What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-12 · 141 added, 219 removed, 618 unchanged (37% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF NET ASSETS

AS OF MARCH 31, 2023 (UNAUDITED) AND DECEMBER 31, 2022

AS OF JUNE 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022

(Liquidation Basis)

Real estate held for sale

$ 53,670,000  

Cash and cash equivalents

3,684,192  

4,082,774  

Rent receivable

120,141  

99,683  

Other receivables

41,768  

36,009  

$ 57,516,101  

$ 57,888,466  

Accounts payable

$ 1,563,917  

$ 1,445,487  

Accrued liabilities

1,337,017  

1,287,209  

Deferred rent liability

216,863  

38,746  

Tenant security deposits payable

231,977  

230,714  

Loans payable

9,690,068  

9,760,083  

Estimated liquidation and operating costs net of estimated receipts

14,166,820  

14,758,728  

Total Liabilities

27,206,662  

27,520,967  

Net assets in liquidation

$ 30,309,439  

$ 30,367,499  

See notes to consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE THREE-MONTHS ENDED MARCH 31, 2023

FOR THE SIX-MONTHS ENDED JUNE 30, 2023

(Liquidation Basis)

Net assets in liquidation, as of December 31, 2022

$ 30,367,499  

Changes in assets and liabilities in liquidation:

1 unchanged sentence

Remeasurement of assets and liabilities

( 58,060 )  

Net decrease in liquidation value

Net assets in liquidation, as of March 31, 2023

$ 30,309,439  

Net assets in liquidation, as of June 30, 2023

See notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE THREE-MONTHS ENDED MARCH 31, 2023 (unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE SIX-MONTHS ENDED JUNE 30, 2023 (unaudited)

Strategic Overview

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Nevertheless, Gyrodyne remains confident that the process of negotiating purchase agreements, securing final subdivision approval and final unappealable site plan approval and consummating the sale of our properties could still culminate by year-end 2024, although there can be no assurance that Gyrodyne and the Town of Smithtown will be successful in the defense of the Planning Board’s determinations against the Petition or that other factors beyond our control (i.e., potential contract contingencies including site plan approval for the undeveloped portion of Flowerfield (the developed portion, situated on two separate lots may be sold together or separately upon the resolution of the Article 78 Proceeding and the conclusion of the subdivision, without any site plan approvals)) will not necessitate an extension of the timeline.

Nevertheless, the Company will continue its efforts to identify one or more purchasers for Flowerfield and execute purchase agreements, and it is unclear at this time what impact, if any, the Article 78 Proceeding will have on such efforts.

On March 20, 2023, the Town of Cortlandt Town Board adopted the SEQRA findings statement and approved Local Law establishing the Medical Oriented Zoning District (the “MOD”) which includes Gyrodyne’s Cortlandt Manor property. 

Pursuant to the adopted MOD, Gyrodyne received designation for total density of 154,000 square feet to be comprised of 150,000 square feet of medical use and 4,000 square feet of retail use.

Various other factors will continue to impact the timeline to achieve approvals, including the backlog of land use applications, labor shortages and environmental concerns.

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in the second half of 2023 for Flowerfield, and could be received for Cortlandt Manor by the middle of 2024, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision (if requested) and site plan approval which the Company believes can be pursued simultaneously rather than sequentially).

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in late 2023 for Flowerfield, and could be received for Cortlandt Manor by the middle of 2024, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision (if requested) and site plan approval which the Company believes can be pursued simultaneously rather than sequentially).

Although Gyrodyne believes that selling individual lots will maximize value, it is also pursuing prospective purchasers who may be willing to pay purchase prices for the entire undivided Flowerfield or Cortlandt Manor property, or for the entire company itself, that Gyrodyne finds more attractive from a timing and value perspective.

11 unchanged sentences

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 31,000 square foot Cortlandt Manor Medical Center;

63 acres  

James, New York,  

including a 14 -acre multi-tenanted industrial park comprising 135,000 rentable square feet.

Cortlandt Manor:

13.8 acres in Cortlandt Manor, New York, consisting of the 31,000 square foot Cortlandt Manor Medical Center;

63 acres in St.

James, New York,including a 14 -acre multi-tenanted industrial park comprising 135,000 rentable square feet.

Basis of Quarterly Presentations

The accompanying interim quarterly financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).

The consolidated financial statements of the Company included herein have been prepared by the Company pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all adjustments which are necessary to present fairly the results for the three -months ended March 31, 2023.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations;

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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.

In preparing the consolidated financial statements in conformity with 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.

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Management makes estimates of the collectability of rents receivable.

business, and changes in tenant payment patterns when evaluating the adequacy of the allowance for doubtful accounts.

Management specifically analyzes receivables and historical bad debts, tenant concentrations, tenant creditworthiness, current economic trends 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 March 31, 2023, 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.

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 June 30, 2023, 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.

Statements of Net Assets in Liquidation

Net assets as of March 31, 2023 and December 31, 2022 would result in estimated liquidating distributions of $ 30,309,439 and $ 30,367,499 , or approximately $ 20.44 and $ 20.48 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $ 58,060 or $ 0.04 per share is mainly attributable to additional general and administrative fees offset by additional interest income and tenant reimbursements.

Net assets as of June 30, 2023 and December 31, 2022 would result in estimated liquidating distributions of $ 29,866,455 and $ 30,367,499 , or approximately $ 20.14 and $ 20.48 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $ 501,044 or $ 0.34 per share is mainly attributable to fees and expenses responding to shareholder activism and addressing feedback from shareholders (see “Note 12, “Contingencies –

Shareholder Nomination”) and professional fees relating to the Company’s efforts to finance its operations through the liquidation.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2024, 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, 2024:

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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 (inclusive of the Article 78 Proceeding) to complete the liquidation.

Costs for the pursuit of entitlements on the Flowerfield and Cortlandt Manor properties and associated litigation.

Costs for the pursuit of entitlements on the Flowerfield and Cortlandt Manor properties.

Retention bonus amounts (See Note 11).

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To the extent the Company underestimates or overestimates forecasted cash outflows (capital improvements, excluding any costs for sewage treatment plants, lease commissions and operating costs) or overestimates or underestimates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated or understated.

The Company estimates that it will incur approximately $ 952,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, See Note 5 ) in land entitlement costs from April 2023 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2024, 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 aggregate Flowerfield and Cortlandt Manor property values and resulting distributions. 

During the three months ended March 31, 2023, the Company incurred approximately $ 253,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes. 

The Company believes the remaining balance of $ 952,000 (inclusive of real estate taxes of $ 254,000 and regulatory fees of $ 363,500 ) will be incurred from April 2023 through the end of the liquidation period, approximately $ 132,000 of which is subject to the informal deferral arrangement by certain of our service providers until the first post subdivision property lot is sold. 

The Company does not intend on developing the properties but rather positioning the properties for increased development flexibility in the shortest period of time with the least amount of risk to the Company. 

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 and direct and indirect costs 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 March 31, 2023 includes some but not all of the potential value impact that may result from the land entitlement efforts.

The Company estimates that it will incur approximately $ 862,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, See Note 5) in land entitlement costs from July 2023 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2024, in an effort to obtain entitlements, including special permits.

During the six months ended June 30, 2023, the Company incurred approximately $ 342,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $ 862,000 (inclusive of real estate taxes of $ 218,000 and regulatory fees of $ 363,500 ) will be incurred from July 2023 through the end of the liquidation period, approximately $ 105,000 of which is subject to the informal deferral arrangement by certain of our service providers until the first post subdivision property lot is sold.

The value of the real estate reported in the statement of net assets as of June 30, 2023 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.

The net assets as of March 31, 2023 ( $ 30,309,439 ) and December 31, 2022 ( $ 30,367,499 ) results in estimated distributions of approximately $ 20.44 and $ 20.48 , respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value 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 March 31, 2023 and December 31, 2022 because the amount of such additional value that may result from such efforts are too difficult to predict with sufficient certainty.

The net assets as of June 30, 2023 ($ 29,866,455 ) and December 31, 2022 ($ 30,367,499 ) results in estimated distributions of approximately $ 20.14 and $ 20.48 , respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value 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 June 30, 2023 and December 31, 2022 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 ultimately enhance estimated distributions per share through the improved aggregate values (some but not all 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 entitlements and other expenses.

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These costs are estimated and are anticipated to be paid during the remaining liquidation period.

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2023 through March 31, 2023 is as follows:

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2023 through June 30, 2023 is as follows:

Expenditures/

2 unchanged sentences

Estimated rents and reimbursements

$ 6,243,080  

$ ( 784,548 )  

$ 10,615  

$ 5,469,147  

Prepaid expenses and other assets

963,457  

12,147  

975,604  

Property operating costs

( 3,758,067 )  

444,010  

32,972  

( 3,281,085 )

Capital expenditures

( 303,722 )  

94,791  

Land entitlement costs

( 1,204,491 )*  

252,825  

Corporate expenditures

( 7,190,989 )  

630,743  

( 101,647 )  

( 6,661,893 )

Selling costs on real estate assets**

( 3,822,457 )  

Retention bonus payments to directors, officers and employees**

( 5,685,539 )  

Liability for estimated liquidation and operating costs net of estimated receipts

$ ( 14,758,728 )  

$ 649,968  

$ ( 58,060 )  

$ ( 14,166,820 )

*The Company reached informal agreements with certain service vendors to defer payment of approximately $ 105,000 of the $ 862,000 until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively.

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The loan will mature on April 30, 2028.

The outstanding balance as of March 31, 2023 was $ 2,055,246 .

The outstanding balance as of June 30, 2023 was $ 2,035,734 .

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.

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The loan will mature on May 20, 2028.

The outstanding balance as of March 31, 2023 was $ 2,811,619 .

The outstanding balance as of June 30, 2023 was $ 2,785,100 .

Both lines are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases.

As of December 31, 2022, the Company is in compliance with the loan covenants.

As of June 30, 2023, 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 two subdivided industrial park lots only.

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If the Cortlandt Manor property is sold to a bona fide third-party purchaser on or before September 14, 2023, the prepayment fee to be paid upon repayment of the Mortgage Loan in full will be reduced by fifty percent.

The outstanding balance as of March 31, 2023 was $ 4,823,203 .

The outstanding balance as of June 30, 2023 was $ 4,800,580 .

On March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver.

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The total debt payable mature as follows:

Years Ending March 31,

$ 286,962  

288,733  

309,686  

4,738,473  

222,726  

3,843,488  

$ 9,690,068  

Years Ending June 30,

Accounts payable and Accrued Liabilities

1 unchanged sentence

Accrued Liabilities

June 30, 2023

December 31, 2022

June 30, 2023

December 31, 2022

Current accounts payable

$ 379,819  

$ 281,174  

Accrued liabilities

$ 185,366  

$ 221,238  

Deferred accounts payable (a)

1,184,098  

1,164,313  

Deferred Compensation to Directors (b)

1,151,651  

1,065,971  

$ 1,563,917  

$ 1,445,487  

$ 1,337,017  

$ 1,287,209  

The Company reached informal 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.

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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 each March 31, 2023 and December 31, 2022, the Company had a zero balance in its allowance for doubtful accounts.

As of each June 30, 2023 and December 31, 2022, the Company had a zero balance in its allowance for doubtful accounts.

Concentration of Credit Risk

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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 March 31, 2023 and December 31, 2022.

Management does not believe significant credit risk existed on June 30, 2023 and December 31, 2022.

As the Company executes on the sale of its assets, its regional concentration in tenants will increase thereby resulting in the increased credit risk from exposure of the local economies.

For the three months ended March 31, 2023 rental income from the Company’s three largest tenants represented approximately 24 %, 21 % and 8 % of total rental income.

The three largest tenants by revenue as of March 31, 2023 consist of New York Presbyterian Medical Group located in the Cortlandt Manor Medical Center, Stony Brook University Hospital located in the industrial park and an athletic facility in the industrial park.

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 tenants that are not part of or affiliated with a major hospital which together comprise 39 % of our expected 2023 rental revenue.

For the six months ended June 30, 2023 rental income from the Company’s three largest tenants represented approximately 26 %, 19 % and 8 % of total rental income.

The three largest tenants by revenue as of June 30, 2023 consist of New York Presbyterian Medical Group located in the Cortlandt Manor Medical Center, Stony Brook University Hospital located in the industrial park and an athletic facility in the industrial park.

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.

As of March 31, 2023, other commitments and contingencies are summarized in the below table:

As of June 30, 2023, other commitments and contingencies are summarized in the below table:

Management employment agreements with bonus* and severance commitment contingencies

$ 350,000  

Other employee severance commitment contingencies

89,000  

$ 439,000  

* Excludes Retention Bonus Payments

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Board Members(a)

55.000 %  

Discretionary Amount (b)

10.000 %  

Board Discretionary Amount (b)

Chief Executive Officer

15.474 %  

Chief Operations Officer

13.926 %  

Officer Discretionary Amount (c)

1.750 %  

Other Employees

3.850 %  

100.000 %  

15 % for the Chairman and 10 % for each of the other four directors.

Under the Plan, the Board has the right to allocate this portion amongst the Board, employees or both.

15 % for the Chairman and 10 % for each of the other three remaining participant directors.

Jan Loeb (nominated to the Board on July 28, 2023) is not a participant in the Plan.

This amount resulted from the departure of two directors and will be reallocated pursuant to the Plan.

The officer discretionary amount of 1.75 % will be allocated to the officers within the discretion of the Board.

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4 also clarifies that a director nominated for reelection but failing to get reelected would be treated as if he or she was terminated without cause (and thus eligible for modified benefits post-termination).

Under the Plan, there were no payments made during the three months ended March 31, 2023.

Under the Plan, there were no payments made during the six months ended June 30, 2023.

As a result of feedback we received from shareholders, the Company is evaluating various possible changes to the Plan to better align the interests of the Plan participants with those of the shareholders.

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.

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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 March 31, 2023 and December 31, 2022, the value of the remaining unsold properties exceeded the respective 2014 appraised values.

As of June 30, 2023 and December 31, 2022, the value of the remaining unsold properties exceeded the respective 2014 appraised values.

Article 78 Proceeding –

On April 26, 2022, the Incorporated Village of Head of the Harbor and certain other parties, commenced a special proceeding under Article 78 of New York’s Civil Practice Law & Rules (the “Article 78 Proceeding”), against the Town of Smithtown and certain other parties, including the Company, seeking to annul the Town of Smithtown Planning Board’s (the “Planning Board”) determinations relating to the Flowerfield Subdivision Application.

On April 26, 2022, the Incorporated Village of Head of the Harbor and certain other parties, commenced a special proceeding under Article 78 of New York’s Civil Practice Law & Rules, against the Town of Smithtown and certain other parties, including the Company, seeking to annul the Town of Smithtown Planning Board’s (the “Planning Board”) determinations relating to the Flowerfield Subdivision Application.

Specifically, the petition commencing the Article 78 Proceeding (the “Petition”) seeks to annul the Planning Board’s (i) approval of a findings statement, pursuant to the SEQRA, dated September 16, 2021, and adopted by the Planning Board on March 30, 2022, concerning the Flowerfield Subdivision Application, and (ii) preliminary approval on March 30, 2022 of the Flowerfield Subdivision Application.

2 unchanged sentences

Shareholder Nomination –

The Company received a notice dated April 25, 2023 from Star Equity Fund, LP (“Star Equity”), which allegedly owned approximately 5.4 % of our outstanding shares at the time of submission, purporting to nominate a slate of two candidates for election as directors at the 2023 Annual Meeting of Shareholders.

The Company received a notice dated April 25, 2023 from Star Equity Fund, LP (“Star Equity”), which allegedly owned approximately 5.4 % of our outstanding shares at the time of submission, of its intent to nominate a slate of two candidates for election as directors at the 2023 Annual Meeting of Shareholders.

The Company remains open to ongoing engagement with Star Equity.

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The COVID-19 pandemic was a significant factor in prolonging the entitlement process.

We believe it was also a major factor leading to the termination in 2021 by the purchasers in two purchase agreements for the sale of portions of our Cortlandt Manor and Flowerfield properties.

In addition, the pandemic has resulted in a significant shift toward commercial acceptance of remote working and telemedicine which may adversely impact our occupancy rate and average rate per square foot.

The pandemic has resulted in a significant shift toward commercial acceptance of remote working and telemedicine 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.

2 unchanged sentences

Due to increased inflation, the U.S.

Federal Reserve raised the federal funds rate a total of seven times during 2022 and three times in 2023.

Federal Reserve raised the federal funds rate a total of seven times during 2022 and four times in 2023.

In response, market interest rates have increased significantly during this time.

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April 2022-Dec 2027

$ 51,051  

$ 317,455  

During the three months ended March 31, 2023, the Company received rental revenue of $ 13,146 .

The independent members of the Board of the Company approved all of the leasing transaction described above.

During the six months ended June 30, 2023, the Company received rental revenue of $ 26,291 .

The independent members of the Board of the Company approved all of the leasing transactions 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.

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in this report refer to Gyrodyne, LLC’s common shares representing limited liability company interests.

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the three-months ended March 31, 2023.

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the six-months ended June 30, 2023.

Cautionary Statements Concerning Forward –

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or “continue,”

the negative thereof, and other variations or comparable terminology as well as statements regarding the evaluation of strategic alternatives and liquidation contingencies.

These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements.

Such risks and uncertainties include, but are not limited to, risks and uncertainties relating to our efforts to enhance the values of our remaining properties and seek the orderly, strategic sale of such properties as soon as reasonably practicable, risks associated with the Article 78 Proceeding against the Company and any other litigation that may develop in connection with our efforts to enhance the value of and sell our properties, ongoing community activism, risk related to the recent banking crisis and closure of two major banks (including one with whom we indirectly have a mortgage loan), regulatory enforcement, risks inherent in the real estate markets of Suffolk and Westchester Counties in New York, the ability to obtain additional capital in order to enhance the value of the Flowerfield and Cortlandt Manor properties and negotiate sales contracts and defend the Article 78 proceeding from a position of strength, the potential effects of the COVID-19 pandemic, the risk of inflation, rising interest rates, recession and supply chain constraints or disruptions, risks associated with proxy contests and other actions of activist shareholders and other risks detailed from time to time in the Company’s SEC reports.

the negative thereof, and other variations or comparable terminology as well as statements regarding the evaluation of strategic alternatives and liquidation contingencies. 

Such risks and uncertainties include, but are not limited to, risks and uncertainties relating to our efforts to enhance the values of our remaining properties and seek the orderly, strategic sale of such properties as soon as reasonably practicable, risks associated with the Article 78 Proceeding against the Company and any other litigation that may develop in connection with our efforts to enhance the value of and sell our properties, ongoing community activism, risks associated with proxy contests and other actions of activist shareholders, risks related to the recent banking crisis and closure of two major banks (including one with whom we indirectly have a mortgage loan), regulatory enforcement, risks inherent in the real estate markets of Suffolk and Westchester Counties in New York, the ability to obtain additional capital in order to enhance the value of the Flowerfield and Cortlandt Manor properties and negotiate sales contracts and defend the Article 78 Proceeding from a position of strength, the potential effects of COVID-19, the risk of inflation, rising interest rates, recession and supply chain constraints or disruptions and other risks detailed from time to time in the Company’s SEC reports.

These and other matters the Company discuss in this Report, or in the documents it incorporates by reference into this Report, may cause actual results to differ from those the Company describes.

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The Company believes the aforementioned dual strategy will increase the aggregate value for such properties as a whole.

The value of the real estate reported in the consolidated statement of net assets as of March 31, 2023 includes some but not all of the potential value impact that may result from such value enhancement efforts.

The value of the real estate reported in the consolidated statement of net assets as of June 30, 2023 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.

17 unchanged sentences

Various other factors will continue to impact the timeline to achieve approvals, including the backlog of land use applications, labor shortages and environmental concerns.

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in the second half of 2023 for Flowerfield, and could be received for Cortlandt Manor by the middle of 2023, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision (if requested) and site plan approval which the Company believes can be pursued simultaneously rather than sequentially). 

The Company believes that standard market terms for real property transactions in both Cortlandt Manor and the Town of Smithtown would include, as conditions to closing, final subdivision approval, final unappealable site plan approval and the resolution of the Article 78 Proceeding.

3 unchanged sentences

Such cash would equate to future distributions of $20.14 per share based on Gyrodyne having 1,482,680 common shares outstanding.

These estimated distributions are based on values as of March 31, 2023 and include some but not all of the potential value that may be derived from the entitlement efforts.

The Consolidated Statements of Net Assets are based on certain estimates.

These estimated distributions are based on values as of June 30, 2023 and include some but not all of the potential value that may be derived from the entitlement efforts.

The Consolidated Statements of Net Assets are based on certain estimates. 

Uncertainties as to the precise value of our non-cash assets, which include some but not all of the estimated potential additional value from the efforts to maximize value of Flowerfield and Cortlandt Manor and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value ultimately distributable to shareholders in a liquidation.

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Such expenses will reduce the amount of assets available for ultimate distribution to shareholders, and, while a precise estimate of those expenses cannot currently be made, management and our Board believe that available cash (including proceeds received under our credit facilities) and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims (including contingent liabilities).

Nevertheless, the Company is considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 proceeding and in any other such proceeding that may arise.

Nevertheless, the Company is considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 Proceeding and in any other such proceeding that may arise. 

However, no assurances can be given that available cash and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims and to make cash distributions to shareholders.

If such available cash and amounts received on the sale of assets are not adequate to provide for our obligations, liabilities, expenses and claims, distributions of cash and other assets to our shareholders would be eliminated.

In the event our shareholders receive distributions from Gyrodyne and there are insufficient funds to pay any creditors who seek payment of claims against Gyrodyne, shareholders could be held liable for payments made to them and could be required to return all or a part of the distributions made to them.

Property Value Enhancement

The Company is pursuing entitlements to increase the development flexibility of its Flowerfield and Cortlandt Manor properties. 

During the three months ended March 31, 2023, the Company incurred approximately $253,000 of land entitlement costs, consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts. 

We estimate that the Company may incur approximately $952,000 in additional land entitlement costs (approximately $132,000 of which Company vendors have informally agreed to defer until the first post subdivision property lot is sold) through December 31, 2024 in pursuit of entitlements (approximately $318,000 in Cortlandt Manor and $634,000 in Flowerfield). 

The Company is pursuing entitlements to increase the development flexibility of its Flowerfield and Cortlandt Manor properties.

During the six months ended June 30, 2023, the Company incurred approximately $342,000 of land entitlement costs, consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $862,000 in additional land entitlement costs (approximately $105,000 of which Company vendors have informally agreed to defer until the first post subdivision property lot is sold) through December 31, 2024 in pursuit of entitlements (approximately $313,000 in Cortlandt Manor and $549,000 in Flowerfield).

The Company is focusing its resources on positioning the properties to be sold with all entitlements to achieve increased development flexibility in the shortest period of time with the least amount of risk to the Company.

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Once designated, the parcels would be governed by the use, dimensional and other provisions of the MOD zoning regulations and MOD zoning would replace the existing zoning.

While the MOD zoning has not been formally adopted, Gyrodyne is currently proposing a two-phase medical office campus with limited retail and has designed the site to function as part of a future "hamlet center”

While the MOD zoning had not been formally adopted, Gyrodyne is currently proposing a two-phase medical office campus with limited retail and has designed the site to function as part of a future "hamlet center”

with streetscape improvements.

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Retail (Lot #1)

 1,500 sft

Multi-Family Residential Lot #2

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Retail (Lot #1)

 4,000 sft

Medical office (inclusive of the existing operating building) Lot #2

 50,000 sft

*Lot lines could change until formal subdivision occurs.

On March 20, 2023, the Town of Cortlandt Town Board adopted the SEQRA Findings Statement and local law establishing the MOD designation for the property reflecting a total density of 154,000 square feet to be comprised of 150,000 square feet of medical use and 4,000 square feet of retail (lot lines and their respective density could change until formal subdivision occurs).

On March 20, 2023, the Town of Cortlandt Town Board adopted the SEQRA Findings Statement and local law establishing the MOD designation for the property reflecting a total density of 154,000 square feet to be comprised of 150,000 square feet of medical use, inclusive of the existing medical office square footage but excluding non-rentable spaces, and 4,000 square feet of ancillary retail (lot lines and their respective density could change until formal subdivision occurs).

The Company does not plan on developing the property but rather positioning the property to be sold with the MOD designation necessary for increased development flexibility in the shortest period of time with the least amount of risk to the Company.

The Company believes, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving site plan approval), the subdivision and site plan approval could be received by the middle of 2024.

The entitlement costs for the three months ended March 31, 2023 associated with the ownership and development of this property were approximately $45,500.

The entitlement costs for the six months ended June 30, 2023 associated with the ownership and development of this property were approximately $50,700.

Flowerfield .

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Approval of the Preliminary Subdivision was granted at that meeting.

Technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services on January 26, 2023, Suffolk County Department of Public Works, New York State Department of Environmental Conservation on January 31, 2023, and New York State Department of Transportation on January 24, 2023 are being addressed and prepared for resubmission to each agency for their final review and approvals.

The Final Subdivision application is being assembled for submission to the Town for review.

Final Subdivision approval is expected in the second half of 2023.

Technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services on April 28, 2023, Suffolk County Department of Public Works, New York State Department of Environmental Conservation on January 31, 2023, and New York State Department of Transportation on July 7, 2023 are being addressed and prepared for resubmission to each agency for their final review and approvals.

The Final Subdivision application is being assembled for submission to the Town for review, pending minor comment responses for the Suffolk County Department of Health Services.

Final Subdivision approval is expected in late 2023.

The entitlement costs for the three months ended March 31, 2023 associated with the ownership and development of this property consisting of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $207,400.

While we cannot predict the outcome of the subdivision application, we undertook to subdivide the Flowerfield property in a manner that we believed will result in increased development flexibility in the shortest amount of time and limited risk (i.e., included in our subdivision application is the separation of the existing industrial buildings into two separate lots which upon resolution of the article 78 proceeding and final subdivision approval will allow us to sell the two lots together or separately, without any site plan approval).

The entitlement costs for the six months ended June 30, 2023 associated with the ownership and development of this property consisting of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $291,800.

While we cannot predict the outcome of the subdivision application, we undertook to subdivide the Flowerfield property in a manner that we believed will result in increased development flexibility in the shortest amount of time and limited risk (i.e., included in our subdivision application is the separation of the existing industrial buildings into two separate lots which upon resolution of the Article 78 Proceeding and final subdivision approval will allow us to sell the two lots together or separately, without any site plan approval). 

There can be no assurance, however, 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.

The pandemic has negatively 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.

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The following discussion is intended to provide shareholders with certain information regarding the impacts of the COVID-19 pandemic on the Company’s business and management’s efforts to respond to those impacts.

Unless otherwise specified, the statistical and other information regarding the Company’s properties and tenants are estimates based on information currently available to the Company, may change, potentially significantly, going forward, and may not be indicative of the actual impact of the COVID-19 pandemic on the Company’s business, operations, cash flows and financial condition for the 3 months ended March 31, 2023 and future periods.

The COVID-19 pandemic has adversely impacted, and is expected to continue to impact adversely, the timeliness of local government in granting required approvals.

Accordingly, COVID-19 has caused, and is expected to continue to cause, the completion of important stages in our efforts to secure entitlements to be delayed.

The COVID-19 pandemic has adversely impacted, and to a lesser degree is expected to continue to impact adversely, the timeliness of local government in granting required approvals.

Accordingly, COVID-19 has caused, and to a lesser degree is expected to continue to cause, the completion of important stages in our efforts to secure entitlements to be delayed.

Until recently, the U.S economy had been growing as COVID-19 vaccinations were increasingly administered and many commercial activities returned to pre-pandemic practices and operations.

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Concurrently, the geopolitical conflict between Russian and Ukraine increased uncertainty during 2022 and 2023.

Concurrently, the military conflict between Russian and Ukraine increased uncertainty during 2022 and 2023.

Inflation has caused an increase in consumer prices, thereby reducing purchasing power and elevating the risks of a recession.

Due to increased inflation, the U.S.

Federal Reserve raised the federal funds rate a total of seven times during 2022 and three times in 2023.

Federal Reserve raised the federal funds rate a total of seven times during 2022 and four times in 2023.

In response, market interest rates have increased significantly during this time.

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Our business, operations and timelines for pursuing entitlements, property sales and distributions of proceeds could be adversely affected by the Coronavirus pandemic ”, of our Annual Report for the year ended December 31, 2022.

Transaction Summary for the Three-Months Ended March 31, 2023

The following summarizes our significant transactions and other activity during the three-months ended March 31, 2023.

Transaction Summary for the Six-Months Ended June 30, 2023

The following summarizes our significant transactions and other activity during the six-months ended June 30, 2023.

Leasing Activity.

During the three-months ended March 31, 2023, the Company executed 5 renewals comprising approximately 6,700 square feet, annual revenue of approximately $96,000 and total commitments of approximately $229,000.

There was one termination of a tenant renting land resulting in a loss of $6,260 of monthly rent.

There were also two expansions comprising approximately 1,027 square feet, $26,000 in annual revenue and approximately $153,000 in total commitment.

During the six-months ended June 30, 2023, the Company executed 7 renewals comprising approximately 8,700 square feet, annual revenue of approximately $125,000 and total commitments of approximately $258,000.

There were two terminations, both of which were of tenants renting land resulting in a loss of $8,960 of monthly rent.

There were also four expansions comprising approximately 2,300 square feet, $40,000 in annual revenue and approximately $185,000 in total commitment.

Subsequent Business Events

On July 28, 2023, Philip F.

Palmedo, a director of the Company and its predecessor Gyrodyne Company of America, Inc.

since 1996, retired from the Board for health reasons effective immediately.

Also on July 28, 2023, the Board appointed Jan H.

Loeb to the Board to fill the vacancy on the Board created by Mr.

Palmedo’s resignation, and to serve in the class of directors up for election at the Annual Meeting.

Loeb was appointed to the Board pursuant to the terms of a cooperation agreement dated July 26, 2023 among Leap Tide Capital Management LLC, Jan Loeb and the Company.

Critical Accounting Policies

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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.

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 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 independent third-party appraisals, estimates and other indications of sales value.  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, 2024. 

The Company is in the process of pursuing entitlements and density approvals, 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.

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The Flowerfield subdivision will remain subject to the Article 78 Proceeding unless Gyrodyne and the Town of Smithtown prevail in their defense of the Planning Board’s determinations against the Petition.  Nevertheless, the Company will continue its efforts to identify one or more purchasers for Flowerfield and execute purchase agreements, and it is unclear at this time what impact, if any, the Article 78 Proceeding will have on such efforts.

Pursuant to the adopted MOD, Gyrodyne received designation for total density of 154,000 square feet to be comprised of 150,000 square feet of medical use and 4,000 square feet of retail use (lot lines and their respective density could change until formal subdivision occurs).

Various other factors will continue to impact the timeline to achieve approvals, including the backlog of land use applications, labor shortages and environmental concerns.

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in the second half of 2023 for Flowerfield, and could be received for Cortlandt Manor by the middle of 2023, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision and site plan approval which the Company believes can be pursued simultaneously rather than sequentially). 

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in late 2023 for Flowerfield, and could be received for Cortlandt Manor by the middle of 2024, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving subdivision and site plan approval which the Company believes can be pursued simultaneously rather than sequentially). 

The Company believes that standard market terms for real property transactions in both Cortlandt Manor and the Town of Smithtown would include final subdivision approval, final unappealable site plan approval and the resolution of the Article 78 Proceeding as conditions to closing.

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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.

Fair Value Measurements –

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Level 1 – observable inputs in an active market on or around the measurement date, Level 2 – observable inputs that are based on prices not quoted on active markets but corroborated by market data and Level 3 – unobservable inputs utilized when no other data is available.

Estimated Distributions per Share  – Under the liquidation basis of accounting, the Company reports estimated distributions per share data by dividing net assets 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, 2022, 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.

New accounting pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of June 30, 2023, 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.

Discussion of the Statements of Net Assets

Net assets in liquidation on March 31, 2023 and December 31, 2022 would result in estimated liquidating distributions of $30,309,439 and $30,367,499, or approximately $20.44 and $20.48 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $58,060 or $0.04 per share is mainly attributable to additional general and administrative fees offset by additional interest income and tenant reimbursements.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2024, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on the March 31, 2023 cash balance of $3.68 million plus adjustments for the following items which are estimated through December 31, 2024:

Net assets in liquidation on June 30, 2023 and December 31, 2022 would result in estimated liquidating distributions of $29,866,455 and $30,367,499, or approximately $20.14 and $20.48 per common share, respectively, based on 1,482,680 shares outstanding.

The decrease of $501,044 or $0.34 per share is mainly attributable to fees and expenses responding to shareholder activism and addressing feedback from shareholders (see “Note 12, “Contingencies –

Shareholder Nomination”, and Part II, Other Information, Item 1 –

Legal Proceedings –

Shareholder Nomination”) and professional fees relating to the Company’s efforts to finance its operations through the liquidation.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2024, although the estimated completion of the liquidation period may change), excluding any interim distributions, is estimated based on the June 30, 2023 cash balance of $3.1 million plus adjustments for the following items which are estimated through December 31, 2024:

The estimated cash receipts from the operation of the 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 property at their estimated gross sales proceeds.

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Costs for the pursuit of the entitlement of the Flowerfield and Cortlandt Manor properties and associated litigation.

Costs for the pursuit of the entitlement of the Flowerfield and Cortlandt Manor properties.

Retention bonus amounts.

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The Company estimates that it will incur approximately $952,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from April 2023 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2024, in an effort to obtain entitlements, including special permits.

During the three-months ended March 31, 2023, the Company incurred approximately $253,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes. 

The Company believes the remaining balance of $952,000 (inclusive of real estate taxes of $254,000 and regulatory fees of $363,500) will be incurred from April 2023 through the end of the liquidation period, approximately $132,000 of which is subject to the informal deferral agreement by certain of our service providers until the first post subdivision property lot is sold. 

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 increased development flexibility. 

The value of the real estate reported in the statement of net assets as of March 31, 2023 includes some but not all of the potential value impact that may result from the land entitlement efforts.

The Company estimates that it will incur approximately $862,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from July 2023 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2024, in an effort to obtain entitlements, including special permits.

During the six-months ended June 30, 2023, the Company incurred approximately $342,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $862,000 (inclusive of real estate taxes of $218,000 and regulatory fees of $363,500) will be incurred from July 2023 through the end of the liquidation period, approximately $105,000 of which is subject to the informal deferral agreement by certain of our service providers until the first post subdivision property lot is sold.

The value of the real estate reported in the statement of net assets as of June 30, 2023 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.

The net assets as of March 31, 2023 ($30,309,439) and December 31, 2022 ($30,367,499) results in estimated distributions of approximately $20.44 and $20.48, respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value which includes some but not all of the potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

The net assets as of June 30, 2023 ($29,866,455) and December 31, 2022 ($30,367,499) results in estimated distributions of approximately $20.14 and $20.48, respectively, per common share (based on 1,482,680 shares outstanding), based on estimates and other indications of sales value which includes some but not all of the potential sales proceeds that may result directly or indirectly from our land entitlement efforts.

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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.

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of March 31, 2023 (dollars are in millions).

March 31, 2023 cash and cash equivalents balance

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of June 30, 2023 (dollars are in millions).

June 30, 2023 cash and cash equivalents balance

Principal payments on loan

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Discussion of Changes in Net Assets

Gyrodyne’s strategy is to enhance the value of Flowerfield and Cortlandt Manor, by pursuing various entitlement opportunities, which the Gyrodyne Board believes will improve the potential of obtaining better aggregate values for such properties as a whole.

The pursuit of the highest and best use of Flowerfield and Cortlandt Manor may involve other strategies to manage risk and or enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders.

Gyrodyne intends to dissolve after we complete the disposition of all of our real property assets, apply the proceeds of such dispositions first to settle any debts and claims, pending or otherwise, against Gyrodyne, and then pays distributions to holders of Gyrodyne common shares.

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the three-months ended March 31, 2023 of which is discussed below:

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the six-months ended June 30, 2023 of which is discussed below:

Net assets in liquidation on January 1, 2023

Changes in net assets in liquidation from January 1 through March 31, 2023:

Changes in net assets in liquidation from January 1 through June 30, 2023:

Change in liquidation value of real estate

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Total decrease in net assets in liquidation

Net assets in liquidation on March 31, 2023

Net assets in liquidation on June 30, 2023

Liquidity and Capital Resources

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The process of accounting for liabilities, including those that are currently unknown or whose amounts are uncertain may involve difficult valuation decisions which could adversely impact the amount or timing of any future distributions.

We generally finance our operations through cash on hand.

The Company is also considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 proceeding and in any other such proceeding that may arise.

Certain of the Company’s major vendors have informally agreed to defer payment on 50% of their fees until the first subdivided lot is sold.

We generally finance our operations through cash on hand. 

The Company is also considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 Proceeding and in any other such proceeding that may arise. 

Certain of the Company’s major vendors have informally agreed to defer payment on 50% of their fees until the first subdivided lot is sold. 

Additionally, 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.

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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 ( See Deferred Compensation Plan above) .

As of March 31, 2023, the Company had cash and cash equivalents totaling approximately $3.68 million.

The Company anticipates that its current cash and cash equivalent balance will be adequate to fund its process of seeking entitlements and selling assets and subsequent dissolution.

As of June 30, 2023, the Company had cash and cash equivalents totaling approximately $3.1 million. 

The Company anticipates that its current cash and cash equivalent balance will be adequate to fund its process of seeking entitlements and selling assets and subsequent dissolution. 

Nevertheless, the Company is considering seeking supplemental funding in the form of a new credit facility, a pro-rata rights offering or other appropriate funding mechanism to fortify our cash position to ensure we are operating through a position of strength through the duration of the liquidation to negotiate and enforce purchase agreements and defend our property rights in the Article 78 Proceeding and in any other such proceeding that may arise .

The $3.68 million of cash will be partially used to fund our efforts to generate the highest values for the Flowerfield and Cortlandt Manor properties while simultaneously pursuing the strategic sale of these properties.

The pursuit of the highest values for Flowerfield and Cortlandt Manor may involve other investments and or other strategies to manage risk and or enhance the net value of Flowerfield and Cortlandt Manor to maximize the returns for our shareholders.

The Company is estimating and reporting in the consolidated statements of net assets total gross cash proceeds from the sale of its assets of approximately $53.67 million.

The $3.1 million of cash will be partially used to fund our efforts to generate the highest values for the Flowerfield and Cortlandt Manor properties while simultaneously pursuing the strategic sale of these properties. 

The Company is estimating and reporting in the consolidated statements of net assets total gross cash proceeds from the sale of its assets of approximately $53.67 million. 

Based on the Company’s current cash balance and the above forecast, the Company estimates distributable cash stemming from the liquidation of the Company of approximately $29.87 million.

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In addition, the Company has and will continue to review operating activities for possible cost reductions and additional capital/credit needs throughout the liquidation process.

Major elements of the Company’s cashflows for the three-months ended March 31, 2023 were as follows:

Major elements of the Company’s cashflows for the six-months ended June 30, 2023 were as follows:

Operating cashflows

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements