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 assumptions used in determining vessel depreciation, including estimated useful lives and residual (scrap) values of its vessels. These revisions were accounted for prospectively as a change in accounting estimate. The Company increased its estimated vessel scrap value from $300 per light weight ton (“lwt”) to $400 per lwt., based on management's evaluation of long-term historical scrap price trends obtained from a third-party data provider, as well as consideration of industry practices. The Company also standardized the estimated useful lives of its dry bulk vessels to 25 years from delivery, which shortened the depreciation period for 26 of its 38 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 June 30, 2026, and by approximately $3.3 million, or $0.05 per basic and diluted share, for the six months ended June 30, 2026. The Company expects depreciation expense to increase by approximately $2.8 million for the remaining six months of 2026.


	June 30, 2026		December 31, 2025
Advance hire	$	3,281	$	3,394
Prepaid expenses	7,116		1,630
Prepaid voyage expenses	7,396		6,286
Accrued receivables - Voyage related	14,887		9,593
Accrued receivables	2,088		1,591
Cash margin on deposit	6,805		572
Derivative assets	290		524


Other current assets	8,164		4,887
	$	50,027	$	28,478

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


	June 30, 2026		December 31, 2025
Intangible Assets, net of accumulated amortization of $1,829 and $1,675 as of June 30, 2026 and December 31, 2025, respectively (1)	$	422	$	576

Investment in Associated Terminals Pangaea Logistics, LLC	1,508		2,032
Investment in Narragansett Bulk Carriers (US) Corp	520		520
Other investments	1,342		1,433
	$	3,792	$	4,561


	June 30, 2026		December 31, 2025
Accounts payable	$	19,224	$	14,328
Accrued expenses	7,862		319
Accrued Voyage Expenses	13,105		8,856
Accrued operating expenses	10,929		3,839
Bunkers suppliers	9,739		8,232
Charter hire payable	14,978		7,829
Accrued compensation	3,092		3,791
Other accrued liabilities	4,082		7,064
	$	83,012	$	54,257

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, 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 condensed consolidated statements of operations 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 June 30, 2026, the Company had ten vessels chartered to customers under time charters that included a lease. These ten leases varied in original length from 28 days to 72 days. The total lease payments remaining as of June 30, 2026 under these arrangements were approximately $5,397. All time charters are scheduled to be completed within 57 days, and no lease payments extend beyond August 2026.

At June 30, 2025, the Company had three vessels chartered to customers under time charters that included a lease. These three leases varied in original length from 34 days to 35 days. The lease payments due under these arrangements were approximately $593, all of which was received within the 18 days following June 30, 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, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient that permits entities to assume that current conditions as of the balance sheet date will remain unchanged for the remaining life of current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The Company adopted the amendments and elected the practical expedient effective January 1, 2026. The adoption did not have a material impact on the Company’s condensed 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 December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify the interim financial statement disclosure requirements and establish a principle requiring disclosure of events occurring since the end of the most recent annual reporting period that have a material effect on an entity. For public business entities, the amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the amendments on its interim financial statement disclosures.