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~~September 30, 2022


☐			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)


Bermuda						98-1205464
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

c/o Phoenix Bulk Carriers (US) LLC

109 Long Wharf

Newport, RI 02840

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (401) 846-7790

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	PANL	NASDAQ

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 Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller 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~~45,922,692 shares outstanding as of ~~August 5,~~November 4, 2022.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of ~~June~~September 3 0 ,30, 2022 (unaudited) and December 31, 2021	3

	Consolidated Statements of Operations (unaudited) for the three and ~~and six~~ nine months ended ~~June~~September 3 0 ,30, 2022 and 2021	4

	Consolidated Statements of Stockholders' Equity (unaudited) for the ~~six~~three and nine months ended ~~June~~September 3 0 ,30, 2022 and 2021	5

	Consolidated Statements of Cash Flows (unaudited) for the ~~six~~nine months ended ~~June~~September 3 0 ,30, 2022 and 2021	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2021

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	3032

Item 4.	Controls and Procedures	3032

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	3133
Item 1A.	Risk Factors	3133
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3133
Item 3.	Defaults upon Senior Securities	3133
Item 4.	Mine Safety Disclosures	3133
Item 5.	Other Information	3133
Item 6.	Exhibits	3234
Signatures		3335

Pangaea Logistics Solutions Ltd.

Consolidated Balance Sheets


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	102,175,390	$	56,208,902	Cash and cash equivalents	$	117,948,614	$	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
Accounts receivable (net of allowance of $3,273,083 and $1,990,459 at September 30, 2022 and December 31, 2021, respectively)						Accounts receivable (net of allowance of $3,273,083 and $1,990,459 at September 30, 2022 and December 31, 2021, respectively)	42,343,295		54,259,265
Bunker inventory	Bunker inventory	52,823,684		27,147,760		Bunker inventory	30,651,975		27,147,760
Advance hire, prepaid expenses and other current assets	Advance hire, prepaid expenses and other current assets	38,063,875		46,347,687		Advance hire, prepaid expenses and other current assets	31,741,934		46,347,687

Total current assets	Total current assets	234,163,328		183,963,614		Total current assets	222,685,818		183,963,614

Fixed assets, net	Fixed assets, net	469,965,208		471,912,810		Fixed assets, net	465,137,127		471,912,810
Advances for vessel purchases	Advances for vessel purchases	—		1,990,000		Advances for vessel purchases	1,710,000		1,990,000
Finance lease right of use assets, net	Finance lease right of use assets, net	46,296,661		45,195,759		Finance lease right of use assets, net	44,880,530		45,195,759
Other non-current Assets		4,198,766		3,961,823
Other non-current assets						Other non-current assets	4,497,445		3,961,823
Total assets	Total assets	$	754,623,963	$	707,024,006	Total assets	$	738,910,920	$	707,024,006

Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable, accrued expenses and other current liabilities	Accounts payable, accrued expenses and other current liabilities	$	65,304,630	$	49,154,439	Accounts payable, accrued expenses and other current liabilities	$	44,491,725	$	49,154,439
Related party debt		—		242,852
Related party notes payable						Related party notes payable	—		242,852
Deferred revenue	Deferred revenue	24,346,521		32,205,312		Deferred revenue	17,233,861		32,205,312
Current portion of secured long-term debt	Current portion of secured long-term debt	12,891,501		15,443,115		Current portion of secured long-term debt	12,916,094		15,443,115
Current portion of finance lease liabilities	Current portion of finance lease liabilities	16,153,750		14,479,803		Current portion of finance lease liabilities	16,261,356		14,479,803
Dividend payable	Dividend payable	197,741		213,765		Dividend payable	197,741		213,765
Total current liabilities	Total current liabilities	118,894,143		111,739,286		Total current liabilities	91,100,777		111,739,286

Secured long-term debt, net	Secured long-term debt, net	99,587,978		105,836,797		Secured long-term debt, net	96,447,396		105,836,797
Finance lease liabilities, net	Finance lease liabilities, net	176,437,981		170,959,553		Finance lease liabilities, net	172,496,539		170,959,553
Long-term liabilities - other - Note 8		18,849,983		17,806,976
Long-term liabilities - other - Note 10						Long-term liabilities - other - Note 10	21,268,827		17,806,976

Commitments and contingencies - Note 7		0		0
Commitments and contingencies - Note 9						Commitments and contingencies - Note 9

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued or outstanding	Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued or outstanding	—		—		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
Common stock, $0.0001 par value, 100,000,000 shares authorized; 45,922,692 shares issued and outstanding at September 30, 2022; 45,617,840 shares issued and outstanding at December 31, 2021						Common stock, $0.0001 par value, 100,000,000 shares authorized; 45,922,692 shares issued and outstanding at September 30, 2022; 45,617,840 shares issued and outstanding at December 31, 2021	4,592		4,562
Additional paid-in capital	Additional paid-in capital	162,385,398		161,534,280		Additional paid-in capital	162,704,593		161,534,280
Retained earnings	Retained earnings	125,250,467		85,663,375		Retained earnings	140,702,171		85,663,375
Total Pangaea Logistics Solutions Ltd. equity	Total Pangaea Logistics Solutions Ltd. equity	287,640,464		247,202,217		Total Pangaea Logistics Solutions Ltd. equity	303,411,356		247,202,217
Non-controlling interests	Non-controlling interests	53,213,414		53,479,177		Non-controlling interests	54,186,025		53,479,177
Total stockholders' equity	Total stockholders' equity	340,853,878		300,681,394		Total stockholders' equity	357,597,381		300,681,394
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	754,623,963	$	707,024,006	Total liabilities and stockholders' equity	$	738,910,920	$	707,024,006

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

Pangaea Logistics Solutions Ltd.

Consolidated Statements of Operations

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021

Revenues:	Revenues:									Revenues:
Voyage revenue	Voyage revenue	$	173,189,073	$	117,395,377	$	349,525,824	$	225,625,680	Voyage revenue	$	173,167,990	$	186,352,802	$	522,693,814	$	411,978,482
Charter revenue	Charter revenue	22,354,883		28,148,988		37,780,535		44,891,212		Charter revenue	11,309,147		26,676,433		49,089,682		71,567,645
Total revenue	Total revenue	195,543,956		145,544,365		387,306,359		270,516,892		Total revenue	184,477,137		213,029,235		571,783,496		483,546,127
Expenses:	Expenses:									Expenses:
Voyage expense	Voyage expense	67,907,824		46,112,779		133,158,291		93,951,636		Voyage expense	74,716,194		60,405,741		207,874,485		154,357,377
Charter hire expense	Charter hire expense	65,713,016		62,604,014		143,424,623		116,239,356		Charter hire expense	50,750,809		103,721,059		194,175,432		219,960,415
Vessel operating expense	Vessel operating expense	12,929,700		9,772,966		26,117,533		18,268,469		Vessel operating expense	15,361,640		11,753,951		41,479,173		30,022,420
General and administrative	General and administrative	5,137,387		6,029,793		10,418,775		10,234,691		General and administrative	5,776,666		4,442,064		16,195,441		14,676,755
Depreciation and amortization	Depreciation and amortization	7,293,433		4,868,730		14,594,852		9,287,824		Depreciation and amortization	7,365,561		7,163,479		21,960,413		16,451,303
Loss on impairment of vessels	Loss on impairment of vessels	—		—		3,007,809		—		Loss on impairment of vessels	—		��		3,007,809		—
Loss on sale of vessels	Loss on sale of vessels	318,032		—		318,032		—		Loss on sale of vessels	—		—		318,032		—
Total expenses	Total expenses	159,299,392		129,388,282		331,039,915		247,981,976		Total expenses	153,970,870		187,486,294		485,010,785		435,468,270

Income from operations	Income from operations	36,244,564		16,156,083		56,266,444		22,534,916		Income from operations	30,506,267		25,542,941		86,772,711		48,077,857

Other income (expense):	Other income (expense):									Other income (expense):
Interest expense, net	Interest expense, net	(3,634,732)		(2,621,110)		(7,005,905)		(4,577,916)		Interest expense, net	(4,116,319)		(2,416,677)		(11,122,224)		(6,994,593)
Income attributable to Non-controlling interest recorded as long-term liability interest expense	Income attributable to Non-controlling interest recorded as long-term liability interest expense	(1,702,674)		(179,080)		(3,543,007)		(449,745)		Income attributable to Non-controlling interest recorded as long-term liability interest expense	(2,418,844)		(325,742)		(5,961,851)		(775,487)
Unrealized (loss) gain on derivative instruments, net	Unrealized (loss) gain on derivative instruments, net	(3,501,649)		6,303,776		3,998,665		8,326,148		Unrealized (loss) gain on derivative instruments, net	(4,508,758)		5,344,327		(510,093)		13,670,475
Other income (loss)		81,231		(82,496)		218,438		250,962
Other income										Other income	298,679		550,781		517,117		801,743
Total other (expense) income, net	Total other (expense) income, net	(8,757,824)		3,421,090		(6,331,809)		3,549,449		Total other (expense) income, net	(10,745,242)		3,152,689		(17,077,051)		6,702,138

Net income	Net income	27,486,740		19,577,173		49,934,635		26,084,365		Net income	19,761,025		28,695,630		69,695,660		54,779,995
Income attributable to non-controlling interests	Income attributable to non-controlling interests	(2,454,307)		(349,898)		(4,734,237)		(1,002,919)		Income attributable to non-controlling interests	(972,611)		(1,700,399)		(5,706,848)		(2,703,318)
Net income attributable to Pangaea Logistics Solutions Ltd.	Net income attributable to Pangaea Logistics Solutions Ltd.	$	25,032,433	$	19,227,275	$	45,200,398	$	25,081,446	Net income attributable to Pangaea Logistics Solutions Ltd.	$	18,788,414	$	26,995,231	$	63,988,812	$	52,076,677

Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	0.56	$	0.44	$	1.02	$	0.57	Basic	$	0.42	$	0.61	$	1.44	$	1.18
Diluted	Diluted	$	0.56	$	0.43	$	1.00	$	0.56	Diluted	$	0.42	$	0.60	$	1.43	$	1.16

Weighted average shares used to compute earnings per common share:	Weighted average shares used to compute earnings per common share:									Weighted average shares used to compute earnings per common share:
Basic	Basic	44,430,487		43,998,424		44,411,025		43,989,515		Basic	44,415,575		44,004,980		44,386,628		43,994,726
Diluted	Diluted	45,070,533		44,688,602		45,129,077		44,731,058		Diluted	44,640,278		44,927,456		44,624,228		44,704,303

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

Pangaea Logistics Solutions Ltd.

Consolidated Statements of Stockholders' Equity

(unaudited)


		Common Stock		Additional Paid-in Capital		Retained Earnings		Total Pangaea Logistics Solutions Ltd. Equity		Non-Controlling Interest		Total Stockholders' Equity						Common Stock	Additional Paid-in Capital	Retained Earnings		Total Pangaea Logistics Solutions Ltd. Equity		Non-Controlling Interest		Total Stockholders' Equity
			Shares											Amount														Total Stockholders' Equity		Amount
Balance at March 31, 2022			45,991,977	$	4,599	$	162,074,419	$	103,554,744	$	265,633,762	$	50,759,107		$	316,392,869
Balance at June 30, 2022																	Balance at June 30, 2022		45,991,977	$	4,599	$	162,385,398	$	125,250,467	$	287,640,464				$	53,213,414	$	340,853,878
Share-based compensation	Share-based compensation		—	—		310,979		—		310,979		—			310,979		Share-based compensation		—	—		319,188		—		319,188		—			319,188

Issuance of restricted shares, net of forfeitures																	Issuance of restricted shares, net of forfeitures		(69,285)	(7)		7		—		—		—			—

Common Stock Dividend	Common Stock Dividend		—	—		—		(3,336,710)		(3,336,710)		—			(3,336,710)		Common Stock Dividend		—	—		—		(3,336,710)		(3,336,710)		—			(3,336,710)
Net Income	Net Income		—	—		—		25,032,433		25,032,433		2,454,307			27,486,740		Net Income		—	—		—		18,788,414		18,788,414		972,611			19,761,025
Balance at June 30, 2022			45,991,977	$	4,599	$	162,385,398	$	125,250,467	$	287,640,464	$	53,213,414		$	340,853,878
Balance at September 30, 2022																	Balance at September 30, 2022		45,922,692	$	4,592	$	162,704,593	$	140,702,171	$	303,411,356	$	54,186,025		$	357,597,381

Balance at December 31, 2021	Balance at December 31, 2021		45,617,840	$	4,562	$	161,534,280	$	85,663,375	$	247,202,217	$	53,479,177		$	300,681,394	Balance at December 31, 2021		45,617,840	$	4,562	$	161,534,280	$	85,663,375	$	247,202,217	$	53,479,177		$	300,681,394
Share-based compensation	Share-based compensation		—	—		1,138,785		—		1,138,785		—			1,138,785		Share-based compensation		—	—		1,457,972		—		1,457,972		—			1,457,972
Distribution to Non-Controlling Interests	Distribution to Non-Controlling Interests		—	—		—		—		—		(5,000,000)			(5,000,000)		Distribution to Non-Controlling Interests		—	—		—		—		—		(5,000,000)			(5,000,000)
Issuance of restricted shares, net of forfeitures	Issuance of restricted shares, net of forfeitures		374,137	37		(287,667)		—		(287,630)		—			(287,630)		Issuance of restricted shares, net of forfeitures		304,852	30		(287,659)		—		(287,629)		—			(287,629)
Common Stock Dividend	Common Stock Dividend		—	—		—		(5,613,306)		(5,613,306)		—			(5,613,306)		Common Stock Dividend		—	—		—		(8,950,016)		(8,950,016)		—			(8,950,016)
Net Income	Net Income		—	—		—		45,200,398		45,200,398		4,734,237			49,934,635		Net Income		—	—		—		63,988,812		63,988,812		5,706,848			69,695,660
Balance at June 30, 2022			45,991,977	$	4,599	$	162,385,398	$	125,250,467	$	287,640,464	$	53,213,414		$	340,853,878
Balance at September 30, 2022																	Balance at September 30, 2022		45,922,692	$	4,592	$	162,704,593	$	140,702,171	$	303,411,356	$	54,186,025		$	357,597,381

		Common Stock		Additional Paid-in Capital		Retained Earnings		Total Pangaea Logistics Solutions Ltd. Equity		Non-Controlling Interest		Total Stockholders' Equity						Common Stock	Additional Paid-in Capital	Retained Earnings		Total Pangaea Logistics Solutions Ltd. Equity		Non-Controlling Interest		Total Stockholders' Equity
			Shares											Amount														Total Stockholders' Equity		Amount
Balance at March 31, 2021			45,572,236	4,557		160,399,765		29,033,976		189,438,298		52,318,661			241,756,959
Balance at June 30, 2021																	Balance at June 30, 2021		45,641,441	4,564		160,817,940		46,718,409		207,540,913					49,335,225		256,876,138
Share-based compensation	Share-based compensation		—	—		418,182		—		418,182		—			418,182		Share-based compensation		—	—		369,224		—		369,224		—			369,224

Issuance of restricted shares, net of forfeitures			69,205	7		(7)		—		—		—			—
Distribution to Non-Controlling Interests			—	—								(3,333,334)			(3,333,334)

Common Stock Dividend	Common Stock Dividend		—	—				(1,542,842)		(1,542,842)					(1,542,842)		Common Stock Dividend		—	—				(1,542,759)		(1,542,759)					(1,542,759)
Net Income	Net Income		—	—		—		19,227,275		19,227,275		349,898			19,577,173		Net Income		—	—		—		26,995,231		26,995,231		1,700,399			28,695,630
Balance at June 30, 2021			45,641,441	$	4,564	$	160,817,940	$	46,718,409	$	207,540,913	$	49,335,225		$	256,876,138
Balance at September 30, 2021																	Balance at September 30, 2021		45,641,441	$	4,564	$	161,187,164	$	72,170,881	$	233,362,609	$	51,035,624		$	284,398,233

Balance at December 31, 2020	Balance at December 31, 2020		44,886,122	4,489		157,504,895		12,736,580		170,245,964		51,665,640			221,911,604		Balance at December 31, 2020		45,447,751	4,545		159,581,415		23,179,805		182,765,765		51,665,640			234,431,405
Share-based compensation	Share-based compensation		—	—		1,365,734		—		1,365,734		—			1,365,734		Share-based compensation		—	—		1,734,958		—		1,734,958		—			1,734,958

Issuance of restricted shares, net of forfeitures	Issuance of restricted shares, net of forfeitures		193,690	19		(129,209)		—		(129,190)		—			(129,190)		Issuance of restricted shares, net of forfeitures		193,690	19		(129,209)		—		(129,190)		—			(129,190)
Distribution to Non-Controlling Interests	Distribution to Non-Controlling Interests		—	—		—		—		—		(3,333,334)			(3,333,334)		Distribution to Non-Controlling Interests		—	—		—		—		—		(3,333,334)			(3,333,334)
Common Stock Dividend	Common Stock Dividend		—	—		—		(1,542,842)		(1,542,842)		—			(1,542,842)		Common Stock Dividend		—	—		—		(3,085,601)		(3,085,601)		—			(3,085,601)
Net Income	Net Income		—	—		—		25,081,446		25,081,446		1,002,919			26,084,365		Net Income		—	—		—		52,076,677		52,076,677		2,703,318			54,779,995
Balance at June 30, 2021			45,641,441	$	4,564	$	160,817,940	$	46,718,409	$	207,540,913	$	49,335,225		$	256,876,138
Balance at September 30, 2021																	Balance at September 30, 2021		45,641,441	$	4,564	$	161,187,164	$	72,170,881	$	233,362,609	$	51,035,624		$	284,398,233

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

Pangaea Logistics Solutions, Ltd.

Consolidated Statements of Cash Flows

(unaudited)

Six Months Ended June 30,
2022 2021
Operating activities
Net income $ 49,934,635 $ 26,084,365
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense 14,594,852 9,287,824
Amortization of deferred financing costs 499,703 477,263
Amortization of prepaid rent 60,969 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 liability 3,543,007 449,745
Provision for doubtful accounts 518,796 285,466
Loss on impairment of vessels 3,007,809 —
Loss on sale of vessel 318,032 —
Drydocking costs (4,858,510) (5,551,513)
Share-based compensation 1,138,785 1,365,734
Change in operating assets and liabilities:
Accounts receivable 12,640,090 (1,894,649)
Bunker inventory (25,675,924) (7,217,311)
Advance hire, prepaid expenses and other current assets 12,286,477 (10,482,310)
Accounts payable, accrued expenses and other current liabilities 13,292,238 12,222,358
Deferred revenue (7,858,791) 3,026,377
Net cash provided by operating activities 69,225,065 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 vessels 8,400,000 —
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 leases 15,000,000 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 equivalents 45,966,488 (7,782,644)
Cash and cash equivalents at beginning of period 56,208,902 48,397,216
Cash and cash equivalents at end of period $ 102,175,390 $ 40,614,572


	Nine Months Ended September 30,
	2022		2021
Operating activities
Net income	$	69,695,660	$	54,779,995
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense	21,960,413		16,451,303
Amortization of deferred financing costs	764,897		676,109
Amortization of prepaid rent	91,453		86,442
Unrealized loss (gain) on derivative instruments	510,093		(13,670,475)
Income from equity method investee	(517,117)		(801,743)
Earnings attributable to non-controlling interest recorded as other long term liability	5,961,851		775,487
Provision for doubtful accounts	1,282,624		193,860
Loss on impairment of vessels	3,007,809		—
Loss on sale of vessel	318,032		—
Drydocking costs	(5,972,024)		(7,616,318)
Share-based compensation	1,457,972		1,734,958
Change in operating assets and liabilities:
Accounts receivable	10,633,346		(12,343,647)
Bunker inventory	(3,504,215)		(8,915,026)
Advance hire, prepaid expenses and other current assets	14,095,660		(19,146,819)
Accounts payable, accrued expenses and other current liabilities	(2,946,749)		18,487,297
Deferred revenue	(14,971,451)		11,985,858
Net cash provided by operating activities	101,868,254		42,677,281

Investing activities
Purchase of vessels and vessel improvements	(18,370,977)		(159,710,150)
Advances for vessel purchases	(1,710,000)		—
Write off (Purchase) of fixed assets and equipment	187,638		(137,874)

Proceeds from sale of vessels	8,400,000		—

Contributions to non-consolidated subsidiaries	(18,505)		—
Net cash used in investing activities	(11,511,844)		(159,848,024)

Financing activities
Proceeds from long-term debt	—		79,150,000
Payments of financing fees and debt issuance costs	(331,317)		(1,992,346)
Payments of long-term debt	(12,223,052)		(58,614,319)
Proceeds from finance leases	15,000,000		109,125,739
Payments of finance lease obligations	(11,808,661)		(6,482,397)
Payments of other long-term liabilities	(5,000,000)		(2,500,000)
Dividends paid to non-controlling interests	(5,000,000)		(3,333,334)
Accrued common stock dividends paid	(8,966,039)		(3,992,500)
Cash paid for incentive compensation shares relinquished	(287,629)		(129,190)
Contributions from non-controlling interest recorded as long-term liability	—		6,901,911
Payments to non-controlling interest recorded as long-term liability	—		(195,597)
Net cash (used in) provided by financing activities	(28,616,698)		117,937,967

Net increase in cash and cash equivalents	61,739,712		767,224
Cash and cash equivalents at beginning of period	56,208,902		48,397,216
Cash and cash equivalents at end of period	$	117,948,614	$	49,164,440

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

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~~September 30, 2022, the Company owns 3three Panamax, 2two Ultramax Ice Class 1C, one Ultramax and 8eight Supramax drybulk vessels. The Company owns two-thirds of Nordic Bulk Holding Company Ltd. ("NBHC") which owns a fleet of 6six 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.

On August 18, 2022, the Company entered into a memorandum of agreement to purchase a 2010 Hyundai Vinashin-built 55,618 dwt dry bulk vessel to add to its operating fleet. The Company took delivery of the vessel on October 13, 2022 for a final purchase price of $16.6 million.

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~~Significant estimates ~~and assumptions of the Company are residual value of vessels, the useful lives of vessels,~~include the percentage completion of spot voyages, the establishment of the allowance for doubtful accounts and ~~estimated losses on our trade receivables.~~the estimate of salvage value used in determining vessel depreciation expense. 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, 2022 December 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, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Advance hire	Advance hire	$	9,799,745	$	12,014,451	Advance hire	$	7,946,894	$	12,014,451
Prepaid expenses	Prepaid expenses	5,897,012		5,956,195		Prepaid expenses	3,735,661		5,956,195
Accrued receivables	Accrued receivables	12,356,868		17,009,957		Accrued receivables	7,842,837		17,009,957
Margin deposit		(25,652)		5,464,379
Cash margin on deposit						Cash margin on deposit	3,861,154		5,464,379
Derivative assets	Derivative assets	7,884,772		3,886,107		Derivative assets	5,264,065		3,886,107
Other current assets	Other current assets	2,151,130		2,016,598		Other current assets	3,091,323		2,016,598
		$	38,063,875	$	46,347,687		$	31,741,934	$	46,347,687

Other non-current Assets

Other non-current assets were comprised of the following:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Name	Name	(unaudited)				Name	(unaudited)
Investment in Seamar Management	Investment in Seamar Management	$	756,230	$	428,572	Investment in Seamar Management	$	713,682	$	428,572
Investment in Pangaea Logistics Solutions (US) LLC	Investment in Pangaea Logistics Solutions (US) LLC	435,775		507,270		Investment in Pangaea Logistics Solutions (US) LLC	435,775		507,270
Investment in Bay Stevedoring LLC	Investment in Bay Stevedoring LLC	3,006,761		3,025,981		Investment in Bay Stevedoring LLC	3,347,988		3,025,981
		$	4,198,766	$	3,961,823		$	4,497,445	$	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, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Accounts payable	Accounts payable	$	25,950,765	$	21,090,717	Accounts payable	$	13,055,473	$	21,090,717
Accrued expenses	Accrued expenses	21,541,388		16,254,253		Accrued expenses	20,500,282		16,254,253
Bunkers supplies		12,343,555		9,260,262
Note Payable - Note 8		5,156,245		2,549,207
Bunkers suppliers						Bunkers suppliers	9,439,945		9,260,262
Note Payable - Note 10						Note Payable - Note 10	—		2,549,207
Other accrued liabilities	Other accrued liabilities	312,677		—		Other accrued liabilities	1,496,025		—
		$	65,304,630	$	49,154,439		$	44,491,725	$	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~~September 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~~September 30, 2022, the Company had 1seven vessel chartered to ~~a customer~~customers under a time ~~charter~~charters that contained a lease. ~~This 1 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 15seven leases varied in original length from 2427 days to ~~138~~66 days. ~~At June 30, 2021,~~The lease payments due under these arrangements totaled

approximately ~~$8,648,000~~$2,481,000 and each of the time charters were due to be completed in 6544 days or less.

At September 30, 2021, the Company had eight vessels chartered to customers under time charters that contain leases. These eight leases varied in original length from 16 days to 92 days. At September 30, 2021, lease payments due under these

arrangements totaled approximately $9,474,000 and each of the time charters were due to be completed in 51 days or less. The Company does not have any sales-type or direct financing leases.

Office leases

The Company has 2two 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.

NOTE 3 - CASH AND CASH EQUIVALENTS


	September 30, 2022		December 31, 2021
	(unaudited)
Money market accounts – cash equivalents	$	55,939,922	$	35,193,025
Cash (1)	62,008,692		21,015,877
Total cash and cash equivalents	$	117,948,614	$	56,208,902

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

As of September 30, 2022 and December 31, 2021, we held cash and cash equivalents in the following subsidiaries:


Cash and cash equivalents	September 30, 2022		December 31, 2021
Pangaea (1)	$	77,398,003	$	29,486,488
NBHC (2)	30,137,210		21,329,407
NBP and Deck Barge (3)	10,413,401		5,393,007
Total cash and cash equivalents	$	117,948,614	$	56,208,902

(1) Held by 100% owned Pangaea consolidated subsidiaries

(2) Held by a 67% owned Pangaea consolidated subsidiary

(3) Held by a 50% owned Pangaea consolidated subsidiary

NOTE 4 - FIXED ASSETS

At ~~June~~September 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,			September 30,		December 31,
		2022		2021			2022		2021
		(unaudited)					(unaudited)
m/v NORDIC ODYSSEY (1)	m/v NORDIC ODYSSEY (1)	$	21,570,749	$	22,456,407	m/v NORDIC ODYSSEY (1)	$	21,127,921	$	22,456,407
m/v NORDIC ORION (1)	m/v NORDIC ORION (1)	22,231,771		23,057,114		m/v NORDIC ORION (1)	21,819,100		23,057,114
m/v NORDIC OSHIMA (1)	m/v NORDIC OSHIMA (1)	24,952,260		25,612,412		m/v NORDIC OSHIMA (1)	24,622,184		25,612,412
m/v NORDIC OLYMPIC (1)	m/v NORDIC OLYMPIC (1)	25,305,330		25,982,802		m/v NORDIC OLYMPIC (1)	24,966,593		25,982,802
m/v NORDIC ODIN (1)	m/v NORDIC ODIN (1)	25,399,937		26,073,841		m/v NORDIC ODIN (1)	25,062,985		26,073,841
m/v NORDIC OASIS (1)	m/v NORDIC OASIS (1)	26,941,537		27,650,350		m/v NORDIC OASIS (1)	26,587,130		27,650,350
m/v NORDIC NULUUJAAK (2) ~~(5)~~(4)	m/v NORDIC NULUUJAAK (2) ~~(5)~~(4)	38,234,130		38,949,402		m/v NORDIC NULUUJAAK (2) ~~(5)~~(4)	37,876,493		38,949,402
m/v NORDIC QINNGUA (2) ~~(5)~~(4)	m/v NORDIC QINNGUA (2) ~~(5)~~(4)	38,133,232		38,838,142		m/v NORDIC QINNGUA (2) ~~(5)~~(4)	37,780,777		38,838,142
m/v NORDIC SANNGIJUQ (2) ~~(5)~~(4)	m/v NORDIC SANNGIJUQ (2) ~~(5)~~(4)	37,688,843		38,377,457		m/v NORDIC SANNGIJUQ (2) ~~(5)~~(4)	37,344,537		38,377,457
m/v NORDIC SIKU(2) ~~(5)~~(4)	m/v NORDIC SIKU(2) ~~(5)~~(4)	38,084,765		38,776,359		m/v NORDIC SIKU(2) ~~(5)~~(4)	37,738,968		38,776,359
m/v BULK ENDURANCE	m/v BULK ENDURANCE	23,707,705		23,069,545		m/v BULK ENDURANCE	23,388,693		23,069,545
m/v BULK COURAGEOUS ~~(5)~~(4)	m/v BULK COURAGEOUS ~~(5)~~(4)	16,056,284		16,356,730		m/v BULK COURAGEOUS ~~(5)~~(4)	15,906,061		16,356,730
m/v BULK CONCORD ~~(5)~~(4)	m/v BULK CONCORD ~~(5)~~(4)	19,845,938		—		m/v BULK CONCORD ~~(5)~~(4)	19,620,452		—
m/v BULK NEWPORT	m/v BULK NEWPORT	10,970,171		11,566,639		m/v BULK NEWPORT	10,675,153		11,566,639
m/v BULK FREEDOM	m/v BULK FREEDOM	7,950,193		8,476,937		m/v BULK FREEDOM	7,523,324		8,476,937
m/v BULK PRIDE	m/v BULK PRIDE	12,867,799		13,560,656		m/v BULK PRIDE	12,521,371		13,560,656
m/v BULK SPIRIT ~~(5)~~(4)	m/v BULK SPIRIT ~~(5)~~(4)	11,997,224		12,293,336		m/v BULK SPIRIT ~~(5)~~(4)	11,850,197		12,293,336
m/v BULK INDEPENDENCE	m/v BULK INDEPENDENCE	13,799,729		13,466,530		m/v BULK INDEPENDENCE	15,041,839		13,466,530
m/v BULK FRIENDSHIP ~~(5)~~(4)	m/v BULK FRIENDSHIP ~~(5)~~(4)	14,101,133		14,526,423		m/v BULK FRIENDSHIP ~~(5)~~(4)	13,890,856		14,526,423
m/v BULK VALOR	m/v BULK VALOR	17,461,842		17,797,021		m/v BULK VALOR	17,284,143		17,797,021
m/v BULK PROMISE	m/v BULK PROMISE	17,963,804		18,306,557		m/v BULK PROMISE	17,792,031		18,306,557
m/v BULK PANGAEA ~~(3)~~	m/v BULK PANGAEA ~~(3)~~	—		11,802,463		m/v BULK PANGAEA ~~(3)~~	—		11,802,463
MISS NORA G PEARL ~~(4)~~(3)	MISS NORA G PEARL ~~(4)~~(3)	2,491,597		2,714,931		MISS NORA G PEARL ~~(4)~~(3)	2,461,363		2,714,931
		467,755,973		469,712,054			462,882,171		469,712,054
Other fixed assets, net	Other fixed assets, net	2,209,235		2,200,756		Other fixed assets, net	2,254,956		2,200,756
Total fixed assets, net	Total fixed assets, net	$	469,965,208	$	471,912,810	Total fixed assets, net	$	465,137,127	$	471,912,810

Right of Use Assets ~~(5)~~	Right of Use Assets ~~(5)~~					Right of Use Assets ~~(5)~~
m/v BULK XAYMACA	m/v BULK XAYMACA	$	14,220,803	$	12,661,804	m/v BULK XAYMACA	$	13,422,911	$	12,661,804
m/v BULK DESTINY	m/v BULK DESTINY	20,335,023		20,074,619		m/v BULK DESTINY	20,075,103		20,074,619
m/v BULK TRIDENT	m/v BULK TRIDENT	11,740,835		12,459,336		m/v BULK TRIDENT	11,382,516		12,459,336
		$	46,296,661	$	45,195,759		$	44,880,530	$	45,195,759

Advances for vessel purchases						Advances for vessel purchases	$	1,710,000	$	1,990,000

(1) Vessels are owned by NBHC, a consolidated joint venture in which the Company has a two-third ownership interest at ~~June~~September 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~~September 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.

~~(5)~~(4) Refer to Note ~~7, "Commitments and Contingencies,"~~6, "Finance Leases" 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 and third quarter of 2022 which would require impairment testing.

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

1213

NOTE 45 - DEBT

Long-term debt consists of the following:


		June 30, 2022		December 31, 2021		Interest Rate (%) (1)		Maturity Date		September 30, 2022		December 31, 2021		Interest Rate (%) (1)		Maturity Date
		(unaudited)								(unaudited)

Bulk Nordic Odyssey (MI) Corp., Bulk Nordic Orion (MI) Corp. Senior Secured Term Loan Facility (2) (3)	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 Odyssey (MI) Corp., Bulk Nordic Orion (MI) Corp. Senior Secured Term Loan Facility (2) (3)	14,857,655		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)	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	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)	45,800,000		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)	The Amended Senior Facility - Dated May 13, 2019 (formerly The Amended Senior Facility - Dated December 21, 2017) (4)								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)	Bulk Nordic Six Ltd. - Tranche A (2)	10,633,327		11,166,661		4.39	%	May 2024	Bulk Nordic Six Ltd. - Tranche A (2)	10,366,660		11,166,661		4.39	%	May 2024
Bulk Nordic Six Ltd. - Tranche B	Bulk Nordic Six Ltd. - Tranche B	2,200,000		2,330,000		3.37	%	May 2024	Bulk Nordic Six Ltd. - Tranche B	2,135,000		2,330,000		4.60	%	May 2024
Bulk Pride - Tranche C (2)	Bulk Pride - Tranche C (2)	3,550,000		4,100,000		5.39	%	May 2024	Bulk Pride - Tranche C (2)	3,275,000		4,100,000		5.39	%	May 2024
Bulk Independence - Tranche E (2)	Bulk Independence - Tranche E (2)	11,000,000		11,500,000		3.54	%	May 2024	Bulk Independence - Tranche E (2)	10,750,000		11,500,000		3.54	%	May 2024
Bulk Freedom Loan Agreement	Bulk Freedom Loan Agreement	—		2,600,000		4.55	%	June 2022	Bulk Freedom Loan Agreement	—		2,600,000		N/A		June 2022
Bulk Valor Corp. Loan and Security Agreement (2)	Bulk Valor Corp. Loan and Security Agreement (2)	12,076,114		12,718,279		3.29	%	June 2028	Bulk Valor Corp. Loan and Security Agreement (2)	11,752,183		12,718,279		3.29	%	June 2028
Bulk Promise Corp. ~~(5)~~(2)	Bulk Promise Corp. ~~(5)~~(2)	11,761,778		12,453,926		3.34	%	October 2027	Bulk Promise Corp. ~~(5)~~(2)	11,415,704		12,453,926		3.15	%	October 2027
109 Long Wharf Commercial Term Loan	109 Long Wharf Commercial Term Loan	429,266		484,066		3.62	%	April 2026	109 Long Wharf Commercial Term Loan	401,866		484,066		5.08	%	April 2026
Total	Total	$	113,967,003	$	122,977,121				Total	$	110,754,068	$	122,977,121
Less: unamortized issuance costs, net	Less: unamortized issuance costs, net	(1,487,524)		(1,697,209)					Less: unamortized issuance costs, net	(1,390,578)		(1,697,209)
		$	112,479,479	$	121,279,912					$	109,363,490	$	121,279,912
Less: current portion	Less: current portion	(12,891,501)		(15,443,115)					Less: current portion	(12,916,094)		(15,443,115)
Secured long-term debt, net	Secured long-term debt, net	$	99,587,978	$	105,836,797				Secured long-term debt, net	$	96,447,396	$	105,836,797

(1)As of ~~June~~September 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,			Years ending December 31,
		(unaudited)			(unaudited)
2022 (remainder of the year)	2022 (remainder of the year)	$	6,432,998	2022 (remainder of the year)	$	3,220,064
2023	2023	12,940,758		2023	12,940,758
2024	2024	31,857,187		2024	31,857,187
2025	2025	9,718,626		2025	9,718,626
2026	2026	9,761,812		2026	9,761,812
Thereafter	Thereafter	43,255,622		Thereafter	43,255,621
		$	113,967,003		$	110,754,068

1314

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~~September 30, 2022 and December 31, 2021.

NOTE 6 - FINANCE LEASES

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.

Finance lease consists of the following as of September 30, 2022:


	September 30, 2022		December 31, 2021		Interest Rate (%) (1)		Maturity Date
	(unaudited)
Bulk PODS Ltd.	$	7,067,708	$	8,450,521	5.30	%	December 2027
Bulk Trident Ltd.	5,958,086		7,177,082		4.78	%	June 2027
Bulk Spirit Ltd.	8,912,761		9,768,229		5.10	%	February 2027
Bulk Nordic Five Ltd. (2)	13,520,702		14,633,229		3.97	%	April 2028
Bulk Friendship Corp. (2)	9,761,799		10,491,481		5.29	%	September 2024
Bulk Nordic Seven LLC (3)	30,496,569		31,673,199		6.80	%	May 2036
Bulk Nordic Eight LLC(3)	30,484,596		31,660,789		6.80	%	June 2036
Bulk Nordic Nine LLC(3)	30,548,715		31,692,105		6.80	%	September 2036
Bulk Nordic Ten LLC(3)	30,660,171		31,799,563		6.80	%	November 2036
Bulk Courageous Corp. (2)	10,500,000		11,400,000		3.93	%	April 2028
Phoenix Bulk 25 Corp. (2)	14,026,427		—		4.67	%	February 2029
Total	$	191,937,534	$	188,746,198
Less: unamortized issuance costs, net	(3,179,639)		(3,306,842)
	$	188,757,895	$	185,439,356
Less: current portion	(16,261,356)		(14,479,803)
Secured long-term debt, net	$	172,496,539	$	170,959,553

(1)As of September 30, 2022 including the effect of interest rate cap if any.

(2)Interest rates on the loan facilities are fixed.

(3)The Company entered into an interest rate cap through Q2 of 2026 and Q4 2026 which caps the LIBOR rate at 3.25%.

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 September 30, 2022.


Year ending December 31,	Amount
2022 (remainder of the year)	$	7,219,795
2023	28,415,179
2024	34,730,839
2025	25,176,739
2026	22,729,607
Thereafter	158,152,586
Total minimum lease payments	$	276,424,745
Less imputed interest	84,487,211
Present value of minimum lease payments	191,937,534
Less current portion	(16,261,356)
Less issuance costs	(3,179,639)
Long-term portion	$	172,496,539

NOTE 57 - 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~~September 30, 2022 and December 31, 2021:


		Asset Derivative					Asset Derivative			Liability Derivative
Derivative instruments	Derivative instruments	Balance Sheet Location	06/30/2022		12/31/2021			Derivative instruments	Balance Sheet Location	09/30/2022		12/31/2021		Balance Sheet Location	9/30/2022		12/31/2021
Margin accounts (1)	Margin accounts (1)	Other current assets	$	(25,652)	$	5,464,379		Margin accounts (1)	Other current assets	$	3,861,154	$	5,464,379	Other current liabilities	$	—	$	—
Forward freight agreements (2)	Forward freight agreements (2)	Other current assets	$	3,181,161	$	2,119,581		Forward freight agreements (2)	Other current assets	$	—	$	2,119,581	Other current liabilities	$	630,007	$	—
Fuel swap contracts (2)	Fuel swap contracts (2)	Other current assets	$	1,937,037	$	1,047,752		Fuel swap contracts (2)	Other current assets	$	—	$	1,047,752	Other current liabilities	$	1,258,043	$	—
Interest rate cap (2)	Interest rate cap (2)	Other current assets	$	2,766,575	$	718,774		Interest rate cap (2)	Other current assets	$	5,264,065	$	718,774	Other current liabilities	$	—	$	—

(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).

1517

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


		Unrealized gain (loss) on derivative instruments									Unrealized gain (loss) on derivative instruments
		For the three months ended				For the six months ended					For the three months ended				For the nine months ended
Derivative instruments	Derivative instruments	06/30/2022		6/30/2021		06/30/2022		6/30/2021		Derivative instruments	09/30/2022		9/30/2021		09/30/2022		9/30/2021
Forward freight agreements	Forward freight agreements	$	(1,698,327)	$	5,651,000	$	1,061,579	$	6,140,885	Forward freight agreements	$	(3,811,168)	$	4,891,791	$	(2,749,589)	$	11,032,675
Fuel Swap Contracts	Fuel Swap Contracts	(2,133,497)		940,615		$	889,285	$	1,682,229	Fuel Swap Contracts	(3,195,080)		471,511		$	(2,305,795)	$	2,153,740
Interest rate cap	Interest rate cap	330,175		(287,839)		$	2,047,801	$	503,034	Interest rate cap	2,497,490		(18,975)		$	4,545,291	$	484,060
Total Gain	Total Gain	$	(3,501,649)	$	6,303,776	$	3,998,665	$	8,326,148	Total Gain	$	(4,508,758)	$	5,344,327	$	(510,093)	$	13,670,475

1618

NOTE 68 - RELATED PARTY TRANSACTIONS

Amounts and notes payable to related parties consist of the following:


		December 31, 2021		Activity		June 30, 2022			December 31, 2021		Activity		September 30, 2022
						(unaudited)							(unaudited)

Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:	Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:							Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:
Affiliated companies (trade payables) (i)	Affiliated companies (trade payables) (i)	$	2,847,910	77,384		$	2,925,294	Affiliated companies (trade payables) (i)	$	2,847,910	(2,035,519)		$	812,391
Commissions payable (trade payables) (ii)	Commissions payable (trade payables) (ii)	$	38,896	109,144		$	148,040	Commissions payable (trade payables) (ii)	$	38,896	(38,896)		$	—

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

Interest payable - 2011 Founders Note	Interest payable - 2011 Founders Note	242,852		(242,852)		—		Interest payable - 2011 Founders Note	242,852		(242,852)		—
Total current related party debt	Total current related party debt	$	242,852	$	(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~~September 30, 2022 and 2021, the Company incurred technical management fees of approximately ~~$815,400~~$772,800 and ~~682,800,~~$765,600, respectively, under this arrangement. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company incurred technical management fees of approximately ~~$1,597,000~~$2,370,000 and ~~1,276,800,~~$2,019,000, respectively, under this arrangement.

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

NOTE 79 - COMMITMENTS AND CONTINGENCIES

~~Bulk Concord Bareboat Charter Agreement dated January 27, 2022~~

~~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.~~

Year ending December 31, Amount
2022 (remainder of the year) $ 13,753,442
2023 27,174,431
2024 33,598,344
2025 24,161,223
2026 21,824,643
Thereafter 153,349,290
Total minimum lease payments $ 273,861,373
Less imputed interest 77,935,802
Present value of minimum lease payments 195,925,571
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~~September 30, 2022, the remaining lease term is ~~fourteen~~eleven months.

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

For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company recognized approximately ~~$104,000~~$156,000 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.

1819

NOTE 810 - 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 3three equal installments of $2.5 million due on the first, second, and third anniversaries of September 28, 2020. The Company ~~expects to pay~~paid 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)		06/30/2022		12/31/2021
							09/30/2022		12/31/2021
Beginning Balance	Beginning Balance	$	17,806,976	$	10,135,409	Beginning Balance	$	17,806,976	$	10,135,409
Payments to non-controlling interest recorded as long-term liability	Payments to non-controlling interest recorded as long-term liability	—		(195,599)		Payments to non-controlling interest recorded as long-term liability	—		(195,599)
Contributions from non-controlling interests	Contributions from non-controlling interests	—		9,182,425		Contributions from non-controlling interests	—		9,182,425
Earnings attributable to non-controlling interest recorded as other long term liability	Earnings attributable to non-controlling interest recorded as other long term liability	3,543,007		1,184,741		Earnings attributable to non-controlling interest recorded as other long term liability	5,961,851		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	Payments on other long-term liability	—		(2,500,000)		Payments on other long-term liability	(2,500,000)		(2,500,000)
Ending balance	Ending balance	$	18,849,983	$	17,806,976	Ending balance	$	21,268,827	$	17,806,976

1920

NOTE 11 - NET INCOME PER COMMON SHARE

The computation of basic net income per share is based on the weighted average number of common stock outstanding for the three and nine months ended September 30, 2022 and 2021. Diluted net income per share gives effect to restricted stock awards.

The following table summarizes the calculation of basic and diluted income per share:


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net income	$	18,788,414	$	26,995,231	$	63,988,812	$	52,076,677
Weighted Average Shares - Basic	44,415,575		44,004,980		44,386,628		43,994,726
Dilutive effect of restricted stock awards	224,703		922,476		237,600		709,577
Weighted Average Shares - Diluted	44,640,278		44,927,456		44,624,228		44,704,303
Basic net income per share	$	0.42	$	0.61	$	1.44	$	1.18
Diluted net income per share	$	0.42	$	0.60	$	1.43	$	1.16

NOTE 912 - SUBSEQUENT EVENTS

On ~~July 7,~~August 18, 2022, the ~~Bulk Promise Corp~~Company entered into a memorandum of agreement to acquire a 2010 Hyundai Vinashin-built 55,618 dwt dry bulk vessel for $17.1 million. The Company took delivery of the vessel on October 13, 2022 for a final purchase price of $16.6 million, and subsequently financed the vessel with a term loan facility with one of our lenders in the amount of $8.5 million payable over 7 years at a fixed interest rate ~~was fixed at 5.45% effective July 15, 2022 through maturity.~~of 6.19%.

On ~~August 5,~~November 8, 2022, the Company's Board of Directors declared a quarterly cash dividend of ~~$0.075~~$0.10 per common share, to be paid on ~~September~~December 15, 2022, to all shareholders of record as of ~~September~~December 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.

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.

2122

Selected Financial Information


(in thousands, except for shipping days data and per share data) (figures may not foot due to rounding)	(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,				(in thousands, except for shipping days data and per share data) (figures may not foot due to rounding)	For the three months ended September 30,				For the nine months ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Selected Financial Data	Selected Financial Data	Unaudited				Unaudited				Selected Financial Data	Unaudited				Unaudited
Voyage revenue	Voyage revenue	$	173,189	$	117,395	$	349,526	$	225,626	Voyage revenue	$	173,168	$	186,353	$	522,694	$	411,978
Charter revenue	Charter revenue	22,355		28,149		37,781		44,891		Charter revenue	11,309		26,676		49,090		71,568
Total revenue	Total revenue	195,544		145,544		387,306		270,517		Total revenue	184,477		213,029		571,783		483,546
Voyage expense	Voyage expense	67,908		46,113		133,158		93,952		Voyage expense	74,716		60,406		207,874		154,357
Charter hire expense	Charter hire expense	65,713		62,604		143,425		116,239		Charter hire expense	50,751		103,721		194,175		219,960
Vessel operating expenses	Vessel operating expenses	12,930		9,773		26,118		18,268		Vessel operating expenses	15,362		11,754		41,479		30,022
Total cost of transportation and service revenue	Total cost of transportation and service revenue	146,551		118,490		302,700		228,459		Total cost of transportation and service revenue	140,829		175,881		443,529		404,339
Vessel depreciation and amortization	Vessel depreciation and amortization	7,293		4,850		14,595		9,200		Vessel depreciation and amortization	7,347		7,145		21,905		16,370
Gross Profit	Gross Profit	41,700		22,204		70,011		32,857		Gross Profit	36,301		30,003		106,349		62,836
Other operating expenses	Other operating expenses	5,156		6,048		10,419		10,322		Other operating expenses	5,795		4,460		16,251		14,759
Loss on impairment of vessels	Loss on impairment of vessels	—		—		3,008		—		Loss on impairment of vessels	—		—		3,008		—
Loss on sale of vessels	Loss on sale of vessels	318		—		318		—		Loss on sale of vessels	—		—		318		—
Income from operations	Income from operations	36,245		16,156		56,266		22,535		Income from operations	30,506		25,543		86,773		48,078
Total other (expense) income, net	Total other (expense) income, net	(8,758)		3,421		(6,332)		3,549		Total other (expense) income, net	(10,745)		3,153		(17,077)		6,702
Net income	Net income	27,487		19,577		49,935		26,084		Net income	19,761		28,696		69,696		54,780
Income attributable to non-controlling interests	Income attributable to non-controlling interests	(2,454)		(350)		(4,734)		(1,003)		Income attributable to non-controlling interests	(973)		(1,700)		(5,707)		(2,703)
Net income attributable to Pangaea Logistics Solutions Ltd.	Net income attributable to Pangaea Logistics Solutions Ltd.	$	25,032	$	19,227	$	45,200	$	25,081	Net income attributable to Pangaea Logistics Solutions Ltd.	$	18,788	$	26,995	$	63,989	$	52,077

Net income from continuing operations per common share information	Net income from continuing operations per common share information									Net income from continuing operations per common share information
Basic net income per share	Basic net income per share	$	0.56	$	0.44	$	1.02	$	0.57	Basic net income per share	$	0.42	$	0.61	$	1.44	$	1.18
Diluted net income per share	Diluted net income per share	$	0.56	$	0.43	$	1.00	$	0.56	Diluted net income per share	$	0.42	$	0.60	$	1.43	$	1.16
Weighted-average common shares Outstanding - basic	Weighted-average common shares Outstanding - basic	44,430		43,998		44,411		43,990		Weighted-average common shares Outstanding - basic	44,416		44,005		44,387		43,995
Weighted-average common shares Outstanding - diluted	Weighted-average common shares Outstanding - diluted	45,071		44,689		45,129		44,731		Weighted-average common shares Outstanding - diluted	44,640		44,927		44,624		44,704

Adjusted EBITDA (1)	Adjusted EBITDA (1)	$	44,248	$	21,360	$	75,544	$	33,440	Adjusted EBITDA (1)	$	38,490	$	33,626	$	114,034	$	67,065

Shipping Days (2)	Shipping Days (2)									Shipping Days (2)
Voyage days	Voyage days	3,963		3,431		8,139		7,059		Voyage days	3,998		4,430		12,137		11,489
Time charter days	Time charter days	740		1,292		1,343		2,332		Time charter days	555		875		1,898		3,207
Total shipping days	Total shipping days	4,703		4,723		9,482		9,391		Total shipping days	4,553		5,305		14,035		14,696

TCE Rates ($/day)	TCE Rates ($/day)	$	27,139	$	21,053	26,803		$	18,802	TCE Rates ($/day)	$	24,107	$	28,770	25,929		$	22,400

2223


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Selected Data from the Consolidated Balance Sheets	Selected Data from the Consolidated Balance Sheets					Selected Data from the Consolidated Balance Sheets
Cash and cash equivalents	Cash and cash equivalents	$	102,175	$	56,209	Cash and cash equivalents	$	117,949	$	56,209
Total assets	Total assets	$	754,624	$	707,024	Total assets	$	738,911	$	707,024
Total secured debt, including finance leases liabilities	Total secured debt, including finance leases liabilities	$	305,071	$	306,719	Total secured debt, including finance leases liabilities	$	298,121	$	306,719
Total shareholders' equity	Total shareholders' equity	$	340,854	$	300,681	Total shareholders' equity	$	357,597	$	300,681

		For the six months ended June 30,					For the nine months ended September 30,
		2022		2021			2022		2021
Selected Data from the Consolidated Statements of Cash Flows	Selected Data from the Consolidated Statements of Cash Flows					Selected Data from the Consolidated Statements of Cash Flows
Net cash provided by operating activities	Net cash provided by operating activities	$	69,225	$	19,534	Net cash provided by operating activities	$	101,868	$	42,677
Net cash used in investing activities	Net cash used in investing activities	$	(10,192)	$	(108,652)	Net cash used in investing activities	$	(11,512)	$	(159,848)
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	$	(13,067)	$	81,336	Net cash (used in) provided by financing activities	$	(28,617)	$	117,938

(1)Adjusted EBITDA represents net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, income taxes, depreciation and amortization, loss on impairment, 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).

The reconciliation of gross profit to net transportation and service revenue and net income in accordance with U.S. GAAP to Adjusted EBITDA is as follows:


(in thousands, figures may not foot due to rounding)	(in thousands, figures may not foot due to rounding)	Three Months Ended June 30,				Six Months Ended June 30,				(in thousands, figures may not foot due to rounding)	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net Transportation and Service Revenue (3)	Net Transportation and Service Revenue (3)									Net Transportation and Service Revenue (3)
Gross Profit (4)	Gross Profit (4)	$	41,700	$	22,204	$	70,011	$	32,857	Gross Profit (4)	$	36,301	$	30,003	$	106,349	$	62,836
Add:	Add:									Add:
Vessel Depreciation and Amortization	Vessel Depreciation and Amortization	7,293		4,850		14,595		9,200		Vessel Depreciation and Amortization	7,347		7,145		21,905		16,370
Net transportation and service revenue	Net transportation and service revenue	$	48,993	$	27,055	$	84,606	$	42,057	Net transportation and service revenue	$	43,648	$	37,148	$	128,254	$	79,206

Adjusted EBITDA	Adjusted EBITDA									Adjusted EBITDA
Net Income	Net Income	$	27,487	$	19,577	$	49,935	$	26,084	Net Income	$	19,761	$	28,696	$	69,696	$	54,780
Interest expense, net	Interest expense, net	5,337		2,800		10,549		5,028		Interest expense, net	4,116		2,417		11,122		6,995
Income attributable to Non-controlling interest recorded as long-term liability interest expense										Income attributable to Non-controlling interest recorded as long-term liability interest expense	2,419		326		5,962		775
Depreciation and amortization	Depreciation and amortization	7,293		4,869		14,595		9,288		Depreciation and amortization	7,366		7,163		21,960		16,451
EBITDA	EBITDA	$	40,118	$	27,246	$	75,078	$	40,400	EBITDA	$	33,662	$	38,602	$	108,740	$	79,001
Non-GAAP Adjustments	Non-GAAP Adjustments									Non-GAAP Adjustments
Loss on impairment of vessels	Loss on impairment of vessels	—		—		3,008		—		Loss on impairment of vessels	—		—		3,008		—
Loss on sale of vessels	Loss on sale of vessels	318		—		318		—		Loss on sale of vessels	—		—		318		—
Share-based compensation	Share-based compensation	311		418		1,139		1,366		Share-based compensation	319		369		1,458		1,735
Unrealized loss (gain) on derivative instruments, net	Unrealized loss (gain) on derivative instruments, net	3,502		(6,304)		(3,999)		(8,326)		Unrealized loss (gain) on derivative instruments, net	4,509		(5,344)		510		(13,670)
Adjusted EBITDA	Adjusted EBITDA	$	44,248	$	21,360	$	75,544	$	33,440	Adjusted EBITDA	$	38,490	$	33,626	$	114,034	$	67,065

(3) Net transportation and service revenue represents total revenue less the total direct costs of transportation and services, which includes charter hire, voyage and vessel operating expenses. Net transportation and service revenue is included because it is used by management and certain investors to measure performance by comparison to other logistic service providers. Net transportation and service revenue 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 net transportation and service revenue used here may not be comparable to an operating measure used by other companies.

(4) Gross profit represents total revenue less cost of transportation and service revenue less vessel depreciation.

2425

Business Overview

The dry bulk sector of the transportation and logistics industry is cyclical and can be volatile due to changes in supply of vessels and demand for transportation of dry bulk commodities. After reaching levels not seen in over a decade in 2021, the dry bulk freight market remained strong in historical terms in the first half of ~~2022.~~2022 before slowing down in the third quarter due to decreased freight demand. The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged ~~2,403~~1,540 for the ~~second~~third quarter of 2022, compared to an average of ~~3,001~~4,197 for the comparable quarter of 2021, and updown approximately ~~24%~~36% from the ~~first~~second quarter of 2022. More specifically, and reflecting the composition of the Company's fleet, the average published market rates for Supramax and Panamax vessels ~~increased~~decreased approximately 8%47% from an average of ~~$24,185~~$32,033 in the ~~second~~third quarter of 2021 to ~~$26,075~~$17,115 in the same period of 2022. We have historically experienced fluctuations in our results of operations on a quarterly and annual basis due to the volatility of the dry bulk sector. We expect to experience continued fluctuations in our operating results in the foreseeable future due to a variety of factors, including cargo demand for vessels, supply of vessels, competition, and seasonality.

Effect of Inflation

High inflation in the United States and in many of the global economies where the Company operates is beginning to impact vessel operating costs, including crew travel, transportation of equipment and spares, and drydocking costs. We expect crew payroll expenses to continue to increase over the near and medium future, and other inflated cost changes may make our vessel daily operating costs higher. Increases in the cost of fuel consumed on voyages are usually absorbed by cargo market rates passed on to customers or covered by fuel cost pass through under the terms of long-term contracts. Because interest rates on a large portion of the Company’s long-term debt, and finance leases is fixed or capped, the impact of higher interest rates on the Company’s earnings is limited.

Quarterly TCE Performance

For the three months ended ~~June~~September 30, 2022, the Company's TCE rates were ~~up 29%~~down 16% to ~~$27,139~~$24,107 from ~~$21,053~~$28,770 for the three months ended ~~June~~September 30, 2021. The Company's achieved TCE rates ~~continued to improve~~declined as the overall dry bulk market rates ~~improved~~declined for the three months ended ~~June~~September 30, 2022. The Company's achieved TCE rate for the three months ended ~~June~~September 30, 2022 outperformed the average of the Baltic panamax and supramax market indexes and exceeded the average market rates by approximately 4%41% due to its long-term contracts of affreightment, ("COAs"), its specialized fleet and its cargo-focused strategy.

~~2nd~~3rd Quarter Highlights

•Net income attributable to Pangaea Logistics Solutions Ltd. was approximately ~~$25.0~~$18.8 million for three months ended ~~June~~September 30, 2022 as compared to approximately ~~$19.2~~$27.0 million for the same period of 2021.

•Diluted net income per share was ~~$0.56~~$0.42 for three months ended ~~June~~September 30, 2022, as compared to ~~$0.43~~$0.60 for the same period of 2021.

•Pangaea's TCE rates were ~~$27,139~~$24,107 for the three months ended ~~June~~September 30, 2022 and ~~$21,053~~$28,770 for the three months ended ~~June~~September 30, 2021.

•Adjusted EBITDA was ~~$44.2~~$38.5 million for the three months ended ~~June~~September 30, 2022, as compared to ~~$21.4~~$33.6 million for the same period of 2021.

•At the end of the quarter, Pangaea had ~~$102.2~~$117.9 million in cash, and cash equivalents.

Three Months Ended ~~June~~September 30, 2022 Compared to Three Months Ended ~~June~~September 30, 2021

Revenues

Pangaea’s revenues are derived predominately from voyage and time charters. Total revenue for the three months ended ~~June~~September 30, 2022 was ~~$195.5~~$184.5 million, compared to ~~$145.5~~$213.0 million for the same period in 2021, a ~~34% increase.~~13% decrease. The ~~increase~~decrease in revenues was primarily due to ~~higher~~lower average TCE rates earned as discussed above. The total number of shipping days ~~were approximately the same for~~decreased 14% to 4,553 in the three months ended ~~June~~September 30, 2022, ~~and~~compared to 5,305 for the same period in 2021.

Components of revenue are as follows:

Voyage revenues ~~increased~~decreased by ~~48%~~7% for the three months ended ~~June~~September 30, 2022 to $173.2 million compared to ~~$117.4~~$186.4 million for the same period in 2021. The ~~increase~~decrease in voyage revenues was primarily due to ~~higher~~lower average TCE rates earned and a ~~greater~~lesser number of voyage days which ~~increased 16%~~decreased 10% to ~~3,963~~3,998 for the three months ended ~~June~~September 30, 2022 compared to ~~3,431~~4,430 for the same period in 2021.

Charter revenues decreased to ~~$22.4~~$11.3 million from ~~$28.1~~$26.7 million, or ~~21%~~58%, for the three months ended ~~June~~September 30, 2022 compared to the same period in 2021. The decrease in charter revenues was due to a decrease in time charter days which were down ~~43%~~37% to ~~740~~555 in the ~~first~~third quarter of 2022 from ~~1,292~~875 for the same quarter in 2021 and ~~offset by increased~~decreased charter hire rates earned. The optionality of our chartering strategy allows the Company to selectively release excess ship days, if any, into the market under time charter arrangements.

Voyage Expenses

Voyage expenses were ~~$67.9~~$74.7 million for the three months ended ~~June~~September 30, 2022, compared to ~~$46.1~~$60.4 million for the same period in 2021, an increase of approximately ~~47.3%~~23.7%. The increase was primarily attributable to an increase in bunker costs. ~~Further voyage days increased by 16% to 3,963 days in the three months ended June 30, 2022 from 3,431 days for the same period in 2021.~~ Total costs of bunkers consumed increased by ~~94.8%~~39.0% for the three months ended ~~June~~September 30, 2022 compared to the same period in 2021 due to the increasing market price for bunkers. Port expenses increased by 9%2% compared to prior ~~year as a result of the increase in voyage days.~~year.

Charter Hire Expenses

Charter hire expenses for the three months ended ~~June~~September 30, 2022 were ~~$65.7~~$50.8 million, compared to ~~$62.6~~$103.7 million for the same period in 2021, a ~~5% increase.~~51% decrease. The ~~increase~~decrease in charter hire expenses was primarily due to an ~~increase~~decrease in market rates to charter-in vessels. The average published market rates for Supramax and Panamax vessels ~~increased~~decreased approximately 8%47% from an average of ~~$24,185~~$32,033 in the ~~second~~third quarter of 2021 to ~~$26,075~~$17,115 in the same period of 2022. ~~This was offset by a decrease in~~The chartered-in days ~~of 20%~~decreased 28% from ~~3,108~~3,337 days in the three months ended ~~June~~September 30, 2021 to ~~2,501~~2,391 days for the three months ended ~~June~~September 30, 2022. The Company's flexible charter-in strategy allows it to supplement its owned fleet with short term chartered-in tonnage at prevailing market prices, when needed, to meet cargo demand.

Vessel Operating Expenses

Vessel operating expenses for the three months ended ~~June~~September 30, 2022 were ~~$12.9~~$15.4 million, compared to ~~$9.8~~$11.8 million for the same period in 2021, an increase of approximately ~~32%~~31%. The increase in vessel operating expenses was ~~predominantly~~partially due to an increase in owned days resulting from the acquisition of vessels in 2021 and 2022. The ownership days for the three months ended September 30, 2022 and 2021 were 2,208 and 2,019, respectively. Excluding technical management fees, vessel operating expenses on a per day basis were ~~$5,198~~$6,471 for the three months ended ~~June~~September 30, 2022 and ~~$5,254~~$5,313 for the three months ended ~~June~~September 30, 2021. Technical management fees were approximately $1.1 million and ~~$0.9~~$1.0 million for the three months ended ~~June~~September 30, 2022 and 2021, respectively. The increase in vessel operating expenses was also attributable to an increase in crew expenses due to an increase in crewing costs, crew changes and expenses related to COVID-19 and the war in Ukraine. The Company also continues to face general inflationary pressures particularly impacting the cost of lubes, stores and spares.

General and Administrative Expenses

General and administrative expenses were ~~$5.1~~$5.8 million and ~~$6.0~~$4.4 million for the three months ended ~~June~~September 30, 2022 and 2021, respectively. The ~~decrease~~increase was primarily due to ~~a decrease~~an increase in timing of recognition of incentive ~~compensation.~~compensation, compensation for new employees in 2022 for the company's port operation division, and the increased costs of travel related expenditures.

Unrealized gain (loss) on derivative instruments

The Company assesses risk associated with fluctuating future freight rates and bunker prices, and when appropriate, actively hedges identified economic risk that may impact the operating income of long-term cargo contracts and forward bookings with forward freight agreements and bunkers swaps. The utilization of such derivatives can lead to fluctuations in the Company's reported results from operations on a period-to-period basis as the Company marks these positions to market at the balance sheet date while settlement of the position and execution of the physical transaction may occur at a future date. The Company recognized a mark to market loss on bunker swaps of approximately ~~$2.1~~$3.2 million and unrealized loss on forward freight agreements (FFAs) of approximately ~~$1.7~~$3.8 million in the three months ended ~~June~~September 30, 2022. The fair value gain on interest

rate derivative was approximately ~~$0.3~~$2.5 million for the three months ended ~~June~~September 30, 2022. These gains and losses resulted from changes in the fair value of the derivatives at the respective balance sheet dates.

~~Six~~Nine Months Ended ~~June~~September 30, 2022 Compared to ~~Six~~Nine Months Ended ~~June~~September 30, 2021

Revenues

Pangaea’s revenues are derived predominately from voyage and time charters. Total revenue for the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$387.3~~$571.8 million, compared to ~~$270.5~~$483.5 million for the same period in 2021, ~~a 43%~~an 18% increase. The increase in revenues was primarily due to higher average TCE rates earned asthroughout the first half of 2022 and offset by a decline in market rates in third quarter of 2022. The total shipping days ~~remained relatively consistent, only increasing approximately 1%~~decreased 4% to ~~9,482~~14,035 in the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~9,391~~14,696 for the same period in 2021.

Components of revenue are as follows:

Voyage revenues increased by ~~55%~~27% for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$349.5~~$522.7 million compared to ~~$225.6~~$412.0 million for the same period in 2021. The increase in voyage revenues was primarily due to higher average TCE rates earned throughout the first half of 2022 and ~~greater~~offset by declined market rates in the third quarter of 2022. The increase in voyage revenues was also due to slight increase in the number of voyage days.

Charter revenues decreased to ~~$37.8~~$49.1 million from ~~$44.9~~$71.6 million, or ~~16%~~31%, for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the same period in 2021. The decrease in charter revenues was due to a decrease in time charter days, which were down ~~42%~~41% to ~~1,343~~1,898 in the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~2,332~~3,207 in the ~~six~~nine months ended ~~June~~September 30, 2021, offset by increased time charter hire earned per day. The time charter revenue per day was ~~$28,131~~$25,864 for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$19,250~~$22,316 for the same period of 2021. The optionality of our chartering strategy allows the Company to selectively release excess ship days, if any, into the market under time charter arrangements.

Voyage Expenses

Voyage expenses were ~~$133.2~~$207.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~$94.0~~$154.4 million for the same period in 2021, an increase of ~~42%~~35%. The increase was mainly attributable to increased bunker costs, port expenses and canal fees. Bunkers, port charges, and canal fees ~~primarily~~ increase in periods during which vessels are employed on voyage charters. The number of voyage days increased by ~~15%~~6% to ~~8,139~~12,137 days in the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~7,059~~11,489 days for the same period in 2021. Total costs of bunkers consumed increased by ~~80%~~62% for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the same period in 2021 due to increasing market prices for bunkers. Port expenses increased ~~11%~~8% compared to prior ~~year as a result of increased canal fees incurred in the current~~ year.

Charter Hire Expenses

Charter hire expenses for the ~~six~~nine months ended ~~June~~September 30, 2022 were ~~$143.4~~$194.2 million, compared to ~~$116.2~~$220.0 million for the same period in 2021, a ~~23% increase.~~12% decrease. The ~~increase~~decrease in charter hire expenses was primarily due to ~~an increase~~a decrease in market rates to charter-in vessels ~~offset by~~and a decrease in the number of chartered-in days from ~~6,404~~9,741 days in the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~5,165~~7,557 days for the ~~six~~nine months ended ~~June~~September 30, 2022. The Company's flexible charter-in strategy allows it to supplement its owned fleet with short term chartered-in tonnage at prevailing market prices, when needed, to meet cargo demand.

Vessel Operating Expenses

Vessel operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2022 were ~~$26.1~~$41.5 million, compared to ~~$18.3~~$30.0 million for the same period in 2021, an increase of approximately ~~43%~~38%. The increase in vessel operating expenses was primarily due to an increase in owned days resulting from the acquisition of vessels over the period. The ownership days for the nine months ended September 30, 2022 and 2021 were 6,680 and 5,233, respectively. Excluding technical management fees, vessel operating expenses on a per day basis were ~~$5,270~~$5,667 for the ~~six~~nine months ended ~~June~~September 30, 2022 and ~~$5,140~~$5,211 for the same period in 2021. Technical management fees were approximately ~~$2.5~~$3.6 million and ~~$1.8~~$2.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. The increase in vessel operating expenses was also attributable an increase in crew expenses due to an increase in crewing costs, crew changes and expenses related to COVID-19 and the war in Ukraine. The Company also continues to face general inflationary pressures particularly impacting the cost of lubes, stores and spares.

General and Administrative Expenses

General and administrative expenses were ~~$10.4~~$16.2 million and ~~$10.2~~$14.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. The increase was primarily due to an increase in timing of recognition of incentive compensation, compensation for new employees in 2022 for company's port operation division, and the increased costs of travel related expenditures.

Unrealized (loss) gain on derivative instruments

The Company assesses risk associated with fluctuating future freight rates and bunker prices, and when appropriate, actively hedges identified economic risk that may impact the operating income of long-term cargo contracts and forward bookings with forward freight agreements and bunkers swaps. The utilization of such derivatives can lead to fluctuations in the Company's reported results from operations on a period-to-period basis as the Company marks these positions to market at the balance sheet date while settlement of the position and execution of the physical transaction may occur at a future date. The Company recognized mark to market ~~gains~~loss on bunker swaps of approximately ~~$0.9~~$2.3 million and ~~gains~~loss on forward freight agreements (FFAs) of approximately ~~$1.1~~$2.7 million in the ~~six~~nine months ended ~~June~~September 30, 2022. The fair value gain on interest rate derivatives was approximately ~~$2.0~~$4.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022. These gains and losses resulted from changes in the fair value of the derivatives at the respective balance sheet dates.

Significant accounting estimates

The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company are the estimated fair value used in determining the estimated future cash flows used in its impairment analysis, the estimated salvage value used in determining depreciation expense, the estimated on the percentage completion of spot voyages and the allowances for doubtful accounts.

Long-lived Assets Impairment Considerations

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 performed an impairment analysis on each asset group and concluded the estimated undiscounted future cash flows were higher than their carrying amount and as such, no additional loss on impairment was recognized. The Company concluded that no triggering event had occurred during the during the second and third quarter of 2022 which would require impairment testing.

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

Liquidity and Capital Resources

The Company has historically financed its capital requirements with cash flow from operations, the issuance of common stock, proceeds from non-controlling interests, and proceeds from long-term debt and finance lease financing arrangements. The Company has used its capital primarily to fund operations, vessel acquisitions, and the repayment of debt and the associated interest expense. The Company may consider debt or additional equity financing alternatives from time to time. However, if market conditions deteriorate, the Company may be unable to raise additional debt or equity financing on acceptable terms or at all. As a result, the Company may be unable to pursue opportunities to expand its business.

At ~~June~~September 30, 2022 and December 31, 2021, the Company had working capital of ~~$115.3~~$131.6 million and $72.2 million, respectively.

Cash Flows:

The table below summarizes our primary sources and uses of cash for the nine months ended September 30, 2022 and 2021. We have derived these summarized statements of cash flows from the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.


	For the nine months ended
(In millions)	September 30, 2022		September 30, 2021
Net cash provided by/(used in):
Operating activities:
Net income adjusted for non-cash items	$	98.6	$	52.6
Changes in operating assets and liabilities, net	3.3		(9.9)
Operating activities	101.9		42.7
Investing activities	(11.5)		(159.8)
Financing activities	(28.6)		117.9
Net change	$	61.7	$	0.8

Operating Activities

Net cash provided by operating activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$69.2~~$101.9 million compared to net cash provided by operating activities of ~~$19.5~~$42.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The cash flows from operating activities increased compared to the same period in the prior year primarily due to the increase in income from operations, ~~as well as the impact~~and timing of ~~changes in working capital.~~customer receipts and supplier payments.

Investing Activities

Net cash used in investing activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$10.2~~$11.5 million compared to net cash used in investing activities of ~~$108.7~~$159.8 million for the same period in 2021. ~~During the second quarter of 2021, the~~The Company purchased ~~four vessels~~one vessel for ~~$105.4~~$18.4 million and paid ~~$2.7~~$1.7 million ~~as advances~~ for a vessel deposit. This use of cash was partially offset by the ~~purchase~~proceeds from the sale of one ~~additional~~ vessel ~~which was delivered on July 12, 2021. Additionally,~~for $8.4 million. The Company purchased six vessels for $159.7 million during the ~~Company paid $0.3 million as advances towards two newbuildings delivered in the~~second and third ~~and fourth~~ quarter of 2021.

Financing Activities

Net cash used in financing activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$13.1~~$28.6 million compared to net cash provided by financing activities of ~~$81.3~~$117.9 million for the same period of 2021. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company received $15.0 million in proceeds from finance leases. The Company repaid ~~$9.0~~$12.2 million of long term debt, ~~and $7.8~~$11.8 million of finance ~~leases.~~leases, and $5.0 million of other long-term liability. The Company also paid ~~$5.6~~$9.0 million of cash dividends.

The Company has demonstrated its unique ability to adapt to changing market conditions by maintaining a nimble chartered-in profile to meet its cargo commitments. We believe, given our current cash holdings, if drybulk shipping rates do not decline

significantly from current levels, our capital resources, including cash anticipated to be generated within the year, are sufficient to fund our operations for at least the next twelve months.

Capital Expenditures

The Company’s capital expenditures relate to the purchase of vessels and interests in vessels, and to capital improvements to its vessels which are expected to enhance the revenue earning capabilities and safety of these vessels. The Company’s owned or partially owned and controlled fleet at ~~June~~September 30, 2022 includes: ~~ten~~nine Panamax drybulk carriers (six of which are Ice-Class 1A); eight Supramax drybulk carriers, three Ultramax drybulk carriers (Two of which are Ice-Class IC), and four Post Panamax Ice Class 1A drybulk vessels.

In addition to vessel acquisitions that the Company may undertake in future periods, its other major capital expenditures include funding its program of regularly scheduled drydockings necessary to make improvements to its vessels, as well as to comply with international shipping standards and environmental laws and regulations. This includes installation of ballast water treatment systems required under new regulations, the cost of which will be approximately $0.5 million to $0.7 million per vessel. The Company has some flexibility regarding the timing of dry docking, but the total cost is unpredictable. Funding expenses associated with these requirements will be met with cash from operations. The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce the Company’s available days and operating days during that period. The Company capitalized drydocking costs totaling approximately ~~$4.9~~$6.0 million and ~~$5.6~~$7.6 million in the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. The Company expensed drydocking costs of approximately $4,000 and ~~$122,000,~~$71,000, respectively, in the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

Off-Balance Sheet Arrangements

The Company does not have off-balance sheet arrangements at ~~June~~September 30, 2022 or December 31, 2021.

2931

ITEM 3. Quantitative and Qualitative Disclosures about Market Risks

No significant changes to our market risk have occurred since December 31, 2021. For a discussion of market risks affecting us, refer to Part II, Item 7A—"Quantitative and Qualitative Disclosures About Market Risk" included in the Company Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 4. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective for the ~~six~~nine months ended ~~June~~September 30, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3032

PART II: OTHER INFORMATION

Item 1 - Legal Proceedings

From time to time, we are involved in various other disputes and litigation matters that arise in the ordinary course of our business, principally cargo claims. Those claims, even if lacking merit, could result in the expenditure by us of significant financial and managerial resources.

Item 1A – Risk Factors

In addition to the other information set forth in this report, the reader should carefully consider the factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Risk Factor described below, which could materially affect the Company’s business, financial condition or future results.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 – Mine Safety Disclosures

None.

Item 5 - Other Information

None.

3133

Item 6 – Exhibits


Exhibit No.			Description


31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2			Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

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

104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

______________

* Filed herewith

3234

SIGNATURES

Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~August~~November 9, 2022.


			PANGAEA LOGISTICS SOLUTIONS LTD.

			By:			/s/ Mark L. Filanowski
			Mark L. Filanowski
			Chief Executive Officer
			(Principal Executive Officer)

			By:			/s/ Gianni Del Signore
			Gianni Del Signore
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

3335