TORO

Business Context and Reporting Period

Toro Corp. (Nasdaq: TORO) is a Marshall Islands-incorporated shipping company focused on the transportation of liquefied petroleum gas (LPG). This Form 20-F covers the fiscal year ended December 31, 2024. The company operates a fleet of four LPG carrier vessels. A significant corporate development occurred subsequent to the reporting period: on April 14, 2025, Toro completed the "Robin Spin-Off," distributing its Handysize tanker segment to shareholders to create a separate publicly traded entity, Robin Energy Ltd. As of the filing date, Toro operates solely as an LPG carrier company.

Key Financial Metrics (Year Ended Dec 31, 2024)

Note: Total Net Income in 2023 included $129.5 million from discontinued operations (Aframax/LR2 segment). In 2024, discontinued operations contributed $19.7 million, primarily from the sale of the M/T Wonder Sirius.

Material Changes vs. Prior Period

• Revenue Stability: Total vessel revenues remained relatively flat ($22.39M vs $22.30M) despite a 30% increase in available days. This was driven by the addition of four LPG carriers (lower daily rates) offsetting the sale of the Handysize vessel M/T Wonder Formosa (higher daily rates).
• Profitability Decline: Net income from continuing operations dropped 51% to $5.51 million. This was primarily due to a $8.2 million gain on the sale of the M/T Wonder Formosa in 2023, which did not recur in 2024, and a significant increase in General and Administrative (G&A) expenses.
• Expense Increases: G&A expenses nearly doubled to $10.2 million (from $5.4 million), largely driven by $5.3 million in stock-based compensation costs under the Equity Incentive Plan. Depreciation and amortization increased to $4.9 million due to the expanded fleet.
• Cash Position: Cash and cash equivalents decreased by approximately $114.6 million to $37.2 million. Major outflows included a $100 million senior term loan provided to related party Castor Maritime Inc. and a $50 million purchase of Castor Series D Preferred Shares.
• Segment Shift: The LPG Carrier segment revenues grew 133% to $15.6 million, while the Handysize segment revenues declined 57% to $6.8 million following the sale of one vessel.

Guidance, Outlook, and Risks

Outlook and Strategy: Management intends to expand the LPG fleet through secondhand acquisitions and potentially newbuilds. The company expects to operate as a single-segment LPG carrier business following the Robin Spin-Off. All four LPG vessels are currently employed under period time charters with rates fixed through 2025-2027.

Key Risks and Contingencies:

• Geopolitical Instability: Attacks on vessels in the Red Sea and conflicts in the Middle East/Ukraine pose risks to trade routes, insurance costs (war risk premiums), and crew safety.
• Related Party Concentration: Toro is heavily exposed to Castor Maritime Inc. (a related party controlled by the CEO). As of Dec 31, 2024, Toro held a $100 million term loan and $100.7 million in preferred equity investments in Castor, constituting a substantial portion of assets.
• Charter Rate Volatility: The LPG carrier market is cyclical. While current vessels are fixed, future spot market exposure could lead to volatility.
• Regulatory Compliance: Increasing environmental regulations (IMO 2020, EEXI, CII, EU ETS) may require capital expenditures for fuel efficiency or alternative fuels.
• Dividend Policy: The company has no declared dividend policy for common shares. Dividends on Series A Preferred Shares (held by Castor) must be paid before any common dividends can be declared.

Investor Verification Checklist

• Related Party Exposure: Verify the creditworthiness of Castor Maritime Inc., given Toro's $200 million+ exposure (loan + equity) to this related entity.
• Robin Spin-Off Impact: Confirm the post-spin-off financial structure and any remaining liabilities or indemnities between Toro and Robin Energy Ltd.
• Charter Expirations: Review the specific expiration dates of the four LPG carrier time charters (ranging from May 2025 to April 2027) to assess re-chartering risk.
• Stock-Based Compensation: Assess the sustainability of G&A expenses, noting the $5.3 million non-cash stock compensation charge in 2024.
• Preferred Share Terms: Review the terms of the Series A Preferred Shares (1.00% dividend, convertible, senior to common) and the Series B Preferred Shares (super-voting rights held by CEO affiliate).