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6-K

Toro Corp. (TORO)

6-K 2023-08-09 For: 2023-06-30
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Added on April 08, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-41561

TORO CORP.

(Translation of registrant’s name into English)

223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒ Form 40-F  ☐

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached to this report on Form 6-K as Exhibits 99.1 and 99.2 are the unaudited consolidated interim financial statements and related management’s discussion and analysis of financial condition and results of operations of Toro Corp. for the six months ended June 30, 2023

Exhibit Index

Exhibit No. Description
99.1 Unaudited Consolidated Interim Financial Statements for the Six Months Ended June 30, 2023
99.2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements 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.

TORO CORP.
Dated: August 9, 2023
By: /s/ Petros Panagiotidis
Petros Panagiotidis
Chairman and Chief Executive Officer

Exhibit 99.1

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Page
Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022, and June 30, 2023 F-2
Unaudited Interim Condensed Consolidated<br><br><br> Statements of Comprehensive Income for the six months ended June 30, 2022, and 2023 F-3
Unaudited Condensed Consolidated Statements of Shareholders’ Equity and Mezzanine Equity for the six months ended June 30,<br> 2022, and 2023 F-4
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022, and 2023 F-5
Notes to Unaudited Interim Condensed Consolidated Financial Statements F-6

F-1

TORO CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2022 and June 30, 2023

(Expressed in U.S. Dollars – except for share data)

​ December 31, June 30,
ASSETS 2022 2023
CURRENT ASSETS:
Cash and cash equivalents $ 41,779,594 $ 127,889,058
Due from related parties, current 3 558,327 4,848,344
Accounts receivable trade, net 10,616,573 4,798,868
Inventories 893,569 857,881
Assets held for sale 5 — 22,668,084
Prepaid expenses and other assets 915,244 1,512,963
Total current assets 54,763,307 162,575,198
​
NON-CURRENT ASSETS:
Vessels, net 3,5 92,486,178 77,783,068
Advances for vessel acquisition 5 — 3,390,000
Restricted cash 6 700,000 350,000
Due from related parties 3 1,708,474 1,126,542
Prepaid expenses and other assets, non-current 5,199,999 1,457,769
Deferred charges, net 4 2,621,145 1,415,756
Total non-current assets 102,715,796 85,523,135
Total assets $ 157,479,103 $ 248,098,333
​
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt, net 6 2,606,302 1,304,917
Accounts payable 1,643,468 4,635,935
Deferred revenue — 440,425
Accrued liabilities 2,269,281 3,621,055
Total current liabilities 6,519,051 10,002,332
​
NON-CURRENT LIABILITIES:
Long-term debt, net 6 10,463,172 4,559,632
Total non-current liabilities 10,463,172 4,559,632
​
Commitments and contingencies 10
​
MEZZANINE EQUITY:
1.00% Series A fixed rate cumulative perpetual<br> convertible preferred shares: 0 and 140,000 shares issued and outstanding as of December 31, 2022, and June 30, 2023, respectively, aggregate liquidation preference of 0 and 140,000,000 as of December 31, 2022 and June 30, 2023,<br> respectively 8 — 118,103,169
Total mezzanine equity — 118,103,169
SHAREHOLDERS’ EQUITY:
Former Net Parent Company investment 140,496,912 —
Common shares, 0.001 par value; 1,000 and 3,900,000,000 shares<br> authorized; 1,000 and 17,961,009<br> shares issued; 1,000 and 17,961,009<br> shares outstanding as of December 31, 2022, and June 30, 2023 respectively 7 — 17,961
Preferred shares, 0.001 par value: 0 and 100,000,000 shares<br> authorized; Series B preferred shares: 0 and 40,000 shares issued and outstanding as of December 31, 2022<br> and June 30, 2023, respectively 7 — 40
Additional paid-in capital — 56,795,721
(Accumulated deficit)/Retained Earnings (32 ) 58,619,478
Total shareholders’ equity 140,496,880 115,433,200
Total liabilities, mezzanine equity and shareholders’ equity $ 157,479,103 $ 248,098,333

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-2

TORO CORP.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the six months ended June 30, 2022 and 2023

(Expressed in U.S. Dollars – except for share data)

​ Six months Ended<br><br> <br>June 30, Six months Ended<br><br> <br>June 30,
​ 2022 2023
REVENUES:
Time charter revenues 12 $ 4,836,315 $ 5,519,288
Voyage charter revenues 12 29,592,279 389,119
Pool revenues 12 8,180,973 50,104,276
Total vessel revenues 42,609,567 56,012,683
​
EXPENSES:
Voyage expenses (including 530,089 and 715,183 to related party for the six months ended June 30, 2022, and 2023, respectively) 3,13 (18,669,842 ) (1,242,116 )
Vessel operating expenses 13 (10,807,764 ) (11,190,295 )
Management fees to related parties 3 (1,384,650 ) (1,657,500 )
Recovery of provision for doubtful accounts — 266,732
Depreciation and amortization 4,5 (3,571,444 ) (3,785,684 )
General and administrative expenses (including 186,335 and 1,102,777 to<br> related party for the six months June 30, 2022, and 2023, respectively) 3 (640,156 ) (1,841,586 )
Gain on sale of vessels 3,5 — 40,548,776
Total expenses $ (35,073,856 ) $ 21,098,327
​
Operating income $ 7,535,711 $ 77,111,010
​
OTHER (EXPENSES)/INCOME:
Interest and finance costs 14 (388,385 ) (668,815 )
Interest income 1,412 1,210,769
Foreign exchange losses (11,129 ) (21,352 )
Total other (expenses)/ income, net $ (398,102 ) $ 520,602
​
Net income, before taxes $ 7,137,609 $ 77,631,612
Income taxes (480,476 ) (290,625 )
Net income and comprehensive income $ 6,657,133 $ 77,340,987
Dividend on Series A Preferred Shares 3,11 — (451,111 )
Deemed dividend on Series A Preferred Shares 8 — (931,034 )
Net income attributable to common shareholders $ 6,657,133 $ 75,958,842
Earnings per common share, basic 11 0.70 5.13
Earnings per common share, diluted 11 0.12 1.28
Weighted average number of common shares, Basic 11 9,461,009 14,810,147
Weighted average number of common shares, Diluted 11 54,143,655 59,492,793

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-3

TORO CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND MEZZANINE EQUITY

For the six months ended June 30, 2022 and 2023

(Expressed in U.S. Dollars – except for share data)

Mezzanine equity
# of<br><br> <br>Series B<br><br> <br>Preferred<br><br> <br>Shares Par<br><br> <br>Value of<br><br> <br>Preferred<br><br> <br>Series B shares # of<br><br> <br>Common<br><br> <br>shares Par<br><br> <br>Value of<br><br> <br>Common<br><br> <br>Shares Additional<br><br> <br>Paid-in<br><br> <br>capital Former<br><br> <br>Parent<br><br> <br>Company<br><br> <br>Investment (Accumulated<br><br> <br>deficit)/<br><br> <br>Retained<br><br> <br>Earnings Total<br><br> <br>Shareholders’<br><br> <br>Equity # of<br><br> Series A<br><br> <br>Preferred<br><br> <br>Shares Mezzanine<br><br> <br>Equity
Balance, December 31, 2021 — — — — — 104,031,170 — 104,031,170 — —
Net income and comprehensive income — — — — — 6,657,133 — 6,657,133 — —
Net decrease in former Parent Company Investment — — — — — (1,994,004 ) — (1,994,004 ) — —
Balance, June 30, 2022 — — — — — 108,694,299 — 108,694,299 — —
Balance, December 31, 2022 — — — — — 140,496,912 (32 ) 140,496,880 — —
Net income and comprehensive income — — — — — 17,339,332 60,001,655 77,340,987 — —
Net increase in Former Parent Company investment — — — — — 211,982 — 211,982 — —
Capitalization at spin off, including Issuance of capital and preferred stock, net of costs (Note 8) 40,000 40 9,461,009 9,461 38,156,985 (158,048,226 ) — (119,881,740 ) 140,000 117,172,135
Issuance of common shares pursuant to private placement — — 8,500,000 8,500 18,638,736 — — 18,647,236 — —
Dividend on Series A preferred shares — — — — — — (451,111 ) (451,111 ) — —
Deemed dividend on Series A preferred shares (Note 8) — — — — — — (931,034 ) (931,034 ) — 931,034
Balance, June 30, 2023 40,000 40 17,961,009 17,961 56,795,721 — 58,619,478 115,433,200 140,000 118,103,169

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-4

TORO CORP.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2022, and 2023

(Expressed in U.S. Dollars)

Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
​ Note 2022 2023
Cash Flows (used in)/provided by Operating Activities:
Net income $ 6,657,133 $ 77,340,987
Adjustments to reconcile net income to net cash (used in)/provided by Operating activities:
Depreciation and amortization 4,5 3,571,444 3,785,684
Amortization of deferred finance charges 14 62,909 115,074
Gain on sale of vessels 5 — (40,548,776 )
Changes in operating assets and liabilities:
Accounts receivable trade, net (5,416,468 ) 5,817,705
Inventories (2,924,444 ) (66,884 )
Due from/to related parties 2,111,830 (4,035,130 )
Prepaid expenses and other assets (1,264,091 ) 3,144,511
Other deferred charges (38,889 ) —
Accounts payable 1,727,697 3,039,191
Accrued liabilities 550,692 751,189
Deferred revenue (542,347 ) 440,425
Dry-dock costs paid (503,755 ) (1,447,121 )
Net Cash provided by Operating Activities 3,991,711 48,336,855
​
Cash flow (used in)/provided by Investing Activities:
Vessel acquisitions and other vessel improvements 5 (479,188 ) (37,778,507 )
Advances for vessel acquisition — (3,390,000 )
Net proceeds from sale of vessel — 69,102,804
Net cash (used in)/provided by Investing Activities (479,188 ) 27,934,297
​
Cash flows (used in)/provided by Financing Activities:
Net (decrease)/ increase in Former Parent Company Investment (1,994,004 ) 211,982
Issuance of Series B Preferred shares 7 — 40
Issuance of common shares pursuant to private placement — 19,415,001
Payment of Dividend Preferred Shares A — (151,667 )
Repayment of long-term debt 6 (1,700,000 ) (7,320,000 )
Payments related to Spin-Off 3 — (2,667,044 )
Net cash (used in)/provided by Financing Activities (3,694,004 ) 9,488,312
​
Net (decrease)/ increase in cash, cash equivalents, and restricted cash (181,481 ) 85,759,464
Cash, cash equivalents and restricted cash at the beginning of the period 5,663,411 42,479,594
Cash, cash equivalents and restricted cash at the end of the period $ 5,481,930 128,239,058
​
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents $ 4,781,930 $ 127,889,058
Restricted cash, non-current 700,000 350,000
Cash, cash equivalents, and restricted Cash 5,481,930 128,239,058

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-5

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

1. Basis of Presentation and General information

Toro Corp. (“Toro”) was formed on July 29, 2022 as a wholly owned subsidiary of Castor Maritime Inc. (“Castor”, or the “Former Parent Company”) under the laws of the Republic of the Marshall Islands under the name Tankco Shipping Inc. and changed its name to Toro Corp. on September 29, 2022. On March 7, 2023 (the “Distribution Date”), Castor completed the Spin-Off of Toro based on the terms approved by the independent disinterested directors of Castor following the recommendation of its special committee of independent disinterested directors. In the Spin-Off, Castor separated its tanker fleet from its dry bulk and container fleet by, among other actions, contributing to Toro its interest in the subsidiaries comprising its tanker fleet, each owning one tanker vessel and Elektra Shipping Co. in exchange for (i) 9,461,009 common shares of Toro, (ii) the issuance to Castor of 140,000 1.00% Series A fixed rate cumulative perpetual convertible preferred shares of Toro (the “Series A Preferred Shares”) having a stated amount of $1,000 per share and a par value of $0.001 per share and (iii) the issuance at par to Pelagos Holdings Corp, a company controlled by the Toro’s Chairman and Chief Executive Officer, of 40,000 Series B preferred shares of Toro, par value $0.001 per share (the “Series B Preferred Shares”). Toro’s common shares were distributed on March 7, 2023 pro rata to the shareholders of record of Castor as of February 22, 2023 at a ratio of one Toro common share for every ten Castor common shares. The foregoing transactions are referred to collectively herein as the “Spin-Off”. Toro began trading on the Nasdaq Capital Market (the “Nasdaq”), under the symbol “TORO”.

In addition, Toro entered into various agreements effecting the separation of its business from Castor including a Contribution and Spin-Off Distribution Agreement entered into by Toro and Castor on February 24, 2023 (the “Contribution and Spin-Off Distribution Agreement”), pursuant to which, among other things, (i) Castor agreed to indemnify Toro and its vessel-owning subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries Castor retained after the Distribution Date and Toro agreed to indemnify Castor for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to it or its vessel-owning subsidiaries, and (ii) Toro agreed to replace Castor as guarantor under the $18.0 senior secured credit facility with Alpha Bank S.A. (the “$18.0 Million Term Loan Facility”) upon completion of the Spin-Off. The Contribution and Spin-Off Distribution Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between Castor and Toro and provides Castor with certain registration rights relating to Toro’s common shares, if any, issued upon conversion of the Series A Preferred Shares issued to Castor in connection with the Spin-Off. Following the successful completion of the Spin Off on March 7, 2023, Toro reimbursed Castor for expenses related to the Spin-Off that were incurred by Castor, except for any of these expenses that were incurred or paid by any of Toro’s subsidiaries after March 7, 2023.

The Spin-off has been accounted for as a transfer of business among entities under common control. Accordingly, these accompanying consolidated financial statements of the Company have been presented as if the subsidiaries  were consolidated subsidiaries of the Company for all periods presented and using the historical carrying costs of the assets and the liabilities of the subsidiaries listed below, from their dates of incorporation. As a result, the accompanying consolidated financial statements include the accounts of Toro and its wholly owned subsidiaries (collectively, the “Company”).

The Company is currently engaged in the worldwide transportation of crude oil, refined petroleum products and liquefied petroleum gas through its vessel-owning subsidiaries.

Castor Ships S.A., a corporation incorporated under the laws of the Republic of the Marshall Islands (“Castor Ships”), a related party controlled by Toro’s Chairman and Chief Executive Officer, Petros Panagiotidis, provides ship management and chartering services to the vessels owned the Company’s vessel-owning subsidiaries with effect from July 1, 2022. Such services are provided through subcontracting agreements with unrelated third-party managers, entered into with the Company’s consent, for all of the Company’s vessels. During the period ended December 31, 2021 and until June 30, 2022, Castor Ships provided only commercial ship management and chartering services to such subsidiaries. As a part of the Spin-Off, the Company entered into a master management agreement with Castor Ships with respect to its vessels in substantially the same form as Castor’s Master Management Agreement previously in place for its vessels. The vessel management agreements with Castor Ships previously entered into for each of the vessels by the applicable vessel-owning subsidiary remain in effect for each such vessel. Upon the acquisition of the LPG carrier vessels (Note 5), the relevant vessel owning subsidiaries entered into management agreements with Castor Ships on substantially the same terms as the existing vessel-owning subsidiaries.

F-6

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

1. Basis of Presentation and General information: (continued)

Pavimar S.A., a corporation incorporated under the laws of the Republic of the Marshall Islands (“Pavimar”) and related party controlled by the sister of Petros Panagiotidis, Ismini Panagiotidis, provided technical, crew and operational management services to such vessels in the period ended December 31, 2021 and until June 30, 2022. Effective July 1, 2022, the technical management agreements entered into between Pavimar and the Company’s vessel owning subsidiaries were terminated by mutual consent.

The subsidiaries which are included in the Company’s consolidated financial statements for the periods presented are listed below.

Consolidated vessel owning subsidiaries:

Company Country of<br><br> <br>incorporation Date of<br><br> <br>incorporation Vessel Name DWT Year<br><br> <br>Built Delivery date<br><br> <br>to Vessel<br><br> <br>owning company
1 Gamora Shipping Co. (“Gamora”) Marshall Islands 01/13/2021 M/T Wonder Sirius 115,341 2005 March 22, 2021
2 Starlord Shipping Co. (“Starlord”) Marshall Islands 04/15/2021 M/T Wonder Vega 106,062 2005 May 21, 2021
3 Hawkeye Shipping Co. (“Hawkeye”) Marshall Islands 04/27/2021 M/T Wonder Avior 106,162 2004 May 27, 2021
4 Vision Shipping Co. (“Vision”) Marshall Islands 04/27/2021 M/T Wonder Mimosa 36,718 2006 May 31, 2021
5 Colossus Shipping Co. (“Colossus”) Marshall Islands 04/27/2021 M/T Wonder Musica 106,290 2004 June 15, 2021
6 Xavier Shipping Co. (“Xavier”) Marshall Islands 04/27/2021 M/T Wonder Formosa 36,660 2006 June 22, 2021
7 Zatanna Shipping Co. (“Zatanna”) Marshall Islands 05/02/2023 LPG Dream Terrax 4,743 2020 May 26, 2023
8 Starfire Shipping Co. (“Starfire”) Marshall Islands 05/02/2023 LPG Dream Arrax 4,753 2015 June 14, 2023

Consolidated non-vessel owning subsidiaries:

1 Toro RBX Corp. (“Toro RBX”)^^^(1)^
2 Elektra Shipping Co. (“Elektra”)^(2)^
3 Rocket Shipping Co. (“Rocket”) ^(3)^
4 Drax Shipping Co. (“Drax”) ^(4)^
(1) Incorporated under the laws of the Marshall Islands on October 3, 2022, this entity serves as the cash manager of the Company’s subsidiaries with effect from March 7, 2023.
--- ---
(2) Incorporated under the laws of the Marshall Islands on April 27, 2021, no longer owns any vessel following the sale of the M/T Wonder Arcturus on May 9,<br> 2022, for a gross sale price of $13.15 million and delivery of such vessel to an unaffiliated third-party on July 15, 2022.
--- ---
(3) Incorporated under the laws of the Marshall Islands on January 13, 2021, no longer<br> owns any vessel following the sale of the M/T Wonder Polaris on May 18, 2023, for a gross sale price of $34.5 million and delivery of such vessel to an unaffiliated<br> third-party on June 26, 2023.
--- ---
(4) Incorporated under the laws of the Marshall Islands on November 22, 2021, no longer<br> owns any vessel following the sale of the M/T Wonder Bellatrix on May 12, 2023, for a gross sale price of $37.0 million and delivery of such vessel to an<br> unaffiliated third-party on June 22, 2023.
--- ---

F-7

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

1. Basis of Presentation and General information: (continued)

Consolidated subsidiaries formed to acquire vessels:

1 Cyborg Shipping Co. (“Cyborg”) ^(1)^
2 Nightwing Shipping Co. (“Nightwing”) ^(2)^
(1) Incorporated under the laws of the Marshall Islands on May 2, 2023, this<br> entity is formed to acquire a 2015<br> Japanese-built 5,000 cbm LPG carrier from an unaffiliated third party for a purchase price of $17.0 million (Note 5).
--- ---
(2) Incorporated under the laws of the Marshall Islands on May 2, 2023, this<br> entity is formed to acquire a 2015 Japanese-built 5,000 cbm LPG carrier from an unaffiliated third<br> party for a purchase price of $17.0 million (Note 5).
--- ---

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These statements and the accompanying notes should be read in conjunction with the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on March 8, 2023 (the “2022 Annual Report”).

The accompanying interim condensed consolidated financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of its condensed consolidated financial position and results of operations for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year.

2. Significant Accounting Policies and Recent Accounting Pronouncements:

A discussion of the Company’s significant accounting policies can be found in the combined-carve out financial statements for the year ended December 31, 2022, included in the Company’s 2022 Annual Report. Apart from the below, there have been no material changes to these policies in the six-month period ended June 30, 2023.

New significant accounting policies adopted during the six months ended June 30, 2023

Principles of consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The consolidated financial statements include the accounts of Toro and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Toro, as the holding company, determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity. Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810 “Consolidation”, a voting interest entity is an entity in which the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, the equity holders have all the characteristics of a controlling financial interest and the legal entity is structured with substantive voting rights. The holding company consolidates voting interest entities in which it owns all, or at least a majority (generally, greater than 50%) of the voting interest. Variable interest entities (“VIE”) are entities, as defined under ASC 810, that in general either have equity investors with non-substantive voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. The holding company has a controlling financial interest in a VIE and is, therefore, the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. A VIE should have only one primary beneficiary which is required to consolidate the VIE. A VIE may not have a primary beneficiary if no party meets the criteria described above. The Company evaluates all arrangements that may include a variable interest in an entity to determine if it is the primary beneficiary, and would therefore be required to include assets, liabilities, and operations of a VIE in its consolidated financial statements.

F-8

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

2. Significant Accounting Policies and Recent Accounting<br> Pronouncements: (continued)

Earnings per common share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the relevant period. Dividends on cumulative redeemable perpetual preferred shares reduce the income available to common shareholders, (whether or not earned). Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted at the beginning of the periods presented, or issuance date, if later. Diluted earnings attributable to common shareholders per common share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding plus the dilutive effect of convertible securities during the applicable periods. The if converted method is used to compute the dilutive effect of shares which could be issued upon conversion of the convertible preferred shares. For purposes of the if converted calculation, the conversion price of convertible preferred shares is based on the fixed conversion price or on the average market price when the number of shares that may be issued is variable. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share.

Recent Accounting Pronouncements:

There are no recent accounting pronouncements the adoption of which is expected to have a material effect on the Company’s unaudited interim consolidated condensed financial statements in the current period.

3. Transactions with Related Parties:

During the six months ended June 30, 2022, and the six months ended June 30, 2023, the Company incurred the following charges in connection with related party transactions, which are included in the accompanying unaudited interim condensed consolidated statements of comprehensive income:

​ Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
​ 2022 2023
Management fees-related parties
Management fees – Pavimar (b) $ 977,400 $ —
Management fees – Castor Ships (a) 407,250 1,657,500
​
Included in Voyage expenses
Charter hire commissions – Castor Ships (a) $ 530,089 $ 715,183
​
Included in General and administrative expenses
Administration fees – Castor Ships (a) $ 186,335 $ 1,102,777
Included in Gain on sale of vessels
Sale & purchase commission – Castor Ships (a) $ — $ 715,000
Included in Vessels’ cost
Sale & purchase commission – Castor Ships (a) $ — $ 368,150

F-9

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

3. Transactions with Related Parties: (continued)

As of December 31, 2022, and June 30, 2023, balances with related parties consisted of the following:

December 31,<br><br> <br>2022 June 30,<br><br> <br>2023
Assets:
Due from Castor Ships (a) – current $ 558,327 $ 5,175,390
Due from Castor Ships (a) – non-current 1,708,474 1,126,542
Liabilities:
Due to Former Parent Company (d) – current $ — $ 327,046
(a) Castor Ships:
--- ---

During the six-month period ended June 30, 2022, Castor Ships provided the Company’s subsidiaries with commercial ship management, chartering and administrative services, including, but not limited to, securing employment for the vessels, arranging and supervising the vessels’ commercial functions, handling all vessel sale and purchase transactions, undertaking related shipping project and management advisory and support services, as well as other associated services requested from time to time by the Company’s subsidiaries (the “Ship Management Agreements”). In exchange for these services, the Company’s subsidiaries paid Castor Ships (i) a daily fee of $250 per vessel for the provision of the services under the Ship Management Agreements, (ii) a commission of 1.25% on all charter agreements arranged by Castor Ships and (iii) a commission of 1% on each vessel sale and purchase transaction.

Effective July 1, 2022, Castor entered into an Amended and Restated Master Management Agreement with Castor Ships. Under such agreement, Castor Ships has agreed to provide the Company  with a broad range of management services such as crew management, technical management, operational employment management, insurance management, provisioning, bunkering, accounting and audit support services, commercial, chartering and administrative services, including, but not limited to, securing employment for the Company’s fleet, arranging and supervising the vessels’ commercial operations, providing technical assistance where requested in connection with the sale of a vessel, negotiating loan and credit terms for new financing upon request and providing general corporate and administrative services, among other matters, which it may choose to subcontract to other parties at its discretion. Castor Ships shall generally not be liable to the Company for any loss, damage, delay, or expense incurred during the provision of the foregoing services, except insofar as such events arise from Castor Ships or its employees’ fraud, gross negligence, or willful misconduct (for which our recovery will be limited to two times the Flat Management Fee, as defined below).

Until March 7, 2023, in exchange for these services, the Company, including the subsidiaries, paid Castor Ships (i) a flat quarterly management fee in the amount of $0.75 million for the management and administration of their business (the “Flat Management Fee”), (ii) a commission of 1.25% on all gross income received from the operation of their vessels, and (iii) a commission of 1% on each consummated sale and purchase transaction. In addition, each of the Company’s subsidiaries agreed to pay Castor Ships a daily fee of $975 per vessel for the provision of commercial and technical ship management services provided under the ship management agreements (the “Ship Management Fee”). The Ship Management Fee and Flat Management Fee will be adjusted annually for inflation on each anniversary of the effective date of the Amended and Restated Master Management Agreement. The Company’s subsidiaries will also reimburse Castor Ships for extraordinary fees and costs, such as the costs of extraordinary repairs, maintenance, or structural changes to their vessels. The Amended and Restated Master Management Agreement has a term of eight years from its effective date and this term automatically renews for a successive eight-year term on each anniversary of the effective date, starting from the first anniversary of the effective date, unless the agreements are terminated earlier in accordance with the provisions contained therein, in which case the payment of a termination fee equal to seven times the total amount of the Flat Management Fee calculated on an annual basis may be due in certain circumstances. As part of the Spin-Off, on March 7, 2023, Toro entered into a master management agreement with Castor Ships with respect to its vessels in substantially the same form as Castor’s Amended and Restated Master Management Agreement.

F-10

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

3. Transactions with Related Parties: (continued)

As of June 30, 2023, in accordance with the provisions of the Amended and Restated Master Management Agreement, Castor Ships had subcontracted to three third-party ship management companies the technical management of all the Company’s vessels. Castor Ships pays, at its own expense, the tanker third-party technical management companies a fee for the services it has subcontracted to them, without any additional cost to Toro.

During the six months ended June 30, 2022, and the six months ended June 30, 2023, the Company’s subsidiaries were charged

      the following fees and commissions by Castor Ships \(i\) management fees amounting to $407,250 and $1,657,500, respectively, which are included in Management fees to related parties in the accompanying unaudited interim condensed consolidated
      statements of comprehensive income, \(ii\) charter hire commissions amounting to $530,089  and $715,183, respectively, which are included in ‘Voyage expenses’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income and \(iii\) sale and purchase commissions
        amounting to $0 and $1,083,150,
        respectively, comprising of \(a\) $715,000, related to the sale of the vessel M/T Wonder Bellatrix
          and M/T Wonder Polaris and \(b\) $368,150 related to the acquisition of the vessel LPG
          Dream Terrax and LPG Dream Arrax \(Note 5\).

In addition, until March 7, 2023, part of the general and administrative expenses incurred by Castor has been allocated on a pro rata basis within General and administrative expenses of the Company based on the proportion of the number of ownership days of the Company’s subsidiaries’ vessels to the total ownership days of Castor’s fleet. These expenses consisted mainly of administration costs charged by Castor Ships, investor relations, legal, audit and consultancy fees. During the six months ended June 30, 2022 and the period from January 1 through March 7, 2023 the above mentioned administration fees charged by Castor Ships to Castor that were allocated to the Company amounted to $186,335 and $144,445, respectively and are included in ‘General and administrative expenses’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income. For the period of March 7 through June 30, 2023, the Company recognized as pro rata allocation of days of Flat Management Fee in the amount of $985,333 which is included in ‘General and administrative expenses’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income. As a result, in the six months ended June 30, 2023 and in the same period of 2022, the aggregate amount of $1,102,777 and the amount of $186,335, respectively, are included in ‘General and administrative expenses’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

The Amended and Restated Master Management Agreement also provides for advance funding equal to one month of vessel daily operating costs to be deposited with Castor Ships as a working capital guarantee, refundable in case a vessel is no longer under Castor Ship’s management.

As of

        June 30, 2023, the total working capital guarantee advances amounted to $1,126,542, comprising of working capital guarantee advances
        to Castor Ships of $826,542 and working capital guarantee deposits related to third party manager amounting to $300,000, which

are presented in ‘Due from related parties, non-current’ in the accompanying unaudited condensed consolidated balance sheets. As of June 30, 2023 the amount ‘Due from related parties, current’ of $5,175,390 represents working capital guarantee deposits relating to third party managers and operating expense payments made on behalf of the Company in excess of amounts advanced.

(b) Pavimar:

During the six months ended June 30, 2022, Pavimar provided the Company’s vessel-owning subsidiaries with a wide range of shipping services, including crew management, technical management, operational management, insurance management, provisioning, bunkering, vessel accounting and audit support services, which it could choose to subcontract to other parties at its discretion (the “Technical Management Agreements”) in exchange for which Pavimar was paid a daily fee of $600 per vessel. Effective July 1, 2022, the technical management agreements entered into between Pavimar and the Company’s tanker vessel owning subsidiaries were terminated by mutual consent. In connection with such termination, Pavimar and the tanker vessel owning subsidiaries agreed to mutually discharge and release each other from any past and future liabilities arising from the respective agreements.

F-11

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

3. Transactions with Related Parties: (continued)

Following the termination of the Technical Management Agreements, as of December 31, 2022,  there are no remaining obligations from Pavimar to the Company.

During the six months ended June 30, 2022 and the six months ended June 30, 2023, management fees under the Technical Management Agreements amounted to $977,400 and $0, respectively, and are separately presented in ‘Management fees to related parties’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

(c) Pool Agreement:

In the period between September 30, 2022, and December 12, 2022, all Aframax/LR2 tanker vessels, entered into a series of

        separate agreements with V8 Pool Inc., a member of Navig8 Group of companies, for the participation of the vessels in the V8 plus pool \(the “V8 Plus Pool”\), a pool operating Aframax tankers aged fifteen \(15\) years or more. In February 2023, the agreement relating to the M/T Wonder Sirius’s
          participation in the V8 Plus Pool was terminated and the vessel commenced a period time charter. The V8 Plus Pool is managed by V8 Plus Management Pte. Ltd., a company in which the Company’s Chairman and Chief Executive Officer, Petros
          Panagiotidis, has a minority equity interest. Following the sales of M/T Wonder Bellatrix and M/T Wonder Polaris in the second quarter of 2023, and the
          announced sales of M/T Wonder Avior and M/T Wonder Musica \(Note 5\), which were delivered to their new owners during the third quarter of 2023, and
          consequently the termination of the respective pool agreements with the V8 Plus Pool, the only remaining working capital deposit is related to M/T Wonder Vega and amounts to $0.8 million which is presented in ‘Prepaid expenses and other assets, non-current’ in the accompanying unaudited condensed consolidated balance
          sheet.
(d) Former Parent Company:

In connection with the Spin-Off as discussed in Note 1, on March 7, 2023, Toro issued 140,000 1.00% Series A Preferred Shares to Castor having a stated amount of $1,000 per share and a par value of $0.001 per share, refer Note 8. The amount of accrued dividend on Series A Preferred Shares due to Castor as of June 30, 2023 was $299,444 and is presented net in ‘Due from related parties, current’ in the accompanying unaudited condensed consolidated balance sheet.

Following the Spin-Off, the Company reimbursed Castor $2,667,044 for expenses related to the Spin-Off that were incurred by Castor. As of June 30, 2023, the outstanding expenses to be reimbursed by the Company amounted to $27,602 and are presented net in ‘Due from related parties, current’, in the accompanying unaudited condensed consolidated balance sheet.

4. Deferred Charges, net:

The movement in deferred charges net, which represents deferred dry-docking costs, in the accompanying unaudited condensed consolidated balance sheets is as follows:

​ Dry-docking costs
Balance December 31, 2022 $ 2,621,145
Additions 1,136,017
Amortization (894,799 )
Transfer to Assets held for sale (Note 5(c)) (1,446,607 )
Balance June 30, 2023 $ 1,415,756

During the six months ended June 30, 2023, the M/T Wonder Formosa, initiated and completed its scheduled dry-dock. As of June 30, 2023, the M/T Wonder Vega was undergoing its scheduled drydocking repairs.

F-12

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

5. Vessels, net/Advances for vessel acquisition/Assets held for sale:

(a) Vessels, net:

The amounts in the accompanying unaudited condensed consolidated balance sheets are analyzed as follows:

​ Vessel Cost Accumulated<br><br> <br>depreciation Net Book Value
Balance December 31, 2022 $ 102,122,080 $ (9,635,902 ) $ 92,486,178
Acquisitions, improvements, and other vessel costs 37,860,709 — 37,860,709
Vessel disposals (31,967,118 ) 3,413,088 (28,554,030 )
Transfer to Assets held for sale (c) (24,031,208 ) 2,912,304 (21,118,904 )
Period depreciation — (2,890,885 ) (2,890,885 )
Balance June 30, 2023 $ 83,984,463 $ (6,201,395 ) $ 77,783,068

On April 26, 2023, the Company, through Zatanna, entered into an agreement to purchase a 2020 Japanese-built 5,000 cbm LPG carrier, the Dream Terrax, from an unaffiliated third party for a purchase

        price of $19.9 million. The LPG Dream Terrax was delivered to the Company
        on May 26, 2023.

On April 26, 2023, the Company, through Starfire, entered into an agreement to purchase a 2015 Japanese-built 5,000 cbm LPG carrier, the Dream Arrax, from an unaffiliated third party for a purchase price of $17.0 million. The LPG Dream Arrax was delivered to the Company on June 14, 2023.

On May 12, 2023, the Company entered into an agreement with an unaffiliated third party for the sale of the M/T

          Wonder Bellatrix for a gross sale price of $37.0 million. The vessel was delivered to its new owners on June 22, 2023. In
        connection with this sale, the Company recognized a net gain of $19.3 million which is separately presented in ‘Gain on sale of
        vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

On May 18, 2023, the Company entered into an agreement with an unaffiliated third party for the sale of the M/T

          Wonder Polaris for a gross sale price of $34.5 million. The vessel was delivered to its new owners on June 26, 2023. In
        connection with this sale, the Company recognized during the second quarter of 2023 a net gain of $21.3 million which is separately
        presented in ‘Gain on sale of vessels’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

During the six months ended June 30, 2023, the M/T Wonder Formosa was equipped with a ballast water

        treatment system \(“BWTS”\).

F-13

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

5. Vessels, net/Advances for vessel acquisition/Assets held for sale: (continued)

The Company reviewed all its vessels for impairment and none were found to have an indication of impairment as the fair value was in excess of carrying value at June 30, 2023.

As of June 30, 2023, one vessel in the Company’s fleet having a carrying value of $12.0 million was first priority mortgaged as security under the $18.0 Million Term Loan Facility (Note 6).

(b) Advances for vessel acquisition:

Advances for vessel acquisition
Balance December 31, 2022 $ —
Advances for vessel acquisition and other vessel pre-delivery costs 3,390,000
Balance June 30, 2023 3,390,000

On April 26, 2023, the Company, through Cyborg, entered into an agreement to purchase a 2015 Japanese-built 5,000 cbm LPG carrier from an unaffiliated third party for a purchase price of $17.0 million. The Company paid an amount of $1.7 million, which represents a 10% advance of the purchase price. The vessel LPG Dream Syrax was delivered to the Company on July 18, 2023.

On April 26, 2023, the Company, through Nightwing, entered into an agreement to purchase a 2015 Japanese-built 5,000 cbm LPG carrier from an unaffiliated third party for a purchase price of $17.0 million. The Company paid an amount of $1.7

                  million, which represents 10% advance of the purchase price. The vessel LPG Dream Vermax was

                  delivered to the Company on August 4, 2023.

(c) Assets held for sale

          :

On April 28, 2023, the Company entered into an agreement with an unaffiliated  third party for the sale of the M/T Wonder Avior, at a price of $30.1 million and on June 15, 2023, the Company entered into an agreement with an unaffiliated third party for the sale of the M/T Wonder Musica, at a price of $28.0 million. The Company followed the provisions of ASC360 and, as all criteria required for their classifications as such were met at the balance sheet date, as of June 30, 2023, classified the carrying value of both vessels amounting to $21,118,904 and such vessels’ deferred charges and inventory onboard, amounting to $1,446,607 and, $102,573, respectively, as “Assets held for sale” measured at the lower of carrying value and fair value (sale price) less costs to sell. No impairment charges have been recorded as of June 30, 2023 in connection with the anticipated sale of the vessels since the carrying amount plus unamortized dry-dock costs as at the balance sheet date was lower than the fair value less cost to sell for each vessel. The Company expects to recognize during the third quarter of 2023 a gain on the sale of the M/T Wonder Avior and M/T Wonder Musica of approximately $18.5 million and $17.0 million, excluding any transaction related costs, respectively. The M/T Wonder Avior was delivered to its new owners on July 17, 2023 and the M/T Wonder Musica was delivered to its new owners on July 6, 2023.

F-14

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

6. Long-Term Debt:

The amounts of long-term debt shown in the accompanying unaudited condensed consolidated balance sheets of December 31, 2022 and June 30, 2023, are analyzed as follows:

Loan facilities Borrowers As of December 31,<br><br> <br>2022 As of June 30,<br><br> <br>2023
$18.0 Million Term Loan Facility Rocket- Gamora 13,250,000 5,930,000
Total long-term debt $ 13,250,000 $ 5,930,000
Less: Deferred financing costs (180,526 ) (65,451 )
Total long-term debt, net of deferred finance costs 13,069,474 5,864,549
Presented:
Current portion of long-term debt $ 2,700,000 $ 1,345,600
Less: Current portion of deferred finance costs (93,698 ) (40,683 )
Current portion of long-term debt, net of deferred finance costs $ 2,606,302 $ 1,304,917
​
Non-Current portion of long-term debt ​ 10,550,000 4,584,400
Less: Non-Current portion of deferred finance costs ​ (86,828 ) (24,768 )
Non-Current portion of long-term debt, net of deferred finance costs ​ $ 10,463,172 $ 4,559,632

$18.0 Million Term Loan Facility

As part of the Spin-Off, on March 7, 2023, the first supplemental agreement was signed with Alpha Bank, whereby the Company replaced Castor as guarantor under the 18.0 Million Term Facility, such that Castor no longer has any obligations under such facility. Further details of the Company’s $18.0 Million Term Loan Facility, are discussed in Note 6 of the combined carve-out financial statements for the year ended December 31, 2022, included in the Company’s 2022 Annual Report. On June 26, 2023, the Company prepaid $6.0 million under this facility from the proceeds of the sale of M/T Wonder Polaris, being the part of a two vessel loan secured by M/T Wonder Polaris and M/T Wonder Sirius, and the repayment schedule was adjusted accordingly.

During the six-month period ended June 30, 2023, the Company did not enter into any new or amended loan agreements and made scheduled principal repayments (in addition to the prepayment of part of the loan in connection with the sale of the M/T Wonder Polaris discussed above) amounting to $1.3 million with respect to its $18.0 Million Term Loan Facility.

As of June 30, 2023, the borrower was in compliance with all financial covenants prescribed in the above debt agreement.

Restricted cash as of December 31, 2022 and June 30, 2023, non-current, comprises $0.7 million and $0.4  million of minimum liquidity deposits required pursuant to the $18.0 Million Term Loan Facility, respectively.

The annual principal payments for the Company’s outstanding debt arrangement as of June 30, 2023, required to be made after the balance sheet date, are as follows:

Twelve-month period ending June 30, Amount
2024 $ 1,345,600
2025 4,584,400
Total long-term debt $ 5,930,000

The weighted average interest rate on long-term debt for the six months ended June 30, 2022, and 2023, was 3.8% and 7.9%, respectively.

Total interest incurred on long-term debt for the six months ended June 30, 2022, and 2023, amounted to $290,071 and $495,701, respectively, and is included in ‘Interest and finance costs’ (Note 14) in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

F-15

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

7. Equity Capital Structure:

Under Toro’s Articles of Incorporation, Toro’s authorized capital stock consists of 3,900,000,000 shares, par value $0.001 per share and 100,000,000 preferred shares, par value $0.001 per share. On the completion of the Spin-Off on March 7, 2023 (Note 1), Toro issued (i) 9,461,009 common shares, par value $0.001 per share, to Castor’s common shareholders of record as of February 22, 2023, (ii) 140,000 1.00% Series A fixed Preferred Shares, having a stated amount of $1,000 per share and a par value of $0.001 per share, to Castor (Note 8) and (iii) 40,000 Series B preferred shares, par value $0.001 per share, to Pelagos Holdings Corp, a company controlled by our Chairman and Chief Executive Officer.

Each Series B preferred share has the voting power of 100,000 common shares and counts for 100,000 votes for purposes of determining quorum at a meeting of shareholders, subject to adjustment to maintain a substantially identical voting interest in Toro. Upon any liquidation, dissolution or winding up of the Company, the Series B preferred shares shall have the same liquidation rights as and pari passu with the common shares up to their par value of $0.001 per share and, thereafter, the Series B preferred shares have no right to participate further in the liquidation, dissolution or winding up of the Company.

Private Placement of Common Shares

On April 17, 2023, Toro entered into a subscription agreement (the “Subscription Agreement”) with Pani Corp., a company controlled by Toro’s Chairman and Chief Executive Officer, pursuant to which Toro issued and sold, and Pani Corp. purchased, 8,500,000 common shares, par value $0.001 per share, at a purchase price of $2.29 per share, for gross proceeds of $19,465,000, less issuance costs of $817,764. The 8,500,000 common shares were issued on April 19, 2023 in a private placement pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

As of June 30, 2023, Toro had 17,961,009 common shares issued and outstanding.

8. Mezzanine equity:

Series A Preferred Shares

The Company has issued as part of the Spin-Off to Castor 140,000 Series A Preferred Shares with par value of $0.001 and a stated value of $1,000 each. The Series A Preferred Shares have the following characteristics:

Holders of the Series A Preferred Shares do not have any voting rights except for a right to elect directors in the event of nonpayment of dividends and a vote or consent of the holders of at least two thirds of the Series A Preferred Shares at the time outstanding, voting together with any other series of preferred shares that would be adversely affected in substantially the same manner and entitled to vote as a single class in proportion to their respective stated amounts, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, for effecting or validating: (i) any amendment, alteration or repeal of any provision of our Articles of Incorporation or Bylaws that would alter or change the voting powers, preferences or special rights of the Series A Preferred Shares so as to affect them adversely; (ii) the issuance of dividend parity stock if the accrued dividends on all outstanding Series A Preferred Shares through and including the most recently completed dividend period have not been paid or declared and a sum sufficient for the payment thereof has been set aside for payment; (iii) any amendment or alteration of the Articles of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series or any securities convertible into shares of any class or series of our capital stock ranking prior to Series A in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (iv) any consummation of (x) a binding share exchange or reclassification involving the Series A Preferred Shares, (y) a merger or consolidation of the Company with another entity (whether or not a corporation), or (z) a conversion, transfer, domestication or continuance of the Company into another entity or an entity organized under the laws of another jurisdiction, unless in each case (A) the Series A Preferred Shares remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, or any such conversion, transfer, domestication or continuance, the Series A Preferred Shares are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (B) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and restrictions and limitations thereof, of the Series A Preferred Shares immediately prior to such consummation, taken as a whole.

F-16

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

8. Mezzanine equity: (continued)

The Company may, at its option, redeem the Series A preferred shares in whole or in part, at any time and from time to time after the seventh anniversary of March 7, 2023 (the Series A Preferred Shares issue date), at a cash redemption price equal to the stated amount, together with an amount equal to all accrued dividends.

Holders of Series A Preferred Shares shall be entitled to receive, when, as and if declared by the Company’s board of directors, cumulative cash dividends at 1.00% per annum of the stated amount, payable quarterly in arrears on the 15^th^ day of each January, April, July and October, respectively, in each year, beginning on April 15, 2023. For each dividend period commencing on or after the seventh anniversary of March 7, 2023, the rate shall be rate in effect for the prior dividend period multiplied by a factor of 1.3; but the rate cannot exceed 20% per annum in respect of any dividend period.

The Series A Preferred Shares are convertible, at their holder’s option, to common shares after the third anniversary of March 7, 2023, until but excluding the seventh anniversary of March 7, 2023. The conversion price for any conversion of the Series A Preferred Shares shall be the lower of (i) 150% of the VWAP of our common shares over the five consecutive trading day period commencing on and including March 7, 2023, and (ii) the VWAP of our common shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, in no event shall the conversion price be less than $2.50.

In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, before any distribution or payment out of the Company’s assets may be made to or set aside for the holders of any junior stock, holders of Series A Preferred Shares will be entitled to receive out of our assets legally available for distribution to our shareholders an amount equal to the stated amount per share ($1,000), together with an amount equal to all accrued dividends to the date of payment whether or not earned or declared.

The Series A Preferred Shares have been classified in Mezzanine equity as per ASC 480-10-S99 “Distinguishing liabilities from Equity – SEC Materials” as they are in essence redeemable at the option of the holder as Mr. Panagiotidis, the Chief Executive Officer and controlling shareholder of Castor and Toro, who can effectively determine the timing  of the redemption of the Series A Preferred.

The Company uses an effective interest rate of 3.71% over the expected life of the preferred stock being nine years which is  the  expected earliest redemption date. This is consistent with the interest method, taking into account the discount between the issuance price and liquidation preference and the stated dividends, including “step-up” amounts. The amount accreted was $931,034 and is presented  as  ‘Deemed dividend on Series A Preferred Shares’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income.

As of June 30, 2023, the net value of Mezzanine Equity amounted to $118,103,169, comprising (i) the fair value measurement of the Series A Preferred Shares on initial recognition based on a third party valuation of $117,222,135, less issuance costs of $50,000  and (ii) $931,034 of deemed dividend on the Series A Preferred Shares during the period March 7, 2023 through June 30, 2023, and is separately presented as ‘Mezzanine Equity’ in the accompanying unaudited condensed consolidated balance sheet. As of June 30, 2023, the Company paid to Castor a dividend amounting to $151,667 on the Series A Preferred Shares for the period from March 7, 2023 to April 14, 2023 and the accrued amount for the period from April 15, 2023 to June 30, 2023 (included in the dividend period ended July 14, 2023) amounted to $299,444 (Notes 3(d) and 16(a)).

F-17

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

9. Financial Instruments and Fair Value Disclosures:

The principal financial assets of the Company consist of cash at banks, restricted cash, trade accounts receivable and amounts due from related parties. The principal financial liabilities of the Company consist of trade accounts payable, amounts due to related parties and long-term debt.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

• Cash and cash equivalents, accounts receivable trade, net, amounts due from/to related party/(ies) and accounts payable: The carrying<br> values reported in the unaudited condensed consolidated balance sheets for those financial instruments are reasonable estimates of their fair values due to their short-term maturity nature. Cash and cash equivalents are considered<br> Level 1 items as they represent liquid assets with short term maturities. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current and is considered Level 1 item of<br> the fair value hierarchy.
• Long-term debt: The secured credit facility discussed in Note 6, has a recorded value which is a reasonable estimate of its<br> fair value due to its variable interest rate and is thus considered Level 2 item in accordance with the fair value hierarchy as SOFR rates are observable at commonly quoted intervals for the full terms of the loans.
--- ---

Concentration of credit risk: Financial instruments, which potentially subject the

        Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, due from related parties and trade accounts receivable. The Company places its cash and cash equivalents, consisting mostly of deposits,
        with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of the financial institutions in which it places its deposits. The Company limits its credit risk with accounts
        receivable by performing ongoing credit evaluations of its customers’ financial condition.
10. Commitments and Contingencies:

Various claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, pool operators, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying unaudited interim condensed consolidated financial statements.

The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. As of the date of these unaudited interim condensed consolidated financial statements, management was not aware of any such claims or contingent liabilities that should be disclosed or for which a provision should be established in the accompanying unaudited interim condensed consolidated financial statements. The Company is covered for liabilities associated with the vessels’ actions to the maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.

(a) Commitments under long-term lease contracts

The following table sets forth the future minimum contracted lease payments to the Company (gross of charterers’ commissions), based on the Company’s vessels’ commitments to non-cancelable time charter contracts as of June 30, 2023. Non-cancelable time charter contracts include fixed-rate time charters.

Twelve-month period ending June 30, Amount
2024 $ 5,366,000
Total $ 5,366,000

(b) Commitments under purchase agreements

As of June 30, 2023, there were commitments relating to purchase agreements of two 2015 Japanese-built 5,000 cbm LPG carriers from unaffiliated third parties (Note 5) at a price of $15.3 million each, amounting to $30.6 million, which represents 90% of their purchase price, payable in cash upon delivery of these two vessels. Both vessels were delivered in the third quarter of 2023 (Note 16).

F-18

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

11. Earnings Per Common Share:

The computation of earnings per share is based on the weighted average number of common shares outstanding during that period and gives retroactive effect to the shares issued  in connection with the Spin-Off.

The Company calculates earnings per common share by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the relevant period.

Diluted earnings per common share, if applicable, reflects the potential dilution that could occur if potentially dilutive instruments were exercised, resulting in the issuance of additional shares that would then share in the Company’s net income. The computation of diluted earnings per share reflects the potential dilution from conversion of outstanding Series A Preferred Shares (Note 8) calculated with the “if converted” method by using the average closing market price over the reporting period from March 7, 2023 to June 30, 2023. The components of the calculation of basic and diluted earnings per common share in each of the periods comprising the accompanying unaudited interim condensed consolidated statements of comprehensive income are as follows:

Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
2022 2023
Net income and comprehensive income $ 6,657,133 $ 77,340,987
Dividend on Series A Preferred Shares — (451,111 )
Deemed dividend on Series A Preferred<br><br> <br>Shares — (931,034 )
Net income attributable to common<br><br> <br>shareholders $ 6,657,133 $ 75,958,842
Weighted average number of common shares<br><br> <br>outstanding, basic 9,461,009 14,810,147
Effect of dilutive shares 44,682,646 44,682,646
Weighted average number of common shares<br><br> <br>outstanding, diluted 54,143,655 59,492,793
Earnings per common share, basic $ 0.70 $ 5.13
Earnings per common share, diluted $ 0.12 $ 1.28
12. Vessel Revenues:
--- ---

The following table includes the voyage revenues earned by the Company by type of contract (time charters, voyage charters and pool agreements) in each of the six-month periods ended June 30, 2022, and June 30, 2023, as presented in the accompanying unaudited interim condensed consolidated statements of comprehensive income:

​ Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
2022 2023
Time charter revenues 4,836,315 5,519,288
Voyage charter revenues 29,592,279 389,119
Pool revenues 8,180,973 50,104,276
Total Vessel Revenues $ 42,609,567 $ 56,012,683

As of December 31, 2022, and June 30, 2023, ‘Trade accounts receivable, net’, related to voyage charters, amounted to $2,462,714 and $137,798, respectively. This decrease by $2,324,916 in ‘Trade accounts receivable, net’ was mainly attributable to the timing of collections and the employment in pools of our tanker fleet, except from one tanker vessel that operated under period time charter.

The Company did not have deferred assets or contract liabilities related to voyage charters as of December 31, 2022 and June 30, 2023.

F-19

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

13. Vessel Operating and Voyage Expenses:

The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income are analyzed as follows:

​ Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
Voyage expenses 2022 2023
Brokerage commissions 794,643 197,796
Brokerage commissions- related party 530,089 715,183
Port & other expenses 4,128,158 97,532
Bunkers consumption 13,216,960 237,544
Gain on bunkers (8 ) (5,939 )
Total Voyage expenses $ 18,669,842 $ 1,242,116
​ Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
--- --- --- --- ---
Vessel Operating Expenses 2022 2023
Crew & crew related costs 6,287,381 6,233,528
Repairs & maintenance, spares, stores, classification, chemicals & gases, paints, victualling 2,411,998 1,928,803
Lubricants 495,990 537,325
Insurance 765,730 641,335
Tonnage taxes 167,503 198,031
Other 679,162 1,651,273
Total Vessel operating expenses $ 10,807,764 $ 11,190,295
14. Interest and Finance Costs:
--- ---

The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income are analyzed as follows:

Six months ended<br><br> <br>June 30, Six months ended<br><br> <br>June 30,
2022 2023
Interest on long-term debt $ 290,071 $ 495,701
Amortization of deferred finance charges 62,909 115,074
Other finance charges 35,405 58,040
Total $ 388,385 $ 668,815
15. Segment Information:
--- ---

In the second quarter of 2023, the Company acquired two LPG carriers for the first time. As a result of the different characteristics of such LPG carries in relation to the Company’s other two operating segments, the Company determined that, with effect from the second quarter of 2023, it operated in three reportable segments: (i) Aframax/LR2 tanker, (ii) Handysize tanker and (iii) LPG carrier. The reportable segments reflect the internal organization of the Company and the way the chief operating decision maker reviews the operating results and allocates capital within the Company. The transport of crude oil (carried by Aframax/LR2 tankers) and the transport of oil products (carried by Handysize tanker vessels), has different characteristics to the transport of liquefied petroleum gas (carried by LPG carries). In addition, the nature of trade, as well as the trading routes, charterers and cargo handling of liquefied petroleum gas differs from those of crude oil and other oil products.

F-20

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

15. Segment Information: (continued)

The table below presents information about the Company’s reportable segments for the six months ended June 30, 2022, and 2023. The accounting policies followed in the preparation of the reportable segments are the same as those followed in the preparation of the Company’s unaudited interim consolidated financial statements. Segment results are evaluated based on income from operations.

Six months ended June 30, 2022 Six months ended June 30, 2023
Aframax/LR2<br><br> <br>tanker segment Handysize<br><br> <br>tanker<br><br> <br>segment Total Aframax/LR2<br><br> <br>tanker segment Handysize<br><br> <br>tanker<br><br> <br>segment LPG carrier<br><br> <br>segment Total
- Time charter revenues $ 4,836,315 $ — $ 4,836,315 $ 5,519,288 $ — $ — 5,519,288
- Voyage charter revenues 29,592,279 — 29,592,279 1,032 — 388,087 389,119
- Pool revenues 3,729,807 4,451,166 8,180,973 41,987,330 8,116,946 — 50,104,276
Total vessel revenues $ 38,158,401 $ 4,451,166 $ 42,609,567 $ 47,507,650 $ 8,116,946 $ 388,087 $ 56,012,683
Voyage expenses (including charges from related parties) (18,599,250 ) (70,592 ) (18,669,842 ) (834,590 ) (104,980 ) (302,546 ) (1,242,116 )
Vessel operating expenses (8,701,065 ) (2,106,699 ) (10,807,764 ) (8,013,227 ) (2,852,712 ) (324,356 ) (11,190,295 )
Management fees to related parties (1,076,950 ) (307,700 ) (1,384,650 ) (1,047,150 ) (352,950 ) (257,400 ) (1,657,500 )
Recovery of Provision for doubtful accounts — — — 266,732 — — 266,732
Depreciation and Amortization (2,992,158 ) (579,286 ) (3,571,444 ) (2,805,193 ) (850,371 ) (130,120 ) (3,785,684 )
Gain on sale of vessels — — — 40,548,776 — — 40,548,776
Segments operating income/(loss) $ 6,788,978 $ 1,386,889 $ 8,175,867 $ 75,622,998 $ 3,955,933 $ (626,335 ) $ 78,952,596
Interest and finance costs (388,385 ) (668,815 )
Interest income 1,412 1,210,769
Foreign exchange losses (11,129 ) (21,352 )
Less: Unallocated corporate general and administrative expenses (including related parties) (640,156 ) (1,841,586 )
Net income and comprehensive income, before taxes $ 7,137,609 $ 77,631,612

A reconciliation of total segment assets to total assets presented in the accompanying unaudited condensed consolidated balance sheets of December 31, 2022, and June 30, 2023, is as follows:

As of December 31,<br><br> <br>2022 As of June 30,<br><br> <br>2023
Aframax/LR2 tanker segment $ 134,093,677 $ 123,679,407
Handysize tanker segment 23,385,458 19,740,686
LPG carrier segment — 41,505,734
Cash and cash equivalents^(1)^ (32 ) 63,235,883
Prepaid expenses and other assets^(1)^ — (63,377 )
Total assets $ 157,479,103 $ 248,098,333
(1) Refers to assets of other, non-vessel owning, entities included in the unaudited<br> interim condensed consolidated financial statements.
--- ---

F-21

TORO CORP.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars – except for share data unless otherwise stated)

16. Subsequent Events:

(a) Dividend on Series A Preferred Shares:  On July 14, 2023, the Company paid to Castor a dividend amounting to $350,000 on the Series A Preferred Shares for the dividend period from April 15, 2023 to July 14, 2023.

(b) Acquisition of two 2015 Japanese-built 5,000 cbm LPG carriers

: The vessel LPG

              Dream Syrax was delivered to the Company on July 18, 2023 and the vessel LPG Dream Vermax was delivered to the Company on August 4, 2023 \(Note 5\).

(c) Purchase of Series D Preferred Shares of Castor: On August 7, 2023, the Company agreed to purchase 50,000 Series D Preferred shares (“Pref D shares”) of Castor of $1,000

            each for a total consideration of $50 million, in cash. The distribution rate of the Pref D shares is 5%, paid quarterly, and they are convertible to common shares of Castor from the first anniversary of the issue date at the lower of \(i\) $0.70 and \(ii\) the 5 day value
            weighted average price immediately preceding the conversion, subject to a minimum conversion price. The distribution rate is set to increase by a factor of 1.3 times per annum from year 7 with a maximum rate of 20%. This
            transaction and its terms were approved by the independent members of the board of directors of each of Castor and Toro at the recommendation of their respective independent committees who negotiated the transaction.

F-22

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of operations of Toro Corp. (“Toro”) for the six month periods ended June 30, 2022, and June 30, 2023. Unless otherwise specified herein, references to the “Company”, “we”, “our” and “us” or similar terms shall include Toro and its wholly owned subsidiaries. You should read the following discussion and analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in this report. Amounts relating to percentage variations in period-on-period comparisons shown in this section are derived from those unaudited interim condensed consolidated financial statements. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. These forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements. For a more complete discussion of these risks and uncertainties, please read the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3. Key Information—D. Risk Factors” in our Annual Report for the year ended December 31, 2022 (the “2022 Annual Report”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 8, 2023. For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our 2022 Annual Report. Unless otherwise defined herein, capitalized terms and expressions used herein shall have the same meanings ascribed to them in the 2022 Annual Report.

Business Overview and Fleet Information

We are an independent, growth-oriented shipping company that was incorporated under the laws of the Republic of the Marshall Islands in July 2022 by Castor Maritime Inc. (“Castor”) to serve as the holding company of Castor’s former tanker owning subsidiaries and Elektra Shipping Co. (formerly owning the M/T Wonder Arcturus) in connection with the spin-off of Castor’s tanker business into an independent, publicly traded company (the “Spin-Off”). The Spin-Off was completed on March 7, 2023, on which date we began to trade as an independent publicly listed company. For further information regarding the Spin-Off, refer to the 2022 Annual Report.

We acquire, own, charter and operate oceangoing tanker and LPG carrier vessels and provide worldwide seaborne transportation services for crude oil, refined petroleum products and liquefied petroleum gas.

As of August 9, 2023, we operated four tanker vessels that engage in the worldwide transportation of crude oil and refined petroleum products using our one Aframax/LR2 tanker and one Aframax tanker which transport crude oil, two Handysize tankers, which transport refined petroleum products and four LPG carriers 5,000 cbm each, which transport liquified petroleum gas, with an aggregate cargo carrying capacity of 0.3 million dwt and an average age of 12.4 years (together, our “Fleet”). As a result of the different characteristics of the transport of crude oil (carried by Aframax/LR2 tankers) and the transport of oil products (carried by Handysize tanker vessels), to the transport of liquefied petroleum gas (carried by LPG carries) as well as the differences in the nature of trade, as well as the trading routes, charterers and cargo handling of liquefied petroleum gas compared to crude oil and other oil products, we have determined that we currently operate in three reportable segments: (i) the Aframax/LR2 tanker segment, (ii) the Handysize tanker segment and (iii) the LPG carrier segment.

Our Fleet is currently contracted to operate in a mix of pools, voyage charters and time charters. Our commercial strategy primarily focuses on deploying our fleet under a mix of pools, voyage charters and time charters according to our assessment of market conditions. We adjust the mix of these charters to take advantage of the relatively stable cash flows and high utilization rates for our vessels associated with period time charters, to profit from attractive trip charter rates during periods of strong charter market conditions associated with voyage charters or to take advantage of high utilization rates for our vessels along with exposure to attractive charter rates during periods of strong charter market conditions when employing our vessels in pools.

Until June 30, 2022, our Fleet was technically managed by Pavimar S.A. (“Pavimar”), a related party controlled by the sister of Petros Panagiotidis, Ismini Panagiotidis, and commercially managed by Castor Ships S.A (“Castor Ships”), a company controlled by Mr. Petros Panagiotidis. Effective July 1, 2022, the technical management agreements entered into between Pavimar and the Company’s tanker vessel owning subsidiaries were terminated by mutual consent. With effect from July 1, 2022, Castor Ships provides ship management and chartering services to the vessels through subcontracting agreements with unrelated third-party managers.

The following table summarizes key information about our Fleet as of August 8, 2023:

Fleet vessels:

Vessel Name Capacity<br><br> <br>(dwt) Year<br><br> <br>Built Country of<br><br> <br>Construction ​ Type of<br><br> <br>Charter Gross Charter<br><br> <br>Rate Estimated<br><br> <br>Earliest Charter<br><br> <br>Expiration Estimated Latest<br><br> <br>Charter<br><br> <br>Expiration
Aframax/LR2 Segment ​
M/T Wonder Sirius 115,341 2005 S. Korea ​ Period Time Charter^(1)^ $ 40,000 per day November 2023 June 2024
M/T Wonder Vega 106,062 2005 S. Korea ​ Tanker Pool^(2)^ N/A N/A N/A
Handysize Segment ​
M/T Wonder Mimosa 36,718 2006 S. Korea ​ Tanker Pool^(3)^ N/A N/A N/A
M/T Wonder Formosa 36,660 2006 S. Korea ​ Tanker Pool^(3)^ N/A N/A N/A
LPG Carrier Segment
LPG Dream Terrax 4,743 2020 Japan Period Time Charter^(1),(4)^ $ 310,000 per month August 2024 August 2025
LPG Dream Arrax 4,753 2015 Japan Voyage $ 235,000 lump sum August 11, 2023^(5)^ N/A
LPG Dream Syrax 5,158 2015 Japan Period Time Charter^(1)^ $ 308,500 per month February 2024 February 2024
LPG Dream Vermax 5,155 2015 Japan Period Time Charter^(1)^ $ 314,950 per month March 2024 March 2025
(1) In February 2023, the agreement relating to the M/T Wonder Sirius’s participation in the V8 Plus Pool was terminated and the vessel commenced a period time charter.
--- ---
(2) The vessel is currently participating in the V8 Plus Pool, a pool operating Aframax tankers aged fifteen (15) years or more that is managed by V8 Plus Management Pte Ltd., a company in which our Chairman and Chief<br> Executive Officer, Petros Panagiotidis has a minority equity interest.
--- ---
(3) The vessel is currently participating in an unaffiliated tanker pool specializing in the employment of Handysize tanker vessels.
--- ---
(4) The vessel has been fixed under a TC period contract of twelve months at $310,000 per month plus twelve months at $320,000 per month in Charterer’s option, with estimated delivery on about August 13, 2023.
--- ---
(5) Estimated completion date of voyage.
--- ---

Recent Developments

Please refer to Note 16 to our unaudited interim condensed consolidated financial statements for developments that took place after June 30, 2023.

2

Operating Results

Principal factors impacting our business, results of operations and financial condition

Our results of operations are affected by numerous factors. The principal factors that have impacted the business during the fiscal periods presented in the following discussion and analysis and that are likely to continue to impact our business are the following:

• The levels of demand and supply of seaborne cargoes and vessel tonnage in the shipping industries in which we operate;
• The cyclical nature of the shipping industry in general and its impact on charter and freight rates and vessel values;
--- ---
• The successful implementation of a growth business strategy, including the ability to obtain equity and debt financing at acceptable and attractive terms to fund future capital expenditures and/or to implement<br> this business strategy;
--- ---
• The global economic growth outlook and trends;
--- ---
• Economic, regulatory, political and governmental conditions that affect shipping and the tanker shipping industry, including international conflict or war (or threatened war), such as between Russia and Ukraine;
--- ---
• The employment and operation of our fleet including the utilization rates of our vessels;
--- ---
• The ability to successfully employ our vessels at economically attractive rates and the strategic decisions regarding the employment mix of our fleet in the voyage, time charter and pool markets, as our charters<br> expire or are otherwise terminated;
--- ---
• Management of the operational, financial, general and administrative elements involved in the conduct of our business and ownership of our fleet, including the effective and efficient management of our fleet by<br> our manager and its sub-managers, and each of their suppliers;
--- ---
• The number of charterers and pool operators who use our services and the performance of their obligations under their agreements, including their ability to make timely payments to us;
--- ---
• The ability to maintain solid working relationships with our existing charterers and pool operators and our ability to increase the number of our charterers through the development of new working relationships;
--- ---
• The vetting approvals requested by oil majors and the Chemical Distribution Institute (CDI) for the vessels managed by our<br> manager and/or sub-managers;
--- ---
• Dry-docking and special survey costs and duration, both expected and unexpected;
--- ---
• Our borrowing levels and the finance costs related to our outstanding debt as well as our compliance with our debt covenants;
--- ---
• Management of our financial resources, including banking relationships and of the relationships with our various stakeholders; and
--- ---
• Major outbreaks of diseases (such as COVID-19) and governmental responses thereto; and
--- ---
• The level of any distribution on all classes of our shares.
--- ---

These factors are volatile and in certain cases may not be within our control. Accordingly, past performance is not necessarily indicative of future performance, and it is difficult to predict future performance with any degree of certainty. See also “Item 3. Key Information—D. Risk Factors” in our 2022 Annual Report. Because many of these factors are beyond our control and certain of these factors have historically been volatile, past performance is not necessarily indicative of future performance and it is difficult to predict future performance with any degree of certainty.

3

Employment and operation of our fleet

Another factor that impacts our profitability is the employment and operation of our fleet. The profitable employment of our fleet is highly dependent on the levels of demand and supply in the shipping segments in which we operate, our commercial strategy including the decisions regarding the employment mix of our fleet among time and voyage charters and pool arrangements, as well as our manager’s and sub-managers’ ability to leverage our relationships with existing or potential customers. As a new entrant to the tankers and LPG carriers business, our customer base is currently concentrated to a small number of charterers and pool managers. In the six months ended June 30, 2023, 89% of our revenues were earned on pool arrangements entered into with two pool managers. The breadth of our customer base has and will continue to have an impact on the profitability of our business. Further, the effective operation of our fleet mainly requires regular maintenance and repair, effective crew selection and training, ongoing supply of our fleet with the spares and the stores that it requires, contingency response planning, auditing of our vessels’ onboard safety procedures, arrangements for our vessels’ insurance, chartering of the vessels, training of onboard and on shore personnel with respect to the vessels’ security and security response plans (ISPS), obtaining of ISM certifications, compliance with environmental regulations and standards and performing the necessary audit for the vessels within the year of taking over a vessel and the ongoing performance monitoring of the vessels.

Financial, general and administrative management

The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires us to manage our financial resources, which includes managing banking relationships, administrating our bank accounts, managing our accounting system, records and financial reporting, monitoring and ensuring compliance with the legal and regulatory requirements affecting our business and assets and managing our relationships with our service providers and customers.

Important Measures and Definitions for Analyzing Results of Operations

Our management uses the following metrics to evaluate our operating results, including our operating results at the segment level, and to allocate capital accordingly:

Total vessel revenues. Total vessel revenues are generated from voyage charters, time charters and pool arrangements. Total vessel revenues are affected by the number of vessels in our fleet, hire and freight rates and the number of days a vessel operates which, in turn, are affected by several factors, including the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in dry-dock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, and levels of supply and demand in the seaborne transportation market. Total vessel revenues are also affected by our commercial strategy related to the employment mix of our fleet between vessels on time charters, vessels operating on voyage charters and vessels in pools.

We measure revenues in each segment for three separate activities: (i) time charter revenues, (ii) voyage charter revenues, and (iii) pool revenues.

Voyage expenses. Our voyage expenses primarily consist of bunker expenses, port and canal expenses and brokerage commissions paid in connection with the chartering of our vessels. Voyage expenses are incurred primarily during voyage charters or when the vessel is repositioning or unemployed. Bunker expenses, port and canal dues increase in periods during which vessels are employed on voyage charters because these expenses are in this case borne by us. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. Under pooling arrangements, voyage expenses are borne by the pool operator. Gain/loss on bunkers may also arise where the cost of the bunker fuel sold to the new charterer is greater or less than the cost of the bunker fuel acquired.

4

Operating expenses. We are responsible for vessel operating costs, which include crewing, expenses for repairs and maintenance, the cost of insurance, tonnage taxes, the cost of spares and consumable stores, lubricating oils costs, communication expenses, and ship management fees. Expenses for repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically occur during periodic drydocking. Our ability to control our vessels’ operating expenses also affects our financial results. Daily vessel operating expenses are calculated by dividing fleet operating expenses by the Ownership days for the relevant period.

Off-hire. Off-hire is the period our fleet is unable to perform the services for which it is required under a charter for reasons such as scheduled repairs, vessel upgrades, dry-dockings or special or intermediate surveys or other unforeseen events.

Dry-docking/Special Surveys. We periodically dry-dock and/or perform special surveys on our fleet for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Our ability to control our dry-docking and special survey expenses and our ability to complete our scheduled dry-dockings and/or special surveys on time also affects our financial results. Dry-docking and special survey costs are accounted for under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due.

Ownership Days. Ownership Days are the total number of calendar days in a period during which we owned a vessel. Ownership Days are an indicator of the size of our fleet over a period and determine both the level of revenues and expenses recorded during that specific period.

Available Days. Available Days are the Ownership Days in a period less the aggregate number of days our vessels are off-hire due to scheduled repairs, dry-dockings or special or intermediate surveys. The shipping industry uses Available Days to measure the aggregate number of days in a period during which vessels are available to generate revenues. Our calculation of Available Days may not be comparable to that reported by other companies.

Operating Days. Operating Days are the Available Days in a period after subtracting unscheduled off-hire and idle days.

Fleet Utilization. Fleet Utilization is calculated by dividing the Operating Days during a period by the number of Available Days during that period. Fleet Utilization is used to measure a company’s ability to efficiently find suitable employment for its vessels and minimize the number of days that its vessels are off-hire for reasons such as major repairs, vessel upgrades, dry-dockings or special or intermediate surveys and other unforeseen events.

Results of Operations

Consolidated Results of Operations

Six months ended June 30, 2023, as compared to the six months ended June 30, 2022

Six months ended<br><br> <br>June 30, 2022 Six months ended<br><br> <br>June 30, 2023 Change -<br><br> <br>Amount
Total vessel revenues $ 42,609,567 $ 56,012,683 $ 13,403,116
Expenses:
Voyage expenses (including commissions to related party) (18,669,842 ) (1,242,116 ) 17,427,726
Vessel operating expenses (10,807,764 ) (11,190,295 ) (382,531 )
Management fees to related parties (1,384,650 ) (1,657,500 ) (272,850 )
Depreciation and amortization (3,571,444 ) (3,785,684 ) (214,240 )
General and administrative expenses (including costs from related parties) (640,156 ) (1,841,586 ) (1,201,430 )
Recovery of provision for doubtful accounts — 266,732 266,732
Gain on sale of vessels — 40,548,776 40,548,776
Operating  income $ 7,535,711 $ 77,111,010 $ 69,575,299
Interest and finance costs, net^(1)^ (386,973 ) 541,954 928,927
Foreign exchange losses (11,129 ) (21,352 ) (10,223 )
US source income taxes (480,476 ) (290,625 ) 189,851
Net income and comprehensive income $ 6,657,133 $ 77,340,987 $ 70,683,854
Dividend on Series A Preferred Shares — (451,111 ) (451,111 )
Deemed dividend on Series A Preferred Shares — (931,034 ) (931,034 )
Net income attributable to common shareholders $ 6,657,133 $ 75,958,842 $ 69,301,709
Earnings per common share, basic 0.70 5.13
Earnings per common share, diluted 0.12 1.28
Weighted average number of common shares, basic 9,461,009 14,810,147
Weighted average number of common shares, diluted 54,143,655 59,492,793
^(1)^ Includes interest and finance costs, net of interest income, if any.
--- ---

5

Total vessel revenues

Total vessel revenues, net of charterers’ commissions, increased to $56.0 million in the six months ended June 30, 2023, from $42.6 million in the same period in 2022. This increase was largely driven by the improved Aframax/LR2 and Handysize tanker markets, as compared to the corresponding period in 2022 as during the six months ended June 30, 2023, our Fleet earned on average a Daily TCE Rate of $38,168, compared to an average Daily TCE Rate of $15,066 earned during the same period in 2022, partially offset by the decrease in Available Days to 1,435 days in the six months ended June 30, 2023, from 1,589 days in the same period of 2022. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of this measure to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Voyage expenses

Voyage expenses for our tanker fleet decreased by $17.4 million, to $1.2 million in the six months ended June 30, 2023, from $18.6 million in the same period of 2022. This decrease in voyage expenses is mainly associated with the decrease in (i) expenses associated with our vessels’ commercial employment arrangements as during the six months ended June 30, 2023, seven of our eight tanker vessels operated under pool agreements resulting in a substantial decrease in bunker consumption cost and port expenses, which were borne by our pool operators, as compared to the six months ended June 30, 2022, where our Aframax/LR2 tanker segment operated predominantly under voyage charters, and (ii) the Ownership Days of our Fleet, to 1,489 days in the six months ended June 30, 2023 from 1,629 days in the same period in 2022 due to the decrease of the average number of operating vessels to 8.2 vessels in the six months ended June 30, 2023, from 9.0 vessels in the same period of 2022.

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Vessel Operating Expenses

The increase in vessel operating expenses by $0.4 million, to $11.2 million in the six months ended June 30, 2023, from $10.8 million in the same period of 2022, mainly reflects the increase in the daily vessel operating expenses to $7,515 in the six months ended June 30, 2023, from $6,635 in the same period in 2022, partially offset by the decrease in the Ownership Days of our fleet to 1,489 days in the six months ended June 30, 2023, from 1,629 days in the corresponding period in 2022.

Management Fees

The increase in management fees by $0.3 million, to $1.7 million in the six months ended June 30, 2023, from $1.4 million in the same period of 2022, mainly reflects the (i) increased management fees following our entry into the Amended and Restated Master Management Agreement with effect from July 1, 2022 and (ii) management agreements for our four LPG carriers, which are effective from the date of the purchase agreements, on April 26, 2023.

Depreciation and Amortization

Depreciation expenses for our Fleet decreased to $2.9 million in the six months ended June 30, 2023, from $3.4 million in the same period in 2022 as a result of the decrease in the Ownership Days of our fleet. Dry-dock and special survey amortization charges amounted to $0.9 million for the six months ended June 30, 2023, compared to a charge of $0.2 million in the six months ended June 30, 2022. This variation in dry-dock amortization charges primarily resulted from the increase in dry-dock amortization days from 195 days in the six months ended June 30, 2022, to 575 dry-dock amortization days in the six months ended June 30, 2023.

General and Administrative Expenses

General and administrative expenses in the six months ended June 30, 2023, amounted to $1.8 million, whereas, in the same period in 2022, general and administrative expenses totaled $0.6 million. This increase is mainly associated with (i) incurred legal and other corporate fees primarily related to the growth of our Company and becoming a public company on March 7, 2023 and (ii) the flat management fee for the period March 7, 2023 through June 30, 2023, amounting to $1.0 million. For the six months ended June 30, 2022, and for the period from January 1 through March 7, 2023 (completion of Spin-Off), General and administrative expenses reflect the expense allocations made to the Company by Castor based on the proportion of the number of Ownership Days of our Fleet vessels to the total Ownership Days of Castor’s full fleet.

Gain on sale of vessels

On June 22, 2023, we concluded the sale of the M/T Wonder Bellatrix which we sold, pursuant to an agreement dated May 12, 2023, for a cash consideration of $37.0 million. The sale resulted in net proceeds to the Company of $35.8 million and the Company recording a net gain on the sale of $19.3 million. On June 26, 2023, we concluded the sale of the M/T Wonder Polaris which we sold, pursuant to an agreement dated May 18, 2023, for a cash consideration of $34.5 million. The sale resulted in net proceeds to the Company of $33.3 million and the Company recording a net gain on the sale of $21.3 million.

Interest and finance costs, net

Interest and finance costs, net amounted to $(0.5) million in the six months ended June 30, 2023, whereas in the same period of 2022, interest and finance costs, net amounted to $0.4 million. This variation is mainly due to a substantial increase in interest income for the six months ended June 30, 2023 on our available cash, which more than offset an increase in the weighted average interest rate on our long-term debt from 3.8% in the six months ended June 30, 2022 to 7.9% in the same period of 2023.

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Six months ended June 30, 2023, as compared to the six months ended June 30, 2022— Aframax/LR2 Tanker Segment

Six months ended<br><br> <br>June 30, 2022 Six months ended<br><br> <br>June 30, 2023 Change –<br><br> <br>amount
Total vessel revenues $ 38,158,401 $ ​ 47,507,650 $ 9,349,249
Expenses:
Voyage expenses (including commissions to related party) (18,599,250 ) (834,590 ) 17,764,660
Vessel operating expenses (8,701,065 ) (8,013,227 ) 687,838
Management fees to related parties (1,076,950 ) (1,047,150 ) 29,800
Depreciation and amortization (2,992,158 ) (2,805,193 ) 186,965
Recovery of provision for doubtful accounts — 266,732 266,732
Gain on sale of vessels — 40,548,776 40,548,776
Segment operating income $ ​ 6,788,978 $ 75,622,998 $ 68,834,020

Total vessel revenues

Total vessel revenues, net of charterers’ commissions, for our Aframax/LR2 tanker segment amounted to $47.5 million in the six months ended June 30, 2023, as compared to $38.2 million in the same period of 2022. This increase is mainly due to an improved Aframax/LR2 tanker market. During the six months ended June 30, 2023, our Aframax/LR2 tanker fleet earned on average a Daily TCE Rate of $43,907, compared to an average Daily TCE Rate of $15,941 earned in the same period of 2022, partly offset by the decrease in Available Days to 1,063 days in the six months ended June 30, 2023, from 1,227 days in the same period of 2022. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Voyage Expenses

Voyage expenses for our Aframax/LR2 tanker segment amounted to $0.8 million and $18.6 million in the six months ended June 30, 2023, and the same period of 2022, respectively. This decrease is mainly associated with (i) our vessels operating mostly under pool agreements, in which our pool operators bear bunker consumption and port expenses during the six months ended June 30, 2023, whereas, in the corresponding period in 2022, our Aframax/LR2 tanker fleet operated mostly under voyage charters, under which we bear all voyage expenses, including bunkers and port expenses and (ii) the sale of M/T Wonder Arcturus on July 15, 2022.

Vessel Operating Expenses

The decrease in Operating expenses by $0.7 million, to $8.0 million in the six months ended June 30, 2023, from $8.7 million in the same period in 2022, mainly reflects the decrease in the Ownership Days of our Aframax/LR2 vessels in our Fleet to 1,074 days in the six months ended June 30, 2023, from 1,267 days in the corresponding period in 2022, as the result of the sale of the M/T Wonder Arcturus, as offset in part by higher operating expenses per Ownership Day in the six months ended June 30, 2023 compared to the corresponding period in 2022.

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Management Fees

Management fees for our Aframax/LR2 tanker segment in the six months ended June 30, 2023 and June 30, 2022, were stable at $1.1 million. There was no change in management fees because the decrease in the total number of Ownership Days of our Fleet for which our managers charged us a daily management fee, offset by the increased management fees following our entry into the Amended and Restated Master Management Agreement with effect from July 1, 2022.

Depreciation and Amortization

Depreciation expenses for our Aframax/LR2 tanker segment decreased to $2.2 million in the six months ended June 30, 2023, from $3.0 million in the same period in 2022 as a result of the decrease in the Ownership Days of our Aframax/LR2 tanker fleet. Dry-dock and special survey amortization charges in the six months ended June 30, 2023 of $0.6 million relate to the amortization of the M/T Wonder Musica and M/T Wonder Avior in this period, as the vessels underwent their scheduled dry-docking repairs during the second quarter of 2022 and the fourth quarter of 2022, respectively. Dry-dock and special survey amortization charges amounted to $26,200 in the same period of 2022, related to the amortization of the M/T Wonder Musica.

Gain on sale of vessels

Refer to discussion under ‘Consolidated Results of Operations-Gain on sale of vessels’ above for details on the sale of the M/T Wonder Bellatrix and M/T Wonder Polaris.

Six months ended June 30, 2023, as compared to the six months ended June 30, 2022— Handysize Tanker Segment

​ Six months ended<br><br> <br>June 30, 2022 Six months ended<br><br> <br>June 30, 2023 Change -<br><br> <br>Amount
Total vessel revenues $ 4,451,166 $​ 8,116,946 $ 3,665,780
Expenses:
Voyage expenses (including commissions to related party) (70,592 ) (104,980 ) (34,388 )
Vessel operating expenses (2,106,699 ) (2,852,712 ) (746,013 )
Management fees to related parties (307,700 ) (352,950 ) (45,250 )
Depreciation and amortization (579,286 ) (850,371 ) (271,085 )
Segment Operating income $ 1,386,889 $​ 3,955,933 $ 2,569,044

Total Vessel revenues

Total vessel revenues, net of charterers’ commissions for our Handysize tanker segment amounted to $8.1 million in the six months ended June 30, 2023, as compared to $4.5 million in the same period in 2022. The increase is mainly due to the improvement in the Handysize tanker market relative to the same period in 2022, reflected in the increase in the Handysize fleet average Daily TCE Rate to $25,116 in the six months ended June 30, 2023 from $ 12,101 in the same period in 2022. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Vessel Operating Expenses

The increase in operating expenses for our Handysize tanker segment by $0.8 million, to $2.9 million in the six months ended June 30, 2023, from $2.1 million in the corresponding period of 2022, mainly reflects the increased crewing expenses.

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Management Fees

The increase in management fees for our Handysize tanker segment by $0.1 million, to $0.4 million in the six months ended June 30, 2023, from $0.3 million in the same period of 2022, mainly reflects the increased management fees following our entry into the Amended and Restated Master Management Agreement with effect from July 1, 2022, as there was no change in Ownership Days in both periods.

Depreciation and Amortization

Depreciation expenses amounted to $0.5 million for our Handysize tanker segment in the six months ended June 30, 2023 and in the same period in 2022, as there was no change in Ownership Days in both periods. Dry-dock amortization charges in the six months ended June 30, 2023 and the same period of 2022 amounted to $0.3 million and $0.1 million, respectively and this increase by $0.1 million relates to the M/T Wonder Formosa which underwent its scheduled dry-dock and special survey from early February 2023 and up to early March 2023.

Six months ended June 30, 2023— LPG Carrier Segment

We entered the LPG business in the second quarter of 2023 and, accordingly, no comparative financial information exists for the six months ended June 30, 2022.

​ Six months ended<br><br> <br>June 30, 2023
Total vessel revenues $ 388,087
Expenses:
Voyage expenses (including commissions to related party) (302,546 )
Vessel operating expenses (324,356 )
Management fees to related parties (257,400 )
Depreciation and amortization (130,120 )
Segment Operating loss $ (626,335 )

Total Vessel revenues

Total vessel revenues for our LPG carrier segment amounted to $0.4 million in the six months ended June 30, 2023. During the six months ended June 30, 2023, we owned on average 0.3 LPG carriers that earned a Daily TCE Rate of $1,614. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to Appendix A for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. During the period in which we owned them, both our LPG carriers were engaged in voyage charters.

Voyage Expenses

Voyage expenses for our LPG carrier segment amounted to $0.3 million in the six months ended June 30, 2023, mainly comprised of bunkers’ consumption costs and port expenses.

Vessel Operating Expenses

Operating expenses for our LPG carrier segment amounted to $0.3 million in the six months ended June 30, 2023, and mainly comprised crew wages costs, repairs and maintenance costs and lubricants’ consumption costs.

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Management Fees

Management fees for our containership segment amounted to $0.3 million in the six months ended June 30, 2023.

Depreciation and Amortization

Depreciation and amortization expenses amounted to $0.1 million in the six months ended June 30, 2023 and exclusively relate to vessels’ depreciation for the period during which we owned them.

Liquidity and Capital Resources

We operate in a capital-intensive industry, and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of cash from operations, proceeds from equity offerings, and borrowings from debt transactions. Our liquidity requirements relate to servicing the principal and interest on our debt, funding capital expenditures and working capital (which includes maintaining the quality of our vessels and complying with international shipping standards and environmental laws and regulations) and maintaining cash reserves for the purpose of satisfying certain minimum liquidity restrictions contained in our credit facility. In accordance with our business strategy, other liquidity needs may relate to funding potential investments in new vessels and maintaining cash reserves against fluctuations in operating cash flows. Our funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity.

As of June 30, 2023, and December 31, 2022, we had cash and cash equivalents of $127.9 million and $41.8 million, respectively, which excludes $0.4 million and $0.7 million of restricted cash in each period under our debt agreements, respectively. Cash and cash equivalents are primarily held in U.S. dollars.

As of June 30, 2023, we had $5.9 million of gross indebtedness outstanding under our debt agreement, of which $1.3 million matures in the twelve-month period ending June 30, 2024. As of June 30, 2023, we were in compliance with all the financial and liquidity covenants contained in our debt agreement.

Working capital is equal to current assets minus current liabilities. As of June 30, 2023 and December 31, 2022, we had a working capital surplus of $152.6 million and $48.2 million, respectively.

We believe that our current sources of funds and those that we anticipate to internally generate for a period of at least the next twelve months from the date of this annual report, will be sufficient to fund the operations of our fleet, meet our normal working capital requirements and service the principal and interest on our debt for that period.

As of June 30, 2023, there were commitments relating to purchase agreements of two 2015 Japanese-built 5,000 cbm LPG carriers from unaffiliated third parties at a price of $15.3 million each, amounting to $30.6 million, which represents 90% of their purchase price, payable in cash upon delivery of these two vessels. Both vessels were delivered in the third quarter of 2023.

Our Borrowing Activities

Please refer to Note 6 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for information regarding our borrowing activities as of June 30, 2023.

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Cash Flows

The following table summarizes our net cash flows provided by/(used in) operating, investing and financing activities for the six months ended June 30, 2023 and the six months ended June 30, 2022:

​ For the six months<br><br> <br>ended For the six months<br><br> <br>ended
​ June 30,<br><br> <br>2022 June 30,<br><br> <br>2023
Net cash provided by operating activities 3,991,711 48,336,855
Net cash (used in)/ provided by investing activities (479,188 ) 27,934,297
Net cash (used in)/ provided by financing activities (3,694,004 ) 9,488,312

Operating Activities: Net cash provided by operating activities amounted to $48.3 million for the six months ended June 30, 2023, consisting of net income of $77.3 million, non-cash adjustments related to depreciation and amortization of $3.9 million, gain on sale of the M/T Wonder Bellatrix and  M/T Wonder Polaris of $40.6 million and a net decrease of $9.1 million in working capital. For the six months ended June 30, 2022, net cash provided by operating activities amounted to $4.0 million, consisting of net income of $6.7 million, non-cash adjustments related to depreciation and amortization of $3.6 million and a net increase of $5.8 million in working capital. The $44.3 million increase in net cash from operating activities in the six months ended June 30, 2023, as compared with the same period of 2022, reflects mainly the increase in net income which was largely driven by the improvement of the charter rates earned by our Fleet and the gain on sale of M/T Wonder Bellatrix and M/T Wonder Polaris.

Investing Activities: Net cash provided by investing activities in the six months ended June 30, 2023 amounted to $27.9 million and mainly reflects the (i) vessel acquisitions of LPG Dream Terrax and LPG Dream Arrax amounting to $36.8 million, (ii) payments of initial vessel and BWTS installation expenses amounting to $1.0 million, (iii) advances for vessel acquisition of two LPG carriers amounting to $3.4 million and (iv) net proceeds from the sale of the M/T Wonder Bellatrix and M/T Wonder Polaris amounting to $69.1 million. Net cash used in investing activities in the six months ended June 30, 2022 amounting to $0.5 million mainly reflect payments in the current period of prior year initial vessel and BWTS installation expenses.

Financing Activities: Net cash provided by financing activities during the six months ended June 30, 2023 amounted to $9.5 million and relates to (i) Spin-Off expenses incurred by Castor on our behalf, which were reimbursed by us, amounting to $2.7 million, pursuant to the Contribution and Spin-Off Distribution Agreement entered into between us and Castor on February 24, 2023, (ii) net proceeds from the issuance of common shares pursuant to a subscription agreement with Pani Corp. amounting to $19.4 million (iii) $1.3 million of period scheduled principal repayments in connection with our $18.0 million term loan facility and $6.0 million of the repayment the part of the loan secured by M/T Wonder Polaris, (iv) payment to Castor of a dividend on the Series A Preferred Shares for the period from March 7, 2023 to April 14, 2023 amounting to $0.1 million, and (v) a net increase in former parent company investment amounting to $0.2 million. Net cash used in financing activities during the six months ended June 30, 2022 amounting to $3.7 million, relates to: (i) a net decrease in former parent company investment amounting to $2.0 million, and (ii) $1.7 million of period scheduled principal repayments in connection with our $18.0 million term loan facility.

Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We prepare our financial statements in accordance with U.S. GAAP. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For more details on our Critical Accounting Estimates, please read “Item 5.E. Critical Accounting Estimates” in our 2022 Annual Report. For a description of our significant accounting policies, please read Note 2 to our unaudited interim condensed consolidated financial statements, “Item 18. Financial Statements” in our 2022 Annual Report and more precisely “Note 2. Summary of Significant Accounting Policies” of our Combined Carve-Out Financial Statements included in our 2022 Annual Report.

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APPENDIX A

Non-GAAP Financial Information

Daily TCE Rate. The Daily Time Charter Equivalent Rate (“Daily TCE Rate”), is a measure of the average daily revenue performance of a vessel. The Daily TCE Rate is not a measure of financial performance under U.S. GAAP (i.e., it is a non-GAAP measure) and should not be considered as an alternative to any measure of financial performance presented in accordance with U.S. GAAP. We calculate Daily TCE Rate by dividing total revenues (time charter and/or voyage charter revenues, and/or pool revenues, net of charterers’ commissions), less voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time or other charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. Under voyage charters, the majority of voyage expenses are generally borne by us whereas for vessels in a pool, such expenses are borne by the pool operator. The Daily TCE Rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and, management believes that the Daily TCE Rate provides meaningful information to our investors since it compares daily net earnings generated by our vessels irrespective of the mix of charter types (i.e., time charter, voyage charter or other) under which our vessels are employed between the periods while it further assists our management in making decisions regarding the deployment and use of our vessels and in evaluating our financial performance. Our calculation of the Daily TCE Rates may not be comparable to that reported by other companies. The following table reconciles the calculation of the Daily TCE Rate for our fleet to Total vessel revenues, the most directly comparable U.S. GAAP financial measure, for the periods presented (amounts in U.S. dollars, except for Available Days):

Reconciliation of Daily TCE Rate to Total vessel revenues

​ Six months<br><br> <br>ended<br><br> <br>June 30, Six months<br><br> <br>ended<br><br> <br>June 30,
​ 2022 2023
Total vessel revenues $ 42,609,567 $ 56,012,683
Voyage expenses – including commissions from related party (18,669,842 ) (1,242,116 )
TCE revenues $ 23,939,725 $ 54,770,567
Available Days 1,589 1,435
Daily TCE Rate $ 15,066 $ 38,168

Reconciliation of Daily TCE Rate to Total vessel revenues — Aframax/LR2 Tanker Segment

​ Six months<br><br> <br>ended<br><br> <br>June 30, Six months<br><br> <br>ended<br><br> <br>June 30,
​ 2022 2023
Total vessel revenues $ 38,158,401 $ 47,507,650
Voyage expenses – including commissions from related party (18,599,250 ) (834,590 )
TCE revenues $ 19,559,151 $ 46,673,060
Available Days 1,227 1,063
Daily TCE Rate $ 15,941 $ 43,907

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Reconciliation of Daily TCE Rate to Total vessel revenues — Handysize Tanker Segment

​ Six<br><br> months<br><br> <br>ended<br><br> <br>June 30, Six<br><br> <br>months<br><br> <br>ended<br><br> <br>June 30,
​ 2022 2023
Total vessel revenues $ 4,451,166 $ 8,116,946
Voyage expenses – including commissions from related party (70,592 ) (104,980 )
TCE revenues $ 4,380,574 $ 8,011,966
Available Days 362 319
Daily TCE Rate $ 12,101 $ 25,116

Reconciliation of Daily TCE Rate to Total vessel revenues — LPG carrier Segment

​ Six<br><br> <br>months<br><br> <br>ended<br><br> <br>June 30,
​ 2023
Total vessel revenues $ 388,087
Voyage expenses – including commissions from related party (302,546 )
TCE revenues $ 85,541
Available Days 53
Daily TCE Rate $ 1,614

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