made are highly subjective, and could be negatively impacted by further significant deterioration in charter rates or vessel utilization over the remaining life of the vessels which could require the Company to record a material impairment charge in future periods.

Vessel's depreciation : Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate at the date of the vessel's delivery. Management estimates the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is adjusted at the date such regulations become effective.

Accounting and measurement of derivative instruments: ASC 815 "Derivatives and Hedging" requires all derivative contracts to be recorded at fair value, as determined in accordance with ASC 820 "Fair Value Measurements and Disclosures", which is more fully discussed in Note 10 to our consolidated financial statements. The changes in fair value of the derivative contracts are recognized in earnings unless specific hedging criteria are met. As derivative instruments have not been designated as hedging instruments, changes in their fair value are reported in current period earnings. The Company does not believe it is necessary to obtain collateral arrangements.

ASC 815 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. ASC 815 relates to disclosures only and its adoption did not have any effect on the financial condition, results of operations or liquidity of the Company.

Effective January 1, 2009, the Company adopted the accounting pronouncement relating to the expanded disclosure requirements about derivative instruments and hedging activities codified as ASC 815, "Derivatives and Hedging". ASC 815 intents to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows.

Financial instruments with characteristics of both liabilities and equity : ASC 480 "Distinguishing liabilities from equity" establishes standards for the accounting for certain financial instruments with characteristics of both liabilities and equity. Certain obligations to issue a variable number of shares are financial instruments that embody unconditional obligations, or financial instruments other than outstanding shares that embody conditional obligation, that the issuers must or may settle by issuing variable number of equity shares. These obligations also must be classified as liabilities if, at inception, the monetary values of the obligations are based solely or predominantly on any one of the following: 1) a fixed monetary amount known at inception, 2) variations in something other than the fair value of the issuer's equity shares, or 3) variations inversely related to changes in the fair value of the issuer's equity shares. Freestanding financial instruments indexed to or potentially settled in the issuer's shares for which equity classification is precluded by ASC 480 initially and subsequently should be measured at fair value. Subsequently changes in fair value are recognized in earnings.

Deferred Dry-dock costs : The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking is scheduled to become due. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the period of the vessel's sale. During 2009 and 2008 three vessels ( Omega King , Omega Queen and Omega Lady Sarah ) and one vessel ( Omega Lady Miriam ), respectively, have entered their scheduled drydock.

Allowance for non-collectible accounts : At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts.

Equity method investments : Investments in entities that the Company does not control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for using the equity method. Under this method the investment is carried at cost, and is adjusted to recognize the investor's share of the earnings or losses of the investee after the date of acquisition and is adjusted for impairment whenever facts and circumstances determine that a decline in fair value below the cost basis is other than temporary. The amount of the adjustment is included in the determination of net income by the investor and such amount reflects adjustments similar to those made in preparing consolidated financial statements including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any differences between investor cost and underlying equity in net assets of the investee at the date of acquisition. The investment of an investor is also adjusted to reflect the investor's share of changes in the investee's capital.

Year Ended December 31, 2009 compared with the Year Ended December 31, 2008

OPERATING FLEET – Our fleet, in 2009, was comprised of eight wholly owned-product tankers, including two Handysize MR's and six Panamax vessels. The two Handysize MR's and four of the Panamax vessels were purchased in 2006 with a combination of debt and proceeds from our initial public offering. The vessels were delivered to us between May and August of 2006. The other two Panamax vessels were purchased in 2007 and were delivered to us in March and April of 2007, respectively. The results from operations for these vessels in 2009 and 2008 are in Continuing Operations. Discontinued operations relate to the results of operations of our bulk carriers that we agreed to sell in 2006 and were delivered to their new owners in 2007. In addition, since April 2009 we own, through a 50% controlled joint venture, a Handymax (MR2) vessel. The results of the joint venture company are presented as "Loss from joint venture companies" in the accompanying consolidated financial statements of income.

CONTINUING OPERATIONS

VOYAGE REVENUES – Voyage revenues were $64.5 million in 2009 versus $77.7 million in 2008, a decrease of 17%. During 2009 the time charter of six out of the eight wholly-owned vessels expired. Four of the these vessels have entered into new time charters with lower rates and two have entered into new time charters with higher rates. As a result of the deterioration of the shipping rates in 2009, the overall decrease of our average charter rate (excluding any profit sharing) was 15%. Also the amount of revenue received from our profit sharing agreements decreased from $6.8 million in 2008 to $3.2 million in 2009.

VOYAGE EXPENSES – Voyage expenses, which include mainly brokerage commissions on voyage revenues as well as bunkers consumed and port expenses of spot voyages, were $1.5 million in 2009 versus $1.0 million in 2008, an increase of 50%. The amount of commission on voyage revenue was decreased by $0.1 million in 2009 compared to 2008 due to the decrease of the revenues. Voyage expenses were increased in 2009 due to spot voyages performed by some of our vessels, versus time charters in 2008, resulting in charges for the bunkers consumed and port expenses incurred which amounted to $0.7 million.

VESSEL OPERATING EXPENSES – Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance and repairs, were $17.3 million in 2009 versus $15.5 million in 2008, an increase of 12%. The increase was primarily related to higher crew wages and the increased cost of spares incurred as a result of repairs and maintenance effected during the drydocking of three vessels in our fleet during 2009.

DEPRECIATION AND AMORTIZATION – Depreciation and amortization, which primarily includes depreciation of vessels, was $19.2 million in 2009 versus $18.9 million in 2008. The increase of 2% relates to the amortization of the costs incurred during drydocking.

MANAGEMENT FEES – Management fees relate to the fees paid to V. Ships and Benhard Schulte Ship management for the technical management of our vessels. These fees were $1.3 million in 2009 versus $1.2 million in 2008. This increase of 8% related to the contractual annual increase of the management fees.

GENERAL AND ADMINISTRATIVE EXPENSES – General and Administrative Expenses were $6.0 million in 2009 versus $6.1 million in 2008, reflecting a decrease of 2%.

INTEREST AND FINANCE COSTS - Interest and Finance costs for 2009 were $7.2 million versus $14.4 million in 2008, a decrease of $7.2 million or 50%. The decrease reflects the decrease in average interest rates by 50% in 2009 compared with 2008.

INTEREST INCOME – Interest Income was $0.1 million in 2009 versus $0.7 million in 2008, a decrease of 86%, relating mainly to lower interest rates and balances.

CHANGE IN FAIR VALUE OF WARRANTS - This gain was $1.1 million in 2009 versus $3.2 million in 2008 and is related to the changes in fair values of the warrants issued to the seller of the Ice Class 1A Panamax newbuildings, which we took delivery of in March and April of 2007, as partial compensation for the vessels. Additionally the gain recognized in 2009 is due to the further decrease of our share price, until the exercise date of the warrants that was March 31, 2009.

LOSS ON DERIVATIVE INSTRUMENTS – For the year ended December 31, 2009, realized loss from the interest rate swaps amounted to $8.5 million and unrealized gain was $4.3 million. For the year ended December 31, 2008, realized loss from the interest rate swaps amounted to $0.9 million and unrealized loss was $12.7 million. The decrease of the loss on derivative instruments relates primarily to the increase of the forward interest rates as of December 31, 2009 compared to December 31, 2008.

LOSS FROM JOINT VENTURE COMPANIES – For year ended December 31, 2009, loss from joint venture companies amounted to $0.3 million. This amount relates to our investment in a 50% joint venture that owns an MR(2) product tanker Omega Duke that was delivered on April 24, 2009.

INCOME FROM CONTINUING OPERATIONS – Income from continuing operations for 2009 was $5.7 million versus $10.9 million in 2008. The decrease of $5.2 million, or 48%, primarily is related to (i) the decrease of revenues by $13.2 million, (ii) an amount of $3.0 million relating to the termination of a purchase agreement of the Omega Duke, further discussed in Liquidity and Capital Resources section, (iii) the increase of voyage expenses and vessels' operating expenses by $2.3 million, (iv) the decrease of gains from warrants by $2.0 million, (v) the increase of depreciation cost by $0.3 million and (vi) the loss from joint venture companies of $0.3 million, partially offset by the decrease of interest and finance cost, interest income as well as derivative losses by $ 16.1 million.

Year Ended December 31, 2008 compared with the Year Ended December 31, 2007

OPERATING FLEET – Our fleet, in 2008, was comprised of eight product tankers, including two Handysize MR's and six Panamax vessels. The two Handysize MR's and four of the Panamax vessels were purchased in 2006 with a combination of debt and proceeds from our initial public offering. The vessels were delivered to us between May and August of 2006. The other two Panamax vessels were purchased in 2007 and were delivered to us in March and April of 2007, respectively. The results from operations for these vessels in 2007 and 2008 are in Continuing Operations. Discontinued operations relate to the results of operations of our bulk carriers that we agreed to sell in 2006 and were delivered to their new owners in 2007.

CONTINUING OPERATIONS

VOYAGE REVENUES – Voyage revenues were $77.7 million in 2008 versus $69.9 million in 2007, an increase of 11%. The increase was primarily due to an increase in the number of ship operating days for the product tankers from 2,719 days in 2007 to 2,918 in 2008, an increase of 199 days or 7%. On average, we operated 6.0 Panamax vessels and 2.0 Handysize MR's in 2008 versus 5.4 Panamax vessels and 2.0 Handysize MR's in 2007. Voyage revenues for 2008 and 2007 also include revenue from profit sharing of $6.8 million and $4.0 million, respectively.

VOYAGE EXPENSES – Voyage expenses, which include mainly brokerage commissions on voyage revenues, were $1.0 million in 2008 versus $0.9 million in 2007, an increase of 11%. This increase is due primarily to the respective increase in voyage revenues, as commissions are calculated as a percentage of gross hire.

VESSEL OPERATING EXPENSES – Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oils, insurance, maintenance and repairs, were $15.5 million in 2008 versus $13.1 million in 2007, an increase of 18%. This increase was primarily related to the operation of a larger fleet in 2008 versus 2007, when we operated a fleet of 8.0 compared to 7.4 vessels, respectively. The increase in crew wages and the increased cost of spares incurred as a result of repairs and maintenance effected during the drydocking for one vessel in our fleet.

DEPRECIATION AND AMORTIZATION – Depreciation and amortization, which primarily includes depreciation of vessels, was $18.9 million in 2008 versus $17.6 million in 2007. The increase of 7% reflected the operation of an average of 8.0 vessels in 2008 versus 7.4 vessels in 2007.

MANAGEMENT FEES – Management fees relate to the fees paid to V. Ships and Bernhard Schulte Ship Management for the technical management of our vessels. These fees were $1.2 million in 2008 versus $1.1 million in 2007. This increase of 9.1% related to the operation of a larger fleet in 2008 than 2007 as well as 7% annual increase of the management fees in 2008 compared to 2007. This increase was partially offset by the fact that in 2007 extra fees were charged by V. Ships as for management services rendered prior to the acquisition of Omega Emmanuel and Omega Theodore .

GENERAL AND ADMINISTRATIVE EXPENSES – General and Administrative Expenses were $6.1 million in 2008 versus $5.1 million in 2007, reflecting an increase of 20%. The increase is mainly attributable to a $0.9 million increase of non cash charges relating to the fair value of the restricted shares granted. The grant date fair value of the restricted shares is being recognized rateably over the vesting period. Also during 2008 there was an increase of wages that was partially offset by the decrease of the cash bonus received by the Officers and the decrease of the audit fees. The amount of audit and consulting fees was higher in 2007 mainly due to Sarbanes-Oxley compliance requirements.

INTEREST AND FINANCE COSTS - Interest and Finance costs for 2008 were $14.4 million versus $18.6 million in 2007, a decrease of $4.2 million or 23%. The decrease reflects the decrease of average interest rate by 32% in 2008 compared to 2007. The decrease resulted from the lower interest rates was partially offset by the higher amount of outstanding debt relating mainly to the financing of the two Handymax (MR2) product tankers that we have agreed to purchase.

INTEREST INCOME – Interest Income was $0.7 million in 2008 versus $1.8 million in 2007, a decrease of 61%, relating mainly to lower interest rates and balances.

CHANGE IN FAIR VALUE OF WARRANTS - This gain was $3.2 million in 2008 versus $1.1 million in 2007 and is related to the changes in fair values of the warrants issued to the seller of the Ice Class 1A Panamax newbuildings, which we took delivery of in March and April of 2007, as partial compensation for the vessels. The increase of the amount of gain relates mainly to the decrease of our share price on December 31, 2008 compared to December 31, 2007.

LOSS ON DERIVATIVE INSTRUMENTS – For the year ended December 31, 2008, realized loss from the interest rate swaps amounted to $0.9 million and unrealized loss was $12.7 million. For the year ended December 31, 2007, realized gain from the interest rate swap amounted to $0.04 million and the net unrealized loss on the interest rate collar option amounted to $1.3 million. The increase of the loss on derivative instruments relates primarily to the significant decrease of the forward interest rates as of December 31, 2008 compared to December 31, 2007. On March 27, 2008 we entered into two interest rate swap agreements with NIBC and BTMU in order to hedge our exposure to fluctuations in interest rates on our junior secured credit facility. The notional amount of each agreement is $21.3 million and the interest rate is fixed at 2.96% per annum. Furthermore, on April 15, 2008 we entered into a restructuring agreement amending the initial rate collar option with HSH. Under the amended agreement, we have entered into a participation swap with a gradual alignment factor. The notional amount of the swap is $150.0 million

and the cap has been set at 5.1%, with the floor being at 2.5% and the gradual aligned participation at a maximum of 2.6% when the three months LIBOR drops below 2.5%. Finally, on November 10, 2008 we entered into an interest rate swap agreement with Lloyds Bank in order to hedge our exposure to fluctuations in interest rates. The interest rate is fixed at 2.585% per annum and the notional amount was $100.0 million as of December 31, 2008.

INCOME FROM CONTINUING OPERATIONS – Income from continuing operations for 2008 was $10.9 million versus $14.9 million in 2007. The decrease of $4.0 million, or 27%, primarily is related to the significant increase of the loss on derivative instruments by $12.4 million, that was partially offset by (i) the increase of operating income by $3.2 million due primarily to the increase of the size of our fleet from an average of 7.4 vessels in 2007 to 8.0 vessels in 2008, (ii) the decrease of interest and finance costs and interest income by $3.1 million and (iii) the increase of gain from change in fair value of warrants by $2.1 million.

B. Liquidity and Capital Resources

We operate in a capital intensive market. We have financed the acquisition of our fleet with proceeds from our initial public offering, long-term debt and internally generated cash. Our main uses of funds have been capital expenditure for the acquisition of new vessels, repayment of bank loans and payment of dividends.

We have entered into an equal partnership joint venture named Megacore Shipping Ltd. with a wholly owned subsidiary of Glencore International AG to acquire two Handysize double hull chemical / product tankers and seven Panamax double hull product tankers to be constructed at Hyundai Mipo Dockyard in South Korea. Two of the Handysize vessels, the 37,000 dwt. Megacore Honami and Megacore Hibiscus, were delivered in February and May, 2010, respectively, to companies owned by Megacore. The Megacore Honami and the Megacore Hibiscus were funded with Bank debt and equity contributions from the shareholders. Upon delivery, the Megacore Honami commenced a three year time charter with NYK Line. The Megacore Hibiscus is currently trading in the spot market.

As mentioned Megacore has contracted to take delivery of one LR1 Panamax vessel in the third quarter 2010, two LR1's in the first quarter 2011 another two LR1's in the third quarter 2011 and finally two LR1's are scheduled for delivery in the first quarter 2012. The payment terms contracted with the shipyard provide for five installments, each of 20% of the contract price, with the last three installments, amounting in total to 60% of the contract price, payable within five months before the final delivery date. The construction and acquisition of the remaining seven LR1 newbuildings, owned by Megacore Shipping Ltd, that are currently under construction are being funded by debt and equity contributions by the shareholders. The Company is funding the pre-delivery construction schedule with respect to three and a half of these vessels, for all of which bank debt financing commitments are already in place, including pre-delivery as well as post delivery financing. Based on prevailing market conditions and also taking into account our current liquidity and short term debt obligations, these capital expenditure commitments, can only be funded with a combination of debt financing, internally generated cash flow and other capital raises which are currently being explored.

The Company is currently in advanced discussions with its lenders to extend the term of its loans under the Senior Credit Facility and the Junior Credit Facility beyond the current maturity of April 2011. Both the Senior as well as the Junior Facility are non amortizing until the maturity. While both loans will mature in nine months, we believe we will reach a satisfactory outcome well in advance as we are in negotiations to reach a final agreement to obtain waivers and extend or restructure our debt. The current outstanding balance of our credit facilities, including predelivery advances for newbuildings, amounts to approximately $340 million.

While delivery dates and respective capital expenditures are staggered within a time frame of 20 months from today, the Company is currently in negotiations to reach a final agreement to obtain waivers and extend or restructure its debt, and is also exploring, amidst challenging capital market conditions, various alternatives including capital raising in order to improve both its short term and long term liquidity, meet short term commitments and manage its overall capital exposure.

Vessel acquisition and vessels under construction

Omega Duke:

(i) On April 8, 2009, we entered into a settlement agreement with the seller to cancel the Memorandum of Agreement and the time charter agreement for Omega Duke , by paying a settlement fee of $3.0 million. Such amount was paid on April 24, 2009 and both parties were released from further liabilities regarding the Memorandum of agreement and the time charter agreement.

(ii) Through our wholly-owned subsidiary Omnicrom Holdings Ltd., or Omnicrom, we have entered into a joint venture agreement with Topley Corporation, or Topley, which is a wholly-owned subsidiary of Glencore International AG. Omnicrom and Topley each own 50% of Stone Shipping Ltd, or Stone, that is a joint venture holding company. Stone owns 100% of Blizzard Navigation Inc., or Blizzard, that is the shipowning company of Omega Duke . Blizzard entered into a Memorandum of Agreement with the seller for the purchase of Omega Duke for a consideration of $45.0 million. Omega Duke was delivered to Blizzard on April 24, 2009. The purchase of the vessel was financed by the loan agreement with Lloyds bank discussed below and by equal equity contributions of the shareholders that amounted to $11.3 million, or $5.6 million each. Blizzard has entered into a five year charter agreement on a daily hire of $16,500 plus 100% of any trading income in excess. The joint venture is expected to declare a dividend on a quarterly basis, in amounts substantially equal to any available cash from operations after cash expenses and discretionary reserves and is expected to be distributed equally between Omnicrom and Topley.

Alpine Marina:

On May 9, 2008, we entered into a Memorandum of Agreement with an unrelated third party to acquire a newbuilding double hull Handymax (MR2) product tanker for a consideration of $55.5 million. The vessel is a sistership to the Omega Duke. As of December 31, 2009, we had paid an advance, representing 10% of the total purchase price, amounting to $5.5 million, from cash available from operations and the proceeds under a loan facility concluded in this respect with Lloyds TSB Bank PLC, as further discussed below.

On April 8, 2009, as supplemented on April 24, 2009, we entered into a settlement agreement with the seller to cancel the Memorandum of Agreement and the time charter agreement that was attached to the vessel and scheduled to commence upon delivery to us, of the vessel that we agreed to purchase on May 9, 2008. The effectiveness of the settlement agreement was subject to several financing arrangements that needed to be in place relating mainly to equity contributions from the joint venturers and the payment of the settlement fee.

On April 8, 2009, as supplemented on April 24, 2009, we entered, through Omnicrom, our wholly owned subsidiary, into a joint venture agreement with Topley, a wholly owned subsidiary of Glencore International AG. Omnicrom and Topley each own 50% of Onest Shipping Ltd, or Onest, which is a joint venture holding company. Onest owns 100% of Tornado Navigation Inc., or Tornado, which is the shipowning company of the vessel (Alpine Marina). This agreement was subject to several financing arrangements that were not in place as of December 31, 2009.

On June 2, 2010, we paid the amount of $3.0 million as settlement fee for the cancellation of the initial MOA agreement as well as the time charter. Also, Tornado has entered into an MOA to acquire the vessel for a consideration of $45.0 million. Tornado has also entered into a five year time charter agreement for the vessel with ST Shipping, a wholly owned subsidiary of Glencore International AG, on a daily hire of $14,000 plus 100% of any trading income in excess.

The Alpine Marina was delivered on July 8, 2010. The acquisition of the vessel was financed by debt financing, described below and 50/50 equity contributions of $7,275 each.

On April 24, 2009 Blizzard Navigation Inc., owner of the vessel Omega Duke, and Tornado that is the owner of Alpine Marina have entered into a senior secured loan facility with Lloyds bank. The facility was divided in two tranches. The first advance amounted to $33.7 million and it was used for the financing of the acquisition of Omega Duke. The second advance amounted to $28.5 million and it was used for the financing of the acquisition of Alpine Marina. In addition, for the financing of the acquisition of Alpine Marina, Glencore provided a top up loan facility of $2.0 million and will be repaid from the available net cash flow of Tornado. Both facilities will bear interest at LIBOR plus margin. We will guarantee 50% of the obligations of the borrower under both facilities.

Under the joint venture agreement it is agreed to declare dividends on a quarterly basis, in amounts substantially equal to any available cash from operations after cash expenses and discretionary reserves and is expected to be distributed equally between Omnicrom and Topley provided that no dividends shall be paid unless and until the outstanding indebtedness of the loan provided by Glencore has been fully repaid.

Megacore newbuilding contracts

On June 15, 2007, we entered into five shipbuilding contracts with Hyundai Mipo Dockyard, in South Korea, to construct and acquire five newbuilding double hull Handysize (MR1) product tankers, each with a capacity of 37,000 dwt. The contractual purchase price of the five newbuildings was $44.2 million per vessel ($221.2 million in total).

On September 8, 2008 we entered into a joint venture agreement with Topley, which is a wholly-owned subsidiary of Glencore International AG. Based on the agreement, each party was expected to initially contribute five (5) newbuilding double hull Handysize product tanker vessels, with a capacity of 37,000 dwt, thus forming a fleet of 10 newbuilding vessels, with the aim of establishing a major participant in the ownership and operation of product tankers.

On June 11, 2009 we entered into five novation agreements with Hyundai Mipo shipyard and five shipowning companies wholly owned by Megacore Shipping Ltd, a joint venture company owned equally by the Company and Topley, in order to transfer all of the rights and obligations to the joint venture companies. Subsequently, we transferred the financing arrangements to the five joint venture companies but continued to guarantee the performance of their loans during the pre-delivery period. As a result the above five shipowning companies are included in the consolidated financial statements as of December 31, 2009. On December 10, 2009 we have entered into Addendum No. 1 of the shipbuilding contracts with Hyundai Mipo shipyard whereby out of the original 10 shipbuilding contracts for Handysize product tankers only 2 remained unchanged and 7 were converted to Panamax (LR1) product tankers with a capacity of 74,000dwt while one contract was suspended. The contract price was amended for the 7 LR1s and the delivery dates were extended. One of the vessels is scheduled for delivery in 2010, four of the vessels are scheduled for delivery in 2011 and two in 2012.

Each shareholder is expected to fully fund through Megacore all obligations under four shipbuilding contracts until the delivery of the respective vessels, while the predelivery obligations of one vessel will be funded 50/50 by each shareholder. The objective of the joint venturers is that, following delivery of the vessels the equity contribution of the Company and Topley is expected to be equal. After the delivery of each vessel the shipowning companies shall declare and pay quarterly dividends to the Company and Topley that are expected to be substantially equal to available cash from operations during the previous quarter after cash expenses and discretionary reserves. Dividends are expected to be equal for the two joint venture partners.

Two of the Megacore joint venture vessels, Megacore Honami and Megacore Hibiscus , were delivered on February 25, 2010 and May 6, 2010, respectively.

Credit Facilities

HSH Nordbank Syndicated Senior Secured Term Loan and Revolving Facility

We financed the acquisition of our fleet with advances under a term loan that we had in place prior to our initial public offering for an amount of $39.0 million. Contemporaneously with the closing of our initial public offering, the net proceeds of which amounted to $186.7 million, we repaid our outstanding debt that amounted to $38.5 million, with advances under the term loan portion of a new, $295.0 million senior secured credit facility with HSH Nordbank and a syndicate of Banks, that we entered into upon the closing of our initial public offering in April 2006. This facility consisted of (1) a term loan of $145.0 million that was used to refinance the previously obtained term loan facility of $38.5 million and (2) a revolving line of credit of $150.0 million. Draw downs up to December 31, 2006 under the term loan facility and the revolving facility totaled $144.4 million and $97.1 million, respectively. At December 31, 2006, the outstanding principal balance of the facility amounted to $238.9 million and the undrawn portion of the revolving credit facility amounted to $54.0 million.

On March 21, 2007, a second supplement amending this facility was signed in connection with the financing of the acquisition of the tanker vessels Omega Emmanuel and Omega Theodore . Under the amended facility, HSH Nordbank agreed to make available to us an aggregate amount of $94.3 million, which would be made available by (i) re-committing for re-borrowing again (once only) an amount of $38.1 million from the term loan facility amount that we had repaid on the same date relating to the drybulk carriers that we have sold and (ii) drawing an amount of $56.2 million from the revolving facility. These amounts were to be combined and comprise two tranches, one for each of the above two vessels, in each case of $47.2 million per vessel.

Pursuant to the above supplement, on March 26, 2007, we drew down an amount of $19.0 million from the term loan facility and $28.1 million from the revolving facility in order to partly finance the acquisition of the Omega Emmanuel and on April 25, 2007, we drew down an amount of $19.0 million from the term loan facility and $28.1 million from the revolving facility in order to partly finance the acquisition of the Omega Theodore . As of December 31, 2007, the outstanding balance of the term loan and the revolving facility was $139.9 million and $141.8 million, respectively.

On March 27, 2008, a third supplement, amending the principal agreement of our $295.0 million senior secured credit facility with HSH Nordbank, was signed. Under the amended agreement, HSH agreed to make available to us a term loan facility of up to $242.7 million, comprised of (1) an amount of $139.9 million that was used to refinance the then outstanding balance of $139.9 million under the original term loan facility and (2) an amount of $102.8 million to partially finance the repayment of the revolving credit facility.

Pursuant to the third supplement, the interest rate margin was reduced and the financial covenants of the loan were amended as follows: (a) the ratio of fleet market value to total debt was changed from 135% to 120%, (b) the calculation of leverage ratio was amended from Total Debt to Total Capitalization, to Total Net Debt to Total Net Capitalization. According to the amended agreement, the leverage ratio may be temporarily increased to between 65% and 70%, compared to a previous maximum of 65%, provided that it will thereafter be reduced to 65% within six months after the end of the quarter that it first exceeded 65%, (c) we should maintain a ratio of EBITDA to interest payable on a four trailing quarter basis of not less than 2:00 to 1:00 instead of 3:00 to 1:00, which was required by the original agreement. The facility is scheduled to be repaid in one amount on April 12, 2011. As of December 31, 2009, as well as currently the outstanding balance of the term loan facility was $ 242.7 million.

Our credit facility with HSH contains a "Market Disruption Clause" requiring us to compensate the banks for any increases to their funding costs caused by disruptions to the market which the bank may unilaterally trigger. While we have reserved our rights regarding the ability of HSH to invoke such clause commencing January 30, 2009 we are paying the market disruption rate that is on average 0.23% higher than LIBOR and varies on each loan roll over based on the HSH actual funding cost. At this time we do not know when our lender will stop charging us the Market Disruption rate.

On April 15, 2008, we entered into a restructuring agreement amending the initial rate collar option with HSH. Under the amended agreement we entered into a participation swap with gradual alignment factor. The notional amount of the swap is $150.0 million and the cap has been set at 5.1% with the floor being at 2.5% and the gradual aligned participation at a maximum of 2.6% when the three months LIBOR drops below 2.5%. On July 22, 2008 the maturity date of the swap was amended from April 4, 2011 to April 14, 2011.

HSH Nordbank Bridge Loan Facility

On April 25, 2007, we entered into an agreement with HSH Nordbank for a $2.4 million bridge facility to finance the remainder of the purchase price of the Omega Emmanuel and Omega Theodore . We drew down the total amount on April 25, 2007, shortly before the delivery of Omega Theodore . This bridge loan facility was repaid in full on March 28, 2008, with proceeds drawn under our junior secured credit facility with BTMU and NIBC, described below.

BTMU / NIBC Junior Secured Credit Facility

On March 27, 2008, we entered into a junior secured credit facility with BTMU and NIBC for the purpose of (i) partially prepaying the $295.0 million senior secured credit facility with HSH Nordbank described above, (ii) repaying the HSH bridge loan facility and (iii) for working capital purposes. The amount of the junior secured credit facility was $42.5 million and was drawn down on March 28, 2008. Based on the loan agreement, the facility has to be repaid in one amount on April 12, 2011. The junior secured credit facility bears interest at LIBOR plus margin.

The junior secured credit facility contains financial covenants calculated on a consolidated basis requiring us to maintain (i) minimum cash of $5.0 million, (ii) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00, (iii) a leverage ratio maximum of 70% based on Net Debt to Net Capitalization, (iv) a ratio of fair market value to combined senior secured credit facility, junior secured credit facility and swap exposure, in case of early termination, of 120%.

The junior facility is secured by owners' guarantees, second priority, cross collateralized mortgages, second priority pledge/assignment of earnings account and retention account, second priority assignment of insurances in respect to the vessels, second priority pledge of the time charter contracts currently in place for the vessels, and second priority assignment of each of the vessels earnings.

On March 27, 2008, we entered into two interest rate swap agreements with NIBC and BTMU in order to hedge our exposure to fluctuations in the interest rate on our junior secured credit facility. The notional amount of each agreement is $21.25 million, or $42.5 million in total, and interest rate is fixed at 2.96% per annum with NIBC and 2.9625% per annum with BTMU. The effective date of the agreements are March 28, 2008 and their duration is three years. The agreements are secured under second preferred mortgages.

According to the cash sweep clause of the junior facility, in the event that at any time during the security period the fair market value of the secured vessels is less than 130% of the aggregate of the senior and junior credit facilities we shall prepay part of the facility. On November 20, 2009 an amount of $2.2 million was prepaid under the cash sweep clause of the junior facility and as a result the outstanding balance of the loan amounted to $40.3 million as of December 31, 2009. Also an amount of $2.0 million was prepaid under cash sweep clause on January 19, 2010 and the current outstanding balance is $38.3 million.

Bremer Landesbank Loan Facilities

On July 4, 2007, we entered into a secured loan facility with Bremer Landesbank Kreditanstalt Oldenburg Girozentrale, or Bremer, of up to $19.9 million to partially finance the first construction installment (representing the 10% of the total purchase price) made on July 5, 2007, amounting to $22.1 million of the five newbuilding vessels.

On August 24, 2007, we, through our two wholly-owned subsidiaries that were to become the owners of two of the five Handysize (MR1) product tankers currently under construction, entered into a secured loan facility with Bremer of up to $55.3 million for the purpose of (i) the partial repayment of the outstanding loan facility with Bremer discussed above and (ii) to partly finance the acquisition cost during the construction period of the two of the five product tankers described above. The loan amount would be drawn in two tranches, one for each vessel under construction, which would be available in five advances to be drawn on the payment dates of the installments under the shipbuilding contracts and would bear interest at LIBOR plus margin. The interest of the first two advances, which would be deferred until the third installment to the shipyard is due, was considered as a part of the loan and bear interest thereon until full repayment of the loan upon delivery of the vessels.

On August 31, 2007, we drew down the first advance of the pre-delivery facility for both vessels ($4.0 million per vessel) and used it for the repayment of the previous loan facility with Bremer, discussed above. On December 13, 2007, we drew down the second advance of pre-delivery facility for both vessels ($4.0 million per vessel) to partially finance the second construction installment for the two vessels, made on December 13, 2007, amounting to $8.8 million (representing 10% of their total purchase price). The draw down of the following advances would take

place on the dates of the third, fourth and fifth installments falling due under the shipbuilding contracts signed on June 15, 2007 in partial payment of the construction installments under the contracts. The facility contained financial covenants calculated on a consolidated basis providing for a) minimum liquidity of $5.0 million and b) a leverage ratio, calculated as total debt to total capitalization, of maximum 70%. The facility was secured by a) first priority assignment of all rights under the relevant two shipbuilding contracts signed on June 15, 2007, b) first priority assignment of all rights under the relative refund guarantees and c) corporate guarantee. Furthermore, we were permitted to pay dividends so long as an event of default had not occurred and would not occur upon the payment of such dividend.

On February, 2, 2009, we entered into a post-delivery term loan facility with Bremer of up to $66.3 million representing 75% of the vessels' price on delivery or the fair market value of those vessels at delivery, whichever is less, for the purpose of repayment of the pre-delivery facility as well as financing the sixth installment to the shipyard. The loan wpuld be drawn at the vessels' delivery dates and would be repayable in 40 quarterly installments and a balloon installment equal to $14.7 million per vessel. Repayment would commence three months after delivery of the vessels. The loan would bear interest at LIBOR plus margin. We would pay commitment fees of 0.2% per annum on the post delivery loan remaining undrawn. The loan agreement would be secured by a) first priority mortgages over the vessels, b) first priority assignment of each vessels insurances, c) corporate guarantee, d) first priority assignment of each of the vessels' earnings account and retention accounts and e) manager's undertakings. Furthermore the loan agreement contains financial covenants calculated on a consolidated basis, that will require the Company to maintain: a) liquidity of not less than $5.0 million, b) a ratio of total net debt to total net capitalization of not more than 70%, c) a ratio of market value of the secured vessels to outstanding net debt of the secured vessels shall be in excess of 120%.

On June 29, 2009 we repaid the outstanding balance of $16.9 million, including an amount of $1.0 million relating to the interest deferred until that date. On June 25, 2009 we, through Lightning Navigation Inc and Rain Navigation Inc, have entered into a senior secured loan facility with Bremer for an amount up to $58.8 million to (i) repay the outstanding loan facility discussed above and (ii) to partially finance the acquisition of the two of the five newbuilding vessels that we have novated to the above Joint Venture companies. Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts and bear interest at LIBOR plus margin and a commitment fee of 0.2% per annum on the undrawn portion of the loan. The amount of interest is deferred until the payment of the third instalment to the yard is due and it cannot exceed $2.5 million.

According to the pre-delivery facility signed on June 25, 2009 we, through Lightning Navigation Inc and Rain Navigation Inc, will enter into a new loan agreement for the post delivery financing in accordance with the terms presented above but including any necessary amendments based on the addendum of the shipbuilding contracts.

As of December 31, 2009, the outstanding balance of the loan was $17.0 million.

Bank of Scotland Loan Facility

On September 7, 2007, we entered into a senior secured loan facility up to a maximum of $70.0 million with Bank of Scotland to partly finance the construction and acquisition cost of another two of the five Handysize (MR1) product tankers that we have agreed to construct and purchase. This facility would be drawn down in two tranches, each in six advances. We drew down the first advance on September 20, 2007 as a reimbursement for the first installment made in July, 2007 under the shipbuilding contracts in an amount equal to $4.0 million per vessel. On December 13, 2007, we drew down the second advance for both vessels ($4.0 million per vessel) to partially finance the second construction installment amounting to $8.8 million (representing 10% of their total purchase price). In respect of each tranche, the remaining advances would be drawn on the payment dates and in partial payment of the installments under the shipbuilding contracts and would cover up to the lesser of $35.0 million and the 75% of the fair market value of each vessel on delivery date. Each tranche would be repaid in 40 equal quarterly installments commencing 3 months after the relevant vessel's delivery date plus a balloon payment of $14.7 million. The senior secured credit facility would bear interest at LIBOR plus margin.

The facility contained financial covenants calculated on a consolidated basis providing for a) minimum liquidity of $5.0 million b) a leverage ratio, calculated as total debt to total capitalization, of maximum 70%, c) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00 and d) working capital of not less than $1.0

million. After the vessels have been delivered the ratio of fair market value of the secured vessels to outstanding debt should not be less than 125%. Prior to the newbuildings' delivery the facility was secured by a) first priority assignment of all rights under the relevant two shipbuilding contracts signed on June 15, 2007, b) first priority assignment of all rights under the relative refund guarantees and c) corporate guarantee. Upon delivery of the newbuildings the term loan facility would be secured by a) first priority mortgages over the vessels, b) first priority assignment of each vessel's insurances, c) Corporate guarantee, d) first priority assignment of vessels' charter agreements and e) pledge over each of the vessels' earnings account and retention accounts. Furthermore, we were permitted to pay dividends so long as an event of default had not occurred and would not occur upon the payment of such dividend.

On June 29, 2009 we repaid the outstanding balance of $16.9 million, including an amount of $1.0 million relating to the interest deferred until that date. On June 29, 2009 we, through Fire Navigation Inc and Hurricane Navigation Inc, have entered into a loan agreement with Bank of Scotland for an amount of up to $70.0 million to (i) repay the outstanding loan facility discussed above and (ii) to partially finance the two of the five newbuilding vessels that we have novated to the above Joint Venture companies. On October 1, 2009 and on October 29, 2009 we paid the third and fourth instalments of Hull 2189 ( Megacore Honami ) and as a result we drew down the third and fourth instalments of the loan amounting $7.1 million each. Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts and bear interest at LIBOR plus a margin and commitment fees of 0.3% per annum on the undrawn portion of the loan. The interest of the first two advances under each tranche will be deferred until the date the advance for the third instalment to the shipyard is drawn.

As of December 31, 2009 the outstanding balance of the loan was $31.2 million.

Megacore Honami was delivered to Fire Navigation Inc in February 2010. The total financing amounts to $28.2 million that consists of $22.9 million of senior loan facility and $5.3 million of top up loan facility. The loan was drawn down on vessels' delivery on February 25, 2010. The top up loan facility shall be repayable in 12 equal consecutive quarterly instalments. According to the amended terms the ratio of fair market value of the secured vessels to outstanding senior debt should not be less than to 125% or 115% in case that the top up loan is included.

On March 26, 2010 we, through Fire Navigation Inc and Hurricane Navigation Inc, have entered into a supplemental agreement to amend the loan agreement with Bank of Scotland dated June 29, 2009 to (i) increase the amount of the post-delivery financing for the acquisition of Megacore Honami to take into account the top up loan facility described above and (ii) to amend the pre-delivery and post-delivery financing to take into account the amendment of the shipbuilding contract to a double hull product tanker of 74,000 dwt with expected delivery in October 2010.

In respect to the double hull product tanker of 74,000 dwt with expected delivery in October 2010, the amount of the loan was amended in order to take into consideration the contract price of the amended shipbuilding contract as well as the increased amounts of the pre-delivery instalments. As a result the loan amount should not exceed the lesser of (i) $38.9 million and (ii) 75% of the fair market value of the vessel on delivery date. On March 5, 2010 and June 25, 2010 Hurricane Navigation Inc paid the third and fourth instalments of Hull 2288 and as a result we drew down the third and fourth instalment of the loan amounting $8.6 million each. The outstanding balance of the loan after these draw downs is $25.8 million.

On February 25, 2010 we, through Fire Navigation Inc and Hurricane Navigation Inc have entered into a fixed rate swap agreement with the Bank of Scotland to hedge its exposure to fluctuations in interest rate. The interest rate was fixed at 0.59% for one year and the notional amount is $16.6 million. The effective date of the agreement was March 9, 2010 and its expiration date March 9, 2011.

National Bank of Greece Facility

On November 20, 2007, for the financing of one of the newbuildings, we entered into a senior secured loan facility with the National Bank of Greece (NBG) for an amount of up to the lesser of $33.2 million or 75% of the fair market value of the vessel on its delivery date. The loan would be available in six advances; the first of which was drawn down on November 21, 2007 as a reimbursement for the first installment on the vessel made in July, 2007 under the shipbuilding contract in an amount equal to $4.0 million. On December 13, 2007, we drew down the second advance equal to $4.0 million, to partially finance the second construction installment for the newbuilding

vessel, made on December 13, 2007, amounting to $4.4 million (representing 10% of its total purchase price). The remaining advances would be drawn on the payment dates of the installments under the shipbuilding contract. The loan would bear interest at LIBOR plus margin. The loan would be repayable in 40 equal quarterly installments plus a balloon installment equal to $13.3 million. Repayment would commence three months after delivery of the vessel.

The facility contained financial covenants calculated on a consolidated basis providing for a) minimum liquidity of $0.5 million per fleet vessel b) a leverage ratio, calculated as total debt to total capitalization, of maximum 70%, c) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00. After the vessel has been delivered the ratio of fair market value of the secured vessel to outstanding debt should not be less than 120%. The facility was secured, prior to the newbuildings' delivery by a) first priority assignment of all rights under the relevant shipbuilding contract signed on June 15, 2007 b) first priority assignment of all rights under the relative refund guarantee and c) corporate guarantee. Upon delivery of the newbuildings the term loan facility, would be secured by a) first priority mortgages over the vessels, b) first priority assignment of each vessel's insurances, c) Corporate guarantee, d) first priority assignment of vessels' charter agreements and e) pledge over each of the vessels' earnings account and retention accounts and e) manager's undertaking. Furthermore, we would be permitted to pay dividends so long as an event of default had not occurred and would not occur upon the payment of such dividend.

On June 10, 2009 we, through Ice Navigation Inc, have entered into a loan agreement with NBG for an amount of up to $33.2 million to (i) repay the outstanding loan facility discussed above and (ii) to partially finance the one of the five newbuilding vessels that the Company has novated to the above Joint Venture company. Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts and bear interest at LIBOR plus a margin and commitment fees of 0.2% per annum on the undrawn portion of the loan. The loan is repayable in 40 quarterly instalments ($0.5 million each), commencing three months after delivery of the vessel, plus a balloon instalment equal to $13.3 million. On June 29, 2009 we paid the total outstanding balance.

As of December 31, 2009 the outstanding balance of the loan was $8.0 million.

On January 27, 2010 we, through Ice Navigation Inc, have entered into a term sheet to amend the loan agreement with NBG dated June 10, 2009 to take into account the amendment of the shipbuilding contract to a double hull product tanker of 74,000 dwt with expected delivery date in January 2011. The purpose of the facility is to provide pre-delivery and post-delivery financing for the acquisition of a double hull product tanker of 74,000 dwt with expected delivery in January 2011. The total amount of the loan shall not exceed the lower of a) $36.3 million and b) 70% of the market value of the vessel on delivery. The facility shall be repaid by 40 equal, consecutive, quarterly instalments of $0.5 million each plus a balloon payment of $14.5 million. During the post delivery period the loan will be secured by the Company's corporate guarantee for the 50% of the outstanding debt and Glencore for the remaining 50% of the outstanding debt. All other terms of the loan agreement dated June 10, 2009 remain unchanged.

According to the shipbuilding contract and Megacore joint venture agreement, each of the joint venturer is 50/50 responsible for the financing of the acquisition of the vessel on delivery as well as the predelivery period. As of December 31, 2009 we include the outstanding balance of the debt in our consolidated financial statements because we have contributed 100% of the required capital and we have provided a corporate guarantee for the debt. On July 2, 2010 Ice Navigation Inc. paid the third instalment of Hull 2289 that was financed through debt financing amounting to $8.6 million and 50/50 equity contribution amounting to $1.1 million per joint venturer. On July 2, 2010 we received from Glencore an amount of $0.4 million representing 50% of the equity already contributed by us for the payment of the first and second instalment to the yard. The current balance of the debt is $16.6 and will be deconsolidated during the ensuing quarters.

Lloyds TSB Bank PLC

On May 9, 2008, we entered into an agreement to purchase two newbuilding Handymax (MR2) product tankers for $55.5 million each. Payment terms provided for a 10% advance payment and the balance of 90% at the respective deliveries. On May 28, 2008, we entered into a pre-delivery loan facility with Lloyds TSB Bank PLC of up to $9.9 million to finance 90% of the advance payment to the seller that amounts to $11.1 million. The facility was repayable by a bullet payment at the delivery date and would bear interest at a rate of LIBOR plus margin. The loan would be secured by i) Memorandum of Agreement assignment, ii) shares charge and iii) Corporate Guarantee and

contained financial covenants calculated on a consolidated basis that would require the Company to maintain: a) a ratio of EBITDA to interest payable of not less than 2:1, b) a ratio of total net debt to total net capitalization of not more than 0.70:1, c) working capital of not less than $1.0 million and d) liquidity of not less than (A) $0.5 million per vessel if the average remaining time charter coverage in respect of both vessels was more than 1 year, (B) $0.75 million per vessel if the average remaining time charter coverage in respect of both Vessels was more than six months and less or equal to one year; and (C) 5% of the outstanding indebtedness if the average remaining time charter coverage in respect of both vessels was less or equal to six months, but in any event not less than $0.75 million per vessel. The amount of $4.95 million was fully repaid, on April 23, 2009. As of December 31, 2009 the outstanding balance of the loan is $4.95 million and related to the vessel that was under construction and was fully repaid on June 2, 2010.

On May 28, 2008, we also entered into a post-delivery credit facility to fund the balance of the acquisition cost of the same two vessels in an amount of the lesser of $83.25 million and 75% of the fair market value of the vessels on their delivery dates. The loan facility was repayable in 40 equal quarterly installments plus a balloon installment of $18.3 million per vessel together with the final installment. Repayment would commence three months after the delivery of the vessels. Amounts under the facility would bear interest at LIBOR plus margin. Also, the credit facility contained financial covenants that required the Company to maintain: i) a ratio of EBITDA to interest payable of not less than 2:1, ii) a ratio of total net debt to total net capitalization of not more than 0.70:1, iii) working capital of not less than $1.0 million and iv) liquidity of not less than (a) $0.5 million per vessel if the average remaining time charter coverage in respect of both vessels was more than 1 year, (b) $0.75 million per vessel if the average remaining time charter coverage in respect of both Vessels was more than six months and less or equal to one year; and (c) 5% of the outstanding indebtedness if the average remaining time charter coverage in respect of both vessels was less or equal to six months, but in any event not less than $0.75 million per vessel. The loan was secured by a) first priority mortgage over each security vessel, b) first priority assignments of accounts, c) first priority general assignment in relation to security vessels' earnings, insurances and employment, and d) corporate guarantee.

On November 10, 2008 we entered into an interest rate swap agreement with Lloyds Bank in order to hedge our exposure to fluctuations in interest rate. Furthermore, on April 23, 2009, we terminated the fixed rate swap agreement that had entered into with Lloyds Bank on November 10, 2008. Concurrently we entered into (i) an interest rate swap with a notional amount of $66.3 million at a fixed rate of 2.655% per annum effective since February 12, 2009 and (ii) an interest rate swap with a notional amount of $33.8 million at a fixed rate of 2.655% per annum effective since April 24, 2009. The second swap was novated to Blizzard on April 24, 2009. The duration for both swaps is until May 12, 2011.

On April 8, 2009 we have entered into two joint venture agreements. The joint venture agreement relating to Omega Duke was effective on April 24, 2009 and part of the pre-delivery loan facility, amounting to $4.95 million, was fully repaid on April 23, 2009. As of December 31, 2009 the joint venture agreement relating to the second vessel, Alpine Marina, that was delivered on July 8, 2010, was not effective and as a result the pre-delivery and post-delivery facilities, signed in May 2008, were still valid for this vessel. On June 2, 2010 the joint venture agreement became effective and as a result the above loan was no more effective.

On April 24, 2009 the joint venture shipowning companies, Blizzard and Tornado, have entered into a senior secured loan facility with Lloyds bank. The facility is divided in two tranches. The first tranche amounts to $33.8 million for the financing of the acquisition of Omega Duke and was drawn down on April 24, 2009. The second tranche amounted to $28.5 million for the financing of the acquisition of Alpine Marina. After the drawdown of the second tranche the notional amount of the Company's swap with Lloyds, amounting to $66.3 million as of December 31, 2009, was decreased by $28.5 million because it was novated to Tornado. The swap matures on May 12, 2011 and it has a fixed rate of $2.655%. Omega Duke and Alpine Marina are not consolidated in our financial statements but are or will be presented by using the equity method.

The facility bears interest at LIBOR plus margin. The facility is secured by (i) first priority mortgage, (ii) first priority assignment of insurances, (iii) first priority assignment of earnings of the vessel plus any time charter exceeding 12 months, (iv) first priority pledge over vessel earnings accounts, (v) first priority pledge over the shares of Stone, Topley and Omnicrom, (vi) Omnicrom's guarantee for 50% of the loan and Omega's guarantee for 100% of Omnicrom's obligations. The facility contains financial covenants calculated on Omega's and Glencore's consolidated financial statements. Also a ratio of market value of the secured vessel to outstanding net debt of the secured vessel shall be in excess of 125%. The bank has provided a waiver of the security value coverage up to and including the 2nd anniversary of the delivery date of each vessel.

Breach of financial covenants under secured credit facilities

The Company is in breach of certain financial covenants, primarily the security value maintenance (also known as loan to value). Although the lenders have not declared an Event of Default, this constitutes a potential event of default and could result in the lenders requiring immediate repayment of the loan. The security value maintenance ratio is calculated as the fair market value of the secured vessels under a loan facility divided by the outstanding amount of the junior and senior facilities of the secured vessels. Due to cross default provisions in the loan agreements, the Company has classified the affected debt as current.

Cash Flows

Our cash and cash equivalents decreased to $15.6 million in the year ended December 31, 2009 from $16.8 million in the year ended December 31, 2008. Working capital is current assets minus current liabilities including the current portion of long-term debt. Our working capital deficit was $334.3 million as of December 31, 2009. The deficit is due to the reclassification of long term debt to current liabilities. We are currently in negotiations with the lenders to obtain waivers, extend the maturity of the loans and otherwise restructure the debt. The lenders have not demanded payment of the loans before their maturity. Management plans to settle the loan interest with cash generated from operations. Working capital was $3.6 million as of December 31, 2008.

NET CASH PROVIDED BY OPERATING ACTIVITIES – was $19.6 million in 2009 versus $40.1 million in 2008. The decrease is primarily attributable to the decrease of revenues, the increase of operating expenses, the increase of drydocking expenses in 2009 and the payment of $3.0 million relating to the termination of a purchase agreement. In 2007 net cash provided by operating activities was $33.3 million and we operated an average of 7.4 vessels.

NET CASH USED IN INVESTING ACTIVITIES – was $18.9 million in 2009 relating mainly to advance payments to the yard for the acquisition of Megacore Honami .

Net cash used in investing activities was $12.8 million in 2008 relating to 10% advance payment for the acquisition of two (MR2) newbuilding vessels.

Net cash used in investing activities was $83.7 million in 2007 consisting of $120.3 million paid for the acquisition of Omega Emmanuel and Omega Theodore , $81.5 million received from the sale of our two drybulk product carriers and $44.9 million advance payment for the acquisition of the five newbuilding vessels four of which are currently under construction and one was delivered in February 2010.

NET CASH USED IN FINANCING ACTIVITIES – was $1.9 million in 2009 primarily consisting of $56.3 million of proceeds draw downs under our credit facilities, repayment of $48.8 million of our credit facilities, $7.8 million of cash dividend paid during the year, $1.0 million relating to the settlement of warrants and $0.6 million increase of restricted cash.

Net cash used in financing activities was $19.3 million in 2008 primarily consisting of $156.6 million of proceeds drawn under our credit facilities, repayment of $144.3 million of our credit facilities, $30.4 million of cash dividend paid during the year, $1.4 million paid as to financing fees and $0.2 million decrease of restricted cash.

Net cash provided by financing activities was $55.5 million in 2007 mainly consisting of $156.8 million of proceeds drawn under our credit facilities to fund part of the acquisition cost of Omega Emmanuel , Omega Theodore and the five newbuilding vessels, the repayment of $71.4 million of our credit facilities (including a $38.1 million repayment of the term loan facility relating to the drybulk vessels sold), $30.3 million of cash dividend paid during the year, $1.0 million decrease of restricted cash and $0.6 million paid as financing costs.

C. Research and development, Patents and Licenses

Not applicable.

D. Trend Information

Not applicable.

E. Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

F. Tabular disclosure of contractual obligations

At December 31, 2009 we had the following contractual obligations:

	Payments due by period
	Total		less than 1 year		1-3 years		3-5 years		more than 5 years
Debt (1)		344,096		344,096		-		-		-
Shipbuilding contracts (2)		163,956		83,232		80,724		-		-
Vessel acquisitions (3)		49,950		49,950		-		-		-
Operating leases (4)		651		189		462		-		-
Periodic Survey fees (5)		314		112		199		3		-
Total		558,967		477,579		81,385		3		-

(1) Refer to Item 18 for a complete description of our credit facilities.

(2) The amount presented above relates to the five shipbuilding contracts that were novated to Megacore JV and includes the installments payable for the vessels that we are responsible to finance during predelivery period. More specifically the amount above includes (i) 100% of the installments payable to the yard for three LR1s, (ii) 100% of the installments payable to the yard for Megacore Honami that was delivered in February 2010 and (iii) 50% of the installments payable to the yard for one LR1. The joint venture has entered into shipbuilding contracts to acquire two Handysize double hull product tankers, already delivered, and seven Panamax product tankers, that are currently under construction at Hyundai Mipo Dockyard.

(3) On May 9, 2008, we entered into a memorandum of agreement for the purchase of a newbuilding double hull Handymax (MR2) product tanker, Apline Marina, for a consideration of $55.5 million. On June 2, 2010 the agreement to purchase the vessel was cancelled. The vessel was delivered in July 2010. We acquired the vessel through Onest joint venture in which we have 50% participation for a consideration of $45.0 million.

(4) In October 2009, we entered into rental agreements to lease office spaces in Athens, Greece. The termination date is December 2012. The amount reflected in the table represents the Dollar equivalent of lease payments in Euros calculated assuming a $/Euro exchange rate of $1.43/Euro on December 31, 2009.

(5) We have entered into a five year fee agreement with American Bureau of Shipping as well as Lloyds Register for periodic surveys of our vessels.

(6) The above table does not include interest payments. Interest payments and obligations are discussed in Item 11 "Quantitative and Qualitative disclosures about market risk".

G. Safe Harbor

See section "forward looking statements" at the beginning of this annual report.

ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Set forth below are the names, ages and positions of our directors, executive officers and key employees. Our board of directors is elected annually on a staggered basis, and each director elected holds office until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected.

Name	Age	Position

Robert J. Flynn	57	Chairman and Class A Director
George Kassiotis	38	President, Chief Executive Officer and Class C Director
Charilaos Loukopoulos	41	Executive Vice President, Chief Operating Officer, General Counsel and Class C Director
Gregory McGrath	59	Chief Financial Officer
Nicolas Borkmann	48	Class B Director
Dr. Chiang Hai Ding	71	Class A Director
Kevin Harding	51	Class C Director
Shariq Azhar	55	Class A Director
Matthew W. McCleery	40	Class B Director
Huang Yuan Chiang	51	Class B Director

_____________________________

Our board of directors is divided into three classes, as nearly equal in number as possible, with each director serving a three-year term and one class being elected at each year's annual meeting of shareholders. Class A Directors' term expires in 2010. Class B Directors' term expires in 2011. Class C Directors' term expires in 2012.

Biographical information with respect to each of our directors, executives and key personnel is set forth below.

Robert J. Flynn (Chairman and Class A Director) serves as our Chairman and as a Director. Since 2000, Mr. Flynn has been the president of Mallory Jones Lynch Flynn & Assoc. Inc., or MJLF. Mr. Flynn joined MJLF in 1979 and has been involved in all aspects of oil tanker chartering, sales and purchase, newbuilding contracting and special project related business. Although we do not currently do business with MJLF, we may enter into transactions with MJLF or engage MJLF for brokerage services. From 1987 to 1999, Mr. Flynn served on the board of directors of Association of Shipbrokers and Agents, or ASBA, and from 1995 to 1997 was the president of ASBA. Mr. Flynn worked also at Maritime Overseas Corporation from 1991 to 1992. From 1974 to 1979, Mr. Flynn served as a commissioned officer with the U.S. Coast Guard. He is a member of The American Bureau of Shipping, and serves as a Director of the Coast Guard Foundation. Mr. Flynn holds a bachelor degree from the U.S. Coast Guard Academy.

George Kassiotis (President, Chief Executive Officer and Class C Director) founded Omega Navigation. Prior to founding Omega Navigation in 2005, Mr. Kassiotis served as the commercial director of Target Marine S.A. since 1996, and since 1999 he led, as a senior executive director, the development of Target's business and oversaw its growth and expansion. Mr. Kassiotis comes from a shipping family and has been involved in various sectors of the shipping industry, under the family business for 15 years. Mr. Kassiotis graduated from the Universite de Paris, Pantheon - Sorbonne, France in 1993, where he studied international business law, and holds a Masters degree in law from the University of London, England.

Charilaos Loukopoulos (Executive Vice President, Chief Operating Officer, General Counsel and Class C Director ) has served as our Executive Vice President, Chief Operating Officer, General Counsel and Director since our inception in February 2005. Prior to joining our Company, since 1996, Mr. Loukopoulos was employed by Target Marine S.A. where he acted as a General Counsel and Insurance and Claims Director. In this capacity, Mr. Loukopoulos was responsible for the administrative and legal supervision of all of Target's departments, overseeing all the Target operations. Prior to that, after being admitted to the Athens Bar Association in 1993, Mr. Loukopoulos worked as an attorney in a shipping law firm based in Piraeus. He has lectured on shipping law and vessel sale & purchase contracts at the Institute of Chartered Shipbrokers' Greek branch. He graduated from the University of Thessaloniki, Greece in 1992, having studied law and holds a Masters degree in Shipping law from the University of Southampton, England.

Gregory A. McGrath (Chief Financial Officer) has served as our Chief Financial Officer since June 2005. He previously served as Vice President of Finance and Administration at American Eagle Tankers, Inc., Ltd., an Aframax and VLCC owner and operator, from 1995 to 2004 and as Vice President of Public Affairs from 2004 to 2005. Mr. McGrath served as Vice President, Finance and Administration with Marine Transport Lines, Inc. from 1990 to 1995. Prior to that, Mr. McGrath spent 16 years with Mobil Oil Corporation (now Exxon Mobil Corporation) in various financial, shipping and supply and distribution positions. Mr. McGrath is a director of Shoreline Mutual Insurance Co. and several subsidiaries of American Eagle Tankers, Inc., Ltd. Mr. McGrath holds a Bachelor of Arts degree from Fairfield University, Connecticut and holds and a Masters in Business Administration degree from Pace University, New York.

Dr. Chiang Hai Ding (Class A Director) serves as a Director. He worked in Neptune Orient Lines Ltd. as an economic advisor to the Chairman and the Chief Executive Officer from 1995 to 2002. He had also worked at Citibank from 1973 to 1978. Dr Chiang has had a varied career. He has been a university lecturer, an elected Member of Parliament, and a Singapore Ambassador, serving in Malaysia, Germany, The European Communities, The USSR and Egypt. He also worked as the executive director in two NGOs for the elderly and as an Independent Director in a few publicly-listed companies in Singapore. Dr Chiang has a BA from the National University Singapore and a Ph.D. from the Australia National University. In 2001 he took a Graduate Diplomacy in Gerontology from Simon Fraser University in Vancouver, BC, Canada. Dr. Chiang Hai Ding's son is a partner of the Singapore affiliate of Ernst & Young Global. Ernst & Young (Hellas) Certified Auditors Accountants S.A., our independent auditors, and the Singapore affiliate of Ernst & Young Global are members of the Ernst & Young Global network. Dr. Chiang Hai Ding has advised us that his son is not and will not be directly or indirectly involved in providing any services to us during his employment at the Singapore or any other affiliate of Ernst & Young Global for so long as Dr. Chiang Hai Ding remains our director.

Nicolas Borkmann (Class B Director) serves as a Director. Mr. Borkmann has been a senior broker at ACM Shipping Ltd., London, since 2000 where his responsibilities include competitive shipbrokering for tankers both in respect of chartering of all sizes, as well as in the S&P market for large ships, and the wet freight derivative broking activities of ACM. Prior to joining ACM, Mr. Borkmann was a commercial director of Frachtcontor Junge & Co, Hamburg from 1996 to 1999, where he was responsible for shipbroking for tankers and commercial management and chartering of tankers and combination carriers.

Kevin Harding (Class C Director) serves as a Director. Mr. Harding is currently acting as a consultant within the shipping industry. Since 2005, Mr. Harding has been a director of Sextant Consultancy Ltd. where he served as a shipping consultant. Since 2008, Mr. Harding has been a director of Pareefers where he provides general shipping advice to the other board members of Pareefers. From 1992 to 2005, he was the Senior Vice President of Star Reefers UK Ltd., a Siem Industries company, responsible for chartering and sale and purchases of vessels and overseeing operations and financial management. From 1978 to 1992 Mr. Harding served as a manager with Associated Container Transportation Limited (London), where he managed international trade operations.

Shariq Azhar (Class A Director) serves as a Director. Since 2008 Mr. Azhar has been the Chief Executive Officer of Oman International Development & Investment Co. SAOG, a leading Muscat Securities Market listed Omani investment company engaged in investment activities across a diversity of sectors, geographies and asset classes. Prior to this, he was the Director General of Injaz Mena Investment Co. PSC, an Abu Dhabi based investment bank

focused on global private equity, real estate, capital markets and corporate finance activities. Among other positions held over some 25 years in banking and finance, Mr. Azhar served as Executive Vice President of Abu Dhabi Commercial Bank heading the bank's wholesale businesses including corporate banking, investment banking, commercial banking, institutional banking and treasury. Earlier in his career he served as General Manager of Mashreqbank USA, as Vice President of Chase Manhattan Bank in New York and as Senior Research Analyst at the Federal Reserve Bank of New York, the US central bank. He is a director on the boards of several companies. Mr. Azhar holds an MBA in Finance from the Stern School of Business at New York University.

Matthew W. McCleery (Class B Director) serves as a Director. Since 2002, Mr. McCleery has been the president of Blue Sea Capital, Inc., a provider of ship finance advisory services. Since 2000, Mr. McCleery has been the president of Marine Money International, a provider of maritime finance transactional information and maritime company analysis. He joined Marine Money International in 1996 as a managing editor. Mr. McCleery also serves as a managing director of Marine Money Consulting Partners, the financial advisory and consulting company that provides shipowners with advisory services in capital raising, debt financing and business combination transactions. Mr. McCleery previously served on the board of directors of FreeSeas, Inc., a bulk shipping company, which is also a publicly traded company with securities registered under the Securities Exchange Act of 1934. Mr. McCleery holds a Juris Doctor degree from the University of Connecticut School of Law.

Huang Yuan Chiang (Class B Director) serves as a Director. Mr. Huang is a lawyer by training and he has had a career in Investment Banking spanning 12 years. He has held senior management positions at various international banks including Standard Chartered Bank, HSBC, Bankers Trust and Deutsche Bank. His areas of specialization were in the areas of mergers and acquisitions and corporate finance and his last position at Bankers Trust was Managing Director, heading the Mergers & Acquisition Division for Bankers Trust for Singapore, Malaysia, Indonesia, Thailand, Philippines and India. Apart from Omega Navigation Enterprises Inc., Mr. Huang holds board positions in several other listed and private companies. Mr. Huang has degrees in law and economics.

No family relationships exist among any of the Executive Officers and Directors.

B. Compensation

The aggregate annual compensation paid to our executive officers, Messrs. Kassiotis, Loukopoulos and McGrath, amounted to approximately $1.3 million for the year ended December 31, 2009. In March 2008, pursuant to the Company's Stock Incentive Plan, the officers were granted an aggregate of 53,357 restricted common shares that will become vested rateably over three years. In March 2008 the officers received bonus compensation, relating to 2007 performance, which amounted to $0.85 million and consisted of cash and immediately vested shares. The actual amount of cash paid was $0.2 million and the number of immediately vested shares issued was 42,059. In February, 2009, the Board of Directors approved the reward of the executive officers by means of a bonus and incentive stock compensation. The executive officers were awarded to receive an amount equal to $0.03 million in cash and 54,342 shares of immediately vested Class A common stock. Also the Board has approved an additional compensation of one month's salary to the executive officers that amounted to $0.1 million. In February 2009, pursuant to the Company's Stock Incentive Plan, the officers were granted an aggregate of 108,685 restricted common shares that will become vested rateably over three years. Executive officers who also serve as directors do not receive additional compensation for their services as directors.

We do not have a retirement plan for our executive officers or directors. Under the respective employment agreements between us and Messrs. Kassiotis, Loukopoulos and McGrath, we will be required to make an aggregate lump sum payment of $1.3 million to our executive officers, in addition to their respective base salary, until the end of the contract term, for early termination of employment during its term or in the event that we materially breach the terms of the respective employment agreements. Such an amount will be increased by an aggregate amount of approximately $0.6 million in the case where the term of the employment agreements is extended prior to the occurrence of material breach. In addition, in the event of a change of control of our Company (as defined in the amended and restated articles of incorporation) during the term of the employment agreements, we will be required to pay to the executives an amount equal to the equivalent of two to three years their annual base salary, over and above the lump sum described above.

Non-employee directors receive annual compensation in the aggregate amount of $30,000 plus reimbursement of their out-of-pocket expenses. In addition, non-employee directors who serve as audit committee members and compensation committee members receive an additional annual fee of $7,500 and $2,500, respectively. In lieu of any other compensation, Mr. Robert J. Flynn, the Chairman of our board of directors, receives annual compensation in the amount of $150,000. In July, 2007, pursuant to the Company's Stock Incentive Plan, the non-executive directors were granted an aggregate of 6,000 restricted common shares that vest after one year. In July, 2008, pursuant to the Company's Stock Incentive Plan, the non-executive directors were granted an aggregate of 10,500 restricted common shares that vest after one year. In July, 2009, pursuant to the Company's Stock Incentive Plan, the non-executive directors were granted an aggregate of 21,000 restricted common shares that vest after one year.

C. Board Practices

We have established an audit committee that is responsible for, among other things, making recommendations concerning the engagement of our independent public accountants, reviewing with the independent public accountants the plans and results of the audit engagement, approving professional services provided by the independent public accountants, reviewing the independence of the independent public accountants, considering the range of audit and non-audit fees, reviewing the adequacy of our internal accounting controls, and reviewing the annual and quarterly financial statements. The members of our audit committee, each of whom is an independent director, are Messrs. McCleery, Azhar, Harding and Huang. In addition, we have established a compensation committee that is responsible for establishing executive officers' compensation and benefits. The members of our compensation committee are Messrs. Borkmann, Harding, McCleery, each an independent director, and Mr. Loukopoulos.

There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.

D. Employees

As of December 31, 2009, we employed 198 employees, consisting of 14 shore-based personnel based in Athens, Greece, and 184 seagoing employees. We have entered into employment agreements with Messrs George Kassiotis, Charilaos Loukopoulos and Greg McGrath. Our shore-based employees are not covered by industry-wide collective bargaining agreements that set basic standards of employment.

The following table presents the number of shore-based personnel and the number of seagoing personnel employed by our vessel owning subsidiaries during the periods indicated.

	2009		2008		2007		2006
Shore-based		14		13		9		9
Seagoing		184		156		178		163

Total		198		169		187		172

E. Share Ownership

The common shares beneficially owned by our directors and senior managers are disclosed in "Item 7". Major Shareholders and Related Party Transactions" below.

Equity Incentive Plan

We have adopted an equity incentive plan, or the Plan, which entitles our officers, key employees and directors to receive options to acquire Class A common stock. Under the Plan, a total of 1,500,000 shares of Class A common stock has been reserved for issuance. The Plan is administered by our board of directors. Under the terms of the Plan, our board of directors is able to grant new options exercisable at a price per share to be determined by our board of directors. The exercise price of initially issued options are equal to the average daily closing price for our Class A common stock over the 20 trading days following the closing of our initial public offering. Under the terms of the Plan, no options may be exercised until at least two years after the closing of our initial public offering in April 2006. Any shares received on exercise of the options may not be able to be sold until three years after the closing of our initial public offering. All options expire ten years from the date of grant. The Plan expires ten years from the closing of our initial public offering. On February 8, 2007, March 20, 2008 and February 4, 2009, we granted an aggregate of 54,138, 95,416 and 163,027 restricted shares, respectively, to our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. On July 26, 2007, July 31, 2008 and July 23, 2009 we granted an aggregate of 6,000, 10,500 and 21,000 restricted shares to our non-executive directors. On March 20, 2008 and February 4, 2009 we granted an aggregate of 8,815 and 25,109 restricted shares to some employees. During 2008 3,650 restricted shares were forfeited.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth as of July 15, 2010, information regarding (i) the owners of more than five percent of our common stock that we are aware of and (ii) the total amount of common stock owned by all of our officers and directors, individually and as a group. All of the shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.

Title of Class	Identity of Person or Group	Number of Shares Owned		Percent of Class (1)

Class A Common Stock, par value $0.01	George Kassiotis (2)		3,249,532		20.46	%

	MHR Fund management LLC (3)		1,358,100		8.55	%

	All Directors and officers as a group (4)		3,370,890		21.22	%

____________

(1)	Does not include unvested restricted shares granted pursuant to the Plan to our Chief Executive Officer, Chief Operating Officer Chief Financial Officer, non-executive directors and employees.

(2)	Our Chief Executive Officer, Mr. Kassiotis, beneficially owns 3,150,000 shares indirectly through ONE Holdings, Inc. Mr. Kassiotis is the sole shareholder of ONE Holdings, Inc.

(3)	Based on the SEC filings of the Shareholder dated as of February 13, 2009.

(4)	The number of shares owned and percent of class by all Directors and officers as a group are as of July 15, 2010.

The Company's major shareholders and Officers and Directors do not have different rights from other shareholders in the same class. To our knowledge, there are no arrangements, the operation of which may, at a subsequent date, result in a change in control.

On April 13, 2009 we have issued 499,724 Class A common shares relating to warrants issued to the seller of the Ice Class 1A Panamax newbuildings, which we took delivery in March and April of 2007, as partial compensation for the vessels.

B. Related party transactions

Registration Rights Agreement : We have entered into a registration rights agreement with One Holdings, which is wholly-owned by Mr. Kassiotis, pursuant to which it has the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act our Class A common stock held by it. Under the registration rights agreement, One Holdings will have the right to request us to register the sale of Class A common stock held by it and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, One Holdings will have the ability to exercise certain piggyback registration rights in connection with registered offerings requested by other shareholders or initiated by us. One Holdings owns 3,150,000 shares of Class A common stock that are entitled to these registration rights.

Stone Shipping Ltd: As of April 2009, we through our wholly-owned subsidiary Omnicrom Holdings Ltd., ("Omnicrom"), entered into a joint venture agreement with Topley Corporation, ("Topley"), which is a wholly-owned subsidiary of Glencore International AG ("Glencore"). Omnicrom and Topley each own 50% of Stone, that is a joint venture holding company. Stone owns 100% of Blizzard Navigation Inc., ("Blizzard"), that is the shipowning company of Omega Duke . We account for our 50% interest in Stone by using the equity method. We provide to Blizzard technical, operating and administrative services. No management fees were payable to us during 2009. The outstanding balance due from Stone as of December 31, 2009 is $56 thousand and relates to payments in advance by Blizzard to its technical manager netted off by an amount of $101 thousand that was paid on behalf of Blizzard as loan financing related expenses.

Onest Shipping Ltd. : As of April 2009, we entered through Omnicrom, into a joint venture agreement with Topley. Omnicrom and Topley each own 50% of Onest, a joint venture holding company, that owns 100% of Tornado Navigation Inc., ("Tornado"), a shipowning company that owns Alpine Marina. Onest was charged with administrative expenses, 50% of which were charged to us equal to $3 thousand. The outstanding balance due from Onest as of December 31, 2009 is $5 thousand.

Megacore Shipping Ltd. : On September 2008, we formed an equal partnership (50/50) joint venture company with Topley named Megacore. Companies owned by us and the ST Shipping Pte Limited have novated their respective original shipbuilding contracts entered into with Hyundai Mipo, consisting in total of 10 newbuilding 37,000 dwt product/chemical carriers (MR1s) (5 vessels each partner), to companies wholly owned by Megacore. On December 2009, this order was converted to two 37,000 dwt product/chemical tankers (MR1s) and seven 74,000 dwt. product/oil tankers (LR1s) while one MR1 vessel has been suspended and remains as an option for Megacore to exercise in the future. All nine vessels will be owned by companies fully owned by Megacore. In addition, we will provide the technical, operating and administrative services for the vessels. During 2009, Megacore incurred legal administrative expenses, 50% of which were charged to us, equal to $30 thousand. The outstanding balance due from Megacore as of December 31, 2009 is $29 thousand.

Charter party agreements for the vessels Omega Emmanuel and Omega Theodore , acquired within 2007, were arranged through a ship-brokerage firm, in which one of our non-executive director of the Board of Directors acts as a senior broker. The same ship-brokerage firm has arranged charter party arrangements for the vessels Omega Lady Miriam and Omega Lady Sarah in 2008 and Omega Queen , Omega Prince and Omega Princess in 2009. No commissions are paid by us to the ship brokerage firm.

Shoreline Mutual Bermuda Ltd. : Under the Oil Pollution Act 1990 (OPA '90) every ship entering U.S. waters has to provide evidence of its ability to pay for the consequences of an oil pollution. Following receipt of such evidence the US Coast Guard ("USCG") issues a Certificate of Financial Responsibility ("COFR"), which demonstrates the vessel's compliance with the provisions of the Act. Shoreline issues on behalf of its members financial guarantees to support the issuance of the COFRs for its members by the USCG. During 2007, 2008 and 2009 Shoreline Mutual Bermuda Ltd provided to us financial guarantees needed to support COFRs issued by USCG for Omega Lady Sarah ,

Omega Lady Miriam and Omega Theodore . Our Chief Financial Officer is a non executive director of Shoreline. During 2009, 2008 and 2007 Shoreline's charges amounted to $66, $31 and $22 thousand, respectively for which we were reimbursed by the vessels' charterers, as per the respective charter party agreements. The outstanding balance due as of December 31, 2009 is $5 thousand.

Marine Money International: is a maritime finance transactional information and maritime company analysis provider, in which one of our non-executive director of the Board of Directors acts as president. Within 2009 and 2008 the Company paid an annual subscription of $2 thousand to Marine Money International.

Worldscale Association (London) Limited: is a non-profit making organisation providing information about rates of freight for tanker voyage charters. The organization is under the control of a management committee, the members of which are senior brokers from leading tanker broking firms in London. A non-executive director of the Company's Board of Directors acts as management committee member. Within 2009 and 2008 we paid an annual subscription of $5 thousand to Worldscale.

C. Interest of Experts and Counsel

Not applicable.

ITEM 8 - FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See Item 18.

Legal Proceedings

The ordinary course of our business exposes us to the risk of lawsuits for damages or penalties relating to, among other things, personal injury, property casualty and environmental contamination. We are not aware of any litigation in which we are currently involved, that individually and in the aggregate, would be material to us.

Dividend policy

Our general policy has been to declare and pay quarterly dividends to shareholders in amounts that are substantially equal to our available cash from operations during the previous quarter after cash expenses (e.g., operating expenses and debt service), discretionary reserves for (i) further vessel acquisitions, (ii) contingent and other liabilities, such as drydocking and extraordinary vessel maintenance and repair, and (iii) general corporate purposes. Declaration and payment of dividends is at the discretion of our board of directors.

As a result of market conditions in the international shipping industry our board of directors did not declare any dividends for the 2 nd , 3 rd and 4 th quarter 2009. We believe that this increased our available cash and enhanced our internal growth capabilities. In addition, other external factors, such as our lenders imposing restrictions on our ability to pay dividends under the terms of our credit facilities, may limit our ability to pay dividends. The declaration and payment of dividends, if any, in future quarters will be at the sole discretion of our board of directors. Furthermore, our ability to pay dividends is subject to our satisfaction of the financial covenants contained in our credit agreements. Under our credit facilities we are prohibited from paying dividends if (i) an event of default has occurred or will occur as a result of the payment of the dividend or (ii) the aggregate average fair market value of our vessels to total debt (as defined in our senior secured credit facility) is less than 125.0%.

ONE Holdings, an entity wholly-owned by our President and Chief Executive Officer, Mr. Georgios Kassiotis, owns 3,150,000 shares of Class A common stock as of December 31, 2009.

B. Significant changes

No significant changes occurred except for those mentioned in item 4.

ITEM 9 - THE OFFER AND LISTING

Shares of our Class A common stock commenced trading on the NASDAQ Global Market on April 7, 2006 under the symbol "ONAV". Shares of our Class A common stock also trade on the Singapore Exchange Securities Trading Limited under the symbol "ONAV 50".

The high and low closing prices of shares of our Class A common stock on the NASDAQ Global Market since April 7, 2006 is as follows:

For the Period	Low		High
January 2010	$	2.92	$	3.42
February 2010	$	2.80	$	3.01
March 2010	$	2.81	$	3.08
April 2010	$	2.83	$	3.04
May 2010	$	2.37	$	3.04
June 2010	$	1.95	$	2.40


2009
First quarter 2009	$	3.40	$	8.10
Second quarter 2009	$	3.63	$	5.84
Third quarter 2009	$	3.23	$	4.25
Fourth quarter 2009	$	2.73	$	3.97
Year ended December 31, 2009	$	2.73	$	8.10

2008
First quarter 2008	$	13.85	$	16.96
Second quarter 2008	$	15.50	$	21.66
Third quarter 2008	$	10.55	$	16.28
Fourth quarter 2008	$	4.95	$	12.20
Year ended December 31, 2008	$	4.95	$	21.66

2007
Year ended December 31, 2007	$	14.50	$	24.22

2006
Year ended December 31, 2006	$	13.15	$	16.60

ITEM 10 - ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and articles of association

Our amended and restated articles of incorporation and bylaws have been filed as exhibits 3.1 and 3.2 to our Registration Statement on form F-1 filed with the Securities and Exchange Commission on March 17, 2006 with file number 333-132503. Information regarding the rights, preferences and restrictions attaching to each class of our common shares is described in section "Description of Capital Stock" in our Registration Statement on Form F-1 and is incorporated by reference herein.

C. Material Contracts

As of December 31, 2009 we had debt obligations under our credit facilities. For a full description of our credit facilities, see Item 5B "Liquidity and Capital Resourses" above. Other than as described above, there were no material contracts, other than contracts entered into in the ordinary course of business, to which the Company was a party during the two year period immediately preceding the date of this report.

D. Exchange Controls

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

E. Taxation

Tax Considerations

United States Taxation

The following discussion is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed U.S. Treasury Department regulations, administrative rulings, pronouncements and judicial decisions, all as of the date of this Annual Report. This discussion assumes that we do not have an office or other fixed place of business in the United States. Unless the context otherwise requires, the reference to Company below shall be meant to refer to both the Company and its vessel owning and operating subsidiaries.

Taxation of the Company's Shipping Income: In General

The Company anticipates that it will derive substantially all of its gross income from the use and operation of vessels in international commerce and that this income will principally consist of freights from the transportation of cargoes, hire or lease from time or voyage charters and the performance of services directly related thereto, which the Company refers to as "shipping income."

Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the United States will be considered to be 100% derived from sources within the United States. The Company is not permitted by law to engage in transportation that gives rise to 100% U.S. source income. Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to U.S. federal income tax.

Based upon the Company's anticipated shipping operations, the Company's vessels will operate in various parts of the world, including to or from U.S. ports. Unless exempt from U.S. taxation under Section 883 of the Code, the Company will be subject to U.S. federal income taxation, in the manner discussed below, to the extent its shipping income is considered derived from sources within the United States, which we refer to as U.S.-source shipping income. In the absence of exemption from tax under Section 883, the Company would have been effectively subject to a 4% tax on its gross U.S. source shipping income which would have amounted to approximately $0.4 million for the year ended December 31, 2009.

Application of Code Section 883

Under the relevant provisions of Section 883 of the Code and the final regulations promulgated thereunder, or the final regulations, which became effective on January 1, 2005 for calendar year taxpayers like ourselves and our subsidiaries, a foreign corporation will be exempt from U.S. taxation on its U.S.-source shipping income if:

(i)

It is organized in a qualified foreign country which, as defined, is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the shipping income for which exemption is being claimed under Section 883, or the "country of organization requirement"; and

(ii)

It can satisfy any one of the following two (2) stock ownership requirements:

more than 50% of its stock, in terms of value, is beneficially owned by qualified shareholders which, as defined, includes individuals who are residents of a qualified foreign country, or the "50% Ownership Test"; or

a class of its stock or that of its 100% parent is "primarily and regularly" traded on an established securities market located in the United States, or the "Publicly-Traded Test".

The U.S. Treasury Department has recognized the Marshall Islands, the Company's country of organization, and the country of incorporation of each of the Company's subsidiaries that earned shipping income during 2009, as a qualified foreign country. Accordingly, the Company and each of the subsidiaries satisfies the country of organization requirement.

For the 2009 tax year, the Company believes that it will be unlikely to satisfy the 50% Ownership Test. Therefore, the eligibility of the Company and each subsidiary to qualify for exemption under Section 883 is wholly dependent upon being able to satisfy the Publicly-Traded Test.

Under the final regulations, the Company's Class A common stock was "primarily traded" on the NASDAQ Global Market during 2009.

Under the final regulations, the Company's Class A common stock will be considered to be "regularly traded" on the NASDAQ Global Market if such class of stock is listed on the NASDAQ Global Market and in addition is traded on the NASDAQ Global Market, other than in minimal quantities, on at least 60 days during the taxable year and the aggregate number of shares of Class A common stock so traded during the taxable year is at least 10% of the average number of shares of Class A common stock issued and outstanding during such year. The Company has satisfied the listing requirement as well as the trading frequency and trading volume tests.

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

Based on its shareholdings during its 2009 taxable year, the Company believes that it is not subject to the 5 Percent Override Rule for its 2009 taxable year. Therefore, the Company anticipates that it satisfies the Publicly-Traded Test for its 2009 taxable year.

Taxation in Absence of Internal Revenue Code Section 883 Exemption

To the extent the benefits of Section 883 are unavailable with respect to any item of U.S.-source shipping income, the Company and each of its subsidiaries would be subject to a 4% tax imposed on such income by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, no more than 50% of the Company's shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on the Company's shipping income would never exceed 2% under the 4% gross basis tax regime.

Based on its U.S.-source shipping income for 2009 and 2008, the Company would be subject to U.S. federal income tax of approximately $0.4 million and $0.4 million, respectively, under Section 887 in the absence of an exemption under Section 883.

Gain on Sale of Vessels

Regardless of whether the Company qualifies for exemption under Section 883, the Company will not be subject to U.S. federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by the Company will be considered to occur outside of the United States.

United States Federal Income Taxation of U.S. Holders

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

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

Distributions

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

Dividends paid on our Class A common stock to a U.S. Holder who is an individual, trust or estate (a "U.S. Individual Holder") will generally be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates (through 2010) provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be) (2) the common stock is readily tradable on an established securities market in the United States (such as the NASDAQ Global Market, on which our Class A common stock are listed), and (3) the U.S. Individual Holder has owned the Class A common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the Class A common stock become ex-dividend. There is no assurance that any dividends paid on our Class A common stock will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Legislation has been previously introduced in the U.S. Congress which, if enacted in its present form, would preclude our dividends from qualifying for such preferential rates prospectively from the date of the enactment. Further, in the absence of legislation extending the term of the preferential tax rates for qualified dividend income, all dividends received by a taxpayer in tax years beginning on January 1, 2011 or later will be taxed at ordinary graduated tax rates.

Special rules may apply to any "extraordinary dividend," generally a dividend in an amount which is equal to or in excess of ten percent of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of Class A common stock paid by us. If we pay an "extraordinary dividend" on our Class A common stock and such dividend is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such Class A common stock will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Class A Common Stock

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

Passive Foreign Investment Company Status and Significant Tax Consequences

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

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

at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income (including cash).

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

Based on our current operations and future projections, we do not believe that we have been, are, nor do we expect to become, a passive foreign investment company with respect to any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a passive foreign investment company. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. In the absence of any legal authority specifically relating to the statutory provisions governing passive foreign investment companies, the Internal Revenue Service or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a passive foreign investment company with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future. Under specified constructive ownership rules, if we are

treated as a passive foreign investment company, then a U.S. Holder will be treated as owning his proportionate share of the stock of any our subsidiaries that are treated as passive foreign investment companies. The tax regimes discussed below would also apply to any shares in a subsidiary passive foreign investment company which are constructively owned by a U.S. Holder under these constructive ownership rules.

As discussed more fully below, if we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a "QEF election." As an alternative to making a QEF election, a U.S. Holder should be able to make a "mark-to-market" election with respect to our Class A common stock, as discussed below. In addition, if we were to be treated as a passive foreign investment company for any taxable year after 2010, a U.S. Holder would be required to file an annual report with the Internal Revenue Service for that year with respect to such holder's common stock.

If we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder would also be subject to special U.S. federal income tax rules in respect of such U.S. Holder's indirect interest in any of our subsidiaries that are also treated as passive foreign investment companies. Such a U.S. Holder would be permitted to make a QEF election in respect of any such subsidiary, so long as we timely provided the information necessary to such election, which we currently intend to do in such circumstances, but such a U.S. Holder would not be permitted to make a mark-to-market election in respect of such U.S. Holder's indirect interest in any such subsidiary. The application of the passive foreign investment company rules is complicated and U.S. Holders are encouraged to consult with their tax advisors regarding the application of such rules in their circumstances.

Taxation of U.S. Holders Making a Timely QEF Election

If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an "Electing Holder," the Electing Holder must report each year for U.S. federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the Class A common stock will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the Class A common stock and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our Class A common stock. A U.S. Holder would make a QEF election with respect to any year that our company is a passive foreign investment company by filing Internal Revenue Service Form 8621 with his U.S. federal income tax return. If we were aware that we were to be treated as a passive foreign investment company for any taxable year, we would provide each U.S. Holder with all necessary information in order to make the QEF election described above. A U.S. Holder who is treated as constructively owning shares in any of our subsidiaries which are treated as passive foreign investment companies would be required to make a separate QEF election with respect to each such subsidiary.

Taxation of U.S. Holders Making a "Mark-to-Market" Election

Alternatively, if we were to be treated as a passive foreign investment company for any taxable year and our Class A common stock is treated as "marketable stock," as we believe is the case, a U.S. Holder would be allowed to make a "mark-to-market" election with respect to our Class A common stock, provided the U.S. Holder completes and files Internal Revenue Service Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the Class A common stock at the end of the taxable year over such holder's adjusted tax basis in the Class A common stock. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the Class A common stock over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in his Class A common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our Class A common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the Class A common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder. A mark-to-market election would likely not be available for any of our subsidiaries that are treated as passive foreign investment companies.

Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election

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

the excess distribution or gain would be allocated rateably over the Non-Electing Holders' aggregate holding period for the Class A common stock;

the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company would be taxed as ordinary income; and

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

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our Class A common stock. If a Non-Electing Holder who is an individual dies while owning our Class A common stock, such holder's successor generally would not receive a step-up in tax basis with respect to such stock.

United States Federal Income Taxation of "Non-U.S. Holders"

A beneficial owner of Class A common stock that is not a U.S. Holder (other than a partnership) is referred to herein as a "Non-U.S. Holder."

Dividends on Class A Common Stock

Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to our Class A common stock, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Sale, Exchange or Other Disposition of Class A Common Stock

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

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

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

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

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if you are a non-corporate U.S. Holder and you:

fail to provide an accurate taxpayer identification number;

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

in certain circumstances, fail to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If you sell your Class A common stock to or through a U.S. office or broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your Class A common stock through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States then information reporting and backup withholding generally will not apply to that payment. However, U.S. information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your Class A common stock through a non-U.S. office of a broker that is a U.S. person or has certain other contacts with the United States.

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

Marshall Islands Tax Considerations

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

F. Dividends and paying agents

Not applicable.

G. Statement by experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates from the Public Reference Section of the Commission at its principal office in Washington, D.C. 20549. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information that we and other registrants have filed electronically with the SEC. Our filings are also available on our website at www.omeganavigation.com. In addition, documents referred to in this annual report may be inspected at our offices at 61 Vasilissis Sofias Ave., Athens 115 21 J3 00000, Greece.

I. Subsidiary Information

Not applicable.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

The Company does not have a material currency exposure risk.

Inflation Risk

We do not consider inflation to be a significant risk to operating or voyage costs in the current economic environment. However, in the event that inflation becomes a significant factor in the global economy, inflationary pressures would result in increased operating, voyage and financing costs.

Interest Rate Risk

The shipping industry is a capital intensive industry, requiring significant amounts of investment. Much of this investment is provided in the form of long-term debt. Our debt usually contains interest rates that fluctuate with the financial markets. Increasing interest rates could adversely impact future earnings.

Our interest expense is affected by changes in the general level of interest rates, particularly LIBOR. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100 basis points would have decreased our net income and cash flows in the current year by approximately $3.0 million based upon our $291.4 million weighted average debt level during 2009.

The table below provides information about our debt and derivative financial instruments and other financial instruments at December 31, 2009 that are sensitive to changes in interest rates. See notes 9 and 10 to our consolidated financial statements, which provide additional information with respect to our existing debt agreements and derivative financial instruments. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For derivative financial instruments, the table presents notional amounts and weighted average interest rates by expected maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contracts. Weighted average interest rates are based on implied forward rates in the yield curve at the reporting date.

	Expected maturity date
	2010			2011			2012		2013		2014		Thereafter
	(amounts in million USD)
Debt
Variable interest rate ($US) (1)		344.1			-			-		-		-		-
Average interest rate		0.70	%		1.58	%		-		-		-		-

Interest rate derivatives

a) Rate collar notional amount ($US) (2)		150.0			150.0			-		-		-		-
Average pay rate		5.10	%		4.80	%		-		-		-		-
Average receive rate		0.70	%		1.58	%		-		-		-		-

b) Fixed rate swaps ($US) (3)		42.5			42.5			-		-		-		-
Average pay rate		2.96	%		2.96	%		-		-		-		-
Average receive rate		0.70	%		1.58	%		-		-		-		-

c) Fixed rate swap ($US) (4)		45.3			32.6			-		-		-		-
Average pay rate		2.655	%		2.655	%		-		-		-		-
Average receive rate		0.70	%		1.58	%		-		-		-		-

(1) Refer to Item 18 for a complete description of our credit facilities

(2) In March 2006, we entered into an interest rate swap agreement in order to partially hedge our exposure to fluctuations in interest rates on its variable-rate debt, according to which the Company exchanges LIBOR with a fixed rate of 5.25% (pay fixed receive floating). The expiration date of the swap agreement was in April 2007 and the notional amount at inception was $144.4 million, diminishing down to $142.9 million following our term loan's repayment schedule.

The termination date of the rate collar option is in April 2009. On April 15, 2008, we entered into a restructuring agreement amending the initial rate collar option with HSH which extended its duration up to April 4, 2011. Under the amended agreement we entered into a participation swap with gradual alignment factor. The notional amount of the swap is $150.0 million and the cap has been set at 5.1% with the floor being at 2.5% and the gradual aligned participation at maximum of 2.6% when the three months LIBOR drops below 2.5%. On July 22, 2008 the agreement was amended and its duration was extended up to April 14, 2011.

(3) On March 27, 2008 we entered into two interest rate swap agreements with NIBC and BTMU in order to hedge our exposure to fluctuations in interest rate on our junior secured credit facility. The notional amount of each agreement is $21.3 million, $42.5 million in total, and interest rate is fixed at 2.96% per annum. The effective date of the agreements is March 28, 2008 and their duration is three years.

(4) On November 10, 2008 we entered into an interest rate swap agreement with Lloyds Bank in order to hedge our exposure to fluctuations in interest rate. The interest rate is fixed at 2.585% per annum and the notional amount at inception was $100.0 million diminishing down to $77.4 million. The annual notional amount presented on the above table is the average of each year. The effective date of the agreement is November 12, 2008 and its duration is until May 12, 2011. On April 23, 2009, we terminated the fixed rate swap agreement that we had entered into with Lloyds Bank on November 10, 2008. Concurrently we entered into (i) an interest rate swap with a notional amount of $66.3 million at a fixed rate of 2.655% per annum effective since February 12, 2009 and (ii) an interest rate swap with a notional amount of $33.8 million at a fixed rate of 2.655% per annum effective since April 24, 2009. The second swap was novated to Blizzard on April 24, 2009. The duration for both swaps is until May 12, 2011. After the drawdown of the second advance of the loan, relating to the acquisition of Alpine Marina, the notional amount of the Company's swap with Lloyds, amounting to $66.3 million as of December 31, 2009, was decreased by $28.5 million because it was novated to Tornado. The swap matures on May 12, 2011 and it has a fixed rate of $2.655%.

ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15 - CONTROLS AND PROCEDURES

(A) Disclosure Controls and Procedures

We evaluated the effectiveness of the Company's disclosure controls and procedures as of December 31, 2009. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

(B) Management's Annual Report on Internal Controls over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

Management has conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company's internal control over financial reporting as of December 31, 2009 is effective.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

(D) Changes in Internal Controls

There were no changes in internal control over financial reporting during the year ended December 31, 2009 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

ITEM 16A. Audit Committee Financial Expert

In accordance with the rules of the NASDAQ Global Market, the exchange on which our Class A common stock is listed, the Company has appointed an audit committee whose members as of 2009 are Messrs. McCleery, Azhar, Harding and Huang. Mr. McCleery has been determined to be a financial expert and independent according to Securities and Exchange Commission rules by the Company's board of directors.

ITEM 16 B. Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. A copy of our code of ethics is available on our website at www.omeganavigation.com. We will also provide a hard copy of our code of ethics free of charge upon written request of a shareholder. Shareholders may direct their requests to Mr. Charilaos Loukopoulos at our offices at 61 Vasilissis Sofias Ave, Athens 115 21 J3 00000, Greece.

ITEM 16C. Principal Accountant Fees and Related Services

Audit fees

Our principal Accountants, Ernst and Young (Hellas), Certified Auditors Accountants S.A have billed us for audit and other services as follows:

Stated in Euro

	2009		2008		2007
Audit fees		223,450		270,000		409,500
All other fees		-		1,180		1,180
Total		224,630		271,180		410,680

Audit fees for 2009 relate primarily to the audit of our consolidated financial statements. Audit fees for 2008 relate to the audits of our 2008 consolidated financial statements and internal control over financial reporting. Audit fees for 2007 relate to the audits of our 2007 consolidated financial statements and internal control over financial reporting and audit services provided in connection with SAS 100 reviews and registration statements. All other fees relate to access to Ernst & Young Online, a service of Ernst & Young that provides web based access to US GAAP and SEC related matters.

Our audit committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services.

ITEM 16D. Exemption from the listing standards for Audit committees

Not applicable.

ITEM 16E. Purchases of Equity Securities by Issuer and Affiliated purchases

None.

ITEM 16G. Corporate Governance

We have certified to the NASDAQ Stock Exchange that our corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. Therefore, we are exempt from many of the NASDAQ Stock Exchange's corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with the NASDAQ Stock Exchange corporate governance practices and the establishment of an audit committee in accordance with NASDAQ Marketplace Rules 5605(c)(3) and 5605(c)(2)(A)(ii). The practices we follow in lieu of the NASDAQ Stock Exchange's corporate governance rules are as follows:

In lieu of obtaining shareholder approval prior to the issuance of designated securities, we will comply with provisions of the Marshall Islands Business Corporations Act, or BCA, providing that the board of directors approves share issuances.

As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to the NASDAQ Stock Exchange pursuant to the NASDAQ Stock Exchange's corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law and as provided in our bylaws, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us between 90 and 120 days advance notice to properly introduce any business at a meeting of shareholders.

Other than as noted above, we expect to be in compliance with all other NASDAQ Stock Exchange corporate governance standards applicable to U.S. domestic issuers.

PART III

ITEM 17 - FINANCIAL STATEMENTS

See Item 18.

ITEM 18 - FINANCIAL STATEMENTS

The following financial statements, together with the report of our independent registered public accounting firm, Ernst & Young (Hellas) Certified Auditors Accountants S.A. thereon, are set forth below on pages F-1 through F-43 and are filed as a part of this annual report.

ITEM 19 -EXHIBITS

Exhibit	Description
1.1	Amended and Restated Articles of Incorporation (1)
1.2	Amended and restated by-laws of the Company (1)
2.1	Form of Share Certificate (2)
4.1	Vessel Management Agreement with the V. Ships (1)
4.2	Senior Secured Credit Facility Agreement (3)
4.3	Form of Registration Rights Agreement in favor of ONE Holdings (1)
4.4	Form of Stock Incentive Plan (1)
4.5	Form of Vessel Management Agreement with Eurasia (4)
4.6	Form of Bridge Loan Facility with HSH Nordbank (5)

Exhibit	Description
4.7	Form of Second Supplement to Senior Secured Credit Facility Agreement with HSH Nordbank (5)
4.8	Form of Third Supplement to Senior Secured Credit Facility Agreement with HSH Nordbank (5)
4.9	Form of Junior Secured Credit Facility with BTMU and NIBC (5)
4.10	Form of Credit Facility with Bremer, dated July 4, 2007 (5)
4.11	Form of Credit Facility with Bremer, dated August 24, 2007 (5)
4.12	Form of Credit Facility with Bank of Scotland (5)
4.13	Form of Credit Facility with National Bank of Greece (5)
4.14	Form of Pre-Delivery Credit Facility with Lloyds TSB Bank PLC (5)
4.15	Form of Post-Delivery Credit Facility with Lloyds TSB Bank PLC (5)
4.16	Stockholders Rights Agreement (6)
8.1	Subsidiaries of the Company
11.1	Code of Ethics (4)
12.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
13.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Independent Registered Public Accounting Firm

____________

(1)	Filed as an exhibit to the Company's Registration Statement on Form F-1 filed on March 17, 2006, File No. 333-132503 and incorporated by reference herein.

(2)	Filed as an exhibit to the Company's Registration Statement on Form 8-A filed on April 4, 2006, File No. 000-51894 and incorporated by reference herein.

(3)	Filed as an exhibit to the Company's post effective amendment to its Registration Statement filed Form F-1 filed on April 7, 2006, File No. 333-132503 and incorporated by reference herein.

(4)	Filed as an exhibit to the Company's Annual Report on Form 20-F filed on April 25, 2007 and incorporated by reference herein.

(5)	Filed as an exhibit to the Company's Annual Report on Form 20-F filed on June 11, 2008 and incorporated by reference herein.

(6)	Filed as an exhibit to the Company's Registration Statement on Form 8-A, filed on February 22, 2008, File No. 001-33976 and incorporated by reference herein.

SIGNATURES

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

	OMEGA NAVIGATION ENTERPRISES, INC


	By:	/s/ Gregory McGrath
		Gregory McGrath
		Chief Financial Officer

Dated: July 15, 2010

OMEGA NAVIGATION ENTERPRISES INC

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2009 and 2008		F-3

Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007		F-4

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009, 2008 and 2007		F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007		F-6

Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Omega Navigation Enterprises Inc.

We have audited the accompanying consolidated balance sheets of Omega Navigation Enterprises Inc. (the "Company") as of December 31, 2009 and 2008, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company\'s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Omega Navigation Enterprises Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 3 to the consolidated financial statements, the Company has a working capital deficiency. In addition, the Company has not complied with certain covenants of loan agreements with banks. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Ernst & Young (Hellas) Certified Auditors Accountants S.A.

Athens, Greece

July 15, 2010

F-2

OMEGA NAVIGATION ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2009 AND 2008

(Expressed in thousands of U.S. Dollars – except share and per share data)

	Notes		2009			2008
ASSETS

CURRENT ASSETS:
Cash and cash equivalents			$	15,564		$	16,811
Accounts receivable, trade				1,720			596
Inventories				614			602
Prepayments and other				1,419			506
Due from related parties				90			-
Restricted cash	2 and 9			5,807			123
Total current assets				25,214			18,638

FIXED ASSETS:
Vessels, net		7		423,762			442,485
Property and equipment, net				54			56
Advances for vessels under construction and acquisitions		5		70,620			57,672
Total fixed assets				494,436			500,213

OTHER NON-CURRENT ASSETS:
Investments in Joint Ventures		6		5,347			-
Deferred charges		8		2,110			1,154
Restricted cash	2 and 9			105			5,174
Intangible assets, net				221			8
Other non-current assets				-			109
Total other non-current assets				7,783			6,445

Total assets			$	527,433		$	525,296

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt		9	$	343,252		$	138
Accounts payable				2,401			1,804
Accrued and other current liabilities				3,211			1,815
Deferred revenue		2(t)		594			1,368
Warrants		7		-			3,941
Derivative liability, current portion		10		9,909			5,839
Dividends payable				166			87
Total current liabilities				359,533			14,992

NON - CURRENT LIABILITIES:
Long - term debt, net of current portion		9		-			335,112
Derivative liability, net of current portion		10		-			8,409
Dividends payable				105			174
Other long - term liabilities				1			5
Total non-current liabilities				106			343,700

COMMITMENTS AND CONTINGENCIES:				-			-

STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 25,000,000 shares authorised, none issued				-			-
Common stock:
Class A shares, par value $0.01 per share 75,000,000 shares authorised; 16,030,079 shares issued and outstanding as at December 31, 2009, 12,183,019 shares issued and outstanding as at December 31, 2008				158			120
Class B shares, par value $0.01 per share, 25,000,000 shares authorised; 0 shares issued and outstanding as at December 31, 2009 and 3,140,000 shares issued and outstanding as at December 31, 2008				-			31
Additional paid in capital				201,618			198,402
Accumulated deficit				(33,982	)		(31,949	)
Total stockholders' equity				167,794			166,604

Total liabilities and stockholders' equity			$	527,433		$	525,296

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

F-3

OMEGA NAVIGATION ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Expressed in thousands of U.S. Dollars – except share and per share data)

	Notes		2009			2008			2007
CONTINUING OPERATIONS
Revenues
Voyage revenues			$	64,456			77,713			69,890
Expenses
Voyage expenses		14		(1,535	)		(1,032	)		(930	)
Vessel operating expenses		14		(17,260	)		(15,486	)		(13,121	)
Depreciation and amortization				(19,173	)		(18,868	)		(17,557	)
Management fees		1		(1,283	)		(1,243	)		(1,110	)
Options' premium				-			-			(200	)
General and administrative expenses (including $1,408, $1,355 and $457 of non cash compensation expense in 2009, 2008 and 2007 respectively)				(6,018	)		(6,085	)		(5,088	)
Foreign currency gains / (losses)				(122	)		44			(90	)
Income from vessels operation				19,065			35,043			31,794

Loss on termination of purchase agreements		5		(3,000	)		-			-
Loss from Joint Venture Companies		6		(278	)		-			-
Operating Income				15,787			35,043			31,794

Other income / (expenses)
Interest and finance costs		15		(7,181	)		(14,385	)		(18,579	)
Interest income				138			711			1,821
Change in fair value of warrants		7		1,127			3,156			1,071
Loss on derivative instruments		10		(4,149	)		(13,586	)		(1,221	)
Total other income / (expenses), net				(10,065	)		(24,104	)		(16,908	)

INCOME FROM CONTINUING OPERATIONS				5,722			10,939			14,886

DISCONTINUED OPERATIONS
Income / (loss) from discontinued operations of the dry-bulk carrier fleet				-			20			(155	)
INCOME / (LOSS) FROM DISCONTINUED OPERATIONS				-			20			(155	)

NET INCOME			$	5,722			10,959			14,731

Earnings / (Loss) per common share, basic and diluted:		11

- From continuing operations
Earnings per Class A common share, basic			$	0.27			0.71			0.98
Earnings per Class A common share, diluted			$	0.27			0.69			0.95
Earnings per Class B common share, basic and diluted			$	1.90			0.71			0.98
Weighted average number of Class A common shares, basic				14,825,002			12,057,717			12,010,000
Weighted average number of Class A common shares, diluted				15,185,237			12,610,219			12,488,976
Weighted average number of Class B common shares, basic and diluted				825,863			3,140,000			3,140,000

- From discontinued operations
Earnings / (loss) per Class A common share, basic and diluted			$	-			-			(0.01	)
Earnings / (loss) per Class B common share, basic and diluted			$	-			-			(0.01	)
Weighted average number of Class A common shares, basic				14,825,002			12,057,717			12,010,000
Weighted average number of Class A common shares, diluted				15,185,237			12,610,219			12,488,976
Weighted average number of Class B common shares, basic and diluted				825,863			3,140,000			3,140,000

- From continuing and discontinued operations
Earnings per Class A common share, basic			$	0.27			0.71			0.97
Earnings per Class A common share, diluted			$	0.27			0.69			0.94
Earnings per Class B common share, basic and diluted			$	1.90			0.71			0.97
Weighted average number of Class A common shares, basic				14,825,002			12,057,717			12,010,000
Weighted average number of Class A common shares, diluted				15,185,237			12,610,219			12,488,976
Weighted average number of Class B common shares, basic and diluted				825,863			3,140,000			3,140,000

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

F-4

OMEGA NAVIGATION ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Expressed in thousands of U.S. Dollars – except share and per share data)

			Class A		Class B
			Common Stock		Common Stock
	Comprehensive Income		# of shares	Par value	# of shares		Par value		Additional Paid-in Capital	Retained Earnings/(Accumulated Deficit)		Total
Balance December 31, 2006			12,010,000	120	3,140,000		31		196,590	3,356		200,097

- Issuance of restricted shares		-	60,138	-	-		-		457	-		457
- Net income		14,731	-	-	-		-		-	14,731		14,731
- Dividends declared ($2 per share)		-	-	-	-		-		-	(30,411	)	(30,411	)
Comprehensive income	$	14,731
Balance December 31, 2007			12,070,138	120	3,140,000		31		197,047	(12,324	)	184,874

- Issuance of restricted shares, net of forfeitures		-	112,881	-	-		-		1,355	-		1,355
- Net income		10,959	-	-	-		-		-	10,959		10,959
- Dividends declared ($2 per share)		-	-	-	-		-		-	(30,584	)	(30,584	)
Comprehensive income	$	10,959
Balance December 31, 2008			12,183,019	120	3,140,000		31		198,402	(31,949	)	166,604

- Issuance of restricted shares, net of forfeitures		-	207,336	2	-		-		1,408	-		1,410
- Net income		5,722	-	-	-		-		-	5,722		5,722
- Conversion of Class B shares to Class A		-	3,140,000	31	(3,140,000	)	(31	)	-	-		-
- Issuance of shares, warrants settlement		-	499,724	5	-		-		1,808			1,813
- Dividends declared ($0.5 per share)		-	-	-	-		-		-	(7,755	)	(7,755	)
Comprehensive income		5,722
Balance December 31, 2009			16,030,079	158	-		-		201,618	(33,982	)	167,794

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

F-5

OMEGA NAVIGATION ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Expressed in thousands of U.S. Dollars)

	2009			2008			2007
Cash flows from operating activities:
Net income from continuing operations	$	5,722			10,939			14,886
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		19,173			18,868			17,557
Amortization and write-off of loan fees		782			669			307
Stock based compensation		1,408			1,355			457
Change in fair value of derivative instruments		(4,339	)		12,669			1,266
Options’ premium		-			-			200
Undistributed losses of Joint Venture companies		278			-			-
Change in fair value of warrants		(1,127	)		(3,156	)		(1,071	)
(Increase) / Decrease in:
Accounts receivable, trade		(1,124	)		(417	)		(150	)
Prepayments and other		(913	)		342			(386	)
Inventories		(12	)		(101	)		4
Due from related parties		(90	)		-			-
Other non-current assets		109			(109	)		-
Increase / (Decrease) in:
Accounts payable		597			935			(465	)
Accrued and other current liabilities		1,396			(905	)		1,849
Deferred revenue		(774	)		(501	)		(498	)
Other long-term liabilities		(4	)		5			-
Payments for dry docking costs		(1,521	)		(538	)		-
Net cash provided by continuing operating activities		19,561			40,055			33,956
Net cash provided by/ (used in) discontinued operating activities		-			-			(695	)
Net cash provided by operating activities		19,561			40,055			33,261

Cash flows from investing activities:
Vessels acquisition and other vessels’ costs		(74	)		(29	)		(120,292	)
Advances for vessels under construction and vessels acquisitions		(12,930	)		(12,783	)		(44,865	)
Intangible assets		(225	)		-			-
Property and equipment acquisition		(29	)		(8	)		(21	)
Investments in Joint Ventures		(5,625	)		-			-
Net cash used in investing activities-continuing operations		(18,883	)		(12,820	)		(165,178	)
Net cash provided by investing activities-discontinued operations		-			-			81,468
Net cash used in investing activities		(18,883	)		(12,820	)		(83,710	)

Cash flows from financing activities:
Capital contributions, net of related costs		2			-			-
Proceeds from bank credit facilities		56,322			156,574			156,760
Financing costs		(50	)		(1,418	)		(537	)
Dividends paid		(7,745	)		(30,434	)		(30,300	)
Principal payments of bank credit facilities		(48,839	)		(144,240	)		(33,320	)
Warrants cash settlement		(1,000	)		-			-
(Increase) / decrease in restricted cash		(615	)		201			272
Net cash (used in) /provided by financing activities-continuing operations		(1,925	)		(19,317	)		92,875
Net cash used in financing activities-discontinued operations		-			-			(37,395	)
Net cash (used in)/ provided by financing activities		(1,925	)		(19,317	)		55,480

Net (decrease)/ increase in cash and cash equivalents		(1,247	)		7,918			5,031
Cash and cash equivalents at beginning of year		16,811			8,893			3,862
Cash and cash equivalents at end of year	$	15,564			16,811			8,893
Supplemental cash flow information
Cash paid during the year for interest on bank loans	$	5,567			13,719			17,199
Non-cash financing activities
Issuance of warrants for vessels’ acquisition	$	-			-			8,168

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

F-6

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

1. Basis of presentation and general information:

The accompanying consolidated financial statements include the accounts of Omega Navigation Enterprises Inc. ("Omega"), its wholly-owned subsidiaries and VIEs for which the Company is the primary beneficiary (collectively, the "Company"). Investments in 50% joint ventures are accounted for under the equity method of accounting. Omega was incorporated on February 28, 2005 under the laws of Marshall Islands for the purpose of engaging in any lawful act or activity under the Marshall Islands Business Corporations Act. On March 2, 2005, the Company commenced operations and preparation for an initial public offering in the United States under the United States Securities Act of 1933, as amended. In April 2006, the Company completed its initial public offering, the net proceeds of which amounted to $186,711. The Company's Class A shares are listed on the Nasdaq National Market and on the Singapore Exchange Securities Trading Limited.

The Company is currently engaged in the ocean transportation services of crude and refined petroleum products and is the sole owner of all outstanding shares of the following subsidiaries:

Ship-owning companies with vessels in operation at December 31, 2009
Company	Country of incorporation	Vessel-owned	Type of vessel	Acquisition Date

Galveston Navigation Inc.	Marshall Islands	Omega Lady Miriam	Product Tanker	August 2006
Beaumont Navigation Inc.	Marshall Islands	Omega Lady Sarah	Product Tanker	June 2006
Carrolton Navigation Inc.	Marshall Islands	Omega Prince	Product Tanker	June 2006
Decatur Navigation Inc.	Marshall Islands	Omega Princess	Product Tanker	July 2006
Elgin Navigation Inc.	Marshall Islands	Omega Queen	Product Tanker	May 2006
Fulton Navigation Inc.	Marshall Islands	Omega King	Product Tanker	June 2006
Orange Navigation Inc.	Marshall Islands	Omega Emmanuel	Product Tanker	March 2007
Baytown Navigation Inc.	Marshall Islands	Omega Theodore	Product Tanker	April 2007

Ship-owning companies with vessels under construction at December 31, 2009

Company	Country of incorporation	Vessel owned	Type of vessel	Expected Year of delivery

Lemannville Navigation Inc	Marshall Islands	Under construction	Product Tanker	2010

Ship-owning companies with vessels sold during the year 2007

Company	Country of incorporation	Vessel-owned	Type of vessel	Disposition Date

Abilene Navigation Inc.	Marshall Islands	EKAVI I	Bulk Carrier	January 2007
Hamilton Navigation Inc.	Marshall Islands	ELECTRA I	Bulk Carrier	January 2007

Other group companies
Company	Country of incorporation	Activity

Omega Management Inc.	Marshall Islands	Fleet commercial management
Omega Navigation (USA) LLC	USA	Company's representative in United States
Omnicrom Holdings Ltd	Marshall Islands	Holding Company
Turneville Navigation Inc	Marshall Islands
Tyler Navigation Inc	Marshall Islands
Pasedena Navigation Inc	Marshall Islands

F-7

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

1. Basis of presentation and general information (continued):

Sunray Navigation Inc		Marshall Islands
Nederland Navigation Inc		Marshall Islands
Lakeview Navigation Inc		Marshall Islands

As further discussed in Note 5, the Company is the primary beneficiary and as a result consolidates the following companies:

Fire Navigation Inc	Marshall Islands	Company owned by 50%, through Megacore Joint Venture
Hurricane Navigation Inc	Marshall Islands	Company owned by 50%, through Megacore Joint Venture
Ice Navigation Inc	Marshall Islands	Company owned by 50%, through Megacore Joint Venture
Lightning Navigation Inc	Marshall Islands	Company owned by 50%, through Megacore Joint Venture
Rain Navigation Inc	Marshall Islands	Company owned by 50%, through Megacore Joint Venture

The day-to-day operations of the Company's 100% owned vessels are managed by two unrelated third party managers under separate management agreements with each vessel-owning subsidiary, effective upon each vessel's delivery, which agreements provide for an annual fixed management fee per vessel increased, where specified, by miscellaneous management expenses while the vessel operating expenses are charged as incurred, and, following either party's prior written notice, can be terminated within one to three months period from such notice.

During the years ended December 31, 2009, 2008, 2007, three charterers individually accounted for 10% or more of the Company's voyage and time charter revenues as follows:

Charterer	2009	2008	2007	Reportable segment (Note 17)
A	16%	25%	28%	Product tankers
B	74%	55%	50%	Product tankers
C	10%	20%	22%	Product tankers

2. Significant accounting policies and recent accounting pronouncements:

FASB Accounting Standards Codification: In June 2009, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard No. 168 ("SFAS 168"), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162" (codified as "ASC 105"). ASC 105 establishes the Accounting Standards Codification ("ASC") as the source of authoritative accounting literature recognized by the FASB to be applied by nongovernmental entities in addition to rules and interpretive releases of the Securities and Exchange Commission ("SEC"), which are sources of authoritative generally accepted accounting principles ("GAAP") for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. ASC 105 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of the financial statements. Following this statement, the FASB will issue new standards in the form of Accounting Standards Updates ("ASU").

In conjunction with the issuance of SFAS 168, the FASB also issued its first Accounting Standards Update No. 2009-1, "Topic 105 –Generally Accepted Accounting Principles" ("ASU 2009-1") which includes SFAS 168 in its entirety as a transition to the ASC. ASU 2009-1 was effective on a prospective basis for interim and annual periods ended after September 15, 2009.

The Codification was effective for the Company for the interim reporting period ended September 30, 2009. As a result of the adoption of this pronouncement, the Company's consolidated financial statements reference the Codification as the sole source of authoritative literature. Accordingly, all accounting references have been updated and SFAS references have been replaced with ASC references as if the SFAS has been adopted into the Codification. The Codification did not change or alter existing GAAP and; therefore, it did not have an impact of the Company's financial position, results of operations and cash flows.

F-8

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include the accounts of Omega Navigation Enterprises Inc. and those entities in which it has a controlling financial interest referred to in Note 1 above (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

Omega Navigation Enterprises Inc. determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity. Under ASC 810-10, "Consolidation," a voting interest entity is an entity in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make financial and operating decisions. The Holding Company consolidates voting interest entities in which it owns all, or at least a majority (generally, greater than 50%) of the voting interest.

As discussed in Note 5(a), in September 2008, the Company entered into a joint venture agreement, in which the Company will have variable interests; however, the Company has, and will continue to consolidate, five ship-owning companies contributed to the joint venture since each venture investor is solely responsible for the financing and any variability of the future cash flows during the pre-delivery period of its new building.

As of December 31, 2009, there were no other entities for the periods presented that were required to be included in the accompanying consolidated financial statements.

Equity Method Investments: Investments in entities that the Company does not control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for using the equity method. Under this method the investment is carried at cost, and is adjusted to recognize the investor's share of the earnings or losses of the investee after the date of acquisition, and is adjusted for impairment whenever facts and circumstances determine that a decline in fair value below the cost basis is other than temporary. The amount of the adjustment is included in the determination of net income by the investor and such amount reflects adjustments similar to those made in preparing consolidated financial statements including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any differences between investor cost and underlying equity in net assets of the investee at the date of acquisition. The investment of an investor is also adjusted to reflect the investor's share of changes in the investee's capital. As discussed in Note 6, in April 2009, the Company entered into a joint venture agreement for the purchase of a double hull handymax product tanker "Omega Duke". The Company records its ownership interest in "Investments in Joint Ventures" in the consolidated balance sheets. Earnings or losses from equity method investments are recorded in "Loss from Joint Venture Companies" in the accompanying consolidated statements of income.

F-9

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

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

Comprehensive Income: The Company follows the provisions of ASC 220 "Comprehensive Income", which requires separate presentation of certain transactions, which are recorded directly as components of stockholders' equity. The Company has no such transactions which affect comprehensive income and, accordingly, comprehensive income equals net income for all periods presented.

Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar because the Company's vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company's accounting records are maintained in U.S. Dollars. Transactions involving other currencies during the period presented are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities which are denominated in other currencies are translated into U.S. Dollars at the period-end exchange rates. Resulting translation gains or losses are included in Foreign currency gains / (losses) in the accompanying consolidated statements of income.

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

Restricted Cash: Restricted cash includes minimum liquid funds and deposits in so-called "retention accounts" that can only be used for the purposes of loan repayment as required under the Company's borrowing arrangements, as well as deposits of dividends declared to unvested restricted shares. The restricted cash balance related to minimum liquid funds, as defined in the loan agreements, has been classified as current as of December 31, 2009 since its related debt has also been classified as current, as discussed in Note 9.

Insurance Claims: The Company records insurance claim recoveries for insured losses incurred on damage to fixed assets. Insurance claim recoveries are recorded, net of any deductible amounts, at the time the Company's fixed assets suffer insured damages, recovery is probable under the related insurance policies and the Company can make an estimate of the amount to be reimbursed following the insurance claim.

j)	Inventories : Inventories consist of lubricants which are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.

Accounts Receivable, Trade: The amount shown as accounts receivable, trade, at each balance sheet date includes receivables from charterers for hire, freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts has been established as of December 31, 2009 and 2008.

Vessels: Vessels are stated at cost, which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements and delivery expenses, interest and on-site supervision costs incurred during the construction periods). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred.

Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate at the date of the vessel's delivery. Management estimates the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is adjusted at the date such regulations become effective.

F-10

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

It is the Company's policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily to keep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale in accordance with ASC 360''Property, Plant and Equipment'', when the following criteria are met: (i) management possessing the necessary authority has committed to a plan to sell the asset (disposal group); (ii) the asset (disposal group) is immediately available for sale on an "as is" basis; (iii) an active program to find the buyer and other actions required to execute the plan to sell the asset (disposal group) have been initiated; (iv) the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year; (v) the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale.

Property and Equipment, net: Property and equipment consists of office furniture and equipment and computer hardware. The useful life of the office furniture and equipment and computer hardware is 5 or 3 years. Depreciation is calculated on a straight-line basis, and amounted to $31, $35 and $30 in 2009, 2008 and 2007, respectively.

Intangible assets: Intangible assets consist of computer software and leasehold improvements. The useful life of the computer software is 3 years, and the amortization commences when software is ready for its intended use. Leasehold improvements are depreciated over the remaining contractual term of the lease. Amortization is calculated on a straight-line basis, and amounted to $12, $11 and $30 in 2009, 2008 and 2007, respectively.

Reporting Discontinued Operations: The current and prior year periods results of operations and cash flows of assets classified as held for sale are reported as discontinued operations when it is determined that their operations and cash flows will be eliminated from the ongoing operations of the Company as a result of their disposal, and that the Company will not have continuing involvement in the operation of these assets after their disposal.

Accounting for Dry-Docking Costs: The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking is scheduled to become due. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the period of the vessel's sale.

Impairment of Long-Lived Assets: The Company applies ASC 360 "Property, Plant and Equipment", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that, long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted projected operating cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. The Company determines the fair value of its assets based on management estimates and assumptions and by making use of available market data and taking into consideration third party valuations.

The Company evaluates the carrying amounts (primarily for vessels and related drydocking and special survey costs) and periods over which long lived assets are depreciated to determine if events have occurred which would require modification of their carrying values or useful lives. In evaluating useful lives and carrying values of long lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases and overall market conditions. The amount of undiscounted operating cash flows estimated in 2008 for 2009 was not materially different from the actual amount of 2009.

F-11

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

The Company determines undiscounted future net operating cash flows for each vessel and compares it to the vessel's carrying value. The future net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days (based on the most recent 10 years average historical one year time charter rates) over the remaining estimated life of each vessel, net of brokerage commissions, expected outflows for scheduled vessels' maintenance and vessel operating expenses assuming an average annual inflation rate of 3%. In the Company's exercise the fleet utilization is assumed to be 99% for the first 15 years of the life of the vessel and 98% thereafter. Additional off hire is assumed for the periods each vessel is expected to undergo her scheduled maintenance (drydocking and special surveys). The undiscounted future cash flows are based on the conditions that existed at the balance sheet date and are not affected by subsequent decisions.

Financing Costs: Arrangement fees, except as noted below, paid to lenders for obtaining new loans or refinancing existing ones are recorded as a contra to debt and are amortized to interest and finance costs over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing is made. Arrangement fees paid to lenders for loans which the Company has not drawn down are capitalized as deferred financing costs and are amortized on a pro rata basis according to the loan availability terms. Loan commitment fees as well as agency and handling fees are charged to expense in the period incurred.

Concentration of Credit Risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and trade accounts receivable and derivative contracts (interest rate swaps). The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its accounts receivable.

Accounting for Revenues and Related Expenses: The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using either voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate, or time charters, where a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. If a charter agreement exists, and collection of the related revenue is reasonably assured, revenue is recognized, as it is earned rateably over the duration of the period of each voyage or time charter. A voyage is deemed to commence upon the completion of discharge of the vessel's previous cargo and is deemed to end upon the completion of discharge of the current cargo. Profit sharing represents the Company's portion on the excess of the actual net daily charter rate earned by the Company's charterers from the employment of the Company's vessels over a predetermined base daily charter rate, as agreed between the Company and its charterers; such profit sharing is recognized in revenue when mutually settled. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeded the stipulated time in the voyage charter and is recognized as incurred. Deferred revenue represents cash received on charter agreements prior to the balance sheet date and is related to revenue not meeting the criteria for recognition.

F-12

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

Voyage expenses, primarily consisting of port, canal and bunker expenses that are unique to a particular charter, are paid for by the charterer under time charter arrangements or by the Company under voyage charter arrangements, except for commissions, which are always paid for by the Company, regardless of charter type. All voyage and vessel operating expenses are expensed as incurred, except for commissions. Commissions paid to brokers are deferred and amortized over the related voyage charter period to the extent revenue has been deferred since commissions are earned as the Company's revenues are earned.

u)	Repairs and Maintenance : All repair and maintenance expenses including underwater inspection expenses are expensed in the year incurred. Such costs are included in vessel operating expenses in the accompanying consolidated statements of income.

Earnings/ (Loss) Per Common Share: Basic earnings/ (loss) per common share is computed by dividing income/ (loss) available to common stockholders by the weighted average number of common shares deemed outstanding during the period. Diluted earnings/ (loss) per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. As further discussed in Note 13, the Company, on March 11, 2006, amended and restated its articles of incorporation and authorized the issuance of preferred stock, as well as common stock with different participation rights in dividends. Accordingly, the Company follows the two-class presentation for purposes of both basic and diluted earnings/ (loss) per share calculations. Following the payment of the dividend with respect to the fourth quarter 2008, all issued and outstanding subordinated Class B shares were converted into Class A common shares on a one-for-one basis. The Class A shares were issued on April 7, 2009. For the year ended December 31, 2009, 2008 and 2007, diluted earnings/ (loss) per share reflect the potential dilution from the restricted stock granted by the Company under its equity incentive plan (Note 13). Also for the years ended December 31, 2008 and 2007, diluted earnings/(loss) per share reflect the potential dilution from the warrants issued by the Company in order to partially finance vessels' acquisition (Note 7).

Pension and Retirement Benefit Obligation: Administrative personnel employed by Omega Management are covered by Greek state-sponsored pension funds. Both employees and the Company are required to contribute a portion of the employees' gross salary to the fund. Upon retirement, the state-sponsored pension funds are responsible for paying the employees retirement benefits, and accordingly the Company has no such obligation. Employer's contributions for the year ended December 31, 2009, 2008 and 2007 amounted to $179, $161 and $136, respectively. Administrative personnel are entitled to an indemnity in case of dismissal or retirement unless they resign or are dismissed with cause. The Company's liability on an actuarially determined basis at December 31, 2009 and 2008 amounted to $34 and $ 33, respectively.

Share Based Payments : According to ASC 718 "Compensation-Stock Compensation", a public entity is required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met. A public company will initially measure the cost of employee services received in exchange for an award of liability instruments based on its current fair value; the fair value of that award will be re-measured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

F-13

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

Financial Instruments with Characteristics of Both Liabilities and Equity: ASC 480 "Distinguishing liabilities from equity" establishes standards for the accounting for certain financial instruments with characteristics of both liabilities and equity. Certain obligations to issue a variable number of shares are financial instruments that embody unconditional obligations, or financial instruments other than outstanding shares that embody conditional obligation, that the issuers must or may settle by issuing variable number of equity shares. These obligations also must be classified as liabilities if, at inception, the monetary values of the obligations are based solely or predominantly on any one of the following: 1) a fixed monetary amount known at inception, 2) variations in something other than the fair value of the issuer's equity shares, or 3) variations inversely related to changes in the fair value of the issuer's equity shares. Freestanding financial instruments indexed to or potentially settled in the issuer's shares for which equity classification is precluded by ASC 480 initially and subsequently should be measured at fair value. Subsequently changes in fair value are recognized in earnings.

Derivative Instruments: ASC 815 "Derivatives and Hedging" requires all derivative contracts to be recorded at fair value, as determined in accordance with ASC 820 "Fair Value Measurements and Disclosures", which is more fully discussed in Note 10 of the consolidated financial statements. The changes in fair value of the derivative contracts are recognized in earnings unless specific hedging criteria are met. As derivative instruments have not been designated as hedging instruments, changes in their fair value are reported in current period earnings.

aa)

Fair Value Measurements : The Company adopted as of January 1, 2008 ASC 820 "Fair Value Measurements and Disclosures," which defines and provides guidance as to the measurement of fair value. This statement creates a hierarchy of measurement and indicates that, when possible, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 applies when assets or liabilities in the financial statements are to be measured at fair value, but does not require additional use of fair value beyond the requirements in other accounting principles. The statement was effective for the Company as of January 1, 2008, excluding certain non-financial assets and non-financial liabilities, for which the statement is effective for fiscal years beginning after November 15, 2008, and its adoption did not have a material impact on the Company's financial position or results of operations.

ASC 825 "Financial Instruments," permits companies to report certain financial assets and financial liabilities at fair value. ASC 825 was effective for the Company as of January 1, 2008 at which time the Company could elect to apply the standard prospectively and measure certain financial instruments at fair value. The Company has evaluated the guidance contained in ASC 825, and has elected not to report any existing financial assets or liabilities at fair value that are not already reported as such; therefore, the adoption of the statement had no impact on the Company's financial position and results of operations. The Company retains the ability to elect the fair value option for certain future assets and liabilities acquired under this new pronouncement. The statement was effective for the Company as of January 1, 2008, excluding certain nonfinancial assets and nonfinancial liabilities, for which the statement was effective for fiscal years beginning after November 15, 2008 and its adoption did not have a material impact on the Company's financial position or results of operations.

F-14

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

Effective January 1, 2009, the Company adopted ASC 820-10-65, "Fair Value Measurements and Disclosures" that provides additional guidelines for estimating fair value in accordance with fair value accounting. The adoption of this statement did not have a material impact on the Company's consolidated financial position, cash flows or results of operations.

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value. The adoption of this statement did not have a material impact on the Company's consolidated results of operations or financial condition.

bb)

Segmental Reporting: ASC 280 ''Segment Reporting'' requires descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company reports financial information and evaluates its operations and operating results by type of vessel and not by the length or type of ship employment for its customers. The Company does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for different types of charters or for charters with different duration, management cannot and does not identify expenses, profitability or other financial information for these charters. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. Accordingly, the reportable segments of the company are the Panamax product tankers segment, the Handymax product tankers segment and Dry bulk carriers segment. The Company, during 2007 disposed of its dry bulk carriers segment.

cc)	Leases : The lease agreement relating to the office space is considered to be operating lease. In case the rentals vary from a straight line basis, the income/expense is recognized on a straight-line basis.

dd)	Recent Accounting Pronouncements:

ASU 2009-16: In December 2009, the FASB issued ASU 2009-16, Transfers and Servicing (Topic 860) - Accounting for Transfers of Financial Assets, which formally codifies FASB Statement No. 166, Accounting for Transfers of Financial Assets into the ASC. ASU 2009-16 represents a revision to the provisions of former FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. Among other things, ASU 2009-16 (1) eliminates the concept of a "qualifying special-purpose entity", (2) changes the requirements for derecognizing financial assets, and (3) enhances information reported to users of financial statements by providing greater transparency about transfers of financial assets and an entity's continuing involvement in transferred financial assets. ASU 2009-16 will be effective for transfers of financial assets in fiscal years beginning after November 15, 2009, and in interim periods within those fiscal years with earlier adoption prohibited. The provisions of ASU 2009-16 are not expected to have a material impact on the Company's consolidated financial statements

ASU 2009-17: In December 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, which codifies FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). ASU 2009-17 represents a revision to former FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based

F-15

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the activities of the other entity that most significantly impact the other entity's economic performance. ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. ASU 2009-17 is effective as of the beginning of an enterprise's first fiscal year beginning after November 15, 2009, and for interim periods within that first period. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.

ASU 2010-01: In January 2010, the FASB issued ASU 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash which amends FASB ASC 505, Equity in order to clarify that the stock portion of a distribution to shareholders that allows the shareholder to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend for purposes of applying FASB ASC 505, Equity and FASB ASC 260, Earnings Per Share. ASU 2010-01 is effective for interim or annual periods ending on or after December 15, 2009 and is adopted retrospectively. The Company has not been involved in any such distributions and thus, the impact to the Company cannot be determined until any such distribution occurs.

ASU 2010-02: In January 2010, the FASB issued ASU 2010-02, Consolidations (Topic 810) – Accounting and Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification. This update provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify the scope of the decrease in ownership provisions of the Subtopic and related guidance. The amendments in this update are effective in the period that an entity adopts ASC 810-10 and if an entity has previously adopted ASC 810-10 as of the date the amendments of the update are included in the Codification, the amendments are effective in the first interim or annual reporting period ending on or after December 15, 2009. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.

ASU 2010-06: In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820)-Improving Disclosures About Fair Value Measurements. ASU 2010-06 amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The ASU also amends guidance on employers' disclosures about postretirement benefit plan assets under ASC 715 to require that disclosures be provided by classes of assets instead of by major categories of assets. The guidance in the ASU is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. In the period of initial adoption, entities will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. However, those disclosures are required for periods ending after initial adoption. The provisions of ASU 2010-06 are not expected to have a material impact on the Company's consolidated financial statements.

ASU 2010-09: In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855). ASU 2010-09 amends ASC 855 to clarify which entities are required to evaluate subsequent events through the date the financial statements are issued and the scope of the disclosure requirements related to subsequent events. The amendments remove the requirement for an SEC filer to disclose the date through which management evaluated subsequent events in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. Additionally, the FASB has clarified that if the financial statements have been revised, then an entity that is not an SEC filer should disclose both the date that the financial statements were issued or available to be issued and the date the revised financial statements were issued or available to be issued. Those amendments remove potential conflicts with the SEC's literature. All of the amendments in this Update are effective upon its issuance, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. The adoption of the above amendments of ASU 2010-09 did not have a material impact on the Company's consolidated financial statements.

F-16

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements (continued):

ASU 2010-11: In March 2010, the FASB issued ASU 2010-11, Derivatives and Hedging- Scope Exception Related to Embedded Credit Derivatives (Topic 815) which addresses application of the embedded derivative scope exception in ASC 815-15-15-8 and 15-9. The ASU primarily affects entities that hold or issue investments in financial instruments that contain embedded credit derivative features, however, other entities may also benefit from the ASU's transition provisions, which permit entities to make a special one-time election to apply the fair value option to any investment in a beneficial interest in securitized financial assets, regardless of whether such investments contain embedded derivative features. The ASU is effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of any fiscal quarter beginning after March 5, 2010. The Company has not been engaged in any such contracts and thus, the impact to the Company cannot be determined.

ASU 2010-13 : In April 2010, the FASB issued ASU 2010-13, Compensation-Stock Compensation, Effect of Denominating the Exercise Price of a Share- Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades a consensus of the FASB Emerging Issues Task Force (Topic 718) which Update addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The provisions of ASU 2010-13 are not expected to have a material impact on the Company's consolidated financial statements.

Reclassification of prior year balances

Certain minor reclassifications have been made to the 2008 consolidated financial statements to conform to the current year presentation. Software balance of $8 previously classified under "Property and equipment, net" was reclassified to "Intangible assets, net".

3. Going concern:

As of December 31, 2009, the Company was in breach of certain financial loan covenants, related primarily to the security value maintenance (also known as loan-to-value ratio). Although the lenders have not declared an Event of Default, this constitutes a potential event of default and could result in the lenders requiring immediate repayment of the loan. As further discussed in Note 9 below, due to cross default provisions in the loan agreements, the Company has classified the affected debt as current. As a result, as of December 31, 2009, the Company has a working capital deficiency.

The Company is currently in negotiations with the lenders to restructure the debt. Management plans to settle the loan interest and scheduled loan repayments with cash generated from operations. The working capital deficit may affect the Company's ability to finance the acquisition of the new-buildings that are currently under construction. The Company is currently exploring various alternatives including capital raising in order to improve its liquidity, meet short term commitments and manage its overall capital exposure.

F-17

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

3. Going concern (continued):

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of the recorded asset amounts, the amounts and classification of liabilities or any other adjustments that might result should the Company be unable to continue as a going concern, except for the current classification of the debt discussed in Note 9.

4. Transactions with related parties:

(a)

Stone Shipping Ltd ("Stone"): As of April 2009, the Company through its wholly-owned subsidiary Omnicrom Holdings Ltd., ("Omnicrom"), entered into a joint venture agreement with Topley Corporation, ("Topley"), which is a wholly-owned subsidiary of Glencore International AG ("Glencore"). Omnicrom and Topley each own 50% of Stone, that is a joint venture holding company. Stone owns 100% of Blizzard Navigation Inc., ("Blizzard"), that is the shipowning company of the vessel Omega Duke. The Company account for its 50% interest in Stone by using the equity method of accounting (Note 2(b)). The Company provides Blizzard with technical, operating and administrative services. No management fees were payable to the Company during 2009. The outstanding balance due from Stone as of December 31, 2009 is $56, and relates to payments in advance by Blizzard to its technical manager netted off by an amount of $101 that was paid on behalf of Blizzard as loan financing related expenses.

(b)

Onest Shipping Ltd. ("Onest"): As of April 2009, the Company entered through Omnicrom, into a joint venture agreement with Topley. Omnicrom and Topley each own 50% of Onest, a joint venture holding company, that owns 100% of Tornado Navigation Inc., ("Tornado"), a shipowning company that owns Alpine Marina, a handymax double hull product tanker delivered in July 2010. The joint venture agreement was subject to several settlement, novation and financing arrangements that were fulfilled subsequent to December 31, 2009 (Note 18(i)). Onest was charged with administrative expenses, 50% of which were charged to the Company equal to $3. The outstanding balance due from Onest as of December 31, 2009 is $5.

(c)

Megacore Shipping Ltd. ("Megacore"): On September 2008, the Company formed an equal partnership (50/50) joint venture company with Topley named Megacore. Companies owned by Omega and ST Shipping have novated their respective original shipbuilding contracts entered into with Hyundai Mipo, consisting in total of 10 newbuilding 37,000 dwt product/chemical carriers (MR1s) (5 vessels each partner), to companies wholly owned by Megacore. On December 2009, this order was converted to two 37,000 dwt product/chemical tankers (MR1s) and seven 74,000 dwt. product/oil tankers (LR1s) while the contract of one MR1 vessel has been suspended and remains as an option for Megacore to exercise in the future. All nine vessels will be owned by companies fully owned by Megacore. In addition, Omega will provide the technical, operating and administrative services for the vessels. During 2009, Megacore incurred legal administrative expenses, 50% of which were charged to the Company, equal to $30. The outstanding balance due from Megacore as of December 31, 2009 is $29.

(d)

Charter party agreements for the vessels Omega Emmanuel and Omega Theodore acquired within 2007 (Note 7) were arranged through a ship-brokerage firm in which a non-executive director of the Company's Board of Directors acts as a senior broker. The same ship-brokerage firm has arranged charter party arrangements for the vessels Omega Lady Miriam and Omega Lady Sarah in 2008 and Omega Queen, Omega Prince and Omega Princess in 2009. No commissions are paid by the Company to the ship brokerage firm.

(e)

Shoreline Mutual Bermuda Ltd. ("Shoreline"): Under the Oil Pollution Act 1990 (OPA '90) every ship entering U.S. waters has to provide evidence of its ability to pay for the consequences of an oil pollution. Following receipt of such evidence, the US Coast Guard ("USCG") issues a Certificate of Financial Responsibility ("COFR"), which demonstrates the vessel's compliance with the provisions of the Act. Shoreline issues on behalf of its members financial guarantees to support the issuance of the COFRs for its members by the USCG. During 2007, 2008 and 2009, Shoreline provided to the Company financial guarantees needed to support COFRs issued by USCG for Omega Lady Sarah, Omega Lady Miriam and Omega Theodore. The Company's Chief Financial Officer is a non executive director of Shoreline. During 2009, 2008 and 2007, Shoreline's charges amounted to $66, $31 and $22, respectively for which the Company was reimbursed by the vessels' charterers, as per the respective charter party agreements. The outstanding balance due as of December 31, 2009 is $5.

F-18

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

4.	Transactions with related parties (continued):

(f)

Marine Money International is a maritime finance transactional information and maritime company analysis provider, in which a non-executive director of the Company's Board of Directors acts as president. Within 2009 and 2008, the Company paid an annual subscription of $2 to Marine Money International.

(g)

Worldscale Association (London) Limited "Worldscale" is a non-profit making organisation providing information about rates of freight for tanker voyage charters. The organization is under the control of a management committee, the members of which are senior brokers from leading tanker broking firms in London. A non-executive director of the Company's Board of Directors acts as management committee member. Within 2009 and 2008, the Company paid an annual subscription of $5 to Worldscale.

5. Advances for vessels' under construction and acquisition:

The amount in the accompanying consolidated balance sheets as of December 31, 2009 and 2008 is analyzed below:

	2009		2008
- Advances for vessels acquisition		5,550		11,100
- Pre-delivery instalments		61,929		44,235
- Capitalized interest and other related costs		3,141		2,337
		70,620		57,672

(a) Advances for vessels under construction:

On June 15, 2007, the Company entered into five shipbuilding contracts for the acquisition of five new building double hull handysize product tankers, with a capacity of 37,000 dwt each, four of which were scheduled for delivery in 2010 and the fifth within the first quarter of 2011. The contractual purchase price was $44,235 per vessel ($221,175 in total) payable in six instalments, each of the first two (2) instalments being equal to 10% of the vessels' purchase price and each of the next four (4) instalments being equal to 20% of the vessels' purchase price. Until December 31, 2009, the Company has paid $61,929 and has incurred $3,141 of additional costs. On September 1, 2008, the Company concluded an agreement to charter one of the above five newbuilding product tankers for three years, with charterer's option to extend for two years, commencing on delivery of the vessel from the shipyard. As further discussed in Note 18(d) the vessel Megacore Honami, was delivered to Megacore on February 25, 2010.

On September 8, 2008, the Company has entered into a joint venture agreement that was further amended in May 29, 2009 and June 30, 2010 with Topley, which is a wholly-owned subsidiary of Glencore. Based on the agreement, each party would initially contribute five (5) newbuilding double hull handysize product tanker vessels thus forming a fleet of 10 newbuilding vessels, with the aim of establishing a major participant in the ownership and operation of product tankers. Megacore is the resulting joint venture holding company, and is the sole owner of the following 10 shipowning companies:

1) Fire Navigation Inc.	6) Storm Navigation Inc.
2) Hurricane Navigation Inc.	7) Thunder Navigation Inc.
3) Ice Navigation Inc.	8) Twister Navigation Inc.
4) Lightning Navigation Inc.	9) Typhoon Navigation Inc.
5) Rain Navigation Inc.	10) Wind Navigation Inc.

On June 11, 2009, the Company has entered into five novation agreements with Hyundai Mipo shipyard and five shipowning companies wholly owned by Megacore (Fire Navigation Inc., Hurricane Navigation Inc., Ice Navigation Inc., Lightning Navigation Inc. and Rain Navigation Inc.) in order to transfer all of the rights and obligations to the Joint Venture companies. Subsequently, as described in Note 9, the Company transferred its financing arrangements to the five Joint Venture companies, but continued to guarantee the performance of their loans during the predelivery period.

F-19

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

5. Advances for vessels' under construction and acquisition (continued):

On December 10, 2009, Hurricane Navigation Inc., Ice Navigation Inc., Lightning Navigation Inc. and Rain Navigation Inc. have entered into Addendum No. 1 of the shipbuilding contract with Hyundai Mipo shipyard to amend the type of the vessels to be built from double hull handysize product tankers with a capacity of 37,000 dwt each to double hull panamax product tankers (LR1s) with a capacity of 74,000 dwt each. The contract price was increased from $44,235 per vessel to $51,900 per vessel. The delivery dates were extended, and one of the vessels is scheduled for delivery in 2010, two of the vessels are scheduled for delivery in 2011 and the remaining one in 2012. Refund guarantees and performance guarantees were replaced. For the shipbuilding contract between Ice Navigation Inc. and Hyundai Mipo, ST Shipping and Transport Pte Ltd ("ST Shipping") a wholly owned subsidiary of Glencore, has provided a performance guarantee of 50% of the contract price in case of payment default by the Omega under the performance guarantee, ST Shipping will guarantee 100% of the buyer's obligation.

Glencore has novated the shipbuilding contracts to Storm Navigation Inc., Thunder Navigation Inc., Twister Navigation Inc., Typhoon Navigation Inc. and Wind Navigation Inc. On December 10, 2009, Thunder Navigation Inc., Twister Navigation Inc., Typhoon Navigation Inc. and Wind Navigation Inc. have entered into Addendum No. 1 of the shipbuilding contract with Hyundai Mipo shipyard to amend the type of three of the vessels from double hull handysize product tankers with a capacity of 37,000 dwt each to double hull panamax product oil tankers (LR1s) with a capacity of 74,000 dwt each while one vessel has been suspended and remains as an option for Megacore to exercise in the future. For two vessels the contract price was increased from $44,850 per vessel to $51,900 per vessel and for one vessel was increased from $44,850 to $53,900.

After the signing of the addendums of the shipbuilding contracts, the Megacore joint venture will take delivery of two double hull handysize product tankers (MR1s) with a capacity of 37,000 dwt each and seven double hull panamax product oil tankers (LR1s) with a capacity of 74,000 dwt each.

Each joint venturer will fully fund through Megacore all obligations under four shipbuilding contracts until the delivery of the respective vessels while the predelivery obligations of one vessel will be funded by each shareholder on an equal basis. The objective of the joint venturers is that, following delivery of the vessels, the equity contribution of the Company and Topley will be equal. During the predelivery period of each vessel, only the cost of supervision of the vessels as well as the running expenses of Megacore will be split equally between the two joint venturers. After the delivery of each vessel, the shipowning companies shall declare and pay quarterly dividends to the Company and Topley that will be equal to available cash from operations during the previous quarter after cash expenses and discretionary reserves. Dividends will be equal for the two joint venturers.

As of December 31, 2009, the Company was the primary beneficiary of the Fire Navigation Inc., Hurricane Navigation Inc., Lightning Navigation Inc. and Rain Navigation Inc., because based on Megacore Joint Venture agreement, Omega is solely responsible for ensuring that the relevant obligations under the shipbuilding contracts and any financing in respect of these companies will be met. The Company was also considered the primary beneficiary of Ice Navigation Inc. because although based on the addendum to the shipbuilding contracts, the Company and Topley are share equal responsibility for ensuring that the relevant obligations under the shipbuilding contract are met, the Company is responsible for ensuring that the obligations under the predelivery financing are met. As a result, the above five shipowning companies are included in the consolidated financial statements.

(b) Advances for vessels acquisition

On May 9, 2008, the Company entered into Memoranda of Agreement with an unrelated third party to acquire two newbuilding double hull handymax product tankers for a consideration of $55,500 per vessel ($ 111,000 in total). As at December 31, 2008, the Company had paid an advance, representing 10% of the total purchase price, amounting to $11,100, from cash available from operations and the proceeds under a loan facility concluded in this respect with Lloyds TSB Bank PLC, as further discussed in Note 9. Concurrently with the Memorandum of Agreements, the Company entered into three years time charter agreements for both vessels commencing upon delivery.

F-20

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

5. Advances for vessels' under construction and acquisition (continued):

On April 8, 2009, the Company has entered into a settlement agreement with the seller of Omega Duke, one of the aforementioned new building double hull handymax product tankers, to cancel the Memorandum of Agreement and the time charter agreement by paying a settlement fee of $3.0 million. Such amount was paid on April 24, 2009, and both parties were released from further liabilities regarding the Memorandum of agreement and the time charter agreement. The amount of the settlement fee is presented as "Loss on termination of purchase agreements" in the accompanying statement of income. As further discussed in Note 6, the Company acquired the Omega Duke, through Stone, a 50% owned joint venture with Glencore.

On April 8, 2009, the Company has entered into a settlement agreement with the seller to cancel the second Memorandum of Agreement and the time charter agreement described above. Also on April 8, 2009 as supplemented on April 24, 2009, the Company through its wholly owned subsidiary Omnicrom entered into a Joint Venture agreement with "Topley". Omnicrom and Topley each own 50% of Onest which in turn owns 100% of Tornado that is the shipowning company of the newbuilding vessel. Tornado has entered into a 5 year time charter agreement with ST Shipping. The settlement agreement and the joint venture agreement were subject to financing arrangements that were placed subsequent to December 31, 2009 (Note 18(i)).

6.	Equity method investments:

"Investments in Joint Venture companies" include the Company's investment in a joint venture company accounted for by using the equity method. On April 8, 2009, the Company, through its wholly owned subsidiary Omnicrom, entered into a joint venture agreement with Topley. Omnicrom and Topley each own 50% of Stone, a joint venture holding company, which in turn owns 100% of Blizzard that is the shipowning company of the vessel Omega Duke. Blizzard entered into a Memorandum of Agreement in April 2009 to purchase the vessel Omega Duke for a consideration of $45,000. The vessel Omega Duke was delivered on April 24, 2009.

The purchase of the vessel Omega Duke was financed by a $33,750 loan agreement with Lloyds Bank and by equal equity contributions of the joint venturers that amounted to $11,250 ($5,625 each). Omnicrom entered into corporate guarantee agreement with Lloyds Bank for 50% of the loan, and Omega entered into a corporate guarantee agreement for 100% of Omnicrom's obligations. The facility contains financial covenants calculated on Omega's and Glencore's consolidated financial statements. Also the ratio of market value of the secured vessel to outstanding net debt of the secured vessel shall be in excess of 125%. The bank has provided a waiver of the security value coverage up to and including the 2nd anniversary of the delivery date of the vessel.

On April 24, 2009, the Company novated to Blizzard an interest rate swap with Lloyds bank having a notional amount of $33,750 at a fixed rate of 2.655% per annum. The swap matures on May 12, 2011.

Omega Management entered into a management agreement with Blizzard based on which services relating to crewing, technical management, purchasing, insurances, accounting, bookkeeping, budgeting, operations and corporate secretarial services will be provided. For the first year commencing upon the delivery of the vessel, no management fee shall be payable, and after the first year a monthly fee will be agreed. Blizzard has entered into a five year charter agreement with ST Shipping.

The joint venture will declare dividends on a quarterly basis, in amounts equal to any available cash from operations after cash expenses and discretionary reserves, and will be distributed equally between Omnicrom and Topley. No dividend has been declared in 2009.

A condensed summary of the assets and liabilities of the equity method investment follows:

		2009
	Current assets	$ 911
	Vessels net	$ 43,986
	Other assets	-
	Total Assets	$ 44,897

F-21

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

6.	Equity method investments (continued):

	Current liabilities	$ 3,708
	Long term debt and other non-current liabilities	$ 30,495
	Shareholders equity	$ 10,694
	Total liabilities and shareholders equity	$ 44,897

A condensed summary of the results of operations of the equity method investment follows:

		2009
	Voyage revenues,net	$ 4,135
	Operating expenses	$ (1,551)
	Amortization and depreciation	$(1,175)
	Other	$(64)
	Interest and finance cost, net	$(676)
	Losses from derivative instruments	(1,226)

	Net income/(loss)	$ (557)

7.	Vessels, net:

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

	Vessel Cost		Accumulated Depreciation			Net Book Value
Balance, December 31, 2007		485,955		(24,704	)		461,251
- Other vessels' costs		29		-			29
- Depreciation		-		(18,795	)		(18,795	)
Balance, December 31, 2008		485,984		(43,499	)		442,485
- Other vessels' costs		74		-			74
- Depreciation		-		(18,797	)		(18,797	)
Balance, December 31, 2009		486,058		(62,296	)		423,762

On March 27, 2007 and April 26, 2007, the Company took delivery of two product tanker vessels, named Omega Emmanuel and Omega Theodore. The acquisition of these vessels was financed from the proceeds of bank credit facilities discussed in Note 9, the net proceeds from the sale of the two dry bulk product carriers, and warrants issued by the Company, as further discussed below.

The warrants issued entitled the holders to a variable number of shares of Class A common stock equal to the quotient of $4.5 million divided by the warrant share price which shall be the greater of (i) the price equal to the average closing price of the Company's Class A common stock on the Nasdaq Stock Market or such other stock exchange as the Class A common shares may then be listed and have their primary trading market, during the 15 business days immediately preceding the exercise date, less 8% of such average price, and (ii) eighteen dollars US ($18.00). However, if the average closing price of the Company's Class A common shares on the primary trading market during the 15 business days immediately preceding the exercise date was less than $18.00, the buyer should pay to the seller, in cash, an amount equal to the lesser of (i) the difference between the aggregate warrant share price and $4.5 million; and (ii) $0.5 million, in addition to the issuance of the warrant shares upon exercise of the warrant.

The warrants were accounted for in accordance with the requirements of ASC 480 and EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock". The Company used binomial model to measure the fair value of warrants at each reporting date. The fair value of the warrants was derived principally from or corroborated by observable market data. Inputs include Company's share price, US zero coupon rate, dividend yield and share price volatility. The difference in fair values from initial measurement is separately reflected in the accompanying 2009, 2008 and 2007 consolidated statement of income.

F-22

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

7.	Vessels, net (continued):

On March 31, 2009, the Company received a Notice of Exercise of Warrants from the sellers of the vessels, Omega Emmanuel and Omega Theodore. By cashless exercise pursuant to the warrant agreement, 499,724 shares were issued on April 13, 2009. In accordance with the warrants' agreement, the Company further paid $ 1.0 million ($0.5 million per vessel) in cash on April 3, 2009, as the average closing price of the Company's class A share 15 business days immediately preceding the exercise date was US $3.63.

All of the Company's vessels have been provided as collateral to secure the bank credit facilities discussed in Note 9 and, as of December 31, 2009, were operating under time charters for which the latest expires in September 2012.

Charters-out

The future minimum revenues, before reduction for brokerage and address commissions, expected to be recognized on non-cancelable time charters are as follows:

Year	Amount

2010		28,894
2011		18,615
2012		12,164
2013		-
2014 and thereafter		-
Net minimum charter payments		59,673

These amounts do not assume any off-hire. The above amount of revenues relates only to the eight vessels of the Company's fleet, and does not include vessels that were under construction as of December 31, 2009. The duration of the charter parties of the vessels Omega Queen, Omega Prince and Omega Princess are for an indefinite time. Specifically, charterers and owners have each the option to cancel the time charter agreement with 60 days written notice given. After such notice is served, the charterers will ensure that the vessel is fixed in voyages that will not exceed the 60 day redelivery notice. Since no written notice was given for the cancellation of these time charter agreements as of December 31, 2009, 60 days of hire revenue have been included in the calculations above.

8.	Deferred charges:

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

	Financing costs			Drydock costs			Total
Balance, December 31, 2007		343			-			343
- Additions		1,418			538			1,956
- Amortization		(66	)		(27	)		(93	)
- Financing fees presented as a contra to debt		(1,052	)		-			(1,052	)
Balance, December 31, 2008		643			511			1,154
- Additions		50			1,521			1,571
- Amortization		(218	)		(334	)		(552	)
- Financing fees presented as a contra to debt		(63	)		-			(63	)
Balance, December 31, 2009		412			1,698			2,110

Financing fees presented as a contra to debt represent the portion of loan arrangement fees relating to the outstanding portion of debt. The amortization of loan financing costs is included in "Interest and finance costs" in the accompanying consolidated statements of income, except for the amortization of loan financing costs relating to the outstanding portion of debt of the five new buildings discussed in Note 5 that amounts to $24 and $ 42 for 2008 and 2009, respectively, and is included in "Advances for vessels' under construction and acquisition" in the accompanying 2008 and 2009 consolidated balance sheets.

F-23

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

8.	Deferred charges (continued):

Additions in dry dock costs of $538 in 2008 relate to the scheduled drydock of vessel Omega Lady Miriam, which took place within September 2008, and is amortised during the period through the next drydocking, scheduled in 2013. Additions in dry dock costs of $1,521 in 2009 relate to the scheduled drydocks of the vessels Omega Lady Sarah, Omega Queen and Omega King which took place in February, April and May 2009, respectively and are amortized during the period through the next drydockings scheduled in 2014.The amortization of drydock costs is included in "Depreciation and amortization" in the accompanying consolidated statements of income.

9.	Long-term debt:

The amount of long-term debt shown in the accompanying consolidated balance sheets is analyzed as follows:

	2009			2008
Term loans		344,096			336,612
Less unamortized financing fees		(844	)		(1,362	)
Total		343,252			335,250
Less: Current portion of long-term debt		(343,252	)		(138	)
Long -term debt, net of current portion Portionportion		-			335,112

The movement of the Company's bank debt during 2009 and 2008 per type and financial institution is analysed as follows:

			Movement in 2008
Name of Financial Institution/ loan type	Balance at December 31, 2007		Drawdowns		Accrued interest		Repayments			Balance at December 31, 2008		Unused portion (1)
(I) HSH
- Term loan		139,919		102,801		-		-			242,720		-
- Revolving facility		141,807		-		-		(141,807	)		-		-
- Bridge loan		2,433		-		-		(2,433	)		-		-
		284,159		102,801		-		(144,240	)		242,720		-

(II) NIBC-BTMU ( junior credit facility)		-		42,500		-		-			42,500		-

(III) Bremer ( term loan)		16,087		-		672		-			16,759		38,491

(IV) Bank of Scotland ( term loan)		16,070		-		701		-			16,771		53,229

(V) NBG ( term loan)		7,962		-		-		-			7,962		25,214

(VI) Lloyds ( term loan)		-		9,900		-		-			9,900		73,350

Total		324,278		155,201		1,373		(144,240	)		336,612		190,284

(1) Based on the maximum notional amounts available under the loan facilities.

F-24

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

9.	Long-term debt (continued):

			Movement in 2009
Name of Financial Institution/ loan type	Balance at December 31, 2008		Drawdowns		Accrued interest		Repayments			Balance at December 31, 2009		Unused portion (1)
(I) HSH
- Term loan (senior credit facility)		242,720		-		-		-			242,720		-

(II) NIBC-BTMU ( junior credit facility)		42,500		-		-		(2,156	)		40,344		-

(III) Bremer ( term loan)		16,759		16,868		214		(16,868	)		16,973		41,777

(IV) Bank of Scotland ( term loan)		16,771		31,058		220		(16,903	)		31,146		35,945

(V) NBG ( term loan)		7,962		7,962		-		(7,962	)		7,962		28,368

(VI) Lloyds ( term loan)		9,900		-		-		(4,950	)		4,950		36,675

Total		336,612		55,888		434		(48,839	)		344,095		142,765

(1)	Based on the maximum notional amounts available under the loan facilities, including any amendments based on the term sheets signed in 2010 with NBG and Bank of Scotland. (Note 18(b) and (c)).

(I) HSH Nordbank ("HSH")

On March 27, 2008, the Company completed, through a supplemental agreement, the restructuring of its existing syndicated senior secured credit facility with HSH. As a result of the restructuring, the senior secured credit facility was effectively reduced from its then outstanding balance of $284.2 million to $242.7 million. The Company agreed to repay the outstanding balance of the revolving credit facility of $141,807 and HSH agreed to make available to the Company a term loan facility of up to $242,720 comprising of (1) $139,919 representing the amount outstanding under the term portion of the facility at the date of the restructuring, (2) an additional amount of $102,801 to partially finance the repayment of the revolving credit facility. The repayment of the remaining balance of the revolving facility of $39,006 was financed by the Junior Facility discussed below. The related revolving and bridge loan facilities' deferred financing costs of $112 were written off and included in "Interest and Finance costs" in the accompanying 2008 consolidated statement of income.

The amended facility with HSH provides for interest rate at LIBOR plus a margin, and contains the following financial covenants calculated on a consolidated basis: a) ratio of fleet market value to outstanding balance of the facility of 120%; b) leverage ratio calculated as total net debt to total net capitalization, that may be temporarily increased to between 65% and 70%, provided that it will thereafter be reduced to 65% within six months after the end of the quarter that it first exceeded 65%; c) ratio of EBITDA to interest payable on a four trailing quarter basis of not less than 2:00 to 1:00; d) minimum liquidity which is equal to the higher of (i) $4.0 million and (ii) $500 multiplied by the number of vessels with more than six months remaining charter employment and $750 multiplied by the number of vessels with less than six months remaining charter employment; e) working capital of not less than $1.0 million. The facility is secured by a) first priority mortgage, b) pledge of accounts in credit, c) owners guarantee, d) assignment of insurance and earnings of mortgaged vessels. The Company is permitted to pay dividends under the credit facility so long as an event of default has not occurred and will not occur upon payment of such dividend, and at any time that the fair market value of the secured vessels does not fall below 125% of the outstanding senior secured credit facility.

The restructured credit facility with HSH has a term until April of 2011, and is non amortizing.

F-25

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

9. Long-term debt (continued):

(II) NIBC Bank N.V ("NIBC) and Bank of Tokyo-Mitsubishi UFJ Ltd.("BTMU") :

On March 27, 2008, the Company entered into a new $42.5 million junior facility with NIBC Bank N.V. ("NIBC") and Bank of Tokyo-Mitsubishi UFJ Ltd. ("BTMU")

The junior facility of $42.5 million was used to fund the repayment of (i) the revolving credit facility with HSH of $39,006, (ii) the bridge loan facility with HSH of $2,433 and (iii) for working capital purposes. The facility bears interest at LIBOR plus margin, commitment fee of 0.5% per annum payable quarterly from signing of the junior facility, and an annual agency fee in the amount of $10.

The junior facility contains financial covenants calculated on a consolidated basis requiring the Company to maintain i) minimum cash of $5.0 million; ii) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00; iii) a leverage ratio, calculated as total net debt to total net capitalization of a maximum of 70%; iv) a ratio of fair market value to combined senior secured credit facility with HSH and junior facility of not less than 120%.

The junior facility is secured by owners guarantee, second priority cross-collateralized mortgages, second priority pledge/assignment of earnings account and retention account, second priority assignment of insurances in respect to the vessels, second priority pledge of the time charter contracts currently in place for the vessels and, second priority assignment of each of the vessels earnings.

The Company will not declare or pay any dividends, grant or repay any intercompany loans or distribute any of its present or future assets, undertakings, rights or revenues to any of its shareholders at any time that the fair market value of the vessels in relation to the combined senior secured credit facility with HSH and junior credit facility falls below 125% and in case an event of default has occurred.

The Junior Facility has a term until April of 2011, and is non amortizing.

According to the cash sweep clause of the junior facility, in the event that at any time during the security period the fair market value of the secured vessels is less than 130% of the aggregate of the senior and junior credit facilities, the Company shall prepay part of the facility. On November 20, 2009, an amount of $2,156 was prepaid under the cash sweep clause of the junior facility, and as a result the outstanding balance of the debt was reduced to $40,344 as of December 31, 2009. Also, an amount of $1,991 was prepaid under cash sweep clause on January 19, 2010 (Note 18(a)).

(III) Bremer Landesbank Kreditanstalt Oldenburg Girozentrale ("Bremer") :

a) Predelivery facility

On August 24, 2007, the Company entered into a secured loan facility with Bremer of up to $55,250 for the purpose to partly finance the acquisition cost during the construction period of two of the Company's newbuildings. On June 29, 2009, the Company repaid the outstanding balance of $16,868, including an amount of $956 relating to the interest deferred until that date.

On June 25, 2009, the Company, through Lightning Navigation Inc. and Rain Navigation Inc., has entered into a senior secured loan facility with Bremer for an amount up to $58,750 to (i) repay the outstanding loan facility discussed above, and (ii) to partially finance the acquisition of the two of the five newbuilding vessels that the Company has novated to the above Joint Venture companies (Note 5). Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts and bear interest at LIBOR plus margin and a commitment fee of 0.2% per annum on the undrawn portion of the loan. The interest for the period up to the payment of the third instalment to the shipyard is deferred but it cannot exceed $2,544.

The facility contains financial covenants calculated on a consolidated basis providing for a) minimum liquidity of $5.0 million, and b) a leverage ratio, calculated as total debt to total capitalization, of maximum 70%. The facility is secured by a) first priority assignment of all rights under the relevant two shipbuilding contracts signed on June 15, 2007, b) first priority assignment of all rights under the relative refund guarantees, and c) the Company's corporate guarantee.

F-26

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

9. Long-term debt (continued):

Furthermore, the Company is permitted to pay dividends so long as an event of default has not occurred and will not occur upon the payment of such dividend.

b) Post delivery facility

On February 2, 2009, the Company entered into a post-delivery term loan facility with Bremer of up to $66,300 representing 75% of the vessels' contract price on delivery (without taking into consideration the amendment of the shipbuilding contract signed on December 10, 2009) or the fair market value of those vessels at delivery, whichever is less, for the purpose of repayment of the pre-delivery facility discussed above as well as financing the remaining instalments to the shipyard. The loan will be drawn at the vessels' delivery dates and will be repayable in 40 quarterly instalments ($460.5 per vessel) and a balloon instalment equal to $14,730 per vessel. Repayment will commence three months after delivery of the vessels. The loan will bear interest at LIBOR plus margin. The Company pays commitment fees of 0.2% per annum on the post delivery loan. The loan agreement will be secured by a) first priority mortgages over the vessels, b) first priority assignment of each vessels insurances, c) corporate guarantee, d) first priority assignment of each of the vessels' earnings and retention accounts, and e) manager's undertakings. Furthermore, the loan agreement contains financial covenants calculated on a consolidated basis, that will require the Company to maintain: a) liquidity of not less than $5.0 million; b) a ratio of total net debt to total net capitalization of not more than 70%; c) a ratio of market value of the secured vessels to outstanding net debt of the secured vessels in excess of 120%.

According to the predelivery facility signed on June 25, 2009, the Company, through Lightning Navigation Inc. and Rain Navigation Inc., will enter into a new loan agreement for the post delivery financing in accordance with the terms presented above, but including any necessary amendments based on the addendum of the shipbuilding contracts discussed in Note 5.

(IV) Bank of Scotland:

On September 7, 2007, the Company entered into a senior secured loan facility with Bank of Scotland of up to the lesser of $70.0 million or 75% of the fair market value of the vessels on delivery date, to partly finance the construction and acquisition cost of two of the Company's new buildings. The Company had drawn down an amount of $15,925, is order to partially finance the first two instalments under the two shipbuilding contracts paid in 2007. On June 29, 2009, the Company repaid the outstanding balance of $16,903, including an amount of $979 relating to the interest deferred until that date.

On June 29, 2009, the Company, through Fire Navigation Inc. and Hurricane Navigation Inc., have entered into a loan agreement with Bank of Scotland for an amount of up to $70,000 to (i) repay the outstanding loan facility discussed above and (ii) to partially finance the two of the five newbuilding vessels that the Company has novated to the above Joint Venture companies (Note 5). On October 1, 2009, and on October 29, 2009, the Company paid the third and fourth instalment of Hull 2189 (Megacore Honami) and as a result the third and four instalment of the loan amounting $7.1 million each was drawn down. Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts and bear interest at LIBOR plus a margin and commitment fees of 0.3% per annum on the undrawn portion of the loan under the terms of the facility agreement. The interest of the first two advances under each tranche will be deferred until the date the advance for the third instalment to the shipyard is drawn.

The senior secured loan facility will be repaid in 40 equal quarterly instalments of $506.75, commencing 3 months after the relevant vessels' delivery date plus a balloon payment of $14,730.

The facility contains financial covenants calculated on a consolidated basis providing for: a) minimum liquidity of $5.0 million; b) a leverage ratio, calculated as total debt to total capitalization of maximum 70%; c) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00; and d) working capital of not less than $1.0 million. After any vessel is delivered, the ratio of the fair market value of the secured vessels to outstanding debt should not be less than 125%. Prior to the newbuildings' delivery, the facility is secured by: a) first priority assignment of all rights under the relevant two shipbuilding contracts signed on June 15, 2007; b) first priority assignment of all rights under the relative refund guarantees; and

F-27

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

9. Long-term debt (continued):

c) corporate guarantee. Upon delivery of the newbuildings, the term loan facility will be secured by a) first priority mortgages over the vessels, b) first priority assignment of each vessel's insurances, c) Corporate guarantee, d) first priority assignment of vessels' charter agreements, and e) pledge over each of the vessels' earnings account and retention accounts. Furthermore, the Company is permitted to pay dividends so long as an event of default has not occurred and will not occur upon the payment of such dividend.

As further discussed in Note 18(c), the facility was amended on March 26, 2010.

(V) National Bank of Greece ("NBG"):

On November 20, 2007, the Company entered into a senior secured loan facility with NBG of up to the lesser of $33,176 or 75% of the fair market value of the vessel on delivery date to partly finance the construction and acquisition cost of the remaining one of the five Megacore vessels. The Company had drawn down an amount of $7,962 in order to partially finance the first two instalments under the shipbuilding contract paid in 2007. The outstanding balance of the loan was repaid on June 29, 2009.

On June 10, 2009, the Company, through Ice Navigation Inc., entered into a loan agreement with NBG for an amount of up to $33,176 to (i) repay the outstanding loan facility discussed above, and (ii) to partially finance the one of the five newbuilding vessels that the Company has novated to the above Joint Venture company (Note 5). Drawdowns under this loan are made in accordance with the payment dates of the instalments under the shipbuilding contracts, and bear interest at LIBOR plus a margin and commitment fees of 0.2% per annum on the undrawn portion of the loan. The loan is repayable in 40 quarterly instalments ($497.65 each), commencing three months after delivery of the vessel plus a balloon instalment equal to $13,270.

The facility contains financial covenants calculated on a consolidated basis providing for: a) minimum liquidity of $0.5 million per fleet vessel; b) a leverage ratio, calculated as total debt to total capitalization, of maximum 70%; and c) minimum interest coverage ratio on a four trailing quarter basis of 2.00:1.00. After the vessel has been delivered, the ratio of fair market value of the secured vessel to outstanding debt should not be less than 120%. The facility is secured, prior to the newbuilding's delivery by: a) first priority assignment of all rights under the relevant shipbuilding contract signed on June 15, 2007, b) first priority assignment of all rights under the relative refund guarantee, and c) corporate guarantee. Upon delivery of the newbuilding, the term loan facility is secured by a) first priority mortgages over the vessel, b) first priority assignment of the vessel's insurances, c) Corporate guarantee, d) first priority assignment of vessel's charter agreements, e) pledge over the vessel's earnings account and retention accounts and f) manager's undertaking. Furthermore, the Company is permitted to pay dividends so long as an event of default has not occurred and will not occur upon the payment of such dividend.

As further discussed in Note 18(b) the facility was amended on January 27, 2010.

(VI) Lloyds TSB Bank PLC ("Lloyds Bank"):

On May 28, 2008, the Company entered into a predelivery term loan facility with Lloyds Bank of up to $9,900 to finance the 90% of the advance payment for the acquisition of the two double hull Handymax product tankers, discussed in Note 5(b). On April 23, 2009, the predelivery loan facility for the vessel Omega Duke amounting to $4,950 was fully repaid.

As of December 31, 2009, the outstanding balance was $4,950, and relates to the second double hull Handymax product tanker that is currently under construction (Note 5(b)). The facility was repayable by a bullet payment upon delivery of the vessel, and would bear interest at a rate of LIBOR plus margin.

The term loan was secured by a) Memorandum of Agreement assignment; b) shares charge; and c) Corporate Guarantee. The term loan contained financial covenants calculated on a consolidated basis that required the Company to maintain: a) a ratio of EBITDA to interest payable of not less than 2.00:1.00; b) a ratio of total net debt to total net capitalization of not more than 0.70:1; c) working capital of not less than $1 million; d) liquidity of not less than (i) $500 per vessel if the average remaining time charter coverage in respect of both vessels was more than 1 year, (ii) $750 per vessel if the average remaining time charter coverage in respect of both vessels was more than 6 months and less or equal to 1 year; and (iii) 5% of the outstanding indebtedness if the average remaining time charter coverage in respect of both vessels was less or equal to 6 months, but in any event not less than $750 per vessel.

F-28

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

9. Long-term debt (continued):

Furthermore on May 28, 2008, the Company entered into a post delivery credit facility with Lloyds Bank to to repay, in accordance with the terms of the agreement, the predelivery term loan facility mentioned above, and fund the acquisition cost of the same two vessels in an amount of the lesser of $83,250 and 75% of the fair market value of the vessels on their delivery dates. Due to the fact that the one vessel, Omega Duke, was acquired in 2009 through Stone, a 50/50 joint venture, the postdelivery loan agreement was effective for the second vessel, Alpine Marina, that was under construction as of December 31, 2009 (Note 5(b) and Note 18(i)). As further discussed in Note 18 (i), subsequent to December 31, 2009 the Company took delivery of Alpine Marina through Onest, a 50/50 joint venture and as a result the post delivery financing described above was not drawn down by the Company.

The post delivery facility would be repayable in 40 quarterly installments of $582.3 plus a balloon payment of $18,333 together with the final installment. Repayment would commence three months after each vessel's delivery. Amounts under the facility would bear interest at LIBOR plus margin, and would contain financial covenants that required the Company to maintain: a) a ratio of EBITDA to interest payable of not less than 2:1; b) a ratio of total net debt to total net capitalization of not more than 0.70:1; c) working capital of not less than $1.0 million; d) a ratio of secured vessel's market value to outstanding loan of not less than 125%; and e) liquidity of not less than (i) $500 per vessel if the average remaining time charter coverage of the vessel was more than 1 year, (ii) $750 vessel if the average remaining time charter coverage in respect of the vessel was more than 6 months and less or equal to 1 year; and (iii) 5% of the outstanding indebtedness if the average remaining time charter coverage in respect of the vessel was less or equal to 6 months, but in any event not less than $750. The facility would be secured by a) first priority mortgage over the vessel, b) first priority assignments of accounts, c) first priority general assignment in relation to security vessels' earnings, insurances and employment, and d) a corporate guarantee. The Company was paying on a quarterly basis a commitment fee of 0.45% of the undrawn portion of the term loan facility, and an agency fee of $15 on an annual basis.

As further discussed in Note 18 (j), subsequent to year end, the outstanding balance of $4,950 was fully repaid.

The Company pays commitment fees on the undrawn portion of term loan facilities with the lending banks, as discussed above, which for the years 2009, 2008 and 2007 amounted to $524, $526 and $173, respectively and are included in "Interest and finance costs" in the accompanying consolidated statements of income. During 2009, the Company paid an upfront fee of $50 for entering into new credit facilities.

Total interest incurred on long-term debt for the years ended December 31, 2009, 2008 and 2007 amounted to $5,562, $12,859 and $17,958, respectively (Note 15) and is included in income/(loss) from discontinued operations and "Interest and finance costs" in the accompanying consolidated statements of income. The weighted average interest rate of the Company's bank loans during 2009, 2008 and 2007 was 2.22%, 4.47% and 6.54%, respectively.

As of December 31, 2009, the Company was in breach of certain of the financial covenants, primarily the security value maintenance in respect of the junior loan facility. As a result of this non compliance and of cross-default provisions, the lenders currently have the ability to call the debt due. The Company is currently under discussions with the lender to obtain waivers and restructure the debt. As of December 31, 2009 the Company has classified all debt as current. As of December 31, 2008, the Company was in compliance with all financial covenants as required by the loan agreements.

10. Financial instruments:

The carrying values of cash, accounts receivable and accounts payable are reasonable estimates of their fair values due to the short-term nature of those financial instruments. The fair values of long-term bank loans approximate the recorded values due to the variable interest rates payable. The fair value of the interest rate

F-29

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

10. Financial instruments (continued):

swaps is determined based on observable Level 2 inputs, as defined in ASC 820 "Fair Value Measurements and Disclosures" derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.

On March 27, 2008, the Company entered into two interest rate swap agreements with NIBC and BTMU in order to hedge its exposure to fluctuations in interest rate on its junior secured credit facility. The notional amount of each agreement is $21,250 and interest rate is fixed at 2.96% per annum. The effective date of the agreements is March 28, 2008 and they mature in March 2011.

On April 15, 2008, the Company entered into a restructuring agreement amending the initial rate collar option with HSH, which extended its maturity to April 4, 2011. On July 22, 2008, the agreement was amended and its maturity was extended up to April 14, 2011. Under the amended agreement, the Company has entered into a participation swap with gradual alignment factor. The notional amount of the swap is $150.0 million and the cap has been set at 5.1% with the floor being at 2.5% and the gradual aligned participation at maximum of 2.6% when the three months LIBOR drops below 2.5%.

On November 10, 2008, the Company entered into an interest rate swap agreement with Lloyds Bank in order to hedge its exposure to fluctuations in interest rate. The interest rate was fixed at 2.585% per annum and the notional amount was $100.0 million as of December 31, 2008. The effective date of the agreement was November 12, 2008, and its expiration date May 12, 2011. On April 23, 2009, the Company terminated this fixed rate swap agreement, and entered into (i) an interest rate swap with a notional amount of $ 66,250 at a fixed rate of 2.655% per annum effective since February 12, 2009 and (ii) an interest rate swap with a notional amount of $ 33,750 at a fixed rate of 2.655% per annum effective since April 24, 2009. The second swap was novated to Blizzard on April 24, 2009. Both swaps mature on May 12, 2011.

The Company entered into these financial instruments in order to partially hedge its exposure to fluctuations in interest rates on its loans. These financial instruments did not meet hedge accounting criteria. Accordingly, the changes in their fair values are reported in earnings.

As of and for the years ended December 31, 2009, 2008 and 2007, realized and unrealized gains and losses per category of derivative are analyzed as follows:

	Realized			Unrealized
	Gains/(Losses)			Gains/(Losses)			Total

January 1, 2007		-			(313	)		(313	)
Interest rate swap		45			(30	)		15
Rate collar option		-			(1,236	)		(1,236	)
Effect on 2007 earnings		45			(1,266	)		(1,221	)

December 31, 2007		-			(1,579	)		(1,579	)
Interest rate swaps		(16	)		(3,746	)		(3,762	)
Rate collar option/Participation swap		(901	)		(8,923	)		(9,824	)
Effect on 2008 earnings		(917	)		(12,669	)		(13,586	)

December 31, 2008		-			(14,248	)		(14,248	)
Interest rate swaps		(2,148	)		1,527			(621	)
Rate collar option/Participation swap		(6,340	)		2,812			(3,528	)
Effect on 2009 earnings		(8,488	)		4,339			(4,149	)

December 31, 2009		-			(9,909	)		(9,909	)

The above aggregate realized and unrealised losses from derivative instruments for 2009, 2008 and 2007 of $4,149 and $13,586 and $1,221 respectively, are reflected as "Loss on derivative instruments" in the accompanying consolidated statements of income. The fair values of the derivative contracts as of

F-30

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

10. Financial instruments (continued):

December 31, 2009 and 2008 are $9,909 and $14,248, respectively, and are included under "Derivative liability", current and non-current in the accompanying consolidated balance sheets.

The long term portion of the derivative liability has been classified as current as of December 31, 2009 since its related debt has also been classified as current, as discussed in Note 9.

11. Earnings/(loss) per Share:

All shares issued under the Company's Incentive Plan (including non-vested shares) are the Company's Class A common stock and have equal rights to vote and participate in dividends upon their vesting. The right of Class B stockholders to receive dividends were subordinated to the right of Class A stockholders as further discussed in Note 13(a). Following the payment of the dividend with respect to the fourth quarter 2008, all issued and outstanding subordinated Class B shares were converted into Class A common shares on a one-for-one basis. The Class A shares were issued on April 7, 2009. For the calculation of basic earnings per share, non-vested shares are not considered outstanding until the time-based vesting restriction has lapsed. Dividends declared during the year 2009, 2008 and 2007 for non-vested shares are deducted from the net income reported for purposes of calculating net income available to common shareholders for the computation of basic earnings per share.

For purposes of calculating diluted earnings per share, dividends declared during the period for non-vested shares are not deducted from the net income reported since such calculation assumes non-vested shares were fully vested from the grant date. The calculation of diluted earnings per share includes also the shares assumed to be issued relating to warrants (Note 7). The number of shares assumed to be issued was calculated based on the average market price over the period of 15 business days immediately proceeding December 31, 2007 and 2008, as per warrants terms. In 2009, the calculation of diluted earnings per share used the actual number of shares issued after the expiration of warrants agreement, and the effect was "time weighted". After April 13, 2009, the number of Class A shares issued under warrants agreements was included at the basic earnings per share calculation. The denominator of the diluted earnings per share calculation includes the incremental shares assumed issued under the treasury stock method weighted for the period the shares were outstanding.

The components of the calculation of the basic and diluted shares for the years ended December 31, 2009, 2008 and 2007 are presented below:

	2009		2008		2007
Class A common stock
Weighted average common shares outstanding, basic		14,825,002		12,057,717		12,010,000
Add: Dilutive effect of non-vested shares		228,800		52,502		29,661
Add: Dilutive effect of warrants		131,435		500,000		449,315
Weighted average common shares outstanding, diluted		15,185,237		12,610,219		12,488,976

Class B common stock
Weighted average common shares outstanding, basic and diluted		825,863		3,140,000		3,140,000

The components of the calculation of basic and diluted earnings/ (loss) per share for years ended December 31, 2009, 2008 and 2007 are presented below:

	2009
	Continuing operations			Discontinued operations		Total
Net income		5,722			-		5,722
- Less dividends paid for non vested shares		(102	)		-		(102	)
Net income available to common shareholders		5,620			-		5,620
- Less dividends paid
Class A shares		(6,082	)		-		(6,082	)
Class B shares		(1,570	)		-		(1,570	)
Undistributed earnings/ (loss)		(2,032	)		-		(2,032	)

F-31

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

11. Earnings/(loss) per Share (continued):

Allocation of undistributed earnings:
To Class A shares
- 15,811,535 shares at $0.13 per share in total	(2,032	)	-	(2,032	)
Undistributed earnings/ (loss)	(2,032	)	-	(2,032	)

	2008
	Continuing operations			Discontinued operations			Total
Net income		10,939			20			10,959
- Less dividends paid for non vested shares		(179	)		-			(179	)
Net income available to common shareholders		10,760			20			10,780
- Less dividends paid
Class A shares		(24,081	)		(44	)		(24,125	)
Class B shares		(6,268	)		(12	)		(6,280	)
Undistributed earnings / (loss)		(19,589	)		(36	)		(19,625	)
Allocation of undistributed earnings:
To Class A shares
- 12,071,594 shares at $1.29 per share in total		(15,546	)		(29	)		(15,575	)
To Class B shares
- 3,140,000 shares at $1.29 per share		(4,043	)		(7	)		(4,050	)
To all Class A and Class B shares, pro rata, as if they were a single class		-			-			-
Undistributed earnings/ (loss)		(19,589	)		(36	)		(19,625	)

	2007
	Continuing operations			Discontinued operations			Total
Net income/(loss)		14,886			(155	)		14,731
- Less dividends paid for non vested shares		(111	)		-			(111	)
Net income/(Loss) available to common shareholders		14,775			(155	)		14,620
- Less dividends paid
Class A shares		(24,020	)		-			(24,020	)
Class B shares		(6,280	)		-			(6,280	)
Undistributed earnings/ loss		(15,525	)		(155	)		(15,680	)
Allocation of undistributed earnings:
To Class A shares
- 12,010,000 shares at $1.035 per share in total		(12,307	)		(123	)		(12,430	)
To Class B shares
- 3,140,000 shares at $1.035 per share		(3,218	)		(32	)		(3,250	)
To all Class A and Class B shares, pro rata, as if they were a single class		-			-			-
Undistributed earnings/ (loss)		(15,525	)		(155	)		(15,680	)

Basic and diluted per share amounts:

	2009					2008						2007
Continuing Operations	Class A shares			Class B Shares		Class A shares			Class B shares			Class A Shares			Class B Shares
Basic
Distributed earnings		0.41			1.90		2.00			2.00			2.00			2.00
Undistributed earnings/ (loss)		(0.14	)		-		(1.29	)		(1.29	)		(1.02	)		(1.02	)
Total		0.27			1.90		0.71			0.71			0.98			0.98

F-32

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

11. Earnings/(loss) per Share (continued):

Diluted
Distributed earnings	0.41		1.90	1.92		2.00		1.93		2.00
Undistributed earnings/ (loss)	(0.14	)	-	(1.23	)	(1.29	)	(0.98	)	(1.02	)
Total	0.27		1.90	0.69		0.71		0.95		0.98

Discontinued Operations
Basic
Distributed earnings	-	-	-	-	-		-
Undistributed earnings/ (loss)	-	-	-	-	(0.01	)	(0.01	)
Total	-	-	-	-	(0.01	)	(0.01	)

Diluted
Distributed earnings	-	-	-	-	-		-
Undistributed earnings/ (loss)	-	-	-	-	(0.01	)	(0.01	)
Total	-	-	-	-	(0.01	)	(0.01	)

Continuing and Discontinued Operations
Basic
Distributed earnings	0.41		1.90	2.00		2.00		2.00		2.00
Undistributed earnings/ (loss)	(0.14	)	-	(1.29	)	(1.29	)	(1.03	)	(1.03	)
Total	0.27		1.90	0.71		0.71		0.97		0.97

Diluted
Distributed earnings	0.41		1.90	1.92		2.00		1.93		2.00
Undistributed earnings/ (loss)	(0.14	)	-	(1.23	)	(1.29	)	(0.99	)	(1.03	)
Total	0.27		1.90	0.69		0.71		0.94		0.97

12. Commitments and contingencies:

Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.

The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A minimum of up to $1 billion of the liabilities associated with the individual vessel actions, mainly for sea pollution, are covered by the Protection and Indemnity (P&I) Club insurance.

Contracts for vessels under construction: Refer to discussion made in Note 5(a), in connection with the Company's newbuildings under construction.

Contracts for vessels acquisitions: Refer to discussion made in Note 5(b) in connection with the Company's Memorandum of Agreement for the purchase of one newbuilding.

Corporate Guarantee to Blizzard: Refer to discussion made in Note 6 in connection with the corporate guarantee between the Company and Lloyds bank.

Operating leases: On June 29, 2005 and August 29, 2006, the Company entered into rental agreements, as amended on April 1, 2008, with a lessor affiliated with Target Marine S.A. to lease office space in Piraeus,

F-33

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

12. Commitments and contingencies (continued):

Greece. The termination date of agreements, following their amendment in April 2008 was February 28, 2009. The agreement was extended without written notice on a monthly basis up to December 20, 2009. Neither the President and Chief Executive Officer nor any other director or officer of the Company has any ownership interest in the lessor. The average monthly rental from January 1, 2009 until December 20, 2009 was Euro 4,962 (U.S. dollars 7,113 using the exchange rate of U.S. dollar/Euro at December 31, 2009). On October 20, 2009, the Company entered into rental agreement with unrelated parties. The monthly rental for the first five months commencing December 1, 2009 is Euro 5,000, and for the remaining period is Euro 14,000 ($U.S. dollars 7,168 and $U.S. dollars 20,070, respectively, using the exchange rate of U.S. dollar/Euro at December 31, 2009). Rental expense for the years ended December 31 2009, 2008 and 2007 amounted to $109, $79 and $65, respectively and is included in General and administrative expenses in the accompanying consolidated statements of income. The future minimum rentals payable under the above amended non-cancellable operating leases using the exchange rate of U.S. dollar/Euro at December 31, 2009 are approximately $189, $241, $221 for 2010, 2011 and 2012, respectively.

Employment agreements: The Company, effective April 6, 2006, has signed employment agreements with its executives, namely the Chief Executive Officer ("CEO"), the Chief Operating Officer ("COO") and the Chief Financial Officer ("CFO"), which were amended on March 20, 2008. Under specific termination clauses in the employment agreements, as amended, the Company is committed to pay to its executives a lump sum of $1,300 in total, in addition to their base salary until the end of the contract term, for early termination of employment within the term or in the event there is a material breach by the Company of the terms of the respective employment agreements. Such amount will be increased by approximately $600 in total in the case the duration of the agreements is extended prior to the occurrence of such events. Furthermore, in the event of a change of control (as defined in the Company's amended and restated articles of incorporation) during the term of the employment agreements, the Company is committed to pay its executives the equivalent of two or three years annual base salary, over and above the lump sum described above.

Periodic survey fees: The Company entered into agreements with unrelated parties for the performance of periodic surveys for its vessels. The agreements provide for a fixed survey fee payable periodically throughout the duration of the agreements, the last of which expires in February 2013. The future minimum period survey fees payable under the above agreements for the years 2010, 2011, 2012 and 2013 will be $112, $112, $87 and $3, respectively.

Software fees: On February 12, 2009, the Company entered into agreement with an unrelated party for software support on the vessels managed. The agreement includes payments of licence fees during 2010 and 2011. The future minimum payments for 2010 and 2011 using the exchange rate of U.S. dollar/Euro at December 31, 2009 will be approximately $ 114 and $81, respectively.

13. Stock:

(a)

Preferred stock and common stock : Under the amended and restated articles of incorporation, the Company's authorized capital stock consists of 25,000,000 shares of preferred stock, par value $0.01 per share and 100,000,000 shares of common stock, par value $0.01 per share, divided into 75,000,000 shares of Class A common stock and 25,000,000 shares of Class B (or "subordinated shares") common stock. Through the amended and restated articles of incorporation, the Company declared a reverse stock split and issued 1 Class A share for every 300 shares of the then outstanding common stock of 3,000,000 shares owned by its sole stockholder. Following this reverse stock split, the total issued and outstanding common stock of the Company was 10,000 Class A shares, par value $0.01 per share. Furthermore, on March 16, 2006, the Company declared a stock split in the form of stock dividend and issued 314 Class B shares for each of its 10,000 Class A shares. Following this stock dividend, 10,000 of Class A shares and 3,140,000 of Class B shares were issued and outstanding. All share and per share data included in the accompanying consolidated financial statements have been restated to reflect both the reverse stock split and the stock dividend. The holders of the common shares are entitled to one vote on all matters submitted to a vote of stockholders and to receive all dividends, if any. The right of Class B stockholders to receive dividends is subordinated to the right of Class A stockholders. If the company has not sufficient cash available to a quarterly dividend of $0.50 per share ("base dividend") to its Class A common stockholders, the right of Class B common stockholders to receive dividends

F-34

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

13. Stock (continued):

will be subordinated to the right of Class A common stockholders to receive dividends during the subordination period. The subordination period commenced upon the issuance of the shares of Class B common stock upon completion of the initial public offering discussed below and ended on the first day after the quarter ending December 31, 2008, subject to preconditions, as defined in the Company's amended and restated articles of incorporation. Following the payment of the dividend on March 9, 2009 with respect to the fourth quarter 2008, all issued and outstanding subordinated Class B shares were converted into Class A common shares on a one-for-one basis. The Class A shares were issued on April 7, 2009. In April 2006, the Company completed its initial public offering and issued 12,000,000 shares of common stock with par value $0.01 per share. The net proceeds of the public offering amounted to $186,711.

(b)

Additional paid-in capital: The amounts shown in the accompanying consolidated balance sheets, as additional paid-in capital, represent (i) payments made by the stockholders at various dates to finance vessel acquisitions in excess of the amounts of bank loans obtained, third party financing and advances for working capital purposes and (ii) payments made by the stockholders in excess of the par value of common stock purchased by them.

(c)	Dividends: During the years ended December 31, 2009 and 2008, the Company declared dividends of $7,755 and $30,584, respectively.

(d)

Warrants: On March 31, 2009, the Company received a Notice of Exercise of Warrants from the sellers of Omega Emmanuel and Omega Theodore (Note 7). By cashless exercise pursuant to the warrant agreement, 499,724 class A shares were issued on April 13, 2009. In accordance with the warrants' agreement the Company further paid $1.0 million ($0.5 million per vessel) in cash on April 3, 2009, as the average closing price of the Company's Class A share 15 business days immediately preceding the exercise date was US $3.63.

(e)

Equity Incentive plan : In February 2006, the Company adopted an equity incentive plan which entitles the Company to grant its officers, key employees and directors with options to acquire the Company's common stock or restricted stock. A total of 1.5 million shares of common stock are reserved for issuance under the plan. The plan is administered by the Company's Board of Directors. Under the terms of the plan, the Company's Board of Directors will be able to grant new stock and/or options exercisable at a price per share to be determined by the Company's Board of Directors. No stock and/or options will be exercisable until at least two years after the closing of the initial public offering discussed above. Any shares received on exercise of the options will not be able to be sold until three years after the closing of the initial public offering. All options will expire 10 years from the date of grant. The plan will expire 10 years from the closing of the initial public offering. As of December 31, 2006, no stock and/or options were granted under the plan. During the years ended December 31, 2007, 2008 and 2009, the Company granted restricted shares as follows:

On February 8, 2007, the Company's Board of Directors granted 54,138 restricted shares of Class A common stock to CEO, COO and CFO pursuant to its Stock Incentive Plan. The restricted shares shall become vested, and the restrictions set forth in this award shall lapse, with respect to: (i) 25% of the shares covered by this award on the first anniversary of the date of this award, (ii) 25% of the shares covered by this award on the second anniversary of the date of this award, (iii) 50% of the shares covered by this award on the third anniversary of the date of this award, all conditioned upon the grantee's continued service as an employee of the Company or as a director of the Company from the date of the award agreement through the applicable vesting date.

The grant date fair value of the restricted shares granted amounted to $828 and is being recognized rateably over the three year vesting period, of which $149, $265 and $400 was recognized as "General and administrative expenses" in the accompanying 2009, 2008 and 2007 consolidated statements of income. As of December 31, 2009, the total unrecognized cost related to restricted shares is $14 which is expected to be recognized until February 2010. The grant date fair value of the 13,535 shares that vested on February 8, 2009 was $207.

F-35

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

13. Stock (continued):

On July 26, 2007, the Company's Board of Directors granted 6,000 restricted shares of Class A common stock to all non executive directors pursuant to its Stock Incentive Plan. Such restricted shares vested on July 26, 2008. The grant date fair value of the restricted shares granted amounted to $131 and was recognized rateably over the one year vesting period, of which $74 and $57 was recognized as "General and administrative expenses" in the accompanying 2008 and 2007 consolidated statements of income, respectively.

On March 20, 2008, the Company's Board of Directors awarded to each executive officer to receive an amount equal to one year's salary, and had the option to receive up to $100 each in cash and the remaining balance in immediately vested Class A common stock. The number of immediately vested Class A common stock granted was 42,059. The grant date fair value of the restricted shares granted amounted to $599, and was recognized in full as "General and administrative expenses" in the accompanying 2008 consolidated statement of income.

On March 20, 2008, the Company's Board of Directors granted 53,357 restricted shares of Class A common stock to CEO, COO and CFO as well as 8,815 restricted shares (out of which 3,650 restricted shares were forfeited during 2008) of Class A common stock to key persons pursuant to its Stock Incentive Plan. The restricted shares shall become vested, and the restrictions set forth in this award shall lapse, with respect to: (i) 25% of the shares covered by this award on the first anniversary of the date of this award, (ii) 25% of the shares covered by this award on the second anniversary of the date of this award, (iii) 50% of the shares covered by this award on the third anniversary of the date of this award, all conditioned upon the grantee's continued service as an employee of the Company or as a director of the Company from the date of the award agreement through the applicable vesting date.

The grant date fair value of the restricted shares granted, net of forfeitures, amounted to $818 and is being recognized rateably over the three year vesting period, of which $280 and $348 recognized as "General and administrative expenses" in the accompanying 2009 and 2008 consolidated statements of income, respectively. As of December 31, 2009, the total unrecognized cost related to restricted shares is $190 which is expected to be recognized until March 2011. The grant date fair value of the 16,018 shares that became vested on March 20, 2009 was $208.

On July 31, 2008, the Company's Board of Directors granted 10,500 restricted shares of Class A common stock to all non executive directors pursuant to its Stock Incentive Plan. Such restricted shares vested on the first anniversary of the date of grant. The grant date fair value of the restricted shares granted amounted to $164, and is being recognized rateably over the one year vesting period, of which $95 and $69 is recognized as "General and administrative expenses" in the accompanying 2009 and 2008 consolidated statements of income, respectively.

On February 4, 2009, the Company granted 54,342 immediately vesting Class A common stock to its Officers pursuant to the Company's Stock Incentive Plan (the "Plan"). The grant date fair value of the restricted shares granted amounted to $387 and was recognized in full as "General and administrative expenses" in the accompanying 2009 consolidated statement of income.

On February 4, 2009, the Company granted restricted Class A common stock pursuant to the Company's Stock Incentive Plan (the "Plan"), to the Company's officers and key persons. The plan is administered by the Board of Directors and granted 108,685 restricted shares of Class A common stock to CEO, COO and CFO and 25,109 to key persons. The shares will be vested in three years of which 25% will become immediately vested on the first anniversary of the agreement, 25% will be become vested on the second anniversary of the agreement and the balance of 50% on the third anniversary of the agreement. In relation to the dividend payments which those shares are eligible to receive, same will be deposited to the existing Company's accounts, while the shares forfeited due to cessation of the employment, such dividends will remain in the Company's custody.

F-36

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

13. Stock (continued):

The grant date fair value of the restricted shares granted amounted to $923 and is being recognized rateably over the three year vesting period, of which $463 recognized as "General and administrative expenses" in the accompanying 2009 consolidated statement of income . As of December 31, 2009, the total unrecognized cost related to restricted shares is $460 which is expected to be recognized until February 2012.

On July 23, 2009, the Company's Board of Directors granted 21,000 restricted shares of Class A common stock to all non executive directors pursuant to its Stock Incentive Plan. Such restricted shares will vest on the first anniversary of the date of grant. The grant date fair value of the restricted shares granted amounted to $76 and is being recognized rateably over the one year vesting period, of which $34 recognized as "General and administrative expenses" in the accompanying 2009 consolidated statements of income. As of December 31, 2009, the total unrecognized cost related to restricted shares is $42 which is expected to be recognized until July 2010.

The Company follows the provisions of ASC 718 "Compensation - Stock Compensation" for purposes of accounting of such share-based payments. All share-based compensation provided to employees is recognized in accordance with the provisions of ASC 718 and is classified as "General and administrative expenses" in the accompanying 2009, 2008 and 2007 consolidated statements of income. The fair value of each share granted is equal to the market value of the Company's common stock as of the grant date.

The dividends declared on shares granted under the plan during the year ended 2009, 2008 and 2007 amounted to $180, $285 and $111 respectively and is recognized in the financial statements as a charge to retained earnings. In 2009, the amount of dividends paid on shares vested during the year was $170.

A summary of the status of the Company's vested and non-vested restricted shares as of December 31, 2007, 2008 and 2009 and movement during the year 2007, 2008 and 2009 is as follows:

	Number of non-vested restricted shares			Number of vested restricted shares		Grant date fair values per restricted share
As at December 31, 2006		-			-		-
Granted on February 8, 2007		54,138			-		$15.29
Granted on July 26, 2007		6,000			-		$21.84
Vested		-			-		-
Forfeited		-			-		-
As at December 31, 2007		60,138			-

Vested on February 8, 2008		(13,535	)		13,535		$15.29
Granted on March 20, 2008		104,231			-		$14.23
Vested on March 20, 2008		(42,059	)		42,059		$14.23
Vested on July 26, 2008		(6,000	)		6,000		$21.84
Granted on July 31, 2008		10,500			-		$15.65
Forfeited		(3,650	)		-		$14.23
As at December 31, 2008		109,625			61,594

Granted on February 4, 2009		188,136			-		$7.11
Granted on July 23, 2009		21,000			-		$3.64
Vested February 4, 2009		(54,342	)		54,342		$7.11
Vested February 8, 2009		(13,535	)		13,535		$15.29
Vested March 20, 2009		(14,631	)		14,631		$14.23
Vested July 31, 2009		(10,500	)		10,500		$15.65
Vested September 30, 2009		(7,210	)		7,210		$3.29
As at December 31, 2009		218,543			161,812

F-37

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

13. Stock (continued):

As of December 31, 2009 and 2008, the weighted average grant date fair value of non vested shares was $9.35 and $14.76, respectively.

14. Voyage and Vessel Operating Expenses:

Voyage and Vessel Operating Expenses are analyzed as follows:

Continuing operations
	2009		2008		2007
Voyage expenses
Commissions		821		917		864
Bunkers		362		38		22
Port Charges		299		-		-
Other		53		77		44
		1,535		1,032		930

Vessel Operating Expenses
Crew wages and related costs	10,153	9,468	7,314
Spares and consumables	3,055	2,774	2,394
Pre delivery expenses	-	-	778
Insurances	1,799	1,680	1,507
Inspection-Surveys-Safety	782	642	644
Repairs and maintenance	536	241	144
Other	935	681	340
	17,260	15,486	13,121

Discontinued operations
	2009		2008			2007

Voyage expenses		-		-			8

Vessel Operating Expenses/(income)		-		(20	)		135

15. Interest and finance costs:

Interest and finance costs are analyzed as follows:

	2009			2008			2007
Continuing operations
Interest expense		6,160			14,516			18,464
Less: Interest capitalized		(598	)		(1,657	)		(590	)
Interest expense, net		5,562			12,859			17,874
Bank credit facility commitment fees		524			526			173
Amortization and write-off of financing costs		782			667			307
Other finance costs		313			333			225
		7,181			14,385			18,579

Discontinued operations
Interest on bank credit facilities	-	-	84
Amortization and write-off of financing costs	-	-	41
Other finance costs	-	-	4
	-	-	129

F-38

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

16. Income taxes:

Under the laws of the Republic of Marshall Islands the companies are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in vessel operating expenses in the accompanying consolidated statement of income.

Pursuant to the Internal Revenue Code of the United States (the "Code"), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the company operating the ships meets both of the following requirements, (a) the Company is organized in a foreign country that grants an equivalent exemption to corporations organized in the United States, and (b) either (i) more than 50% of the value of the Company's stock is owned, directly or indirectly, by individuals who are "residents" of the Company's country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States (50% Ownership Test) or (ii) the Company's stock is "primarily and regularly traded on an established securities market" in its country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States (Publicly-Traded Test). Under the regulations, the Company's stock will be considered to be "regularly traded" on an established securities market if (i) one or more classes of its stock representing 50 percent or more of its outstanding shares, by voting power and value, is listed on the market and is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year; and (ii) the aggregate number of shares of the Company's stock traded during the taxable year is at least 10% of the average number of shares of the stock outstanding during the taxable year. Notwithstanding the foregoing, the regulations provide, in pertinent part, that each class of the Company's stock will not be considered to be "regularly traded" on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively, under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of the Company's outstanding stock ("5 Percent Override Rule").

In the event the 5 Percent Override Rule is triggered, the regulations provide that the 5 Percent Override Rule will nevertheless not apply if the Company can establish that among the closely-held group of 5% Stockholders, there are sufficient 5% Stockholders that are considered to be "qualified stockholders" for purposes of Section 883 to preclude non-qualified 5% Stockholders in the closely-held group from owning 50% or more of each class of the Company's stock for more than half the number of days during the taxable year.

Treasury regulations under the Code were promulgated in final form in August 2003. These regulations apply to taxable years beginning after September 24, 2004. As a result, such regulations are effective for calendar year taxpayers, like the Company, beginning with the calendar year 2005. All the Company's ship-operating subsidiaries currently satisfy the 50% Ownership Test. In addition, following the completion of the public offering of the Company's shares (Note 1), the management of the Company believes that by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like the Company, the 50% Ownership Test can also be satisfied based on the trading volume and the widely-held ownership of the Company's shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside the Company's control. Based on its U.S. source Shipping Income for 2009, 2008 and 2007, the Company would be subject to U.S. federal income tax of approximately $0.4 million per year in the absence of an exemption under Section 883.

17. Segment information:

The table below presents information about the Company's reportable segments as of December 31, 2009, 2008 and 2007 and for the years ended December 31, 2009, 2008 and 2007. The accounting policies followed in the preparation of the reportable segments are the same with those followed in the preparation of the Company's consolidated financial statements. All intra-segment balances/ transactions are eliminated in the preparation of the reportable segments.

F-39

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

17. Segment information (continued):

	Product tankers
2007	Panamax tankers		Handymax tankers		Dry bulk carriers			Other			Total
Revenues from external customers		54,508		15,382		151			-			70,041
Interest expense and finance costs		15,233		2,777		129			569			18,708
Interest income		118		4		-			1,699			1,821
Depreciation and amortization		13,557		3,940		-			60			17,557
Change in fair value of warrants		1,071		-		-			-			1,071
Loss on derivative instruments		-		-		-			(1,221	)		(1,221	)
Segment income/ (loss)		15,518		4,866		(155	)		(5,498	)		14,731
Total assets		400,360		107,428		22			14,675			522,485

	Product tankers
2008	Panamax tankers		Handymax tankers		Dry bulk carriers		Other			Total
Revenues from external customers		62,214		15,499		-		-			77,713
Interest expense and finance costs		11,096		3,177		-		112			14,385
Interest income		10		220		-		481			711
Depreciation and amortization		14,883		3,939		-		46			18,868
Change in fair value of warrants		3,156		-		-		-			3,156
Loss on derivative instruments		-		-		-		(13,586	)		(13,586	)
Segment income/ (loss)		25,790		4,453		20		(19,304	)		10,959
Total assets		387,501		115,475		22		22,298			525,296

	Product tankers
2009	Panamax tankers		Handymax tankers			Dry bulk carriers		Other			Total
Revenues from external customers		52,273		12,183			-		-			64,456
Interest expense and finance costs		5,195		1,950			-		36			7,181
Interest income		16		35			-		87			138
Depreciation and amortization		15,192		3,939			-		42			19,173
Loss from Joint Venture companies		-		-			-		278			278
Change in fair value of warrants		1,127		-			-		-			1,127
Loss on derivative instruments		-		-			-		(4,149	)		(4,149	)
Loss on termination of purchase agreements		-		-			-		3,000			3,000
Segment income/ (loss)		17,690		(1,454	)		-		(10,514	)		5,722
Investments in Joint Ventures		-		-			-		5,347			5,347
Total assets		385,081		127,693			22		14,637			527,433

The dry bulk carriers segment was discontinued effective September 2006. For the year ended December 31, 2009, the segment of panamax tankers includes the advances, interest expense and finance cost and interest income of the four panamax new building vessels and the segment of handymax tankers includes the advances, interest expense and finance cost and interest income of the two handymax new building vessels, and the vessel

F-40

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

17. Segment information (continued):

Omega Duke up to its delivery (Note 5). Segment information for the years ended December 31, 2008 and 2007 has been adjusted according to the amended shipbuilding contracts as discusses in Note 5(a).

18. Subsequent events:

Cash sweep: According to the cash sweep clause of the BTMU and NIBC junior facility, discussed in Note 9, in the event that at any time during the security period the fair market value of the secured vessels is less than 130% of the aggregate of the senior and junior credit facilities, the Company shall prepay part of the facility. On January 19, 2010, an amount of $1,991 was prepaid under the cash sweep clause of the junior facility.

Amendment of the loan facility with National Bank of Greece: On January 27, 2010, the Company, through Ice Navigation Inc., has entered into a term sheet to amend the loan agreement with NBG dated June 10, 2009 to take into account the amendments of the shipbuilding contract to a double hull product tanker of 74,000 dwt with expected delivery in January 2011. The purpose of the facility is to provide predelivery and postdelivery financing for the acquisition of a double hull product tanker of 74,000 dwt with expected delivery in January 2011. The total amount of the facility shall not exceed the lower of a) $36,330 and b) 70% of the market value of the vessel on delivery. The facility shall be repaid by 40 equal, consecutive, quarterly instalments of $545 each plus a balloon payment of $14,530. During the post delivery period, the facility will be secured by the Company's corporate guarantee for the 50% of the outstanding debt and Glencore for the remaining 50% of the outstanding debt. All other terms of the loan agreement dated June 10, 2009 remain unchanged. The amended loan agreement was signed on July 2, 2010.

Amendment of the loan facility with Bank of Scotland: On March 26, 2010, the Company, through Fire Navigation Inc. and Hurricane Navigation Inc., has entered into a supplemental agreement to amend the loan agreement with Bank of Scotland dated June 29, 2009 to (i) increase the amount of the postdelivery financing for the acquisition of Megacore Honami by raising a top up loan, and (ii) to amend the predelivery and postdelivery financing to take into account the amendment of the shipbuilding contract to a double hull product tanker of 74,000 dwt with expected delivery in October 2010.

In respect of the vessel Megacore Honami, the total financing amounts to $28,167 that consists of $22,875 of senior loan facility and $5,292 of top up loan facility. The loan was drawn down on vessels' delivery (Note 18(d)). The top up loan facility shall be repayable in 12 equal consecutive quarterly. According to the amended terms the ratio of fair market value of the secured vessels to outstanding senior debt should not be less than to 125% or 115% in case that the top up loan is included.

In respect to the double hull product tanker of 74,000 dwt with expected delivery in October 2010, the amount of the loan was amended in order to take into consideration the contact price of the amended shipbuilding contract as well as the increased amounts of the predelivery instalments (Note 5(a)). As a result the loan amount should not exceed the lesser of (i) $38,925 and (ii) 75% of the fair market value of the vessel on delivery date.

d)	Delivery of Megacore Honami: On February 25, 2010, the vessel Megacore Honami was delivered to the Company, through Fire Navigation Inc. The acquisition of the vessel was financed by the loan facility with the Bank of Scotland described in Notes 9 and 18(c) and own equity.

Interest rate swap with the Bank of Scotland: On February 25, 2010 the Company, through Fire Navigation Inc. and Hurricane Navigation Inc. has entered into a fixed rate swap agreement with the Bank of Scotland to hedge its exposure to fluctuations in interest rate. The interest rate was fixed at 0.59% for one year and the notional amount is $16,649. The effective date of the agreement was March 9, 2010. The swap matures on March 9, 2011.

F-41

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

18. Subsequent events (continued):

New time charter agreement of the vessel Omega Queen: On March 23, 2010 the vessel Omega Queen has entered into commercial agreement with ST Shipping on an evergreen basis with two months termination notice. According to the commercial agreement the amount of revenues is calculated based on the monthly average time charter equivalent of a pool of ten similar vessels

g)	Change of technical manager: Effective March 25, 2010 and May 8, 2010, Omega Management is the technical manager of Omega Emmanuel and Omega Theodore respectively.

h)	Delivery of the vessel Megacore Hibiscus: On May 6, 2010, the vessel Megacore Hibiscus was delivered to the Megacore Joint Venture. Omega Management Inc. provides technical management and financial services to Megacore Hibiscus for an annual fee of $183.

Amendments to JV agreement and settlement agreement for the second vessel that the Company has agreed to purchase on May 9, 2008 (Note 5 (b)) : On June 2, 2010, the Company cancelled the Memorandum of Agreement and the time charter agreement discussed in Note (5(b)), by paying a settlement fee of $3.0 million, and as a result both parties were released from further liabilities regarding the two agreements. On June 2, 2010, the Company has entered into Addendum 2 to the joint venture agreement dated April 8, 2009, as further amended by Addendum 1. According to the Addendum 2 the equity required to be contributed by the Company is $7,275.

Tornado has entered into an MOA agreement for the acquisition of the Alpine Marina, a handymax product tanker for a consideration of $45,000. The Alpine Marina was delivered on July 8, 2010 and it was financed by a loan facility with Lloyds described below, a top up facility described below, and equal equity contributions of the joint venture partners of $7,275 each.

On April 24, 2009, Blizzard and Tornado have entered into a senior secured loan facility with Lloyds bank. The facility was divided in two tranches. The first advance amounted to $33,750 and it was used for the financing of the acquisition of Omega Duke. The second advance amounted to $28,500 and it was used for the financing of the acquisition of the vessel Alpine Marina. The loan is repayable in 28 equal quarterly instalments and a balloon payment payable together with the 28 th instalment. The facility bears interest at LIBOR plus margin, commitment fees of 0.7% and annual agency fees of $15. The facility is secured by: (i) first priority mortgage, (ii) first priority assignment of insurances, (iii) first priority assignment of earnings of the vessel plus any time charter exceeding 12 months, (iv) first priority pledge over vessel earnings accounts, (v) first priority pledge over the shares of Stone, Topley and Omnicrom, (vi) Omnicrom's guarantee for the 50% of the loan and Omega's guarantee for 100% of Omnicrom's obligations. The facility contains financial covenants calculated on Omega's and Glencore's consolidated financial statements. Also a ratio of the secured vessel to outstanding net debt of the secured vessel shall be in excess of 125%. The bank has provided a waiver of the security value coverage up to and including the 2 nd anniversary of the delivery date of each vessel. After the drawdown of the second advance the notional amount of the Company's swap with Lloyds, amounting to $66,250 as of December 31, 2009, was decreased by $28,500 because it was novated to Tornado. The swap matures on May 12, 2011 and it has a fixed rate of $2.655%.

Glencore has provided a top up loan facility of $1,950. The facility will bear interest at LIBOR plus margin and will be repaid from the available net cash flow of Tornado. The ratio of the fair market value of the vessel to the loan outstanding, including the senior and the top up facility, shall be in excess of 115%. No dividends can be declared or paid until the repayment of the facility. The Company and Topley will provide 50/50 guarantee of the obligations of the borrower.

j)	Loan repayment: On June 2, 2010, part of the pre-delivery loan with Lloyds bank, discussed in Note 9 (VI) that amounted to $4,950 was fully repaid.

k)	New fixed rate time charter agreement of Omega King: On June 9, 2010, the vessel Omega King entered into a 1 year time charter agreement with an unrelated third party at a daily rate of $16.

F-42

OMEGA NAVIGATION ENTERPRISES, INC.

Notes to consolidated financial statements December 31, 2009

(Expressed in thousands of U.S. Dollars - except share and per share data, unless otherwise stated)

18. Subsequent events (continued):

Seller's credit for the acquisition of Hull 2288 : On June 25, 2010 the Company paid to Hyundai Mipo Dockyard the amount of $8,611 relating to the 4 th instalment for the acquisition of Hull 2288. The total amount of the instalment due was $10,763. The payment was financed by the loan facility with the Bank of Scotland described in Note 18(c) above. The remaining amount of $2,152 bears interest at 6% and is payable within a day after the delivery of the vessel.

Amended Megacore joint venture agreement : On June 30, 2010 the Company has entered into an agreement to amend and restate the Megacore joint venture agreement to take into account amended shipbuilding contracts signed in 2009 (Note 5(a)). Also there were additions at the clauses relating to the total loss of vessels, sale of vessels and termination of the joint venture agreement before or after the delivery of the vessels that are currently under construction.

F-43

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