Exhibit 99.1

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
Page
F-2
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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
  
Note
    
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 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, 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 authorized; 1,000 and 17,961,009 shares issued; 1,000 and 17,961,009 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 authorized; Series B preferred shares: 0 and 40,000 shares issued and outstanding as of December 31, 2022 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
  

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
June 30,
    
Six months Ended
June 30,
  
​
  
Note
    
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 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
  

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
Series B
Preferred
Shares
    
Par
Value of
Preferred
Series B shares
    
# of
Common
shares
    
Par
Value of
Common
Shares
    
Additional
Paid-in
capital
    
Former
Parent
Company
Investment
    
(Accumulated
deficit)/
Retained
Earnings
    
Total
Shareholders’
Equity
    
# of
Series A
Preferred
Shares
    
Mezzanine
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
June 30,
    
Six months ended
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
incorporation
  
Date of
incorporation
  
Vessel Name
  
DWT
  
Year
Built
  
Delivery date
to Vessel
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, 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 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 third-party on June 26, 2023.
(4)
Incorporated under the laws of the Marshall Islands on November 22, 2021, no longer 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 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 entity is formed to acquire a 2015 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 entity is formed to acquire a 2015 Japanese-built 5,000 cbm LPG carrier from an unaffiliated third 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 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
June 30,
    
Six months ended
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,
2022
    
June 30,
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
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,
2022
    
As of June 30,
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 15th 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 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 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 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 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
June 30,
    
Six months ended
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
Shares
    
—
      
(931,034
)
Net income attributable to common
shareholders
  
$
6,657,133
    
$
75,958,842
  
 
                
Weighted average number of common shares
outstanding, basic
    
9,461,009
      
14,810,147
  
Effect of dilutive shares
    
44,682,646
      
44,682,646
  
Weighted average number of common shares
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
June 30,
    
Six months ended
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
June 30,
    
Six months ended
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
June 30,
    
Six months ended
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
June 30,
    
Six months ended
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
tanker segment
    
Handysize
tanker
segment
    
Total
    
Aframax/LR2
tanker segment
    
Handysize
tanker
segment
    
LPG carrier
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,
2022
    
As of June 30,
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 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