UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2018



¨	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: 001-36139

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

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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated Filer ¨	Accelerated Filer ¨	Non-accelerated Filer ¨	Smaller reporting company x

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 $0.01 per share, ~~43,795,182~~44,096,911 shares outstanding as of ~~November 9, 2017.~~May 10, 2018.

TABLE OF CONTENTS



		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements

	Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2018 (unaudited) and December 31, ~~2016~~2017	3

	Consolidated Statements of Operations (unaudited) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	4

	Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	2526

Item 4.	Controls and Procedures	2526

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2627
Item 1A.	Risk Factors	2627
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2627
Item 3.	Defaults upon Senior Securities	2627
Item 4.	Mine Safety Disclosures	2627
Item 5.	Other Information	2627
Item 6.	Exhibits	2728
Signatures

Pangaea Logistics Solutions Ltd.

Consolidated Balance Sheets


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(unaudited)						(unaudited)
Assets
Current assets
Cash and cash equivalents	$	29,336,687		$	22,322,949		$	28,205,463		$	34,531,812
Restricted cash	4,000,000			6,100,000
Accounts receivable (net of allowance of $4,183,826 at September 30, 2017 and $4,752,265 at December 31, 2016)	30,915,458			20,476,797
Accounts receivable (net of allowance of $2,135,877 at March 31, 2018 and December 31, 2017)							21,682,912			21,089,425
Bunker inventory	16,470,391			13,202,937			14,293,347			15,356,712
Advance hire, prepaid expenses and other current assets	13,465,163			6,441,583			9,797,784			12,032,272
Total current assets	94,187,699			68,544,266			73,979,506			83,010,221

Restricted cash							4,000,000			4,000,000
Fixed assets, net	290,837,537			275,265,672			304,114,813			306,292,655
Investments in newbuildings in-process	—			18,383,964
Vessels under capital lease	30,285,569			—			29,704,830			29,994,212
Total assets	$	415,310,805		$	362,193,902		$	411,799,149		$	423,297,088

Liabilities and stockholders' equity
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	30,160,371		$	23,231,179		$	21,793,353		$	29,181,276
Related party debt	6,929,885			15,972,147			4,468,457			7,009,597
Deferred revenue	7,913,518			6,422,982			6,581,760			5,815,924
Current portion of secured long-term debt	17,830,996			19,627,846			18,706,122			18,979,335
Current portion of capital lease obligations	1,759,303			—			1,812,475			1,785,620
Dividend payable	7,238,401			12,624,825			6,333,598			7,238,401
Total current liabilities	71,832,474			77,878,979			59,695,765			70,010,153

Secured long-term debt, net	113,430,205			107,637,851			113,170,604			117,615,634
Obligations under capital lease	25,472,098			—			24,552,298			25,015,659

Commitments and contingencies (Note 7)

Stockholders' equity:
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; 43,795,182 shares issued and outstanding at September 30, 2017; 36,590,417 shares issued and outstanding at December 31, 2016	4,380			3,659
Common stock, $0.0001 par value, 100,000,000 shares authorized; 44,096,911 shares issued and outstanding at March 31, 2018; 43,794,526 shares issued and outstanding at December 31, 2017							4,410			4,379
Additional paid-in capital	154,781,731			133,677,321			155,556,362			154,943,728
Accumulated deficit	(13,618,666		)	(17,409,579		)	(7,694,827		)	(9,596,785		)
Total Pangaea Logistics Solutions Ltd. equity	141,167,445			116,271,401			147,865,945			145,351,322
Non-controlling interests	63,408,583			60,405,671			66,514,537			65,304,320
Total stockholders' equity	204,576,028			176,677,072			214,380,482			210,655,642
Total liabilities and stockholders' equity	$	415,310,805		$	362,193,902		$	411,799,149		$	423,297,088

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

Pangaea Logistics Solutions Ltd.

Consolidated Statements of ~~Income~~Operations

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017

Revenues:
Voyage revenue	$	93,688,834		$	65,986,320		$	251,608,298		$	161,509,615		$	70,319,194		$	77,688,449
Charter revenue	13,334,202			4,797,572			31,293,637			10,173,501			8,654,099			6,766,672
	107,023,036			70,783,892			282,901,935			171,683,116			78,973,293			84,455,121
Expenses:
Voyage expense	44,305,446			29,166,651			124,174,513			74,434,257			30,168,028			41,271,919
Charter hire expense	34,764,942			19,655,327			91,140,160			43,199,730			22,695,935			23,201,155
Vessel operating expense	9,144,472			7,483,507			26,810,071			22,277,417			9,849,165			8,591,243
General and administrative	4,762,860			3,179,287			11,418,900			9,151,608			4,128,298			3,514,764
Depreciation and amortization	3,950,661			3,532,171			11,604,168			10,576,223			4,338,188			3,941,795
Loss on sale and leaseback of vessels	70,000			—			9,275,042			—			—			4,289,998
Total expenses	96,998,381			63,016,943			274,422,854			159,639,235			71,179,614			84,810,874

Income from operations	10,024,655			7,766,949			8,479,081			12,043,881
Income (loss) from operations													7,793,679			(355,753		)

Other income (expense):
Other (expense) income:
Interest expense, net	(2,106,139		)	(1,258,105		)	(5,981,237		)	(4,158,143		)	(2,060,736		)	(1,630,988		)
Interest expense on related party debt	(79,713		)	(79,712		)	(236,538		)	(235,212		)	(63,459		)	(77,979		)
Unrealized (loss) gain on derivative instruments, net	(59,138		)	161,002			430,869			1,212,434			(562,605		)	1,966,387
Other income (expense)	977,795			(8,097		)	1,885,801			(42,754		)
Total other expense, net	(1,267,195		)	(1,184,912		)	(3,901,105		)	(3,223,675		)
Other income													428,332			94,650
Total other (expense) income, net													(2,258,468		)	352,070

Net income	8,757,460			6,582,037			4,577,976			8,820,206
Income attributable to non-controlling interests	(1,576,209		)	(517,701		)	(787,063		)	(1,429,132		)
Net income (loss)													5,535,211			(3,683		)
(Income) loss attributable to non-controlling interests													(1,210,217		)	1,350,525
Net income attributable to Pangaea Logistics Solutions Ltd.	$	7,181,251		$	6,064,336		$	3,790,913		$	7,391,074		$	4,324,994		$	1,346,842

Earnings per common share:
Basic	$	0.18		$	0.17		$	0.10		$	0.21		$	0.10		$	0.04
Diluted	$	0.17		$	0.17		$	0.10		$	0.21		$	0.10		$	0.04

Weighted average shares used to compute earnings
per common share
Basic	40,796,867			35,165,532			37,225,825			35,148,793			42,019,779			35,280,806
Diluted	41,074,592			35,347,403			37,674,123			35,299,839			42,655,038			35,805,205

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

Pangaea Logistics Solutions, Ltd.

Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
Operating activities
Net income	$	4,577,976		$	8,820,206
Net income (loss)							$	5,535,211		$	(3,683	)
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense	11,604,168			10,576,223			4,338,188			3,941,795
Loss on sale and leaseback of vessel	9,134,908			—
Amortization of deferred financing costs	527,348			513,311			166,221			174,342
Amortization of prepaid rent	91,453			—			30,484			30,485
Unrealized gain on derivative instruments	(430,869		)	(1,212,434		)
(Gain) loss from equity method investee	(282,362		)	68,477
(Recovery of) provision for doubtful accounts	(10,356		)	982,393
Share-based compensation	878,759			274,286
Unrealized loss (gain) on derivative instruments							562,605			(1,966,387		)
Gain from equity method investee							(90,000		)	(80,681		)
Provision for doubtful accounts							—			147,745
Loss on sale of vessel							—			4,289,998
Drydocking costs							(1,497,979		)	(63,808		)
Recognized cost for restricted stock issued as compensation							612,665			446,978
Change in operating assets and liabilities:
Decrease in restricted cash	—			499,269
Accounts receivable	(10,428,305		)	3,824,491			(593,487		)	(2,324,202		)
Bunker inventory	(3,267,454		)	(1,845,707		)	1,063,365			(2,166,797		)
Advance hire, prepaid expenses and other current assets	(7,118,526		)	(2,471,301		)	4,026,194			(69,870		)
Drydocking costs	(1,043,164		)	(42,478		)
Accounts payable, accrued expenses and other current liabilities	8,021,053			(743,918		)	(7,400,141		)	(838,732		)
Deferred revenue	1,490,536			(925,490		)	(3,962,909		)	913,854
Net cash provided by operating activities	13,745,165			18,317,328			2,790,417			2,431,037

Investing activities
Purchase of vessels	(47,328,517		)	(3,372,433		)
Purchase of vessels and vessel improvements							(298,418		)	(37,902,753		)
Purchase of building and equipment	—			(315,818		)	(110,417		)	(7,245		)
Proceeds from sale of equipment							31,594			—
Purchase of non-controlling interest in consolidated subsidiary	(832,572		)	—			—			(799,289		)
Net cash used in investing activities	(48,161,089		)	(3,688,251		)	(377,241		)	(38,709,287		)

Financing activities
Proceeds of related party debt	—			1,522,500
Payments of related party debt	—			(2,500,497		)	(2,541,140		)	—
Proceeds from long-term debt	25,000,000			1,375,971			—			19,500,000
Payments of financing and issuance costs	(896,175		)	(45,755		)	(91,329		)	(763,381		)
Payments of long-term debt	(20,635,670		)	(20,809,044		)	(4,765,747		)	(4,059,488		)
Proceeds from sale and leaseback of vessel	28,000,000			—			—			21,000,000
Payments of capital lease obligations	(768,599		)	—			(436,506		)	—
Decrease (increase) in restricted cash	2,100,000			(5,000,000		)
Proceeds from non-controlling interests	—			1,600,000
Proceeds from private placement of common stock, net of issuance costs	9,631,530			—
Accrued common stock dividends paid	(1,001,424		)	(100,000		)
Net cash provided by (used in) financing activities	41,429,662			(23,956,825		)
Dividends paid to non-controlling interests							(904,803		)	—
Net cash (used in) provided by financing activities							(8,739,525		)	35,677,131

Net increase (decrease) in cash and cash equivalents	7,013,738			(9,327,748		)
Cash and cash equivalents at beginning of period	22,322,949			37,520,240
Cash and cash equivalents at end of period	$	29,336,687		$	28,192,492
Net decrease in cash, cash equivalents and restricted cash							(6,326,349		)	(601,119		)
Cash, cash equivalents and restricted cash at beginning of period							38,531,812			28,422,949
Cash, cash equivalents and restricted cash at end of period							$	32,205,463		$	27,821,830

Supplemental cash flow information and disclosure of noncash items
Cash paid for interest	$	5,052,102		$	3,520,635		$	1,758,934		$	1,420,287
Conversion of dividend into common stock	$	4,385,000		$	—
Extinguishment of related party loan	$	9,278,800		$	—

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

Note 1. General Information

The accompanying consolidated financial statements include the accounts of Pangaea Logistics Solutions Ltd. and its consolidated subsidiaries (collectively, the “Company”, “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.

The Company owns two Panamax, two Ultramax Ice Class 1C, ~~five~~six Supramax, and two Handymax Ice Class 1A drybulk ~~vessels, including two vessels financed under capital lease obligations.~~vessels. The Company also owns one-third of Nordic Bulk Holding Company Ltd. (“NBHC”), a consolidated joint venture with a fleet of six Panamax Ice Class 1A drybulk vessels. The Company operates two additional Supramax drybulk vessels under bareboat charter for five-year periods that commenced on July 13, 2016. In addition, the Company, through a new wholly-owned subsidiary, signed a Memorandum of Agreement to purchase a Supramax bulk carrier built in 2008, for approximately $13.8 million. The vessel is expected to be delivered in December 2017.

On January 27, 2017, the Company acquired its consolidated joint venture partner's interest in Nordic Bulk Ventures Holding Company Ltd. (“BVH”). BVH owns m/v Bulk Destiny and m/v Bulk Endurance through wholly-owned subsidiaries. BVH is wholly-owned by the Company after the acquisition.

~~On March 21, 2017, the Company's Board of Directors (the “Board~~”) approved, and on June 27, 2017, the shareholders holding a majority of the issued and outstanding shares of our Common Stock approved, by unanimous written consent, the issuance of shares of our Common Stock in connection with two stock purchase agreements, both dated as of June 15, 2017, (the “~~Agreements”).~~

Shares of common stock sold under the Agreements totaled 6,533,443. These shares were issued on June 29, 2017 and August 9, 2017 for aggregate net proceeds of $14.1 million of which approximately $4.4 million was issued as in-kind payment of accrued dividends. Upon completion of these transactions, issued and outstanding shares of Common Stock totaled 43,795,182.

Note 2. Basis of Presentation and Significant Accounting Policies

The accompanying consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2018, the consolidated statements of ~~income~~operations and consolidated statements of cash flows for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and its results of operations and cash flows for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017. The financial data and the other information disclosed in these notes to the consolidated financial statements related to these three ~~and nine~~ month periods are unaudited. Certain information and disclosures included in the annual consolidated financial statements have been omitted for the interim periods pursuant to the rules and regulations of the SEC. The results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 are not necessarily indicative of the results for the year ending December 31, ~~2017~~2018 or for any other interim period or future years.

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 loss on sale and leaseback of vessel, the estimated future cash flows used in its impairment analysis, the estimated salvage value used in determining depreciation expense and the allowances for doubtful accounts.

Advance hire, prepaid expenses and other current assets were comprised of the following:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(unaudited)				(unaudited)
Advance hire	$	5,159,896	$	2,232,444	$	4,578,681	$	3,628,417
Prepaid expenses	646,493		1,844,522		304,402		460,445
Accrued receivables	5,042,672		1,319,220		4,397,325		6,153,212
Other current assets	2,616,102		1,045,397		517,376		1,790,198
	$	13,465,163	$	6,441,583	$	9,797,784	$	12,032,272

Accounts payable, accrued expenses and other current liabilities were comprised of the following:



	March 31, 2018		December 31, 2017
	(unaudited)
Accounts payable	$	14,776,185	$	15,686,235
Accrued voyage expenses	5,322,131		11,923,445
Accrued interest	571,549		611,406
Other accrued liabilities	1,123,488		960,190
	$	21,793,353	$	29,181,276

Significant Accounting Policies Update

Our significant accounting policies are included in Note 3 of our Annual Report on Form 10-K for the year ended December 31, 2017. On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As the Company’s performance obligations are transportation services which are received and consumed by its customers as it performs such services, revenues are recognized over time using the input method, proportionate to the days elapsed since the service commencement compared to the total days anticipated to complete the service. The Company believes that this method provides a faithful depiction of the satisfaction of its performance obligation. After analyzing its contracts with customers for each significant revenue stream, the Company determined that revenue from vessels operating on time charter will not change significantly from previous practice, which is to recognize revenue ratably over the periods of such charters. Payment on time charters is made in advance.Under the new standard, voyage revenue is recognized over the period between load port and discharge port. In addition, certain costs to fulfill contracts for voyages for which loading has not commenced are recognized as assets and amortized pro rata over the period between load and discharge. The payment terms on voyage charters is within five days of cargo loading. Costs to obtain a contract are expensed as incurred, as provided by a practical expedient, since all such costs are expected to be amortized over less than one year. The Company adopted ASC 606 using the modified retrospective transition method applied to voyage contracts that were not substantially complete at the end of 2017. The Company recorded a $2.4 million adjustment to decrease retained earnings at the beginning of 2018, which reflects the cumulative impact of adopting this standard. Comparative financial statements have not been restated and are reported under the accounting standards in effect for those periods.

A reconciliation as of and for the three months ended March 31, 2018 under ASC 606 to the prior accounting standards, for each of the financial statement line items impacted, is provided below:

September 30, 2017 December 31, 2016
(unaudited)
Accounts payable $ 17,690,288
$ 15,435,179
Accrued voyage expenses 11,656,486
6,955,389
Accrued interest 604,041
412,984
Other accrued liabilities 209,556
427,627
$ 30,160,371
$ 23,231,179



Consolidated Balance Sheets	As Reported		Effect of ASC 606 Adoption		Under Prior Accounting
Advance hire, prepaid expenses and other current assets	9,797,784		1,359,317		8,438,467
Total current assets	73,979,506		1,359,317		72,620,189
Total assets	411,799,149		1,359,317		410,439,832
Deferred revenue	6,581,760		2,124,830		4,456,930
Total current liabilities	59,695,765		2,124,830		57,570,935
Accumulated deficit	(7,694,827	)	(765,513	)	(6,929,314	)
Total liabilities and stockholders' equity	411,799,149		1,359,317		410,439,832

Consolidated Statements of Operations	As Reported		Effect of ASC 606 Adoption		Under Prior Accounting
Voyage revenue	70,319,194		2,603,925		67,715,269
Total revenues	78,973,293		2,603,925		76,369,368
Voyage expense	30,168,028		256,325		29,911,703
Charter hire expense	22,695,935		690,078		22,005,857
Total Expenses	71,179,614		946,403		70,233,211
Income from Operations	7,793,679		1,657,522		6,136,157
Net Income	5,535,211		1,657,522		3,877,689
Net income attributable to Pangaea Logistics Solutions Ltd.	4,324,994		1,657,522		2,667,472
Earnings per common share, basic	0.10		0.04		0.06
Earnings per common share, diluted	0.10		0.04		0.06

Consolidated Statements of Cash Flows	As Reported		Effect of ASC 606 Adoption		Under Prior Accounting
Net Income	5,535,211		1,657,522		3,877,689
Change in operating assets and liabilities:
Advance hire, prepaid expenses and other current assets	4,026,194		946,403		3,079,791
Deferred Revenue	(3,962,909	)	(2,603,925	)	(1,358,984	)

Assets and liabilities related to our voyage contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. Accounts receivable represent amounts billed and currently due from customers which are reported at their net estimated realizable value. The Company maintains reserves against its accounts receivable for potential credit losses. Credit losses recognized on accounts receivable were immaterial for the three-month periods ended March 31, 2018 and 2017, respectively. Other contract assets include unbilled revenue which arises when revenue is recognized in advance of billing for certain voyage contracts. Contract liabilities consist of deferred revenue which arises when amounts are billed to or collected from customers in advance of revenue recognition.

At March 31, 2018, unbilled revenue and deferred revenue totaled $1.4 million and $2.1 million, respectively. Upon adoption of ASC 606 on January 1, 2018, unbilled revenue and deferred revenue totaled $2.3 million and $4.7 million, respectively. All voyages that were not substantially complete on January 1, 2018 were completed during the three months ended March 31, 2018, therefore, all related voyage contract liabilities were recognized as revenue in the quarter.

On January 1, 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (ASC 230). The amendments in this update provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows, thereby reducing the diversity in practice. Specifically, this update addresses how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents, and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments

made from restricted cash or restricted cash equivalents. The new standard became effective for the Company on January 1, 2018. The amendments in this update were applied using a retrospective transition method to each period presented.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows:



	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	28,205,463	$	34,531,812
Restricted cash	4,000,000		4,000,000
Total cash, cash equivalents and restricted cash	$	32,205,463	$	38,531,812

Cash and cash equivalents include short-term deposits with an original maturity of less than three months. Restricted cash at March 31, 2018 and December 31, 2017 consists of $1.5 million held by the facility agent as required by the The Senior Secured Post-Delivery Term Loan Facility and $2.5 million held by the facility agent as required by the Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. and Bulk Nordic Oshima Ltd. – Dated September 28, 2015 - Amended and Restated Loan Agreement.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued an ASU 2016-02, Accounting Standards Update for Leases. The update is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company does not typically enter into charters for terms exceeding six months. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company does not expect adoption of this guidance to have a material impact on its financial statements.

In May 2014, the FASB issued an ASU 2014-09, Accounting Standards Update for Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017. Management has organized a working group and is currently analyzing contracts with our customers covering the significant streams of the Company's annual revenues under the provisions of the new standard as well as changes necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting.

While we are continuing to assess all potential impacts of the standard, the Company's preliminary expectation is that revenue from vessels operating on time charter will continue to be recognized under current revenue recognition policies because the services being provided to its customers currently reflect the consideration to which the entity expects to be entitled in exchange for those services, and because these arrangements qualify as single performance obligations that meet the criteria to recognize revenue over time, as the customer is simultaneously receiving and consuming the benefits of these services. The performance obligation in a voyage charter is also the transportation service provided and also meets the criteria to recognize revenue over time. However, under the new standard, our expectation is that revenue for these voyages will be recognized over the period between load port and discharge port in contrast to the current recognition policy to recognize revenue from discharge port to discharge port. The Company also believes that under the new standard, it will recognize an asset from certain costs incurred to fulfill contracts that have not begun to load if they meet the criteria outlined in this update. Such assets will be amortized pro rata over the period of the contract. Neither of these changes is expected to have a material impact on the consolidated financial statements because the number of open voyages at any point in time are not a significant portion of the annual total and the difference in revenue is expected to be only a small percentage of such voyage revenue. The Company will apply the new revenue standard on a modified retrospective basis with a cumulative effect adjustment to the opening balance of retained earnings as of

January 1, 2018. Prior periods will not be retrospectively adjusted. The Company is prepared to implement the new revenue standard on the effective date and will follow recently issued guidance on practical expedients as part of our transition.

In November 2016, the FASB issued an ASU 2016-18 Accounting Standards Update for Statement of Cash Flows. The amendments in this Update provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows, thereby reducing the diversity in practice. Specifically, this Update addresses how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents, and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company does not expect adoption of this guidance to have a material impact on its financial statements.

In August 2017, the FASB issued an ASU 2017-12 Accounting Standards Update for Derivatives and Hedging. The amendments in this ~~Update~~update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this ~~Update~~update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the ~~Update.~~update. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ~~Update.~~update. The amended presentation and disclosure guidance is required only prospectively. The Company does not expect adoption of this guidance to have a material impact on its financial statements.

Note 3. Fixed Assets

At ~~September 30, 2017,~~March 31, 2018, the Company owned ~~seventeen~~eighteen dry bulk vessels including two financed under capital ~~lease obligations.~~leases and one barge. The carrying amounts of these vessels, including unamortized drydocking costs, are as follows:


	September 30,		December 31,		March 31,		December 31,
	2017		2016		2018		2017
Owned vessels	(unaudited)				(unaudited)
m/v BULK PANGAEA	$	16,768,833	$17,879,380		$	16,034,826	$16,398,650
m/v BULK PATRIOT	11,426,580		12,391,724		10,790,200		11,111,437
m/v BULK JULIANA	11,621,472		12,252,733		11,205,266		11,411,052
m/v NORDIC ODYSSEY	25,981,360		27,021,211		25,296,932		25,634,743
m/v NORDIC ORION	26,819,591		27,874,584		26,124,812		26,467,928
m/v BULK TRIDENT	14,386,864		14,962,163		14,003,332		14,195,098
m/v BULK BEOTHUK ⁽¹⁾	—		12,006,270
m/v BULK NEWPORT	13,312,095		13,473,429		14,720,293		13,139,242
m/v NORDIC BARENTS	3,526,711		3,517,151		4,731,668		4,846,522
m/v NORDIC BOTHNIA	3,518,031		3,520,616		4,678,480		4,787,388
m/v NORDIC OSHIMA	30,428,323		31,346,414		29,816,112		30,122,172
m/v NORDIC ODIN					30,241,726		30,548,435
m/v NORDIC OLYMPIC	30,668,705		31,560,965		30,066,346		30,371,285
m/v NORDIC ODIN	30,846,740		31,741,658
m/v NORDIC OASIS	31,915,214		32,834,500		31,301,751		31,608,785
m/v BULK ENDURANCE ⁽²⁾	27,284,169		—
m/v BULK FREEDOM ⁽³⁾	8,942,254		—
m/v BULK ENDURANCE					26,778,315		27,030,918
m/v BULK FREEDOM					8,742,824		8,834,746
m/v BULK PRIDE					13,871,047		14,007,731
MISS NORA G PEARL					2,639,360		2,695,145
	287,446,942		272,382,798		301,043,290		303,211,277
Other fixed assets, net	3,390,595		2,882,874		3,071,523		3,081,378
Total fixed assets, net	$	290,837,537	$	275,265,672	$	304,114,813	$	306,292,655

Vessels under capital lease
m/v BULK DESTINY ⁽⁴⁾	$	23,365,388	$	—
m/v BULK BEOTHUK ⁽¹⁾	$	6,920,181	$	—
m/v BULK DESTINY					$	22,942,313	$	23,153,850
m/v BULK BEOTHUK					6,762,517		6,840,362
	$	30,285,569	$	—	$	29,704,830	$	29,994,212


⁽¹⁾	~~The m/v Bulk Beothuk was sold on June 15, 2017 and simultaneously chartered back under a bareboat charter accounted for as a capital lease, the terms of which are discussed in Note 7.~~


⁽²⁾	~~The m/v Bulk Endurance was delivered to the Company on January 7, 2017.~~


⁽³⁾	~~The Company acquired the m/v Bulk Freedom on June 14, 2017.~~


⁽⁴⁾	~~The Company took delivery of the m/v Bulk Destiny on January 7, 2017 and simultaneously entered into a sale and leaseback financing agreement, the terms of which are discussed in Note 7.~~

The Company also operates two dry bulk vessels under bareboat charters accounted for as operating leases, as discussed in Note 7.

Long-lived Assets Impairment Considerations. The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the pricing of new vessels, which tend to be cyclical. The carrying value of each group of vessels classified as held and used are reviewed for potential impairment when events or changes in circumstances indicate that the carrying value of a particular group may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the group and its eventual disposition is less than its carrying value. This assessment is made at the 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.

The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis include the Company’s estimate of future time charter equivalent "TCE" rates based on current rates under existing charters and contracts. When existing contracts expire, the Company uses an estimated TCE based on actual results and extends these rates out to the end of the vessel’s useful life. TCE rates can be highly volatile, may affect the fair value of the Company’s vessels and may have a significant impact on the Company’s ability to recover the carrying amount of its fleet. Accordingly, the volatility is contemplated in the undiscounted projected net operating cash flow by using a sensitivity analysis based on percent changes in the TCE rates. The Company prepares a series of scenarios in an attempt to capture the range of possible trends and outcomes. Projected net operating cash flows are net of brokerage and address commissions and assume no revenue on scheduled offhire days. The Company uses the current vessel operating expense budget, estimated costs of drydocking and historical general and administrative expenses as the basis for its expected outflows, and applies an inflation factor it considers appropriate. The net of these inflows and outflows, plus an estimated salvage value, constitutes the projected undiscounted future cash flows. If these projected cash flows do not exceed the carrying value of the asset group, an impairment charge would be recognized.

During the three months ended ~~September 30, 2017,~~March 31, 2018, the Company did not identify any potential triggering ~~events. At December~~events and therefore, in accordance with authoritative guidance, did not perform tests of recoverability.

During the three months ended March 31, ~~2016, testing~~2017, the Company identified a potential impairment indicator based on the estimated market value of its vessels. As a result, the Company evaluated each asset group for ~~recoverability indicated that~~impairment by estimating the total undiscounted cash flows expected to result from the use of the asset group and its eventual disposal. The estimated undiscounted future cash flows were higher than the carrying amount of ~~each long-lived asset group, therefore,~~ the ~~Company did not recognize any~~vessels in the Company's fleet and as such, no loss on ~~impairment.~~ impairment was recognized.

Note 4. Debt

Long-term debt consists of the following:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(unaudited)						(unaudited)
Bulk Pangaea Secured Note	$	—		$	1,040,625
Bulk Patriot Secured Note	—			1,087,500
Bulk Trident Secured Note (1)	3,887,500			5,737,500			$	3,017,500		$	3,452,500
Bulk Juliana Secured Note (1)	2,028,126			3,042,186			1,014,064			1,521,095
Bulk Phoenix Secured Note (1)							4,030,947			4,473,805
Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. and Bulk Nordic Oshima Ltd. Amended and Restated Loan Agreement (2)	71,700,000			77,325,001			67,950,000			69,825,000
Bulk Atlantic Secured Note	—			5,350,000
Bulk Phoenix Secured Note (1)	4,916,663			6,816,685
Term Loan Facility of USD 13,000,000 (Nordic Bulk Barents Ltd. and Nordic Bulk Bothnia Ltd.)	6,119,550			7,097,820			5,467,370			5,793,460
Bulk Nordic Oasis Ltd. Loan Agreement (2)	18,875,000			20,000,000			18,125,000			18,500,000
Bulk Nordic Six Ltd. Loan Agreement	19,135,000			—			28,196,666			28,803,333
Bulk Freedom Loan Agreement	5,325,000			—			4,975,000			5,150,000
109 Long Wharf Commercial Term Loan	949,864			1,032,067			895,067			922,466
Phoenix Bulk Carriers (US) LLC Automobile Loan	24,483			28,582			—			23,090
Phoenix Bulk Carriers (US) LLC Master Loan	197,362			236,242
Total	133,158,548			128,794,208			133,671,614			138,464,749
Less: unamortized bank fees	(1,897,347		)	(1,528,511		)	(1,794,888		)	(1,869,780		)
	131,261,201			127,265,697			131,876,726			136,594,969
Less: current portion	(17,830,996		)	(19,627,846		)	(18,706,122		)	(18,979,335		)
Secured long-term debt, net	$	113,430,205		$	107,637,851		$	113,170,604		$	117,615,634


⁽¹⁾	The Bulk Juliana Secured Note, the Bulk Trident Secured Note and the Bulk Phoenix Secured Note are cross-collateralized by the m/v Bulk Juliana, m/v Bulk Trident and m/v Bulk Newport and are guaranteed by the Company.

⁽²⁾

The borrower under this facility is NBHC, of which the Company and its joint venture partners, STST and ASO2020, each own one-third. NBHC is consolidated in accordance with Accounting Standards Codification ("ASC") 810, Consolidation, and as such, amounts pertaining to the non-controlling ownership held by these third parties in the financial position of NBHC are reported as non-controlling interest in the accompanying balance sheets.

The Senior Secured Post-Delivery Term Loan Facility

On April 14, 2017, the Company, through its wholly owned subsidiaries, Bulk Pangaea, Bulk Patriot, Bulk Juliana, Bulk Trident and Bulk Phoenix, entered into the Fourth Amendatory Agreement, (the "Fourth Amendment"), amending and supplementing the Loan Agreement dated April 15, 2013, as amended by a First Amendatory Agreement dated May 16, 2013, the Second Amendatory Agreement dated August 28, 2013 and the Third Amendatory Agreement dated July 14, 2016. The Fourth Amendment advanced the final repayment dates for Bulk Pangaea and Bulk Patriot and extended the final maturity date and modified the repayment schedules, as follows:

~~Bulk Pangaea Secured Note~~

Initial amount of $12,250,000, entered into in December 2009, for the acquisition of m/v Bulk Pangaea. The Fourth Amendment advanced the final installment to April 18, 2017, thereby increasing the amount to $1,040,625, which was paid on the maturity date.

~~Bulk Patriot Secured Note~~

Initial amount of $12,000,000, entered into in September 2011, for the acquisition of the m/v Bulk Patriot. The Fourth Amendment advanced the final installment to April 18, 2017, thereby increasing the amount to $1,087,500, which was paid on the maturity date.

Bulk Trident Secured Note

Initial amount of $10,200,000, entered into in April 2012, for the acquisition of the m/v Bulk Trident. The Fourth Amendment extends the final maturity date and modifies the repayment schedule. The first and second quarterly installments following the amendment were increased to $650,000 and the third and fourth installments were increased to $435,000. These are followed by two installments of $327,500 and three of $300,000. A balloon payment of $1,462,500 is payable on July 19, 2019. The interest rate was fixed at 4.29% through April 19, 2017 and is floating at LIBOR plus 3.50% ~~(4.78%~~(5.81% at ~~September 30, 2017)~~March 31, 2018), since April 19, 2017.

On April 19, 2018, the Company entered into a sale-leaseback financing arrangement whereby the m/v Bulk Trident will be sold and simultaneously leased back under a bareboat charter for a period of eight years. Proceeds from the sale will be used to repay the Bulk Trident Secured Note (see Note 8. - Subsequent Events)

Bulk Juliana Secured Note

Initial amount of $8,112,500, entered into in April 2012, for the acquisition of the m/v Bulk Juliana. The Fourth Amendment did not change this tranche, the balance of which is payable in six quarterly installments of $507,031. The final payment is due inon July 19, 2018. The interest rate is fixed at 4.38%.

Bulk Phoenix Secured Note

Initial amount of $10,000,000, entered into in May 2013, for the acquisition of m/v Bulk Newport. The Fourth Amendment did not change this tranche, the balance of which is payable in two installments of $700,000 and seven installments of $442,858. A balloon payment of $1,816,659 is payable on July 19, 2019. The interest rate is fixed at 5.09%.

The agreement contains financial covenants that require the Company to maintain a minimum net worth and minimum liquidity, on a consolidated basis. The facility also contains a consolidated leverage ratio and a consolidated debt service coverage ratio. In addition, the facility contains other Company and vessel related covenants that, among other things, restrict changes in management and ownership of the vessel, declaration of dividends, further indebtedness and mortgaging of a vessel without the bank’s prior consent. It also requires minimum collateral maintenance, which is tested at the discretion of the lender. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was in compliance with these covenants.

~~Bulk Atlantic Secured Note~~

Initial amount of $8,520,000, entered into on February 18, 2013, for the acquisition of m/v Bulk Beothuk. The loan required repayment in 8 equal quarterly installments of $90,000 beginning in May 2013, 12 equal quarterly installments of $295,000 and a balloon payment of $4,170,000 due in February 2018. The loan was repaid in conjunction with the sale of the vessel on June 6, 2017.

Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd. Bulk Nordic Odyssey Ltd., Bulk Nordic Orion Ltd. And Bulk Nordic Oshima Ltd. – Dated September 28, 2015 - Amended and Restated Loan Agreement

The amended agreement advanced $21,750,000 in respect of each the m/v Nordic Odin and the m/v Nordic Olympic; $13,500,000 in respect of each the m/v Nordic Odyssey and the m/v Nordic Orion, and $21,000,000 in respect of the m/v Nordic Oshima.

The agreement requires repayment of the advances as follows:

In respect of the Odin and Olympic advances, repayment to be made in 28 equal quarterly installments of $375,000 per borrower (one of which was paid prior to the amendment by each borrower) and balloon payments of $11,233,150 due with each of the final installments in January 2022.

In respect of the Odyssey and Orion advances, repayment to be made in 20 quarterly installments of $375,000 per borrower and balloon payments of $5,677,203 due with each of the final installments in September 2020.

In respect of the Oshima advance, repayment to be made in 28 equal quarterly installments of $375,000 and a balloon payment of $11,254,295 due with the final installment in September 2021.

Interest on 50% of the advances to Odyssey and Orion was fixed at 4.24% in March 2017. Interest on the remaining advances to Odyssey and Orion is floating at LIBOR plus 2.40% ~~(3.55%~~(4.71% at ~~September 30, 2017)~~March 31, 2018). Interest on 50% of the advances to Odin and Olympic was fixed at 3.95% in January 2017. Interest on the remaining advances to Odin and Olympic was floating at LIBOR plus 2.0% and was fixed at 4.07% on April 27, 2017. Interest on 50% of the advance to Oshima was fixed at 4.16% in January 2017. Interest on the remaining advance to Oshima is floating at LIBOR plus 2.25% ~~(3.55%~~(4.56% at ~~September 30, 2017)~~March 31, 2018).

The amended loan is secured by first preferred mortgages on the m/v Nordic Odin, m/v Nordic Olympic, m/v Nordic Odyssey, m/v Nordic Orion and m/v Nordic Oshima, the assignment of earnings, insurances and requisite compensation of the five entities, and by guarantees of their shareholders.

The amended agreement contains one financial covenant that requires the Company 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. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was in compliance with this ~~clause.~~covenant.

The Bulk Nordic Oasis Ltd. - Loan Agreement - Dated December 11, 2015

The agreement advanced $21,500,000 in respect of the m/v Nordic Oasis. The agreement requires repayment of the advance in 24 equal quarterly installments of $375,000 beginning on March 28, 2016 and a balloon payment of $12,500,000 due with the final installment in March 2022. Interest on this advance is fixed at 4.30%.

The loan is secured by a first preferred mortgage on the m/v Nordic Oasis, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. Additionally, the agreement contains a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was in compliance with this covenant.

Term Loan Facility of USD 13,000,000 (Nordic Bulk Barents Ltd. and Nordic Bulk Bothnia Ltd.)

Barents and Bothnia entered into a secured Term Loan Facility of $13,000,000 in two tranches of $6,500,000 which were drawn in conjunction with the delivery of the m/v Bulk Bothnia on January 23, 2014 and the m/v Bulk Barents on March 7, 2014. The loan is secured by mortgages on the m/v Nordic Bulk Barents and m/v Nordic Bulk Bothnia and is guaranteed by the Company.

The facility bears interest at LIBOR plus 2.50% ~~(3.80%~~(4.81% at ~~September 30, 2017)~~March 31, 2018). The loan requires repayment in 22 equal quarterly installments of $163,045 (per borrower) beginning in June 2014, one installment of $163,010 (per borrower) and a balloon payment of $1,755,415 (per borrower) due in December 2019. In addition, any cash in excess of $750,000 per borrower on any repayment date shall be applied toward prepayment of the relevant loan in inverse order, so the balloon payment is

prepaid first. The agreement also contains a profit split in respect of the proceeds from the sale of either vessel and a minimum value clause ("MVC"). The Company was in compliance with this covenant at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

The Amended Senior Facility - Dated December 21, 2017 (previously identified as Bulk Nordic Six Ltd. - Loan Agreement --- Dated December 21, ~~2016~~2016)

The agreement advanced $19,500,000 in respect of the m/v Bulk Endurance on January 7, 2017, in two tranches. The agreement requires repayment of Tranche A, totaling $16,000,000, in 3three equal quarterly installments of $100,000 beginning on April 7, 2017 and, thereafter, 17 equal quarterly installments of $266,667 and a balloon payment of $11,667,667 due with the final installment in March 2022. Interest on this advance was fixed at 4.74% on March 27, 2017. The agreement also advanced $3,500,000 under Tranche B, which is payable in 18 equal quarterly installments of $65,000 beginning on October 7, 2017, and a balloon payment of $2,330,000 due with the final installment in March 2022. Interest on this advance is floating at LIBOR plus 6.00% ~~(7.30%~~(8.31% at ~~September 30, 2017)~~March 31, 2018).

The amended agreement advanced $10,000,000 in respect of the m/v Bulk Pride on December 21, 2017, in two tranches. The agreement requires repayment of Tranche C, totaling $8,500,000, in 16 equal quarterly installments of $275,000 beginning in March 2018 and a balloon payment of $4,100,000 due with the final installment in December 2021. Interest on this advance is floating at LIBOR plus 2.75% (5.06% at March 31, 2018). The agreement also advanced $1,500,000 under Tranche D, which is payable in 4 equal quarterly installments of $375,000 beginning on August 21, 2018. Interest on this advance is floating at LIBOR plus 6.00% (8.31% at March 31, 2018).

The loan is secured by a first preferred mortgage on the m/v Bulk Endurance, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. Additionally, the agreement contains a minimum liquidity requirement, positive working capital of the borrower and a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios. At March 31, 2018 and December 31, 2017, the Company was in compliance with these covenants.

The Bulk Freedom Corp. Loan Agreement -- Dated June 14, 2017

The agreement advanced $5,500,000 in respect of the m/v Bulk Freedom on June 14, 2017. The agreement requires repayment of the loan in 8 quarterly installments of $175,000 and 12 quarterly installments of $150,000 beginning on September 14, 2017. A balloon payment of $2,300,000 is due with the final installment. Interest is floating at LIBOR plus 3.75% ~~(5.05%~~(6.06% at ~~September 30, 2017)~~March 31, 2018).

The loan is secured by a first preferred mortgage on the m/v Bulk Freedom, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. Additionally, the agreement contains a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios. At March 31, 2018 and December 31, 2017, the Company was in compliance with these covenants.

109 Long Wharf Commercial Term Loan

Initial amount of $1,096,000 entered into on May 27, 2016. The Long Wharf Construction to Term Loan was repaid from the proceeds of this new facility. The loan is payable in 120 equal monthly installments of $9,133. Interest is floating at the 30 day LIBOR plus ~~2.00% (3.30%~~2.0% (4.31% at ~~September 30, 2017)~~March 31, 2018). The loan is collateralized by all real estate located at 109 Long Wharf, Newport, RI, and a corporate guarantee of the Company. The loan contains a maximum loan to value covenant and a debt service coverage ratio. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was in compliance with these covenants.

Phoenix Bulk Carriers (US) LLC Automobile Loan

The Company purchased a commercial vehicle for use at the site of its port project on the United States' East Coast. The total loan amount of $29,435 is payable in 60 equal monthly installments of $539. Interest is fixed at 3.74%.

~~Phoenix Bulk Carriers (US) LLC Master Equipment Loan~~

The ~~Company purchased commercial equipment for use at~~vehicle was sold in January 2018 and the ~~site of its port project on the United States' East Coast. The total~~ loan ~~amount of $250,536 is payable in 48 equal monthly installments of $5,741. Interest is fixed at 4.75%.~~

was repaid.

The future minimum annual payments (excluding unamortized bank fees) under the debt agreements are as follows:


	Years ending September 30,		Years ending
	(unaudited)		March 31,
2018	$	17,830,996
			(unaudited)
2019	17,999,412		$	18,706,122
2020	25,225,098		20,721,295
2021	18,921,949		21,240,674
2022	52,779,228		70,096,857
2023			2,559,600
Thereafter	401,865		347,066
	$	133,158,548	$	133,671,614

Note 5. Derivative Instruments and Fair Value Measurements

~~Interest-Rate Swaps~~

From time to time, the Company enters into interest rate swap agreements to mitigate the risk of interest rate fluctuations on its variable rate debt. The Company was party to one interest rate swap, which was entered into in February 2011, as required by the ~~109 Long Wharf Construction to Term Loan~~ ~~agreement. Under the terms of the swap agreement, the interest rate was fixed at 6.63%. The swap was cancelled in conjunction with, and the outstanding balance was financed by, the~~ ~~109 Long Wharf Commercial Term Loan~~ ~~in May 2016, which is discussed in Note 4.~~

The Company did not elect to designate the swap as a hedge at inception, pursuant to ASC 815, Derivatives and Hedging. Accordingly, changes in the fair value are recorded in current earnings in the accompanying consolidated statements of income.

The aggregate change in the fair value of the interest rate swap agreement for the nine months ended September 30, 2016 was a loss of $104,000 which was reflected in the unrealized (loss) gain on derivative instruments in the accompanying consolidated statements of operations.

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). Such economic hedges do not always 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. Between November 2016 and ~~September 30, 2017,~~March 31, 2018, the Company entered into FFAs that were not designated for hedge accounting. The aggregate fair value of these FFAs at ~~September 30, 2017 and December~~March 31, ~~2016~~2018 were ~~assets~~liabilities of approximately ~~$675,000,~~$49,000, which are included in other current ~~assets~~liabilities on the consolidated balance ~~sheets, and liabilities~~sheets. The aggregate fair value of FFAs at December 31, 2017 were assets of approximately ~~$21,000, respectively,~~$266,000, which are included in other current ~~liabilities~~assets on the consolidated balance sheets. The change in the aggregate fair value of the FFAs during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 are a loss of approximately ~~$379,000~~$314,000 and a gain of approximately ~~$696,225,~~$2,728,000, respectively, which are included in unrealized (loss) gain on derivative instruments in the accompanying consolidated statements of operations. ~~There were no open positions, and therefore no gain or loss in the three and nine months ended September 30, 2016.~~

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. During 2017 and 2016, the Company entered into various fuel swap contracts that were not designated for hedge accounting. The aggregate fair value of these fuel swaps at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are assets of approximately ~~$38,000~~$129,000 and ~~$304,000,~~$377,000, respectively, which are included in other current assets on the consolidated balance sheets. The change in the aggregate fair value of the fuel swaps during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 are ~~gains of approximately $319,000 and~~ losses of approximately ~~$265,000,~~$248,000 and $758,000, respectively, which are included in unrealized (loss) gain on derivative instruments in the accompanying consolidated statements of operations. The change in the aggregate fair value of the fuel swaps during the three and nine months ended September 30, 2016 are losses of approximately $156,000 and gains of approximately $1,109,000, respectively, which are included in unrealized (loss) gain on derivative instruments in the accompanying consolidated statements of income.

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).

The following table summarizes assets and liabilities measured at fair value on a recurring basis at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


									Balance at
	Balance at September 30, 2017		Level 1		Level 2		Level 3		March 31, 2018			Level 1		Level 2			Level 3
	(unaudited)								(unaudited)
Margin accounts	$	2,688,122	$	2,688,122	$	—	$	—	$	579,299		$	579,299	$	—		$	—
Fuel swaps	$	38,319	$	—	$	38,319	$	—	$	129,037		$	—	$	129,037		$	—
Freight forward agreements	$	675,275	$	—	$	675,275	$	—	$	(48,600	)	$	—	$	(48,600	)	$	—


	Balance at December 31, 2016			Level 1		Level 2			Level 3		Balance at December 31, 2017		Level 1		Level 2		Level 3
Margin accounts	$	488,084		$	488,084	$	—		$	—	$	912,981	$	912,981	$	—	$	—
Fuel swaps	$	303,675		$	—	$	303,675		$	—	$	377,273	$	—	$	377,273	$	—
Freight forward agreements	$	(20,950	)	$	—	$	(20,950	)	$	—	$	265,768	$	—	$	265,768	$	—

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 indexes. Such quotes represent the estimated amounts the Company would receive or pay to terminate the contracts.

Note 6. Related Party Transactions


	December 31, 2016		Activity			September 30, 2017		December 31, 2017		Activity			March 31, 2018
						(unaudited)							(unaudited)
Included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets:
Affiliated companies (trade payables)	$	1,109,570	34,994			$	1,144,564	$	1,421,920	(203,479		)	$	1,218,441

Included in current related party debt on the consolidated balance sheets:
Loan payable – 2011 Founders Note	$	4,325,000	—			$	4,325,000	$	4,325,000	—			$	4,325,000
Interest payable in-kind - 2011 Founders Note ⁽ⁱ⁾	368,347		236,538			604,885		684,597		(541,140		)	143,457
Promissory Note	2,000,000		—			2,000,000
Loan payable – BVH shareholder (STST)⁽ⁱⁱ⁾	9,278,800		(9,278,800		)	—
Promissory Note to Bulk Invest, Ltd.								2,000,000		(2,000,000		)	—
Total current related party debt	$	15,972,147	$	(9,042,262	)	$	6,929,885	$	7,009,597	$	(2,541,140	)	$	4,468,457

⁽ⁱ⁾ Paid in cash

⁽ⁱⁱ⁾~~ST Shipping and Transport Pte. Ltd. ("STST")~~

In November 2014, the Company entered into a $5,000,000 Promissory Note (the “Note”) with Bulk Invest, Ltd., a company controlled by the Founders. The ~~Note is payable on demand. Interest~~outstanding balance on the Note ~~is 5%. The Company~~was repaid ~~a net amount of $3,000,000 since the Note's inception.~~

~~BVH entered into an agreement for the construction of two new ultramax newbuildings in 2013. Shareholder loans totaling $9,278,800 at December 31, 2016, were provided in order to make deposits~~ on these contracts. The loans were converted to equity in conjunction with the acquisition of the noncontrolling interest in BVH on January 27, 2017. BVH is a wholly-owned subsidiary of the Company after the acquisition.February 6, 2018.

On October 1, 2011, the Company entered into a $10,000,000 loan agreement with the Founders, which was payable on demand at the request of the lenders (the 2011 Founders Note). The note bears interest at a rate of 5%. The balance of the 2011 Founders Note was $4,325,000 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

~~Dividends payable consist of the following, all of which are payable to related parties:~~

2008
common
stock
dividend 2012
common
stock
special
dividend 2013
common
stock
dividend 2013
Odyssey
and Orion
dividend Total
Balance at December 31, 2015 2,474,125
2,934,357
6,411,540
904,803
12,724,825
Paid in cash (100,000 ) —
—
—
(100,000 )
Balance at December 31, 2016 2,374,125
2,934,357
6,411,540
904,803
12,624,825
Converted to common shares (2,374,125 ) (2,010,875 ) —
—
(4,385,000 )
Paid in cash (100,000 ) (1,001,424 ) —
—
(1,001,424 )
Balance at September 30, 2017 $ —
$ (77,942 ) $ 6,411,540
$ 904,803
$ 7,238,401

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 and the two vessels operating under bareboat charters. During the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company incurred technical management fees of approximately ~~$718,000~~$756,000 and ~~$2,022,000; and $538,000 and $1,411,000,~~$642,000, respectively, under this arrangement. These fees are included in vessel operating expenses in the consolidated statements of income. The total amounts payable to Seamar at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were approximately ~~$1,145,000~~$1,218,000 and ~~$1,110,000,~~$1,422,000, respectively.

Dividends payable consist of the following, all of which are payable to related parties:



	2013 common stock dividend		2013 Odyssey and Orion dividend ⁽¹⁾			Total
Balance at December 31, 2017	6,333,598		904,803			7,238,401
Payments	—		(904,803		)	(904,803		)
Balance at March 31, 2018	$	6,333,598	$	—		$	6,333,598

⁽¹⁾Paid on February 13, 2018

Note 7. Commitments and Contingencies

Vessel Sales and Leasebacks Accounted for as Capital Leases

The Company's fleet includes ~~one vessel~~two vessels financed under a sale and leaseback financing ~~arrangement~~arrangements accounted for as a capital ~~lease.~~leases. The selling price of the ~~vessel~~m/v Bulk Destiny to the new owner (lessor) was $21.0 million and the fair value of the vessel at the inception of the lease was $24.0 million. The difference between the selling price and the fair value of the vessel was recorded as prepaid rent and is being amortized over the 25 year estimated useful life of the vessel. Prepaid rent is included in vessel under capital lease on the consolidated balance sheet at ~~September 30, 2017.~~March 31, 2018. Minimum lease payments fluctuate based on three-month LIBOR and are payable quarterly over the seven year lease term, with a ~~balloon payment~~purchase obligation of $11,200,000 due with the final lease payment in January 2024. Interest is floating at LIBOR plus 2.75% ~~(3.85%~~(5.06% including the margin, at inception of the lease). The Company will own this vessel at the end of the lease term.

The ~~Company's fleet also includes one vessel financed under a sale and leaseback (bareboat charter) accounted for as a capital lease. The~~ selling price of the m/v Bulk Beothuk was $7,000,000 and the fair value iswas estimated to be the same. The lease is payable at $3,500 per day every fifteen days over the five year lease term, and a balloon payment of $4,000,000 is due with the final lease payment in June 2022. Interest is fixed at 11.83%. The Company will own this vessel at the end of the lease term.

Long-term Contracts Accounted for as Operating Leases

On July 5, 2016, the Company entered into five-year bareboat charter agreements with the owner of two vessels (which were then renamed the m/v Bulk Power and the m/v Bulk Progress). Under a bareboat charter, the charterer is responsible for all of the vessel operating expenses in addition to the charter hire. The agreement also contains a profit sharing arrangement. Scheduled increases in charter hire are included in minimum rental payments and recognized on a straight-line basis over the lease term.

Profit sharing is excluded from minimum lease payments and recognized as incurred. The rent expense under these bareboat charters (which are classified as operating leases) totals approximately $365,000 per annum.

The Company leases office space for its Copenhagen operations. The lease can be terminated with six months prior notice after June 30, 2018.

Future minimum lease payments under capital leases and operating leases with initial or remaining terms in excess of one year at ~~September 30, 2017~~March 31, 2018 were:


	Capital Lease		Operating Leases		Capital Lease		Operating Leases
2018	$	3,278,295	$	585,717
2019	3,278,295		420,514		$	3,278,295	$	530,649
2020	3,278,295		365,446		3,278,295		365,446
2021	3,278,295		285,348		3,278,295		365,446
2022	6,858,295		—		3,330,795		103,126
2023					6,175,795		—
Thereafter	14,227,441		—		13,218,293		—
Total minimum lease payments	$	34,198,916	$	1,657,025	$	32,559,768	$	1,364,667
Less amount representing interest	6,967,515				6,194,995
Present value of minimum lease payments	27,231,401				26,364,773
Less current portion	1,759,303				1,812,475
Long-term portion	$	25,472,098			$	24,552,298

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. In April 2017, the Company entered into a settlement agreement related to a litigation action. The Company was indemnified by third parties related to this matter and recovered approximately $462,000 that was reserved at the time the action was initiated which is included in other income (expense) in the consolidated statements of operations for the nine months ended September 30, 2017.

Note 8. Subsequent Events

On April 12, 2018, the Company, through a wholly-owned subsidiary, signed a Memorandum of Agreement to purchase a Panamax bulk carrier built in 2006 for approximately $14.3 million. The ~~Company acquired the m/v Bulk Pride on October 11, 2017 through its new wholly owned subsidiary Bulk Pride Corp. The purchase price of the~~ vessel ~~which~~ is expected to be delivered in ~~December 2017, was $13.8 million. The purchase price~~the second quarter of 2018.

On April 19, 2018, the Company entered into a sale-leaseback financing arrangement whereby the m/v Bulk Trident will be ~~financed with~~sold for $15.0 million and simultaneously leased back under a ~~commercial facility.~~bareboat charter for a period of eight years. The agreement requires a $2.0 million bareboat charter hire down payment to be deducted from the selling price at the time of delivery to the buyer. The lease is payable monthly at a rate of $4,845 per day over the eight year lease term. Interest is floating at LIBOR plus 1.7% (approximately 4.8% including the margin, at inception of the lease).

The Company acquired a 50% interest in a joint venture, Venture Barge (US) Corp. which purchased a deck barge on November 3, 2017. The barge, which was built in 1979 and rebuilt in 2016, was acquired for $2.4 million.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our ~~condensed~~ 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. Gross revenue is calculated by multiplying the agreed rate per ton of cargo by the number of tons loaded.

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 agree rate per day.

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.

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.

Net Revenue. Net revenue represents total revenue less the total direct costs of transportation and services, which includes charter hire, voyage and vessel operating expenses.

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.~~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.

Selected Financial Information



(in thousands, except shipping days data) (figures may not foot due to rounding)	For the three months ended March 31,
	2018			2017
Selected Data from the Consolidated Statements of Operations
Voyage revenue	$	70,319		$	77,688
Charter revenue	$	8,654		$	6,767
Total revenue	78,973			84,455
Voyage expense	30,168			41,272
Charter expense	22,696			23,201
Vessel operating expenses	9,849			8,591
Total cost of transportation and service revenue	62,713			73,064
Net revenue ⁽¹⁾	16,260			11,391
Other operating expenses	8,466			7,457
Loss on sale and leaseback of vessels	—			4,290
Income from operations	7,794			(356		)
Total other expense, net	(2,258		)	352
Net income	5,536			(4		)
Income attributable to noncontrolling interests	(1,210		)	1,351
Net income attributable to Pangaea Logistics Solutions Ltd.	$	4,326		$	1,347


	March 31, 2018			December 31, 2017
Selected Data from the Consolidated Balance Sheets
Cash	$	28,205		$	34,532
Total assets	$	411,799		$	423,297
Total secured debt, including obligations under capital leases	$	158,241		$	163,396
Total liabilities and stockholders' equity	$	411,799		$	423,297

	For the three months ended March 31,
	2018			2017
Selected Data from the Consolidated Statements of Cash Flows
Net cash provided by operating activities	$	2,790		$	2,431
Net cash used in investing activities	$	(377	)	$	(38,709	)
Net cash (used in) provided by financing activities	$	(8,740	)	$	35,677
Adjusted EBITDA ⁽²⁾	$	12,132		$	7,876

Shipping Days ⁽³⁾
Voyage days	2,945			3,668
Time charter days	579			674
Total shipping days	3,524			4,342

TCE Rates ($/day) ⁽⁴⁾	$	13,849		$	9,945

(1)

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

(2)

Adjusted EBITDA represents operating earnings before interest expense, income taxes, depreciation and amortization, loss on sale and leaseback of vessels 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.

The reconciliation of income from operations to net revenue and adjusted EBITDA is as follows:



	Three Months Ended March 31,
	2018		2017
Net Revenue
Income from operations	$	7,794	$	(356	)
General and administrative	$	4,128	$	3,515
Depreciation and amortization	4,338		3,942
Loss on sale and leaseback of vessels	—		4,290
Net Revenue	$	16,260	$	11,391

Adjusted EBITDA (in millions)
Income from operations	$	7,794	$	(356	)
Depreciation and amortization	$	4,338	$	3,942
Loss on sale and leaseback of vessel	$	—	$	4,290
Adjusted EBITDA	$	12,132	$	7,876

(3) 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).

(4) Pangaea defines time charter equivalent, or “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 such amounts.

Industry Overview

The seaborne drybulk transportation industry is cyclical and can be volatile. ~~Drybulk~~The industry has seen steady improvement over the last year, with rates and demand for dry bulk tonnage up significantly since the historic low in February of 2016 and average published market rates have improved markedly from the fall of 2016 to March of this year, gave up some of the gains in the second quarter, then finished the third quarter at its highest in nearly three years. The increase in freight rates is due to various factors, including the improving global economy and increasing base metal and industrial commodity prices.more than 86% since that time. The Baltic Dry Index ~~("BDI"~~(“BDI”), a measure of dry bulk market performance, ~~increased to an average of 1,162~~averaged 1,146 for the ~~third~~first quarter of ~~2017,~~2018, up from an average of ~~744~~996 for the ~~third~~comparable quarter of ~~2016.~~2017. The Company's TCE rates have climbed consistently since the first quarter of 2017 and have exceeded average published market rates by 10% to 25% over this period.

The Company's strategy to charter in vessels to serve primarily contracted business means we limit our carried volume of chartered-in vessels, which shields us from losses we may incur under a long-term charter-in strategy, but will also have the effect of limiting upside in an increasing rate environment, when we charter-in vessels at higher rates to meet the needs of this contracted business.

~~3rd~~1st Quarter ~~2017~~2018 Highlights

Income from operations ~~up 29% to $10.0~~of $7.8 million for the three months ended ~~September 30, 2017,~~March 31, 2018, as opposed to a loss from ~~$7.8~~operations of $0.4 million for the same period of ~~2016.~~2017.

Net income attributable to Pangaea Logistics Solutions Ltd. of ~~$7.2~~$4.3 million as compared to ~~$6.1~~$1.3 million for the three months ended ~~September 30, 2016.~~March 31, 2017.

~~51%~~Pangaea's TCE rates increased 39% to $13,849 from $9,945 in the first quarter of 2017 while the market average for the first quarter was approximately $11,100, giving the Company an overall average premium over market rates of approximately $2,800 or 25%. The market rate increase is due to the consistent improvement in the drybulk market over the last year.

The Company completed two long-term COAs during 2017 and as a result, total shipping days decreased in the first quarter as compared to the first quarter of 2017. This decrease was matched with a corresponding decrease in voyage revenue, however, net revenue increased to ~~$107.0~~$16.3 million for the three months ended ~~September 30, 2017, up from $70.8~~March 31, 2018, due to the relative strength of the market as reflected in higher freight rates. Net revenue was $11.4 million for the ~~same period in 2016.~~

Pangaea's TCE rates increased 13% to $11,822 while the market average was approximately $9,715. Total shipping days increased 34%. These improvements are due to continued growth in the drybulk market and to an increase in drybulk market rates. The Company operated 58 vessels, on average during the third quarter of 2017 versus approximately 43 during the third quarter of 2016.three months ended March 31, 2017.

At the end of the quarter, Pangaea had ~~$29.3~~$28.2 million in unrestricted cash and cash equivalents.

Three Months Ended ~~September 30, 2017~~March 31, 2018 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2017

Revenues

Pangaea’s revenues are derived predominately from voyage and time charters, which are discussed below. Total revenue for the three months ended ~~September 30, 2017~~March 31, 2018 was ~~$107.0~~$79.0 million, compared to ~~$70.8~~$84.5 million for the same period in ~~2016,~~2017, a ~~51% increase.~~6% decrease. The total number of shipping days ~~increased 34%~~decreased 19% to ~~5,305~~3,524 in the three months ended ~~September 30, 2017,~~March 31, 2018, compared to ~~3,971~~4,342 for the same period in ~~2016.~~2017. The average TCE rate was ~~$11,822~~$13,849 per day for the three months ended ~~September 30, 2017,~~March 31, 2018, compared to ~~$10,480~~$9,945 per day for same period in ~~2016.~~2017. The revenue ~~increase~~decrease is predominantly due to the ~~increase~~decrease in total shipping days, ~~and to overall improvement in the dry bulk market.~~even as rates improved dramatically.

Components of revenue are as follows:

Voyage revenues ~~which represent 88% of total revenue, increased~~decreased by ~~42%~~9% for the three months ended ~~September 30, 2017~~March 31, 2018 to ~~$93.7~~$70.3 million compared to ~~$66.0~~$77.7 million for the same period in ~~2016.~~2017. The ~~increase~~decrease in voyage revenues was predominantly driven by the ~~23% increase~~20% decrease in the number of voyage days, which were ~~4,133~~2,945 in the ~~third~~first quarter of ~~2017~~2018 as compared to ~~3,364~~3,668 in the ~~third~~first quarter of ~~2016.~~2017. The decrease in voyage days was due in large part to COAs that began in the three months ended March 31, 2017 and were completed prior to the first quarter of 2018. However, market improvement from the three months ended March 31, 2017 to the three months ended March 31, 2018 translated into better net results for the current period, as highlighted above. Voyage revenues were also ~~bolstered~~impacted by the ~~increased rates~~adoption of ASC 606 which resulted in a net increase of approximately $2.6 million or $739 per day of TCE revenue for the ~~drybulk market over the comparable quarter.~~three months ended March 31, 2018.

Charter revenues ~~which represent 12% of total revenue,~~ increased to ~~$13.3~~$8.7 million from ~~$4.8~~$6.8 million, or ~~178%~~28%, for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the same period in ~~2016.~~2017. The increase in charter revenues was due to improvement in drybulk market ~~rates, as indicated above, and to an increase in the number of time charter days.~~rates. Time charter days were ~~up 93%~~down 14% to ~~1,172~~579 in the ~~third~~first quarter of ~~2017~~2018 from ~~607~~674 in the ~~third~~first quarter of ~~2016. As the dry bulk~~2017.

market improves, the Company increases its chartered-in profile and looks for additional spot opportunities. In the event a cargo does not present itself, the Company will sub-let the vessel on time-charter to another operator for those days remaining under the contract.

Voyage Expenses

Voyage expenses for the three months ended ~~September 30, 2017~~March 31, 2018 were ~~$44.3~~$30.2 million, compared to ~~$29.2~~$41.3 million for the same period in ~~2016, an increase~~2017, a decrease of approximately ~~52%~~27%. The ~~increase~~decrease in voyage expense was due to the ~~23% increase~~20% decrease in voyage days, as discussed above and to the $6.3 million increase in the cost of bunker fuel consumed. The $6.3 million increase in the cost of bunker fuel consumed was due to both the increase in the number of voyage days, as noted above, and to an increase in price. The average price paid for inventory increased 36% in the third quarter of 2017 over the third quarter of 2016. Bunker prices expressed on a voyage day basis were approximately $4,928 in the three months ended September 30, 2017 as compared to $4,189 in the three months ended September 30, 2016. Port expenses increased $2.5 million or 18%, due to the increase in the number of voyage days and ports visited.above. In addition, the Company incurred relet expenses of ~~$3.7~~$3.4 million in the ~~third~~first quarter of 2017, but ~~did not~~incurred only minimal relet ~~any cargoes~~expense in the same period of ~~2016.~~2018. The Company will opportunistically relet a cargo depending on market conditions and as a risk management tool. Voyage expenses were also impacted by the adoption of ASC 606 which resulted in a net increase in voyage expenses of approximately $0.9 million.

Charter Hire Expenses

Charter hire expenses for the three months ended ~~September 30, 2017~~March 31, 2018 were ~~$34.8~~$22.7 million, compared to ~~$19.7~~$23.2 million for the same period in ~~2016.~~2017. The number of chartered-in days ~~increased 39%~~decreased 33% from ~~2,704~~2,916 days in the three months ended ~~September 30, 2016~~March 31, 2017 to ~~3,763~~1,959 days for the three months ended ~~September 30, 2017. Further,~~March 31, 2018. However, the improving dry bulk market pushed average charter-hire rates paid by the Company up ~~27%~~46% for the three months ended ~~September 30, 2017~~March 31, 2018 as compared to the same period of ~~2016.~~2017. Charter hire expense as a percentage of total revenue ~~rose from 28%~~remained fairly consistent at 27% in the three months ended ~~September 30, 2016~~March 31, 2017 compared to ~~32%~~29% in the three months ended ~~September 30, 2017.~~March 31, 2018. The Company continues to operate under its successful strategy of chartering-in primarily for committed contracts. ~~However, demand~~Increasing charter hire rates in the ~~third~~first quarter ~~resulted~~kept the Company from taking longer positions, thereby avoiding potential losses as these increases in ~~a 34% increase~~hire rates outpaced improvements in ~~total shipping days, many of which are performed on chartered-in ships.~~freight rates.

Vessel Operating Expenses

Vessel operating expenses for the three months ended ~~September 30, 2017~~March 31, 2018 were ~~$9.1~~$9.8 million, compared to ~~$7.5~~$8.6 million in the comparable period in ~~2016,~~2017, an increase of approximately ~~22%~~15%. The increase in vessel operating expenses is due to the ~~21%~~12% increase in owned and bareboat charter days, which were ~~1,748~~1,800 in the three months ended ~~September 30, 2017~~March 31, 2018 as compared to ~~1,448~~1,608 in the three months ended ~~September 30, 2016.~~March 31, 2017. This increase is due to the addition of two ~~newbuildings delivered~~vessels acquired on ~~January 7,~~June 14, 2017 and ~~a vessel acquisition on June 14,~~December 21, 2017. Vessel operating expenses per day were $5,472 for the three months ended March 31, 2018 and $5,343 for the three months ended March 31, 2017.

General and Administrative Expenses

General and administrative expenses increased from ~~$3.2~~$3.5 million in the three months ended ~~September 30, 2016~~March 31, 2017 to ~~$4.8~~$4.1 million in the three months ended ~~September 30, 2017. The increase~~March 31, 2018. This is due to an increase in ~~incentive~~accrued bonus compensation and ~~payroll related expenses.~~director fees.

Depreciation and amortization

The increase in depreciation and amortization is due to the increase in the number of vessels owned and operated under bareboat charters. Ownership days increased 12% due to acquisitions in June and December of 2017, as noted above.

Loss on sale and leaseback of vessels

The Company incurred a $4.3 million loss on the sale and subsequent leaseback of the m/v Bulk Destiny in three months ended March 31, 2017 but did not incur any such losses for the corresponding period of 2018.

Income from Operations

The Company had income from operations of ~~$10.0 million for the three months ended September 30, 2017 as compared to~~ $7.8 million for the three months ended ~~September 30, 2016.~~March 31, 2018 as compared to $0.4 million for the three months ended March 31, 2017. This is primarily due to the ~~increase~~loss on sale and leaseback in ~~total shipping days~~January 2017, discussed above, and to improvement in the dry bulk market rates over the same period of ~~2016.~~2017.

Interest Expense

The increase in interest expense is predominantly due to financing of the m/v Bulk ~~Destiny under a capital lease~~Freedom in June 2017 and ~~to the acquisition of~~ the m/v Bulk ~~Endurance, both~~Pride in ~~January 2017, and to the purchase of the Bulk Freedom in June~~December 2017.

~~Other Income (Expense)~~Unrealized (loss) gain on derivative instruments

~~Other income represents~~The Company incurred losses on FFAs of approximately $314,000 and losses on bunker swaps of approximately $248,000 in the ~~$0.9 million settlement~~three months ended March 31, 2018 as compared to gains on FFAs of ~~a non-performance claim that had not previously been recognized,~~approximately $2,728,000 and ~~to income from an unconsolidated subsidiary.~~losses on bunker swaps of

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~Revenues~~

~~Total revenue for~~approximately $758,000 in the ~~nine~~three months ended ~~September 30, 2017 was $282.9 million, compared to $171.7 million for the same period~~March 31, 2017. These result from changes in 2016, an increase of 65%. The total number of shipping days increased 39% to 14,309 for the nine months ended September 30, 2017, compared to 10,290 for the same period in 2016. The average TCE rate was $11,093 per day for the nine months ended September 30, 2017, compared to $9,451 per day for same period in 2016. The revenue increase is predominantly due to the increase in total shipping days and to overall improvement in the dry bulk market. The BDI increased 75%, to an average of 1,035 for the nine months ended September 30, 2017 from an average of 591 for the comparable period of 2016.

~~Components of revenue are as follows:~~

Voyage revenues, which represent 89% of total revenue, increased by 56% to $251.6 million for the nine months ended September 30, 2017 compared to $161.5 million for the same period in 2016. The increase in voyage revenues was predominantly driven by the 31% increase in the number of voyage days, which were 11,519 in the nine months ended September 30, 2017 as compared to 8,760 in the same period of 2016. Voyage revenues also reflect the increased rates in the drybulk market over the prior nine-month period.

Charter revenues, which represent 11% of total revenue, increased to $31.3 million from $10.2 million, or 208%, for the nine months ended September 30, 2017 compared to the same period in 2016. The increase in charter revenues was due to improvement in drybulk market rates, as indicated above, and to an increase in the number of time charter days. Time charter days were 2,790 in the nine months ended September 30, 2017 versus 1,530 in the nine months ended September 30, 2016, which is also indicative of the increased demand in the drybulk market. As the dry bulk market improves, the Company increases its chartered-in profile and looks for additional spot opportunities. In the event a cargo does not present itself, the Company will sub-let the vessel on time-charter to another operator for those days remaining under the contract.

~~Voyage Expenses~~

Voyage expenses for the nine months ended September 30, 2017 were $124.2 million, compared to $74.4 million for the same period in 2016, an increase of approximately 67%. The increase in voyage expense was due to the increase in voyage days, as discussed above and to the increase in the cost of bunker fuel consumed. The $19.6 million increase in the cost of bunker fuel consumed of was due to both the increase in the number of voyage days, as noted above, and to an increase in price. The average price paid for inventory increased 45% in the nine months ended September 30, 2017 over the nine months ended September 30, 2016. Bunker prices expressed on a voyage day basis were approximately $3,287 in the nine months ended September 30, 2017 as compared to $2,082 in the nine months ended September 30, 2016. Port expenses increased $8.4 million or 35%, due to the increase in the number of voyage days and the consequent number of ports visited.

~~Charter Hire Expenses~~

Charter hire expenses for the nine months ended September 30, 2017 were $91.1 million, compared to $43.2 million for the same period in 2016. The number of chartered-in days increased 52% from 6,546 days in the nine months ended September 30, 2016 to 9,932 days for the nine months ended September 30, 2017, while the improving market pushed average charter-hire rates paid by the Company up 39% for the nine months ended September 30, 2017 as compared to the same period of 2016. Charter hire expense as a percentage of total revenue rose from 25% in the nine months ended September 30, 2016 to 32% in the nine months ended September 30, 2017. The Company continues to operate under its successful strategy of chartering-in primarily for committed contracts. However, demand in the nine months ended September 30, 2017 resulted in a 39% increase in total shipping days, many of which are performed on chartered-in ships.

~~Vessel Operating Expenses~~

Vessel operating expenses for the nine months ended September 30, 2017 were $26.8 million compared to $22.3 million in the comparable period in 2016, an increase of approximately 20%. The increase in vessel operating expenses is due to the increase in owned and bareboat chartered-in days, which were 5,008 in the nine months ended September 30, 2017 as compared to 3,992 in the nine months ended September 30, 2016. This increase is due to the addition of two newbuildings delivered on January 7, 2017, two vessels under bareboat charter since July 2016 and a vessel acquisition on June 14, 2017. Vessel operating expenses under these bareboat charters are paid by Pangaea. Vessel operating expense expressed on a per day basis decreased to $5,353 for the nine months ended September 30, 2017 from $5,581 for the same period in 2016.

~~General and Administrative Expenses~~

General and administrative expenses increased 25%, from $9.2 million in the nine months ended September 30, 2016 to $11.4 million in the nine months ended September 30, 2017. The change is due to increases in incentive compensation, payroll and related expenses, including an increase in personnel in the corporate offices, employee stock based compensation expense, an increase in Director fees and to an increase in travel and representation expense.

~~Loss on Sale and Leaseback of Vessels~~

The Company sold the m/v Bulk Destiny, one of two ultramax newbuildings delivered on January 7, 2017, and simultaneously chartered-back the vessel under a capital lease financing arrangement with the buyer. At inception of the lease, the Company recognized a loss of $4.3 million representing the difference between the delivered cost and the fair value of the ~~vessel, as determined by independent ship brokers. The Company's joint venture partner absorbed 50% of this loss, which is allocated to non-controlling interests to arrive~~derivatives at ~~net income attributable to Pangaea. The Company also sold~~ the m/v Bulk Beothuk on June 6, 2017 and simultaneously chartered-back the vessel from the buyer under a capital lease. At inception of the lease, the Company recognized a loss of $4.9 million representing the difference between the selling price and the carrying amount of the vessel.

~~Income from Operations~~

The Company has income from operations of $8.5 million for the nine months ended September 30, 2017 as compared to $12.0 million for the nine months ended September 30, 2016. The decrease is due to losses on sale and leaseback transactions totaling $9.3 million, without which there would be adjusted income from operations of $17.8 million. Total revenue increased 65% from $171.7 million for the nine months ended September 30, 2016 to $282.9 million for the nine months ended September 30, 2017, which is due to improvement in the drybulk shipping market and a resulting increase in total shipping days. However, the increase in market rates was met with increasing bunker prices and increasing charter hire rates, as noted above, which lowered operating margins to a limited extent.

~~Interest Expense~~

The increase in interest expense is due to the lease of the m/v Bulk Destiny and the acquisition of the m/v Bulk Endurance, both in January 2017. In addition, the interest rates on certain loans were fixed at higher levels during 2016 and 2017 in order to mitigate the risk of further increases in LIBOR.

~~Unrealized (Loss) Gain on Derivative Instruments, Net~~

The Company entered into numerous freight forward agreements, or FFAs, between November 2016 and the June 2017, in order to manage the risk associated with increasing charter-hire rates due to improvement in the drybulk market. The total gain on these FFAs was approximately $0.7 million for the nine months ended September 30, 2017. There were no open positions and therefore no gain or loss on FFAs in nine months ended September 30, 2016. The Company also enters into fuel swaps to manage the risk associated with fluctuating bunker prices. The loss on these swaps was approximately $0.3 million for the nine months ended September 30, 2017 as compared to a gain of approximately $1.1 million for the nine months ended September 30, 2016.

~~Other Income (Expense)~~

Other income represents the $0.9 million settlement of a non-performance claim that had not previously been reserved, to the recovery of $0.5 million of expenses incurred in a litigation action that was indemnified by third parties, to other reductions in the reserve for uncollectible accounts, and to income from an unconsolidated subsidiary of $0.3 million.

~~Income Attributable to Noncontrolling Interests~~

The decrease in income attributable to noncontrolling interests resulted predominantly from the $4.3 million loss on the sale and leaseback of the m/v Bulk Destiny, of which the former joint venture partner in this entity absorbed 50%. This was offset by an increase in net income of NBHC.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 loss on sale and leaseback of vessel, the estimated future cash flows used in its impairment analysis, the estimated salvage value used in determining depreciation expense and the allowances for doubtful accounts.

Long-lived Assets Impairment Considerations

Long-lived Assets Impairment Considerations.The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the pricing of new vessels. Historically, both charter rates and vessel values tend to be cyclical. The carrying value of each group of vessels (allocated by size, age and major characteristic or trade), which are classified as held and used by the Company, are reviewed for potential impairment when events or changes in circumstances indicate that the carrying value of a particular group may not be fully recoverable. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the group and its eventual disposition is less than its carrying value. This assessment is made at the 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.

The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis include the Company’s estimate of future TCE rates based on current rates under existing charters and contracts. When existing contracts expire, the Company uses an estimated TCE based on actual results and extends these rates out to the end of the vessel’s useful life. TCE rates can be highly volatile, may affect the fair value of the Company’s vessels and may have a significant impact on the Company’s ability to recover the carrying amount of its fleet. Accordingly, the volatility is contemplated in the undiscounted projected net operating cash flow by using a sensitivity analysis based on percent changes in the TCE rates. The Company prepares a series of scenarios in an attempt to capture the range of possible trends and outcomes. Projected net operating cash flows are net of brokerage and address commissions and assume no revenue on scheduled offhire days. The Company uses the current vessel operating expense budget, estimated costs of drydocking and historical general and administrative expenses as the basis for its expected outflows, and applies an inflation factor it considers appropriate. The net of these inflows and outflows, plus an estimated salvage value, constitutes the projected undiscounted future cash flows. If these projected cash flows do not exceed the carrying ~~amount~~value of the asset group, an impairment charge ~~equal to the difference between the carrying amount and the fair value of the group~~ would be recognized.

Liquidity and Capital Resources

Liquidity and Cash Needs

The Company has historically financed its capital requirements with cash flow from operations, proceeds from related party debt, proceeds from long-term debt and capital leases, and, in June 2017, through a private placement of common stock. The Company may consider additional debt and equity financing alternatives in the future. However, if market conditions are negative, 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 ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had working capital of ~~$22.4~~$14.3 million and ~~a working capital deficit of $9.3~~$13.0 million, respectively. The improvement in working capital is due to the acquisition of noncontrolling interest in a consolidated joint venture in January 2017 and the resulting reduction in related party debt, to the increase in cash from proceeds of common stock issuance, to the sale of the m/v Bulk Beothuk, and to cash generated from operations.

Considerations made by management in assessing the Company’s ability to continue as a going concern are its ability to consistently generate positive cash flows from operations, which were approximately ~~$13.7~~$2.8 million and ~~$18.3~~$2.4 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, respectively; $29.2 million in 2017 and ~~2016, respectively;~~ $19.2 million in ~~2016 and $26.0 million in 2015;~~2016; and its ability to procure long-term fixed contract employment (COAs) with new and longstanding customers. In addition, the Company has demonstrated its unique ability to adapt to changing market conditions by changing the chartered-in profile to meet its cargo commitments. For more information on the results of operations, see ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Results of Operations.

Capital Expenditures

The Company’s capital expenditures relate to the purchase and lease of interests in vessels, and capital improvements to its vessels which are expected to enhance the revenue earning capabilities and safety of these vessels. The Company’s owned and leased fleet includes two Panamax drybulk carriers, ~~four~~six Supramax drybulk carriers, two Ultramax Ice-Class 1C, ~~and~~ two Handymax drybulk carriers (both of which are Ice-Class 1A). and one barge. The Company also has a one-third interest in a consolidated joint venture which owns six Panamax Ice-Class 1A drybulk carriers.

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. 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 $1.5 million and $64,000 and expensed drydocking costs of approximately $34,000 and $58,000 in the three months ended March 31, 2018 and 2017, respectively.

Off-Balance Sheet Arrangements

The Company does not have off-balance sheet arrangements at ~~September 30, 2017~~March 31, 2018 or December 31, ~~2016.~~2017.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

The international shipping industry is capital intensive, requiring significant amounts of investment provided in the form of long-term debt. Certain of the Company’s outstanding debt contain floating interest rates that fluctuate with changes in the financial markets and in particular changes in LIBOR. Increasing interest rates could increase the Company’s interest expense and adversely impact its future earnings. In the past, the Company has managed this risk by entering into interest rate swap agreements in which the Company exchanged fixed and variable interest rates based on agreed upon notional amounts. The Company has used such derivative financial instruments as risk management tools and not for speculative or trading purposes. As of September 30, 2017 and December 31, 2016, the Company did not have any open interest rate swap agreements. The Company’s net effective exposure to floating interest rate fluctuations on its outstanding debt was ~~$52.7~~$64.3 million and ~~$46.8~~$66.5 million, respectively, at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

The Company’s interest expense is affected by changes in the general level of interest rates, particularly LIBOR. As an indication of the extent of the Company’s sensitivity to interest rate changes, an increase in LIBOR of 1% would have decreased the Company’s net income and cash flows during each of the ~~nine months~~three month periods ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ by approximately ~~$0.4~~$0.1 million, ~~and $0.6 million, respectively,~~ based on the debt levels at the beginning of each period. The Company expects its sensitivity to interest rate changes to increase in the future if the Company enters into additional floating rate debt agreements in connection with its acquisition of additional vessels.

Forward Freight Agreements

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. During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and the year ended December 31, ~~2016,~~2017, the Company entered into various fuel swap contracts that were not designated for hedge accounting. The aggregate fair value of these fuel swaps at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were assets of ~~approximately $38,000~~$129,000 and ~~$0.3 million,~~$377,000, respectively.

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 ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018.

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.

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

There have been no material changes from the “Risk Factors” previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March ~~23, 2017.~~21, 2018.

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

~~As previously disclosed on a Current Report on Form 8-K, Pangaea Logistics Solutions Ltd. (the “Company”) enteredinto two stock purchase agreements, both dated June 15, 2017 (the “Agreements”), for the sale of an aggregate of approximately $15.0 million of its common shares, par value $0.0001 per share (the “Common Shares~~”), in private placement transactions which are exempt from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof, at a purchase price of $2.25 per share (the “~~Transaction”). One agreement was completed with certain directors, officers and employees of the Company (the “Insider Investors~~”) and was subject to shareholder approval pursuant to NASDAQ Listing Rule 5635(c) and the other agreement was completed with other institutional and other accredited investors. The transaction has closed and the Company issued a total of 6,533,443 Common Shares in connection with the sales under both Agreements. As of November 9, 2017 the Company has 43,795,182 Common Shares issued and outstanding. None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 – Mine Safety Disclosures

None.

Item 5 - Other Information

None.

Item 6 – Exhibits



Exhibit no.	Description	Incorporated By Reference			Filed herewith
		Form	Date	Exhibit

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

31.2	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X

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

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

EX-101.INS	XBRL Instance Document				X

EX-101.SCH	XBRL Taxonomy Extension Schema				X

EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase				X

EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase				X

EX-101.LAB	XBRL Taxonomy Extension Label Linkbase				X

EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase				X

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 ~~November 9, 2017.~~May 10, 2018.



	PANGAEA LOGISTICS SOLUTIONS LTD.

	By:	/s/ Edward Coll
	Edward Coll
	Chief Executive Officer
	(Principal Executive Officer)

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

2829



	2008 common stock dividend			2012 common stock special dividend			2013 common stock dividend		2013 Odyssey and Orion dividend		Total
Balance at December 31, 2015	2,474,125			2,934,357			6,411,540		904,803		12,724,825
Paid in cash	(100,000		)	—			—		—		(100,000		)
Balance at December 31, 2016	2,374,125			2,934,357			6,411,540		904,803		12,624,825
Converted to common shares	(2,374,125		)	(2,010,875		)	—		—		(4,385,000		)
Paid in cash	(100,000		)	(1,001,424		)	—		—		(1,001,424		)
Balance at September 30, 2017	$	—		$	(77,942	)	$	6,411,540	$	904,803	$	7,238,401