| Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. 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. Significant estimates include the percentage completion of spot voyages, the establishment of the allowance for credit losses and the estimate of salvage value used in determining vessel depreciation expense. Actual results could differ from those estimates. Concentration of credit risk The Company’s accounts receivable balance includes outstanding receivables from two significant customers. These balances com prise 30% and 13% of accounts receivable, respectively, as of June 30, 2024. Advance hire, prepaid expenses and other current assets Advance hire, prepaid expenses and other current assets were comprised of the following: June 30, 2024 December 31, 2023 (unaudited) Advance hire $ 3,095,835 $ 2,509,313 Prepaid expenses 6,084,609 7,072,634 Accrued receivables 11,444,395 5,777,596 Cash margin on deposit 2,015,301 3,751,257 Derivative assets 5,799,920 3,384,137 Other current assets 4,742,043 5,845,309 $ 33,182,103 $ 28,340,246 Goodwill We conducted our annual qualitative assessment of goodwill as of June 1, 2024, which indicated that it was more likely than not that the fair value of the Company’s goodwill exceeded its carrying amount, thus no impairment was indicated. As of June 30, 2024, no events or changes in circumstances occurred that would necessitate a further impairment review. Other non-current Assets Other non-current assets were comprised of the following: June 30, 2024 December 31, 2023 (unaudited) Intangible Assets, net of accumulated amortization of $901,060 and $474,038 as of June 30, 2024 and December 31, 2023, respectively $ 1,350,041 $ 1,777,063 Investment in Seamar Management 718,217 706,655 Bay Stevedoring LLC 2,435,164 1,667,093 Investment in Narragansett Bulk Carriers (US) Corp 519,975 519,975 Other investments 962,724 919,509 $ 5,986,121 $ 5,590,295 Accounts payable, accrued expenses and other current liabilities Accounts payable, accrued expenses and other current liabilities were comprised of the following: June 30, 2024 December 31, 2023 (unaudited) Accounts payable $ 12,020,777 $ 6,277,693 Accrued expenses 12,338,860 14,038,418 Bunkers suppliers 6,042,775 4,393,533 Charter hire payable 6,816,112 8,112,701 Other accrued liabilities 2,039,448 3,013,917 $ 39,257,972 $ 35,836,262 Leases Time charter in contracts The Company charters in vessels to supplement its owned fleet to support its voyage charter operations. The Company hires vessels under time charters with third party vessel owners, and recognizes the charter hire payments as an expense on a straight-line basis over the term of the charter. Charter hire payments are typically made in advance, and the unrecognized portion is reflected as advance hire in the accompanying consolidated balance sheets. Under the time charters, the vessel owner is responsible for the vessel operating costs such as crews, maintenance and repairs, insurance, and stores. As allowed by a practical expedient under ASC 842, Leases ("ASC 842"), the Company made an accounting policy election by class of underlying asset for leases with a term of 12 months or less, to forego recognizing a right-of-use asset and lease liability on its balance sheet. For the quarter ending June 30, 2024, the Company did not have any time charter in contracts with terms greater than 12 months, as such charter hire expense presented on the consolidated statements of income are lease expenses for chartered in contracts less than 12 months. Time charter out contracts Charter revenue is earned when the Company lets a vessel it owns or operates to a charterer for a specified period of time. Charter revenue is based on the agreed rate per day. The charterer has the power to direct the use and receives substantially all of the economic benefits from the use of the vessel. The Company determined that all time charter contracts are considered operating leases and therefore fall under the scope of ASC 842 because: (i) the vessel is an identifiable asset; (ii) the Company does not have substantive substitution rights; and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use. At June 30, 2024, the Company had two vessel chartered to customers under time charters that contained a lease. These two leases varied in original length from 31 days to 116 days. The lease payments due under these arrangements totaled approximately $2,627,000 and each of the time charters were due to be completed in 106 days or less. At June 30, 2023, the Company had three vessels chartered to customers under time charters that included a lease. These three leases varied in original length from 31 days to 68 days. The lease payments due under this arrangement totaled approximately $1,497,000 and each time charter was due to be completed in 41 days or less. The Company does not have any sales-type or direct financing leases. Office leases The Company has four non-cancelable office and office equipment leases. The resulting lease assets and liabilities are not material. Ground Lease The company entered into a 10-year ground lease agreement with the Tampa Port Authority, commencing on April 22, 2024. According to ASC 842, this lease will be accounted for as a right-of-use (ROU) asset and a lease liability on the balance sheet. The initial measurement of the ROU asset and lease liability will be based on the present value of the lease payments over the lease term. 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. In a stevedore service contract, the Company is paid to provide cargo handling services on a per unit basis for a specified quantity of cargo. The consideration in such a contract is determined on the basis of a rate per unit of cargo handled. The contract may contain minimum quantities. Revenues from stevedore service contracts are earned and recognized on a per unit basis as completed over the performance period. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848): Scope,” which clarified that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition due to reference rate reform. In December 2022, the FASB issued ASU No. 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848," which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief under Topic 848. The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures. In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends the existing segment reporting guidance (ASC Topic 280 — Segment Reporting (“ASC 280”)) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. In addition, companies with a single reporting segment will have to provide all of the disclosures required by ASC 280, including the significant segment expense disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of our pending adoption of this standard on its financial statement disclosures. |
