Passenger Business

We formed our Passenger Business in 2005, when we purchased two vessels, the New Flamenco, with a 1,010 passenger capacity and 401 cabins, and the Blue Monarch (formerly named Grand Victoria) with a 575 passenger capacity and 242 cabins. We immediately undertook an extensive refurbishment of the New Flamenco, including all passenger areas, and we conducted work to recertify the Blue Monarch and upgraded some of her passenger areas.

We have sold our largest vessel, New Flamenco, in October 2007, but continue to operate our Blue Monarch on 7-day and 14-days cruises in the Aegean Sea. In addition, we are currently negotiating opportunities to operate this last vessel during periods outside the European travel season.

On June 30, 2008, we entered into a Memorandum of Agreement (MOA), subsequently modified by two addendums signed on July 24 and August 6, 2008, whereby we have agreed to sell our passenger vessel, Blue Monarch. The net proceeds of this sale to the company shall be $8.3 million. Under the terms of the agreement, the buyers must deposit the purchase price prior to August 25, 2008 in a joint escrow account, while the delivery of the vessel will take place at the end of the current cruising season in the Aegean. If however the purchase price is not deposited in accordance with the MOA by August 25, 2008, this transaction may not materialize as agreed.