STEALTHGAS INC.
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                                                           PAGES




Consolidated Balance Sheets -December 31, 2004 and September 30, 2005                                          2

Consolidated Statements of Income for the three-month period                                                   3
    ended September 30, 2005 and nine-month period ended September 30, 2005

Consolidated Statement of Changes in Stockholders' Equity for the period ended December 31, 2004               4
   and nine-month period ended September 30, 2005

Consolidated Statements of Cash Flows for the                                                                  5
    nine-month period ended September 30, 2005

Notes to the Consolidated Financial Statements                                                              6-19









STEALTHGAS INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND SEPTEMBER 30, 2005 (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)


------------------------------------------------------------------------------------------------------------------------

                                                                             DECEMBER 31,    SEPTEMBER 30,
                                                                                 2004            2005
                                                            NOTE                              (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------

ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                 $        --      $ 15,280,897
  Receivables from related party                              3               1,075,559                --
  Trade receivables, net                                                         19,623                --
  Inventories                                                 4                 116,291           116,055
  Advances and prepayments                                                        9,130         1,022,767
  Deferred offering costs                                                            --           620,338
------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                         $1,220,603       $17,040,057
------------------------------------------------------------------------------------------------------------------------

NON CURRENT ASSETS
  Advances for vessels acquisitions                           5               1,905,282                --
  Vessels, net                                                6              29,385,182        79,896,106
  Deferred finance charges                                                           --           147,188
------------------------------------------------------------------------------------------------------------------------
TOTAL NON CURRENT ASSETS                                                    $31,290,464      $ 80,043,294
------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                $32,511,067      $ 97,083,351
------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Payable to related parties                                  3                      --         1,853,755
  Trade accounts payable                                                        410,398           551,133
  Other accrued liabilities                                   7                 286,125         1,284,935
  Deferred income                                             8                 476,413         1,373,793
  Current portion of long-term debt                           9                      --         5,427,000
------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                    $1,172,936       $10,490,616

NON CURRENT LIABILITIES
 Derivative liability                                        10                      --            74,000
  Long-term debt                                              9                      --        43,635,750
------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                            $1,172,936       $54,200,366
------------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
  Capital stock 6,000,000 shares authorized and
     outstanding with a par value of $.01                    11                  60,000            60,000
  Additional paid-in capital                                 12              31,018,456        44,890,278
  Retained earnings/(accumulated deficit)                                       259,675       (2,067,293)
------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                  $31,338,131       $42,882,985
------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $32,511,067       $97,083,351
------------------------------------------------------------------------------------------------------------------------


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





STEALTHGAS INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 AND NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 2005 (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)


-----------------------------------------------------------------------------------------------------------------------------
                                                                    THREE-MONTH PERIOD ENDED      NINE-MONTH PERIOD ENDED
                                                                       SEPTEMBER 30, 2005            SEPTEMBER 30, 2005
                                                            NOTE          (UNAUDITED)                    (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------

REVENUES
              Voyage revenues                                                        $6,894,976                 $16,487,581
----------------------------------------------------------------------------------------------------------------------------

EXPENSES
              Voyage expenses                                14                         248,850                     632,300
              Vessels' operating expenses                    14                       1,498,313                   3,934,084
              Management fees                                 3                         249,780                     638,395
              General and administrative expenses            12                         113,380                     347,660
              Depreciation                                    6                         998,515                   2,332,734
----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                                                       $3,108,838                  $7,885,173
----------------------------------------------------------------------------------------------------------------------------

INCOME FROM OPERATIONS                                                               $3,786,138                  $8,602,408
----------------------------------------------------------------------------------------------------------------------------

OTHER REVENUES AND (EXPENSE)
              Interest and finance costs, net                                         (599,188)                 (1,161,345)
              Income/Loss on derivatives                                                315,300                    (74,000)
              Interest income                                                           128,137                     317,370
              Foreign exchange loss                                                     (6,854)                    (11,401)
----------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES, NET                                                                  $(162,605)                  $(929,376)
----------------------------------------------------------------------------------------------------------------------------


NET INCOME                                                                           $3,623,533                  $7,673,032
----------------------------------------------------------------------------------------------------------------------------

EARNINGS PER SHARE, BASIC AND DILUTED                        13                           $0.60                       $1.28
                                                                  ==========================================================

WEIGHTED AVERAGE NUMBER OF SHARES, OUTSTANDING               13                       6,000,000                   6,000,000
                                                                  ==========================================================













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





STEALTHGAS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)


----------------------------------------------------------------------------------------------------------------
                                                                                    NINE-MONTH PERIOD ENDED
                                                                    NOTE         SEPTEMBER 30, 2005 (UNAUDITED)
----------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
 Net income for the period                                                                           $7,673,032

ITEMS INCLUDED IN NET INCOME NOT AFFECTING CASH FLOWS:
 Depreciation and amortization                                                                        2,347,546
 Non cash general and administrative expenses                        12                                 243,750
 Loss on derivative                                                                                      74,000

CHANGES IN OPERATING ASSETS AND LIABILITIES:
 Decrease in receivable from related party                                                            1,075,559
 Decrease in trade receivables                                                                           19,623
 Decrease in inventories                                                                                    236
 (Increase) in advances and prepayments                                                             (1,013,637)
 Increase in payable to related parties                                                               1,853,755
 Increase in trade accounts payable                                                                     140,735
 Increase in other accrued liabilities                                                                  378,472
 Increase in deferred income                                                                            897,380
----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                           $13,690,451
----------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Advances for vessels acquisitions                                                                           --
 Acquisition of vessels                                                                            (50,938,376)
----------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                             $(50,938,376)
----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Capital stock                                                                                               --
 Additional paid-in capital                                                                          13,628,072
 Dividends paid                                                                                    (10,000,000)
 Deferred finance charges                                                                             (162,000)
 Loan repayment                                                                                     (4,937,250)
 Proceeds from long-term debt                                                                        54,000,000
----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                           $52,528,822
----------------------------------------------------------------------------------------------------------------
Net Increase in cash and cash equivalents                                                            15,280,897
Cash and cash equivalents at beginning of period                                                             --
----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                          $15,280,897
----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
 Cash paid during the period for: Interest payments                                                  $1,022,532
                                                                                 ===============================
 Disclosure of non-cash items: Deferred offering costs                                                 $620,338
                                                                                 ===============================


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





STEALTHGAS INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED DECEMBER 31, 2004 AND THE NINE-MONTH PERIOD ENDED SEPTEMBER
30, 2005 (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)


-------------------------------------------------------------------------------------------------------------------------
                                                 CAPITAL STOCK
                                                   NUMBER OF                  ADDITIONAL
                                 COMPREHENSIVE       SHARES      AMOUNT     PAID-IN CAPITAL    RETAINED
                                    INCOME         (NOTE 11)    (NOTE 11)      (NOTE 12)       EARNINGS         TOTAL
-------------------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2004                         6,000,000     $60,000      $31,018,456        $259,675     $31,338,131

Additional Paid-in Capital                 --             --       --          13,628,072              --     $13,628,072
Paid-in capital/contributed
Services                                   --             --       --             243,750              --        $243,750

Dividends paid                                                                               (10,000,000)   $(10,000,000)
Net income for the period           7,673,032             --       --                  --       7,673,032      $7,673,032
                               ---------------

Comprehensive income                7,673,032             --       --                  --              --              --

BALANCE, SEPTEMBER 30, 2005                        6,000,000     $60,000      $44,890,278    $(2,067,293)     $42,882,985
-------------------------------------------------------------------------------------------------------------------------









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





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


1.       BASIS OF PRESENTATION AND GENERAL INFORMATION

The accompanying consolidated financial statements include the accounts of
StealthGas Inc. and its wholly owned subsidiaries (collectively, the "Company")
which, as of September 30, 2005 owned a fleet of nine liquefied petroleum gas
carriers providing worldwide marine transportation services under long, medium
or short-term charters. StealthGas Inc. was formed under the laws of Marshall
Islands on December 22, 2004. As of December 31, 2004, under the direction of
Stealth Maritime Corporation S.A. the shareholders of the vessel owning
companies contributed all of their issued and outstanding shares of common stock
to StealthGas Inc. and StealthGas Inc. became the sole owner of all the
outstanding shares of all the subsidiaries mentioned in note 1a. below. The
transaction described above constitutes a reorganization of companies under
common control, and has been accounted for in a manner similar to a pooling of
interests, as each ship-owning company was, indirectly, wholly owned by and
under the common control of the Vafias Group prior to the transfer of ownership
of the companies to StealthGas Inc. Accordingly, the consolidated financial
statements of the Company have been presented as if the ship-owning companies
were consolidated subsidiaries of the Company as of the dates indicated and
using the combined historical carrying costs of the assets and the liabilities
of the ship-owning companies listed below:

(a)      SHIP-OWNING COMPANIES WITH VESSELS IN OPERATION:



         NAME OF COMPANY            VESSEL NAME            ACQUISITION DATE       D.W.T.
         ---------------------------------------------------------------------------------

         VCM Trading Ltd.           Gas Prophet            October 12, 2004       2,999.28
         LPGONE Ltd.                Gas Tiny               October 29, 2004       1,679.96
         Geneve Butane Inc          Gas Courchevel         November 24, 2004      4,380.00
         Matrix Gas Trading Ltd.    Gas Shanghai           December 07, 2004      3,044.64
         Pacific Gases Ltd.         Gas Emperor            February 02, 2005      5,599.44
         Semichlaus Exports Ltd.    Gas Ice                April 07, 2005         3,590.00
         Ventspils Gases Ltd.       Gas Arctic             April 07, 2005         3,590.00
         Industrial Materials Inc.  Birgit Kosan           April 11, 2005         5,589.76
         Aracruz Trading Ltd.       Gas Amazon             May 20, 2005           5,105.00

         At September 30, 2005, five of the above vessels were flying the
         Marshall Islands flag, two were flying the Malta flag, one the Panama
         flag and one the Cyprus flag.

(b)      SHIP-OWNING COMPANIES INCORPORATED FOR VESSELS TO BE ACQUIRED:

         Baroness Holdings Inc.
         Stellar Management Limited
         Iceland Limited
         Fine Tuning Inc.
         Northern Yield Shipping Limited
         OxfordGas Ltd.
         Ocean Blue Limited
         Balcan Profit Limited

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





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


2.       SIGNIFICANT ACCOUNTING POLICIES

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

INTERIM FINANCIAL INFORMATION: The interim financial statements for the
nine-month period ended September 30, 2005 have been prepared by the Company,
without audit, and include, in the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
interim period results. The results of operations for the nine-month period
ended September 30, 2005 are not necessarily indicative of the results to be
expected for the full year.

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

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

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





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


2.       SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

TRADE RECEIVABLES: The amount shown as trade receivables includes estimated
recoveries from charterers for hire, freight and demurrage billings, net of
allowance for doubtful accounts. During 2004 and for the nine-month period ended
September 30, 2005, all potentially un-collectible accounts are assessed
individually for purposes of determining the appropriate provision for doubtful
accounts. No provision for doubtful accounts is required at December 31, 2004
and September 30, 2005.

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

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

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

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

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

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

ACCOUNTING FOR SPECIAL SURVEY AND DRY-DOCKING COSTS: Special survey and
dry-docking costs and all non-capitalizable repair and maintenance expenses are
expensed in the year incurred.







STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


2.       SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

FINANCING COSTS: Fees incurred for obtaining new loans or refinancing existing
ones are deferred and amortized to interest expense over the life of the related
debt using the effective interest method. (The amortization of financing costs
amounted to $14,812 for the nine-month period ended September 30, 2005 ($4,070
for the three-month period ended September 30, 2005) is included in Interest and
finance costs, net in the accompanying consolidated income statements).
Unamortized fees relating to loans repaid or refinanced are expensed in the
period the repayment or refinancing is made.

PENSION AND RETIREMENT BENEFIT OBLIGATIONS - CREW: The ship-owning companies
included in the consolidation employ the crew on board under short-term
contracts (usually up to seven months) and accordingly, they are not liable for
any pension or any post-retirement benefits.

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

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

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

EARNINGS PER SHARE: Basic earnings per share are computed by dividing net income
by the weighted average number of common shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if
securities or other contracts to issue common stock were exercised. The Company
had no dilutive securities outstanding at December 31, 2004 and September 30,
2005.

INCOME TAXES: The Company is not liable for any income tax on its net income
derived from shipping operations because the countries in which the subsidiaries
ship-owning companies are incorporated do net levy tax on income, but rather a
tonnage tax on the vessel.
(Note 15)

DERIVATIVES: The SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" as amended establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value, with changes in the
derivatives' fair value recognized currently in earnings unless specific hedge
accounting criteria are met. The Company had no derivatives as of December 31,
2004. At September 30, 2005, there was an interest rate swap outstanding with an
approximate fair value of $74,000 (liability). Changes in the estimated fair
value of that instrument are recognized in the statement of income.





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


2.       SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

RECENT ACCOUNTING PRONOUNCEMENTS: On January 17, 2003, the Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). Such Interpretation addresses the
consolidation of variable interest entities ("VIEs"), including special purpose
entities ("SPEs"), that are not controlled through voting interests or in which
the equity investors do not bear the residual economic risks and rewards. The
provisions of FIN 46 were effective immediately for transactions entered into by
the Company subsequent to January 31, 2003 and became effective for all other
transactions as of July 1, 2003. However, in October 2003, the FASB permitted
companies to defer the July 1, 2003 effective date to December 31, 2003, in
whole or in part. On December 24, 2003, the FASB issued a complete replacement
of FIN 46 ("FIN 46R"), which clarified certain complexities of FIN 46 and
generally requires adoption no later than December 31, 2003 for entities that
were considered SPEs under previous guidance, and no later than March 31, 2004
for all other entities. The adoption of FIN46R did not have a material impact on
the Company's financial statements.

In December 2004, the FASB issued SFAS No. 123R that will require compensation
costs related to share-based payment transactions to be recognized in the
financial statements. With limited exceptions, the amount of compensation cost
will be measured based on the grant-date fair value of the equity or liability
instruments issued. In addition, liability awards will be remeasured each
reporting period. Compensation cost will be recognized over the period that an
employee provides service in exchange for the award. SFAS 123R replaces SFAS No.
123, "Accounting for Stock-Based Compensation", and supersedes APB 25. This
Statement will be effective as of the beginning of the first interim or annual
reporting period that begins after June 15, 2005. The adoption of SFAS 123R did
not have an impact on the company's financial statement

Entities that used the fair-value-based method for either recognition or
disclosure under SFAS No. 123 will apply this revised Statement using a modified
version of prospective application. Under this transition method, for the
portion of outstanding awards for which the requisite service has not yet been
rendered, compensation cost is recognized on or after required effective date
based on the grant-date fair value of those awards calculated under SFAS No. 123
for either recognition or pro forma disclosures.

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

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





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


3.       TRANSACTIONS WITH RELATED PARTY

The Manager provides the vessels with a wide range of shipping services such as
chartering, technical support and maintenance, insurance, consulting, financial
and accounting services, for a fixed daily fee of $390 or $125 if the vessel is
on bareboat charter and a brokerage commission of 1.25% on freight, hire and
demurrage per vessel. For the nine-month period ended September 30, 2005, a
total amount of $206,035 ($86,128 for the three-month period ended September 30,
2005) was included as voyage expenses and $638,395 ($249,780 for the three-month
period ended September 30, 2005) as operating expenses.

The Manager also acts as a sales and purchase broker of the Company in exchange
for a commission fee equal to 1% of the gross sale or purchase price of vessels
or companies. For the period ended December 31, 2004, an amount of $292,750
($522,500 for the nine-month period ended September 30, 2005) was capitalized to
the cost of the vessels.

The Manager has subcontracted the technical management of the vessels to two
unaffiliated ship-management companies, V.Ships Limited ("V.Ships") and Tesma
Singapore Pte Ltd ("Tesma"). V.Ships and Tesma provide technical management to
the Company's vessels for a fixed annual fee per vessel. Such fees for the
nine-month period ended September 30, 2005, amounted to $382,076 ($143,669 for
the three-month period ended September 30, 2005) and are included in the total
management fee of $638,395 ($249,780 for the three-month period ended September
30, 2005).

The Manager maintained and handled the cash generated from the vessels'
operations up to March 21, 2005. Subsequently, bank accounts were opened in the
name of StealthGas Inc. for all the vessels owned. The current account balance
with the Manager at December 31, 2004 was a receivable of $1,075,559 (a payable
of $1,101,158 for the nine-month period ended September 30, 2005) which
represents revenues collected less payments made by the Manager on behalf of the
ship-owning companies.

The Company has a balance payable of $752,597 at September 30, 2005 to Gaz De
Brazil Inc., a company under common control which is included in amounts due to
related party. The Company has collected cash from time charter, on behalf of
Gaz De Brazil Inc.


4.       INVENTORIES

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

                            PERIOD ENDED DECEMBER       NINE-MONTH PERIOD ENDED
                                         31, 2004            SEPTEMBER 30, 2005
-------------------------------------------------------------------------------
Bunkers                                    52,073                            --
Lubricants                                 64,218                       116,055
-------------------------------------------------------------------------------
TOTAL                                     116,291                       116,055
-------------------------------------------------------------------------------





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


5.       ADVANCES FOR VESSELS ACQUISITIONS

The amount shown in the accompanying consolidated balance sheets, relating to
advances for vessels acquisitions of $1,905,282 at December 31, 2004, was
transferred to vessels in the period ended September 30, 2005 as the vessels
were acquired.


6.       VESSELS
                                           VESSEL    ACCUMULATED       NET BOOK
                                             COST    DEPRECIATION         VALUE
-------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2004             29,559,268       (174,086)    29,385,182
Acquisitions                           52,843,658              --    52,843,658
Depreciation for the period                    --     (2,332,734)   (2,332,734)
-------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2005            82,402,926     (2,506,820)    79,896,106
-------------------------------------------------------------------------------

On October 12, 2004, the Company acquired the vessel Gas Prophet for a total
cost of $8,486,549. Included in this amount are brokerage commissions of $
84,000 and pre-delivery expenses of $86,549.

On October 29, 2004, the Company acquired the vessel Gas Tiny for a total cost
of $1,310,488. Included in this amount are brokerage commissions of $12,250 and
pre-delivery expenses of $85,488.

On November 24, 2004, the Company acquired the vessel Gas Courchevel for a total
cost of $9,806,677. Included in this amount are brokerage commissions of $97,500
and pre-delivery expenses of $56,677.

On December 7, 2004, the Company acquired the vessel Gas Shanghai for a total
cost of $9,955,554. Included in this amount are brokerage commissions of $99,000
and pre-delivery expenses of $55,554.

On February 2, 2005, the Company acquired the vessel Gas Emperor for a total
cost of $11,529,927. Included in this amount are brokerage commissions of
$115,000 and pre-delivery expenses of $29,927.

On April 7, 2005, the Company acquired the vessel Gas Ice for a total cost of
$9,609,039. Included in this amount are brokerage commissions of $95,000 and
pre-delivery expenses of $14,039.

On April 7, 2005, the Company acquired the vessel Gas Arctic for a total cost of
$9,619,143. Included in this amount are brokerage commissions of $95,000 and
pre-delivery expenses of $24,143.

On April 11, 2005, the Company acquired the vessel Birgit Kosan for a total cost
of $12,633,388. Included in this amount are brokerage commissions of $125,000
and pre-delivery expenses of $8,388.






STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


6.       VESSELS - CONTINUED

On May 19, 2005, the Company acquired the vessel Gas Amazon for a total cost of
$9,452,161. Included in this amount are brokerage commissions of $92,500 and
pre-delivery expenses of $109,661.


7.       ACCRUED LIABILITIES

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



                                         PERIOD ENDED DECEMBER  NINE-MONTH PERIOD ENDED
                                                      31, 2004       SEPTEMBER 30, 2005
---------------------------------------------------------------------------------------

Interest on long-term debt                                  --                   98,712
Lease expense                                               --                   23,400
Deferred finance charges                                    --                  620,338
Vessels' operating and voyage expenses                 286,125                  542,485
---------------------------------------------------------------------------------------
TOTAL                                                  286,125                1,284,935
---------------------------------------------------------------------------------------



8.       DEFERRED INCOME

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

                                 PERIOD ENDED DECEMBER  NINE-MONTH PERIOD ENDED
                                              31, 2004       SEPTEMBER 30, 2005
-------------------------------------------------------------------------------
Voyage in progress                              59,158                       --
Hire received in advance                       417,255                1,373,793
-------------------------------------------------------------------------------
TOTAL                                          476,413                1,373,793
-------------------------------------------------------------------------------


9.       LONG-TERM DEBT

In March 2005, the Company entered into a $54,000,000 loan agreement with Fortis
Bank (the "Fortis Loan"). On June 10, 2005 and on August 19, 2005, the amounts
of $3,580,500 and $1,356,750 respectively, were repaid, leaving an outstanding
balance of $49,062,750. The term loan was fully drawn down on the 17th May 2005
and is repayable in 32 equal consecutive quarterly installments from August 2005
through May 2013, of $1,356,750 plus a balloon payment of $7,003,500 payable
together with the last installment. The term loan charges interest at LIBOR plus
a margin and is secured by a first priority mortgage over the vessels involved
plus the assignment of the vessels' insurances, earnings and the vessels'
operating and retention accounts.

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





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


9.       LONG-TERM DEBT  - CONTINUED

The amount outstanding at September 30, 2005 of $49,062,750 bore an average
interest rate (including the margin) of 4.2284%.

Bank loan interest expense for the nine-month period ended September 30, 2005
amounted to $1,121,245 ($594,383 for the three-month period ended September 30,
2005) and is included in Interest and finance costs, net in the accompanying
consolidated statements of income.

The annual principal payments to be made after September 30, 2005 are as
follows:

ONE YEAR PERIOD ENDED SEPTEMBER 30                                       AMOUNT
-------------------------------------------------------------------------------
2006                                                                  5,427,000
2007                                                                  5,427,000
2008                                                                  5,427,000
2009                                                                  5,427,000
2010                                                                  5,427,000
Thereafter                                                           21,927,750
                                                                  -------------
Less: Current portion of long-term debt                             (5,427,000)
-------------------------------------------------------------------------------
 TOTAL                                                               43,635,750
-------------------------------------------------------------------------------

10.      INTEREST RATE SWAP AGREEMENT

On March 31, 2005, the Company entered into an agreement to enter into an
interest rate swap on the term loan. The initial amount of the swap will be
$22,549,000 amortizing to $4,764,250 over its six-year life commencing May 30,
2007. If the United States dollar three month LIBOR is less than 7.5%, the fixed
rate is 4.55%. If the United States dollar three month LIBOR is equal to or
higher than 7.5%, then the fixed rate will be the United States dollar three
month LIBOR. As of September 30, 2005, the fair value of the instrument was
$74,000 (liability).

11.      COMMON STOCK

On August 26, 2005, the Company effected a 60,000-for-one stock split. All share
and per share data give retroactive effect to the stock split. The holders of
the shares are entitled to one vote on all matters submitted to a vote of
stockholders and to receive all dividends, if any.

12.      ADDITIONAL PAID-IN CAPITAL

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

Included in paid-in capital is the value of executive management services
provided through the management agreement with Stealth Maritime S.A. to the
Company, as well as the value of the lease expense for the office space that are
provided to the Company at no extra charge by Stealth Maritime S.A. The value of
the above services is estimated at $48,750 for the three-month period ended
September 30, 2005 and $243,750 (excluding office space) for the nine-month
period ended September 30, 2005 and is recorded as general and administrative
expenses in the accompanying consolidated statements of income and as a
contribution to paid-in capital in the related accompanying statements of
changes in stockholders' equity.





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


13.      EARNINGS PER COMMON SHARE

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



                                                                    THREE-MONTH PERIOD    NINE-MONTH PERIOD ENDED
                                                              ENDED SEPTEMBER 30, 2005         SEPTEMBER 30, 2005
-----------------------------------------------------------------------------------------------------------------

Income:
   Net income for the period available to common stockholders                3,623,533                  7,673,032
Basic earnings per share:
   Weighted average common shares - outstanding                              6,000,000                  6,000,000
Diluted earnings per share:
   Weighted average common shares - diluted                                  6,000,000                  6,000,000
Basic earnings per share:                                                         0.60                       1.28
Diluted earnings per share:                                                       0.60                       1.28



14.      VOYAGE EXPENSES AND VESSEL OPERATING EXPENSES

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



                                                                    THREE-MONTH PERIOD    NINE-MONTH PERIOD ENDED
VOYAGE EXPENSES                                               ENDED SEPTEMBER 30, 2005         SEPTEMBER 30, 2005
-----------------------------------------------------------------------------------------------------------------

Port expenses                                                                    1,009                     29,462
Bunkers                                                                          1,973                     17,971
Commissions charged by third parties                                           157,940                    375,486
Commissions charged by related party                                            86,128                    206,035
Other voyage expenses                                                            1,800                      3,346
-----------------------------------------------------------------------------------------------------------------
TOTAL                                                                          248,850                    632,300
-----------------------------------------------------------------------------------------------------------------


                                                                    THREE-MONTH PERIOD    NINE-MONTH PERIOD ENDED
VESSELS' OPERATING EXPENSES                                   ENDED SEPTEMBER 30, 2005         SEPTEMBER 30, 2005
-----------------------------------------------------------------------------------------------------------------

Crew wages and related costs                                                   848,022                  2,254,639
Insurance                                                                      113,715                    306,232
Repairs and maintenance                                                        131,571                    359,501
Spares and consumable stores                                                   322,047                    765,330
Miscellaneous expenses                                                          82,958                    248,382
-----------------------------------------------------------------------------------------------------------------
TOTAL                                                                        1,498,313                  3,934,084
-----------------------------------------------------------------------------------------------------------------







STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


15.      INCOME TAXES

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

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

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


16.      FINANCIAL INSTRUMENTS

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







STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


17.      COMMITMENTS AND CONTINGENCIES

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

     o   In January 2005, the Company entered into a three-year cancelable
         operating lease for its office facilities that terminates in January
         2008. Rental expense for the period January 3 through September 30,
         2005 was $23,400. Future rental commitments were payable as follows:

                                                                  AMOUNT

                                                             -----------
         January 2006                                             31,200
         January 2007                                             31,200
         January 2008                                             31,200
                                                             -----------
          Total                                                   93,600
                                                             ===========

     o   On June 20, 2005, the Company entered into an agreement with related
         parties, to acquire the Gas Prodigy, the Gas Oracle, the Gas Chios, the
         Sweet Dream, the Gas Cathar, the Gas Crystal, the Gas Legacy and the
         Gas Eternity for a total purchase price of $94.9 million. The purchase
         price for each of these vessels is due upon delivery of the vessels,
         which is expected to be prior to November 30, 2005.

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

     o   On August 15, 2005 the Company entered into an agreement with related
         party to acquire the vessel Marathon for a purchase price of $15.0
         million. The payment of the agreed price was paid upon delivery of the
         vessel which was on November 2, 2005.

     o   On August 26, 2005, the Company terminated the memoranda of agreements
         with respect to the Gas Prodigy, the Gas Oracle, the Gas Chios, and the
         Sweet Dream and entered into stock purchase agreements with Gaz de
         Brazil Inc., Independent Trader Ltd., Continent Gas Inc. and Empire
         Spirit Ltd., the owners of, respectively, the Gas Prodigy, the Gas
         Oracle, the Gas Chios, and the Sweet Dream, for an aggregate purchase
         price of $39.5 million, the same aggregate purchase price that was to
         be paid under the terminated memoranda of agreements.

     o   On September 6, 2005, an addendum to the memorandum of agreement was
         signed changing the delivery date of the Gas Eternity from no later
         than November 30, 2005 to no later than February 28, 2006.









STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


18.      SUBSEQUENT EVENTS

     o   On October 3, 2005 the Company terminated the memorandum of agreement
         with respect to the Gas Cathar and entered into a stock purchase
         agreement with Jungle Investment Inc., the owner of the Gas Cathar, for
         a purchase price of $19.98 million, the same purchase price that was to
         be paid under the terminated memorandum of agreement.

     o   On October 6, 2005, the Company successfully listed on the NASDAQ
         exchange in New York, United States of America. The Company's symbol on
         NASDAQ is GASS. The company issued 8 million shares at $14.50 each
         thus raising gross proceeds of $116 million, and proceeds after related
         expenses of $107,290,000.

     o   On October 19, 2005 the Company took delivery of the Gas Chios and
         Gas Prodigy both vessels it had previously agreed to acquire. The
         vessels were acquired for $11.0 million and $9.5 million respectively.
         The Gas Chios is currently employed under time charter until February
         2006 at a rate of $300,000 per calendar month. The Gas Prodigy is
         currently employed on time charter till March 2006 at a rate of
         $125,000 per calendar month.

     o   On October 27, 2005 the Company took delivery of the Gas Cathar and
         the Gas Legacy both vessels it had previously agreed to acquire. The
         Gas Cathar was acquired for $19,982,500 and the Gas Legacy was acquired
         for $ 13,050,000. The Gas Cathar is currently employed under time
         charter at a rate of $335,000 per calendar month until February 2006.
         The Gas Legacy is employed under time charter at a rate of $425,000 per
         calendar month until April 2007.

     o   On November 2, 2005 the Company took delivery of the Gas Marathon
         which it had previously agreed to acquire. The vessel was acquired for
         $15,000,000. The Gas Marathon is employed under a bareboat charter at a
         rate of $220,000 per calendar month until October 2007.

     o   On November 9, 2005 the Company took delivery of the Gas Crystal
         which it had previously agreed to acquire. The vessel was acquired for
         $9,500,000 and is currently employed on the spot market.

     o   On November 14, 2005 the Company took delivery of the Gas Sincerity a
         vessel it had previously agreed to acquire. The vessel was acquired for
         $15,100,000 and it is currently employed on a time charter until July
         2006.

     o   On November 24, 2005 the Company took delivery of the Catterick for
         $12,750,000. The vessel is currently employed on a time charter until
         February 2007.

     o   On December 5, 2005 the Company signed a $50,000,000 10 year term loan
         facility with DnB NOR Bank, secured against the Gas Oracle, the Sweet
         Dream, the Gas Legacy, the Gas Cathar, the Gas Marathon and the Gas
         Sincerity. Part of the proceeds of the loan were used to acquire the
         Sweet Dream and the Gas Oracle from the Vafias Group for an aggregate
         of $19,000,000 on December 8, 2005.





STEALTHGAS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
--------------------------------------------------------------------------------


18.      SUBSEQUENT EVENTS - CONTINUED

     o   The balance of the proceeds from the DnB NOR Bank fully was used to
         acquire the Feisty Gas and the Gas Spirit, on December 16, 2005 for
         $15,000,000 and $15,500,000 respectively. The Feisty Gas is currently
         employed under a time charter to an oil major at a rate of $199,000 per
         calendar month until August 2006. The Gas Spirit is currently
         employed under time charter to an oil major at a rate of $195,000 per
         calendar month until June 2006. Thereafter the Gas Spirit will be
         employed by the same charterer until June 2007 at a per calendar month
         charter rate of between a minimum of $250,000 and a maximum of $350,000
         to be agreed no later than the end of February 2006.

     o   On December 22, 2005 the Company entered into an agreement to acquire
         the Gas Czar for $9,830,000. In conjunction with the acquisition the
         Company reached an agreement in principle with DnB NOR Bank to increase
         its facility an additional $14,000,000 for a total of $64 million to
         finance the acquisition of the Gas Czar and the Gas Eternity, each
         expected to be delivered during February 2006.

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