Pangaea Logistics Solutions(PANL) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements, management's discussion, market risks, and controls and procedures Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Pangaea Logistics Solutions Ltd. for the periods ended June 30, 2025, and December 31, 2024, highlighting key financial changes Consolidated Balance Sheets This section presents the consolidated balance sheets, highlighting changes in cash, assets, liabilities, and equity between June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :----------------------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $59,252,910 | $86,805,470 | $(27,552,560) | -31.74% | | Total current assets | $184,008,795 | $191,993,893 | $(7,985,098) | -4.16% | | Total assets | $915,995,446 | $936,457,081 | $(20,461,635) | -2.18% | | Total current liabilities | $126,009,715 | $109,108,111 | $16,901,604 | 15.49% | | Total stockholders' equity | $459,130,313 | $474,664,335 | $(15,534,022) | -3.27% | Consolidated Statements of Operations This section details the consolidated statements of operations, showing revenue, expenses, and net income/loss for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :----------- | :----------- | :------- | :------- | | Total revenue | $156,689,442 | $131,497,852 | $25,191,590 | 19.16% | | Total expenses | $153,035,850 | $123,883,626 | $29,152,224 | 23.53% | | Income from operations | $3,653,592 | $7,614,226 | $(3,960,634) | -52.02% | | Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $(2,742,116) | $3,682,775 | $(6,424,891) | -174.45% | | Basic (loss) earnings per common share | $(0.04) | $0.08 | $(0.12) | -150.00% | | Diluted (loss) earnings per common share | $(0.04) | $0.08 | $(0.12) | -150.00% | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :----------- | :----------- | :------- | :------- | | Total revenue | $279,491,328 | $236,246,405 | $43,244,923 | 18.31% | | Total expenses | $272,911,290 | $217,604,060 | $55,307,230 | 25.42% | | Income from operations | $6,580,038 | $18,642,345 | $(12,062,307) | -64.70% | | Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $(4,722,993) | $15,356,951 | $(20,079,944) | -130.75% | | Basic (loss) earnings per common share | $(0.07) | $0.34 | $(0.41) | -120.59% | | Diluted (loss) earnings per common share | $(0.07) | $0.33 | $(0.40) | -121.21% | Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, including share-based compensation, distributions, repurchases, dividends, and net loss for the six months ended June 30, 2025 Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Amount | | :------------------------------------------ | :------------- | | Balance at December 31, 2024 | $474,664,335 | | Share-based compensation | $2,080,781 | | Distribution to Non-Controlling Interests | $(1,941,667) | | Share repurchases | $(1,007,102) | | Common Stock Dividend | $(9,845,199) | | Net Loss | $(5,098,740) | | Balance at June 30, 2025 | $459,130,313 | Consolidated Statements of Cash Flows This section presents the consolidated statements of cash flows, detailing cash movements from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Activity | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :------- | :------- | | Net cash provided by operating activities | $10,039,158 | $17,955,519 | $(7,916,361) | -44.09% | | Net cash used in investing activities | $(2,411,298) | $(9,139,000) | $6,727,702 | -73.61% | | Net cash used in financing activities | $(35,180,420) | $(29,907,430) | $(5,272,990) | 17.63% | | Net change in cash and cash equivalents | $(27,552,560) | $(21,090,911) | $(6,461,649) | 30.64% | | Cash and cash equivalents, end of period | $59,252,910 | $77,946,955 | $(18,694,045) | -24.00% | Notes to Consolidated Financial Statements This section provides detailed notes supporting the consolidated financial statements, covering general information, accounting policies, and specific financial accounts Note 1 - General Information and Recent Events This note provides an overview of Pangaea Logistics Solutions Ltd.'s business, fleet composition, and recent corporate actions - Pangaea Logistics Solutions Ltd. is a Bermuda-incorporated holding company engaged in worldwide drybulk cargo ocean transportation through vessel ownership, chartering, and operation[18] - As of June 30, 2025, the Company owned 41 drybulk vessels, including three Panamax, two Ultramax Ice Class 1C, two Ultramax, nine Supramax, four Post-Panamax Ice Class 1A, and fifteen Handysize vessels (acquired via merger with Strategic Shipping Inc. on December 30, 2024)[19][20] - On July 31, 2025, the Company acquired the remaining 49% equity interest in Seamar Management for $2.7 million, making it a wholly-owned subsidiary[20] Note 2 - Basis of Presentation and Significant Accounting Policies This note describes the basis of financial statement presentation, significant accounting policies, key estimates, and recent accounting pronouncements - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, reflecting all normal recurring adjustments[22] - Significant estimates include voyage completion percentage, allowance for credit losses, vessel depreciation salvage value, and long-lived asset impairment evaluation[23] - One significant customer accounted for 31% of accounts receivable as of June 30, 2025, indicating a concentration of credit risk[24] Advance Hire, Prepaid Expenses and Other Current Assets | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Advance hire | $1,758,980 | $3,348,104 | | Prepaid expenses | $7,109,756 | $9,517,482 | | Accrued receivables | $13,359,656 | $7,352,376 | | Cash margin on deposit | $1,752,935 | $3,268,455 | | Derivative assets | $1,023,259 | $2,047,196 | | Other current assets | $4,296,067 | $4,435,739 | | Total | $29,300,653 | $29,969,352 | - The Company adopted ASU 2023-09 (Income Taxes) in Q1 2025 with no material impact and is assessing ASU 2024-03 (Expense Disaggregation), ASU 2025-03 (Business Combinations), and ASU 2025-04 (Share-Based Payments) for future impact[41][42][43][44] Note 3 - Cash and Cash Equivalents This note details the composition and changes in cash and cash equivalents, highlighting a significant decrease from the prior year-end Cash and Cash Equivalents (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Money market accounts | $22,632,333 | $33,239,201 | | Time deposit accounts | — | $10,204,382 | | Cash | $36,620,577 | $43,361,887 | | Total cash and cash equivalents | $59,252,910 | $86,805,470 | - Cash and cash equivalents decreased by 31.74% from $86.8 million at December 31, 2024, to $59.3 million at June 30, 2025[45] Note 4 - Fixed Assets This note provides information on the Company's owned dry bulk vessels and barge, including carrying amounts and asset reclassifications - As of June 30, 2025, the Company owned 41 dry bulk vessels and one barge, with a total net carrying amount of $694.4 million, down from $707.8 million at December 31, 2024[46][47] - On June 12, 2025, the M/V Strategic Endeavor was reclassified as held for sale at $7.7 million and was delivered to the buyer on July 21, 2025[48][93] - No triggering event for long-lived asset impairment testing occurred during the first half of 2025 or 2024[49][141] Note 5 - Debt This note details the Company's outstanding long-term debt and financing obligations, confirming compliance with financial covenants Outstanding Long-Term Debt (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total secured long-term debt | $123,049,844 | $131,319,017 | | Less: unamortized issuance costs | $(1,681,148) | $(2,022,277) | | Less: current portion | $(16,656,227) | $(16,576,195) | | Secured long-term debt, net | $104,712,469 | $112,720,545 | - The Company was in compliance with all financial covenants, including minimum liquidity and collateral maintenance ratios, as of June 30, 2025, and December 31, 2024[53] Financing Obligations from Failed Sale Leaseback Transactions (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total financing obligations | $244,686,536 | $257,183,904 | | Less: unamortized issuance costs, net | $(2,137,159) | $(2,387,007) | | Less: current portion | $(25,438,710) | $(25,267,105) | | Financing Obligations, net | $217,110,667 | $229,529,792 | Note 6 - Finance Leases This note describes the Company's finance lease arrangements for vessels, including outstanding balances and interest rate cap details - The Company's fleet includes two vessels, Bulk Xaymaca and Bulk Destiny, financed through sale and leaseback arrangements accounted for as finance leases[58] Finance Leases (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total finance leases | $11,947,395 | $13,369,270 | | Less: unamortized issuance costs, net | $(71,363) | $(91,222) | | Less: current portion | $(2,843,750) | $(2,843,750) | | Long-term lease liabilities, net | $9,032,282 | $10,434,298 | - An interest rate cap is effective from Q2 2026 through Q4 2026, capping SOFR at 3.51% for certain finance leases[60] Note 7 - Derivative Instruments and Fair Value Measurements This note explains the Company's use of derivative instruments to manage market risks and their impact on financial results - The Company uses forward freight agreements (FFAs), fuel swap contracts, and interest rate caps to manage exposure to fluctuating freight rates, bunker prices, and interest rate movements[63][64][65] - These economic hedges generally do not qualify for hedge accounting, leading to potential fluctuations in reported operating results[63][64] Effect of Derivative Financial Instruments on Consolidated Statements of Operations (Six Months Ended June 30) | Derivative Instrument | 2025 (Unrealized Loss) | 2024 (Unrealized Gain) | | :-------------------- | :--------------------- | :--------------------- | | Forward freight agreements | $(238,660) | $1,808,866 | | Fuel Swap Contracts | $(505,883) | $2,111,232 | | Interest rate cap | $(850,169) | $236,738 | | Total (loss) gain | $(1,117,392) | $4,156,836 | Note 8 - Related Party Transactions This note discloses transactions with related parties, including technical management fees and intercompany eliminations - The Company incurred technical management fees of approximately $562,500 for the three months ended June 30, 2025, and $1,125,000 for the six months ended June 30, 2025, under an agreement with MTM Ship Management[74] - Upon consolidation of Seamar Management in Q2 2025, the intercompany payable balance was eliminated[72] Note 9 - Commitments and Contingencies This note outlines the Company's non-cancelable office leases and management's assessment of potential legal claims - The Company has non-cancelable office leases in Copenhagen (expires Dec 2025, then month-to-month with 6-month non-cancelable period) and Singapore (renewed for 15 months in June 2025)[75][76] - Lease expenses for office leases were approximately $50,000 for the three months ended June 30, 2025, and $100,000 for the six months ended June 30, 2025[76][77] - Management believes that the financial impact of asserted claims arising in the ordinary course of business will not be material to the Company's consolidated financial position, results of operations, or cash flows[78] Note 10 – Stockholders' Equity This note details changes in stockholders' equity, including share repurchase programs, dividends, and common stock outstanding - On May 8, 2025, the Board authorized a $15.0 million share repurchase program, representing approximately 5.6% of market capitalization[79] - During the six months ended June 30, 2025, the Company repurchased and retired 202,882 shares at an average price of $4.96 per share, totaling approximately $1.01 million[80] - As of June 30, 2025, approximately $14.0 million remained available under the repurchase program[81] - Total cash dividends paid were approximately $9.9 million for the six months ended June 30, 2025[82] Changes in Common Stock Outstanding (Six Months Ended June 30, 2025) | Description | Number of Shares | | :-------------------------------- | :--------------- | | Shares outstanding at December 31, 2024 | 64,961,433 | | Shares issued (e.g., equity grants) | 661,504 | | Share forfeitures | (42,918) | | Shares repurchased and retired | (202,882) | | Shares outstanding at June 30, 2025 | 65,377,137 | Note 11 - Net Income per Common Share This note presents the basic and diluted net income per common share calculations for the reporting periods Basic and Diluted Net Income per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net (loss) income | $(2,742,116) | $3,682,775 | | Weighted Average Shares - Basic | 64,042,209 | 45,276,791 | | Weighted Average Shares - Diluted | 64,042,209 | 46,028,902 | | Basic net (loss) income per share | $(0.04) | $0.08 | | Diluted net (loss) income per share | $(0.04) | $0.08 | Basic and Diluted Net Income per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net (loss) income | $(4,722,993) | $15,356,951 | | Weighted Average Shares - Basic | 63,988,996 | 45,245,655 | | Weighted Average Shares - Diluted | 63,988,996 | 45,922,272 | | Basic net (loss) income per share | $(0.07) | $0.34 | | Diluted net (loss) income per share | $(0.07) | $0.33 | - Restricted stock awards of approximately 380,000 shares (three months) and 406,000 shares (six months) were excluded from diluted EPS calculation for 2025 as their effect would have been anti-dilutive due to the net loss[85] Note 12. Employee Benefit Plans This note describes the Company's 401(k) retirement savings plan and associated matching contributions expense - The Company sponsors a 401(k) retirement savings plan, providing a 100% match on the first 4% of eligible employee contributions, which vest immediately[87][88] - Matching contributions expense was approximately $55,000 for the three months ended June 30, 2025, and $233,000 for the six months ended June 30, 2025[88] Note 13 – Segment Information and Geographic Data This note provides information on the Company's single reportable shipping segment and revenue breakdown by geographic area - The Company operates a single reportable segment: shipping, focused on seaborne dry bulk logistics and transportation services globally[89] - The CEO, as CODM, assesses profitability and asset performance using Time Charter Equivalent (TCE) rates, with voyage expenses as the primary expense analyzed[90] Shipping Segment Total Revenue (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :----------- | :----------- | :------- | :------- | | Shipping segment total revenue | $153,103,042 | $127,942,525 | $25,160,517 | 19.67% | | Total consolidated revenue | $156,689,442 | $131,497,852 | $25,191,590 | 19.16% | Shipping Segment Total Revenue (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :----------- | :----------- | :------- | :------- | | Shipping segment total revenue | $272,688,080 | $230,161,097 | $42,526,983 | 18.48% | | Total consolidated revenue | $279,491,328 | $236,246,405 | $43,244,923 | 18.31% | Revenue by Geographic Area (Six Months Ended June 30) | Region | 2025 | 2024 | Change | % Change | | :------------- | :----------- | :----------- | :------- | :------- | | United States | $81,468,643 | $83,063,706 | $(1,595,063) | -1.92% | | Singapore | $30,998,149 | $17,597,973 | $13,400,176 | 76.15% | | Germany | $29,992,228 | $20,866,516 | $9,125,712 | 43.74% | | Other | $137,032,308 | $114,718,210 | $22,314,100 | 19.45% | | Total | $279,491,328 | $236,246,405 | $43,244,923 | 18.31% | Note 14 - Subsequent Events This note discloses significant events occurring after the balance sheet date, including asset sales and acquisitions - The M/V Strategic Endeavor was sold for $7.7 million and delivered to the buyer on July 21, 2025[93] - On July 31, 2025, the Company acquired the remaining 49% equity interest in Seamar Management for $2.7 million, making it a wholly-owned subsidiary[94] - On August 6, 2025, the Board declared a quarterly cash dividend of $0.05 per common share, payable September 15, 2025[95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the Company's financial condition, operational results, liquidity, and capital resources, including industry context Important Financial and Operational Terms and Concepts This section defines key financial and operational terms used in the drybulk shipping industry, such as voyage revenue, charter revenue, and TCE rates - Voyage Revenue: Derived from voyage charters where the Company retains control over vessel operations, recognized straight-line over voyage days[98][36] - Charter Revenue: Earned from time charters where the charterer directs vessel use, recognized straight-line over the charter term, and identified as operating leases under ASC 842[99][37] - Voyage Expenses: Include bunkers, port charges, canal tolls, brokerage commissions, and cargo handling, expensed as incurred[100] - Time Charter Equivalent (TCE) rates: Total revenues less voyage expenses divided by voyage length, a key industry performance measure[107][108] Selected Financial Information This section presents selected financial data, including revenue, gross profit, net income, and Adjusted EBITDA, for the reported periods Selected Financial Data (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Total revenue | $156,689 | $131,498 | $25,191 | 19.16% | | Gross Profit | $10,865 | $12,671 | $(1,806) | -14.25% | | Income from operations | $3,654 | $7,614 | $(3,960) | -52.01% | | Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $(2,742) | $3,683 | $(6,425) | -174.45% | | Basic net (loss) income per share | $(0.04) | $0.08 | $(0.12) | -150.00% | | Adjusted EBITDA | $15,284 | $15,931 | $(647) | -4.06% | | TCE Rates ($/day) | $12,108 | $16,223 | $(4,115) | -25.37% | Selected Financial Data (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Total revenue | $279,491 | $236,246 | $43,245 | 18.31% | | Gross Profit | $21,093 | $31,005 | $(9,912) | -31.97% | | Income from operations | $6,580 | $18,642 | $(12,062) | -64.70% | | Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $(4,723) | $15,357 | $(20,080) | -130.75% | | Basic net (loss) income per share | $(0.07) | $0.34 | $(0.41) | -120.59% | | Adjusted EBITDA | $30,059 | $35,878 | $(5,819) | -16.22% | | TCE Rates ($/day) | $11,781 | $16,919 | $(5,138) | -30.37% | Selected Balance Sheet Data (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $59,253 | $86,805 | | Total assets | $915,995 | $936,457 | | Total secured debt, including leases liabilities | $375,794 | $397,372 | | Total shareholders' equity | $459,130 | $474,664 | Industry Overview This section provides an overview of the drybulk shipping industry, highlighting market cyclicality, BDI trends, and fleet expansion impacts - The drybulk shipping industry is cyclical and subject to macroeconomic shifts, geopolitical volatility, and fluctuations in vessel supply/demand and drybulk commodity demand[113] - The Baltic Dry Index (BDI) averaged 1,467 for Q2 2025, a 21% decrease from 1,853 in Q2 2024, reflecting weakened market rates[114] - Average market rates for Panamax, Supramax, and Handysize vessels decreased by approximately 31% from $15,104 in Q2 2024 to $10,347 in Q2 2025[114] - Fleet expansion from the December 2024 acquisition of 15 vessels (58% increase in total vessel count) led to a 1,365-day increase in available owned shipping days in Q2 2025[115] Quarterly TCE Performance This section analyzes the Company's Time Charter Equivalent (TCE) rates, comparing performance against market indexes for the quarter - For Q2 2025, TCE rates decreased by 25% to $12,108 from $16,223 in Q2 2024, due to overall dry bulk market weakening[117] - Despite the market decline, Pangaea's TCE rates outperformed the average Baltic panamax, supramax, and handysize market indexes by approximately 17% due to long-term contracts, specialized fleet, and cargo-focused strategy[117] Second Quarter Highlights This section summarizes key financial results for the second quarter, including net loss, diluted EPS, Adjusted EBITDA, and cash position - Net loss attributable to Pangaea Logistics Solutions Ltd. was approximately $2.7 million for Q2 2025, compared to net income of $3.7 million for Q2 2024[120] - Diluted net loss per share was $0.04 for Q2 2025, compared to diluted net income per share of $0.08 for Q2 2024[120] - Adjusted EBITDA was $15.3 million for Q2 2025, a decrease from $15.9 million for Q2 2024[120] - Cash and cash equivalents stood at $59.3 million at the end of Q2 2025[120] Revenues (Three Months Ended June 30, 2025 vs. 2024) This section analyzes revenue changes for the three months ended June 30, 2025, driven by shipping days and market rates - Total revenue increased by 19% to $156.7 million for Q2 2025, primarily due to a 51% rise in total shipping days (6,222 days), partially offset by decreased market rates[119] - Voyage revenues increased by 18% to $146.3 million, driven by a 43% increase in voyage days (5,575 days) due to fleet expansion, despite declining market freight rates[121] - Charter revenues increased by 78% ($3.1 million) to $6.9 million, mainly due to a 213% increase in time charter days (647 days), partially offset by a 31% decline in average market charter rates[122] - Terminal & Stevedore revenues remained stable at $3.6 million[123] Operating and Business Expenses (Three Months Ended June 30, 2025 vs. 2024) This section details changes in operating and business expenses for the three months ended June 30, 2025, influenced by fleet expansion and market rates - Voyage expenses increased by 27% to $77.8 million, driven by a 43% increase in voyage days, leading to higher bunker consumption and port expenses due to fleet expansion[125] - Charter hire expenses decreased by 4% to $31.4 million, primarily due to a 31% decrease in market rates for charter-in vessels, despite a 35% increase in chartered-in days (2,660 days)[126] - Vessel operating expenses increased by 59% to $23.4 million, mainly due to a 66% increase in ownership days (3,822 days) from prior year vessel acquisitions[127] - General and administrative expenses increased by 43% to $7.2 million, primarily due to the consolidation of Seamar in Q2 2025, which reclassified $1.8 million of expenses[129] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 This section provides a comparative analysis of financial performance for the six months ended June 30, 2025, versus the prior year Revenues (Six Months Ended June 30, 2025 vs. 2024) This section analyzes revenue changes for the six months ended June 30, 2025, highlighting impacts from fleet expansion and market rates - Total revenue increased by 18% to $279.5 million, driven by a 46.5% increase in total shipping days (11,432 days) due to fleet expansion, partially offset by declining market charter rates[130] - Voyage revenues increased by 21% to $255.9 million, primarily due to a 45% increase in voyage days (9,771 days) from SSI vessel acquisition, despite a 30% decline in the Baltic Dry Index (BDI)[131] - Charter revenues decreased by 11% to $16.8 million, mainly due to lower time charter revenue per day ($10,140 in 2025 vs. $17,776 in 2024), despite a 56% increase in time charter days (1,661 days)[132] - Terminal & Stevedore revenues increased by 12% to $6.7 million[133] Operating and Business Expenses (Six Months Ended June 30, 2025 vs. 2024) This section details changes in operating and business expenses for the six months ended June 30, 2025, influenced by fleet expansion and market rates - Voyage expenses increased by 41% to $138.1 million, primarily due to higher bunker costs, port costs, and canal fees, corresponding to a 45% increase in voyage days[134] - Charter hire expenses decreased by 18% to $49.1 million, mainly due to a 34% decrease in average market rates for charter-in vessels, despite a 25.6% increase in chartered-in days (4,405 days)[135] - Vessel operating expenses increased by 66% to $45.6 million, driven by the expansion of the owned fleet[136] - General and administrative expenses increased to $14.4 million, primarily due to the consolidation of Seamar Management[138] Significant accounting estimates This section identifies key accounting estimates that require management judgment and can significantly impact financial reporting - Key accounting estimates include voyage completion percentage, allowance for credit losses, vessel salvage value for depreciation, and long-lived asset impairment evaluation[139] Long-lived Assets Impairment Considerations This section outlines the Company's policy for evaluating long-lived assets for impairment and confirms no triggering events occurred - The Company evaluates fixed assets for impairment when indicators are present and undiscounted cash flows are less than carrying amounts, assessing at the asset group level (vessel size/trade)[140] - No triggering event for impairment testing occurred during the first half of 2025 or 2024[141] Liquidity and Capital Resources This section discusses the Company's sources of liquidity, working capital, and cash flow from operating, investing, and financing activities - The Company finances capital needs through cash flow from operations, common stock issuance, non-controlling interest contributions, and long-term debt and finance leases[142] - Working capital was $58.0 million as of June 30, 2025, down from $82.9 million at December 31, 2024[143] - Net cash provided by operating activities decreased by $7.9 million to $10.0 million for the six months ended June 30, 2025, primarily due to a net loss[146] - Net cash used in investing activities decreased by $6.73 million to $2.4 million for the six months ended June 30, 2025, mainly due to a prior year advance for vessel purchase[147] - Net cash used in financing activities decreased by $5.3 million to $29.9 million for the six months ended June 30, 2025, due to lower debt payments and absence of long-term debt proceeds[148][149] Capital Expenditures This section details the Company's capital expenditures related to vessel purchases, improvements, and drydocking costs - Capital expenditures relate to vessel purchases, capital improvements, and port & terminal operations, with funding from cash from operations[150][151] - Drydocking costs capitalized totaled approximately $11.9 million for the six months ended June 30, 2025, significantly higher than $3.2 million in the prior year[151] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements as of the reporting dates - The Company had no off-balance sheet arrangements as of June 30, 2025, or December 31, 2024[152] Item 3. Quantitative and Qualitative Disclosures about Market Risks This section states no significant changes to the Company's market risk profile since December 31, 2024, referring to the Annual Report for detailed discussion - No significant changes to market risk occurred since December 31, 2024[154] - Refer to the Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of market risks[154] Item 4. Controls and Procedures Management concluded that the Company's disclosure controls and procedures were not effective due to a material weakness in revenue recognition controls, with remediation efforts underway - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[155] - The material weakness relates to the design and documentation of controls over the review and application of the revenue recognition policy under ASC 606[155] - Remediation actions include enhancing review/approval procedures for revenue recognition, strengthening supervisory review for ASC 606, and aligning general ledger account mapping[156] - The material weakness will be remediated only after controls are tested and proven effective over a sustained period[156] PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits Item 1. Legal Proceedings The Company is involved in various ordinary course legal disputes and claims, primarily cargo claims, with no material financial impact expected - The Company is involved in ordinary course legal disputes and litigation, mainly cargo claims[158] - Management believes the financial impact of these matters will not be material to the Company's financial position, results of operations, or cash flows[158] Item 1A. Risk Factors This section directs readers to consider risk factors from the Annual Report on Form 10-K and any new risks in this report that could materially affect the Company - Readers should consider risk factors from the Annual Report on Form 10-K for December 31, 2024, and any new risks in this report[159] - These risk factors could materially affect the Company's business, financial condition, or future results[159] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company's Board authorized a $15 million share repurchase program, with approximately $1.01 million in shares repurchased during the period - On May 8, 2025, the Board authorized a $15 million share repurchase program for common stock[160] - During the six months ended June 30, 2025, 202,882 shares were repurchased and retired at an average price of $4.96 per share, totaling approximately $1.01 million[161] - As of June 30, 2025, approximately $14 million remained available for future repurchases[161] Item 3. Defaults upon Senior Securities The Company reported no defaults upon senior securities - There were no defaults upon senior securities[162] Item 4. Mine Safety Disclosures The Company reported no mine safety disclosures - There were no mine safety disclosures[164] Item 5. Other Information The Company reported no other information - There was no other information to report[165] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL documents - Exhibits include CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act) and XBRL instance and taxonomy documents[166] Signatures The report is duly signed on behalf of Pangaea Logistics Solutions Ltd. by its Chief Executive Officer and Chief Financial Officer - The report was signed by Mark L. Filanowski (CEO) and Gianni Del Signore (CFO) on August 8, 2025[168][171]