Pangaea Logistics Solutions Ltd

Board of Directors and Stockholders

Pangaea Logistic Solutions Ltd.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Pangea Logistics Solutions Ltd. (a Bermuda corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 14, 2024 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Vessel Impairment Analysis

As described further in Note 3 to the financial statements, the Company identified a triggering event which required management to evaluate each vessel asset group for impairment. As a result, an impairment analysis was performed for each vessel asset group to determine whether the estimated undiscounted future cash flows exceed the vessel asset group’s carrying amount. We identified the Company’s vessel impairment analysis as a critical audit matter.

The principal considerations for our determination that the Company’s vessel impairment analysis is a critical audit matter is that the impairment analysis for each vessel asset group requires management to make significant estimates and assumptions related to forecasts of future cash flows, including but not limited to revenue growth rates, projected expenses, drydocking costs and estimated vessel salvage values. Evaluating the reasonableness of these estimates and projections require significant auditor judgment.

Our audit procedures related to the Company’s vessel impairment analysis included the following, among others.

•We tested the design and operating effectiveness of internal controls over the Company's vessel impairment analysis.

•We evaluated the reasonableness of the projected time charter equivalent (TCE) rates and projected expenses, including drydocking costs, used in management's undiscounted cash flow analysis for each vessel asset group for consistency with historical data and changes in the business.

•We agreed the inputs included in management's estimated salvage value calculation to third-party sources.

•We performed sensitivity analyses on the projected revenue, expenses, and useful lives used in the impairment analysis to evaluate the impact on the conclusions reached.

Valuation of Accounts Receivable

As described further in Note 3 to the financial statements, the Company had a significant customer who accounted for 37% of the trade receivable balance as of December 31, 2023. These accounts receivable relate to services performed under a contract of affreightment during 2023. We identified the valuation of the accounts receivable as a critical audit matter.

The principal considerations for our determination that the measurement of the receivable is a critical audit matter is that there is a degree of estimation uncertainty resulting from management judgment of the customer’s ability to meet its remaining payment obligation under the contract. Given the customer’s balance is past due, management qualitatively evaluated whether any credit losses exist, including consideration of alternative funding sources the customer may use to meet the obligation. Management’s qualitative evaluation of the measurement of receivables and the determination of the customer’s ability and intent to remit payment required a high degree of auditor judgment and an increased extent of effort to assess the reasonableness of management’s estimates and assumptions.

Our audit procedures related to the measurement of the receivable included the following, among others.

•We tested the design and operating effectiveness of internal controls over the assessment of the receivable.

•We tested management’s process related to the qualitative assessment and obtained an understanding of the relevant facts and circumstances related to the status of collection

•We confirmed the outstanding balance, intent to pay and the existence and accuracy of agreements with the customer as of December 31, 2023.

•We inspected guarantees from the ultimate parent company of the customer (“Parent”) and financial information of the Parent and corroborated their ability to pay.

•We inspected support for cash collections subsequent to year-end

/s/GRANT THORNTON LLP

We have served as the Company’s auditor since 2013.

Boston, Massachusetts

March 14, 2024

Board of Directors and Stockholders

Pangaea Logistic Solutions Ltd.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Pangaea Logistics Solutions Ltd. (a Bermuda corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 14, 2024 expressed an unqualified on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Our audit of, an opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Pangaea Baltimore LLC, a wholly-owned subsidiary whose financial statements reflect total assets and total revenue constituting less than one percent, respectively, and Pangaea Port Everglades LLC, a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting of one percent, respectively, of the related consolidated financial statements as of and for the year ended December 31, 2023. As indicated in Management’s Report, these subsidiaries were acquired during 2023. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded the internal control over financial reporting of Pangaea Baltimore LLC and Pangaea Port Everglades LLC.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/GRANT THORNTON LLP

Boston, Massachusetts

March 14, 2024