What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-10 · 184 added, 109 removed, 266 unchanged (52% of the section changed)

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CMCT does not undertake to update them to reflect changes that occur after the date they are made.

The following discussion of our financial condition as of March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021 should be read in conjunction with the 2021 Form 10-K.

The following discussion of our financial condition as of June 30, 2022 and results of operations for the three and six months ended June 30, 2022 and 2021 should be read in conjunction with the 2021 Form 10-K.

For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2021 Form 10-K and in Part II, Item 1A of this Quarterly Report.

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Additionally, the spread of COVID-19 in the United States and the resulting restrictions on travel, meetings and social gatherings that have been implemented from time to time have impacted, and may continue to impact, the operations of our hotel in Sacramento, California.

For the three months ended March 31, 2022, our hotel segment net operating income was $2.4 million, which was lower than the comparable pre-COVID-19 period.

As a result, the net operating income of our hotel for 2022 may be lower as compared to pre-COVID-19 years and contributions by the hotel to our funds from operations may be diminished in 2022 when compared to pre-COVID-19 years.

Our loans originated and serviced under the SBA 7(a) Small Business Loan Program through March 31, 2022 consist primarily of loans to borrowers in the limited service hospitality sector.

Certain of our borrowers experienced significant reductions in cash flows as COVID-19 caused reductions in travel.

However, the substantial majority of our borrowers received relief under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) during the year ended December 31, 2020 through subsidy in the form of six months of monthly loan payments made on the borrower’s behalf pursuant to Section 1112 of the CARES Act.

Section 1112 of the CARES Act was extended and, beginning February 1, 2021, the CARES Act provided up to an additional five months of subsidy of scheduled principal and interest payments (up to $9,000 per month, per loan).

Those subsidies were not extended further.

The extent to which COVID-19 will continue to impact our operations and those of our tenants, business partners and borrowers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of any new outbreaks involving variants of COVID-19 and actions taken to contain or mitigate such outbreaks, the distribution and acceptance of vaccines, the impacts on the U.S.

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However, our business, financial condition, results of operations, and liquidity have been adversely affected and may continue to be adversely affected during 2022.

As of March 31, 2022, our real estate portfolio consisted of 16 assets, all of which were fee-simple properties, including one office property which we own through our investment in an unconsolidated joint venture (the “Unconsolidated Joint Venture”).

As of March 31, 2022, our 12 office properties, totaling approximately 1.4 million rentable square feet, were 78.9% occupied and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $119.78

for the three months ended March 31, 2022.

Additionally, as of March 31, 2022, we had two development sites (one being used as a parking lot),

As of June 30, 2022, our real estate portfolio consisted of 17 assets, all of which were fee-simple properties, including one office property which we own through our investment in an unconsolidated joint venture (the “Unconsolidated Joint Venture”).

As of June 30, 2022, our 12 office properties, totaling approximately 1.4 million rentable square feet, were 78.1% occupied and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $127.98 for the six months ended June 30, 2022.

Additionally, as of June 30, 2022, we had three development sites (one being used as a parking lot).

We are a Maryland corporation and REIT.

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We seek to apply the expertise of CIM Group to the acquisition, development and operation of top-tier multifamily properties situated in dynamic markets with similar business and employment characteristics to its creative office investments.

All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below.

All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described

further below.

These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth.

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As a result, CIM Group typically spends significant resources over a period of between six months and five years evaluating communities prior to making any acquisitions.

The distinct districts that CIM Group identifies through this process as targets for acquisitions are referred to as “Qualified Communities”.

Qualified Communities typically have dedicated resources to become, or are currently, vibrant communities where people can live, work, shop and be entertained, all within walking distance or close proximity to public transportation.

The distinct districts that CIM Group identifies through this process as targets for acquisitions are referred to as “Qualified Communities.” Qualified Communities typically have dedicated resources to become, or are currently, vibrant communities where people can live, work, shop and be entertained, all within walking distance or close proximity to public transportation.

These areas, which include traditional downtown areas and suburban main streets, generally have high barriers to entry, high population density, positive population trends, a propensity for growth and support for investment.

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CIM Group’s Investments and Development teams are separate groups that work very closely together on transactions requiring development or redevelopment.

in the development management and ongoing asset management of CIM Group’s assets under development.

While the Investments team is ultimately responsible for acquisition analysis, both the Investments and Development teams perform due diligence, evaluate and determine underwriting assumptions and participate in the development management and ongoing asset management of CIM Group’s assets under development.

The Development team is also responsible for the oversight and or execution of securing entitlements and the development/repositioning process.

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The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods (includes property partially owned through the Unconsolidated Joint Venture):

As of March 31,

As of June 30,

Occupancy (1) 78.1 % 78.0 %

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This amount reflects total cash rent before abatements.

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended March 31, 2022 and 2021 were approximately $1.8 million and $1.3 million, respectively.

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended June 30, 2022 and 2021 were approximately $2.2 million and $1.3 million, respectively.

Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

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For the Three Months Ended

June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023

September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023

Expiring Cash Rents:

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(1) Month-to-month tenants occupying a total of 15,552 square feet are included in the expiring leases in the first quarter listed.

(2) Represents gross monthly base rent, as of March 31, 2022, under leases expiring during the periods above, multiplied by 12.

(2) Represents gross monthly base rent, as of June 30, 2022, under leases expiring during the periods above, multiplied by 12.

This amount reflects total cash rent before abatements.

Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

During the three months ended March 31, 2022, we executed leases with terms longer than 12 months totaling 21,478 square feet.

The table below sets forth information on certain of our executed leases during the three months ended March 31, 2022, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

During the three and six months ended June 30, 2022, we executed leases with terms longer than 12 months totaling 39,392 and 60,870 square feet, respectively.

The table below sets forth information on certain of our executed leases during the three and six months ended June 30, 2022, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

Leases (1) Rentable

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Foot (2) Expiring

Three months ended March 31, 2022 7 14,971 $ 61.58 $ 62.14

Three months ended June 30, 2022 7 26,766 $ 35.11 $ 33.18

Six months ended June 30, 2022 14 41,737 $ 44.60 $ 43.57

______________________

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The following table sets forth the occupancy, ADR and RevPAR for our hotel in Sacramento, California for the specified periods:

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Occupancy 73.3 % 38.8 %

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In addition, as an SBA 7(a) licensee, we originated loans as an authorized lender under the Paycheck Protection Program (“PPP”), which was enacted during the year ended December 31, 2020 and completed during 2021.

While originations under the PPP have ended, we still had $3.4 million outstanding in PPP loans as of March 31, 2022.

Originations under the PPP have ended and we had a remaining outstanding balance of $205,000 in PPP loans outstanding as of June 30, 2022.

The SBA 7(a) Loan Program is the SBA’s most common loan program and is considered to be the best SBA assisted loan option when real estate is part of a business purchase.

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Most of our SBA 7(a) loans have maturities of approximately 25 years.

The PPP provides lenders who originated loans under the program with a 100% guaranty of repayment (provided certain conditions are met) and provides small businesses with uncollateralized and unguaranteed loans at an interest rate of 1.00%.

Loans originated under the PPP will be fully forgiven, subject to certain limitations, when used by the borrower for payroll costs, interest on mortgages, rent, and utilities.

For those loans that are forgiven, the SBA will remit 100% of the remaining outstanding principal plus accrued interest to us.

For those loans whose borrowers do not meet the criteria required for forgiveness, the borrower is required to repay the remaining obligation.

Upon a borrower default of any remaining balance due, if any, the SBA will remit the balance due to us.

The loans that we originated under the PPP have a two-year term if originated prior to June 5, 2020 and have a five-year term if originated after June 5, 2020.

The PPP provided lenders who originated loans under the program with a 100% guaranty of repayment (provided certain conditions are met) and provided small businesses with uncollateralized and unguaranteed loans at an interest rate of 1.00%.

We obtained all funds to originate loans under the PPP from the Federal Reserve on a basis that correlated to the outstanding principal balance due from our borrowers pursuant to the PPP on a dollar-for-dollar basis with a cost of funds of 0.35%.

As of June 30, 2022, substantially all loans originated under the PPP have been repaid (with a concomitant reduction in our obligations to the Federal Reserve).

While we have focused on originating real estate loans almost exclusively to the limited service and mid-scale hospitality industry, we intend to increase our efforts to originate other real estate collateralized loans.

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Property Concentration

Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied space in one of our Oakland, California properties, accounted for 29.4% of our annualized rental income for the three months ended March 31, 2022.

Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied space in one of our Oakland, California properties, accounted for 29.2% of our annualized rental income for the three months ended June 30, 2022.

2022 Results of Operations

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Net Income (Loss) and FFO

Three Months Ended March 31, Change

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Net Income and FFO

Three Months Ended June 30, Change

2022 2021 $ %

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Total expenses $ 23,411 $ 21,150 $ 2,261 10.7 %

Net income (loss) $ 2,302 $ (3,671) $ 5,973 (162.7) %

Net income (loss) increased to $2.3 million, or by $6.0 million, for the three months ended March 31, 2022, compared to a net loss of $3.7 million for the three months ended March 31, 2021.

The increase is primarily attributable to an increase of $3.1 million in our segment net operating income primarily as a result of increases in hotel segment and office segment net operating income as well as a decrease in asset management and other fees to related parties of $1.3 million and a decrease in general and administrative expenses of $904,000 .

Net income $ 2,931 $ 527 $ 2,404 456.2 %

Net income increased to $2.9 million, or by $2.4 million, for the three months ended June 30, 2022, compared to net income of $527,000 for the three months ended June 30, 2021.

The increase was primarily due to an increase in office segment net operating income of $314,000 , an increase in hotel segment net operating income of $3.2 million, a decrease in asset management fees of $1.3 million and a decrease in provision for income taxes of $675,000, partially offset by a decrease in lending segment net operating income of $3.4 million.

Funds from Operations

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accordingly, our FFO may not be comparable to the FFOs of other REITs.

Therefore, FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a supplement to or substitute measure for cash flows from operating activities computed

in accordance with GAAP.

FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Net loss attributable to common stockholders (1)

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$ 2,625 $ 859

(1) During the three months ended March 31, 2022 and 2021, we recognized $74,000 and $13,000, respectively, of redeemable preferred stock redemptions and $15,000 and $57,000, respectively, of redeemable preferred stock deemed dividends.

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(1) During the three months ended June 30, 2022 and 2021, we recognized $106,000 and $13,000, respectively, of redeemable preferred stock redemptions and $4,000 and $106,000, respectively, of redeemable preferred stock deemed dividends.

Such amounts are included in, and have the effect of reducing, net loss attributable to common stockholders and FFO attributable to common stockholders, because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.

FFO attributable to common stockholders was $2.2 million for the three months ended March 31, 2022, an increase of $5.4 million compared to a loss of $3.2 million for the three months ended March 31, 2021.

The increase in FFO is primarily attributable to an increase of $3.1 million in our segment net operating income, primarily as a result of increases in hotel segment net operating income as well as a decrease in asset management and other fees to related parties of $1.3 million and a decrease in general and administrative expenses of $904,000 .

FFO attributable to common stockholders was $2.6 million for the three months ended June 30, 2022, an increase of $1.8 million compared to $859,000 for the three months ended June 30, 2021.

The increase in FFO is primarily attributable to an increase in office segment net operating income of $314,000 , an increase in hotel segment net operating income of $3.2 million, a decrease in asset management fees of $1.3 million and a decrease in provision for income taxes of $675,000, partially offset by a decrease in lending segment net operating income of $3.4 million as well as an increase in redeemable preferred stock dividends declared or accumulated of $540,000 .

Summary Segment Results

During the three months ended March 31, 2022 and 2021, we operated in three segments:

During the three months ended June 30, 2022 and 2021, we operated in three segments:

office and hotel properties and lending.

Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2022 2021 $ %

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Non-Segment Revenue and Expenses:

Interest and other income $ — $ 1 $ (1) (100.0) %

Asset management and other fees to related parties $ (920) $ (2,260) $ 1,340 (59.3) %

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Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.

Office revenue increased to $14.1 million, or by 4.3%, for the three months ended March 31, 2022 compared to $13.5 million for the three months ended March 31, 2021.

The increase is primarily due to increased rental revenue at an office property in Austin, Texas as a result of higher occupancy for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Office revenue increased to $14.1 million, or by 5.4%, for the three months ended June 30, 2022 compared to $13.4 million for the three months ended June 30, 2021.

The increase is primarily due to increased rental revenue at an office property in Austin, Texas as a result of higher occupancy for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Hotel Revenue:

Hotel revenue increased to $7.8 million, or by 315.0%, for the three months ended March 31, 2022, compared to $1.9 million for the three months ended March 31, 2021, primarily due to an increase in occupancy, average daily rate, and food, beverage, and other sundry hotel services during the first quarter of 2022 as compared to the first quarter of 2021 as a result of the easing of government restrictions associated with COVID-19.

Hotel revenue increased to $9.6 million, or by 175.4%, for the three months ended June 30, 2022, compared to $3.5 million for the three months ended June 30, 2021, primarily due to an increase in occupancy and average daily rate during the second quarter of 2022 as compared to the second quarter of 2021 as a result of the hospitality industry recovering from the impact of COVID-19.

Lending Revenue:

Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.

Lending revenue decreased to $2.9 million, or by 17.0%, for the three months ended March 31, 2022, compared to $3.5 million for the three months ended March 31, 2021.

The decrease is primarily due to lower premium income as a result of lower loan sale volume during the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

Lending revenue decreased to $2.8 million, or by 52.9%, for the three months ended June 30, 2022, compared to $5.8 million for the three months ended June 30, 2021.

The decrease is primarily due to lower premium income as a result of lower loan sale volume and a reduction in the market premium achieved during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

We expect lending revenue to be lower materially for the second half of 2022, when compared to the second half of 2021 because of lower loan origination volume compared to 2021, a year when the SBA temporarily increased guaranteed percentages for SBA 7(a) loan originations, decreased demand for variable rate loans in the current inflationary economic environment, which we believe tends to lead borrowers to seek fixed rate loan products, and lower revenue from servicing assets retained for servicing the government guaranteed portion of our loans due to expected increases in prepayment.

These factors were partially offset by acceleration of income-recognition from any principal discounts recorded on our loans due to increased prepayment.

Office Expenses:

Office expenses increased to $6.2 million, or by 8.2%, for the three months ended March 31, 2022, compared to $5.7 million for the three months ended March 31, 2021.

The increase is primarily due to an increase in operating expenses at an office property in Austin, Texas and an office property in Oakland, California for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Office expenses increased to $6.4 million, or by 11.6%, for the three months ended June 30, 2022, compared to $5.8 million for the three months ended June 30, 2021.

The increase is primarily due to an increase in operating expenses at an office property in Austin, Texas, primarily as a result of increased real estate tax expense, as well as at an office property in Beverly Hills, California and an office property in Oakland, California, primarily as a result of higher maintenance expenses.

Hotel Expenses:

Hotel expenses increased to $5.4 million, or by 101.1%, for the three months ended March 31, 2022, compared to $2.7 million for the three months ended March 31, 2021, primarily as a result of increased occupancy at the hotel as compared to the first quarter of 2021 as a result of the easing of government restrictions associated with COVID-19.

Hotel expenses increased to $6.3 million, or by 81.9%, for the three months ended June 30, 2022, compared to $3.5 million for the three months ended June 30, 2021, primarily as a result of increased occupancy at the hotel as compared to the first quarter of 2021 as a result of the hospitality industry recovering from the impact of COVID-19.

Lending Expenses:

Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties.

Lending expenses decreased to $1.1 million, or by 17.0%, for the three months ended March 31, 2022, compared to $1.4 million for the three months ended March 31, 2021.

The decrease was primarily due to a decrease in interest expense as a result of net paydowns of SBA 7(a) loans receivable and PPP loans which resulted in corresponding paydowns on our borrowings under our SBA 7(a) loan-backed notes and the PPPLF.

Lending expenses increased to $1.1 million, or by 34.0%, for the three months ended June 30, 2022, compared to $792,000 for the three months ended June 30, 2021.

The increase was primarily due to an increase in salary expenses (largely due to a reduction in costs being capitalized as a result of lower loan origination volume) as well as an increase in general and administrative expenses.

Income From Unconsolidated Entity:

Income from our unconsolidated entity included in office segment net operating income was $120,000 for the three months ended March 31, 2022.

As our investment in the unconsolidated entity was made in February 2022, there was no comparable income for the three months ended March 31, 2021.

Income from our unconsolidated entity included in office segment net operating income was $260,000 for the three months ended June 30, 2022.

As our investment in the unconsolidated entity was made in February 2022, there was no comparable income for the three months ended June 30, 2021.

Asset Management and Other Fees to Related Parties:

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $921,000 for the three months ended March 31, 2022, a decrease of 59.2%, compared to $2.3 million for the three months ended March 31, 2021.

The decrease was a result of the Fee Waiver which became effective January 1, 2022 and replaced the previous asset management fee with a new Base Fee calculated at an annual rate of 1% (or 0.25% per quarter) of the average net asset value attributable to common stockholders at the beginning and end of the period.

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $920,000 for the three months ended June 30, 2022, a decrease of 59.3%, compared to $2.3 million for the three months ended June 30, 2021.

The decrease was a result of the Fee Waiver which became effective January 1, 2022 and resulted in the new Base Fee calculated at an annual rate of 1% (or 0.25% per quarter) of the average net asset value attributable to common stockholders at the beginning and end of the period.

Expense Reimbursements to Related Parties — Corporate:

The Administrator receives compensation and or reimbursement for performing certain services for the Company and its subsidiaries that are not covered by the Incentive Fee.

Expense reimbursements to related parties-corporate were $422,000 for the three months ended March 31, 2022, a decrease of 30.2%, compared to $605,000 for the three months ended March 31, 2021.

Expense reimbursements to related parties-corporate were $526,000 for the three months ended June 30, 2022, an increase of 15.9%, compared to $454,000 for the three months ended June 30, 2021 due to increases in allocated payroll.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, was $2.3 million for the three months ended June 30, 2022, a decrease of 8.3% compared to $2.5 million for the three months ended June 30, 2021.

The decrease is primarily due to a lower average outstanding principal balance on our 2018 Revolving Credit Facility compared to

the three months ended June 30, 2021, partially offset by increases in the LIBOR component of interest rates on our variable-rate debt for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

General and Administrative Expenses:

General and administrative expenses, which have not been allocated to our operating segments, were $880,000 for the three months ended June 30, 2022, consistent with $835,000 for the three months ended June 30, 2021.

Depreciation and Amortization Expense:

Depreciation and amortization expense was consistent at $5.0 million for both the three months ended June 30, 2022 and 2021.

Provision for Income Taxes:

Provision for income taxes was $321,000 for the three months ended June 30, 2022 as compared to $996,000 for the three months ended June 30, 2021.

The decrease in provision for income taxes is due to a decrease in taxable income at our taxable REIT subsidiaries, largely due to the operations of the lending division during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

2022 Results of Operations

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Net Income (Loss) and FFO

Six Months Ended June 30, Change

2022 2021 $ %

Total revenues $ 51,185 $ 41,552 $ 9,633 23.2 %

Total expenses $ 45,704 $ 43,326 $ 2,378 5.5 %

Net income (loss) $ 5,233 $ (3,144) $ 8,377 (266.4) %

Net income increased to $5.2 million, or by $8.4 million, for the six months ended June 30, 2022, compared to net loss of $3.1 million for the six months ended June 30, 2021.

The increase is primarily attributable to an increase of $541,000 in office segment net operating income, an increase of $6.5 million in hotel segment net operating income, a decrease of $2.7 million in asset management fees, a decrease of $859,000 in general and administrative expenses, a decrease of $585,000 in interest expense and a decrease of $742,000 in provision for income taxes, partially offset by a decrease of $3.7 million in lending segment net operating income.

Funds from Operations

The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):

Six Months Ended June 30,

Net loss attributable to common stockholders $ (5,160) $ (12,416)

Depreciation and amortization 9,978 10,106

FFO attributable to common stockholders $ 4,818 $ (2,310)

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(1) During the six months ended June 30, 2022 and 2021, we recognized $181,000 and $26,000, respectively, of redeemable preferred stock redemptions and $19,000 and $163,000, respectively, of redeemable preferred stock deemed dividends.

FFO attributable to common stockholders was $4.8 million for the six months ended June 30, 2022, an increase of $7.1 million compared to $(2.3) million for the six months ended June 30, 2021.

The increase in FFO is primarily attributable to an increase of $541,000 in office segment net operating income, an increase of $6.5 million in hotel segment net operating income, a decrease of $2.7 million in asset management and other fees to related parties, a decrease of $859,000 in general and administrative expenses, a decrease of $585,000 in interest expense and a decrease of $742,000 in provision for income taxes, partially offset by a decrease of $3.7 million in lending segment net operating income and by an increase in redeemable preferred dividends declared or accumulated of $1.1 million.

Summary Segment Results

During the six months ended June 30, 2022 and 2021, we operated in three segments:

office and hotel properties and lending.

Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).

Six Months Ended June 30, Change

2022 2021 $ %

Office $ 28,182 $ 26,883 $ 1,299 4.8 %

Hotel $ 17,369 $ 5,355 $ 12,014 224.4 %

Lending $ 5,634 $ 9,313 $ (3,679) (39.5) %

Office $ 12,648 $ 11,510 $ 1,138 9.9 %

Hotel $ 11,728 $ 6,164 $ 5,564 90.3 %

Lending $ 2,197 $ 2,160 $ 37 1.7 %

Income From Unconsolidated Entity

Office $ 380 $ — $ 380 100.0 %

Non-Segment Revenue and Expenses:

Interest and other income $ — $ 1 $ (1) (100.0) %

Asset management and other fees to related parties $ (1,841) $ (4,519) $ 2,678 (59.3) %

Expense reimbursements to related parties - corporate $ (948) $ (1,059) $ 111 (10.5) %

Interest expense $ (4,347) $ (4,932) $ 585 (11.9) %

General and administrative $ (2,017) $ (2,876) $ 859 (29.9) %

Depreciation and amortization $ (9,978) $ (10,106) $ 128 (1.3) %

Provision for income taxes $ (628) $ (1,370) $ 742 (54.2) %

Office Revenue:

Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.

Office revenue increased to $28.2 million, or by 4.8%, for the six months ended June 30, 2022 compared to $26.9 million for the six months ended June 30, 2021.

The increase is primarily due to increased rental revenue at an office property in Austin, Texas as a result of higher occupancy as compared to the six months ended June 30, 2021.

Hotel Revenue:

Hotel revenue increased to $17.4 million, or by 224.4%, for the six months ended June 30, 2022, compared to $5.4 million for the six months ended June 30, 2021, primarily due to an increase in occupancy and average daily rate during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 as a result of the hospitality industry recovering from the impact of COVID-19.

Lending Revenue:

Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.

Lending revenue decreased to $5.6 million, or by 39.5%, for the six months ended June 30, 2022, compared to $9.3 million for the six months ended June 30, 2021.

The decrease is primarily due to lower premium income as a result of lower loan sale volume and a reduction in the market premium achieved during the six months ended June

30, 2022, compared to the six months ended June 30, 2021.

These factors were partially offset by acceleration of income-recognition from any principal discounts recorded on our loans due to increased prepayment.

Office Expenses:

Office expenses increased to $12.6 million, or by 9.9%, for the six months ended June 30, 2022, compared to $11.5 million for the six months ended June 30, 2021.

The increase is primarily due to an increase in operating expenses at an office property in Austin, Texas, primarily as a result of increased real estate tax expense, and an office property in Oakland, California, primarily as a result of higher maintenance expenses.

and an office property in Oakland, California as compared to the six months ended June 30, 2021.

Hotel Expenses:

Hotel expenses increased to $11.7 million, or by 90.3%, for the six months ended June 30, 2022, compared to $6.2 million for the six months ended June 30, 2021, primarily as a result of increased occupancy at the hotel during as a result of the hospitality industry recovering from the impact of COVID-19.

Lending Expenses:

Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related party.

Lending expenses were $2.2 million, for both the six months ended June 30, 2022 and 2021.

Asset Management and Other Fees to Related Parties:

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $1.8 million for the six months ended June 30, 2022, a decrease of 59.3%, compared to $4.5 million for the six months ended June 30, 2021.

Expense Reimbursements to Related Parties — Corporate:

The Administrator receives compensation and or reimbursement for performing certain services for the Company and its subsidiaries that are not covered by the Incentive Fee.

Expense reimbursements to related parties-corporate were $948,000 for the six months ended June 30, 2022, a decrease of 10.5%, compared to $1.1 million for the six months ended June 30, 2021.

The decrease was primarily due to reductions in allocated payroll.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, was $2.1 million for the three months ended March 31, 2022, a decrease of 15.5% compared to $2.4 million for the three months ended March 31, 2021.

The decrease is primarily due to a lower average outstanding principal balance on our 2018 Revolving Credit Facility compared to the three months ended March 31, 2021.

Interest expense, which has not been allocated to our operating segments, was $4.3 million for the six months ended June 30, 2022, a decrease of 11.9% compared to $4.9 million for the six months ended June 30, 2021.

The decrease is primarily due to a lower average outstanding principal balance on our 2018 revolving credit facility during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, partially offset by increases in the LIBOR component of interest rates on our variable-rate debt for the six months ended June 30, 2022 as compared to six months ended June 30, 2021.

General and Administrative Expenses:

General and administrative expenses, which have not been allocated to our operating segments, were $1.1 million for the three months ended March 31, 2022, a decrease of 44.3% compared to $2.0 million for the three months ended March 31, 2021.

The decrease is primarily due to a decrease in legal fees.

General and administrative expenses, which have not been allocated to our operating segments, were $2.0 million for the six months ended June 30, 2022, a decrease of 29.9% compared to $2.9 million for the six months ended June 30, 2021.

The decrease is primarily due to a decrease in legal fees as compared to the six months ended June 30, 2021.

Depreciation and Amortization Expense:

Depreciation and amortization expense was consistent at $5.0 million for the both three months ended March 31, 2022 and 2021.

Depreciation and amortization expense was $10.0 million for the six months ended June 30, 2022, consistent with $10.1 million for the six months ended June 30, 2021.

Provision for Income Taxes:

Provision for income taxes was $307,000 for the three months ended March 31, 2022 as compared to a $374,000 for the three months ended March 31, 2021.

The decrease in provision for income taxes is due to a decrease in taxable income at our taxable REIT subsidiaries, largely due to the operations of the lending division during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Provision for income taxes was $628,000 for the six months ended June 30, 2022, a decrease of 54.2% compared to $1.4 million for the six months ended June 30, 2021.

The decrease in provision for income taxes is due to a decrease in taxable income at our taxable REIT subsidiaries, largely due to the operations of the lending division during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Cash Flow Analysis

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Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs.

Net cash provided by operating activities increased by $4.0 million for the three months ended March 31, 2022, as compared to the same period in 2021.The increase was primarily due to an increase in net income adjusted for depreciation and amortization expense and write-offs of uncollectible receivables of $5.3 million, primarily as a result of increases in hotel and office segment net operating income, partially offset by a $1.2 million decrease in net proceeds from sale of guaranteed loans net of loan fundings, held for sale.

Net cash provided by operating activities

increased by $7.4 million for the six months ended June 30, 2022, as compared to the same period in 2021.The increase was primarily due to an increase in net income adjusted for depreciation and amortization expense, write-offs of uncollectible receivables and income from our unconsolidated entity of $6.9 million, primarily as a result of increases in segment net operating income and a decrease in asset management fees, partially offset by a $1.5 million decrease in net proceeds from sale of guaranteed loans net of loan fundings, held for sale.

Our cash flows from investing activities are primarily related to property acquisitions and dispositions, expenditures for the development or repositioning of properties, capital expenditures and cash flows associated with loans originated at our lending segment.

Net cash used in investing activities increased by $29.5 million for the three months ended March 31, 2022, as compared to the same period in 2021.

The increase in cash used in investing activities was primarily due to an increase of $4.3 million in additions to investments in real estate and acquisitions of real estate and a cash outlay of $22.4 million related to the Unconsolidated Joint Venture, the investment that was made during the three months ended March 31, 2022, as compared to the same period in 2021.

Net cash used in investing activities increased by $30.9 million for the six months ended June 30, 2022, as compared to the same period in 2021.

The increase in cash used in investing activities was primarily due to an increase of $3.8 million in capital expenditures, primarily as a result of increased office leasing activity resulting in more tenant improvements, and acquisitions of real estate of $8.1 million, compared to no purchases during the same period in 2021, and a cash outlay of $22.4 million related to our investment in the Unconsolidated Joint Venture during the six months ended June 30, 2022.

Additionally, as a result of the ending of the PPP loan originations in 2021, there was a decrease in net cash used in investing activities related to net loan fundings of $3.4 million.

Our cash flows from financing activities are generally impacted by borrowings and capital activities.

Net cash provided by financing activities was $21.4 million during the three months ended March 31, 2022, compared to net cash used in financing activities of $231,000 in the same period in 2021.

The change was primarily due to an increase of $19.8 million in net proceeds from debt, primarily due to an increase in net borrowings under our 2018 Revolving Credit Facility, and an increase of $3.0 million in proceeds from issuance of preferred stock, net of redemptions, partially offset by an increase of $1.2 million in payments of common stock and preferred stock dividends during the three months ended March 31, 2022, as compared to the same period in 2021.

Net cash provided by financing activities was $4.5 million during the six months ended June 30, 2022, compared to net cash provided by financing activities of $12.9 million in the same period in 2021.

The decrease in net cash provided by financing activities of $8.4 million was primarily as a result of net proceeds from issuance of Common Stock during the six months ended June 30, 2021 of $78.5 million related to our rights offering completed in June 2021 as compared to the six months ended June 30, 2022 in which the Company repurchased $303,000 worth of its Common Stock and had no proceeds from Common Stock issuances.

Partially offsetting the aforementioned decrease in net cash provided by financing activities, the Company had net proceeds from debt of $6.5 million during the six months ended June 30, 2022 compared to net debt paydowns of $64.0 million during the six months ended June 30, 2021.

Liquidity and Capital Resources

On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, interest and principal on current and any future debt financings, SBA 7(a) loan originations, and paying distributions on our Preferred Stock and Common Stock.

On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock.

We may finance our future activities through one or more of the following methods:

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and or (v) cash flows from operations.

With respect to the $90.0 million outstanding under the 2018 Revolving Credit Facility as of May 3, 2022 that is scheduled to mature in October 2022, we expect to extend its maturity to October 2023, subject to satisfying certain conditions, and/or refinance such indebtedness.

Based on our projected performance and current capital market conditions, we expect that we will be able to implement either or both options.

With respect to the $50.0 million outstanding under the 2018 Revolving Credit Facility as of August 3, 2022 that is scheduled to mature in October 2022, we are working with a bank to refinance such indebtedness prior to its maturity date.

There can, however, be no assurance that such refinancing will occur.

In the interim, in order to preserve flexibility with respect to our liquidity, we submitted an extension notice in July 2022 to extend the maturity of the 2018 Revolving Credit Facility to October 2023.

The extension is subject to the satisfaction of certain conditions that we expect to be able to satisfy (if the refinancing does not occur).

In November 2022, holders of the Series L Preferred Stock will have the right to require us to redeem all or any of the shares of Series L Preferred Stock held by such holders.

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We do not know whether holders of Series L Preferred Stock will exercise their redemption rights and, if so, in what amounts.

We are currently actively evaluating our options with respect to whether we will exercise our redemption right with respect to any or all shares of Series L Preferred Stock as well as other alternatives.

repurchase and or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock.

Additionally, our outstanding commitments to fund loans were $16.4 million as of March 31, 2022, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.

The majority of these commitments have government guarantees of 90% (although the government guarantee has now reverted to 75%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans.

Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.

We have been actively evaluating our options with respect to whether we will exercise our redemption right with respect to any or all shares of Series L Preferred Stock as well as other alternatives.

Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock.

Additionally, our outstanding commitments to fund loans were $7.1 million as of June 30, 2022, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.

The majority of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75% from 90%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans.

some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.

We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements.

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Sources and Uses of Funds

We have one mortgage loan agreement with an outstanding balance of $97.1 million as of March 31, 2022.

We have one mortgage loan agreement with an outstanding balance of $97.1 million as of June 30, 2022.

Revolving Credit Facilities

In October 2018, we entered into the 2018 Revolving Credit Facility that, as amended, allows us to borrow up to $209.5 million, subject to a borrowing base calculation.

As of March 31, 2022 and December 31, 2021, the variable interest rate was 2.49% and 2.15%, respectively.

As of June 30, 2022 and December 31, 2021, the variable interest rate was 3.72% and 2.15%, respectively.

The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension.

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Based on our projected performance and current capital market conditions, we expect that we will be able to implement either or both options.

As of May 3, 2022, March 31, 2022, and December 31, 2021, $90.0 million, $90.0 million and $60.0 million, respectively, was outstanding under the 2018 revolving credit facility and approximately $106.2 million, $106.2 million, and $117.6 million, respectively, was available for future borrowings.

In May 2020, we entered into the 2020 unsecured revolving credit facility (the “2020 Credit Facility”) pursuant to which we can borrow up to a maximum of $10.0 million.

Outstanding advances under the 2020 Credit Facility bore interest at the rate of 1.00%.

As of and March 31, 2022, no amounts were outstanding under the 2020 Credit Facility.

The 2020 Credit Facility matured on May 1, 2022.

As of August 3, 2022, June 30, 2022, and December 31, 2021, $50.0 million, $75.0 million and $60.0 million, respectively, was outstanding under the 2018 revolving credit facility and approximately $150.9 million, $125.9 million, and $117.6 million, respectively, was available for future borrowings.

In June 2020, we commenced borrowing funds from the Federal Reserve through the PPPLF.

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We borrowed money under the PPPLF to finance all the loans we originated under the PPP.

As of March 31, 2022, $3.7 million was outstanding under the PPPLF.

As of June 30, 2022, $205,000 was outstanding under the PPPLF.

Other Financing Activity

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The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%.

The outstanding balance of SBA 7(a) loan-backed notes on May 3, 2022, March 31, 2022, and December 31, 2021, was $5.1 million, $6.2 million and $7.7 million, respectively.

The outstanding balance of SBA 7(a) loan-backed notes on August 3, 2022, June 30, 2022, and December 31, 2021, was $3.8 million, $4.0 million and $7.7 million, respectively.

We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest‑only payments.

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The junior subordinated notes may be redeemed at par at our option.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of March 31, 2022.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of June 30, 2022.

As an SBA 7(a) licensee, we are an authorized lender under the PPP and originated loans under the program.

As of March 31, 2022, we had $3.4 million outstanding in PPP loans.

As of June 30, 2022, we had $205,000 outstanding in PPP loans.

We expect that all of the outstanding PPP loans will be forgiven, either in part or in full, by the SBA or be repaid by the borrower, including both principal and accrued interest.

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However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the Reverse Stock Split was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of our Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend.

As of March 31, 2022, there were 4,458,589 Series A Preferred Warrants to purchase 1,156,393 shares of Common Stock outstanding.

Since February 2020, we have conducted a continuous public offering of up to approximately $785.0 million of our Series A Preferred Stock and Series D Preferred Stock.

We intend to use the net proceeds from the offering for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies.

As of March 31, 2022, we had issued 7,949,521 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $181.0 million after commissions, fees and allocated costs.

As of June 30, 2022, there were 4,294,512 Series A Preferred Warrants to purchase 1,113,569 shares of Common Stock outstanding.

From February 2020 through June 2022, we conducted a continuous public offering of our Series A Preferred Stock and Series D Preferred Stock.

In June 2022, we concluded the offering of our Series A Preferred Stock and Series D Preferred Stock and have since conducted a continuous public offering of our Series A1 Preferred Stock of up to approximately $692.3 million.

We intend to use the net proceeds from the offerings for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies.

As of June 30, 2022, we had issued 192,440 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $192.2 million after commissions, fees and allocated costs.

On March 16, 2020, we established an “at the market” (“ATM”) program through which we may, from time to time in our discretion, offer and sell shares of Common Stock having an aggregate offering price of up to $25.0 million through an investment banking firm acting as the sales agent.

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We intend to use the net proceeds from shares sold under the ATM program, if any, for general corporate purposes, acquisitions of shares of our Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies.

As of May 3, 2022, no sales of Common Stock have been made under the ATM program.

As of August 3, 2022, no sales of Common Stock have been made under the ATM program.

Dividends on and Redemptions of Preferred Stock

Holders of Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share at an annual rate of 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter), 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), and 5.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year), respectively.

Holders of Series A1 Preferred Stock, Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share as follows:

(1) at the of greater of (i) an annual rate of 6.0% of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5% of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5% of the Series A1 Preferred Stock Stated Value per quarter, (2) 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter), (3) 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), and (4) 5.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year), respectively.

However, if we fail to timely declare distributions or fail to timely pay any distribution on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.00% per year, up to a maximum annual rate of 8.50% of the Series L Preferred Stock Stated Value.

Dividends on each share of Preferred Stock begin accruing on, and are

cumulative from, the date of issuance.

Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance.

Prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, we must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by our Board of Directors at the end of the prior fiscal year.

On December 29, 2021, we announced an Initial Dividend on shares of our Common Stock for fiscal year 2022 in the aggregate amount of $7,010,799, of which $1,986,000 had been paid as of March 31, 2022.

We expect to pay dividends on the Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, and on the Series L Preferred Stock in arrears on a yearly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

On December 29, 2021, we announced an Initial Dividend on shares of our Common Stock for fiscal year 2022 in the aggregate amount of $7,010,799, of which $3,972,000 had been paid as of June 30, 2022.

We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, and on the Series L Preferred Stock in arrears on a yearly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.

Holders of our Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by us out of legally available funds.

In determining our dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, our financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects.

In determining our dividend policy, the Board of Directors considers many

factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, our financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects.

Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor.

From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A Preferred Stated Value and Series D Preferred Stated Value, respectively.

From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A1 Preferred Stock, Series A Preferred Stated Value and Series D Preferred Stated Value, respectively.

From and after the fifth anniversary of the date of original issuance of any share of our Preferred Stock, we generally (subject to certain conditions) have the right (but not the obligation) to redeem, and the holder of such share may require us to redeem, such share at a redemption price equal to 100% of the stated value of such share, plus any accrued but unpaid dividends in respect of such share as of the effective date of the redemption.

The redemption price in respect of any share of Preferred Stock, whether redeemed at our option or at the option of a holder, may be paid in cash or in shares of Common Stock in our sole discretion.

During the three months ended March 31, 2022, we redeemed 49,341 shares of Series A Preferred Stock and no shares of Series D Preferred Stock or Series L Preferred Stock.

During the three months ended June 30, 2022, we redeemed 88,225 shares of Series A Preferred Stock and no shares of Series A1 Preferred Stock, Series D Preferred Stock or Series L Preferred Stock.

Off-Balance Sheet Arrangements

As of March 31, 2022, we did not have any off-balance sheet arrangements.

As of June 30, 2022, we did not have any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

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Item 2. Management’s Discussion and Analysis