Item 5. Market for Registrant’s Common Equity
Item 5.
Market for Registrant’s Common Equity, Related Shareholder
Matters and Issuer Purchases of Equity Securities
Market Information
Our common shares are traded on The Nasdaq Capital Market and the TSX Venture
Exchange under the symbol “ACST.”
Holders
As of June 22, 2021, there were approximately 26 holders of record of our
common shares. The actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial
owners but whose shares are held in street name by brokers and other nominees.
Dividends
We do not anticipate paying any cash dividend on our common shares in the
foreseeable future. We presently intend to retain future earnings to finance the expansion and growth of our business. Any future determination
to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations,
capital requirements and other factors the board of directors deems relevant. In addition, the terms of any future debt or credit facility
may preclude us from paying dividends.
Taxation
The following is a summary of certain U.S. federal income tax considerations
arising from and relating to the acquisition, ownership, and disposition of our common shares to a U.S. Holder (as defined below) as capital
assets.
This summary provides only general information and does not purport to
be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. Holder as a result of
the acquisition, ownership, and disposition of our common shares. In addition, this summary does not take into account the individual
facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences applicable to that U.S.
Holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with
respect to any U.S. Holder. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, state and local, and non-U.S.
tax consequences arising from or relating to the acquisition, ownership, and disposition of our common shares.
No legal opinion from U.S. legal counsel or ruling from the Internal Revenue
Service, or IRS, has been requested, or will be obtained, regarding the U.S. federal income tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of our common shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position
that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary
is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in
this summary.
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Scope of this Disclosure
Authorities
This summary is based on the Code, U.S. Treasury Regulations promulgated
thereunder (whether final, temporary or proposed), published IRS rulings, judicial decisions, published administrative positions of the
IRS, and the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September
26, 1980, as amended (the Canada-U.S. Tax Treaty), in each case, as in effect as of the date of this report. Any of the authorities on
which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive
basis. Unless otherwise discussed, this summary does not discuss the potential effects, whether adverse or beneficial, of any proposed
legislation.
U.S. Holders
For purposes of this summary, a “U.S. Holder” is a beneficial
owner of common shares that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the United States,
(b) a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or
under the laws of the U.S., any state in the United States or the District of Columbia, (c) an estate if the income of such estate is
subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be
treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration
of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not
Addressed
This summary does not address the U.S. federal income tax consequences
applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following U.S. Holders:
(a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred
accounts; (b) U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment
companies; (c) U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e)
U.S. Holders subject to the alternative minimum tax provisions of the Code; (f) U.S. Holders that own common shares as part of a straddle,
hedging transaction, conversion transaction, integrated transaction, constructive sale, or other arrangement involving more than one position;
(g) U.S. Holders that acquired common shares through the exercise of employee stock options or otherwise as compensation for services;
(h) U.S. Holders that hold common shares other than as a capital asset within the meaning of Section 1221 of the Code; (i) U.S. Holders
that beneficially own (directly, indirectly or by attribution) 10% or more of our equity securities (by vote or value); and (j) U.S. expatriates.
U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described above, should consult their own tax
advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S.
tax consequences arising from and relating to the acquisition, ownership, and disposition of the common shares.
If an entity or arrangement that is classified as a partnership for U.S.
federal income tax purposes holds common shares, the U.S. federal income tax consequences to that partnership and the partners of that
partnership generally will depend on the activities of the partnership and the status of the partners. Partners of entities that are classified
as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences
arising from and relating to the acquisition, ownership and disposition of the common shares.
Tax Consequences Other than U.S. Federal Income Tax Consequences
Not Addressed
This summary does not address the U.S. estate and gift, alternative minimum,
state, local or non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition of our common shares. Each U.S.
Holder should consult its own tax advisor regarding the U.S. estate and gift, alternative minimum, state, local and non-U.S. tax consequences
arising from and relating to the acquisition, ownership, and disposition of our common shares.
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U.S. Federal Income Tax Considerations of the Acquisition, Ownership,
and Disposition of Common Shares
Distributions on Common Shares
Subject to the discussion under “—Passive Foreign Investment
Company Rules” below, a U.S. Holder that receives a distribution, including a constructive distribution or a taxable stock distribution,
with respect to the common shares generally will be required to include the amount of that distribution in gross income as a dividend
(without reduction for any Canadian income tax withheld from such distribution) to the extent of our current or accumulated “earnings
and profits” (as computed for U.S. federal income tax purposes). To the extent that a distribution exceeds our current and accumulated
“earnings and profits”, the excess amount will be treated (a) first, as a tax-free return of capital to the extent of a U.S.
Holder’s adjusted tax basis in the common shares with respect to which the distribution is made (resulting in a corresponding reduction
in the tax basis of those common shares) and, (b) thereafter, as gain from the sale or exchange of those common shares (see the more detailed
discussion at “—Disposition of Common Shares” below). We do not intend to calculate our current or accumulated earnings
and profits for U.S. federal income tax purposes and, therefore, will not be able to provide U.S. Holders with that information. U.S.
Holders should therefore assume that any distribution by us with respect to our common shares will constitute a dividend. However, U.S.
Holders should consult their own tax advisors regarding whether distributions from us should be treated as dividends for U.S. federal
income tax purposes. Dividends paid on our common shares generally will not be eligible for the “dividends received deduction”
allowed to corporations under the Code with respect to dividends received from U.S. corporations.
A dividend paid by us generally will be taxed at the preferential tax rates
applicable to long-term capital gains if, among other requirements, (a) we are a “qualified foreign corporation” (as defined
below), (b) the U.S. Holder receiving the dividend is an individual, estate, or trust, and (c) the dividend is paid on common shares that
have been held by the U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the “ex-dividend date”
(i.e., the first date that a purchaser of the common shares will not be entitled to receive the dividend).
For purposes of the rules described in the preceding paragraph, we generally
will be a “qualified foreign corporation”, or a QFC, if (a) we are eligible for the benefits of the Canada-U.S. Tax Treaty,
or (b) our common shares are readily tradable on an established securities market in the United States, within the meaning provided in
the Code. However, even if we satisfy one or more of the requirements, we will not be treated as a QFC if we are classified as a PFIC
(as discussed below) for the taxable year during which we pay the applicable dividend or for the preceding taxable year. The dividend
rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of those rules to them in their particular
circumstances. Even if we satisfy one or more of the requirements, as noted below, there can be no assurance that we will not be a PFIC
in the current taxable year or become a PFIC in the future. Thus, there can be no assurance that we will qualify as a QFC.
Disposition of Common Shares
Subject to the discussion under “—Passive Foreign Investment
Company Rules” below, a U.S. Holder will recognize gain or loss on the sale or other taxable disposition of common shares (that
is treated as a sale or exchange for U.S. federal income tax purposes) equal to the difference, if any, between (a) the U.S. dollar value
of the amount realized on the date of the sale or disposition and (b) the U.S. Holder’s adjusted tax basis (determined in U.S. dollars)
in the common shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term
capital gain or loss if the common shares are held for more than one year. A U.S. Holder's initial tax basis in the common shares generally
will equal the U.S. dollar cost of such common shares. Each U.S. Holder should consult its own tax advisor as to the tax treatment of
dispositions of common shares in exchange for Canadian dollars.
Preferential tax rates apply to long-term capital gains of a U.S. Holder
that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that
is a corporation. Deductions for capital losses are subject to complex limitations.
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Passive Foreign Investment Company Rules
If we are or become a PFIC, the preceding sections of this summary may
not describe the U.S. federal income tax consequences to U.S. Holders of the acquisition, ownership, and disposition of our common shares.
Passive Foreign Investment Company Status.
Special, generally unfavorable, rules apply to the ownership and disposition
of the stock of a PFIC. For U.S. federal income tax purposes, a non-U.S. corporation is classified as a PFIC if:
·
at least 75% of its gross income for the taxable year is “passive”
income (referred to as the “income test”); or
·
at least 50% of the average value of its assets held during the
taxable year is attributable to assets that produce passive income or are held for the production of passive income (referred to as the
“asset test”).
Passive income generally includes the following types of income:
·
dividends, royalties, rents, annuities, interest, and income equivalent
to interest; and
·
net gains from the sale or exchange of property that gives rise
to dividends, interest, royalties, rents, or annuities and certain gains from the commodities transactions.
In determining whether we are a PFIC, we will be required to take into
account a pro rata portion of the income and assets of each corporation in which we own, directly or indirectly, at least 25% by value.
As described above, PFIC status of a non-U.S. corporation depends on the
relative values of certain categories of assets and the relative amount of certain kinds of income for a taxable year. Therefore, our
status as a PFIC for any given taxable year depends upon the financial results for such year and upon relative valuations, which are subject
to change and beyond our ability to predict or control. Based on our most recent financial statements and projections and given uncertainty
regarding the composition of our future income and assets, there is a significant risk that we may have been classified as a PFIC for
the taxable year that ended on March 31, 2021, and may be classified as a PFIC for our current taxable year and possibly subsequent years.
However, PFIC status is fundamentally factual in nature, depends on the application of complex U.S. federal income tax rules (which are
subject to differing interpretations), generally cannot be determined until the close of the taxable year in question and is determined
annually. In addition, in evaluating the risk that we may be classified as a PFIC for our current taxable year and subsequent years, we
have not taken into account any changes to the composition of our income and assets that may result from the merger. Accordingly, there
can be no assurance that we will not be a PFIC in our current taxable year or subsequent years. The PFIC rules are complex, and each U.S.
Holder should consult its tax advisor regarding the application of the PFIC rules to us.
Default PFIC Rules Under Section 1291 of the Code.
Generally, if we are or have been treated as a PFIC for any taxable year
during a U.S. Holder’s holding period of common shares, subject to the special rules described below applicable to a U.S. Holder
who makes a Mark-to-Market Election or a QEF Election (each as defined below), any “excess distribution” with respect to the
common shares would be allocated ratably over the U.S. Holder’s holding period. The amounts allocated to the taxable year of the
excess distribution and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable
year would be subject to tax at the highest rate in effect for individuals or corporations in that taxable year, as appropriate, and an
interest charge would be imposed on the amount allocated to that taxable year. Distributions made in respect of common shares during a
taxable year will be excess distributions to the extent they exceed 125% of the average of the annual distributions on common shares received
by the U.S. Holder during the preceding three taxable years or the U.S. Holder’s holding period, whichever is shorter. In addition,
dividends generally will not be qualified dividend income if we are a PFIC in the taxable year of payment or the preceding year.
Generally, if we are treated as a PFIC for any taxable year during which
a U.S. Holder owns common shares, any gain on the disposition of the common shares would be treated as an excess distribution and would
be allocated ratably over the U.S. Holder’s holding period and subject to taxation in the same manner as described in the preceding
paragraph and would not be eligible for the preferential long-term capital gains rate.
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Certain elections (including the Mark-to-Market Election and the QEF Election,
as defined and discussed below) may sometimes be used to mitigate the adverse impact of the PFIC rules on U.S. Holders, but these elections
may accelerate the recognition of taxable income and have other adverse results.
Each current or prospective U.S. Holder should consult its own tax advisor
regarding potential status of us as a PFIC, the possible effect of the PFIC rules to such holder in their particular circumstances, information
reporting required if we were treated as a PFIC and the availability of any election that may be available to the holder to mitigate adverse
U.S. federal income tax consequences of holding shares in a PFIC.
QEF Election.
A U.S. Holder of common shares in a PFIC generally would not be subject
to the PFIC rules discussed above if the U.S. Holder had made a timely and effective election (a “QEF Election”) to treat
us as a “qualified electing fund” (a “QEF”). Instead, such U.S. Holder would be subject to U.S. federal income
tax on its pro rata share of our (i) net capital gain, which would be taxed as long-term capital gain to such U.S. Holder,
and (ii) ordinary earnings, which would be taxed as ordinary income to such U.S. Holder, in each case regardless of whether such amounts
are actually distributed to such U.S. Holder. However, a U.S. Holder that makes a QEF Election may, subject to certain limitations, elect
to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation,
any such interest paid will be treated as “personal interest,” which is not deductible.
A U.S. Holder that makes a timely and effective QEF Election generally
(a) may receive a tax-free distribution from us to the extent that such distribution represents our “earnings and profits”
that were previously included in income by such U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s
tax basis in the common shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.
In addition, for U.S. federal income tax purposes, a U.S. Holder that makes a timely QEF Election generally will recognize capital gain
or loss on the sale or other taxable disposition of the common shares.
A QEF Election will be treated as “timely” if such QEF Election
is made for the first taxable year in the U.S. Holder’s holding period for the common shares in which we are a PFIC. A U.S. Holder
may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income
tax return for such first year. If a U.S. Holder makes a QEF Election after the first taxable year in the U.S. Holder’s holding
period for the common shares in which we are a PFIC, then, in addition to filing the QEF Election documents, a U.S. Holder may elect to
recognize gain (which will be taxed under the rules discussed under “— Default PFIC Rules Under Section 1291 of the Code ”)
as if the common shares were sold on the qualification date. The “qualification date” is the first day of the first taxable
year in which we are a QEF with respect to such U.S. Holder. The election to recognize such gain can only be made if such U.S. Holder’s
holding period for the common shares includes the qualification date. By electing to recognize such gain, such U.S. Holder will be deemed
to have made a timely QEF Election. In addition, under very limited circumstances, it is possible that a U.S. Holder might make a retroactive
QEF Election if such U.S. Holder failed to file the QEF Election documents in a timely manner. If a U.S. Holder fails to make a QEF Election
for the first taxable year in the U.S. Holder’s holding period for the common shares in which we are a PFIC and does not elect to
recognize gain as if the common shares were sold on the qualification date, such holder will not be treated as having made a “timely”
QEF Election and will continue to be subject to the special adverse taxation rules discussed above under “— Default PFIC
Rules Under Section 1291 of the Code ”.
A QEF Election will apply to the taxable year for which such QEF Election
is made and to all subsequent taxable years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of
such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent taxable year, we cease to be a PFIC, the QEF Election will
remain in effect (although it will not be applicable) during those taxable years in which we are not a PFIC. Accordingly, if we become
a PFIC in another subsequent taxable year, the QEF Election will be effective, and the U.S. Holder will be subject to the rules described
above during any such subsequent taxable year in which we qualify as a PFIC.
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A U.S. Holder cannot make and maintain a valid QEF Election unless we provide
certain U.S. tax information necessary to make such an election. On an annual basis, we intend to use commercially reasonable efforts
to make available to U.S. Holders, upon their written request (a) timely information as to our status as a PFIC, and (b) for each year
in which we are a PFIC, information and documentation that a U.S. Holder making a QEF Election with respect to us is required to obtain
for U.S. federal income tax purposes. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure
for making, a QEF Election with respect to us.
Mark-to-Market Election.
A U.S. Holder of common shares in a PFIC would not be subject to the PFIC
rules discussed above under “— Default PFIC Rules Under Section 1291 of the Code ” if the U.S. Holder had made
a timely and effective election to mark the PFIC common shares to market (a “Mark-to-Market Election”).
A U.S. Holder may make a Mark-to-Market Election with respect to the common
shares only if such shares are marketable stock. Such shares generally will be “marketable stock” if they are regularly traded
on a “qualified exchange,” which is defined as (a) a national securities exchange that is registered with the SEC, (b) the
national market system established pursuant to section 11A of the Exchange Act, or (c) a non-U.S. securities exchange that is regulated
or supervised by a governmental authority of the country in which the market is located, provided that (i) such non-U.S. exchange has
trading volume, listing, financial disclosure, surveillance, and other requirements, and the laws of the country in which such non-U.S.
exchange is located, together with the rules of such non-U.S. exchange, ensure that such requirements are actually enforced and (ii) the
rules of such non-U.S. exchange ensure active trading of listed stocks. Our common shares will generally be treated as “regularly
traded” in any calendar year in which more than a de minimis quantity of common shares is traded on a qualified
exchange for at least 15 days during each calendar quarter. Each U.S. Holder should consult its own tax advisor with respect to the availability
of a Mark-to-Market Election with respect to the common shares.
In general, a U.S. Holder that makes a timely Mark-to-Market Election with
respect to the common shares will include in ordinary income, for each taxable year in which we are a PFIC, an amount equal to the excess,
if any, of (a) the fair market value of the common shares as of the close of such taxable year over (b) such U.S. Holder’s tax basis
in such shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the lesser of (a)
the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the common shares over (ii) the fair market value of such shares
as of the close of such taxable year or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market
Election for prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable
years. If a U.S. Holder makes a Mark-to-Market Election after the first taxable year in which we are a PFIC and such U.S. Holder has not
made a timely QEF Election with respect to us, the PFIC rules described above under “— Default PFIC Rules Under Section
1291 of the Code ” will apply to certain dispositions of, and distributions on, the common shares, and the U.S. Holder’s
mark-to-market income for the year of the election. If we were to cease being a PFIC, a U.S. Holder that marked its common shares to market
would not include mark-to-market gain or loss with respect to its common shares for any taxable year that we were not a PFIC.
A U.S. Holder that makes a Mark-to-Market Election generally will also
adjust such U.S. Holder’s tax basis in his common shares to reflect the amount included in gross income or allowed as a deduction
because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of the common shares subject to a Mark-to-Market
Election, any gain or loss on such disposition will be ordinary income or loss (to the extent that such loss does not to exceed the excess,
if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (b) the amount
allowed as a deduction because of such Mark-to-Market Election for prior taxable years). A Mark-to-Market Election applies to the taxable
year in which such Mark-to-Market Election is made and to each subsequent taxable year unless the common shares cease to be “marketable
stock” or the IRS consents to revocation of such election. Each U.S. Holder should consult its own tax advisor regarding the availability
of, and procedure for making, a Mark-to-Market Election with respect to the common shares.
Reporting .
If we were to be treated as a PFIC in any taxable year, a U.S. Holder will
generally be required to file an annual report with the IRS containing such information as the U.S. Treasury Department may require.
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Each U.S. Holder should consult its own tax advisor regarding our potential
status as a PFIC, the possible effect of the PFIC rules to such holder and information reporting required if we were a PFIC, as well as
the availability of any election that may be available to the holder to mitigate adverse U.S. federal income tax consequences of holding
shares in a PFIC.
Receipt of Foreign Currency
The amount of a distribution paid in Canadian dollars or Canadian dollar
proceeds received on the sale or other taxable disposition of common shares will generally be equal to the U.S. dollar value of the currency
on the date of receipt. If any Canadian dollars received with respect to the common shares are later converted into U.S. dollars, U.S.
Holders may realize foreign currency gain or loss on the conversion. Any gain or loss generally will be treated as ordinary income or
loss and generally will be from sources within the United States for U.S. foreign tax credit purposes. Each U.S. Holder should consult
its own tax advisor concerning the possibility of foreign currency gain or loss if any such currency is not converted into U.S. dollars
on the date of receipt.
Foreign Tax Credit
Subject to certain limitations, a U.S. Holder who pays (whether directly
or through withholding) Canadian or other non-U.S. income tax with respect to the common shares may be entitled, at the election of the
U.S. Holder, to receive either a deduction or a credit for Canadian or other non-U.S. income tax paid. Dividends paid on common shares
generally will constitute income from sources outside the United States. Any gain from the sale or other taxable disposition of the common
shares by a U.S. Holder generally will constitute U.S. source income. The foreign tax credit rules (including the limitations with respect
thereto) are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules, having regard to
such holder’s particular circumstances.
Information Reporting; Backup Withholding
Generally, information reporting and backup withholding will apply to distributions
on, and the payment of proceeds from the sale or other taxable disposition of, the common shares unless (i) the U.S. Holder is a corporation
or other exempt entity, or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number,
certifies that the U.S. Holder is not subject to backup withholding and otherwise complies with the applicable requirements of the backup
withholding rules.
Backup withholding is not an additional tax. Any amount withheld generally
will be creditable against a U.S. Holder’s U.S. federal income tax liability or refundable to the extent that it exceeds such liability
provided the required information is provided to the IRS in a timely manner.
In addition, certain categories of U.S. Holders must file information returns
with respect to their investment in a non-U.S. corporation. For example, certain U.S. Holders must file IRS Form 8938 with respect to
certain “specified foreign financial assets” (such as the common shares) with an aggregate value in excess of US$50,000 (and,
in some circumstances, a higher threshold). Failure to do so could result in substantial penalties and in the extension of the statute
of limitations with respect to such holder’s U.S. federal income tax returns. Each U.S. Holder should consult its own tax advisor
regarding application of the information reporting and backup withholding rules to it in connection with an investment in our common shares.
Medicare Contribution Tax
U.S. Holders that are individuals, estates or certain trusts generally
will be subject to a 3.8% Medicare contribution tax on, among other things, dividends on, and capital gains from the sale or other taxable
disposition of, common shares, subject to certain limitations and exceptions. Each U.S. Holder should consult its own tax advisor regarding
possible application of this additional tax to income earned in connection with an investment in our common shares.
Recent Sales of Unregistered Securities
None.
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Issuer Repurchases of Equity Securities
None.
Item 6.
Selected Financial Data
Not applicable.