0001606909-17-000039.txt : 20170510 0001606909-17-000039.hdr.sgml : 20170510 20170510170556 ACCESSION NUMBER: 0001606909-17-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170510 DATE AS OF CHANGE: 20170510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Pangaea Logistics Solutions Ltd. CENTRAL INDEX KEY: 0001606909 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36798 FILM NUMBER: 17831409 BUSINESS ADDRESS: STREET 1: 109 LONG WHARF CITY: NEWPORT STATE: RI ZIP: 02840 BUSINESS PHONE: 401 846 7790 MAIL ADDRESS: STREET 1: 109 LONG WHARF CITY: NEWPORT STATE: RI ZIP: 02840 FORMER COMPANY: FORMER CONFORMED NAME: Quartet Holdco Ltd. DATE OF NAME CHANGE: 20140430 10-Q 1 panl-3312017x10q.htm 10-Q Document
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 

FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2017
 
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to
 
 
Commission File Number: 001-36139
 
PANGAEA LOGISTICS SOLUTIONS LTD.
 
(Exact name of Registrant as specified in its charter)
Bermuda
 
98-1205464
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
c/o Phoenix Bulk Carriers (US) LLC
109 Long Wharf
Newport, RI 02840
 
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code: (401) 846-7790
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES    x                 NO  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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).
YES  x                  NO ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated Filer  ¨ 
Accelerated Filer ¨ 
Non-accelerated Filer ¨ 
Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
YES       ¨              NO     x
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common Stock, par value $0.01 per share, 37,261,739 shares outstanding as of May 10, 2017.

 




TABLE OF CONTENTS
 
 
 
Page
PART I
FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Signatures
 


2






Pangaea Logistics Solutions Ltd.
Condensed Consolidated Balance Sheets

March 31, 2017

December 31, 2016

(unaudited)

 
Assets
 

 
Current assets
 


 

Cash and cash equivalents
$
21,721,830


$
22,322,949

Restricted cash
6,100,000


6,100,000

Accounts receivable (net of allowance of $4,495,314 at
March 31, 2017 and $4,752,265 at December 31, 2016)
22,653,254


20,476,797

Bunker inventory
15,369,734


13,202,937

Advance hire, prepaid expenses and other current assets
8,202,317


6,441,583

Total current assets
74,047,135


68,544,266







Fixed assets, net
299,579,775


275,265,672

Investments in newbuildings in-process


18,383,964

Vessel under capital lease
23,788,463

 

Total assets
$
397,415,373


$
362,193,902







Liabilities and stockholders' equity
 


 

Current liabilities
 

 
Accounts payable, accrued expenses and other current liabilities
$
21,965,338


$
23,231,179

Related party debt
6,771,327


15,972,147

Deferred revenue
7,336,836


6,422,982

Current portion long-term debt
24,659,322


19,627,846

Current portion of capital lease obligation
1,248,211

 

Dividend payable
12,624,825


12,624,825

Total current liabilities
74,605,859


77,878,979







Secured long-term debt, net
117,457,847


107,637,851

Obligations under capital lease
19,751,789

 







Commitments and contingencies (Note 7)











Stockholders' equity:
 


 

Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued or outstanding
 
 
 
Common stock, $0.0001 par value, 100,000,000 shares authorized; 37,261,739 shares issued and outstanding at March 31, 2017; 36,590,417 shares issued and outstanding at December 31, 2016
3,726

 
3,659

Additional paid-in capital
140,354,611

 
133,677,321

Accumulated deficit
(16,062,737
)
 
(17,409,579
)
Total Pangaea Logistics Solutions Ltd. equity
124,295,600

 
116,271,401

Non-controlling interests
61,304,278

 
60,405,671

Total stockholders' equity
185,599,878

 
176,677,072

Total liabilities and stockholders' equity
$
397,415,373

 
$
362,193,902

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

3




Pangaea Logistics Solutions Ltd.
Condensed Consolidated Statements of Income
(unaudited)
 
 
Three Months Ended March 31,
 
2017

2016
 



Revenues:
 


 

Voyage revenue
$
77,688,449


$
41,974,319

Charter revenue
6,766,672


1,963,200

 
84,455,121


43,937,519

Expenses:



 

Voyage expense
41,271,919


18,500,882

Charter hire expense
23,201,155


8,503,174

Vessel operating expense
8,591,243


6,889,082

General and administrative
3,514,764


3,036,371

Depreciation and amortization
3,941,795


3,515,456

Loss on sale and leaseback of vessel
4,289,998



Total expenses
84,810,874


40,444,965







(Loss) income from operations
(355,753
)

3,492,554


 



Other income (expense):
 

 

Interest expense, net
(1,630,988
)

(1,369,613
)
Interest expense on related party debt
(77,979
)

(80,490
)
Unrealized gain (loss) on derivative instruments, net
1,966,387


(335,959
)
Other income (expense)
94,650


(102,318
)
Total other income (expense), net
352,070


(1,888,380
)






Net (loss) income
(3,683
)

1,604,174

Loss (income) attributable to non-controlling interests
1,350,525


(407,070
)
Net income attributable to Pangaea Logistics Solutions Ltd.
$
1,346,842


$
1,197,104







Earnings per common share:
 


 

Basic
$
0.04


$
0.03

Diluted
$
0.04


$
0.03


 
 
 
Weighted average shares used to compute earnings
 

 
 
per common share
 

 
 
Basic
35,280,806


35,130,211

Diluted
35,805,205


35,201,307

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


4

Pangaea Logistics Solutions, Ltd.
Condensed Consolidated Statements of Cash Flows
(unaudited)

 
Three Months Ended March 31,
 
2017
 
2016
Operating activities
 

 
 

Net (loss) income
$
(3,683
)
 
$
1,604,174

Adjustments to reconcile net income to net cash provided by operations:
 

 
 

Depreciation and amortization expense
3,941,795

 
3,515,456

Amortization of deferred financing costs
174,342

 
182,810

Amortization of prepaid rent
30,485

 

Unrealized (gain) loss on derivative instruments
(1,966,387
)
 
335,959

(Gain) loss from equity method investee
(80,681
)
 
30,380

Provision for doubtful accounts
147,745

 
703,354

Loss on sale and leaseback of vessel
4,289,998

 

Share-based compensation
446,978

 
136,496

Change in operating assets and liabilities:
 
 
 

Decrease in restricted cash

 
500,000

Accounts receivable
(2,324,202
)
 
5,371,689

Bunker inventory
(2,166,797
)
 
(321,343
)
Advance hire, prepaid expenses and other current assets
(69,870
)
 
(779,759
)
Drydocking costs
(63,808
)
 
(42,478
)
Accounts payable, accrued expenses and other current liabilities
(838,732
)
 
(6,342,724
)
Deferred revenue
913,854

 
(759,937
)
Net cash provided by operating activities
2,431,037

 
4,134,077

 
 
 


Investing activities
 

 
 

Purchase of vessels
(793,953
)
 
(253,492
)
Proceeds from sale and leaseback of vessel
21,000,000

 

Deposits on newbuildings in-process
(37,108,800
)
 

Purchase of building and equipment
(7,245
)
 

Purchase of non-controlling interest in consolidated subsidiary
(799,289
)
 

Net cash used in investing activities
(17,709,287
)
 
(253,492
)
 
 
 


Financing activities
 

 
 

Payments of related party debt

 
(2,473,921
)
Proceeds from long-term debt
19,500,000

 

Payments of financing and issuance costs
(763,381
)
 
(34,425
)
Payments of long-term debt
(4,059,488
)
 
(6,126,454
)
Accrued common stock dividends paid

 
(100,000
)
Net cash provided by (used in) financing activities
14,677,131

 
(8,734,800
)
 
 
 
 
Net decrease in cash and cash equivalents
(601,119
)
 
(4,854,215
)
Cash and cash equivalents at beginning of period
22,322,949

 
37,520,240

Cash and cash equivalents at end of period
$
21,721,830

 
$
32,666,025

 
 
 


Supplemental cash flow information
 

 
 

Cash paid for interest
$
1,420,287

 
$
1,191,405

Extinguishment of related party loan
$
9,278,800

 
$


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

5



Note 1. General Information

The accompanying consolidated financial statements include the accounts of Pangaea Logistics Solutions Ltd. and its consolidated subsidiaries (collectively, the “Company”, “we” or “our”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership, chartering and operation of drybulk vessels. The Company is a holding company incorporated under the laws of Bermuda as an exempted company on April 29, 2014.
 
As of March 31, 2017, the Company owns two Panamax, one Ultramax Ice Class 1C, four Supramax and two Handymax Ice Class 1A drybulk vessels and had one vessel under a capital lease. The Company also owns one-third of Nordic Bulk Holding Company Ltd. (“NBHC”) , a consolidated joint venture with a fleet of six Panamax Ice Class 1A drybulk vessels. The Company has two Supramax drybulk vessels under bareboat charter for five-year periods that commenced on July 13, 2016.

On January 27, 2017, the Company acquired its consolidated joint venture partner's interest in Nordic Bulk Ventures Holding Company Ltd. (“BVH”). BVH owns m/v Bulk Destiny and m/v Bulk Endurance through wholly-owned subsidiaries. BVH is wholly-owned by the Company after the acquisition.
 
Note 2. Basis of Presentation

The accompanying consolidated balance sheet as of March 31, 2017, the consolidated statements of income and cash flows for the three months ended March 31, 2017 and 2016 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations and cash flows for the three months ended March 31, 2017 and 2016. The financial data and the other information disclosed in these notes to the consolidated financial statements related to these three month periods are unaudited. Certain information and disclosures included in the annual consolidated financial statements have been omitted for the interim periods pursuant to the rules and regulations of the SEC. The results for the three months ended March 31, 2017 are not necessarily indicative of the results for the year ending December 31, 2017 or for any other interim period or future years.
 
 The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“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. The significant estimates and assumptions of the Company are the estimated fair value used in determining loss on sale and leaseback of vessel, the estimated salvage value used in determining depreciation expense and the allowances for doubtful accounts.
 
Advance hire, prepaid expenses and other current assets were comprised of the following: 
 
 
 
March 31, 2017
 
December 31, 2016
 
 
(unaudited)
 
 
Advance hire
 
$
2,631,613

 
$
2,232,444

Prepaid expenses
 
1,376,878

 
1,844,522

Derivative asset
 
2,735,095

 
259,126

Other current assets
 
1,458,731

 
2,105,491

 
 
$
8,202,317

 
$
6,441,583

 

6


Accounts payable, accrued expenses and other current liabilities were comprised of the following:
 
 
 
March 31, 2017
 
December 31, 2016
 
 
(unaudited)
 
 
Accounts payable
 
$
15,340,821

 
$
15,435,179

Accrued voyage expenses
 
5,115,612

 
6,955,389

Accrued interest
 
456,154

 
412,984

Other accrued liabilities
 
1,052,751

 
427,627

 
 
$
21,965,338

 
$
23,231,179


    
In February 2016, the FASB issued an ASU 2016-02, Accounting Standards Update for Leases. The update is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company does not typically enter into contracts with terms exceeding six months. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. Accordingly, the Company does not expect adoption of this guidance to have a material impact on its financial statements.

In May 2014, the FASB issued an ASU 2014-09, Accounting Standards Update for Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017. While we are continuing to assess all potential impacts of the standard, we expect that revenue from vessels operating on time charter will continue to be recognized under current revenue recognition policies because the services being provided to its customers currently reflect the consideration to which the entity expects to be entitled in exchange for those services, and because these arrangements qualify as single performance obligations that meet the criteria to recognize revenue over time, as the customer is simultaneously receiving and consuming the benefits of these services. The performance obligation in a voyage charter is also the transportation service provided and also meets the criteria to recognize revenue over time. However, under the new standard, we expect revenue for these voyages to be recognized over the period between load port and discharge port in contrast to the current recognition policy to recognize revenue from discharge port to discharge port. The Company also believes that under the new standard, it will recognize an asset from certain costs incurred to fulfill contracts that have not begun to load if they meet the criteria outlined in this Update. Such assets will be amortized pro rata over the period of the contract. Neither of these changes is expected to have a material impact on the consolidated financial statements because the number of open voyages at any point in time are not a significant portion of the annual total and the difference in revenue is expected to be only a percentage of such voyage revenue. The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect adjustment to opening retained earnings in the period of initial period of adoption and we have not yet selected which transition method we will apply. In addition, we are evaluating recently issued guidance on practical expedients as part of our transition decision.


7



Note 3. Fixed Assets

At March 31, 2017, the Company owned fifteen dry bulk vessels and has one under capital lease (2). The carrying amounts of these vessels, including unamortized drydocking costs, are as follows: 
 
March 31,
 
December 31,
Vessel
2017
 
2016
 
(unaudited)
 
 
m/v BULK PANGAEA
$
17,509,198

 
$17,879,380
m/v BULK PATRIOT
12,063,118

 
12,391,724

m/v BULK JULIANA
12,042,312

 
12,252,733

m/v NORDIC ODYSSEY
26,674,593

 
27,021,211

m/v NORDIC ORION
27,522,920

 
27,874,584

m/v BULK TRIDENT
14,770,397

 
14,962,163

m/v BULK BEOTHUK
11,908,718

 
12,006,270

m/v BULK NEWPORT
13,305,732

 
13,473,429

m/v NORDIC BARENTS
3,475,893

 
3,517,151

m/v NORDIC BOTHNIA
3,471,564

 
3,520,616

m/v NORDIC OSHIMA
31,040,353

 
31,346,414

m/v NORDIC OLYMPIC
31,263,546

 
31,560,965

m/v NORDIC ODIN
31,443,352

 
31,741,658

m/v NORDIC OASIS
32,528,072

 
32,834,500

m/v BULK ENDURANCE (1)
27,744,569

 

 
296,764,337

 
272,382,798

Other fixed assets, net
2,815,438

 
2,882,874

Total fixed assets, net
$
299,579,775

 
$
275,265,672

 
 
 
 
m/v BULK DESTINY (2)
$
23,788,463

 
$

 
(1)The m/v Bulk Endurance was delivered to the Company on January 7, 2017.
(2) 
The Company took delivery of the m/v Bulk Destiny on January 7, 2017 and simultaneously entered into a sale-leaseback financing agreement, the terms of which are discussed in Note 7. At March 31, 2017, the vessel acquired under a capital lease had a carrying amount of $23,788,463 and accumulated amortization of $181,053.

The Company also operates two dry bulk vessels under bareboat charters accounted for as operating leases, as discussed in Note 7.
 
Long-lived Assets Impairment Considerations. The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the pricing of new vessels. Historically, both charter rates and vessel values tend to be cyclical. The carrying value of each group of vessels (allocated by size, age and major characteristic or trade), which are classified as held and used by the Company, are reviewed for potential impairment when events or changes in circumstances indicate that the carrying value of a particular group may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the group and its eventual disposition is less than its carrying value. This assessment is made at the group level, which represents the lowest level for which identifiable cash flows are largely independent of other groups of assets. The asset groups established by the Company are defined by vessel size and major characteristic or trade.


8


The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis include the Company’s estimate of future time charter equivalent "TCE" rates based on current rates under existing charters and contracts. When existing contracts expire, the Company uses an estimated TCE based on actual results and extends these rates out to the end of the vessel’s useful life. TCE rates can be highly volatile, may affect the fair value of the Company’s vessels and may have a significant impact on the Company’s ability to recover the carrying amount of its fleet. Accordingly, the volatility is contemplated in the undiscounted projected net operating cash flow by using a sensitivity analysis based on percent changes in the TCE rates. The Company prepares a series of scenarios in an attempt to capture the range of possible trends and outcomes. Projected net operating cash flows are net of brokerage and address commissions and assume no revenue on scheduled offhire days. The Company uses the current vessel operating expense budget, estimated costs of drydocking and historical general and administrative expenses as the basis for its expected outflows, and applies an inflation factor it considers appropriate. The net of these inflows and outflows, plus an estimated salvage value, constitutes the projected undiscounted future cash flows. If these projected cash flows do not exceed the carrying value of the asset group, an impairment charge would be recognized.
 
During the three months ended March 31, 2017 and the year ended December 31, 2016, the Company identified potential impairment indicators by reference to estimated market values of its vessel groups. As a result, the Company evaluated each group for impairment by estimating the total undiscounted cash flows expected to result from the use of the group and its eventual disposal. The estimated undiscounted future cash flows were determined to be higher than the carrying amount of each group. Therefore, the Company did not recognize any additional loss on impairment for the three months ended March 31, 2017 or the year ended December 31, 2016.    

Note 4. Debt

Long-term debt consists of the following: 
 
 
March 31, 2017
 
December 31, 2016
 
 
(unaudited)
 
 
Bulk Pangaea Secured Note (1)
 
$
1,040,625

 
$
1,040,625

Bulk Patriot Secured Note (1)
 
1,087,500

 
1,087,500

Bulk Trident Secured Note (1)
 
5,187,500

 
5,737,500

Bulk Juliana Secured Note (1)
 
3,042,188

 
3,042,186

Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. and Bulk Nordic Oshima Ltd. Amended and Restated Loan Agreement (2)
 
75,450,000

 
77,325,001

Bulk Atlantic Secured Note
 
5,055,000

 
5,350,000

Bulk Phoenix Secured Note (1)
 
6,316,663

 
6,816,685

Term Loan Facility of USD 13,000,000 (Nordic Bulk Barents Ltd. and Nordic Bulk Bothnia Ltd.)
 
6,771,730

 
7,097,820

Bulk Nordic Oasis Ltd. Loan Agreement (2)
 
19,625,000

 
20,000,000

Bulk Nordic Six Ltd. Loan Agreement
 
19,400,000

 

109 Long Wharf Commercial Term Loan
 
1,004,667

 
1,032,067

Phoenix Bulk Carriers (US) LLC Automobile Loan
 
27,237

 
28,582

Phoenix Bulk Carriers (US) LLC Master Loan
 
226,610

 
236,242

Total
 
144,234,720

 
128,794,208

Less: current portion
 
(24,659,322
)
 
(19,627,846
)
Less: unamortized bank fees
 
(2,117,551
)
 
(1,528,511
)
Secured long-term debt
 
$
117,457,847

 
$
107,637,851


(1) 
The Bulk Pangaea Secured Note, the Bulk Patriot Secured Note, the Bulk Juliana Secured Note, the Bulk Trident Secured Note and the Bulk Phoenix Secured Note are cross-collateralized by the m/v Bulk Pangaea, m/v Bulk Patriot, m/v Bulk Juliana, m/v Bulk Trident and m/v Bulk Newport and are guaranteed by the Company.
(2) 
The borrower under this facility is NBHC, of which the Company and its joint venture partners, STST and ASO2020, each own one-third. NBHC is consolidated in accordance with Accounting Standards Codification ("ASC") 810, Consolidation, and as such, amounts pertaining to the non-controlling ownership held by these third parties in the financial position of NBHC are reported as non-controlling interest in the accompanying balance sheets.


9


The Senior Secured Post-Delivery Term Loan Facility
 
On April 14, 2017, the Company, through its wholly owned subsidiaries, Bulk Pangaea, Bulk Patriot, Bulk Juliana, Bulk Trident and Bulk Phoenix, entered into the Fourth Amendatory Agreement, (the "Fourth Amendment"), amending and supplementing the Loan Agreement dated April 15, 2013, as amended by a First Amendatory Agreement dated May 16, 2013, the Second Amendatory Agreement dated August 28, 2013 and the Third Amendatory Agreement dated July 14, 2016. The Fourth Amendment advances the final repayment dates for Bulk Pangaea and Bulk Patriot and extends the final maturity date and modifies the repayment schedules, as follow: 
 
Bulk Pangaea Secured Note

Initial amount of $12,250,000, entered into in December 2009, for the acquisition of m/v Bulk Pangaea. The Fourth Amendment advances the final installment to April 18, 2017, thereby increasing the amount to $1,040,625, which was paid on the maturity date.

Bulk Patriot Secured Note

Initial amount of $12,000,000, entered into in September 2011, for the acquisition of the m/v Bulk Patriot. The Fourth Amendment advances the final installment to April 18, 2017, thereby increasing the amount to $1,087,500, which was paid on the maturity date.

Bulk Trident Secured Note

Initial amount of $10,200,000, entered into in April 2012, for the acquisition of the m/v Bulk Trident. The Fourth Amendment extends the final maturity date and modifies the repayment schedule. The first and second quarterly installments following the amendment were increased to $650,000 and the third and fourth installments were increased to $435,000. These are followed by two installments of $327,500 and three of $300,000. A balloon payment of $1,462,500 is payable on July 19, 2019. The interest rate was fixed at 4.29% through April 19, 2017 and will be floating at LIBOR plus 3.50% after that date.

Bulk Juliana Secured Note

Initial amount of $8,112,500, entered into in April 2012, for the acquisition of the m/v Bulk Juliana. The Fourth Amendment did not change this tranche, the balance of which is payable in six quarterly installments of $507,031. The final payment is due in July 19, 2018. The interest rate is fixed at 4.38%.
 
Bulk Phoenix Secured Note

Initial amount of $10,000,000, entered into in May 2013, for the acquisition of m/v Bulk Newport. The Fourth Amendment did not change this tranche, the balance of which is payable in two installments of $700,000 and seven installments of $442,858. A balloon payment of $1,816,659 is payable on July 19, 2019. The interest rate is fixed at 5.09%.

The agreement contains financial covenants that require the Company to maintain a minimum net worth and minimum liquidity, on a consolidated basis. The facility also contains a consolidated leverage ratio and a consolidated debt service coverage ratio. In addition, the facility contains other Company and vessel related covenants that, among other things, restrict changes in management and ownership of the vessel, declaration of dividends, further indebtedness and mortgaging of a vessel without the bank’s prior consent. It also requires minimum collateral maintenance, which is tested at the discretion of the lender. As of March 31, 2017 and December 31, 2016, the Company was in compliance with these covenants.
  
Bulk Atlantic Secured Note

Initial amount of $8,520,000, entered into on February 18, 2013, for the acquisition of m/v Bulk Beothuk. The loan requires repayment in 8 equal quarterly installments of $90,000 beginning in May 2013, 12 equal quarterly installments of $295,000 and a balloon payment of $4,170,000 due in February 2018. Interest is fixed at 6.46%.


10


The Bulk Atlantic Secured Note is collateralized by the vessel m/v Bulk Beothuk and is guaranteed by the Company. The agreement contains a collateral maintenance ratio clause and a minimum EBITDA to fixed charges ratio. During 2016, the Company increased the letter of credit held by the facility agent to $1.1 million in order to remain in compliance with the collateral maintenance ratio clause. As of March 31, 2017 and December 31, 2016, the Company is in compliance with these covenants.

Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. And Bulk Nordic Oshima Ltd. – Dated September 28, 2015 - Amended and Restated Loan Agreement
 
The amended agreement advanced $21,750,000 in respect of each the m/v Nordic Odin and the m/v Nordic Olympic; $13,500,000 in respect of each the m/v Nordic Odyssey and the m/v Nordic Orion, and $21,000,000 in respect of the m/v Nordic Oshima.

The agreement requires repayment of the advances as follows:

In respect of the Odin and Olympic advances, repayment to be made in 28 equal quarterly installments of $375,000 per borrower (one of which was paid prior to the amendment by each borrower) and balloon payments of $11,233,150 due with each of the final installments in January 2022.

In respect of the Odyssey and Orion advances, repayment to be made in 20 quarterly installments of $375,000 per borrower and balloon payments of $5,677,203 due with each of the final installments in September 2020.

In respect of the Oshima advance, repayment to be made in 28 equal quarterly installments of $375,000 and a balloon payment of $11,254,295 due with the final installment in September 2021.
 
Interest on 50% of the advances to Odyssey and Orion was fixed at 4.24% in March 2017. Interest on the remaining advances to Odyssey and Orion is floating at LIBOR plus 2.40% (3.55% at March 31, 2017). Interest on 50% of the advances to Odin and Olympic was fixed at 3.95% in January 2017. Interest on the remaining advances to Odin and Olympic was floating at LIBOR plus 2.0% (3.15% at March 31, 2017), and was fixed at 4.07% on April 27, 2017. Interest on 50% of the advance to Oshima was fixed at 4.16% in January 2017. Interest on the remaining advance to Oshima is floating at LIBOR plus 2.25% (3.40% at March 31, 2017).

The amended loan is secured by first preferred mortgages on the m/v Nordic Odin, m/v Nordic Olympic, m/v Nordic Odyssey, m/v Nordic Orion and m/v Nordic Oshima, the assignment of earnings, insurances and requisite compensation of the five entities, and by guarantees of their shareholders.

The amended agreement contains one financial covenant that requires the Company to maintain minimum liquidity and a collateral maintenance ratio clause, which requires the aggregate fair market value of the vessels plus the net realizable value of any additional collateral provided, to remain above defined ratios. At March 31, 2017 and December 31, 2016 , the Company was in compliance with this clause.

The Bulk Nordic Oasis Ltd. - Loan Agreement -- Dated December 11, 2015

The agreement advanced $21,500,000 in respect of the m/v Nordic Oasis. The agreement requires repayment of the advance in 24 equal quarterly installments of $375,000 beginning on March 28, 2016 and a balloon payment of $12,500,000 due with the final installment in March 2022. Interest on this advance is fixed at 4.30%.

The loan is secured by a first preferred mortgage on the m/v Nordic Oasis, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. Additionally, the agreement contains a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios. As of March 31, 2017 and December 31, 2016, the Company was in compliance with this covenant.
 
Term Loan Facility of USD 13,000,000 (Nordic Bulk Barents Ltd. and Nordic Bulk Bothnia Ltd.)
 
Barents and Bothnia entered into a secured Term Loan Facility of $13,000,000 in two tranches of $6,500,000 which were drawn in conjunction with the delivery of the m/v Bulk Bothnia on January 23, 2014 and the m/v Bulk Barents on March 7, 2014. The loan is secured by mortgages on the m/v Nordic Bulk Barents and m/v Nordic Bulk Bothnia and is guaranteed by the Company.

11


 
The facility bears interest at LIBOR plus 2.50% (3.65% at March 31, 2017). The loan requires repayment in 22 equal quarterly installments of $163,045 (per borrower) beginning in June 2014, one installment of$163,010 (per borrower) and a balloon payment of $1,755,415 (per borrower) due in December 2019. In addition, any cash in excess of $750,000 per borrower on any repayment date shall be applied toward prepayment of the relevant loan in inverse order, so the balloon payment is prepaid first. The agreement also contains a profit split in respect of the proceeds from the sale of either vessel and a minimum value clause ("MVC"). The Company was in compliance with this covenant at March 31, 2017 and December 31, 2016.

The Bulk Nordic Six Ltd. - Loan Agreement -- Dated December 21, 2016

The agreement advanced $19,500,000 in respect of the m/v Bulk Endurance on January 7, 2017, in two tranches. The agreement requires repayment of Tranche A, totaling $16,000,000, in 3 equal quarterly installments of $100,000 beginning on April 7, 2017 and, thereafter, 17 equal quarterly installments of $266,667 and a balloon payment of $11,667,667 due with the final installment in March 2022. Interest on this advance was fixed at 4.74% on March 27, 2017. The agreement also advanced $3,500,000 under Tranche B, which is payable in 18 equal quarterly installments of $65,000 beginning on October 7, 2017, and a balloon payment of $2,330,000 due with the final installment in March 2022. Interest on this advance is floating at LIBOR plus 6.00% (7.15% at March 31, 2017).

The loan is secured by a first preferred mortgage on the m/v Bulk Endurance, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. Additionally, the agreement contains a minimum liquidity requirement, positive working capital of the borrower and a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios.

109 Long Wharf Commercial Term Loan
 
Initial amount of $1,096,000 entered into on May 27, 2016. The Long Wharf Construction to Term Loan was repaid from the proceeds of this new facility. The loan is payable in 120 equal monthly installments of $9,133. Interest is floating at the 30 day LIBOR plus 2.00% (2.98% at March 31, 2017). The loan is collateralized by all real estate located at 109 Long Wharf, Newport, RI, and a corporate guarantee of the Company. The loan contains a maximum loan to value covenant and a debt service coverage ratio. At March 31, 2017 and December 31, 2016, the Company was in compliance with these covenants.

Phoenix Bulk Carriers (US) LLC Automobile Loan

The Company purchased a commercial vehicle for use at the site of its port project on the Atlantic Coast. The total loan amount of $29,435 is payable in 60 equal monthly installments of $539. Interest is fixed at 3.74%.

Phoenix Bulk Carriers (US) LLC Master Equipment Loan

The Company purchased commercial equipment for use at the site of its port project on the Atlantic Coast. The total loan amount of $250,536 is payable in 48 equal monthly installments of $5,741. Interest is fixed at 4.75%.

The future minimum annual payments (excluding unamortized bank fees) under the debt agreements are as follows:
 
 
Years ending
March 31,
 
(unaudited)
2018
$
24,659,322

2019
18,026,831

2020
16,930,290

2021
19,581,228

2022
64,575,102

Thereafter
461,947

 
$
144,234,720




12


Note 5. Derivative Instruments and Fair Value Measurements
 
Interest-Rate Swaps 
 
From time to time, the Company enters into interest rate swap agreements to mitigate the risk of interest rate fluctuations on its variable rate debt. At December 31, 2015, the Company was party to one interest rate swap, which was entered into in February 2011, as required by the 109 Long Wharf Construction to Term Loan agreement. Under the terms of the swap agreement, the interest rate was fixed at 6.63%. The swap was cancelled in conjunction with, and the outstanding balance was financed by, the 109 Long Wharf Commercial Term Loan in May 2016, which is discussed in Note 4.
 
The Company did not elect to designate the swap as a hedge at inception, pursuant to ASC 815, Derivatives and Hedging. Accordingly, changes in the fair value are recorded in current earnings in the accompanying consolidated statements of income.
The aggregate change in the fair value of the interest rate swap agreement for the three months ended March 31, 2016 was a loss of $18,000 which was reflected in the unrealized gain on derivative instruments in the accompanying consolidated statements of income. 
 
Forward freight agreements
 
The Company assesses risk associated with fluctuating future freight rates and, when appropriate, hedges identified economic risk with appropriate derivative instruments, specifically forward freight agreements (FFAs). Such economic hedges do not always qualify for hedge accounting under ASC 815 and as such, the usage of such derivatives can lead to fluctuations in the Company’s reported results from operations on a period-to-period basis. During the three months ended March 31, 2017 and 2016, the Company entered into FFAs that were not designated for hedge accounting. The aggregate fair value of these FFAs at March 31, 2017 and December 31, 2016 were assets of approximately $2,707,000, which are included in other current assets on the consolidated balance sheets, and liabilities of approximately $21,000, respectively, which are included in other current liabilities on the consolidated balance sheets. The change in the aggregate fair value of the FFAs during the three months ended March 31, 2017 is a gain of approximately $2,728,000, which is included in unrealized gain on derivative instruments in the accompanying consolidated statements of income. There were no open positions, and therefore no gain or loss in the three months ended March 31, 2016.

Fuel Swap Contracts

The Company continuously monitors the market volatility associated with bunker prices and seeks to reduce the risk of such volatility through a bunker hedging program. During the three months ended March 31, 2017 and 2016, the Company entered into various fuel swap contracts that were not designated for hedge accounting. The aggregate fair value of these fuel swaps at March 31, 2017 and December 31, 2016 are liabilities of approximately $454,000, which are included in other current liabilities on the consolidated balance sheets and assets of approximately $304,000, respectively, which are included in other current assets on the consolidated balance sheets. The change in the aggregate fair value of the fuel swaps during the three months ended March 31, 2017 and 2016 are a losses of approximately $758,000 and $318,000, respectively, which are included in unrealized gain on derivative instruments in the accompanying consolidated statements of income. 

The three levels of the fair value hierarchy established by ASC 820, Fair Value Measurements and Disclosures, in order of priority are as follows:
 
Level 1 – Quoted prices in active markets for identical assets or liabilities. Our Level 1 non-derivatives include cash, money-market accounts and restricted cash accounts.
 
Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable.
 
Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions). 


13


The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016:
 
Balance at
March 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
(unaudited)
 
 
 
 
 
 
Margin accounts
$
798,117

 
$
798,117

 
$

 
$

Fuel swaps
$
(454,487
)
 
$

 
$
(454,487
)
 
$

Freight forward agreements
$
2,706,550

 
$

 
$
2,706,550

 
$

 
 
Balance at
December 31, 2016
 
Level 1
 
Level 2
 
Level 3
Margin accounts
$
488,084

 
$
488,084

 
$

 
$

Fuel swaps
$
303,675

 
$

 
$
303,675

 
$

Freight forward agreements
$
(20,950
)
 
$

 
$
(20,950
)
 
$

 
The estimated fair values of the Company’s forward freight agreements and fuel swap contracts are based on market prices obtained from an independent third-party valuation specialist. Such quotes represent the estimated amounts the Company would receive to terminate the contracts.

Note 6. Related Party Transactions
 
December 31, 2016
 
Activity
 
March 31, 2017
 
 
 
 
 
(unaudited)
Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:
 

 
 

 
 

Affiliated companies (trade payables)
$
1,109,570

 
228,857

 
$
1,338,427

 
 
 
 
 
 
Included in current related party debt on the consolidated balance sheets:
 

 
 

 
 

Loan payable – 2011 Founders Note
$
4,325,000

 

 
$
4,325,000

Interest payable in-kind - 2011 Founders Note (i)
368,347

 
77,980

 
446,327

Promissory Note
2,000,000

 

 
2,000,000

Loan payable – BVH shareholder (STST)(ii)
9,278,800

 
(9,278,800
)
 

Total current related party debt
$
15,972,147

 
$
(9,200,820
)
 
$
6,771,327

 
(i)    Paid in cash
(ii) ST Shipping and Transport Pte. Ltd. ("STST")


 In November 2014, the Company entered into a $5,000,000 Promissory Note (the “Note”) with Bulk Invest, Ltd., a company controlled by the Founders. The Note is payable on demand. Interest on the Note is 5%. The Company repaid $1,000,000 of the Note in 2015 and $2,000,000 of the Note in 2016.
 
BVH entered into an agreement for the construction of two new ultramax newbuildings in 2013. Shareholder loans totaling $9,278,800 at December 31, 2016, were provided in order to make deposits on these contracts. The loans were converted to equity in conjunction with the acquisition of the noncontrolling interest in BVH on January 27, 2017. BVH is a wholly-owned subsidiary of the Company after the acquisition.
 
On October 1, 2011, the Company entered into a $10,000,000 loan agreement with the Founders, which was payable on demand at the request of the lenders (the 2011 Founders Note). The note bears interest at a rate of 5%. The balance of the 2011 Founders Note was $4,325,000 at March 31, 2017 and December 31, 2016.
 

14


Under the terms of a technical management agreement between the Company and Seamar Management S.A. (“Seamar”), an equity method investee, Seamar is responsible for the day-to-day operations for certain of the Company’s owned vessels and the two vessels operating under bareboat charters. During the three-month periods ended March 31, 2017 and 2016, the Company incurred technical management fees of approximately $641,000 and $437,000, respectively under this arrangement. These fees are included in vessel operating expenses in the consolidated statements of income. The total amounts payable to Seamar at March 31, 2017 and December 31, 2016 were approximately $1,338,000 and $1,110,000, respectively.

Dividends payable to the Founders total $11,720,000 at March 31, 2017 and December 31, 2016. Dividends payable to non-controlling interests total $0.9 million at March 31, 2017.

Note 7. Commitments and Contingencies

Vessel Sale and Leaseback Accounted for as a Capital Lease

The Company's fleet includes one vessel financed under a sale and leaseback financing arrangement accounted for as a capital lease. The selling price of the vessel to the new owner (lessor) was $21,000,000 and the fair value of the vessel at the inception of the lease was $24,000,000. The difference between the selling price and the fair value of the vessel was recorded as prepaid rent and is being amortized over the 25 year estimated useful life of the vessel. Prepaid rent is included in vessel under capital lease on the consolidated balance sheet at March 31, 2017. Minimum lease payments fluctuate based on 3-month LIBOR and are payable quarterly over the seven year lease term, with a balloon payment of $11.2 million due with the final lease payment in January 2024. Interest is floating at LIBOR plus 2.75% (3.85% including the margin, at inception of the lease).

Long-term Contracts Accounted for as Operating Leases

On July 5, 2016, the Company entered into five-year bareboat charter agreements with the owner of two vessels (which were then renamed the m/v Bulk Power and the m/v Bulk Progress). Under a bareboat charter, the charterer is responsible for all of the vessel operating expenses in addition to the charter hire. The agreement also contains a profit sharing arrangement. Scheduled increases in charter hire are included in minimum rental payments and recognized on a straight-line basis over the lease term. Profit sharing is excluded from minimum lease payments and recognized as incurred. The rent expense under these bareboat charters (which are classified as operating leases) totals approximately $365,000 per annum.

The Company leases office space for its Copenhagen operations. The lease can be terminated with six months prior notice after June 30, 2018.

Future minimum lease payments under capital leases and operating leases with initial or remaining terms in excess of one year at March 31, 2017 were:
 
Capital Lease
 
Operating Leases
2018
$
2,018,295

 
$
585,717

2019
2,018,295

 
530,649

2020
2,018,295

 
365,446

2021
2,018,295

 
365,446

2022
2,018,295

 
103,126

Thereafter
15,236,590

 

Total minimum lease payments
$
25,328,065

 
$
1,950,384

Less amount representing interest
4,328,065

 
 
Present value of minimum lease payments
21,000,000

 
 
Less current portion
1,248,211

 
 
Long-term portion
$
19,751,789

 
 

The Company is subject to certain asserted claims arising in the ordinary course of business. The Company intends to vigorously assert its rights and defend itself in any litigation that may arise from such claims. While the ultimate outcome of these matters could affect the results of operations of any one year, and while there can be no assurance with respect thereto, management believes that after final disposition, any financial impact to the Company would not be material to its consolidated financial

15


position, results of operations, or cash flows.     In April 2017, the Company entered into a settlement agreement related to a litigation action. The Company has determined that there is no requirement to record a loss, as it has been fully indemnified by third parties related to this matter.

16




ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with our condensed consolidated financial statements and footnotes thereto contained in this report.
 
Forward Looking Statements
 
All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward looking statements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward looking statements as a result of the risk factors and other factors detailed in our filings with the Securities and Exchange Commission. All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
 
Important Financial and Operational Terms and Concepts
 
The Company uses a variety of financial and operational terms and concepts when analyzing its performance.

These include revenue recognition, deferred revenue, allowance for doubtful accounts, vessels and depreciation and long-lived assets impairment considerations, as defined above as well as the following:

Voyage Revenue. Voyage revenue is derived from voyage charters which involve the carriage of cargo from load port to discharge port and revenue is earned on the quantity carried.

Charter Revenue. Charter revenue is earned when the Company lets a vessel it owns or operates to a charterer for a specified period of time.
 
Voyage Expenses. The Company incurs expenses for voyage charters, including bunkers (fuel), port charges, canal tolls, brokerage commissions and cargo handling operations, which are expensed as incurred.
 
Charter Expenses. The Company charters in vessels to supplement its owned fleet to support its voyage charter operations. The Company hires vessels under time charters with third party vessel owners, and recognizes the charter hire payments as an expense on a straight-line basis over the term of the charter. Charter hire payments are typically made in advance, and the unrecognized portion is reflected as advance hire in the accompanying consolidated balance sheets. Under the time charters, the vessel owner is responsible for the vessel operating costs such as crews, maintenance and repairs, insurance, and stores.
 
Vessel Operating Expenses. Vessel operating expenses represent the cost to operate the Company’s owned vessels. Vessel operating expenses include crew hire and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes, other miscellaneous expenses, and technical management fees. These expenses are recognized as incurred. Technical management services include day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, arranging the hire of crew, and purchasing stores, supplies, and spare parts.
 
Fleet Data. The Company believes that the measures for analyzing future trends in its results of operations consist of the following:
 
Shipping days. The Company defines shipping days as the aggregate number of days in a period during which its owned or chartered-in vessels are performing either a voyage charter (voyage days) or a time charter (time charter days).
 
Daily vessel operating expenses. The Company defines daily vessel operating expenses as vessel operating expenses divided by ownership days for the period. Vessel operating expenses include crew hire and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes, other miscellaneous expenses, and technical management fees.
 
Chartered in days. The Company defines chartered in days as the aggregate number of days in a period during which it chartered in vessels from third party vessel owners.
 

17




Time Charter Equivalent ‘‘TCE’’ rates. The Company defines TCE rates as total revenues less voyage expenses divided by the length of the voyage, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because rates for vessels on voyage charters are generally not expressed in per-day amounts while rates for vessels on time charters generally are expressed in per-day amounts.

Overview

The seaborne drybulk transportation industry is cyclical and volatile. Demand for drybulk tonnage increased during the first quarter, as did drybulk market rates. The increase in freight rates is due to various factors, including higher bunker fuel prices, increasing demand across all regions and to the South American grain cargo season. The Baltic Dry Index ("BDI"), a measure of dry bulk market performance, increased over 150% from the first quarter of 2016 (at its historic low), to the first quarter of 2017.

The Company's strategy to charter in vessels to serve only contracted business means we limit our carried volume of chartered-in vessels, which shields us from losses we may incur under a long-term charter-in strategy, but will also have the effect of limiting upside in an increasing rate environment, when we charter-in vessels at higher rates to meet the needs of this contracted business.

1st Quarter 2017 Highlights     

Net income attributable to Pangaea of $1.3 million for the quarter, even as the Company recorded a nonrecurring loss on the sale and leaseback financing arrangement for the m/v Bulk Destiny, which was delivered in January 2017. The total amount of the loss on sale and leaseback included in loss from operations was $4.3 million, of which one-half is allocated to non-controlling interests to arrive at net income attributable to Pangaea.
Pangaea's TCE rates increased 12% and total shipping days increased 52% due to moderate growth in the drybulk market and an increase in drybulk market rates.
At the end of the quarter, Pangaea had $21.7 million in unrestricted cash and cash equivalents.

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016
 
Revenues
 
Pangaea’s revenues are derived predominately from voyage and time charters, which are discussed below. Total revenue for the three months ended March 31, 2017 was $84.5 million, compared to $43.9 million for the same period in 2016. The total number of shipping days increased 52% to 4,342 in the three months ended March 31, 2017, compared to 2,863 for the same period in 2016. The average TCE rate was $9,943 per day for the three months ended March 31, 2017, compared to $8,888 per day for same period in 2016. The increase is predominantly due to the improvement in the dry bulk market and to the increase in total shipping days.
 
Components of revenue are as follows:
 
Voyage revenues for the three months ended March 31, 2017 increased by 85% to $77.7 million compared to $42.0 million for the same period in 2016. The increase in voyage revenues was predominantly driven by the 51% increase in the number of voyage days, which were 3,668 in the first quarter of 2017 as compared to 2,424 in the first quarter of 2016. Voyage revenues were also bolstered by the increased rates in the drybulk market over the comparable quarter.
 
Charter revenues increased to $6.8 million from $2.0 million, or 245%, for the three months ended March 31, 2017 compared to the same period in 2016. The increase in charter revenues was due to improvement in drybulk market rates, as indicated above, and to an increase in the number of time charter days. Time charter days were 674 in the first quarter of 2017 versus 438 in the first quarter of 2016, which is also indicative of the increased demand in the drybulk market.
 

18




Voyage Expenses
 
Voyage expenses for the three months ended March 31, 2017 were $41.3 million, compared to $18.5 million for the same period in 2016, an increase of approximately 123%. The increase in voyage expense was due to the increase in voyage days, as discussed above and to the increase in the cost of bunker fuel consumed. The increase in the cost of bunker fuel consumed of $11.5 million is due to both the increase in the number of voyage days and to an increase in price. The average price per ton of IFO bunker fuel increased 72% from March 31, 2016 to March 31, 2017. Bunker prices expressed on a per day basis were approximately $5,143 in the three months ended March 31, 2017 as compared to $3,030 in the three months ended March 31, 2016. Port expenses increased $6.2 million, due to the increase in the number of voyage days. The Company also incurred cargo relet expenses totaling $3.4 million in the first quarter of 2017, but did not incur any cargo relet expenses in the comparable quarter of 2016. Cargo relets are expenses paid to another operator to execute voyages when the Company determines there is arbitrage opportunity in doing so.
 
Charter Hire Expenses
 
Charter hire expenses for the three months ended March 31, 2017 were $23.2 million, compared to $8.5 million for the same period in 2016. The number of chartered-in days increased 82% from 1,601 days in the three months ended March 31, 2016 to 2,916 days for the three months ended March 31, 2017, while the improving market pushed average charter-hire rates paid by the Company up 15% for the three months ended March 31, 2017 as compared to the same period of 2016. The Company continues to operate under its successful strategy of chartering-in only for committed contracts. However, demand in the first quarter resulted in a 52% increase in total shipping days in 2017, many of which are performed on chartered-in ships.
 
Vessel Operating Expenses
 
Vessel operating expenses for the three months ended March 31, 2017 were $8.6 million, compared to $6.9 million in the comparable period in 2016, an increase of approximately 25%. The increase in vessel operating expenses is due to the increase in owned and bareboat charter days, which were 1,608 in the three months ended March 31, 2017 as compared to 1,270 in the three months ended March 31, 2016. This increase is due to the addition of two newbuildings delivered on January 7, 2017 and two vessels under bareboat charter since July 2016. Vessel operating expenses under these bareboat charters are paid by Pangaea. Vessel operating expense expressed on a per day basis decreased slightly to $5,343 for the three months ended March 31, 2017 from $5,424 for the same period in 2016.
 
Loss on Sale and Leaseback of Vessel
 
The Company sold the m/v Bulk Destiny, one of two ultramax newbuildings delivered on January 7, 2017, and simultaneously chartered-back the vessel under a capital lease financing arrangement with the buyer. At inception of the lease, the Company recognized a loss of $4.3 million representing the difference between the delivered cost and the fair value of the vessel, as determined by independent ship brokers. The Company's joint venture partner absorbed 50% of this loss, which is allocated to non-controlling interests to arrive at net income attributable to Pangaea.

(Loss) Income from Operations

The Company has a loss from operations of $0.4 million for the three months ended March 31, 2017 as compared to income from operations of $3.5 million for the three months ended March 31, 2016. This is predominantly due to the $4.3 million loss on the sale of the m/v Bulk Destiny. Total revenue increased 92% from $43.9 million for the three months ended March 31, 2016 to $84.5 million for the three months ended March 31, 2017, which is due to improvement in the drybulk shipping market and a resulting increase in total shipping days. However, the increase in market rates was met with increasing bunker prices and increasing charter hire rates, as noted above.

Unrealized Gain (Loss) on Derivative Instruments, Net

The Company entered into numerous freight forward agreements, or FFAs, for the three months ended March 31, 2017, in order to manage the risk associated with increasing charter-hire rates due to improvement in the drybulk market. The total gain on these FFAs was approximately $2.7 million. There was no gain or loss on FFAs in three months ended March 31, 2016. The Company also enters into fuel swaps to manage the risk associated with fluctuating bunker prices. The loss on these swaps (due to increasing bunker fuel prices) was approximately $0.7 million for the three months ended March 31, 2017 as compared to a gain of approximately $0.3 million for the three months ended March 31, 2016, when prices were decreasing.



19




Loss (Income) Attributable to Non-controlling Interests

The loss attributable to non-controlling interests is predominantly the $2.1 million loss on sale and leaseback of m/v Bulk Destinythat was allocated to BVH prior to the Company's acquisition of its joint venture partner's interest in BVH. This loss was offset by the income attributable to non-controlling interest in NBHC of approximately $0.9 million.

Significant accounting estimates

Long-lived Assets Impairment Considerations

The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the pricing of new vessels. Historically, both charter rates and vessel values tend to be cyclical. The carrying value of each group of vessels (allocated by size, age and major characteristic or trade), which are classified as held and used by the Company, are reviewed for potential impairment when events or changes in circumstances indicate that the carrying value of a particular group may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the group and its eventual disposition is less than its carrying value. This assessment is made at the group level, which represents the lowest level for which identifiable cash flows are largely independent of other groups of assets. The asset groups established by the Company are defined by vessel size and major characteristic or trade.

The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis include the Company’s estimate of future TCE rates based on current rates under existing charters and contracts. When existing contracts expire, the Company uses an estimated TCE based on actual results and extends these rates out to the end of the vessel’s useful life. TCE rates can be highly volatile, may affect the fair value of the Company’s vessels and may have a significant impact on the Company’s ability to recover the carrying amount of its fleet. Accordingly, the volatility is contemplated in the undiscounted projected net operating cash flow by using a sensitivity analysis based on percent changes in the TCE rates. The Company prepares a series of scenarios in an attempt to capture the range of possible trends and outcomes. For example, in the event that TCE rates over the estimated useful lives of the entire fleet are 10% lower than expected, the impact on the total undiscounted projected net operating cash flow would be a decrease of 17%. Projected net operating cash flows are net of brokerage and address commissions and assume no revenue on scheduled offhire days. The Company uses the current vessel operating expense budget, estimated costs of drydocking and historical general and administrative expenses as the basis for its expected outflows, and applies an inflation factor it considers appropriate. The net of these inflows and outflows, plus an estimated salvage value, constitutes the projected undiscounted future cash flows. If these projected cash flows do not exceed the carrying value of the asset group, an impairment charge would be recognized.
 
During the periods ended March 31, 2017 and December 31, 2016, the Company identified a potential impairment indicator by reference to estimated market values of its vessel groups. As a result, the Company evaluated each group for impairment by estimating the total undiscounted cash flows expected to result from the use of the group and its eventual disposal. The estimated undiscounted future cash flows were determined to be higher than the carrying amount of each group. Therefore, the Company did not recognize any additional loss on impairment for the three months ended March 31, 2017 or the year ended December 31, 2016.

Liquidity and Capital Resources

Liquidity and Cash Needs

The Company has historically financed its capital requirements with cash flow from operations, proceeds from related party debt, and proceeds from long-term debt. The Company may consider debt or additional equity financing alternatives from time to time. However, if market conditions are negative, the Company may be unable to raise additional debt or equity financing on acceptable terms or at all. As a result, the Company may be unable to pursue opportunities to expand its business.
 
At March 31, 2017 and December 31, 2017, the Company has working capital deficits of $0.6 million and $9.3 million, respectively. Included in current liabilities, and therefore impacting working capital, are loans and dividends payable to the Founders and their affiliated entities. These debts will only be repaid when cash flow is sufficiently in excess of normal operating requirements.
 

20




Considerations made by management in assessing the Company’s ability to continue as a going concern are its ability to consistently generate positive cash flows from operations, which were approximately $2.4 million and $4.1 million in the three months ended March 31, 2017 and 2016, respectively; $19.2 million in 2016 and $26.0 million in 2015; and its ability to procure long-term fixed contract employment (COAs) with new and longstanding customers. In addition, the Company has demonstrated its unique ability to adapt to changing market conditions by changing the chartered-in profile to meet its cargo commitments. For more information on the results of operations, see ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Results of Operations.

Capital Expenditures
 
The Company’s capital expenditures relate to the purchase and lease of interests in vessels, and capital improvements to its vessels which are expected to enhance the revenue earning capabilities and safety of these vessels. The Company’s owned and leased fleet includes two Panamax drybulk carriers, four Supramax drybulk carriers, two Ultramax Ice-Class 1C and two Handymax drybulk carriers (both of which are Ice-Class 1A). The Company also has a one-third interest in a consolidated joint venture which owns six Panamax Ice-Class 1A drybulk carriers.
 
In addition to vessel acquisitions that the Company may undertake in future periods, its other major capital expenditures include funding its program of regularly scheduled drydockings necessary to make improvements to its vessels, as well as to comply with international shipping standards and environmental laws and regulations. Funding expenses associated with these requirements will be met with cash from operations. The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce the Company’s available days and operating days during that period.
 
Off-Balance Sheet Arrangements
 
The Company does not have off-balance sheet arrangements at March 31, 2017 or December 31, 2016. 


21




ITEM 3. Quantitative and Qualitative Disclosures about Market Risks
 
Interest Rate Risk    
 
The international shipping industry is capital intensive, requiring significant amounts of investment provided in the form of long-term debt. Certain of the Company’s outstanding debt contain floating interest rates that fluctuate with changes in the financial markets and in particular changes in LIBOR. Increasing interest rates could increase the Company’s interest expense and adversely impact its future earnings. In the past, the Company has managed this risk by entering into interest rate swap agreements in which the Company exchanged fixed and variable interest rates based on agreed upon notional amounts. The Company has used such derivative financial instruments as risk management tools and not for speculative or trading purposes. As of March 31, 2017 and December 31, 2016, the Company did not have any open interest rate swap agreements. The Company’s net effective exposure to floating interest rate fluctuations on its outstanding debt was $45.5 million and $46.8 million, respectively, at March 31, 2017 and December 31, 2016.
 
The Company’s interest expense is affected by changes in the general level of interest rates, particularly LIBOR. As an indication of the extent of the Company’s sensitivity to interest rate changes, an increase in LIBOR of 1% would have decreased the Company’s net income and cash flows during the three months ended March 31, 2017 and 2016 by approximately $0.1 million and $0.3 million, respectively, based on the debt levels at the beginning of each period. The Company expects its sensitivity to interest rate changes to increase in the future if the Company enters into additional floating rate debt agreements in connection with its acquisition of additional vessels.
 
Forward Freight Agreements
 
The Company assesses risk associated with fluctuating future freight rates and, when appropriate, hedges identified economic risk with appropriate derivative instruments, specifically forward freight agreements (FFAs). Such economic hedges do not always qualify for hedge accounting under ASC 815 and as such, the usage of such derivatives can lead to fluctuations in the Company’s reported results from operations on a period-to-period basis. The aggregate fair value of FFAs at March 31, 2017 was an asset of $2.7 million and the aggregate fair value of FFAs at December 31, 2016 was a liability of approximately $21,000.
 
Fuel Swap Contracts 

The Company continuously monitors the market volatility associated with bunker prices and seeks to reduce the risk of such volatility through a bunker hedging program. During the three months ended March 31, 2017 and the year ended December 31, 2016, the Company entered into various fuel swap contracts that were not designated for hedge accounting. The aggregate fair value of these fuel swaps at March 31, 2017 was a liability of $0.5 million. At December 31, 2016 the aggregate fair value of fuel swaps was an asset of approximately $0.3 million.
 

22




ITEM 4. Controls and Procedures
 
Management’s Evaluation of Disclosure Controls and Procedures.
 
As of the end of the period covered by this report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective for the three months ended March 31, 2017.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 

23




PART II: OTHER INFORMATION
 
Item 1 - Legal Proceedings
 
From time to time, we are involved in various other disputes and litigation matters that arise in the ordinary course of our business, principally cargo claims. Those claims, even if lacking merit, could result in the expenditure by us of significant financial and managerial resources.
 
Item 1A – Risk Factors
 
There have been no material changes from the “Risk Factors” previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 23, 2017.
 
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3 - Defaults Upon Senior Securities
 
None.
 
Item 4 – Mine Safety Disclosures
 
None.
 
Item 5 - Other Information  
 
None.
 

24




Item 6 – Exhibits
 
Exhibit no.
Description
Incorporated By Reference
Filed herewith
 
 
Form
Date
Exhibit
 
 
 
 
 
 
 
10.36
Fourth Amendatory Agreement dated April 14, 2017
 
 
 
X
 
 
 
 
 
 
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
31.2
Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
32.2
Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
EX-101.INS
XBRL Instance Document
 
 
 
X
 
 
 
 
 
 
EX-101.SCH
XBRL Taxonomy Extension Schema
 
 
 
X
 
 
 
 
 
 
EX-101.CAL
XBRL Taxonomy Extension Calculation Linkbase
 
 
 
X
 
 
 
 
 
 
EX-101.DEF
XBRL Taxonomy Extension Definition Linkbase
 
 
 
X
 
 
 
 
 
 
EX-101.LAB
XBRL Taxonomy Extension Label Linkbase
 
 
 
X
 
 
 
 
 
 
EX-101.PRE
XBRL Taxonomy Extension Presentation Linkbase
 
 
 
X
 

25




SIGNATURES
 
Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 10, 2017.
 
 
PANGAEA LOGISTICS SOLUTIONS LTD.
 
 
 
By:
/s/ Edward Coll
 
Edward Coll
 
Chief Executive Officer
 
(Principal Executive Officer)
 
 
 
By:
/s/ Gianni DelSignore
 
Gianni DelSignore
 
Chief Financial Officer
 
(Principal Financial and Accounting Officer)


26
EX-10.36 2 bulkpartners_dvbfourthamen.htm EXHIBIT 10.36 Exhibit

Execution Version






Dated as of April 14, 2017


BULK PANGAEA LIMITED, BULK PATRIOT LTD., BULK JULIANA LTD.,
BULK TRIDENT LTD. and BULK PHOENIX LTD.
as Borrowers

BULK PARTNERS (BERMUDA) LTD., BULK PARTNERS HOLDING COMPANY BERMUDA LTD.
BULK FLEET BERMUDA HOLDING COMPANY LTD. and PANGAEA LOGISTICS SOLUTIONS LTD.
as Joint and Several Guarantors


DVB BANK SE
as Lender


-and-


DVB BANK SE
as Agent and Security Trustee


_______________________________________________________

FOURTH AMENDATORY AGREEMENT
______________________________________________________

Amending and Supplementing the Loan Agreement dated as of April 15, 2013,
as amended by a First Amendatory Agreement dated as of May 16, 2013,
a Second Amendatory Agreement dated August 28, 2013 and
a Third Amendatory Agreement dated as of July 14, 2016







FOURTH AMENDATORY AGREEMENT dated as of April 14, 2017 (this “Fourth Amendatory Agreement”)
AMONG
(1)
BULK PANGAEA LIMITED, BULK PATRIOT LTD., BULK JULIANA LTD., BULK TRIDENT LTD. and BULK PHOENIX LTD., each a company duly organized and existing under the laws of Bermuda, as borrowers (the “Borrowers”);
(2)
BULK PARTNERS (BERMUDA) LTD., BULK PARTNERS HOLDING COMPANY BERMUDA LTD., BULK FLEET BERMUDA HOLDING COMPANY LTD. and PANGAEA LOGISTICS SOLUTIONS LTD. (“Pangaea”), each a company organized and existing under the laws of Bermuda whose registered office is at 3rd Floor, Par la Ville Place, 14 Par la Ville Road, Hamilton HM08, Bermuda, as joint and several guarantors (the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);
(3)
DVB BANK SE, acting through its office at Platz der Republic 6, 60325 Frankfurt am Main, Germany, as lender (in such capacity, the “Lender”); and
(4)
DVB BANK SE, acting through its office at Platz der Republic 6, 60325 Frankfurt am Main, Germany, as facility agent for the Lenders (in such capacity, the “Agent”) and as security trustee for the Lenders (in such capacity, the “Security Trustee”).
WITNESSETH THAT:
WHEREAS, the Borrowers, the Guarantors, the Lender, the Agent and the Security Trustee are parties to a Loan Agreement dated as of April 15, 2013 (as amended by a First Amendatory Agreement dated May 16, 2013, a Second Amendatory Agreement dated August 28, 2013 and a Third Amendatory Agreement dated as of July 14, 2016, the “Loan Agreement”);
WHEREAS, upon the terms and conditions stated herein the parties hereto have agreed to further amend and supplement the Loan Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1
DEFINITIONS
1.1
Defined terms. Capitalized terms used but not defined herein shall have the meaning assigned such terms in the Loan Agreement.
2
AMENDMENTS TO THE LOAN AGREEMENT
2.1
Amendments. Pursuant to Clause 28 of the Loan Agreement, the parties hereto agree to amend the Loan Agreement as follows with effect on and from the date hereof:
(a)
The following definitions are added to Clause 1.1 in alphabetical order:




““Fourth Amendatory Agreement” means the Fourth Amendatory Agreement dated as of April 14, 2017, amending certain provisions of this Agreement;”
(b)
In Clause 1.1, the definition of “Applicable Maturity Date” is amended and restated to read as follows:
““Applicable Maturity Date” means:
(a)
with respect to the Advance relating to BULK PANGAEA, the earlier of April 18, 2017 and the date on which the Advance relating to BULK PANGAEA is accelerated pursuant to Clause 20.4;
(b)
with respect to the Advance relating to BULK PATRIOT, the earlier of April 18, 2017 and the date on which the Advance relating to BULK PATRIOT is accelerated pursuant to Clause 20.4;
(c)
with respect to the Advance relating to BULK JULIANA, the earlier of July 19, 2018 and the date on which the Advance relating to BULK JULIANA is accelerated pursuant to Clause 20.4;
(d)
with respect to the Advance relating to BULK TRIDENT, the earlier of July 19, 2019 and the date on which the Advance relating to BULK TRIDENT is accelerated pursuant to Clause 20.4; and
(e)
with respect to the Advance relating to BULK NEWPORT, the earlier of July 19, 2019 and the date on which the Advance relating to BULK NEWPORT is accelerated pursuant to Clause 20.4; ”
(c)
Clause 8.1 is hereby amended and restated to read as follows:
8.1    Amount of repayment installments. The Borrowers shall repay the Loan as follows:
(a)
with respect to the Advance relating to BULK PANGAEA, by 12 consecutive quarterly installments of $346,875 for each of installment number 1 through 11, and $1,040,625 for the last quarterly repayment installment which shall be due on April 18, 2017;
(b)
with respect to the Advance relating to BULK PATRIOT, by 13 consecutive quarterly installments of $612,500 for each of installment numbers 1 through 12, and $$1,087,500 for the last quarterly repayment installment, which shall be due on April 18, 2017;
(c)
with respect to the Advance relating to BULK JULIANA, by 21 consecutive quarterly installments of $338,020.83, provided that installments 13 through 15 (due, respectively, on July 18, 2016, October 19, 2016 and January 19, 2017) shall be deferred (such deferred repayments in the aggregate being the “Juliana Deferred Amount”) and such Juliana Deferred Amount shall be added to installments 16 through 21 so that each of installments 16 (due on April 18, 2017) through 21 (due on July 19, 2018) shall be in the amount of $507,031.50;
(d)
with respect to the Advance relating to BULK TRIDENT, by 25 consecutive quarterly installments of $318,750, provided that installments 14 and 15 shall be deferred (such

2



deferred repayments in the aggregate being the “Trident Deferred Amount”) and such Trident Deferred Amount shall be added to the remaining installments and the balloon payment to be made together with the last installment so that installment 16 (due on January 19, 2017) shall be in the amount of $550,000, each of installments 17 (due on April 18, 2017) and 18 shall be in the amount of $650,000, each of installments 19 (due on October 19, 2017) and 20 shall be in the amount of $435,000, each of installments 21 (due on April 19, 2018) and 22 shall be in the amount of $327,500, each of installments 23 (due on October 19, 2018) through 25 shall be in the amount of $300,00 and the balloon payment to be made on July 19, 2019 shall be in the amount of $1,462,500; and
(e)
with respect to the Advance relating to BULK NEWPORT, by 24 consecutive quarterly installments of: $0 for installment number 1, $216,667 for each of installment numbers 2 through 8, $416,667 for each of installment numbers 9 through 14, provided that installments 13 and 14 shall be deferred (such deferred repayments in the aggregate being the “Newport Deferred Amount”, and together with the Juliana Deferred Amount and the Trident Deferred Amount, collectively, the “Deferred Amounts”) and such Newport Deferred Amount shall be added to the remaining installments and the balloon payment so that installment 15 (due on January 19, 2017) shall be in the amount of $500,000, each of installments 16 (due on April 18, 2017) and 17 shall be in the amount of $700,000, each of installments 18 through 24 shall be in the amount of $442,858 and the balloon payment to be made on July 19, 2019 shall be in the amount of $1,816,659;
provided that:
(A)
notwithstanding anything to the contrary in Clauses 8.1(a) – (e), the repayment schedule attached as Exhibit 1 to the Fourth Amendatory Agreement shall be controlling and any conflict between such repayment schedule and the foregoing Clauses 8.1(a) – (e) shall be resolved in favor of said repayment schedule; and
(B)
notwithstanding anything herein or in any other Finance Document to the contrary, if the Advance relating to a Ship (other than BULK PATRIOT) is irrevocably and unconditionally repaid in full, such Ship shall remain as Collateral (such Ship being an “Additional Collateral Ship”) until the earlier to occur of: (i) such Additional Collateral Ship is sold or becomes a Total Loss or (ii) the Loan is repaid in full.”
3
CONDITIONS PRECEDENT AND SUBSEQUENT TO EFFECTIVENESS
3.1
Conditions precedent to effectiveness. The effectiveness of this Fourth Amendatory Agreement shall be subject to the following conditions precedent being completed to the reasonable satisfaction of the Agent on or before 5:00 p.m. New York time on April 14, 2017:
(a)
the Agent shall have received a duly executed original of this Fourth Amendatory Agreement;
(b)
evidence that $1,000,000 from the Retention Account has been applied toward repayment of the Advance relating to BULK PANGAEA and the Advance relating to BULK PATRIOT; and
(c)
evidence that following the payment in (b) above, the balance in the Retention Account is not less than $1,500,000.

3



3.2
Conditions subsequent to effectiveness. The effectiveness of this Fourth Amendatory Agreement shall be subject to the following conditions subsequent being completed to the reasonable satisfaction of the Agent:
(a)
on or before 5:00 p.m. New York time on April 28, 2017:
(i)
the Agent shall have received a duly executed original of an amendment to each Mortgage (other than the Mortgage in relation to BULK PATRIOT, which shall be released upon full and final unconditional irrevocable payment of the Advance relating to such Ship), in Agreed Form;
(ii)
the Agent shall have received a copy of any power of attorney under which this Fourth Amendatory Agreement, each Mortgage amendment and any other document to be executed pursuant to this Fourth Amendatory Agreement was or is to be executed on behalf of a Security Party;
(iii)
the Agent shall have received copies of all consents which a Security Party requires to enter into, or make any payment under, this Fourth Amendatory Agreement and any other document to be executed pursuant to this Fourth Amendatory Agreement, each certified as of a date reasonably near the date of this Fourth Amendatory Agreement by a director, an officer, an authorized person or an attorney-in-fact of such party as being a true and correct copy thereof, or certification by such director, officer, authorized person or attorney-in-fact that no such consents are required;
(iv)
the Agent shall have received a certificate from a director, an officer, an authorized person or an attorney-in-fact of each Borrower and each Guarantor, dated as of a date reasonably near the date of this Fourth Amendatory Agreement, certifying as to:
(A)
the absence of any proceeding for the dissolution or liquidation of such Borrower or such Guarantor, as the case may be;
(B)
the absence of any changes to the constitutional documents of such Borrower or Guarantor since the date they were last delivered to the Agent;
(C)
the veracity in all material respects of the representations and warranties contained in the Loan Agreement, as amended hereby, as though made on and as of the date of this Fourth Amendatory Agreement, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;
(D)
the absence of any material misstatement of fact in any information provided by any of the Security Parties to the Agent or the Lenders or the Security Trustee since April 15, 2013 and that such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

4



(E)
the absence of any event occurring and continuing, or resulting from this Fourth Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(F)
the absence of any material adverse change in the financial condition, operations or business prospects of any of the Security Parties since the date of the Loan Agreement; and
(v)
the Agent shall have received favorable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of such relevant jurisdictions as the Agent may require, including without limitation Bermuda and Panama.
3.3
Deferral of conditions to effectiveness. The Agent, with the consent of the Lenders, may defer completion of one or more of the conditions referred to in Clauses 3.1 and 3.2, provided that the Security Parties deliver to the Agent a written undertaking to satisfy such conditions within ten (10) Business Days after the Agent grants such deferral (or such longer period as the Agent may specify).
3.4
Failure to complete conditions to effectiveness. If the Security Parties fail to complete, or cause the completion of, all or any of the conditions to effectiveness required by Clauses 3.1 and 3.2 by the deadlines stated therein, and the Agent has not granted a deferral pursuant to Clause 3.3 hereof, or if the Agent has granted a deferral and the Security Parties fail to complete such deferred conditions to effectiveness by the deadline set by the Agent under Clause 3.3, the Borrowers acknowledge and agree that such failure shall be deemed an Event of Default under the Loan Agreement and that the Creditor Parties shall be entitled to all rights and to exercise all remedies afforded to them under the terms of the Loan Agreement (all of which are expressly reserved).
4
EFFECT OF AMENDMENTS
4.1
References. Each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the “Loan Agreement” in any of the other Finance Documents, shall mean and refer to the Loan Agreement as amended hereby.
4.2
Effect of amendment. Subject to the terms of this Fourth Amendatory Agreement, with effect on and from the date hereof, the Loan Agreement shall be, and shall be deemed by this Fourth Amendatory Agreement to have been, amended upon the terms and conditions stated herein and, as so amended, the Loan Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. In addition, each of the Finance Documents shall be, and shall be deemed by this Fourth Amendatory Agreement to have been, amended as follows:
(a)
the definition of, and references throughout each of such Finance Documents to, the “Loan Agreement” and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended or supplemented by this Fourth Amendatory Agreement; and
(b)
by construing references throughout each of the Finance Documents to “this Agreement”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Fourth Amendatory Agreement.
4.3
No other amendments; ratification.

5



(a)
Except as amended hereby, all other terms and conditions of the Loan Agreement and the other Finance Documents remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.
(b)
Without limiting the foregoing, each of the Guarantors, by its countersignature of this Fourth Amendatory Agreement, acknowledges and agrees that its Guarantee remains in full force and effect.
(c)
The Security Parties acknowledge and agree that the Loan Agreement shall, together with this Fourth Amendatory Agreement, be read and construed as a single agreement.
5
REPRESENTATIONS AND WARRANTIES
5.1
Authority. The execution and delivery by the Security Parties of this Fourth Amendatory Agreement and the performance by the Security Parties of all of their respective agreements and obligations under the Loan Agreement, as amended hereby, are within each Security Party’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Security Party and, except as stated herein, no consent of any third party is required in connection with the transactions contemplated by this Fourth Amendatory Agreement.
5.2
Enforceability. This Fourth Amendatory Agreement and the Loan Agreement, as amended hereby, constitute the legal, valid and binding obligations of the Security Parties and are enforceable against the Security Parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought.
6
RELEASE
6.1
Release.
In consideration of the Lender, the Agent and the Security Trustee entering into this Fourth Amendatory Agreement, each Security Party acknowledges and agrees that:
(i)
it does not have any claim or cause of action against any Creditor Party (or any of such Creditor Party’s respective directors, officers, employees or agents);
(ii)
it does not have any offset right, counterclaim or defense of any kind against any of its Secured Liabilities to any Creditor Party; and
(iii)
each of the Creditor Parties has heretofore properly performed and satisfied in a timely manner all of their respective obligations to the Borrower.
(b)
To eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any Creditor Party’s rights, interests, contracts, collateral security or remedies, the Borrower unconditionally releases, waives and forever discharges:
(i)
any and all liabilities, obligations, duties, promises or indebtedness of any kind of any Creditor Party to any Security Party, except the obligations to be performed by any Creditor

6



Party on or after the date hereof as expressly stated in the Loan Agreement and the other Finance Documents, in each case as amended by this Fourth Amendatory Agreement; and
(ii)
all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which a Security Party might otherwise have against any Creditor Party or any of its directors, officers, employees or agents,
in either case (i) or (ii), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind.
7
MISCELLANEOUS
7.1
Governing law. THIS FOURTH AMENDATORY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW §5-1401).
7.2
Consent to Jurisdiction. The provisions of Clause 32.2 (Consent to Jurisdiction) of the Loan Agreement shall apply to this Fourth Amendatory Agreement as if set out in full but so that references to “this Agreement” are amended to read “this Fourth Amendatory Agreement”.
7.3
Counterparts. This Fourth Amendatory Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
7.4
Severability. Any provision of this Fourth Amendatory Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating or affecting the validity or enforceability of such provision in any other jurisdiction.
7.5
Costs and Expenses.
The Borrowers agree to pay or reimburse each of the Creditor Parties for all reasonable expenses in connection with the preparation, execution and carrying out of this Fourth Amendatory Agreement and any other document in connection herewith or therewith, including but not limited to, reasonable fees and expenses of any counsel whom the Creditor Parties may deem necessary or appropriate to retain, any duties, registration fees and other charges and all other reasonable out-of-pocket expenses incurred by any of the Creditor Parties in connection with the foregoing.
7.6
Headings and captions. The headings captions in this Fourth Amendatory Agreement are for convenience of reference only and shall not define or limit the provisions hereof.
[SIGNATURE PAGE FOLLOWS ON NEXT PAGE]

7



WHEREFORE, the parties hereto have caused this Fourth Amendatory Agreement to be executed as of the date first above written.

BULK PANGAEA LIMITED, as Borrower


By: /s/ Deborah L. Davis

Deborah L. Davis
Director

BULK PATRIOT LTD., as Borrower


By: /s/ Deborah L. Davis
Deborah L. Davis
Director


BULK JULIANA LTD., as Borrower

By: /s/ Deborah L. Davis
Deborah L. Davis
Director


BULK TRIDENT LTD., as Borrower

By: /s/ Deborah L. Davis
Deborah L. Davis
Director

BULK PHOENIX LTD., as Borrower

By: /s/ Deborah L. Davis
Deborah L. Davis
Director

BULK PARTNERS (BERMUDA) LTD.,
as Guarantor

By: /s/ Arthur Jones
Name: Arthur Jones
Title: Director
BULK PARTNERS HOLDING COMPANY BERMUDA LTD., as Guarantor

By: /s/ Deborah L. Davis
Deborah L. Davis
Director


BULK FLEET BERMUDA HOLDING COMPANY LTD.,
as Guarantor

By: /s/ Deborah L. Davis
Deborah L. Davis
Director


PANGAEA LOGISTICS SOLUTIONS LTD.,
as Guarantor

By:  /s/ Edward Coll
Name: Edward Coll
Title: Chief Executive Officer


DVB BANK SE, as Lender, Agent and Security Trustee


By: /s/Alkaterini Zarkadoula
Name:Alkaterini Zarkadoula
Vice President

By: /s/Christina Hagen
Name:Christina Hagen
Vice President


8

EX-31.1 3 panl-3312017xex311.htm EXHIBIT 31.1 Exhibit


Exhibit 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Edward Coll, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q for the three months ended March 31, 2017, of Pangaea Logistics Solutions Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
May 10, 2017
/s/ Edward Coll
 
 
Edward Coll
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)



EX-31.2 4 panl-3312017xex312.htm EXHIBIT 31.2 Exhibit


Exhibit 31.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
 
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Gianni DelSignore, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q for the three months ended March 31, 2017, of Pangaea Logistics Solutions Ltd.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
May 10, 2017
/s/ Gianni DelSignore
 
 
Gianni DelSignore
 
 
Chief Financial Officer
 
 
(Principal Financial Officer)



EX-32.1 5 panl-3312017xex321.htm EXHIBIT 32.1 Exhibit


Exhibit 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Pangaea Logistics Solutions Ltd. (the “Company”) on Form 10-Q for the three months ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward Coll, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: 
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date:
May 10, 2017
/s/ Edward Coll
 
 
Edward Coll
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)



EX-32.2 6 panl-3312017xex322.htm EXHIBIT 32.2 Exhibit


Exhibit 32.2
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Pangaea Logistics Solutions Ltd. (the “Company”) on Form 10-Q for the three months ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gianni DelSignore, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: 
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:
May 10, 2017
/s/ Gianni DelSignore
 
 
Gianni DelSignore
 
 
Chief Financial Officer
 
 
(Principal Financial Officer)



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style="font-family:inherit;font-size:10pt;">m/v BULK TRIDENT</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">14,770,397</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">14,962,163</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v BULK BEOTHUK</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">11,908,718</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">12,006,270</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v BULK NEWPORT</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">13,305,732</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">13,473,429</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC BARENTS</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">3,475,893</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">3,517,151</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC BOTHNIA</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">3,471,564</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">3,520,616</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC OSHIMA</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">31,040,353</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">31,346,414</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC OLYMPIC</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">31,263,546</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">31,560,965</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC ODIN</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">31,443,352</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">31,741,658</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v NORDIC OASIS</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">32,528,072</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">32,834,500</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v BULK ENDURANCE </font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(1)</sup></font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">27,744,569</font></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#8212;</font></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">296,764,337</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">272,382,798</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Other fixed assets, net</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">2,815,438</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,882,874</font></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Total fixed assets, net</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">299,579,775</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">275,265,672</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">m/v BULK DESTINY </font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(2)</sup></font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">23,788,463</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#8212;</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr></table></div></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;padding-right:48px;">(1)</font><font style="font-family:inherit;font-size:10pt;">The m/v Bulk Endurance was delivered to the Company on January 7, 2017.</font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:96px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">(2)</sup>&#160;</font></div></td><td style="vertical-align:top;padding-left:60px;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;text-indent:-60px;"><font style="font-family:inherit;font-size:10pt;">The Company took delivery of the m/v Bulk Destiny on January 7, 2017 and simultaneously entered into a sale-leaseback financing agreement, the terms of which are discussed in Note 7. At March 31, 2017, the vessel acquired under a capital lease had a carrying amount of </font><font style="font-family:inherit;font-size:10pt;">$23,788,463</font><font style="font-family:inherit;font-size:10pt;"> and accumulated amortization of </font><font style="font-family:inherit;font-size:10pt;">$181,053</font><font style="font-family:inherit;font-size:10pt;">.</font></div></td></tr></table></div> <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Future minimum lease payments under capital leases and operating leases with initial or remaining terms in excess of one year at March 31, 2017 were:</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:680px;border-collapse:collapse;text-align:left;"><tr><td colspan="8" rowspan="1"></td></tr><tr><td style="width:400px;" rowspan="1" colspan="1"></td><td style="width:9px;" rowspan="1" colspan="1"></td><td style="width:119px;" rowspan="1" colspan="1"></td><td style="width:4px;" rowspan="1" colspan="1"></td><td style="width:16px;" rowspan="1" colspan="1"></td><td style="width:9px;" rowspan="1" colspan="1"></td><td style="width:119px;" rowspan="1" colspan="1"></td><td style="width:4px;" rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:bottom;border-bottom:1px solid #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Capital Lease</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Operating Leases</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2018</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,018,295</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">585,717</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2019</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,018,295</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">530,649</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2020</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,018,295</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">365,446</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2021</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,018,295</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">365,446</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2022</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,018,295</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">103,126</font></div></td><td style="vertical-align:bottom;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Thereafter</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">15,236,590</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#8212;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Total minimum lease payments</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">25,328,065</font></div></td><td style="vertical-align:bottom;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">1,950,384</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Less amount representing interest</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">4,328,065</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Present value of minimum lease payments</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">21,000,000</font></div></td><td style="vertical-align:bottom;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Less current portion</font></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">1,248,211</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Long-term portion</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">$</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">19,751,789</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></div> <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Basis of Presentation</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The accompanying consolidated balance sheet as of </font><font style="font-family:inherit;font-size:10pt;">March&#160;31, 2017</font><font style="font-family:inherit;font-size:10pt;">, the consolidated statements of income and cash flows for the </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> months ended </font><font 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Actual results could differ from those estimates. 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