0001606909-22-000069.txt : 20220809 0001606909-22-000069.hdr.sgml : 20220809 20220809163843 ACCESSION NUMBER: 0001606909-22-000069 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 56 CONFORMED PERIOD OF REPORT: 20220630 FILED AS OF DATE: 20220809 DATE AS OF CHANGE: 20220809 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: 221148973 BUSINESS ADDRESS: STREET 1: 109 LONG WHARF CITY: NEWPORT STATE: RI ZIP: 02840 BUSINESS PHONE: 401-457-9552 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-20220630.htm 10-Q panl-20220630
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2022
 
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: 001-36798

PANGAEA LOGISTICS SOLUTIONS LTD. 
(Exact name of Registrant as specified in its charter)
Bermuda98-1205464
(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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockPANLNASDAQ

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨

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 $0.0001 per share, 46,006,182 shares outstanding as of August 5, 2022.



TABLE OF CONTENTS
 
  Page
PART IFINANCIAL 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

2




Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets
June 30, 2022December 31, 2021
(unaudited) 
Assets  
Current assets  
Cash and cash equivalents$102,175,390 $56,208,902 
Accounts receivable (net of allowance of $2,509,255 and $1,990,459 at June 30, 2022 and December 31, 2021, respectively)
41,100,379 54,259,265 
Bunker inventory52,823,684 27,147,760 
Advance hire, prepaid expenses and other current assets38,063,875 46,347,687 
Total current assets234,163,328 183,963,614 
Fixed assets, net469,965,208 471,912,810 
Advances for vessel purchases 1,990,000 
Finance lease right of use assets, net46,296,661 45,195,759 
Other non-current Assets4,198,766 3,961,823 
Total assets$754,623,963 $707,024,006 
Liabilities and stockholders' equity  
Current liabilities  
Accounts payable, accrued expenses and other current liabilities$65,304,630 $49,154,439 
Related party debt 242,852 
Deferred revenue24,346,521 32,205,312 
Current portion of secured long-term debt12,891,501 15,443,115 
Current portion of finance lease liabilities16,153,750 14,479,803 
Dividend payable197,741 213,765 
Total current liabilities118,894,143 111,739,286 
Secured long-term debt, net99,587,978 105,836,797 
Finance lease liabilities, net176,437,981 170,959,553 
Long-term liabilities - other - Note 818,849,983 17,806,976 
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; 46,006,182 shares issued and outstanding at June 30, 2022; 45,617,840 shares issued and outstanding at December 31, 2021
4,599 4,562 
Additional paid-in capital162,385,398 161,534,280 
Retained earnings125,250,467 85,663,375 
Total Pangaea Logistics Solutions Ltd. equity287,640,464 247,202,217 
Non-controlling interests53,213,414 53,479,177 
Total stockholders' equity340,853,878 300,681,394 
Total liabilities and stockholders' equity$754,623,963 $707,024,006 

 The accompanying notes are an integral part of these consolidated financial statements.
3


Pangaea Logistics Solutions Ltd.
Consolidated Statements of Operations
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
 
Revenues:
Voyage revenue$173,189,073 $117,395,377 $349,525,824 $225,625,680 
Charter revenue22,354,883 28,148,988 37,780,535 44,891,212 
Total revenue195,543,956 145,544,365 387,306,359 270,516,892 
Expenses:
Voyage expense67,907,824 46,112,779 133,158,291 93,951,636 
Charter hire expense65,713,016 62,604,014 143,424,623 116,239,356 
Vessel operating expense12,929,700 9,772,966 26,117,533 18,268,469 
General and administrative5,137,387 6,029,793 10,418,775 10,234,691 
Depreciation and amortization7,293,433 4,868,730 14,594,852 9,287,824 
Loss on impairment of vessels  3,007,809  
Loss on sale of vessels318,032  318,032  
Total expenses159,299,392 129,388,282 331,039,915 247,981,976 
Income from operations36,244,564 16,156,083 56,266,444 22,534,916 
Other income (expense): 
Interest expense, net(3,634,732)(2,621,110)(7,005,905)(4,577,916)
Income attributable to Non-controlling interest recorded as long-term liability interest expense
(1,702,674)(179,080)(3,543,007)(449,745)
Unrealized (loss) gain on derivative instruments, net(3,501,649)6,303,776 3,998,665 8,326,148 
Other income (loss)81,231 (82,496)218,438 250,962 
Total other (expense) income, net(8,757,824)3,421,090 (6,331,809)3,549,449 
Net income27,486,740 19,577,173 49,934,635 26,084,365 
Income attributable to non-controlling interests(2,454,307)(349,898)(4,734,237)(1,002,919)
Net income attributable to Pangaea Logistics Solutions Ltd.$25,032,433 $19,227,275 $45,200,398 $25,081,446 
Earnings per common share:
Basic$0.56 $0.44 $1.02 $0.57 
Diluted$0.56 $0.43 $1.00 $0.56 
Weighted average shares used to compute earnings per common share:
Basic44,430,487 43,998,424 44,411,025 43,989,515 
Diluted45,070,533 44,688,602 45,129,077 44,731,058 

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

4


Pangaea Logistics Solutions Ltd.
Consolidated Statements of Stockholders' Equity
(unaudited)
Common StockAdditional Paid-in CapitalRetained EarningsTotal Pangaea Logistics  Solutions Ltd. EquityNon-Controlling InterestTotal  Stockholders' Equity
SharesAmount
Balance at March 31, 202245,991,977 $4,599 $162,074,419 $103,554,744 $265,633,762 $50,759,107 $316,392,869 
Share-based compensation— — 310,979 — 310,979 — 310,979 
Common Stock Dividend— — — (3,336,710)(3,336,710)— (3,336,710)
Net Income— — — 25,032,433 25,032,433 2,454,307 27,486,740 
Balance at June 30, 202245,991,977 $4,599 $162,385,398 $125,250,467 $287,640,464 $53,213,414 $340,853,878 
Balance at December 31, 202145,617,840 $4,562 $161,534,280 $85,663,375 $247,202,217 $53,479,177 $300,681,394 
Share-based compensation1,138,7851,138,7851,138,785
Distribution to Non-Controlling Interests— — — — — (5,000,000)(5,000,000)
Issuance of restricted shares, net of forfeitures374,13737(287,667)(287,630)(287,630)
Common Stock Dividend— — — (5,613,306)(5,613,306)— (5,613,306)
Net Income— — — 45,200,39845,200,3984,734,23749,934,635
Balance at June 30, 202245,991,977 $4,599 $162,385,398 $125,250,467 $287,640,464 $53,213,414 $340,853,878 
Common StockAdditional Paid-in CapitalRetained EarningsTotal Pangaea Logistics  Solutions Ltd. EquityNon-Controlling InterestTotal  Stockholders' Equity
SharesAmount
Balance at March 31, 202145,572,236 4,557 160,399,765 29,033,976 189,438,298 52,318,661 241,756,959 
Share-based compensation— — 418,182 — 418,182 — 418,182 
Issuance of restricted shares, net of forfeitures69,205 7 (7)—  —  
Distribution to Non-Controlling Interests— — (3,333,334)(3,333,334)
Common Stock Dividend— — (1,542,842)(1,542,842)(1,542,842)
Net Income— — — 19,227,275 19,227,275 349,898 19,577,173 
Balance at June 30, 202145,641,441 $4,564 $160,817,940 $46,718,409 $207,540,913 $49,335,225 $256,876,138 
Balance at December 31, 202044,886,122 4,489 157,504,895 12,736,580 170,245,964 51,665,640 221,911,604 
Share-based compensation— — 1,365,734 — 1,365,734 — 1,365,734 
Issuance of restricted shares, net of forfeitures193,690 19 (129,209)— (129,190)— (129,190)
Distribution to Non-Controlling Interests— — — — — (3,333,334)(3,333,334)
Common Stock Dividend— — — (1,542,842)(1,542,842)— (1,542,842)
Net Income— — — 25,081,446 25,081,446 1,002,919 26,084,365 
Balance at June 30, 202145,641,441 $4,564 $160,817,940 $46,718,409 $207,540,913 $49,335,225 $256,876,138 

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

5

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


 Six Months Ended June 30,
 20222021
Operating activities
Net income$49,934,635 $26,084,365 
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense14,594,852 9,287,824 
Amortization of deferred financing costs499,703 477,263 
Amortization of prepaid rent60,969 57,628 
Unrealized gain on derivative instruments(3,998,665)(8,326,148)
Income from equity method investee(218,438)(250,962)
Earnings attributable to non-controlling interest recorded as other long term liability3,543,007 449,745 
Provision for doubtful accounts518,796 285,466 
Loss on impairment of vessels3,007,809  
Loss on sale of vessel318,032  
Drydocking costs(4,858,510)(5,551,513)
Share-based compensation1,138,785 1,365,734 
Change in operating assets and liabilities:
Accounts receivable12,640,090 (1,894,649)
Bunker inventory(25,675,924)(7,217,311)
Advance hire, prepaid expenses and other current assets12,286,477 (10,482,310)
Accounts payable, accrued expenses and other current liabilities13,292,238 12,222,358 
Deferred revenue(7,858,791)3,026,377 
Net cash provided by operating activities69,225,065 19,533,867 
Investing activities
Purchase of vessels and vessel improvements(18,501,875)(108,540,199)
Purchase of fixed assets and equipment(71,416)(112,196)
Proceeds from sale of vessels8,400,000  
Contributions to non-consolidated subsidiaries(18,505) 
Net cash used in investing activities(10,191,796)(108,652,395)
Financing activities
Proceeds from long-term debt 66,350,000 
Payments of financing fees and debt issuance costs(331,317)(1,167,783)
Payments of long-term debt(9,010,117)(55,620,110)
Proceeds from finance leases15,000,000 77,084,500 
Payments of finance lease obligations(7,808,388)(3,824,259)
Dividends paid to non-controlling interests(5,000,000)(3,333,334)
Accrued common stock dividends paid(5,629,329)(2,449,741)
Cash paid for incentive compensation shares relinquished(287,630)(129,190)
Contributions from non-controlling interest recorded as long-term liability 4,621,398 
Payments to non-controlling interest recorded as long-term liability (195,597)
Net cash (used in) provided by financing activities(13,066,781)81,335,884 
Net increase (decrease) in cash and cash equivalents45,966,488 (7,782,644)
Cash and cash equivalents at beginning of period56,208,902 48,397,216 
Cash and cash equivalents at end of period$102,175,390 $40,614,572 

  
The accompanying notes are an integral part of these consolidated financial statements.
6



NOTE 1 - GENERAL INFORMATION AND RECENT EVENTS

Organization and General

The accompanying consolidated financial statements include the accounts of Pangaea Logistics Solutions Ltd. and its consolidated subsidiaries (collectively, the “Company”, “Pangaea” “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.

At June 30, 2022, the Company owns three Panamax, two Ultramax Ice Class 1C, one Ultramax and eight Supramax drybulk vessels. The Company owns two-thirds of Nordic Bulk Holding Company Ltd. ("NBHC") which owns a fleet of six Panamax Ice Class 1A drybulk vessels. The Company owns 50% of Nordic Bulk Partners LLC. ("NBP") which owns a fleet of four Post Panamax Ice Class 1A drybulk vessels. The Company also has a 50% interest in the owner of a deck barge.






7


NOTE 2 - 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, 2021.

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. The significant estimates and assumptions of the Company are residual value of vessels, the useful lives of vessels, the percentage completion of spot voyages and estimated losses on our trade receivables. Actual results could differ from those estimates.

Reclassifications of Voyage revenue and Charter revenue have been made to prior periods to conform to current period presentation.

Cash and cash equivalents

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 and cash equivalents reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:
 
 June 30, 2022December 31, 2021
(unaudited)
Money market accounts – cash equivalents$42,754,278 $35,193,025 
Cash (1)
59,421,112 21,015,877 
Total cash and cash equivalents$102,175,390 $56,208,902 

(1) Consists of cash deposits at various major banks.

Advance hire, prepaid expenses and other current assets

Advance hire, prepaid expenses and other current assets were comprised of the following: 
 June 30, 2022December 31, 2021
 (unaudited) 
Advance hire$9,799,745 $12,014,451 
Prepaid expenses5,897,012 5,956,195 
Accrued receivables12,356,868 17,009,957 
Margin deposit(25,652)5,464,379 
Derivative assets7,884,772 3,886,107 
Other current assets2,151,130 2,016,598 
 $38,063,875 $46,347,687 
8



Other non-current Assets

Other non-current assets were comprised of the following:

June 30, 2022December 31, 2021
Name(unaudited) 
Investment in Seamar Management$756,230 $428,572 
Investment in Pangaea Logistics Solutions (US) LLC435,775 507,270 
Investment in Bay Stevedoring LLC3,006,761 3,025,981 
 $4,198,766 $3,961,823 

Accounts payable, accrued expenses and other current liabilities
Accounts payable, accrued expenses and other current liabilities were comprised of the following:

 June 30, 2022December 31, 2021
 (unaudited) 
Accounts payable$25,950,765 $21,090,717 
Accrued expenses21,541,388 16,254,253 
Bunkers supplies12,343,555 9,260,262 
Note Payable - Note 85,156,245 2,549,207 
Other accrued liabilities312,677  
 $65,304,630 $49,154,439 

Leases

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, Leases ("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 June 30, 2022, 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.

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.

At June 30, 2022, the Company had one vessel chartered to a customer under a time charter that contained a lease. This one lease's duration was 28 days. At June 30, 2022, lease payments due under this arrangement totaled approximately $125,000 and the time charter was due to be completed in 4 days.

At June 30, 2021, the Company had 15 vessels chartered to customers under time charters that contain leases. These 15 leases varied in original length from 24 days to 138 days. At June 30, 2021, lease payments due under these arrangements totaled
9


approximately $8,648,000 and each of the time charters were due to be completed in 65 days or less. The Company does not have any sales-type or direct financing leases.

Office leases

The Company has two non-cancelable office and office equipment leases. The resulting lease assets and liabilities are not material.

Revenue Recognition

In a voyage charter contract, the charterer hires the vessel to transport a specific agreed-upon cargo for a single voyage, which may contain multiple load ports and discharge ports. The consideration in such a contract is determined on the basis of a freight rate per metric ton of cargo carried or occasionally on a lump sum basis. The charter party generally has a minimum amount of cargo. The charterer is liable for any short loading of cargo or "dead" freight. The voyage contract generally has standard payment terms of 95% freight paid within three days after completion of loading. The voyage charter party generally has a "demurrage" or "despatch" clause. As per this clause, the charterer reimburses the Company for any delays that exceed the agreed to laytime at the ports visited, with the amounts recorded as demurrage revenue. Conversely, the charterer is given credit if the loading/discharging activities happen within the allowed laytime which is known as despatch and results in a reduction of revenue. In a voyage charter contract, the performance obligations begin to be satisfied once the vessel begins loading the cargo. The Company determined that its voyage charter contracts consist of a single performance obligation of transporting the cargo within a specified time period. Therefore, the performance obligation is met evenly as the voyage progresses, and the revenue is recognized on a straight-line basis over the voyage days from the commencement of the loading of cargo to completion of discharge.

The voyage contracts are considered service contracts which fall under the provisions of ASC 606, Revenue from Contracts with Customers because the Company, as the shipowner, retains control over the operations of the vessel such as directing the routes taken or the vessel speed. The voyage contracts generally have variable consideration in the form of demurrage or despatch.

During time charter agreements, 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, the charterers have substantive decision-making rights to direct how and for what purpose the vessel is used. As such, the Company has identified that time charter agreements contain a lease in accordance with ASC 842. Revenue is not earned when vessels are offhire.

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.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the beginning of 2023. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently assessing the new guidance and its impact on its consolidated financial statements, and it intends to adopt the guidance when it becomes effective in the first quarter of 2023. 

10


NOTE 3 - FIXED ASSETS

At June 30, 2022, the Company owned twenty-four dry bulk vessels including eight financed under finance leases; and one barge. The carrying amounts of these vessels, including unamortized drydocking costs, are as follows: 
 June 30,December 31,
20222021
(unaudited) 
m/v NORDIC ODYSSEY (1)
$21,570,749 $22,456,407 
m/v NORDIC ORION (1)
22,231,771 23,057,114 
m/v NORDIC OSHIMA (1)
24,952,260 25,612,412 
m/v NORDIC OLYMPIC (1)
25,305,330 25,982,802 
m/v NORDIC ODIN (1)
25,399,937 26,073,841 
m/v NORDIC OASIS (1)
26,941,537 27,650,350 
m/v NORDIC NULUUJAAK (2) (5)
38,234,130 38,949,402 
m/v NORDIC QINNGUA (2) (5)
38,133,232 38,838,142 
m/v NORDIC SANNGIJUQ (2) (5)
37,688,843 38,377,457 
m/v NORDIC SIKU(2) (5)
38,084,765 38,776,359 
m/v BULK ENDURANCE23,707,705 23,069,545 
m/v BULK COURAGEOUS (5)
16,056,284 16,356,730 
m/v BULK CONCORD (5)
19,845,938 — 
m/v BULK NEWPORT10,970,171 11,566,639 
m/v BULK FREEDOM7,950,193 8,476,937 
m/v BULK PRIDE12,867,799 13,560,656 
m/v BULK SPIRIT (5)
11,997,224 12,293,336 
m/v BULK INDEPENDENCE13,799,729 13,466,530 
m/v BULK FRIENDSHIP (5)
14,101,133 14,526,423 
m/v BULK VALOR17,461,842 17,797,021 
m/v BULK PROMISE17,963,804 18,306,557 
m/v BULK PANGAEA (3)
 11,802,463 
MISS NORA G PEARL (4)
2,491,597 2,714,931 
467,755,973 469,712,054 
Other fixed assets, net2,209,235 2,200,756 
Total fixed assets, net$469,965,208 $471,912,810 
Right of Use Assets (5)
m/v BULK XAYMACA$14,220,803 $12,661,804 
m/v BULK DESTINY20,335,023 20,074,619 
m/v BULK TRIDENT11,740,835 12,459,336 
$46,296,661 $45,195,759 

(1) Vessels are owned by NBHC, a consolidated joint venture in which the Company has a two-third ownership interest at June 30, 2022 and December 31, 2021, respectively.

(2) Vessels are owned by NBP, a consolidated joint venture in which the Company has a 50% ownership interest at June 30, 2022 and December 31, 2021.
(3) On April 20, 2022, the Company signed a memorandum of agreement to sell the m/v Bulk Pangaea for $8.6 million after brokerage commissions. The Company recorded an impairment charge of $3.0 million and a loss on sale of vessel of 0.3 million, and the vessel was delivered to the buyer on June 23, 2022.
(4) Barge is owned by a 50% owned consolidated subsidiary.
11


(5) Refer to Note 7, "Commitments and Contingencies," of our Financial Statements for additional information related to the vessels under finance lease.
Long-lived Assets Impairment Considerations

The Company evaluates the recoverability of its fixed assets and other assets in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present, we perform an analysis of the anticipated undiscounted future net cash flows to be derived from the related long-lived assets. Our assessment is made at the asset 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.

During the first quarter of 2022, the Company determined that a triggering event occurred related to the sale of a vessel, as the carrying value exceeded its fair value. On April 20, 2022, the Company signed a memorandum of agreement to sell the m/v Bulk Pangaea for a total net consideration of $8.6 million after brokerage commissions. As a result, we recorded an impairment charge of $3.0 million in the first quarter of 2022. The Company concluded that no triggering event had occurred during the during the second quarter of 2022 which would require impairment testing.

The Company determined there were no triggering events present during the six months ended June 30, 2021 which would require impairment testing.






12


NOTE 4 - DEBT

Long-term debt consists of the following: 
June 30, 2022December 31, 2021
Interest Rate (%) (1)
Maturity Date
(unaudited)
Bulk Nordic Odyssey (MI) Corp., Bulk Nordic Orion (MI) Corp. Senior Secured Term Loan Facility (2) (3)
15,316,518 16,224,189 2.95 %December 2027
Bulk Nordic Oshima (MI) Corp., Bulk Nordic Odin (MI) Corp., Bulk Nordic Olympic (MI) Corp., Bulk Nordic Oasis (MI) Corp. Secured Term Loan Facility (2) (3)
47,000,000 49,400,000 3.38 %June 2027
The Amended Senior Facility - Dated May 13, 2019 (formerly The Amended Senior Facility - Dated December 21, 2017) (4)
Bulk Nordic Six Ltd. - Tranche A (2)
10,633,327 11,166,661 4.39 %May 2024
Bulk Nordic Six Ltd. - Tranche B2,200,000 2,330,000 3.37 %May 2024
Bulk Pride - Tranche C (2)
3,550,000 4,100,000 5.39 %May 2024
Bulk Independence - Tranche E (2)
11,000,000 11,500,000 3.54 %May 2024
Bulk Freedom Loan Agreement 2,600,000 4.55 %June 2022
Bulk Valor Corp. Loan and Security Agreement (2)
12,076,114 12,718,279 3.29 %June 2028
Bulk Promise Corp. (5)
11,761,778 12,453,926 3.34 %October 2027
109 Long Wharf Commercial Term Loan429,266 484,066 3.62 %April 2026
Total$113,967,003 $122,977,121 
Less: unamortized issuance costs, net(1,487,524)(1,697,209)
$112,479,479 $121,279,912 
Less: current portion(12,891,501)(15,443,115)
Secured long-term debt, net$99,587,978 $105,836,797 

(1)As of June 30, 2022.
(2)Interest rates on the loan facilities are fixed.
(3)The borrower under this facility is NBHC. The Company has two-third's ownership interest and an independent third party has one-third ownership interest in NBHC. NBHC is consolidated in accordance with ASC 810-10 and as such, amounts pertaining to the non-controlling ownership held by the third parties in the financial position of NBHC are reported as non-controlling interest in the accompanying balance sheets.
(4)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.
(5)This facility was fixed at 5.45% on July 15, 2022 through maturity.

The future minimum annual payments under the debt agreements are as follows:
Years ending December 31,
(unaudited)
2022 (remainder of the year)$6,432,998 
202312,940,758 
202431,857,187 
20259,718,626 
20269,761,812 
Thereafter43,255,622 
$113,967,003 

13


Financial Covenants

Under the Company's respective debt agreements, the Company is required to comply with certain financial covenants, including 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 and to maintain positive working capital. The Company was in compliance with all applicable financial covenants as of June 30, 2022 and December 31, 2021.

14


NOTE 5 - 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.

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.

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.

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.

The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021:
Asset Derivative
Derivative instrumentsBalance Sheet Location06/30/202212/31/2021
Margin accounts (1)
Other current assets$(25,652)$5,464,379 
Forward freight agreements (2)
Other current assets$3,181,161 $2,119,581 
Fuel swap contracts (2)
Other current assets$1,937,037 $1,047,752 
Interest rate cap (2)
Other current assets$2,766,575 $718,774 

(1) The fair value measurements were all categorized within Level 1 of the fair value hierarchy.

(2) These fair value measurements were all categorized within Level 2 of the fair value hierarchy.

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). 

15


The following table presents the effect of our derivative financial instruments on the consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:

Unrealized gain (loss) on derivative instruments
For the three months ended For the six months ended
Derivative instruments06/30/20226/30/202106/30/20226/30/2021
Forward freight agreements$(1,698,327)$5,651,000 $1,061,579 $6,140,885 
Fuel Swap Contracts(2,133,497)940,615 $889,285 $1,682,229 
Interest rate cap330,175 (287,839)$2,047,801 $503,034 
Total Gain$(3,501,649)$6,303,776 $3,998,665 $8,326,148 



 








16


NOTE 6 - RELATED PARTY TRANSACTIONS

Amounts and notes payable to related parties consist of the following:
December 31, 2021ActivityJune 30, 2022
(unaudited)
Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:   
Affiliated companies (trade payables) (i)
$2,847,910 77,384 $2,925,294 
Commissions payable (trade payables) (ii)
$38,896 109,144 $148,040 
Included in current related party debt on the consolidated balance sheets:   
Interest payable - 2011 Founders Note242,852 (242,852) 
Total current related party debt$242,852 $(242,852)$ 

i.Seamar Management S.A. ("Seamar")
ii.Phoenix Bulk Carriers (Brasil) Intermediacoes Maritimas Ltda. - a wholly-owned Company of a member of the Board of Directors

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. During the three months ended June 30, 2022 and 2021, the Company incurred technical management fees of approximately $815,400 and 682,800, respectively, under this arrangement. During the six months ended June 30, 2022 and 2021, the Company incurred technical management fees of approximately $1,597,000 and 1,276,800, respectively, under this arrangement.

The Company paid cash dividends of $5.0 million to a non-controlling interest holder of NBHC during the six months ended June 30, 2022.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Bulk Destiny, Bulk Trident, Bulk Xaymaca, Bulk Spirit, Bulk Friendship, Bulk Courageous, Nordic Nuluujaak, Nordic Qinngua, Nordic Sanngiguq and Nordic Siku are classified as finance leases and the leases are secured by the assignment of earnings and insurances and by guarantees of the Company. Minimum lease payments under finance leases are recognized on a straight‑line basis over the term of the lease and the Company will own these vessels at the end of lease term. Refer to the Company's annual report Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 16, 2022 for additional information on these finance leases.

Bulk Concord Bareboat Charter Agreement dated January 27, 2022

In February 2022, the Company acquired the m/v Bulk Concord for $19.9 million, which is the estimated fair value, and simultaneously entered into a failed sale and leaseback of the vessel. The Company determined that the transfer of the vessel to the lessor was not a sale in accordance with ASC 606, because control of the vessel was not transferred to the lessor. The lease is classified as finance lease in accordance with ASC 842, because the lease includes a fixed price purchase option, which the Company expects to exercise at the end of the lease term. The minimum lease payments include imputed interest at 4.67%. The Company has the option to purchase the vessel at the end of the third year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. In the event the Company has not exercised any of the purchase options during the term of the charter then the Company shall have a final purchase option to purchase the vessel at the end of the seventh year at a fixed price of $3.0 million. This lease is secured by the assignment of earnings and insurances and by a guarantee of the Company.

The following table provides details of the Company's future minimum lease payments under finance lease liabilities recorded on the Company's consolidated balance sheets as of June 30, 2022.

17


Year ending December 31,Amount
2022 (remainder of the year)$13,753,442 
202327,174,431 
202433,598,344 
202524,161,223 
202621,824,643 
Thereafter153,349,290 
Total minimum lease payments$273,861,373 
Less imputed interest77,935,802 
Present value of minimum lease payments195,925,571 
Less current portion(16,153,750)
Less issuance costs(3,333,840)
Long-term portion$176,437,981 

Other Long-Term Liabilities        

The Company has also entered into a LLC agreement with the non-controlling interest holder of NBP which includes certain obligations as described in Note 8.

Long-term Contracts Accounted for as Operating Leases

The Company leases office space for its Copenhagen operations. Since December 31, 2018, this lease continues on a month to month basis. The non-cancelable period is six months.

The Company leases office space for its Singapore operations. In August 2021, the Company renewed its lease for a two year period. At June 30, 2022, the remaining lease term is fourteen months.

For the three months ended June 30, 2022 and 2021, the Company recognized approximately $52,000 as lease expense for office leases in General and Administrative Expenses.

For the six months ended June 30, 2022 and 2021, the Company recognized approximately $104,000 as lease expense for office leases in General and Administrative Expenses.

Legal Proceedings and Claims

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 position, results of operations, or cash flows.    

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NOTE 8 - OTHER LONG-TERM LIABILITIES

In September 2019, the Company entered into an LLC agreement for the formation of NBP, that, at inception is owned 75% by the Company and 25% by an independent third party. NBP was established for the purpose of constructing and owning four new-build ice class post panamax vessels. The third party contributed additional funding which increased their ownership of NBP to 50% at the time of delivery of the new-build ice class post panamax vessels. The agreement contains both put and call option provisions. Accordingly, the Company may be obligated, pursuant to the put option, or entitled to, pursuant to the call option, to purchase the third party's interest in NBP beginning anytime after September 2026. The put option and call option are at fixed prices which are not significantly different from each other, starting at $4.0 million per vessel on the fourth anniversary from completion and delivery of each vessel and declining to $3.7 million per vessel on or after the seventh anniversary from completion and delivery of each vessel. If neither put nor call option is exercised, the Company is obligated to purchase the vessels from NBP at a fixed price. Pursuant to ASC 480, Distinguishing Liabilities from Equity, the Company has recorded the third party's interest in NBP as a Long term liabilities - Other. The Company took delivery of Nordic Nuluujaak, Nordic Qinngua, Nordic Sanngijuq and Nordic Siku in 2021. Earnings attributable to the third party’s interest in NBP are recorded in Income attributable to Non-controlling interest recorded as long-term liability.

On September 28, 2020, the Company acquired an additional one-third equity interest in its partially-owned consolidated subsidiary NBHC from its shareholders for $22.5 million, including a $15.0 million cash payment upon closing and $7.5 million of deferred consideration, at three-month LIBOR plus 3.5%, in three equal installments of $2.5 million due on the first, second, and third anniversaries of September 28, 2020. The Company expects to pay off the note payable in September of 2022. The deferred consideration is recorded in "Other current liabilities" for $5.0 million plus accrued interest on the Company's Consolidated Balance Sheet as of June 30, 2022. NBHC will continue to be a consolidated entity in the Company’s consolidated financial statements pursuant to ASC 810-10. The portion of NBHC not owned by the Company will continue to be recognized as non-controlling interest in the Company’s consolidated financial statements.

The roll-forward of Other Long-term Liabilities are as follows:

(Dollars in thousands, figures may not foot due to rounding)06/30/202212/31/2021
Beginning Balance$17,806,976 $10,135,409 
Payments to non-controlling interest recorded as long-term liability (195,599)
Contributions from non-controlling interests 9,182,425 
Earnings attributable to non-controlling interest recorded as other long term liability3,543,007 1,184,741 
Reclassification of deferred consideration related to acquisition of non-controlling interest to other current liabilities
(2,500,000)— 
Payments on other long-term liability (2,500,000)
Ending balance$18,849,983 $17,806,976 
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NOTE 9 - SUBSEQUENT EVENTS

On July 7, 2022, the Bulk Promise Corp term loan interest rate was fixed at 5.45% effective July 15, 2022 through maturity.

On August 5, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.075 per common share, to be paid on September 15, 2022, to all shareholders of record as of September 1, 2022.


        

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our 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 a load port to a discharge port, which is predetermined in each voyage contract. Gross revenue is calculated by multiplying the agreed rate per ton of cargo by the number of tons loaded. The Company directs how and for what purpose the vessel is used and therefore, these voyage contracts do not contain leases.

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. Charter revenue is based on the agreed rate per day. These time-charter arrangements contain leases because the lessee has the power to direct the use and receives substantially all of the economic benefits from the use of the vessel. The operating lease component and the vessel operating expense non-lease component of a time-charter contract are reported as a single component.

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. The Company does not record a right-of-use asset or lease liability for any arrangement less than one year.

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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.

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.
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Selected Financial Information
(in thousands, except for shipping days data and per share data)
(figures may not foot due to rounding)
For the three months ended June 30,For the six months ended June 30,
 2022202120222021
Selected Financial DataUnauditedUnaudited
Voyage revenue$173,189 $117,395 $349,526 $225,626 
Charter revenue22,355 28,149 37,781 44,891 
Total revenue195,544 145,544 387,306 270,517 
Voyage expense67,908 46,113 133,158 93,952 
Charter hire expense65,713 62,604 143,425