The accompanying unaudited condensed 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 condensed 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 condensed 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, 2025.

The consolidated financial statements include the accounts of Pangaea Logistics Solutions Ltd. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise indicated, amounts are presented in thousands of U.S. dollars, except for share and per share amounts and certain operating metrics, including time charter equivalent (“TCE”) rates, operating expenses per day, and Baltic Dry Index (“BDI”) data.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates include revenue recognition for voyages in progress, the allowance for credit losses, the estimated salvage value used in determining vessel depreciation expense, and the evaluation of long-lived assets for impairment. Actual results could differ from those estimates.

Effective January 1, 2026, the Company revised certain depreciation estimates for its vessel assets. The Company increased its estimated vessel scrap value from $300 per light weight ton (“lwt”) to $400 per lwt., based on increases in 15-year average scrap price trends from a third-party data provider and similar changes by certain industry peers. The Company also standardized the estimated useful lives of its dry bulk vessels to 25 years from delivery, which shortened the depreciation period for 27 of its 39 vessels.

The increase in depreciation expense resulting from the shorter estimated useful lives of certain vessels exceeded the reduction in depreciation expense resulting from the higher scrap value. As a result, depreciation expense increased, and net income decreased, by approximately $1.6 million, or $0.03 per basic and diluted share, for the three months ended March 31, 2026. The Company expects depreciation expense to increase by approximately $6.7 million for the year ending December 31, 2026.

We conducted our annual qualitative assessment of goodwill as of June 1, 2025, 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 March 31, 2026, no events or changes in circumstances occurred that would necessitate a further impairment review.


	March 31, 2026		December 31, 2025
Intangible Assets, net of accumulated amortization of $1,776 and $1,675 as of March 31, 2026 and December 31, 2025, respectively (1)	$	475	$	576

Investment in Associated Terminals Pangaea Logistics, LLC	2,564		2,032
Investment in Narragansett Bulk Carriers (US) Corp	520		520
Other investments	1,433		1,433
	$	4,991	$	4,561

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 March 31, 2026, 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.

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 March 31, 2026, the Company had six vessels chartered to customers under time charters that included a lease. These six leases varied in original length from 45 days to 190 days. The total lease payments remaining as of March 31, 2026 under these arrangements were approximately $3,758. All time charters are scheduled to be completed within 73 days, and no lease payments extend beyond June 2026.

At March 31, 2025, the Company had seven vessels chartered to customers under time charters that included a lease. These seven leases varied in original length from 27 days to 84 days. The lease payments due under these arrangements were approximately $1,275, all of which was received within the 40 days following March 31, 2025.

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, which are 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.

In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326). The amendments provide a practical expedient and an accounting policy election for estimating expected credit losses on current accounts receivable and contract assets arising under ASC 606. The Company adopted this guidance on January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures.

In November 2024, the FASB released ASU 2024-03, which focuses on Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires the disclosure of additional information regarding specific expense categories in the financial statement notes. It becomes effective for annual periods starting after December 15, 2026, and for interim periods starting after December 15, 2027, with early adoption permitted. The update can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact of ASU 2024-03 on its disclosures in the consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. This update provides guidance on identifying the accounting acquirer when a variable interest entity that meets the definition of a business is acquired primarily through the exchange of equity interests. The standard becomes effective for annual periods beginning after December 15, 2026, and for interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-03 on its accounting and disclosures related to business combinations.

In May 2025, the FASB also issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Scope Application of Share-Based Payment Arrangements with Customers. This update clarifies the accounting for share-based payments made to customers, including guidance on performance conditions and forfeitures. The standard becomes effective for annual periods beginning after December 15, 2026, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of ASU 2025-04 on its consolidated financial statements.