x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | 98-1205464 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock | PANL | NASDAQ |
Large accelerated Filer ¨ | Accelerated Filer ¨ | |
Non-accelerated Filer x | Smaller reporting company x | |
Emerging growth company ¨ |
Page | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Signatures |
March 31, 2020 | December 31, 2019 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 39,972,746 | $ | 50,555,091 | |||
Restricted cash | 1,000,000 | 1,000,000 | |||||
Accounts receivable (net of allowance of $1,723,510 at March 31, 2020 and $1,908,841 at December 31, 2019) | 23,140,149 | 28,309,402 | |||||
Bunker inventory | 19,156,816 | 21,001,010 | |||||
Advance hire, prepaid expenses and other current assets | 17,831,006 | 18,770,825 | |||||
Vessel held for sale | — | 8,319,152 | |||||
Total current assets | 101,100,717 | 127,955,480 | |||||
Restricted cash | 1,500,000 | 1,500,000 | |||||
Fixed assets, net | 287,533,664 | 281,474,857 | |||||
Investment in newbuildings in-process | 15,390,634 | 15,357,189 | |||||
Finance lease right of use assets, net | 46,493,362 | 53,615,305 | |||||
Total assets | $ | 452,018,377 | $ | 479,902,831 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities | |||||||
Accounts payable, accrued expenses and other current liabilities | $ | 35,556,515 | $ | 39,973,635 | |||
Related party debt | 242,852 | 332,987 | |||||
Deferred revenue | 7,616,895 | 14,376,394 | |||||
Current portion of secured long-term debt | 22,240,674 | 22,990,674 | |||||
Current portion of finance lease liabilities | 6,902,370 | 12,549,208 | |||||
Dividend payable | 132,659 | 631,961 | |||||
Total current liabilities | 72,691,965 | 90,854,859 | |||||
Secured long-term debt, net | 81,143,060 | 83,649,717 | |||||
Finance lease liabilities | 55,768,735 | 57,498,217 | |||||
Long-term liabilities - other - Note 8 | 5,052,984 | 4,828,364 | |||||
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; 45,112,062 shares issued and outstanding at March 31, 2020; 44,886,122 shares issued and outstanding at December 31, 2019 | 4,512 | 4,489 | |||||
Additional paid-in capital | 158,564,477 | 157,504,895 | |||||
Retained earnings | 5,941,205 | 12,736,580 | |||||
Total Pangaea Logistics Solutions Ltd. equity | 164,510,194 | 170,245,964 | |||||
Non-controlling interests | 72,851,439 | 72,825,710 | |||||
Total stockholders' equity | 237,361,633 | 243,071,674 | |||||
Total liabilities and stockholders' equity | $ | 452,018,377 | $ | 479,902,831 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Voyage revenue | $ | 86,523,891 | $ | 65,851,347 | |||
Charter revenue | 9,356,046 | 13,692,838 | |||||
95,879,937 | 79,544,185 | ||||||
Expenses: | |||||||
Voyage expense | 47,795,912 | 32,174,107 | |||||
Charter hire expense | 32,325,447 | 24,947,369 | |||||
Vessel operating expense | 9,933,862 | 9,754,375 | |||||
General and administrative | 3,993,243 | 4,033,680 | |||||
Depreciation and amortization | 4,242,251 | 4,377,188 | |||||
Gain on sale of vessels | (77,990 | ) | — | ||||
Total expenses | 98,212,725 | 75,286,719 | |||||
(Loss) income from operations | (2,332,788 | ) | 4,257,466 | ||||
Other (expense) income: | |||||||
Interest expense, net | (2,116,320 | ) | (2,207,168 | ) | |||
Interest expense on related party debt | — | (26,898 | ) | ||||
Unrealized (loss)/gain on derivative instruments, net | (2,917,094 | ) | 2,289,786 | ||||
Other income | 596,556 | 167,820 | |||||
Total other (expense) income, net | (4,436,858 | ) | 223,540 | ||||
Net (loss) income | (6,769,646 | ) | 4,481,006 | ||||
Income attributable to non-controlling interests | (25,729 | ) | (778,452 | ) | |||
Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $ | (6,795,375 | ) | $ | 3,702,554 | ||
Earnings per common share: | |||||||
Basic | $ | (0.16 | ) | $ | 0.09 | ||
Diluted | $ | (0.16 | ) | $ | 0.09 | ||
Weighted average shares used to compute earnings per common share: | |||||||
Basic | 43,341,005 | 42,601,227 | |||||
Diluted | 43,341,005 | 43,071,632 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Total Pangaea Logistics Solutions Ltd. Equity | Non-Controlling Interest | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at December 31, 2019 | 44,886,122 | $ | 4,489 | $ | 157,504,895 | $ | 12,736,580 | $ | 170,245,964 | $ | 72,825,710 | $ | 243,071,674 | |||||||||||||
Share-based compensation | — | — | 1,102,769 | — | 1,102,769 | — | 1,102,769 | |||||||||||||||||||
Issuance of restricted shares, net of forfeitures | 225,940 | 23 | (43,187 | ) | — | (43,164 | ) | — | (43,164 | ) | ||||||||||||||||
Net (Loss) Income | — | — | — | (6,795,375 | ) | (6,795,375 | ) | 25,729 | (6,769,646 | ) | ||||||||||||||||
Balance at March 31, 2020 | 45,112,062 | $ | 4,512 | $ | 158,564,477 | $ | 5,941,205 | $ | 164,510,194 | $ | 72,851,439 | $ | 237,361,633 | |||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Total Pangaea Logistics Solutions Ltd. Equity | Non-Controlling Interest | Total Stockholders' Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at December 31, 2018 | 43,998,560 | $ | 4,400 | $ | 155,946,452 | $ | 5,737,199 | $ | 161,688,051 | $ | 71,678,946 | $ | 233,366,997 | |||||||||||||
Share-based compensation | — | — | 674,599 | — | 674,599 | — | 674,599 | |||||||||||||||||||
Issuance of restricted shares, net of forfeitures | 505,530 | 50 | (50 | ) | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | 3,702,554 | 3,702,554 | 778,452 | 4,481,006 | |||||||||||||||||||
Balance at March 31, 2019 | 44,504,090 | $ | 4,450 | $ | 156,621,001 | $ | 9,439,753 | $ | 166,065,204 | $ | 72,457,398 | $ | 238,522,602 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Operating activities | |||||||
Net (loss) income | $ | (6,769,646 | ) | $ | 4,481,006 | ||
Adjustments to reconcile net income to net cash (used in) provided by operations: | |||||||
Depreciation and amortization expense | 4,242,251 | 4,377,188 | |||||
Amortization of deferred financing costs | 176,526 | 182,802 | |||||
Amortization of prepaid rent | 30,568 | 29,649 | |||||
Unrealized loss (gain) on derivative instruments | 2,917,094 | (2,289,786 | ) | ||||
Gain from equity method investee | (429,360 | ) | (128,250 | ) | |||
Earnings attributable to non-controlling interest recorded as interest expense | (27,643 | ) | — | ||||
(Recovery) provision for doubtful accounts | (185,331 | ) | 487,372 | ||||
Gain on sale of vessel | (77,990 | ) | — | ||||
Drydocking costs | (2,903,277 | ) | (381,059 | ) | |||
Share-based compensation | 1,102,769 | 674,599 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 5,354,584 | 15,264,298 | |||||
Bunker inventory | 1,844,194 | 3,806,864 | |||||
Advance hire, prepaid expenses and other current assets | 1,369,179 | (872,860 | ) | ||||
Accounts payable, accrued expenses and other current liabilities | (6,729,172 | ) | (5,363,850 | ) | |||
Deferred revenue | (6,759,499 | ) | (8,308,254 | ) | |||
Net cash (used in) provided by operating activities | (6,844,753 | ) | 11,959,719 | ||||
Investing activities | |||||||
Purchase of vessels and vessel improvements | (283,446 | ) | (11,426,174 | ) | |||
Investment in newbuildings in-process | (33,445 | ) | — | ||||
Purchase of fixed assets and equipment | — | (159,619 | ) | ||||
Proceeds from sale of vessels | 8,397,142 | — | |||||
Purchase of derivative instrument | (628,000 | ) | — | ||||
Net cash provided by (used in) investing activities | 7,452,251 | (11,585,793 | ) | ||||
Financing activities | |||||||
Payments of related party debt | (90,135 | ) | (838,102 | ) | |||
Payments of financing fees and debt issuance costs | (149,118 | ) | (260,225 | ) | |||
Payments of long-term debt | (3,284,067 | ) | (4,203,014 | ) | |||
Proceeds from finance leases | — | 13,000,000 | |||||
Payments of finance lease obligations | (7,376,320 | ) | (1,429,275 | ) | |||
Accrued common stock dividends paid | (499,302 | ) | (1,135,000 | ) | |||
Cash paid for incentive compensation shares relinquished | (43,164 | ) | — | ||||
Contributions from non-controlling interest recorded as long-term liability | 322,750 | — | |||||
Payments to non-controlling interest recorded as long-term liability | (70,487 | ) | — | ||||
Net cash (used in) provided by financing activities | (11,189,843 | ) | 5,134,384 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (10,582,345 | ) | 5,508,310 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 53,055,091 | 56,114,735 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 42,472,746 | $ | 61,623,045 |
Supplemental cash flow information | |||||||
Cash and cash equivalents | $ | 39,972,746 | $ | 59,123,045 | |||
Restricted cash | 2,500,000 | 2,500,000 | |||||
$ | 42,472,746 | $ | 61,623,045 |
March 31, 2020 | December 31, 2019 | ||||||
(unaudited) | |||||||
Money market accounts – cash equivalents | $ | 28,744,019 | $ | 32,150,342 | |||
Cash (1) | 11,228,727 | 18,404,749 | |||||
Total cash and cash equivalents | $ | 39,972,746 | $ | 50,555,091 | |||
Restricted cash | 2,500,000 | 2,500,000 | |||||
Total cash, cash equivalents and restricted cash | $ | 42,472,746 | $ | 53,055,091 |
March 31, 2020 | December 31, 2019 | |||||||
(unaudited) | ||||||||
Advance hire | $ | 3,976,205 | $ | 3,985,826 | ||||
Prepaid expenses | 2,918,761 | 4,924,557 | ||||||
Accrued receivables | 6,802,009 | 6,466,068 | ||||||
Margin deposit | 2,383,275 | 269,379 | ||||||
Other current assets | 1,750,756 | 3,124,995 | ||||||
$ | 17,831,006 | $ | 18,770,825 |
March 31, 2020 | December 31, 2019 | |||||||
(unaudited) | ||||||||
Accounts payable | $ | 23,712,097 | $ | 24,173,291 | ||||
Accrued expenses | 8,590,256 | 14,883,555 | ||||||
Derivative liabilities | 2,761,165 | 472,073 | ||||||
Other accrued liabilities | 492,997 | 444,716 | ||||||
$ | 35,556,515 | $ | 39,973,635 |
March 31, | December 31, | ||||||
2020 | 2019 | ||||||
Owned vessels | (unaudited) | ||||||
m/v BULK PANGAEA | $ | 14,650,117 | $ | 14,988,076 | |||
m/v NORDIC ODYSSEY | 22,564,898 | 22,897,029 | |||||
m/v NORDIC ORION | 23,437,392 | 23,688,812 | |||||
m/v BULK NEWPORT | 12,722,983 | 12,975,767 | |||||
m/v NORDIC OSHIMA | 27,985,690 | 28,325,078 | |||||
m/v NORDIC ODIN | 28,381,196 | 28,094,764 | |||||
m/v NORDIC OLYMPIC | 28,275,734 | 27,931,771 | |||||
m/v NORDIC OASIS | 28,900,457 | 29,190,935 | |||||
m/v BULK ENDURANCE | 24,784,479 | 25,037,775 | |||||
m/v BULK FREEDOM | 9,918,266 | 8,269,777 | |||||
m/v BULK PRIDE | 12,858,352 | 12,996,311 | |||||
m/v BULK SPIRIT | 12,727,209 | 12,867,060 | |||||
m/v BULK INDEPENDENCE | 13,965,442 | 14,000,946 | |||||
m/v BULK FRIENDSHIP | 13,897,189 | 14,052,500 | |||||
m/v BULK BEOTHUK (1) | 6,476,788 | — | |||||
MISS NORA G PEARL | 3,497,833 | 3,609,851 | |||||
285,044,025 | 278,926,452 | ||||||
Other fixed assets, net | 2,489,639 | 2,548,405 | |||||
Total fixed assets, net | $ | 287,533,664 | $ | 281,474,857 | |||
Right of Use Assets | |||||||
m/v BULK DESTINY | $ | 21,272,616 | $ | 21,484,733 | |||
m/v BULK BEOTHUK (1) | — | 6,589,537 | |||||
m/v BULK TRIDENT | 11,949,023 | 12,095,727 | |||||
m/v BULK PODS | $ | 13,271,723 | 13,445,308 | ||||
$ | 46,493,362 | $ | 53,615,305 |
March 31, 2020 | December 31, 2019 | Interest Rate (%) (1) | Maturity Date | ||||||||||
(unaudited) | |||||||||||||
Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Loan Agreement (2) | 27,716,300 | 28,466,300 | 4.07 | % | 2022 | ||||||||
Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. Loan Agreement (2) (3) | 12,104,406 | 12,854,405 | 3.77 | % | 2020 | ||||||||
Bulk Nordic Oshima Ltd. Amended and Restated Loan Agreement (2) (4) | 13,129,295 | 13,504,295 | 3.14 | % | 2021 | ||||||||
Bulk Nordic Oasis Ltd. Loan Agreement | 15,125,000 | 15,500,000 | 4.30 | % | 2022 | ||||||||
The Amended Senior Facility - Dated May 13, 2019 (formerly The Amended Senior Facility - Dated December 21, 2017) (5) | |||||||||||||
Bulk Nordic Six Ltd. - Tranche A | 13,033,330 | 13,299,997 | 3.69 | % | 2024 | ||||||||
Bulk Nordic Six Ltd. - Tranche B | 2,785,000 | 2,850,000 | 3.65 | % | 2024 | ||||||||
Bulk Pride - Tranche C | 6,025,000 | 6,300,000 | 4.69 | % | 2024 | ||||||||
Bulk Independence - Tranche E | 13,250,000 | 13,500,000 | 3.48 | % | 2024 | ||||||||
Bulk Freedom Loan Agreement | 3,650,000 | 3,800,000 | 4.49 | % | 2022 | ||||||||
109 Long Wharf Commercial Term Loan | 675,866 | 703,266 | 3.69 | % | 2026 | ||||||||
Total | $ | 107,494,197 | $ | 110,778,263 | |||||||||
Less: unamortized bank fees | (4,110,463 | ) | (4,137,872 | ) | |||||||||
$ | 103,383,734 | $ | 106,640,391 | ||||||||||
Less: current portion | (22,240,674 | ) | (22,990,674 | ) | |||||||||
Secured long-term debt, net | $ | 81,143,060 | $ | 83,649,717 |
(1) | As of March 31, 2020. |
(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 ASC 810-10 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. |
(3) | Interest on 50% of the advances to Bulk Nordic Odyssey and Bulk Nordic Orion was fixed at 4.24% in March 2017 and Interest on the remaining advances is floating at LIBOR plus 2.40%. The Company will refinance or pay off the balloon payments due in September of 2020. |
(4) | Interest on 50% of the advance to Bulk Nordic Oshima was fixed at 4.16% in January 2017 and Interest on the remaining advance is floating at LIBOR plus 2.25%. |
(5) | This facility is cross-collateralized by the vessels m/v Bulk Endurance, m/v Bulk Pride, and m/v Bulk Independence and is guaranteed by the Company. |
Fair Value | Notional Amount | |||||||||||||
Interest Rate Derivative | Effective Date | Maturity Date | Interest Rate Strike | March 31, 2020 | December 31, 2019 | March 31, 2020 | December 31, 2019 | |||||||
Interest rate cap contract - 1 | November 15, 2020 | April 30, 2026 | 3.25% | $53,970 | $— | $5,742,750 | $— | |||||||
Interest rate cap contract - 2 | December 15, 2020 | May 31, 2026 | 3.25% | $56,132 | $— | $5,742,750 | $— | |||||||
Interest rate cap contract - 3 | May 15, 2021 | November 30, 2026 | 3.25% | $68,994 | $— | $5,654,336 | $— | |||||||
Interest rate cap contract - 4 | May 15, 2021 | November 30, 2026 | 3.25% | $68,994 | $— | $5,654,336 | $— | |||||||
Total | $248,090 |
Balance at | |||||||||||||||
March 31, 2020 | Level 1 | Level 2 | Level 3 | ||||||||||||
(unaudited) | |||||||||||||||
Margin accounts | $ | 2,383,275 | $ | 2,383,275 | $ | — | $ | — | |||||||
Fuel swaps | $ | (2,873,625 | ) | $ | — | $ | (2,873,625 | ) | $ | — | |||||
Freight forward agreements | $ | (135,630 | ) | $ | — | $ | (135,630 | ) | $ | — | |||||
Interest Rate Derivative | $ | 248,090 | $ | 248,090 | $ | — |
Balance at December 31, 2019 | Level 1 | Level 2 | Level 3 | ||||||||||||
Margin accounts | $ | 269,379 | $ | 269,379 | $ | — | $ | — | |||||||
Fuel swaps | $ | (322,313 | ) | $ | — | $ | (322,313 | ) | $ | — | |||||
Freight forward agreements | $ | (149,760 | ) | $ | — | $ | (149,760 | ) | $ | — |
December 31, 2019 | Activity | March 31, 2020 | |||||||||
(unaudited) | |||||||||||
Included in trade accounts receivable and voyage revenue on the consolidated balance sheets and statements of income, respectively: | |||||||||||
Trade receivables due from King George Slag (i) | $ | 457,629 | $ | — | $ | 457,629 | |||||
Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets: | |||||||||||
Affiliated companies (trade payables) (ii) | 5,679,768 | 744,554 | 6,424,322 | ||||||||
Included in current related party debt on the consolidated balance sheets: | |||||||||||
Interest payable - 2011 Founders Note | 332,987 | (90,135 | ) | 242,852 | |||||||
Total current related party debt | $ | 332,987 | $ | (90,135 | ) | $ | 242,852 |
i. | King George Slag LLC is a joint venture of which the Company owns 25% |
ii. | Seamar Management S.A. ("Seamar") |
2013 common stock dividend | ||||
Balance at December 31, 2019 | $ | 631,961 | ||
Paid in cash | (478,359 | ) | ||
Balance at March 31, 2020 | $ | 153,602 |
Year ending December 31, | |||
2020 | $ | 7,472,176 | |
2021 | 9,774,982 | ||
2022 | 9,608,224 | ||
2023 | 9,440,933 | ||
2024 | 26,166,010 | ||
Thereafter | 13,051,955 | ||
Total minimum lease payments | $ | 75,514,280 | |
Less imputed interest | 12,843,175 | ||
Present value of minimum lease payments | 62,671,105 | ||
Less current portion | 6,902,370 | ||
Long-term portion | $ | 55,768,735 |
(in thousands, except for shipping days data and per share data) (figures may not foot due to rounding) | For the three months ended March 31, | |||||||
2020 | 2019 | |||||||
Selected Financial Data | ||||||||
Voyage revenue | $ | 86,524 | $ | 65,851 | ||||
Charter revenue | 9,356 | 13,693 | ||||||
Total revenue | 95,880 | 79,544 | ||||||
Voyage expense | 47,796 | 32,174 | ||||||
Charter hire expense | 32,325 | 24,947 | ||||||
Vessel operating expenses | 9,934 | 9,754 | ||||||
Total cost of transportation and service revenue | 90,055 | 66,876 | ||||||
Vessel depreciation and amortization | 4,196 | 4,342 | ||||||
Gross Profit | 1,629 | 8,326 | ||||||
Other operating expenses | 4,039 | 4,069 | ||||||
Gain on sale of vessels | (78 | ) | — | |||||
(Loss) income from operations | (2,333 | ) | 4,257 | |||||
Total other expense, net | (4,437 | ) | 224 | |||||
Net (loss) income | (6,770 | ) | 4,481 | |||||
Income attributable to non-controlling interests | (26 | ) | (778 | ) | ||||
Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $ | (6,795 | ) | $ | 3,703 | |||
Net (loss) income from continuing operations per common share information | ||||||||
Basic net (loss) income per share | $ | (0.16 | ) | $ | 0.09 | |||
Diluted net (loss) income per share | (0.16 | ) | $ | 0.09 | ||||
Weighted-average common shares Outstanding - basic | 43,341,005 | 42,601,227 | ||||||
Weighted-average common shares Outstanding - diluted | 43,341,005 | 43,071,632 | ||||||
Adjusted EBITDA (1) | $ | 2,934 | $ | 9,309 | ||||
Shipping Days (2) | ||||||||
Voyage days | 3,625 | 2,905 | ||||||
Time charter days | 951 | 1,033 | ||||||
Total shipping days | 4,576 | 3,938 | ||||||
TCE Rates ($/day) (3) | $ | 10,508 | $ | 12,029 |
March 31, 2020 | December 31, 2019 | |||||||
Selected Data from the Consolidated Balance Sheets | ||||||||
Cash, restricted cash and cash equivalents | $ | 42,473 | $ | 53,055 | ||||
Total assets | $ | 452,018 | $ | 479,903 | ||||
Total secured debt, including finance leases liabilities | $ | 166,055 | $ | 176,688 | ||||
Total shareholders' equity | $ | 237,362 | $ | 243,072 | ||||
For the three months ended March 31, | ||||||||
2020 | 2019 | |||||||
Selected Data from the Consolidated Statements of Cash Flows | ||||||||
Net cash (used in) provided by operating activities | $ | (6,845 | ) | $ | 11,960 | |||
Net cash provided by (used in) investing activities | $ | 7,452 | $ | (11,586 | ) | |||
Net cash (used in) provided by financing activities | $ | (11,190 | ) | $ | 5,134 |
(1) | Adjusted EBITDA represents operating earnings before interest expense, income taxes, depreciation and amortization, loss on sale and leaseback of vessels, share-based compensation and other non-operating income and/or expense, if any. Adjusted EBITDA is included because it is used by management and certain investors to measure operating performance and is also reviewed periodically as a measure of financial performance by Pangaea's Board of Directors. Adjusted EBITDA is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S. GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company's operating performance required by U.S. GAAP. Pangaea’s definition of Adjusted EBITDA used here may not be comparable to the definition of EBITDA used by other companies. |
(2) | Shipping days are defined 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 time charter (time charter days). |
(3) | Pangaea defines time charter equivalent, or “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 such amounts. |
(in thousands, figures may not foot due to rounding) | Three Months Ended March 31, | ||||||
2020 | 2019 | ||||||
Net Transportation and Service Revenue (4) | |||||||
Gross Profit | $ | 1,629 | $ | 8,327 | |||
Add: | |||||||
Vessel Depreciation and Amortization | $ | 4,196 | $ | 4,342 | |||
Net transportation and service revenue | $ | 5,825 | $ | 12,669 | |||
Adjusted EBITDA | |||||||
(Loss) income from operations | $ | (2,333 | ) | $ | 4,257 | ||
Depreciation and amortization | 4,242 | 4,377 | |||||
Gain on sale of vessels | $ | (78 | ) | $ | — | ||
Share-based compensation | $ | 1,103 | $ | 675 | |||
Adjusted EBITDA | $ | 2,934 | $ | 9,309 |
• | Net loss attributable to Pangaea Logistics Solutions Ltd. was approximately $6.8 million for three months ended March 31, 2020 as compared to approximately $3.7 million net income for the same period of 2019. |
• | Net loss per share was $0.16 for three months ended March 31, 2020 as compared to earnings per share of $0.09 for the same period of 2019. |
• | Pangaea's TCE rates were $10,508 for the three months ended March 31, 2020 and $12,029 for the three months ended March 31, 2019 while the market average for the first quarter of 2020 was approximately $5,920, giving the Company an overall average premium over market rates of approximately $4,588 or 78%. The Company's long-term COAs, cargo focus, and specialized fleet give rise to this premium. |
• | Total revenue increased to $95.9 million for the three months ended March 31, 2020, from $79.5 million for the three months ended March 31, 2019 due to an increase in shipping days. |
• | At the end of the quarter, Pangaea had $42.5 million in cash, restricted cash and cash equivalents. |
• | disruptions to our operations as a result of the potential health impact on our employees and crew, and on the workforces of our customers and business partners; |
• | disruptions to our business from, or additional costs related to, new regulations, directives or practices implemented in response to the pandemic, such as travel restrictions (including for any of our onshore personnel or any of our crew members to timely embark or disembark from our vessels), increased inspection regimes, hygiene measures (such as quarantining and physical distancing) or increased implementation of remote working arrangements; |
• | potential delays in the loading and discharging of cargo on or from our vessels, and any related off hire due to quarantine, worker health, or regulations, which in turn could disrupt our operations and result in a reduction of revenue; |
• | potential shortages or a lack of access to required spare parts for our vessels, or potential delays in any repairs to, scheduled or unscheduled maintenance or modifications, or drydocking of, our vessels, as a result of a lack of berths available by shipyards from a shortage in labor or due to other business disruptions; |
• | potential delays in vessel inspections and related certifications by class societies, customers or government agencies; |
• | potential reduced cash flows and financial condition, including potential liquidity constraints; |
• | reduced access to capital, including the ability to refinance any existing obligations, as a result of any credit tightening generally or due to continued declines in global financial markets, including to the prices of publicly-traded securities of us, our peers and of listed companies generally; |
• | a reduced ability to opportunistically sell any of our vessels on the second-hand market, either as a result of a lack of buyers or a general decline in the value of second-hand vessels; |
• | a decline in the market value of our vessels, which may cause us to (a) incur impairment charges or (b) breach certain covenants under our financing agreements (including our secured facility agreements and financial leases) relating to vessel-to-loan covenants; and |
• | potential deterioration in the financial condition and prospects of our customers, joint venture partners or business partners, or attempts by customers or third parties to invoke force majeure contractual clauses as a result of delays or other disruptions. |
Exhibit No. | Description |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
EX-101.INS | XBRL Instance Document |
EX-101.SCH | XBRL Taxonomy Extension Schema |
EX-101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
EX-101.DEF | XBRL Taxonomy Extension Definition Linkbase |
EX-101.LAB | XBRL Taxonomy Extension Label Linkbase |
EX-101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
PANGAEA LOGISTICS SOLUTIONS LTD. | ||
By: | /s/ Edward Coll | |
Edward Coll | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
By: | /s/ Gianni Del Signore | |
Gianni Del Signore | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q 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 13, 2020 | /s/ Edward Coll |
Edward Coll | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q 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: | 5/13/2020 | /s/ Gianni Del Signore |
Gianni Del Signore | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
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: | 5/13/2020 | /s/ Edward Coll |
Edward Coll | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
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 13, 2020 | /s/ Gianni Del Signore |
Gianni Del Signore | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Derivative Instruments and Fair Value Measurements (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table summarizes these derivative instruments as of March 31, 2020.
The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019:
|
Basis of Presentation and Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Issued Accounting Pronouncements | Time charter out contracts Charter revenue is earned when the Company lets a vessel it owns or operates to a charterer for a specified period of time. Charter revenue is based on the agreed rate per day. The charterer has the power to direct the use and receives substantially all of the economic benefits from the use of the vessel. The Company determined that all time charter contracts are considered operating leases and therefore fall under the scope of ASC 842 because: (i) the vessel is an identifiable asset; (ii) the Company does not have substantive substitution rights; and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use. Time charter in contracts 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. As allowed by a practical expedient under ASC 842, the Company made an accounting policy election by class of underlying asset for leases with a term of 12 months or less, to forego recognizing a right-of-use asset and lease liability on its balance sheet. For the quarter ending March 31, 2020, the Company did not have any time charter in contracts with terms greater than 12 months, as such charter hire expense presented on the consolidated statements of income are lease expenses for chartered in contracts less than 12 months. Leases under ASC 842 At March 31, 2020, the Company had four vessels chartered to customers under time charters that contain leases. These four leases varied in original length from 1 day to 30 days. At March 31, 2020, lease payments due under these arrangements totaled approximately $312,000 and each of the time charters were due to be completed in thirty-one days or less. The Company does not have any sales-type or direct financing leases. The Company has two non-cancelable office leases and non-cancelable office equipment leases and the lease assets and liabilities are not material. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Companies can apply the ASU immediately, however the guidance will only be available until December 31, 2022. The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures. |
Derivative Instruments and Fair Value Measurements |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives Instruments and Fair Value Measurements | DERIVATIVE INSTRUMENTS AND FAIR VALUE MEASUREMENTS 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). These economic hedges do not usually 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, 2020 and December 31, 2019 were liabilities of approximately $136,000 and $150,000, 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, 2020 and 2019 are a gain of approximately $14,130 and a loss of approximately $440,000, respectively, which are included in unrealized gain (loss) on derivative instruments in the accompanying consolidated statements of income. 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. The Company enters into fuel swap contracts that are not designated 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 these fuel swaps at March 31, 2020 and December 31, 2019 are liabilities of approximately $2,874,000 and $322,000, respectively, which are included in other current liabilities on the consolidated balance sheets. The change in the aggregate fair value of the fuel swaps during the three months ended March 31, 2020 and 2019 are a loss of approximately $2,551,000 and a gain of approximately $2,729,000, respectively, which are included in unrealized (loss) gain on derivative instruments in the accompanying consolidated statements of income. Interest rate cap The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract. In January 2020, the Company paid $628,000 for interest rate cap contracts to mitigate the risk associated with increases in interest rates on our sale and lease back financing arrangements of the four new-buildings. In the event that the three-month LIBOR rate rises above the applicable strike rate, the Company would receive quarterly payments related to the spread difference. The following table summarizes these derivative instruments as of March 31, 2020.
These interest rate cap agreements do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change as income or expense during the period in which the change occurs. The loss of $379,910 on changes in the fair value of the interest rate cap contracts was recorded in unrealized (loss)/gain on derivative instruments, net at March 31, 2020. The three levels of the fair value hierarchy established by ASC 820, Fair Value Measurements and Disclosures, in order of priority are as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Our Level 1 fair value measurements include cash, money-market accounts and restricted cash accounts. Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions). The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019:
The estimated fair values of the Company’s forward freight agreements and fuel swap contracts are based on market prices obtained from an independent third-party valuation specialist based on published indices. Such quotes represent the estimated amounts the Company would receive or pay to terminate the contracts. The interest rate caps contracts are valued using analysis obtained from independent third party valuation specialists based on market observable inputs, representing Level 2 assets. |
Commitments and Contingencies - Future Minimum Lease Payments Under Finance Leases (Details) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Commitments and Contingencies Disclosure [Abstract] | ||
2020 | $ 7,472,176 | |
2021 | 9,774,982 | |
2022 | 9,608,224 | |
2023 | 9,440,933 | |
2024 | 26,166,010 | |
Thereafter | 13,051,955 | |
Total minimum lease payments | 75,514,280 | |
Less imputed interest | 12,843,175 | |
Present value of minimum lease payments | 62,671,105 | |
Less current portion | 6,902,370 | $ 12,549,208 |
Long-term portion | $ 55,768,735 | $ 57,498,217 |
Basis of Presentation and Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain reclassifications have been made to prior periods to conform to current period presentation. 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 future cash flows used in its impairment analysis, the estimated salvage value used in determining depreciation expense and the allowances for doubtful accounts. Voyage revenues represent revenues earned by the Company, principally from providing transportation services under voyage charters. A voyage charter involves the carriage of a specific amount and type of cargo on a load port to discharge port basis, subject to various cargo handling terms. Under a voyage charter, the service revenues are earned and recognized ratably over the duration of the voyage. A contract is accounted for when it has approval and commitment from both parties, the rights and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Estimated losses under a voyage charter are provided for in full at the time such losses become probable. Demurrage, which is included in voyage revenues, represents payments by the charterer to the vessel owner when loading and discharging time exceed the stipulated time in the voyage charter. Demurrage is measured in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage revenues arise. At the time demurrage revenue can be estimated, it is included in the calculation of voyage revenue and recognized ratably over the duration of the voyage to which it pertains. Voyage revenue recognized is presented net of address commissions. Charter revenues relate to a time charter arrangement under which the Company is paid to provide transportation services on a per day basis for a specified period of time. Revenues from time charters are earned and recognized on a straight-line basis over the term of the charter, as the vessel operates under the charter. Revenue is not earned when vessels are offhire. Cash and cash equivalents include short-term deposits with an original maturity of less than three months. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:
(1) Consists of cash deposits at various major banks. Restricted cash at March 31, 2020 and December 31, 2019 consists of $2.5 million held by the facility agent as required by the 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. $1,000,000 restricted cash was reclassified to current assets due to the balloon payments of Bulk Nordic Odyssey Ltd and Bulk Nordic Orion Ltd due in September of 2020. Advance hire, prepaid expenses and other current assets were comprised of the following:
Accounts payable, accrued expenses and other current liabilities were comprised of the following:
Time charter out contracts Charter revenue is earned when the Company lets a vessel it owns or operates to a charterer for a specified period of time. Charter revenue is based on the agreed rate per day. The charterer has the power to direct the use and receives substantially all of the economic benefits from the use of the vessel. The Company determined that all time charter contracts are considered operating leases and therefore fall under the scope of ASC 842 because: (i) the vessel is an identifiable asset; (ii) the Company does not have substantive substitution rights; and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use. Time charter in contracts 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. As allowed by a practical expedient under ASC 842, the Company made an accounting policy election by class of underlying asset for leases with a term of 12 months or less, to forego recognizing a right-of-use asset and lease liability on its balance sheet. For the quarter ending March 31, 2020, the Company did not have any time charter in contracts with terms greater than 12 months, as such charter hire expense presented on the consolidated statements of income are lease expenses for chartered in contracts less than 12 months. Leases under ASC 842 At March 31, 2020, the Company had four vessels chartered to customers under time charters that contain leases. These four leases varied in original length from 1 day to 30 days. At March 31, 2020, lease payments due under these arrangements totaled approximately $312,000 and each of the time charters were due to be completed in thirty-one days or less. The Company does not have any sales-type or direct financing leases. The Company has two non-cancelable office leases and non-cancelable office equipment leases and the lease assets and liabilities are not material. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Companies can apply the ASU immediately, however the guidance will only be available until December 31, 2022. The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures. |
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