Gyrodyne, LLC 10-Q

Item 1A. Risk Factors   The following risk factor disclosure supplements the discussion of our risk factors previously disclosed in our last Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The risk factors disclosed in our last Annual Report on Form 10-K and the risk factors below could materially and adversely affect our business, financial condition and results of operations, and our business also could be impacted by other risk factors that are not presently known to us or that we currently consider to be immaterial. Further, our disclosure of a risk should not be interpreted to imply that the risk has not already developed or materialized.   We are subject to risks associated with proxy contests and other actions of activist shareholders.   Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as governance changes, financial restructurings, sales of assets and changes to executive and director compensation. The Company received a notice dated April 25, 2023 (the “Nomination Notice”) 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 “Annual Meeting”). On August 11, 2023, Star Equity submitted a shareholder proposal to the Company pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Shareholder Proposal”).   32     On September 5, 2023, the Company entered into a letter agreement (“Cooperation Agreement”) with Star Equity, pursuant to which Star Equity agreed to irrevocably withdraw both the Nomination Notice and the Shareholder Proposal. Through September 30, 2023, the cumulative cost to the Company of responding to and resolving the foregoing shareholder activist campaign, including changes to our incentive compensation arrangements, was approximately $1,200,000. We are working with insurance coverage counsel to pursue coverage under our existing directors and officers insurance policy for amounts in excess of the $500,000 insurance deductible under the policy. The Company values input from all shareholders, including Star Equity, and remains open to ongoing engagement.   A proxy contest or related activities on the part of activist shareholders, including, among others, Star Equity, could adversely affect our business for a number of reasons, including, without limitation, the following:     ● Responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of our Board of Directors (the “Board”), management and employees, and could adversely impact the Company’s ability to achieve timely or at all our strategic objective of positioning our properties so they can be sold at higher values resulting in maximum distributions to all of our shareholders;   ● Perceived uncertainties as to our future direction may result in the loss or compromise of potential opportunities to liquidate our properties for maximum value;   ● A successful proxy contest could result in a change of control of our Board, and such an event could subject us to certain contractual obligations under certain material agreements;   ● If nominees advanced by activist shareholders are elected or appointed to our Board with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plan to position our properties for sale at values that will maximize distributions to all of our shareholders; and   ● Proxy contests may cause our stock price to experience periods of volatility.   Items 2 through 5 are not applicable to the Company in the nine-months ended September 30, 2023.   Item 6. Exhibits.     3.1 Articles of Organization of Gyrodyne, LLC, dated as of October 3, 2013 (1)     3.2 Amended and Restated Limited Liability Company Agreement of Gyrodyne, LLC (2)     10.1 Amended and Restated Retention Bonus Plan (3)         10.2 Amendment No. 2 to the Retention Bonus Plan (4)         10.3 Amendment No. 3 to the Retention Bonus Plan (5)         10.4 Amendment No. 4 to the Retention Bonus Plan (6)         10.5 Cooperation Agreement, dated July 26, 2023, among the Company, Leap Tide Capital Management LLC and Jan Loeb (7)         10.6 Cooperation Agreement, dated September 5, 2023, between the Company and Star Equity Fund (8)         10.7 Amendment No. 5 to the Retention Bonus Plan (9)         10.8 Restricted Stock Plan (10)     31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (11)     32.1 CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (12)   101.INS Inline XBRL Instance (11)   101.SCH Inline XBRL Taxonomy Extension Schema (11)   33     101.CAL Inline XBRL Taxonomy Extension Calculation (11)   101.DE Inline FXBRL Taxonomy Extension Definition (11)   101.LAB Inline XBRL Taxonomy Extension Labels (11)   101.PRE Inline XBRL Taxonomy Extension Presentation (11)   104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)     (1) Incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on October 21, 2013.     (2) Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A12B filed with the Securities and Exchange Commission on September 1, 2015.     (3) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016.         (4) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 31, 2018.         (5) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018.         (6) Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 11, 2022.         (7) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 1, 2023.         (8) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 8, 2023.         (9) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 11, 2023.         (10) Incorporated herein by reference to the Company’s Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on September 12, 2023.         (11) Filed as part of this Report.         (12) Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K. This Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certification will not be deemed incorporated by reference into any filings under the Securities Act, expect to the extent that the registrant specifically incorporates it by reference.   SIGNATURES   Pursuant to the requirements 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   Date: November 14, 2023 /s/ Gary Fitlin   By Gary Fitlin   President and Chief Executive Officer Chief Financial Officer and Treasurer   34     EXHIBIT INDEX     3.1 Articles of Organization of Gyrodyne, LLC, dated as of October 3, 2013 (1)         3.2 Amended and Restated Limited Liability Company Agreement of Gyrodyne, LLC (2)     10.1 Amended and Restated Retention Bonus Plan (3)         10.2 Amendment No. 2 to the Retention Bonus Plan (4)         10.3 Amendment No. 3 to the Retention Bonus Plan (5)         10.4 Amendment No. 4 to the Retention Bonus Plan (6)         10.5 Cooperation Agreement, dated July 26, 2023, among the Company, Leap Tide Capital Management LLC and Jan Loeb (7)         10.6 Cooperation Agreement, dated September 5, 2023, between the Company and Star Equity Fund (8)         10.7 Amendment No. 5 to the Retention Bonus Plan (9)         10.8 Restricted Stock Plan (10)     31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (11)     32.1 CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (12)   101.INS Inline XBRL Instance (11)   101.SCH Inline XBRL Taxonomy Extension Schema (11)   101.CAL Inline XBRL Taxonomy Extension Calculation (11)   101.DEF Inline XBRL Taxonomy Extension Definition (11)   101.LAB Inline XBRL Taxonomy Extension Labels (11)   101.PRE Inline XBRL Taxonomy Extension Presentation (11)   104          Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)     (1) Incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on October 21, 2013.     (2) Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A12B filed with the Securities and Exchange Commission on September 1, 2015.     (3) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016.         (4) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 31, 2018.         (5) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018.         (6) Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 11, 2022.         (7) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 1, 2023.   35       (8) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 8, 2023.         (9) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 11, 2023.         (10) Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 11, 2023.         (11) Filed as part of this Report.         (12) Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K. This Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certification will not be deemed incorporated by reference into any filings under the Securities Act, expect to the extent that the registrant specifically incorporates it by reference.   36