Gyrodyne, LLC 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2020 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. 39 Internal Control Over Financial Reporting The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting as defined in rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting includes those policies and procedures that: ● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Company’s financial statements in accordance with generally accepted accounting principles in the United States of America, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of its management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management assessed the effectiveness of its system of internal control over financial reporting as of December 31, 2020. In making this assessment, management used the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. Based on the Company’s assessment and the criteria set forth by COSO, management believes that the Company did maintain effective internal control over financial reporting as of December 31, 2020. The COSO methodology used in determining effective control over financial reporting follows the concepts in the 2013 Internal Control – Integrated Framework. The guidance demonstrates the applicability of those concepts to help smaller public companies design and implement internal controls to support the achievement of financial reporting objectives. It highlights 5 integrated components (control environment, risk assessment, control activities, information and communication and monitoring activities) and 17 key principles of the 2013 framework, providing a principles-based approach to internal control. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company, as a smaller reporting company, to provide only management’s report in this Annual Report. As such, this Annual Report does not include an attestation report of the Company’s public accounting firm regarding internal control over financial reporting. Changes in Internal Control over Financial Reporting There have been no significant changes in our internal control over financial reporting identified with our evaluation that occurred during the fiscal year ended December 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Subsequent Events Contract Terminations. Flowerfield - On August 27, 2019, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of a 9.0-acre parcel of vacant land (the “BSL Agreement Property”) in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St. James LLC, a Delaware limited liability company (“BSL”). The Agreement provided that BSL would have the right to terminate the BSL Agreement by written notice to GSD Flowerfield prior to the expiration of a defined inspection period (which had been extended via amendments to the BSL Agreement) if BSL was not fully satisfied, in BSL’s sole discretion, as to the status of title, suitability of the Property and all factors concerning same, in which case BSL would have the right to receive a refund of its earnest money deposit. 40 On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement. The BSL Termination Notice referenced the foregoing termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement. The BSL Agreement Property is included in the Company’s subdivision application with the Town of Smithtown, New York, to subdivide the entire Flowerfield property into eight separate parcels (one parcel of which is a catering hall facility sold by the Company in 2002). The Company believes the termination of the BSL Agreement should have no impact on the subdivision application, and will continue to actively market its entire Flowerfield property on the basis of eight subdivided lots subject to and contingent upon approvals for the subdivision and related entitlements. Cortlandt Manor - As of December 7, 2019, the Company’s wholly owned subsidiaries GSD Cortlandt, LLC, a New York limited liability company and Buttonwood Acquisitions, LLC (together the “Cortlandt Subsidiaries”), executed a Purchase and Sale Agreement (the “SC Agreement”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with improvements thereon (the “SC Agreement Property”) to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC” for a purchase price of $5,720,000. The SC Agreement provided that SC LLC would have the right to terminate the SC Agreement by written notice to the Cortlandt Subsidiaries prior to the expiration of a defined inspection period (which had been extended via amendments to the SC Agreement) if SC LLC was not fully satisfied, in SC LLC’s sole discretion, as to the status of title, suitability of the SC Agreement Property and all factors concerning same, in which case SC LLC would have the right to receive a refund of its earnest money deposit. On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC, LLC that it is terminating the SC Agreement. The SC Termination Notice referenced the foregoing termination right and called for the Escrow Agent (as defined in the SC Agreement) to return the earnest money deposit immediately to SC LLC in accordance with the provisions of the SC Agreement. The Company has made applications to the Town of Cortlandt (the “Town”) for a zoning amendment to rezone the entire Cortlandt property (owned by the Cortlandt Subsidiaries) into a Town Medical Oriented District (an “MOD) and to seek approval for a unified site plan. The Company’s original site plan at the time of executing the SC Agreement sought to subdivide its entire Cortlandt Manor property into three parcels for the development of (i) a medical office building with retail, (ii) a multi-family residential housing project and (iii) an open space, passive recreation parcel. The SC Agreement Property, which was the subject of the SC Agreement, is on the subdivision parcel in the original site plan for medical office building with ancillary retail space, but not on the multi-family residential housing parcel or the open space, passive recreation parcel. In response to extensive public comments received during the Cortlandt Manor public hearing process and input from the Cortlandt Manor Town Board, the Company amended the site plan and subdivision application with the Town to reflect a two-lot subdivision comprising a combined total of 184,600 square feet of medical office space and 1,500 square feet of retail space. The Company believes that the Town Board is expected to adopt an MOD designation for the Company’s Cortlandt property (inclusive of the two-lot subdivision and conceptual site plan approval) in early 2022. Credit Facility . The Company amended and extended the working capital line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”). On February 22, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) amended its line to remove the contingency that required signed contracts on Cortlandt Manor to be able to draw on the line. PART III Item 10. Directors, Executive Officers and Corporate Governance. (a) The following table lists the names, ages and positions of all executive officers and directors and all persons nominated or chosen to become such. Each director has been elected to the term indicated. Directors whose term of office ends in 2020 shall serve until the next Annual Meeting of Stockholders or until their successors are elected and qualified. All officers of the Company are elected by the Board to one-year terms. 41 Name & Principal Occupation or Employment Age First Became a Director of Gyrodyne, LLC First Became a Director of Gyrodyne Company Of America, Inc. Current Board Term Expires Gary J. Fitlin 55 --- --- --- President, CEO CFO and Treasurer of the Company Paul L. Lamb 75 2015 1997 2022 Partner of Lamb & Barnosky, LLP Chairman of the Board of Directors of the Company Elliot H. Levine 67 2015 2004 2021 CPA and Senior Member of Levine & Seltzer, LLP Director of the Company Ronald J. Macklin 58 2015 2003 2021 Director of the Company Philip F. Palmedo 86 2015 1996 2023 President of Palmedo Associates Director of the Company Peter Pitsiokos 61 --- --- --- Executive Vice President, COO, Secretary and Chief Compliance Officer of the Company the Company Nader G.M. Salour 62 2015 2006 2023 Principal, Cypress Realty of Florida, LLC Director of the Company Richard B. Smith 66 2015 2002 2022 Mayor of the Incorporated Village of Nissequogue Director of the Company (b) Business Experience Gary J. Fitlin, age 55, joined the Company in October 2009 as its Chief Financial Officer and Treasurer. From August 2012 through February 24, 2013, Mr. Fitlin served as interim President and Chief Executive Officer following the resignation of Stephen V. Maroney in August 2012. Following the separation of Frederick C Braun III, (President and Chief Executive Officer from February 2013 through April 2017), from the Company, the Board of Directors appointed Gary Fitlin as President and Chief Executive Officer effective May 1, 2017. Prior to joining the Company, he was Director of Accounting Implementation for Lexington Realty Trust, a publicly traded real estate investment trust on the NYSE, from July 2006 to March 2008, where he was responsible for mergers and acquisitions. Prior to that, Mr. Fitlin served as Vice President and Corporate Controller for Source Media (f/k/a Thomson Media), a publisher and software solution provider, from June 2005 to July 2006, where he was responsible for global accounting, management reporting, tax compliance and planning, financial systems, risk management and contract administration. Prior to that, he served as a senior financial officer for various publicly traded companies where he was responsible for mergers and acquisitions, global accounting, management reporting, tax compliance and planning, financial systems, risk management and contract administration. Mr. Fitlin also serves as Chairman of the CEO Leadership Committee for Stony Brook University. He is a Certified Public Accountant, an alumnus of Arthur Andersen & Co., and holds a BS degree in Accounting and Economics from the State University of New York at Oswego. 42 Paul L. Lamb, age 75, has been a director since 1997 and became Chairman of the Board on March 14, 1999. He is a founding partner in the law firm of Lamb & Barnosky, LLP, where he has practiced law since 1984; a past President of the Suffolk County Bar Association; and a Dean of the Suffolk Academy of Law. He holds a B.A. from Tulane University, a J.D. from the University of Kentucky and an LL.M. from the University of London, England. The Board concluded that Mr. Lamb should serve as a director of the Company because he is an experienced attorney in all phases of finance and real estate development, which skill set brings extraordinary value in light of the Company’s business and structure. Elliot H. Levine, age 67, was appointed to the Board in October 2004. Mr. Levine is a founding member of the accounting firm Levine & Seltzer, LLP Certified Public Accountants, and a graduate (1975) of Queens College, City University of New York. He became a member of the American Institute of Certified Public Accountants in February 1978. Mr. Levine’s work experience includes five years at Arthur Young, eleven and a half years as partner and director of taxes of Leslie Sufrin & Co. P.C., one-year tenure as senior tax manager at Margolin, Winer & Evans CPAs and over 29 years as senior member of Levine & Seltzer. The Board concluded that Mr. Levine should serve as a director of the Company because of his 40 years of experience as a certified public accountant and in the real estate industry and field of taxation. Ronald J. Macklin, age 58, was appointed to the Board in June 2003. Mr. Macklin served through April 2019 as Senior Vice President and U.S. General Counsel for National Grid and formerly Key Span Corporate Services, where he has held various positions within the Office of General Counsel since 1991. Previously, he was associated with the law firms of Rosenman & Colin and Cullen & Dykman. He received a B.A. degree from Stony Brook University and his Juris Doctorate from Union University’s Albany Law School. The Board concluded that Mr. Macklin should serve as a director of the Company because of his legal expertise, which includes his legal experience in corporate transactions, real estate matters, litigation, compliance and business ethics. Philip F. Palmedo, age 86, was appointed to the Board in July 1996. Mr. Palmedo has been President of the management consulting firm Palmedo Associates since 1980 and from 1988 to 1991 was Managing Director and President of Kepler Financial Management. From 1978 to 2000, he was Chairman of International Resources Group, an international professional services firm, and from 1992 to 1997 was President of the Long Island Research Institute. He was a founder of all four companies. In addition, Mr. Palmedo has been a director of Lixte Biotechnology Holdings, Inc. since 2005 and is currently a member of its Audit Committee. Mr. Palmedo has shepherded numerous fledgling businesses in financial and technological markets and completed several financing agreements. He also served as a trustee for the Stony Brook Foundation and is currently on the Planning Board for the Village of Head of the Harbor. Mr. Palmedo received his B.A degree from Williams College and M.S. and Ph.D. degrees from M.I.T. The Board concluded that Mr. Palmedo should serve as a director of the Company because of his extensive background in successfully guiding a number of entities from initial formation to value recognition. Peter Pitsiokos, age 61, joined the Company in July 1992 as its Assistant Secretary and served as its General Counsel from 1992-2004. He has been the Company’s Executive Vice President, Chief Operating Officer and Chief Compliance Officer since 2004. He has also been Secretary of the Company for over 18 years. Mr. Pitsiokos was formerly the Executive Assistant District Attorney in Suffolk County, New York. He also served as the Assistant Director of Economic Development and the Director of Water Resources in the Town of Brookhaven. He is a former trustee of the Three Village Central School District in Setauket, New York. Mr. Pitsiokos also maintained a private law practice in which he represented several national and local owners, managers and developers of real estate. He holds a law degree from Villanova University and a BA degree from Stony Brook University. Mr. Pitsiokos is also a Counselor of Real Estate. Nader G.M. Salour, age 62, was appointed to the Board in October 2006 and then elected by the shareholders at the Company’s annual meeting in December 2006. Mr. Salour has been a Principal of Cypress Realty of Florida since 2000. He served as President of Abacoa Development Company from June 1996 to June 2006 and has served as a Director of Abacoa Partnership for Community since December 1997 and as a Director of the Economic Council of Palm Beach County since 2004. The Board concluded that Mr. Salour should serve as a director of the Company because of his extensive experience in the real estate industry, including development, construction, project analysis and financing. Richard B. Smith, age 66, was appointed to the Board in November 2002. Mr. Smith was Vice President in the Commercial Banking Division of the First National Bank of Long Island from February 2006 through his retirement in December 2018. He previously served as Senior Vice President for Private Banking at Suffolk County National Bank from May 2000 to February 2005. Previously, he worked for 10 years at Key Bank (Dime Savings Bank) and for three years at L.I. Trust/Apple Bank. He received an MBA in Finance from SUNY Albany in 1983. Mr. Smith serves as the Mayor of the Incorporated Village of Nissequogue. Mr. Smith served as a Trustee of the Smithtown Historical Society for 27 years prior to retiring. He is also a former Trustee for St. Catherine’s Medical Center in Smithtown, New York. The Board concluded that Mr. Smith should serve as a director of the Company because of his background in both the Long Island financial sector and his role in, and experience with, local government issues and zoning matters. 43 (c) Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that the Company’s directors, executive officers, and any person holding more than ten percent (“10% Holder”) of our common shares, file with the SEC reports of ownership changes, and that such individuals furnish the Company with copies of the reports. Based solely on the Company’s review of copies of Forms 3 and 4 and amendments thereto received by it during fiscal 2020 and Forms 5 and amendments thereto received by the Company with respect to fiscal 2020 and any written representations from certain reporting persons that no Form 5 is required, Gyrodyne believes that none of the Company’s executive officers, directors or 10% Holders failed to file on a timely basis reports required by section 16(a) of the Exchange Act during fiscal 2020 other than one Director who filed a late Form 5 with respect to the sale of 114 shares by each of the two trusts of which the Director serves as a trustee. (d) Audit Committee Financial Expert The Board has an Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act, which currently consists of Messrs. Smith, Levine, and Macklin. All members are “financially literate” and have been determined to be “independent” within the meaning of SEC regulations and Nasdaq rules. The Board has determined that at least one member, Mr. Levine, a CPA, qualifies as an “audit committee financial expert” as a result of relevant experience as a member in the accounting firm of Levine & Seltzer, LLP for over 29 years. In addition, Mr. Levine has 11.5 years of accounting experience as a partner and director of taxes at Leslie Sufrin & Co. P.C. as well as several other years of experience in the field of public accounting. (e) Code of Ethics The Company has adopted a written Code of Ethics that applies to all its directors, officers and employees, including the Company’s Chief Executive Officer and Chief Financial Officer. It is available on the Company’s website at www.gyrodyne.com and any person may obtain without charge a paper copy by writing to the Secretary at the address set forth on page 1. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, the provision of our Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of our Code of Ethics by posting such information on our website at www.gyrodyne.com within four business days of such amendment or waiver . The Company is not including the information contained on its website as part of, or incorporating it by reference to, this Report. Item 11. Executive Compensation. (a) Executive Compensation The following table sets forth the total compensation awarded to, earned by or paid to each of the Company’s executive officers for services rendered during the years ended December 31, 2020 and 2019. SUMMARY COMPENSATION TABLE Name and principal position Year Salary ($) Bonus ($) Stock awards ($) Option awards ($) Non-equity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Gary Fitlin 2020 250,000 - - - - - - 250,000 President, CEO, CFO and Treasurer 2019 250,000 - - - 2,390(A) - - 253,390 Peter Pitsiokos 2020 200,000 - - - - - - 200,000 COO and Secretary 2019 200,000 - - - 2,151(A) - - 202,151 (A) Consists of retention bonus payments vested and paid pursuant to the Retention Bonus Plan upon the settlement of master lease from the sale of the Virginia Health Care Center. 44 The Registrant has concluded that aggregate amounts of perquisites and other personal benefits, securities or property to any of the current executives does not exceed $10,000 and that the information set forth in tabular form above is not rendered materially misleading by virtue of the omission of such personal benefits. (a) Employment Agreements On May 17, 2013, the Company entered into a new employment agreement with Gary J. Fitlin (the “Employment Agreement”) dated May 15, 2013 and effective April 1, 2013, pursuant to which Mr. Fitlin continued to serve as President and Chief Executive Officer and as Senior Vice President and Chief Financial Officer. Pursuant to the Employment Agreement, Mr. Fitlin earns a base salary at the rate of $250,000 per year plus a discretionary bonus, as determined and approved by the Board based upon the profitability and/or performance of Gyrodyne. Additionally, Mr. Fitlin is entitled to a bonus equal to $125,000 if he is employed by the Company as of the effective date of a change-in control (the “Change-in-Control Bonus”). The Employment Agreement defines a change-in-control as the first to occur of a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as each such term is defined under Section 409A of the Code. Pursuant to the terms of the Employment Agreement, there is no required minimum period of employment, and either the Company or Mr. Fitlin may terminate at any time, with or without cause. If Mr. Fitlin is terminated without cause, the Company must provide him with at least 60 days’ prior written notice of termination and must pay him (i) the pro rata share of his base salary through those 60 days, (ii) the Change-in-Control Bonus, and (iii) severance pay equal to six months’ base salary from the date of termination. If Mr. Fitlin is terminated for cause (as defined in the Employment Agreement), he will be paid the pro rata share of his base salary through the date of termination. Mr. Fitlin may also terminate upon 60 days’ prior written notice. The foregoing description of the Employment Agreement is only a summary of its material terms, does not purport to be complete and is qualified in its entirety by reference to that agreement. A copy of the Employment Agreement was filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. On May 8, 2014, Gyrodyne entered into a new employment agreement with Peter Pitsiokos effective May 15, 2014, pursuant to which Mr. Pitsiokos continues to serve as Executive Vice-President, Chief Operating Officer, Chief Compliance Officer and Secretary. Pursuant to the agreement, Mr. Pitsiokos earns a base salary at the rate of $200,000 per year plus a discretionary bonus, as determined and approved by the Board based upon the profitability and/or performance of Gyrodyne. There is no required minimum period of employment, and either Gyrodyne or Mr. Pitsiokos may terminate at any time, with or without cause. If Mr. Pitsiokos is terminated without cause, Gyrodyne must provide him with at least 60 days’ prior written notice of termination and must pay him the pro rata share of his base salary through those 60 days and severance pay equal to six months’ base salary from the date of termination. On January 25, 2018, Gyrodyne entered into an amendment to the employment agreement with Mr. Pitsiokos effective January 25, 2018, to define with greater specificity Mr. Pitsiokos’ duties and responsibilities with respect to the Company’s properties. (b) Outstanding Equity Awards at Fiscal Year End As of the year ended December 31, 2020, there were no unexercised options and/or stock that has not vested or equity incentive plan awards held by any of the Company’s named executive officers. (c) Severance and Change-in-Control Benefits Pursuant to the Employment Agreement with Mr. Fitlin, Mr. Fitlin earns a bonus equal to $125,000 if he is employed by the Company as of the effective date of a change-in-control (the “Change-in-Control Bonus”). The Employment Agreement defines a change-in-control as the first to occur of a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as each such term is defined under Section 409A of the Code. Pursuant to the terms of the Employment Agreements, there is no required minimum period of employment, and either the Company or the executive may terminate at any time, with or without cause. If the executive is terminated without cause, the Company must provide him with at least 60 days’ prior written notice of termination and must pay him (i) the pro rata share of his base salary through those 60 days, (ii) the Change-in-Control Bonus, and (iii) severance pay equal to six months’ base salary from the date of termination. If the executive is terminated for cause (as defined in the Employment Agreements), he will be paid the pro rata share of his base salary through the date of termination. Each of the executives may also terminate upon 60 days’ prior written notice. Pursuant to the employment agreement with Mr. Pitsiokos, Mr. Pitsiokos may be terminated at any time, with or without cause. If Mr. Pitsiokos is terminated without cause, Gyrodyne must provide him with at least 60 days’ prior written notice of termination and must pay him the pro rata share of his base salary through those 60 days and severance pay equal to six months’ base salary from the date of termination. 45 (d) Retention Bonus Plan In May 2014, the Board of Directors approved a retention bonus plan (as amended, the “Plan”) designed to recognize the nature and scope of the responsibilities of our directors, executives and employees related to the Company’s strategic plan to enhance the property values, liquidate and dissolve, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan. The Plan provides for bonuses to directors and to officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale. The summary appearing below reflects the terms set forth in the Plan as modified by three amendments. There were no further amendments to the terms of the Plan during the current reporting period. The Plan provides for a bonus pool funded with an amount equal to 5% of the specified appraised value of such properties (set forth in the Plan), so long as the gross selling price of a property is at least equal to its 2013 appraised value as designated in the bonus plan. Additional funding of the bonus pool will occur on a property-by-property basis only if the gross sales price of a property exceeds the Adjusted Appraised Value defined as the sum of (i) its 2013 appraised value, in which case additional funding will occur and (ii) land development costs incurred on a property since the date of the 2013 appraisal, as follows: 10% on the first 10% of appreciation, 15% on the next 10% of appreciation and 20% on appreciation greater than 20%. The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of the Company: Board Members/Employees Bonus Pool Percentage Board Members(a) 65.000 % Chief Executive Officer 15.474 % Chief Operations Officer 13.926 % Officer Discretionary Amount (b) 1.750 % Other Employees 3.850 % Total 100.000 % (a) 15% for the Chairman and 10% for each of the other five directors. (b) The officer discretionary amount of 1.75% will be allocated to the officers within the discretion of the Board. Such shares of the bonus pool are earned only upon the completion of the sale of a property at a gross selling price equal to or greater than its Adjusted Appraised Value and is paid to the named beneficiaries of the Plan or their designees within 60 days of the completion of such sale or, if later, within 60 days of receipt of any subsequent post-completion installment payment related to such sale. The Plan provides that no benefits are to be paid to participants from the sale of any individual post-subdivided lot from either of the Company’s Flowerfield or Cortlandt Manor properties until aggregate sale proceeds from all sales of post-subdivided lots from such property exceed a designated aggregate floor for such property. The aggregate floor for each of the Flowerfield and Cortlandt Manor properties is defined in Amendment No. 3 to the Plan as the 2013 appraisal of such property plus land development costs incurred for such property since such appraisal. The Plan provides for vesting of benefits upon the sale of each individual post-subdivision lot at Flowerfield and Cortlandt Manor. It also provides for entitlement to a future benefit in the event of death, voluntary termination following substantial reduction in compensation or board fees, mutually agreed separation to right-size the board or involuntary termination without cause, except that a participant will only be eligible to receive a benefit to the extent that a property is sold within three years following the separation event and the sale produces an internal rate of return equal to at least four percent of the property’s value as of December 31 immediately preceding such event and that the sale exceeded the Adjusted Appraised Value. There were no payments made under the Plan during the twelve months ended December 31, 2020. The payments made during the twelve months ended December 31, 2019 under the Plan relate to the settlement of the master lease from the Sale of the Virginia Health Care Center were as follows: RETENTION BONUS PLAN PARTICPANTS 2019 Board of Directors $ 9,471 President and Chief Executive Officer 2,390 Chief Operating Officer 2,151 Other Employees 561 Total $ 14,573 46 2020 DIRECTOR COMPENSATION The following table shows the compensation earned by each of the Company’s non-officer directors for the year ended December 31, 2020: Name (a) Fees earned or paid in cash (b) Stock awards (c) Option awards (d) Non-equity incentive plan compensation (e) Nonqualified deferred compensation earnings (f) All other compensation (g) Total (h) Paul L. Lamb $ 120,000 $ - $ - $ - $ - $ - $ 120,000 Philip F. Palmedo 42,000 - - - - - 42,000 Elliot H. Levine 42,000 - - - - - 42,000 Richard B. Smith 42,000 - - - - - 42,000 Ronald J. Macklin 42,000 - - - - - 42,000 Nader G.M. Salour 42,000 - - - - - 42,000 Total $ 330,000 $ - $ - $ - $ - $ - $ 330,000 Deferred Compensation Plan. On December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020. The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company. Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%. All DCP benefits will be paid in a single lump sum cash payment on December 15, 2026, unless a Plan of Liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP. The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP, which is attached hereto as Exhibit 10.12. Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020 and 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. (a) As of December 31, 2020, there were no equity compensation plans under which securities of the Company were authorized for issuance. (e) The following table sets forth certain information as of April 13, 2021, regarding the beneficial ownership of the Company’s common shares by (i) each person who the Company believes to be the beneficial owner of more than 5% of its outstanding common shares, (ii) each present director, (iii) each person listed in the Summary Compensation Table under “Executive Compensation,” and (iv) all the Company’s present executive officers and directors as a group. 47 Name and address of beneficial owner Amount and nature of beneficial ownership (1) Percent of Class (10) Poplar Point Capital Management, LLC 840 Hinckley Road, Suite 250 Burlingame, CA 94010 179,904 (2) 12.1 Mario Gabelli /Gamco Asset Management Inc. /Gabelli Funds/GCIA/Teton Advisors One Corporate Center Rye, NY 10580 170,870 (3) 11.5 Grantham, Mayo, Van Otterloo & Co., LLC 40 Rowes Wharf Boston, MA 02110 148,088 (4) 10.0 Neil Subin MILFAM LLC 3300 South Dixie Highway, Suite 1-365 West Palm Beach, FL 33405 113,557 (5) 7.7 Towerview LLC. 460 Park Avenue New York, NY 10022 101,500 (6) 6.8 MFP Investors LLC 667 Madison Avenue, 25 th Floor New York, NY 10065 80,850 (7) 5.5 Paul L. Lamb 1 Flowerfield, Suite 24 St. James, NY 11780 37,259 (8) 2.5 Philip F. Palmedo 1 Flowerfield, Suite 24 St. James, NY 11780 16,677 (9) 1.1 Nader G.M. Salour 1 Flowerfield, Suite 24 St. James, NY 11780 3,866 * Richard B. Smith 1 Flowerfield, Suite 24 St. James, NY 11780 862 * Ronald J. Macklin 1 Flowerfield, Suite 24 St. James, NY 11780 1,381 * Elliot H. Levine 1 Flowerfield, Suite 24 St. James, NY 11780 113 * Peter Pitsiokos 1 Flowerfield, Suite 24 St. James, NY 11780 0 * Gary J. Fitlin 1 Flowerfield, Suite 24 St. James, NY 11780 0 * All executive officers and Directors as a group (8 persons) 60,158 4.1 (1) Except as otherwise indicated, the beneficial owner has sole voting and investment power. Except as indicated, the beneficial owner has not pledged as security, or has any rights to acquire beneficial ownership of, any securities of the Company. 48 (2) On December 30, 2015, Poplar Point Capital Management, LLC filed a Schedule 13G with the Securities and Exchange Commission stating that each reporting person has shared power to vote or direct the vote and has shared power to dispose of or direct the disposition of 179,904 common shares. The Schedule 13G was jointly filed by Poplar Point Capital Management LLC, Poplar Point Capital Partners L.P., Poplar Point Capital GP LLC and Mr. Jad Fakhry, collectively, the reporting persons. (3) On April 1, 2021, Gamco Investors Inc. filed a Schedule 13D with the Securities and Exchange Commission stating that GAMCO, a group of investment funds, beneficially owns an aggregate of 170,870 common shares. Power to dispose of and vote securities resides with Mario Gabelli, Douglas Jamieson and Kevin Handwerker. Each reporting person has the shared power to vote or direct the vote and has shared power to dispose of or direct the disposition of 170,870 common shares. The Schedule 13D was filed by Mario Gabelli, David Goldman, Douglas Jamieson and Kevin Handwerker. (4) On February 12, 2021, Grantham, Mayo, Van Otterloo & Co. LLC filed a Schedule 13G with the Securities and Exchange Commission stating that it has the power to vote or direct the vote, and the power to dispose of or direct the disposition of 148,088 common shares. The Schedule 13G was filed by Gregory Pottle. (5) On August 20, 2020, Neil Subin filed a Schedule 13G with the Securities and Exchange Commission stating that he has the power to vote or direct the vote and has power to dispose of or direct the disposition of 113,557 common shares. (6) On January 12, 2021, Towerview LLC filed a Schedule 13G with the Securities and Exchange Commission stating that each reporting person has shared power to vote or direct the vote and has shared power to dispose of or direct the disposition of 101,500 common shares. The Schedule 13G was filed by Daniel R. Tisch. (7) On February 14, 2019, MFP Investors LLC filed a Schedule 13G/A with the Securities and Exchange Commission stating that each reporting person has shared power to vote or direct the vote and has shared power to dispose of or direct the disposition of 80,850 common shares. The Schedule 13G/A was filed by Michael Price. (8) Includes 4,368 shares held by Lamb & Barnosky, LLP Profit Sharing Trust and 32,891 shares in an Individual Retirement Account. Mr. Lamb is a trustee of the Profit-Sharing Trust. (9) Does not include his wife’s ownership of 4,125 shares in which he denies any beneficial interest. (10) The percent of class is calculated on the basis of the number of shares outstanding, which is 1,482,680 as of April 13, 2021. Ownership Limitation Under Gyrodyne, LLC’s Amended and Restated Limited Liability Company Agreement, shareholders of Gyrodyne may not hold common shares representing in excess of 20% of the outstanding common shares at any time. If a shareholder of Gyrodyne exceeds 20% ownership, at any time for any reason whatsoever, including but not limited to additional contributions by shareholders, purchases or other acquisitions by shareholders, mergers, consolidations, acquisitions, or other business combinations involving the shareholder, then common shares in excess of such 20% ownership limit shall be transferred by such shareholder to an irrevocable trust formed and administered by Gyrodyne and of which such shareholder shall be the beneficiary. Such LLC Shares held in trust shall have no voting rights when held in the trust and shall be disregarded in computing any required votes under the Amended and Restated Limited Liability Company Agreement of Gyrodyne. At the end of each fiscal quarter, or at such other earlier date as determined by the Board, the Company, on behalf of the trust, shall have the option to purchase such common shares from the trust at a price determined by an independent appraiser or to offer such common shares to third parties, including to other shareholder of Gyrodyne in proportion to their relative ownership percentage, or to other persons at the appraised price. However, in the event such a shareholder’s ownership percentage including common shares held beneficially in the trust on behalf of such shareholder, at any time becomes less than the 20% ownership limit due to the sale of common shares by such shareholder or due to additional issuances of common shares by Gyrodyne, then the trust (to the extent such shareholder’s common shares have not been sold pursuant) has an obligation to return such common shares up to the 20% ownership limit. 49 Item 13. Certain Relationships and Related Transactions and Director Independence. The Company has entered into various leasing arrangements with a not-for-profit organization of which the Company’s Chairman, Paul Lamb, serves as Chairman and a director but receives no compensation or any other financial benefit. A summary of the leasing arrangements is as follows: Term Square Feet Annual Rent Total Commitment (excluding remaining renewal options) Additional Commitment (assumes two-year renewal option is exercised) Jan 2019-Dec 2020 2,284 $ 19,414 $ 38,828 $ 38,828 Jan 2019-Dec 2020 1,817 -(a) -(a) -(a) Jan 2019-Dec 2020 1,905 $ 16,193 $ 32,385 $ 32,385 (a) In February 2019, the Company amended the square footage under the master lease with the not-for-profit originally entered into in August 2016. The Company understood that the tenant’s main intent was to sublease the space to artists, on a short-term basis, after which such subtenant artists would transition into their own space leased directly from the Company. Under the master lease, the tenant has the right to sublease the space without prior written consent for use as an art studio, art school or related use. Under the terms of the master lease, rent is payable by the tenant only to the extent the space is sublet, at the rent amount per square foot payable by the subtenant up to a maximum of $10 per square foot per year. The lease originally was for 2,130 square feet. The amended maximum annual and total lease commitment of up to $18,170 and $36,340, respectively. Approximately $3,500 in improvements were provided. Any space not subleased may be used by the tenant rent-free for certain stated art uses, although the tenant is responsible for certain passthrough expenses such as electric and heat. Since rent is only due if the space is sublet, the Company believes the fair value of the space to the extent not sublet reflects a below market lease over the year ending December 31, 2020 of $18,170 and total commitments including two-year renewal option of up to $72,680. In December 2020, the tenant exercised the second and last renewal term option, extending the lease terms until December 31, 2022. During the twelve months ended December 31, 2020 and 2019, respectively, the Company received rental revenue of $35,607 and $34,720, respectively. The independent members of the Board of the Company approved all of the leasing transaction described above. The Chairman is also a partner of the firm Lamb & Barnosky, LLP that provided pro bono legal representation to the aforementioned not-for-profit corporation on the lease. The members of the Board are independent directors as defined by the listing requirements of the Nasdaq Stock Market. Such independent directors are Messrs. Lamb, Levine, Macklin, Palmedo, Salour and Smith. The Company has compensation, nominating, investment and audit committees, the members of which are also independent as defined by the listing requirements of the Nasdaq Stock Market. Item 14. Principal Accounting Fees and Services. The following is a summary of the fees billed to the Company by Baker Tilly US, LLP, its independent registered principal accountants, for professional services rendered for the years ended December 31, 2020 and 2019: Fee Category Fiscal December 31, 2020 Fiscal December 31, 2019 Audit Fees (1) $ 101,750 $ 86,000 Audit-Related Fees (2) 11,799 5,977 Tax Fees (3) 40,696 18,800 Total Fees $ 154,245 $ 110,777 (1) Audit Fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements, review of the interim financial statements included in quarterly reports, and services that are normally provided by the principal accountants in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2020 and 2019, respectively. (2) Audit-Related Fees consist of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under "Audit Fees." Such services include review of the Company’s strategic plan analysis, Form 8-K filings, proxy filings and research into various accounting issues. (3) Tax Fees consist of aggregate fees billed for professional services rendered by the Company’s principal accountant for tax compliance, tax advice and tax planning. The amounts disclosed consist of fees paid for the preparation of federal and state income tax returns and K-1’s. The Audit Committee is responsible for the appointment, compensation and oversight of the work of the principal accountants and approves in advance any services to be performed by the principal accountants, whether audit-related or not. The Audit Committee reviews each proposed engagement to determine whether the provision of services is compatible with maintaining the independence of the principal accountant’s independent auditors. The Audit Committee has determined not to adopt any blanket pre-approval policies or procedures. All of the fees shown above were pre-approved by the Audit Committee. 50 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Statement of Net Assets as of December 31, 2020 and 2019 (liquidation basis) Consolidated Statement of Changes in Net Assets for the twelve months ended December 31, 2020 and 2019, (liquidation basis) Notes to Consolidated Financial Statements Schedules All other information required by the following schedules has been included in the consolidated financial statements, is not applicable, or not required: Schedule I, III, IV, V, VI, VII, VIII, IX, X, XI, XII and XIII. (b) Exhibits: The following exhibits are either filed as part of this report or are incorporated herein by reference as indicated: 3.1 Amended and Restated Limited Liability Company Agreement of Gyrodyne, LLC (1) 10.1 Compensation of Directors (2) 10.2 Employment Agreement, with Gary J. Fitlin, dated May 15, 2013 (3) 10.3 Employment Agreement with Peter Pitsiokos dated May 8, 2014 (4) 10.4 Indemnification Agreement, dated as of February 8, 2013, between the Company and each of its directors and officers (5) 10.5 Amended and Restated Limited Liability Company Agreement of Gyrodyne Special Distribution, LLC (6) 10.6 Retention Bonus Plan (7) 51 10.7 Amendment No. 1 to Employment Agreement with Peter Pitsiokos (8) 10.8 Amended and Restated Retention Bonus Plan (9) 10.9 Amendment No. 2 to Retention Bonus Plan (8) 10.10 Amendment No. 3 to Retention Bonus Plan (10) 10.11 Nonqualified Deferred Compensation Plan (11) 10.12 Board Advisor Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.13 Amendment No. 1 dated as of November 24, 2017 to Board Adviser Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.14 Amendment No. 2 dated as of December 31, 2019 to Board Adviser Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.15 Purchase and Sale Agreement effective as of August 27, 2019 between GSD Flowerfield LLC and BSL St. James LLC (13) 10.16 Purchase and Sale Agreement effective as of December 7, 2019 between GSD Cortlandt LLC, Buttonwood LLC and Sound Cortlandt LLC (12) 10.17 Notice of Termination from Sound Cortlandt, LLC (2) 10.18 Notice of Termination from BSL St. James LLC (2) 21.1 List of all subsidiaries (2) 31.1 Rule 13a-14(a)/15d-14(a) Certifications (2) 32.1 CEO/CFO Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2) 101.INS** XBRL Instance 101.SCH**XBRL Taxonomy Extension Schema 101.CAL**XBRL Taxonomy Extension Calculation 101.DEF**XBRL Taxonomy Extension Definition 101.LAB**XBRL Taxonomy Extension Labels 101.PRE**XBRL Taxonomy Extension Presentation (1) Incorporated herein by reference to Amendment No. 2 to Form S-4, Annex F, filed with the Securities and Exchange Commission on June 17, 2014. (2) Filed as part of this report. (3) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 23, 2013. 52 (4) Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 12, 2014. (5) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on February 14, 2013. (6) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on December 27, 2013. (7) Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 8, 2014. (8) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on January 31, 2018. (9) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016. (10) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018. (11) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on December 13, 2019. (12) Incorporated herein by reference to Form 10-K, filed with the Securities and Exchange Commission on March 26, 2020. (13) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on August 30, 2019. ** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. GYRODYNE, LLC. /S/ Gary J. Fitlin By Gary J. Fitlin, President, Chief Executive Officer, Chief Financial Officer and Treasurer Date: April 13, 2021 ******************** Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /S/ Richard B. Smith By Richard B. Smith, Director Date: April 13, 2021 /S/ Elliot H. Levine By Elliot H. Levine, Director Date: April 13, 2021 /S/ Ronald J. Macklin By Ronald J. Macklin, Director Date: April 13, 2021 /S/ Paul L. Lamb By Paul L. Lamb, Director Date: April 13, 2021 53 Exhibit Index 3.1 Amended and Restated Limited Liability Company Agreement of Gyrodyne, LLC (1) 10.1 Compensation of Directors (2) 10.2 Employment Agreement, with Gary J. Fitlin, dated May 15, 2013 (3) 10.3 Employment Agreement with Peter Pitsiokos dated May 8, 2014 (4) 10.4 Indemnification Agreement, dated as of February 8, 2013, between the Company and each of its directors and officers (5) 10.5 Amended and Restated Limited Liability Company Agreement of Gyrodyne Special Distribution, LLC (6) 10.6 Retention Bonus Plan (7) 10.7 Amendment No. 1 to Employment Agreement with Peter Pitsiokos (8) 10.8 Amended and Restated Retention Bonus Plan (9) 10.9 Amendment No. 2 to Retention Bonus Plan (8) 10.10 Amendment No. 3 to Retention Bonus Plan (10) 10.11 Nonqualified Deferred Compensation Plan (11) 10.12 Board Advisor Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.13 Amendment No. 1 dated as of November 24, 2017 to Board Adviser Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.14 Amendment No. 2 dated as of December 31, 2019 to Board Adviser Agreement dated as of May 24, 2016 with Jad Fakhry (12) 10.15 Purchase and Sale Agreement effective as of August 27, 2019 between GSD Flowerfield LLC and BSL St. James LLC (13) 10.16 Purchase and Sale Agreement effective as of December 7, 2019 between GSD Cortlandt LLC, Buttonwood LLC and Sound Cortlandt LLC (12) 54 10.17 Notice of Termination from Sound Cortlandt, LLC (2) 10.18 Notice of Termination from BSL St. James LLC (2) 21.1 List of all subsidiaries (2) 31.1 Rule 13a-14(a)/15d-14(a) Certifications (2) 32.1 CEO/CFO Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2) 101.INS** XBRL Instance 101.SCH**XBRL Taxonomy Extension Schema 101.CAL**XBRL Taxonomy Extension Calculation 101.DEF**XBRL Taxonomy Extension Definition 101.LAB**XBRL Taxonomy Extension Labels 101.PRE**XBRL Taxonomy Extension Presentation (1) Incorporated herein by reference to Amendment No. 2 to Form S-4, Annex F, filed with the Securities and Exchange Commission on June 17, 2014. (2) Filed as part of this report. 55 (3) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 23, 2013. (4) Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 12, 2014. (5) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on February 14, 2013. (6) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on December 27, 2013. (7) Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 8, 2014. (8) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on January 31, 2018. (9) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016. (10) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018. (11) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on December 13, 2019. (12) Incorporated herein by reference to Form 10-K, filed with the Securities and Exchange Commission on March 26, 2020. (13) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on August 30, 2019. ** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 56 GYRODYNE, LLC AND SUBSIDIARIES REPORT ON AUDITS OF CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2020 and 2019 GYRODYNE, LLC AND SUBSIDIARIES Contents Years Ended December 31, 2020 and 2019 Pages Report of Independent Registered Public Accounting Firm F-1 Consolidated Statements of Net Assets as of December 31, 2020 and 2019 (liquidation basis) F-3 Consolidated Statements of Changes in Net Assets for the years ended December 31, 2020 and 2019 (liquidation basis) F-4 Notes to Consolidated Financial Statements F-5-20 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Gyrodyne, LLC: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of net assets (liquidation basis) of Gyrodyne, LLC and Subsidiaries (the "Company") as of December 31, 2020 and 2019, and the related consolidated statements of changes in net assets (liquidation basis) for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated statements of net assets (liquidation basis) of the Company as of December 31, 2020 and 2019, and the related consolidated statements of changes in net assets (liquidation basis) for years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Liquidation Value of Real Estate Assets - Refer to Notes 2, 3, 7 and 13 to the Consolidated Financial Statements Critical Audit Matter Description The Company presents its consolidated financial statements under the liquidation basis of accounting and, accordingly, presents its real estate assets at their liquidation value at each reporting period. The Company estimates the liquidation value of its real estate assets by using both income and market valuation techniques. The market valuation techniques use estimates and assumptions based on market information, such as broker opinions of value, appraisals, and recent sales data for similar assets. The income valuation technique consists of a discounted cash flow model. As disclosed by management, the Company’s evaluation of anticipated discounted cash flows is subjective and is based, in part, on estimates and assumptions, such as market rental rates, capitalization rates, and discount rates that could differ materially from actual results. F-1 We identified the liquidation value of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to determine the liquidation value of the real estate assets, specifically the estimates of market rental rates, capitalization rates, and discount rates for each real estate asset. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the critical audit matter included, among other things, the following: • We obtained an understanding of the design and implementation of the controls over management’s evaluation of the key estimates and assumptions used in the determination of the liquidation value of real estate assets, including those over the selection of market rental rates, capitalization rates, and discount rates. • With the assistance of our fair value specialists, we performed the following procedures: o Assessed the reasonableness of the significant assumptions used in both real estate appraisals and discounted cash flow analyses, including estimates of market rental rates, capitalization rates, and discount rates. o Tested the source information underlying the assumptions. o Developed a range of independent estimates, regarding the assumptions, focusing on the geographical location and property type and compared our independent estimates to the estimates and assumptions used by the Company. o Tested the mathematical accuracy and completeness of the discounted cash flow analyses. • We evaluated the reasonableness of management’s discounted cash flow analyses by comparing management’s projections to the Company’s historical results and external market sources. • We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit. • We evaluated the impact of current market events and conditions, including the effect of COVID-19 pandemic, as well as any recent and relevant comparable transactions, on the valuation techniques and assumptions used by management. • We evaluated management’s ability to reasonably estimate liquidation value of real estate based on the subsequent sales of the Company’s properties. We have served as the Company's auditor since 1990. /s/ Baker Tilly US, LLP Melville, New York April 13, 2021 F-2 PART I – FINANCIAL INFORMATION Item 1. Financial Statements. GYRODYNE, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET ASSETS (Liquidation Basis) December 31, 2020 December 31, 2019 ASSETS: Real estate held for sale $ 39,050,000 $ 48,270,000 Cash and cash equivalents 1,632,231 2,213,205 Restricted cash 169,000 - Rent receivable 21,849 63,132 Other receivables 34,751 41,460 Total Assets $ 40,907,831 $ 50,587,797 LIABILITIES: Accounts payable $ 893,183 $ 592,743 Accrued liabilities 556,926 178,479 Deferred rent liability 15,283 24,316 Tenant security deposits payable 241,722 265,078 Mortgage loans payable 5,159,833 3,780,068 Estimated liquidation and operating costs net of receipts 11,552,940 14,377,476 Total Liabilities 18,419,887 19,218,160 Net assets $ 22,487,944 $ 31,369,637 See notes to consolidated financial statements F-3 GYRODYNE, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Liquidation Basis) Year ended December 31, 2020 2019 Net assets, beginning of period $ 31,369,637 $ 26,846,670 Changes in net assets: Change in real estate value (9,220,000 ) 12,068,730 Remeasurement of assets and liabilities 338,307 (7,545,763 ) Net (decrease)/increase in value (8,881,693 ) 4,522,967 Net assets, end of period $ 22,487,944 $ 31,369,637 See notes to consolidated financial statements F-4 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 1. The Company Gyrodyne, LLC (including its subsidiaries, “Gyrodyne”, the “Company” or the “Registrant”) is a limited liability company formed under the laws of the State of New York whose primary business is the management of, and the pursuit of entitlements on, a portfolio of medical office and industrial properties located in Suffolk (“Flowerfield”) and Westchester Counties (“Cortlandt Manor”), New York State. Substantially all of our developed properties are subject to leases in which the tenant reimburses the Company for a portion, all of or substantially all of the costs and/or cost increases for utilities, insurance, repairs, maintenance and real estate taxes. Certain leases provide that the Company is responsible for certain operating expenses. Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities and enhancing the value of its leases. The Company believes the aforementioned strategy will improve the chances of increasing the values for such properties. The value of the real estate reported in the consolidated statements of net assets as of December 31, 2020 and 2019 (predicated on current asset values) includes some, but not all of the potential value impact that may result from such value enhancement efforts. There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all. Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve in limited circumstances other strategies to enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders. Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes distributions to holders of Gyrodyne common shares. The process of seeking entitlements to enhance property values and the amount and timing of distributions from proceeds of asset sales involve risks and uncertainties. As such, it is impossible at this time to determine the ultimate amount of proceeds that will actually be distributed to our shareholders or the timing of such payments. Accordingly, no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in our consolidated statements of net assets. The actual nature, amount and timing of all distributions will be determined by Gyrodyne’s Board in its sole discretion and will depend in part upon the Company’s ability to convert our remaining assets into cash in compliance with our obligations under the Stipulation entered into in connection with the class action lawsuit (See Note 14 – Contingencies) and settle and pay our remaining liabilities and obligations. Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), such dissolution may be effected upon the vote of holders of a majority of Gyrodyne common shares or, in the Company’s discretion and without any separate approval by the holders of the Gyrodyne common shares, at any time the value of Gyrodyne’s assets, as determined by the Company in good faith, is less than $1,000,000. The Company’s remaining real estate investments, each of which is held in a single asset limited liability company wholly owned by the Company, consist of: ● Cortlandt Manor:13.8 acres in Cortlandt Manor, New York, consisting of the 34,000 square foot Cortlandt Manor Medical Center; and ● Flowerfield: 68 acres in St. James, New York, including a 10-acre multi-tenanted industrial park comprising 127,000 rentable square feet. 63 of the 68 acres are included in the subdivision application filed with the Town of Smithtown. 5 acres of the 68 acres are zoned residential and non-contiguous to the Flowerfield property. 2. Summary of Significant Accounting Policies Gyrodyne intends to dissolve after it completes the disposition of all of its real property assets, applies the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then makes distributions to holders of Gyrodyne common shares. Therefore, effective September 1, 2015 Gyrodyne adopted the liquidation basis of accounting. This basis of accounting is considered appropriate when, among other things, liquidation of the entity is “imminent”, as defined in ASC 205-30, Presentation of Financial Statements Liquidation Basis of Accounting. Under the LLC Agreement, the Company may elect, in its sole discretion and without any separate approval by shareholders, to dissolve the Company at any time the value of the Company’s assets, as determined by the Company in good faith, is less than $1 million. The LLC Agreement also provides that the Company will dissolve, and its affairs wound up, upon the sale, exchange or other disposition of all the real properties of the Company. As a result, liquidation is “imminent” in accordance with the guidance provided in ASC 205-30. F-5 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 Principles of Consolidation - The consolidated financial statements include the accounts of Gyrodyne and all subsidiaries. All consolidated subsidiaries are wholly owned. All inter-company balances and transactions have been eliminated. Basis of Presentation - Liquidation Basis of Accounting – Under the liquidation basis of accounting the consolidated balance sheet and consolidated statements of operations, equity, comprehensive income and cash flows are no longer presented. The consolidated statements of net assets and the consolidated statements of changes in net assets are the principal financial statements presented under the liquidation basis of accounting. Under the liquidation basis of accounting, all the Company’s assets have been stated at their estimated net realizable value, or liquidation value, (which represents the estimated amount of cash that Gyrodyne will collect on the disposal of assets as it carries out the plan of liquidation), which is based on current contracts, estimates and other indications of sales value (predicated on current values). All liabilities of the Company, including those estimated costs associated with implementing the plan of liquidation, have been stated at their estimated settlement amounts. These amounts are presented in the accompanying statements of net assets. These estimates are periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or amount of future distributions or our actual dissolution. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amount represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the plan of liquidation. The actual values and costs associated with carrying out the plan of liquidation may differ from amounts reflected in the accompanying consolidated financial statements because of the plan’s inherent uncertainty. These differences may be material. In particular, the estimates of our costs will vary with the length of time necessary to complete the plan of liquidation, which is currently anticipated to be completed by December 31, 2022. The Company is in the process of pursuing entitlements and density, and our ability to obtain required permits and authorizations is subject to factors beyond our control, including environmental concerns of governmental entities, community groups and purchasers. The process will involve extensive analysis internally at the government entity level, as well as between government entities such as town planning departments and Gyrodyne and or purchasers, and will continue up until such time as entitlement and density decisions are made by the relevant government entities. The Company hopes to secure favorable decisions on entitlements and density so that we can then seek the sale of our remaining properties at higher prices (than those achievable under their current entitlements) and then proceed with the liquidation and dissolution of the Company. Any deviation in use or density between what we are pursuing in our entitlement efforts and what is ultimately permitted could have a material impact on value. The Company expects the process of pursuing entitlements, density, sales, liquidation and dissolution could extend through December 31, 2022 with the ultimate timing to a certain extent managed by Gyrodyne but also dependent upon and under the control of the applicable municipality’s planning board or other governmental authority and or purchasers. Accordingly, it is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to common shareholders and no assurance can be given that the distributions will equal or exceed the estimate presented in the accompanying consolidated statements of net assets. The Company’s assumptions and estimates (including the sales proceeds of all its real estate holdings, selling costs, retention bonus payments, rental revenues, rental expenses, capital expenditures, land entitlement costs, general and administrative fees, director and officer liability and reimbursement, post liquidation insurance tail coverage policy and final liquidation costs) are based on completing the liquidation by December 31, 2022. As previously stated, on an ongoing basis, Gyrodyne evaluates the estimates and assumptions that can have a significant impact on the reported net assets in liquidation and will update respective information accordingly for any costs and value associated with a change in the duration of the liquidation, as we cannot give any assurance on the timing of the ultimate sale of all the Company’s properties. Management Estimates – In preparing the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) and the liquidation basis of accounting, management is required to make estimates and assumptions that affect the reported amounts of assets, including net assets in liquidation, and liabilities, and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of receipts and expenditures for the reporting period. Actual results could differ from those estimates. F-6 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 Cash equivalents - The Company considers all certificates of deposits, money market funds, treasury securities and other highly liquid debt instruments purchased with short-term maturities to be cash equivalents. Allowance for doubtful accounts – Rent receivable is carried at net realizable value. Management makes estimates of the collectability of rents receivable. Management specifically analyzes receivables and historical bad debts, tenant concentrations, tenant creditworthiness, current economic trends, including the impact of the outbreak of the novel strain of coronavirus (COVID-19) on tenants’ business, and changes in tenant payment patterns when evaluating the adequacy of the allowance for doubtful accounts. Estimated Distributions per Share – Under the liquidation basis of accounting, the Company reports estimated distributions per share data by dividing net assets in liquidation by the number of shares outstanding. New Accounting Pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of December 31, 2020, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis. 3. Statements of Net Assets Net assets as of December 31, 2020 and 2019 would result in estimated distributions of $22,487,944 and $31,369,637, or approximately $15.17 and $21.16 per common share, respectively, based on 1,482,680 shares outstanding. The decrease of $8,881,693 or $5.99 per share is mainly attributable to the change in the estimated value of the real estate, due to the current status of entitlement uses and market conditions, the extension of the liquidation period and additional land development costs, offset by a decrease in estimated selling costs and estimated retention bonus. More specifically, in response to the extensive public comments received during the Cortlandt Manor State Environmental Quality Review Draft Generic Environmental Impact Study (“SEQR DGEIS”) public hearing process and input from the Cortlandt Manor Town Board, the Company amended the Cortlandt Manor site plan and subdivision application with the Town to develop the Cortlandt Manor property as follows: SUBDIVISION LOT # BUILDING SIZE/YIELD Medical office Lot #1 100,000 sft Retail (Lot #1) Medical Office Lot #2 1,500 sft 84,600 sft The original site plan, in response to the Town’s request, was a mixed-use plan comprising of 100,000 square feet of medical use, 4,000 square feet of retail and 200 units of multitenant residential use. The change in use from partly residential to mostly medical combined with the reduction in retail and the cancellation of the purchase and sale agreement on a portion of the Cortlandt Manor property resulted in a reduction to the estimated real estate value by approximately $3,820,000. The remaining decrease in value of approximately $5,400,000 is driven by the market decline in real estate value in Flowerfield, including the termination of the BSL Agreement, that is directly related to and stems from the impact of the pandemic. The Town of Cortlandt has expressed preliminary demands for certain offsite improvements that are directly related to the higher traffic related to medical. Furthermore, the pandemic continues to adversely impact medical office but has created a significant demand for residential real estate. As a result, contingent on discussions with the Town of Cortlandt on the pandemic’s impact to the local market, we may further amend our site plan to include some residential component if doing so will provide a higher return with an equivalent timeline, although there can be no assurance that such amended plan will be approved. Additionally, the pandemic has also adversely impacted demand for office (including medical office) and hotel development “on spec”. The Company’s subdivision plan at Flowerfield will allow for any combination of the aforementioned uses and is marketing the undeveloped lots to reflect such flexibility. F-7 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 The value degradation of $9,220,000 net of the lower bonuses and selling costs of $1,767,038 and $439,203, respectively, directly reduced the estimated net assets by $7,013,759 or $4.73 per share. The cash balance at the end of the liquidation period (currently estimated to be December 31, 2022, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on adjustments for the following items which are estimated through December 31, 2022: 1. The estimated cash receipts from the operation of the Company’s properties net of rental property related expenditures as well as costs expected to be incurred to preserve or improve the net realizable value of the properties at their estimated gross sales proceeds. 2. Net proceeds from the sale of all the Company’s real estate holdings. 3. The general and administrative expenses and or liabilities associated with operations and the liquidation of the Company including severance, director and officer liability coverage including post liquidation tail policy coverage, and financial and legal fees to complete the liquidation. 4. Costs for the pursuit of entitlements on the Flowerfield and Cortlandt Manor properties. 5. Retention bonus amounts (See Note 12). 6. Costs, including principal payments, net of draw-downs on the Company’s credit facilities to fund tenant improvements and working capital and related fees. The Company estimates the net realizable value of its real estate assets by using income and market valuation techniques. The Company may estimate net realizable values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs, as defined under FASB ASC Topic No. 820, Fair Value Measurement. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted capital improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals and experience the Company has with its other owned properties in such markets. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company underestimates forecasted cash outflows (capital improvements, lease commissions and operating costs) or overestimates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated. The Company estimates that it will incur approximately $1.5 million (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, See Note 4) in land entitlement costs from January 2021 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2022, in an effort to obtain entitlements, including special permits. The Company believes the commitment of these resources will enable the Company to position the properties for sale with all entitlements necessary to maximize the Flowerfield and Cortlandt Manor property values and resulting distributions. During the year ended December 31, 2020, the Company incurred approximately $1.0 million of land entitlement costs, consisting predominately of engineering fees. The Company believes the remaining balance of $1.5 million (approximately $321,000 of which certain of the Company service vendors have agreed to defer until the first post subdivision property lot is sold) will be incurred from January 2021 through the end of the liquidation period. The Company does not intend to develop the properties but rather to commit resources to position the properties for sale in a timely manner with all entitlements necessary to achieve maximum pre-construction values. The costs and time frame to achieve the entitlements could change due to a range of factors including a shift in the value of certain entitlements making it more profitable to pursue a different mix of entitlements and the dynamics of the real estate market. As a result, the Company has focused and will continue to focus its land entitlement efforts on achieving the highest and best use while considering the time necessary to achieve such entitlements. During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay premiums for the properties that the Company finds more acceptable from a timing or value perspective than completing the entitlement processes itself. The value of the real estate reported in the statement of net assets as of December 31, 2020 (predicated on current asset values) includes some but not all of the potential value impact that may result from the land entitlement efforts. There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all. F-8 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 The net assets as of December 31, 2020 ($22,487,944) and 2019 ($31,369,637) results in estimated distributions of approximately $15.17 and $21.16, respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value (predicated on current asset values) which includes some but not all of the potential sales proceeds that may result directly or indirectly from our land entitlement efforts. Some of the additional value that may be derived from the land entitlement efforts is not included in the estimated distributions as of December 31, 2020 because the amount of such additional value that may result from such efforts are too difficult to predict with sufficient certainty. The Company believes the land entitlement efforts will enhance estimated distributions per share through the improved values (a large amount of which has already been included in the reported value for real estate held for sale) from the sales of the Flowerfield and Cortlandt Manor properties net of the costs to achieve the improved values and other expenses. This estimate of distributions includes projections of costs and expenses to be incurred during the period required to complete the plan of liquidation. There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, change in values of the Cortlandt Manor and/or Flowerfield properties (whether market driven or resulting from the land entitlement efforts) net of any bonuses (if such values exceed the minimum values required to pay bonuses under the retention bonus plan), favorable or unfavorable changes in the land entitlement costs, the performance of the underlying assets, the market for commercial real estate properties generally and any changes in the underlying assumptions of the projected cash flows. 4. Estimated Liquidation and Operating Costs Net of Estimated Receipts The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. The Company currently estimates that it will incur liquidation and operating costs net of estimated receipts during the liquidation period, excluding the net proceeds from the real estate sales. These amounts can vary significantly due to, among other things, land entitlement costs, the timing and estimates for executing and renewing leases, capital expenditures to maintain the real estate at its current estimated realizable value and estimates of tenant improvement costs, the timing of property sales and any direct/indirect costs incurred that are related to the sales (e.g., retention bonuses on the sale of the Cortlandt Manor and Flowerfield properties, costs to address buy side due diligence inclusive of administrative fees, legal fees and property costs to address items arising from such due diligence and not previously known), the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to be paid during the liquidation period. The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2020 through December 31, 2020 is as follows: January 1, 2020 Expenditures/ (Receipts) Remeasurement of Assets and Liabilities December 31, 2020 Assets: Estimated rents and reimbursements $ 4,309,328 $ (2,432,540 ) $ 3,049,860 $ 4,926,648 Liabilities: Property operating costs (2,594,954 ) 1,506,037 (1,972,487 ) (3,061,404 ) Capital expenditures (474,133 ) 13,495 - (460,638 ) Land entitlement costs (1,847,127 ) 1,013,966 (657,538 ) (1,490,699 )* Corporate expenditures (6,196,551 ) 2,139,978 (2,287,769 ) (6,344,342 ) Selling costs on real estate assets** (3,497,200 ) - 439,203 (3,057,997 ) Retention bonus payments to directors, officers and employees** (4,680,518 ) - 1,767,038 (2,913,480 ) Less prepaid expenses and other assets 603,679 245,293 - 848,972 Liability for estimated liquidation and operating costs net of estimated receipts $ (14,377,476 ) $ 2,486,229 $ 338,307 $ (11,552,940 ) F-9 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 *The Company reached agreements with certain service vendors to defer payment of approximately $321,000 of the $1.5 million until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively. **The amounts reported are based on the provisions of the retention bonus plan and the reported amount of the real estate assets estimated net realizable value. Based on the estimated real estate value of the Cortlandt property, aggregate proceeds from the sale of the two Cortlandt lots would not exceed the adjusted floor under the retention bonus plan and therefore the above table only reflects the projected bonus from the sale of the Flowerfield property. The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2019 through December 31, 2019 is as follows: January 1, 2019 Expenditures/ (Receipts) Remeasurement of Assets and Liabilities December 31, 2019 Assets: Estimated rents and reimbursements $ 3,418,285 $ (2,600,047 ) $ 3,491,090 $ 4,309,328 Liabilities: Property operating costs (2,084,955 ) 1,536,010 (2,046,009 ) (2,594,954 ) Capital expenditures (1,130,844 ) 616,230 40,481 (474,133 ) Land entitlement costs (1,468,474 ) 1,422,192 (1,800,845 ) (1,847,127 ) Corporate expenditures (4,904,367 ) 2,167,814 (3,459,998 ) (6,196,551 ) Selling costs on real estate assets* (2,437,076 ) - (1,060,124 ) (3,497,200 ) Retention bonus payments to directors, officers and employees* (1,984,733 ) 14,573 (2,710,358 ) (4,680,518 ) Less prepaid expenses and other assets 397,854 205,825 - 603,679 Liability for estimated liquidation and operating costs net of estimated receipts $ (10,194,310 ) $ 3,362,597 $ (7,545,763 ) $ (14,377,476 ) *The amounts reported are based on the provisions of the retention bonus plan and the reported amount of the real estate assets estimated net realizable value. 5. Disposition Activities Properties Under Contract Flowerfield - On May 11, 2020, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “Non-Contiguous Property Agreement”) for the sale of a 5.0-acre parcel of vacant land (the “Non-Contiguous Property”) that is non-contiguous to and not part of the Flowerfield complex in Smithtown, New York for a purchase price of $500,000. Under the Non-Contiguous Property Agreement, $25,000 of the purchase price was deposited in escrow at signing with the $475,000 balance payable at closing, subject to Buyer’s right to terminate as described below. Under the Non-Contiguous Property Agreement: (i) Buyer will have the right during an investigation period to conduct a phase 1 environmental survey and or other related analysis. Buyer will have the right to terminate the Non-Contiguous Property Agreement, during the investigation period, by written notice to GSD Flowerfield if Buyer is not fully satisfied, in its sole discretion, as to the status of title, suitability of the property and all factors concerning same, in which case Buyer will have the right to receive a refund of its down payment; (ii) unless Buyer terminates the Non-Contiguous Property Agreement on or prior to the end of the investigation period, the closing will occur on the 20th day following the earlier of (y) the Town of Smithtown’s granting of the Approvals (as defined in the Non-Contiguous Property Agreement and as described below); or (z) Buyer’s waiver of such Approvals. F-10 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 The Non-Contiguous Property Agreement is also contingent on the receipt of a Certificate of Correction/Subdivision Plan (“Correction Plan”) signed and approved by the Town of Smithtown and the Suffolk County Department of Health Services (“SCDHS”) for the Non-Contiguous Property and the recharge basin and building Permits Approval (as defined in the Non-Contiguous Property Agreement and as described below). The Approval condition requires that the Buyer obtain the Correction Plan to create the two parcels and the recharge basin (as generally depicted in the Non-Contiguous Property Agreement) within a specified time (the “Approval Period”) following the last day of the investigation period. The Correction Plan is specifically delineated in the Non-Contiguous Property Agreement. In March 2021, the Buyer-received the Correction Plan signed and approved by the Town of Smithtown and the SCDHS for the Non-Contiguous Property and the recharge basins. As a result, the Company anticipates the closing to occur during the second quarter of 2021. Terminated Contracts Flowerfield - On August 27, 2019, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of a 9.0-acre parcel of vacant land (the “BSL Agreement Property”) in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St. James LLC, a Delaware limited liability company (“BSL”). The Agreement provided that BSL would have the right to terminate the BSL Agreement by written notice to GSD Flowerfield prior to the expiration of a defined inspection period (which had been extended via amendments to the BSL Agreement) if BSL was not fully satisfied, in BSL’s sole discretion, as to the status of title, suitability of the Property and all factors concerning same, in which case BSL would have the right to receive a refund of its earnest money deposit. On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement. The BSL Termination Notice referenced the foregoing termination right and requested the return of the earnest money deposit to BSL in accordance with the provisions of the BSL Agreement. The BSL Agreement Property is included in the Company’s subdivision application with the Town of Smithtown, New York, to subdivide the entire Flowerfield property into eight separate parcels (one parcel of which is a catering hall facility sold by the Company in 2002). The Company believes the termination of the BSL Agreement should have no impact on the subdivision application, and will continue to actively market its entire Flowerfield property on the basis of eight subdivided lots subject to and contingent upon approvals for the subdivision and related entitlements. Cortlandt Manor - As of December 7, 2019, the Company’s wholly owned subsidiaries GSD Cortlandt, LLC, a New York limited liability company and Buttonwood Acquisition, LLC (together the “Cortlandt Subsidiaries”), executed a Purchase and Sale Agreement (the “SC Agreement”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with the improvements thereon (the “SC Agreement Property”), to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”), for a purchase price of $5,720,000. The SC Agreement provided that SC LLC would have the right to terminate the SC Agreement by written notice to GSD prior to the expiration of a defined inspection period (which had been extended via amendments to the SC Agreement) if SC LLC was not fully satisfied, in SC LLC’s sole discretion, as to the status of title, suitability of the SC Agreement Property and all factors concerning same, in which case SC LLC would have the right to receive a refund of its earnest money deposit. On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC LLC that it is terminating the SC Agreement. The SC Termination Notice referenced the foregoing termination right and called for the Escrow Agent (as defined in the SC Agreement) to return the earnest money deposit immediately to SC LLC in accordance with the provisions of the SC Agreement. F-11 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 6. Loans Payable The Company secured a non-revolving credit line for up to $3,000,000 (the “Original Line”) with a bank, which closed on March 21, 2018. The original line included an interest only phase for the first eight months of the loan (as amended the “Interest-Only Phase”). The Company amended and extended the Original Line which included extending the conversion date of the Interest-Only Phase to the earlier of April 30, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of April 30, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”). The interest rate, per the latest modification, during the Interest-Only Phase is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 150 basis points (1.5% rounded up to the nearest 1/8 percent), adjusted daily, but shall not be less than 4.75%. During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, but shall not be less than 3.85%, plus principal based on a 20-year amortization period. The Permanent Phase interest rate currently would be 3.85%. The first advance of $1.1 million was used to finance the tenant improvements pursuant to the amended and expanded signed lease with Stony Brook University Hospital (“SBU Hospital”). An additional advance of $1.1 million was drawn on March 29, 2019 to finance the buildouts on leases signed through December 31, 2018. The balance of the loan can be drawn upon for improvements to be completed by the Company, as landlord, pursuant to future leases with the State University of New York or institutions affiliated with it (or other tenants subject to the bank’s approval) anytime during the Interest-Only Phase. To secure access to additional working capital through the final sale date of the Flowerfield industrial buildings, the Company secured a second loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $3,000,000, which closed on January 24, 2019. This loan included an interest only phase for the first twenty-four months of the loan (“Interest-Only Phase”) after which it automatically converts to a permanent loan maturing on January 20, 2028 (84 months after conversion to a permanent loan) (the “Permanent Phase”). The Company amended and extended the line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan. The interest rate during the Interest-Only Phase shall be a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1% rounded up to the nearest 1/8 percent), but in no event less than 4.75%. During the Permanent Phase, the Company will pay interest at a fixed rate based on the Federal Home Loan Bank rate for a 7-year maturity as made available by the Federal Home Loan Bank of New York plus a margin of 200 basis points (2%) rounded up to the nearest 1/8 percent, but shall not be less than 3.85%, plus principal based on a 20-year amortization period. The Permanent Phase interest rate currently would be 3.85%. Pursuant to the terms of the loan, the bank is in the process of converting the loan to a permanent loan following the drawdowns of $1,580,068, $1,000,000 and $419,932 in 2019, 2020 and January 2021, respectively. Both lines are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases. As of December 31, 2020, the Company is in compliance with the loan covenants. The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain secured by the subdivided industrial park lot only. To secure access to additional working capital, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) secured a loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $2,500,000 which closed on July 16, 2020. The term is 24 months, with an option to extend for an additional 12 months. The interest rate is a variable rate equal to the daily highest prime rate published by the Wall Street Journal plus 100 basis points (1%), rounded up to the nearest 1/8 percent, but in no event less than four and three quarters percent (4.75%). The terms of the loan originally limited access to certain amounts, contingent upon GSD Cortlandt securing purchase agreements for one or both Cortlandt Property lots. On February 22, 2021, the loan was amended to remove such limitation on draws. Advances of $379,765 and $670,235, were drawn at closing and on January 28, 2021, respectively. Under the line, a balance of $1,450,000 is available at the Lender’s discretion. The line is secured by the Cortlandt property (13.8 acres) and cross collateralized by 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases. The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain cross collateralized by the subdivided industrial park lot only. F-12 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 The loans payable mature upon the earlier of the sale of the Flowerfield Industrial Park or as follows: Years Ending December 31, 2021 $ 99,913 2022 545,562 2023 172,295 2024 179,046 2025 186,063 Thereafter 3,976,954 Total $ 5,159,833 7. Real Estate The Company reports its financial statements under the liquidation basis of accounting which reflects real estate value at net realizable value (predicated on current asset values). During 2020, the net realizable value of real estate decreased by $9,220,000 and in 2019 it increased by $12,068,730. The 2020 decrease is primarily driven by the change in use in Cortlandt Manor from partly residential to all medical, the cancellation of the contract on lot one in Cortlandt Manor, the termination of the BSL Agreement and by the market decline in real estate value in Flowerfield that is directly related to and stems from the impact of the pandemic. The 2019 increase was mainly attributable to the Purchase and Sale Agreements entered into in Flowerfield and Cortlandt Manor (see Note 5). The valuation of the remaining real estate as of December 31, 2020 was $39,050,000. 2020 2019 Net Realizable Value at beginning of period $ 48,270,000 $ 36,201,270 Change in Net Realizable Value Cortlandt Manor (3,820,000 ) 2,010,000 Flowerfield (5,400,000 ) 10,058,730 Net Realizable Value on December 31, $ 39,050,000 $ 48,270,000 8. Accounts Payable and Accrued Liabilities Accounts Payable Accrued Liabilities December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Current accounts payable $ 241,963 $ 338,383 Accrued liabilities $ 188,554 $ 178,479 Other accounts payable (a) 651,220 254,360 Deferred Compensation to Directors (b) 368,372 - Total $ 893,183 $ 592,743 Total $ 556,926 $ 178,479 (a) The Company reached agreements with certain service vendors to defer payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively. (b) The director fees and interest accrued under the deferred Compensation Plan where each director elected to defer 100% of his fees for 2020 and 2021. This amount also includes the deferred compensation of a Board advisor per an agreement to defer payments due. F-13 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 Accrued liabilities on December 31, 2020 and 2019 are as follows: December 31, 2020 2019 Payroll and related taxes $ 48,701 $ 40,011 Professional fees 139,853 101,468 Other - 37,000 Total $ 188,554 $ 178,479 9. Income Taxes As a limited liability company, Gyrodyne is not subject to an entity level income tax but rather is treated as a partnership for tax purposes, with its items of income, gain, deduction, loss and credit being reported on the Company’s information return, on Form 1065, and allocated annually on Schedule K-1 to its members pro rata. The Bipartisan Budget Act of 2015 (the “2015 Act”) changed this procedure for partnership tax audits and audit adjustments for partnership returns of large partnerships for fiscal years beginning after December 31, 2017. Pursuant to the 2015 Act, if any audit by the IRS of our income tax returns for any fiscal year beginning after December 31, 2017 results in any adjustments, the IRS may collect any resulting taxes, including any applicable penalties and interest, directly from Gyrodyne. IRS tax audit assessments on tax years beginning January 1, 2018 will require Gyrodyne to: a) bear any tax liability resulting from such audit, or b) elect to push out the tax audit adjustments to the respective shareholders once it has been calculated at the company level. 10. Credit Quality of Rents Receivable The Company’s standard lease terms include rent due on the first of the month. The Company credit terms extend a standard ten-day grace period across its tenant portfolio and do not normally provide extensions beyond one year. The Company manages its billing and collection process internally to enable timely identification of collection issues. The controls and related processes enable the Company to timely identify and establish payment plans to minimize material losses from defaults. In accordance with generally accepted accounting principles, the Company identifies high risk collectibles, records them on a cash basis and does not include them in revenue or accounts receivable. As of December 31, 2020 and 2019, respectively, the Company’s allowance for doubtful accounts reflected the following activity: Allowance for Doubtful Accounts December 31, 2020 December 31, 2019 Beginning balance $ - $ 13,000 Accounts receivable (written off) - (13,000 ) Ending Balance $ - $ - 11. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents. The Company places its temporary cash investments with high credit quality financial institutions and generally limits the amount of credit exposure in any one financial institution. The Company maintains bank account balances, which exceed insured limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash. Management does not believe significant credit risk existed on December 31, 2020 and 2019. As the Company executes on the sale of its assets, its regional concentration in tenants will lessen thereby resulting in the increased credit risk from exposure of the local economies. F-14 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 For the year ended December 31, 2020 rental income from the Company’s three largest tenants represented approximately 24%, 21% and 9% of total rental income. The three largest tenants by revenue as of December 31, 2020 consist of a state agency located in the industrial park, a medical tenant in the Cortlandt Manor Medical Center and a tenant in the industrial park that previously expanded its space. The current economic challenges facing state and local budgets impacted most of the Company’s largest tenants. In addition, the current economic challenges stemming from the coronavirus are disproportionately impacting not-for-profit tenants and tenants that are neither medical offices nor part of or affiliated with SBU or SBU Hospital which together comprise 37% of our expected 2021 rental revenue. There can be no assurance that the Company’s leases will renew for the same square footage, at favorable rates net of tenant improvements, if at all. 12. Commitments As of December 31, 2020 and 2019, other commitments and contingencies are summarized in the below table: 2020 2019 Management Employment agreements with bonus* and severance commitment contingencies $ 350,000 $ 350,000 Other employee severance commitment contingencies 81,716 81,716 Total $ 431,716 $ 431,716 *Excludes Retention Bonus Payments Employment agreements - The Company has an employment agreement with its Chief Executive Officer. The agreement provides for a bonus of $125,000 payable upon a change of control as defined in the agreement. In addition, the agreement provides for severance equivalent to 6 months of base salary and the vesting and related payment of the change of control bonus. The Company also has an employment agreement with its Chief Operating Officer (“COO”) executed on May 8, 2014 which provides for severance on a termination without cause equal to 6 months of base salary. On January 25, 2018, Gyrodyne entered into an amendment to the employment agreement with the COO to define with greater specificity the COO’s duties and responsibilities with respect to the Company’s properties. Under Company policy the aggregate severance commitment contingency to other employees is approximately $81,716. Retention Bonus Plan- In May 2014, the Board of Directors approved a retention bonus plan (as amended, the “Plan”) designed to recognize the nature and scope of the responsibilities of our directors, executives and employees related to the Company’s strategic plan to enhance the property values, liquidate and dissolve, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan. The Plan provides for bonuses to directors and to officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale. The summary appearing below reflects the terms set forth in the Plan as modified by three amendments. There have been no further amendments to the terms of the Plan during the current reporting period. The Plan provides for a bonus pool funded with an amount equal to 5% of the specified appraised value of such properties (set forth in the Plan), so long as the gross selling price of a property is at least equal to its 2013 appraised value as designated in the bonus plan. Additional funding of the bonus pool will occur on a property-by-property basis only if the gross sales price of a property exceeds the Adjusted Appraised Value defined as the sum of (i) its 2013 appraised value and (ii) land development costs incurred on a property since the date of the 2013 appraisal, as follows: 10% on the first 10% of appreciation, 15% on the next 10% of appreciation and 20% on appreciation greater than 20%. F-15 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of the Company: Board Members/Employees Bonus Pool Percentage Board Members(a) 65.000 % Chief Executive Officer 15.474 % Chief Operations Officer 13.926 % Officer Discretionary Amount (b) 1.750 % Other Employees 3.850 % Total 100.000 % (a) 15% for the Chairman and 10% for each of the other five directors. (b) The officer discretionary amount of 1.75% will be allocated to the officers within the discretion of the Board. Such shares of the bonus pool are earned only upon the completion of the sale of a property at a gross selling price equal to or greater than its Adjusted Appraised Value and is paid to the named beneficiaries of the Plan or their designees within 60 days of the completion of such sale or, if later, within 60 days of receipt of any subsequent post-completion installment payment related to such sale. The Plan provides that no benefits are to be paid to participants from the sale of any individual post-subdivided lot from either of the Company’s Flowerfield or Cortlandt Manor properties until aggregate sale proceeds from all sales of post-subdivided lots from such property exceed a designated aggregate floor for such property. The aggregate floor for each of the Flowerfield and Cortlandt Manor properties is defined in Amendment No. 3 to the Plan as the 2013 appraisal of such property plus land development costs incurred for such property since such appraisal. The Plan provides for vesting of benefits upon the sale of each individual post-subdivision lot at Flowerfield and Cortlandt Manor. It also provides for entitlement to a future benefit in the event of death, voluntary termination following substantial reduction in compensation or board fees, mutually agreed separation to right-size the board or involuntary termination without cause, except that a participant will only be eligible to receive a benefit to the extent that a property is sold within three years following the separation event and the sale produces an internal rate of return equal to at least four percent of the property’s value as of December 31 immediately preceding such event and that the sale exceeded the Adjusted Appraised Value. Under the Plan, there were no payments made during the year ended 2020. The payments made during the year ended December 31, 2019 under the Plan relate to the settlement of the master lease from the Sale of the Virginia Health Care Center, were as follows: RETENTION BONUS PLAN PARTICPANTS 2019 Board of Directors $ 9,471 President and Chief Executive Officer 2,390 Chief Operating Officer 2,151 Other Employees 561 Total $ 14,573 Deferred Compensation Plan - On December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020. The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company. Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%. All DCP benefits will be paid in a single lump sum cash payment on December 15, 2026, unless a Plan of Liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP. Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020 and 2021. F-16 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 13. Fair Value of Financial Instruments Assets and Liabilities Measured at Fair-Value – The Company believes the concepts for determining net realizable value are consistent with the guidance for measuring fair value. As a result, the Company follows authoritative guidance on fair value measurements, which defines fair-value, establishes a framework for measuring fair-value, and expands disclosures about fair-value measurements. The guidance applies to reported balances that are required or permitted to be measured at fair-value under existing accounting pronouncements. The Company follows authoritative guidance on the fair value option for financial assets, which permits companies to choose to measure certain financial instruments and other items at fair-value in order to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently. However, the Company adopted the liquidation basis of accounting, and therefore reports all assets and liabilities at net realizable value. The guidance emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, the guidance establishes a fair-value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy, as defined under FASB ASC Topic No. 820, Fair Value Measurements) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. Our assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair Value Measurements - The Company adopted the liquidation basis of accounting effective September 1, 2015; accordingly, the Company reports all real estate at their net realizable value. The Company estimates the net realizable value of its real estate assets by using income and market valuation techniques. The Company may estimate net realizable values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted capital improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent, the Company underestimates forecasted cash outflows (capital improvements, lease commissions and operating costs) or over estimates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated. 14. Contingencies Putative Class Action Lawsuit - On August 14, 2015, the Company entered a Stipulation of Settlement (the "Settlement") providing for the settlement of a putative class action lawsuit against the Company and certain related parties. Under the Settlement, Gyrodyne agreed that any sales of its properties would be effected only in arm's-length transactions at prices at or above their appraised values as of 2014. As of December 31, 2020 and 2019, the value of the remaining unsold properties exceeded the respective 2014 appraised value. General - In the normal course of business, the Company is a party to various legal proceedings. After reviewing all actions and proceedings pending against or involving the Company, management considers that any loss resulting from such proceedings individually or in the aggregate will not be material to the Company’s financial statements. F-17 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 15. COVID-19 In December 2019, a novel strain of coronavirus was reported in Wuhan, Hubei province, China. In the first several months of 2020, the virus, SARS-CoV-2, and resulting disease, COVID-19, spread to the United States, including New York State, the geographic location in which the Company operates. The Company's evaluation of the effects of these events is ongoing; however, in February and March 2020, some of our tenants began to experience decreasing demand for their products and services which has impacted their ability to timely meet their lease obligations. Furthermore, on March 21 , 2020, New York Governor Andrew Cuomo issued an Executive Order entitled “New York State on PAUSE” (Policy that Assures Uniform Safety for Everyone) (the “Order”), pursuant to which, all non-essential employees (as defined by the State) must stay at home starting March 22, 2020 through April 19, 2020. The Order also includes a 90-day moratorium on any residential or commercial evictions. On April 16, 2020, the Order was subsequently extended until May 15, 2020. Governor Cuomo outlined guidelines that will help regions create individual plans based on facts and data to reopen New York. The loosening of restrictions in New York will be considered on a regional basis (The Cortlandt property is located in the Mid-Hudson region and the Flowerfield property is located in the Long Island region), based on the following criteria. These criteria are designed to allow phased reopening’s to begin in each region only if: ● The infection rate is sufficiently low; ● The health care system has the capacity to absorb a potential resurgence in new cases; ● Diagnostic testing capacity is sufficiently high to detect and isolate new cases; and ● Robust contact-tracing capacity is in place to help prevent the spread of the virus. While most business in all regions have opened under certain guidelines (including occupancy limitations), a rise in COVID-19 cases could and has fostered certain small hot spots to be quarantined or returned to a more restrictive phase of reopening under government order. Beginning March 16, 2020, prior to the Order, the Company’s employees began temporarily working remotely to ensure their and their family’s safety and well-being. The Company’s technology infrastructure, for some time, has been set up to handle offsite seamless operations to respond to disaster recovery disruption. As a result, all employees will continue to work remotely unless they report needing sick leave or family leave pursuant to regulated benefits. Small businesses have been and are expected to continue to be adversely affected disproportionately by the economic ramifications of COVID-19. In terms of its own tenants, the Company deems as small businesses those that are neither part of or affiliated with Stony Brook University or SBU Hospital, non-medical offices and not-for-profit corporations, which in the aggregate account for approximately 37% ($776,000) of the Company’s projected annual rental revenues for 2021. Although it is difficult to estimate the duration and full extent of the COVID-19 pandemic, its impact on our future results could be significant and will largely depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the novel coronavirus, the success of actions taken to contain or treat COVID-19 and reactions by consumers, companies, governmental entities and capital markets. We are actively working with our tenants to manage and mitigate the impact of COVID-19 on the Company’s operations, liquidity and resulting Net Asset Value. The COVID-19 public health crisis has also adversely impacted the timeline to secure entitlements and the sale of our real estate. Furthermore, the real estate market is also being adversely affected which could further negatively impact the timing of sales and the resulting value of our real estate. The extent of the impact of COVID-19 on the Company's operational and financial performance and ultimately its Net Asset Value, will depend on current and future developments, including the duration and spread of the outbreak and related governmental or other regulatory actions and the effectiveness of the Covid 19 vaccine program. In addition, the pandemic has resulted in a seismic shift toward commercial acceptance of remote working which may adversely impact our occupancy rate and average rate per square foot. The Company’s ability to operate seamlessly and limit any adverse impact on its forecasted net asset value will also depend, in part, on whether any of its key employees or key advisers are infected by the Coronavirus and become ill from COVID-19. F-18 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 16. Related Party Transactions The Company has entered into various leasing arrangements with a not-for-profit organization of which the Company’s Chairman, Paul Lamb, serves as Chairman and a director but receives no compensation or any other financial benefit. A summary of the leasing arrangements is as follows: Term Square Feet Annual Rent Total Commitment (excluding renewal options) Additional Commitment (assumes two-year renewal option is exercised) Jan 2019-Dec 2020 2,284 $ 19,414 $ 38,828 $ 38,828 Jan 2019-Dec 2020 1,817 -(a) -(a) -(a) Jan 2019-Dec 2020 1,905 $ 16,193 $ 32,385 $ 32,385 (a) In February 2019, the Company amended the square footage under the master lease with the not-for-profit originally entered into in August 2016. The Company understood that the tenant’s main intent was to sublease the space to artists, on a short-term basis, after which such subtenant artists would transition into their own space leased directly from the Company. Under the master lease, the tenant has the right to sublease the space without prior written consent for use as an art studio, art school or related use. Under the terms of the master lease, rent is payable by the tenant only to the extent the space is sublet, at the rent amount per square foot payable by the subtenant up to a maximum of $10 per square foot per year. The lease originally was for 2,130 square feet. The amended maximum annual and total lease commitment of up to $18,170 and $36,340, respectively. Approximately $3,500 in improvements were provided. Any space not subleased may be used by the tenant rent-free for certain stated art uses, although the tenant is responsible for certain passthrough expenses such as electric and heat. Since rent is only due if the space is sublet, the Company believes the fair value of the space to the extent not sublet reflects a below market lease over the term ending December 31, 2020 of $18,170 and total commitments including two-year renewal option of up to $72,680. In December 2020, the tenant exercised the second and last renewal term option, extending the lease terms until December 31, 2022. During the twelve months ended December 31, 2020 and 2019, respectively, the Company received rental revenue of $35,607 and $34,720, respectively. The independent members of the Board of the Company approved all of the leasing transaction described above. The Chairman is also a partner of the firm Lamb & Barnosky, LLP that provided pro bono legal representation to the aforementioned not-for-profit corporation on the lease. 17. Reclassifications Certain amounts in the prior period have been reclassified to conform to the classification used in the current period due to the agreements with certain service vendors to defer payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively. 18. Subsequent Events Cortlandt Manor. As of December 7, 2019, the Company’s wholly owned subsidiaries GSD Cortlandt, LLC, a New York limited liability company, and Buttonwood Acquisition, LLC (together the “Cortlandt Subsidiaries”), executed a Purchase and Sale Agreement (the “SC Agreement”) for the sale of approximately 4.5 acres of its real property located in Cortlandt Manor, New York, together with the improvements thereon (the “SC Agreement Property”), to Sound Cortlandt, LLC, a Delaware limited liability company (“SC LLC”), for a purchase price of $5,720,000. The SC Agreement provided that SC LLC would have the right to terminate the SC Agreement by written notice to GSD prior to the expiration of a defined inspection period (which had been extended via amendments to the SC Agreement) if SC LLC was not fully satisfied, in SC LLC’s sole discretion, as to the status of title, suitability of the SC Agreement Property and all factors concerning same, in which case SC LLC would have the right to receive a refund of its earnest money deposit. F-19 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2020 and 2019 On February 1, 2021, the Company received a notice (the “SC Termination Notice”) from SC LLC that it is terminating the SC Agreement. The SC Termination Notice referenced the foregoing termination right and called for the Escrow Agent (as defined in the SC Agreement) to return the earnest money deposit immediately to SC LLC in accordance with the provisions of the SC Agreement. Flowerfield. On August 27, 2019, the Company’s wholly owned subsidiary GSD Flowerfield, LLC entered into a Purchase and Sale Agreement (the “BSL Agreement”) for the sale of a 9.0-acre parcel of vacant land (the “BSL Agreement Property”) in the Flowerfield complex in Smithtown, New York for $16,800,000 to BSL St. James LLC, a Delaware limited liability company (“BSL”). The Agreement provided that BSL would have the right to terminate the BSL Agreement by written notice to GSD Flowerfield prior to the expiration of a defined inspection period (which had been extended via amendments to the BSL Agreement) if BSL was not fully satisfied, in BSL’s sole discretion, as to the status of title, suitability of the Property and all factors concerning same, in which case BSL would have the right to receive a refund of its earnest money deposit. On March 16, 2021, the Company received a notice (the “BSL Termination Notice”) from BSL that it is terminating the BSL Agreement. The BSL Termination Notice referenced the foregoing termination right and requested the return of the earnest money deposit BSL in accordance with the provisions of the BSL Agreement. The BSL Agreement Property is included in the Company’s subdivision application with the Town of Smithtown, New York, to subdivide the entire Flowerfield property into eight separate parcels (one parcel of which is a catering hall facility sold by the Company in 2002). The Company believes the termination of the BSL Agreement should have no impact on the subdivision application, and will continue to actively market its entire Flowerfield property on the basis of eight subdivided lots subject to and contingent upon approvals for the subdivision and related entitlements. Credit Facility . The Company amended and extended the working capital line which included extending the conversion date of the Interest-Only Phase to the earlier of May 20, 2021 or upon drawing down a total of $3,000,000 after which it automatically converts to a permanent loan maturing on the earlier of May 20, 2028 or 84 months after conversion to a permanent loan (the “Permanent Phase”). On February 22, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”) amended its line to remove the contingency that required signed purchase and sale agreements on Cortlandt Manor to be able to draw on the line. F-20