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 under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were effective as of December 31, 2024 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. 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. 40 The Company’s management assessed the effectiveness of its system of internal control over financial reporting as of December 31, 2024. 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, 2024. 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 was no change in our internal control over financial reporting identified with our evaluation that occurred during the year ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. 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. Also on July 28, 2023, the Board appointed Jan H. Loeb to the Board to fill the vacancy created by Mr. Palmedo’s resignation, and to serve in the class of directors up for election at the Annual Meeting. Mr. 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. 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 2025 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. 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 59 - - - President, CEO CFO and Treasurer of the Company Paul L. Lamb 79 2015 1997 2025 Partner of LambZankel, LLP Chairman of the Board of Directors of the Company Jan H. Loeb 65 2023 - 2026 Managing Member Leap Tide Capital Management LLC Director of the Company Ronald J. Macklin 62 2015 2003 2027 Director of the Company Peter Pitsiokos 65 - - - Executive Vice President, COO, Secretary and Chief Compliance Officer of the Company Nader G.M. Salour 66 2015 2006 2026 Principal, Cypress Realty of Florida, LLC Director of the Company Richard B. Smith 70 2015 2002 2025 Mayor of the Incorporated Village of Nissequogue Director of the Company 41 (b) Business Experience Gary J. Fitlin, age 59, 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. Paul L. Lamb, age 79, 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 LambZankel, 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. Jan H. Loeb, age 65, was appointed to our Board in July 2023. Mr. Loeb has more than forty years of business, money management and investment banking experience. He has been the Managing Member of Leap Tide since 2007. From 2005 to 2007, he served as the President of Leap Tide’s predecessor, Leap Tide Capital Management Inc., which was formerly known as AmTrust Capital Management Inc. He served as a Portfolio Manager of Chesapeake Partners, privately-owned hedge fund sponsor investing in the public equity and alternative investment markets, from February 2004 to January 2005. From January 2002 to December 2004, he served as Managing Director at Jefferies & Company, Inc., an American multinational independent investment bank and financial services company. From 1994 to 2001, he served as Managing Director at Dresdner Kleinwort Wasserstein, Inc. (formerly Wasserstein Perella & Co., Inc.), a boutique investment banking firm. He served as a Lead Director of American Pacific Corporation, a chemical manufacturing corporation, from July 8, 2013 to February 27, 2014, and also served as its Director from January 1997 to February 27, 2014. He served as an Independent Director of Pernix Therapeutics Holdings Inc. (formerly, Golf Trust of America, Inc.), a specialty pharmaceutical business, from 2006 to August 31, 2011. He served as a Director of aerospace and defense company TAT Technologies, Ltd. from August 2009 to December 21, 2016. He served as a Director of Keweenaw Land Association, Ltd., a subsurface mineral mining company, from December 2016 until May 2019. He has served as President, Executive Chairman and board member of Novelstem International Corp., a biotechnology company, since June 2018. He has served as Chairman of Newstem Ltd., a biopharmaceutical company since June 2018. He has served as President and CEO of Acorn Energy Corp., an energy utility company, since January 2016 and CEO of Omnimetrix, LLC, a subsidiary of Acorn Energy Corp., since December 2019. He currently serves as Chairman and Director of Agudath Israel of Baltimore, Inc., a nonprofit religious organization. 42 Ronald J. Macklin, age 62, 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. Peter Pitsiokos, age 65, 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 19 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 66, 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 70, 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. (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 2024 and Forms 5 and amendments thereto received by the Company with respect to fiscal 2024 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 2024. (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 until July 2023 consisted of Messrs. Smith, Palmedo, and Macklin. Mr. Palmedo resigned as a director and as a member of the Audit Committee, effective July 28, 2023. The Board appointed Mr. Salour to replace Mr. Palmedo on the Audit Committee. All members are “financially literate” and have been determined to be “independent” within the meaning of SEC regulations and Nasdaq rules. The Board had previously determined that at least one member, Mr. Smith qualifies as an “audit committee financial expert” as a result of relevant experience in the commercial banking industry. (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. (f) Insider Trading Policy The Company has adopted an insider trading policy and procedures governing the purchase, sale, and/or other dispositions of our securities (the “Insider Trading Policy”) that applies to all directors, officers, employees, consultants, contractors of the Company and its subsidiaries, as well as the Company itself. We believe that the Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations with respect to the purchase, sale and/or other dispositions of the Company's securities, as well as any listing standards, rules and regulations applicable to us. A copy of the Insider Trading Policy is filed as Exhibit 97.2 to this Report. 43 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, 2024 and 2023. 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 2024 250,000 - - - - - - 250,000 President, CEO, CFO and Treasurer 2023 250,000 10,000 - - - - - 260,000 Peter Pitsiokos 2024 200,000 - - - - - - 200,000 COO and Secretary 2023 200,000 10,000 - - - - - 210,000 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 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. 44 (b) Outstanding Equity Awards at Fiscal Year End As of the year ended December 31, 2024, 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. (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. As a result of feedback we received from shareholders during our shareholder listening tours in 2022 and 2023, the Company evaluated various possible changes to the Plan to better align the interests of the Plan participants with those of the shareholders. Effective September 5, 2023, the Board of Directors approved Amendment No. 5 (“Amendment No. 5”) to the Plan. Amendment No. 5 is intended to create better alignment of interests between Plan participants and all shareholders. The primary features of Amendment No. 5 are as follows: ● $1,137,108 forfeited by retired directors returned to the Company : Prior to Amendment No. 5, the Plan provided that Bonus Plan benefits forfeited by retired director participants would be re-allocated among the remaining director participants pro rata. Nevertheless, under Amendment No. 5, such forfeited Bonus Plan benefits in the estimated amount of $1,137,108 have been removed from the pool and returned to the Company. ● Waiver of plan benefits by directors : Director participants agreed to waive all Plan benefits in exchange for 91,628 shares issuable under the Stock Plan (defined and described below), which received shareholder approval on October 12, 2023. All benefits so waived by the director participants were deemed void and not reallocated to any other participants in the Plan. ● Bonus rate : Bonus rate on property sale proceeds was modified for employees to 4.12% on up to $50,985,000 of net proceeds (net of commissions) and 6.72% for incremental net sales above $50,985,000 ● Delayed vesting : An employee participant will only vest in Plan benefits triggered by property sales if he or she remains continuously employed through both the date of closing and the date of the Board’s irrevocable determination of a shareholder distribution; if employment terminates by death, disability or voluntary termination following substantial reduction in compensation (assuming no “cause” grounds for involuntary termination), however, the employee participant remains entitled to benefits only with respect to any property sales occurring within three years and yielding an internal rate of return of at least 4% (IRR ceases to apply to periods beginning after the property is under contract) 45 ● Benefits generally not payable until shareholders paid : Benefits are not payable until liquidating cash distributions are paid to shareholders, except that employee participants will receive early payments if the cumulative amounts credited to the bonus pool bookkeeping account for employee participants equals or exceeds $500,000. ● Early sale incentive : If any property is sold on or before June 30, 2024, the bonus pool for employee participants will be funded with an additional 1% of net sale price. ● Removal of price floor : The price floor hurdle for the sale of properties was removed for all participants to eliminate the perception of any perverse incentive to avoid particular property sales that may not exceed the floor but which otherwise may be in the best interests of shareholders. 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: Bonus Pool Percentage Board Members/Employees Prior to Amend. No 5 Amendment No. 5 RSP approved Board Members (a) 45.000 % 0.000 % Board Discretionary Amount 20.000 % (b) 0.000 % Chief Executive Officer 15.474 % 44.211 % Chief Operations Officer 13.926 % 39.789 % Officer Discretionary Amount (c) 1.750 % 5.000 % Other Employees (d) 3.850 % 11.000 % Total 100.000 % 100.000 % (a) 15% (18.75%) for the Chairman and 10% (12.5%) for each of the other three remaining participant directors. Jan Loeb (appointed to the Board on July 28, 2023) is not a participant in the Plan. (b) Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan. (c) The officer discretionary amount will be allocated to the officers within the discretion of the Board. (d) Other employees will receive 0.75% prior to amendment 5 or 2.143% after amendment No. 5 and the approval of the restricted stock plan. The remaining 3.10% (prior to amendment 5) or 8.857% (after amendment 5) will be allocated to officers and employees within the discretion of the Board. Under the Plan, there were no payments made during the years ended 2024 and 2023. 2024 DIRECTOR COMPENSATION The following table shows the compensation earned by each of the Company’s non-officer directors for the year ended December 31, 2024: 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 Jan H. Loeb 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 $ 288,000 $ - $ - $ - $ - $ - $ 288,000 46 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, 2031, 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. Each of the Directors, excluding Jan Loeb who was appointed to the Board in July 2023, elected (under the DCP) to defer 100% of their director fees for 2020, 2021, 2022, 2023, 2024 and 2025. Restricted Stock Award Plan. The Gyrodyne, LLC Restricted Stock Award Plan (the “Stock Plan”) was approved by the Board on September 5, 2023 and by the shareholders of the Company on October 12, 2023 and became effective on October 12, 2023. Under the Stock Plan, the Company issued to the former director participants in the Retention Bonus Plan (the “Bonus Plan”), in exchange for the waiver and forfeiture of their Bonus Plan benefits, an aggregate of 91,628 Gyrodyne shares, subject to vesting, effective November 14, 2023. The primary features of the Stock Plan are as follows: ● Purpose: The purpose of adoption of the Stock Plan was to incentivize the former director participants in the Bonus Plan to exchange their interests in the Bonus Plan for shares in the Company issuable under the Stock Plan, which would allow for compensation plan separation between directors and employees and better alignment of interests between director participants and shareholders. ● Eligibility: Directors of the Company who were participants in the Bonus Plan are eligible to receive grants under the Stock Plan. The eligible directors were Paul Lamb, Ronald Macklin, Nader Salour and Richard Smith. All such individuals agreed to exchange their Bonus Plan benefits for shares under the Stock Plan, subject to shareholder approval of the Stock Plan. Jan Loeb was not a participant in the Bonus Plan and was not eligible to participate in the Stock Plan. ● Maximum Shares: The total number of shares that were authorized for issuance under the Stock Plan is 91,628 shares, or approximately 5.8% of the common shares outstanding at the effective time of the Stock Plan after giving effect to the issuance of the Stock Plan shares. All 91,628 Stock Plan shares were issued effective November 14, 2023 to Stock Plan participants. There are no remaining shares issuable in the Stock Plan. ● Administration: Pursuant to the terms of the Stock Plan, the Stock Plan is administered and interpreted by a committee consisting of either (i) the Board, or (ii) the President and at least two other directors appointed by the Board. The committee has full power and authority to administer and interpret the Stock Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Stock Plan and for the conduct of its business as it deems necessary or advisable, to waive requirements relating to formalities or other matters that do not modify the substance of rights of participants or constitute a material amendment of the Stock Plan, to correct any defect or supply any omission of the Stock Plan or any grant document and to reconcile any inconsistencies in the Stock Plan or any grant document. ● Restricted Stock: Incentives under the Stock Plan consisted of grants of restricted stock. No shares issued under the Stock Plan, or any interest therein, are transferrable by a participant, whether voluntarily or involuntarily, unless and until a liquidating distribution is made to the shareholders, except by will or by the laws of descent or distribution, and may not be subject to any voluntary or involuntary pledge, assignment, alienation, attachment, or similar encumbrance or transfer. All shares issued in connection with a grant will be subject to the terms, conditions, and restrictions set forth in the Company’s articles of organization, amended and restated limited liability company agreement, or other governing documents of the Company, as amended. ● Vesting: Vesting of shares issued under the Stock Plan occurs (i) in equal one-third tranches on each of the first three anniversaries of the grant date, and (ii) at such time as a liquidating distribution is made to the shareholders of the Company, subject to acceleration upon a liquidating distribution. Unvested Stock Plan shares will be forfeited by a participant if such participant is no longer serving on the Board at or prior to such time that liquidating distributions are paid to the shareholders other than as a result of death, disability or failure to be reelected. ● Amendments: The Board may amend, suspend or terminate the Stock Plan at any time, in its discretion, except that shareholder approval is required for any amendment that increases the number of shares available for grant, accelerates vesting or results in a material increase in benefits or a change in eligibility requirements. The shares under the Stock Plan were distributed as follows in lieu of the director portion of the Bonus Plan of $2,702,285: Board Member Shares of Restricted Stock Paul Lamb 30,542 Ronald Macklin 20,362 Nader Salour 20,362 Richard Smith 20,362 Total 91,628 47 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. (a) As of December 31, 2024, there were no equity compensation plans under which securities of the Company were authorized for issuance, beyond the above shares of restricted stock issued in 2024. (e) The following table sets forth certain information as of March 15, 2025, 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. Name and address of beneficial owner Amount and nature of beneficial ownership (1) Percent of Class (10) Mario Gabelli /Gamco Asset Management Inc. /Gabelli Funds/GCIA/Teton Advisors One Corporate Center Rye, NY 10580 430,476 (2) 19.6 Towerview LLC 460 Park Avenue New York, NY 10022 340,996 (3) 15.5 Lance Gad Revocable Trust 5310 No. Ocean Drive, Unit 702 Riviera Beach, FL 33404 166,765 (4) 7.6 Star Equity Fund LP 53 Forest Avenue, Suite 101 Greenwich, CT 06870 156,043 (5) 7.1 Neil Subin MILFAM LLC 3300 South Dixie Highway, Suite 1-365 West Palm Beach, FL 33405 113,557 (6) 5.2 Paul L. Lamb 1 Flowerfield, Suite 24 St. James, NY 11780 111,099 (7) 5.1 Jan H. Loeb 1 Flowerfield, Suite 24 St. James, NY 11780 69,218 (8) 3.1 Nader G.M. Salour 1 Flowerfield, Suite 24 St. James, NY 11780 33,918 1.5 Ronald J. Macklin 1 Flowerfield, Suite 24 St. James, NY 11780 30,415 1.4 Richard B. Smith 1 Flowerfield, Suite 24 St. James, NY 11780 21,570 1.0 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 (7 persons) 266,220 12.1 (9) (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 March 21, 2024, Gamco Investors Inc. filed Amendment No. 12 to Schedule 13D with the Securities and Exchange Commission stating that GAMCO, a group of investment funds, beneficially owns an aggregate of 430,476 common shares. Power to dispose of and vote securities resides with Mario Gabelli, David Goldman, Peter Goldstein and Douglas Jamieson. 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 430,476 common shares. Amendment No. 12 to Schedule 13D was filed by David Goldman, Douglas Jamieson and Peter Goldstein. (3) On October 21, 2024, Towerview LLC filed Form 4 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 340,996 common shares. The Form 4 was filed by Daniel R. Tisch. (4) On March 14, 2024, Lance Gad Revocable Trust filed a Schedule 13G/A 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 166,765 common shares. (5) On September 7, 2023, Star Equity Fund, LP filed a Schedule 13D with the Securities and Exchange Commission stating that it has the power to vote or direct the vote, and power to dispose of or direct the disposition of 99,464 common shares. The Schedule 13D was filed by Jeffrey Eberwein and Richard Coleman. On March 26, 2024, Star Equity Fund LP communicated to the Company that it had acquired an additional 56,579 common shares in the recently completed rights offering. (6) On August 20, 2020, Neil Subin filed Amendment No. 1 to 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. (7) Includes 4,368 shares held by LambZankel, LLP Profit Sharing Trust and 80,557 shares in an Individual Retirement Account. Mr. Lamb is a trustee of the Profit-Sharing Trust. (8) Includes 7,940 shares in Individual Retirement Account, 6,000 shares by Steinberg Family Trust, 4,000 shares by Kollel Simchas Chaim, 9,800 shares by Son and 2,913 shares by Tide Realty Capital. (9) The percent of class is calculated on the basis of the number of shares outstanding, which is 2,199,308 as of March 15, 2025. 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. 49 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. 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. In March 2022, a Consolidated Lease Agreement was signed between the Company and the not-for-profit organization that extended the lease to December 2027. It also changed some terms of the original leases including rent on the master lease suite, 3% escalators and agreements on work to be done by the Company and the tenant. The signed Consolidated Lease Agreement reflects a below market lease of $8,829 annually and $44,144 during the extended period. A summary of the additional rent under the new arrangement is as follows: Term Square Feet Annual Rent Total Commitment (excluding renewal options) April 2022-Dec 2027 6,006 $ 51,051 $ 317,455 During the twelve months ended December 31, 2024 and 2023, the Company received rental revenue of $54,160 and $52,583, respectively. The independent members of the Board of the Company approved all of the leasing transaction described above. The Chairman was also a partner of the firm LambZankel, 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, Loeb, Macklin, 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, 2024 and 2023: Fee Category Fiscal December 31, 2024 Fiscal December 31, 2023 Audit Fees (1) $ 265,538 $ 139,128 Tax Fees (2) 46,550 44,610 Total Fees $ 312,088 $ 187,738 (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, S-1 consent 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, 2024 and 2023, respectively. (2) 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, 2024 and 2023 (liquidation basis) Consolidated Statement of Changes in Net Assets for the twelve months ended December 31, 2024 and 2023, (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 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 Employment Agreement, with Gary J. Fitlin, dated May 15, 2013 (3) 10.2 Employment Agreement with Peter Pitsiokos dated May 8, 2014 (4) 10.3 Indemnification Agreement, dated as of February 8, 2013, between the Company and each of its directors and officers (5) 10.4 Amendment No. 1 to Employment Agreement with Peter Pitsiokos (6) 10.5 Amended and Restated Retention Bonus Plan (7) 10.6 Amendment No. 2 to Retention Bonus Plan (6) 10.7 Amendment No. 3 to Retention Bonus Plan (8) 10.8 Amendment No. 4 to the Retention Bonus Plan (9) 10.9 Amendment No. 5 to the Retention Bonus Plan (10) 10.10 Nonqualified Deferred Compensation Plan (11) 10.11 Restricted Stock Plan (12) 10.12 Short Form Order of Supreme Court of the State of New York, Suffolk County, dated February 6, 2024 (13) 10.13 Short Form Order of Supreme Court of the State of New York, Suffolk County, dated March 21, 2025 (14) 21.1 List of all subsidiaries (14) 31.1 Rule 13a-14(a)/15d-14(a) Certifications (14) 51 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 (16) 97.1 Executive Compensation Clawback Policy (15) 97.2 Insider Trading Policy (14) 101.INS Inline XBRL Instance (14) 101.SCH Inline XBRL Taxonomy Extension Schema (14) 101.CAL Inline XBRL Taxonomy Extension Calculation (14) 101.DEF Inline XBRL Taxonomy Extension Definition (14) 101.LAB Inline XBRL Taxonomy Extension Labels (14) 101.PRE Inline XBRL Taxonomy Extension Presentation (14) 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 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 January 31, 2018. (7) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016. (8) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018. (9) 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. (10) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on September 11, 2023. (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 8-K, filed with the Securities and Exchange Commission on September 11, 2023. (13) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on February 9, 2024. 52 (14) Filed as part of this report. (15) Incorporated herein by reference to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2024. (16) 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. ** 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. Item 16. Form 10-K Summary. None. 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: March 28, 2025 ******************** 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: March 28, 2025 /S/ Ronald J. Macklin By Ronald J. Macklin, Director Date: March 28, 2025 /S/ Nader Salour By Nader Salour, Director Date: March 28, 2025 /S/ Paul L. Lamb By Paul L. Lamb, Director Date: March 28, 2025 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 Employment Agreement, with Gary J. Fitlin, dated May 15, 2013 (3) 10.2 Employment Agreement with Peter Pitsiokos dated May 8, 2014 (4) 53 10.3 Indemnification Agreement, dated as of February 8, 2013, between the Company and each of its directors and officers (5) 10.4 Amendment No. 1 to Employment Agreement with Peter Pitsiokos (6) 10.5 Amended and Restated Retention Bonus Plan (7) 10.6 Amendment No. 2 to Retention Bonus Plan (6) 10.7 Amendment No. 3 to Retention Bonus Plan (8) 10.8 Amendment No. 4 to the Retention Bonus Plan (9) 10.9 Amendment No. 5 to the Retention Bonus Plan (10) 10.10 Nonqualified Deferred Compensation Plan (11) 10.11 Restricted Stock Plan (12) 10.12 Short Form Order of Supreme Court of the State of New York, Suffolk County, dated February 6, 2024 (13) 10.13 Short Form Order of Supreme Court of the State of New York, Suffolk County, dated March 21, 2025 (14) 21.1 List of all subsidiaries (14) 31.1 Rule 13a-14(a)/15d-14(a) Certifications (14) 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 (16) 97.1 Executive Compensation Clawback Policy (15) 97.2 Insider Trading Policy (14) 101.INS Inline XBRL Instance (14) 101.SCH Inline XBRL Taxonomy Extension Schema (14) 101.CAL Inline XBRL Taxonomy Extension Calculation (14) 101.DEF Inline XBRL Taxonomy Extension Definition (14) 101.LAB Inline XBRL Taxonomy Extension Labels (14) 101.PRE Inline XBRL Taxonomy Extension Presentation (14) 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 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. 54 (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 January 31, 2018. (7) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on May 26, 2016. (8) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on November 2, 2018. (9) 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. (10) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on September 11, 2023. (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 8-K, filed with the Securities and Exchange Commission on September 11, 2023. (13) Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on February 9, 2024. (14) Filed as part of this report. (15) Incorporated herein by reference to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2024. (16) 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. ** 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. 55 GYRODYNE, LLC AND SUBSIDIARIES REPORT ON AUDITS OF CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024 and 2023 GYRODYNE, LLC AND SUBSIDIARIES Contents Years Ended December 31, 2024 and 2023 Pages Report of Independent Registered Public Accounting Firm F-1 Consolidated Statements of Net Assets as of December 31, 2024 and 2023 (liquidation basis) F-3 Consolidated Statements of Changes in Net Assets for the years ended December 31, 2024 and 2023 (liquidation basis) F-4 Notes to Consolidated Financial Statements F-5–22 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of Gyrodyne, LLC: Opinion on the 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, 2024 and 2023, 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, 2024 and 2023, 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) relate to accounts or disclosures that are material to the 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 financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions 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, 6 and 13 to the Consolidated Financial Statements Critical Audit Matter Description The Company presents its 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, discount rates and in certain instances offers 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 and evaluated 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 capitalization rates, and discount rates. o Tested the source information underlying the assumptions. o Developed a range of independent estimates, 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 offers both received and made by management on the properties being valued We have served as the Company's auditor since 1990. /s/ Baker Tilly US, LLP Tysons, Virginia March 28, 2025 F-2 PART I – FINANCIAL INFORMATION Item 1. Financial Statements. GYRODYNE, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET ASSETS (Liquidation Basis) December 31, 2024 December 31, 2023 ASSETS: Real estate held for sale $ 50,388,000 $ 53,780,000 Cash and cash equivalents 5,899,232 3,492,692 Rent receivable 335,966 119,471 Other receivables 36,893 12,601 Total Assets $ 56,660,091 $ 57,404,764 LIABILITIES: Accounts payable $ 1,524,238 $ 2,640,662 Accrued liabilities 2,045,596 1,696,508 Deferred rent liability 21,195 37,515 Tenant security deposits payable 213,081 219,337 Mortgage loans payable 11,169,922 10,981,068 Estimated liquidation and operating costs net of receipts 11,089,746 11,108,640 Total Liabilities 26,063,778 26,683,730 Net assets $ 30,596,313 $ 30,721,034 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, 2024 2023 Net assets, beginning of period $ 30,721,034 $ 30,367,499 Changes in net assets: Change in real estate value ( 3,392,000 ) 110,000 Issuance of common shares, net 4,418,380 Remeasurement of assets and liabilities ( 1,151,101 ) 243,535 Net increase in value ( 124,721 ) 353,535 Net assets, end of period $ 30,596,313 $ 30,721,034 See notes to consolidated financial statements F-4 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 1. The Company Strategic Overview Gyrodyne, LLC’s (including its subsidiaries, “Gyrodyne”, the “Company” or the “Registrant”) corporate strategy is to pursue entitlements on our two remaining properties, so that they can be sold to one or more developers with increased development flexibility at higher prices, thereby maximizing value and distributions. Gyrodyne intends to dissolve after we complete the disposition of our assets, apply the proceeds to settle debts and claims, and then pay liquidating distributions to our shareholders. Gyrodyne filed subdivision applications in March 2017 with respect to Cortlandt Manor and Flowerfield. The COVID-19 pandemic caused significant delays in the regulatory approval process, as state, county and local staff charged with processing our subdivision applications all postponed activity due to work-from-home transitions. On March 30, 2022, the Town of Smithtown Planning Board (the “Planning Board”) voted four to zero with one abstention to grant Gyrodyne’s application for preliminary approval to divide the Flowerfield property into eight lots, subject to certain conditions (the “Flowerfield Subdivision Application”). On April 26, 2022, the Incorporated Village of Head of the Harbor and certain other parties (collectively, the “Petitioners”), 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 Gyrodyne, seeking to annul the Planning Board’s 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 State Environmental Quality Review Act (“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. The arguments made in the Petition are substantially similar to those made by opponents of the Flowerfield Subdivision Application during the SEQRA and subdivision process. Gyrodyne and the Town of Smithtown are vigorously defending the Planning Board’s determinations against the Petition. In June 2022, Gyrodyne and the Town of Smithtown filed motions to dismiss the Petition (the “Motions”). On February 6, 2024, the Supreme Court of the State of New York, Suffolk County issued an order (the “Order”), denying the Motions in part and granting them in part. Specifically, the Order (i) denied the Motions as to three individual Petitioners and the St. James-Head of the Harbor Neighborhood Preservation Coalition, Inc., (ii) granted the Motions as to the remaining twenty (20) individual Petitioners and the Village of Head of the Harbor, (iii) denied the branch of Gyrodyne’s motion alleging that Petitioners failed to state a claim. On October 11, 2024, the Supreme Court of the State of New York issued a ruling in favor of the Company dismissing the Article 78 petition in its entirety. On October 28, 2024, the Company received a notice of appeal filed by the petitioners in this proceeding seeking to appeal the court’s dismissal of the Article 78 petition, citing as grounds for appeal “whether the court erred in denying the petition and dismissed the Article 78 proceeding, and any and all other issues which may arise upon further review of the record on appeal”. On November 12, 2024, the petitioners filed a notice of motion to renew and reargue, seeking to have the court direct the respondents to undertake a supplemental environmental impact statement to address retaining of storm water at the property being developed in light of a recent storm, and to annul the resolution approving the preliminary site plan. On March 17, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the appellants motion to stay enforcement of the order, pending hearing and determination of appeal. On March 21, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the Petitioners motion to renew and reargue. Pleadings filed in the Article 78 Proceeding may be accessed through a link (and related instructions) to the New York State Unified Court System which appears on the Company’s website at https://www.gyrodyne.com. An Article 78 Proceeding could take up to two years or more to run its course given the likelihood of appeals and other motions. Nevertheless, Gyrodyne remains confident in its defense of the appeal and the motion to renew and reargue. Due to the anticipated time it may take for the appeal and any other motions in the Article 78 Proceeding to be finally resolved. Gyrodyne believes that the process of negotiating purchase agreements, securing final subdivision approval and final unappealable site plan approval and consummating the sale of our properties will extend into 2026, although there can be no assurance that Gyrodyne and the Town of Smithtown will be successful in the defense of the appeal and any other motions or that other factors beyond our control will not necessitate a further extension of the timeline. The developed portion of Flowerfield, situated on two separate lots, may be sold together or separately upon the resolution of the Article 78 Proceeding and the filing of the final subdivision map without site plan approval. F-5 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The estimated timeline assumes that Flowerfield is not sold until the culmination of the Article 78 Proceeding. Although Gyrodyne believes that selling individual lots will maximize value, it is also pursuing prospective purchasers who may be willing to purchase all of Flowerfield as an undivided parcel for terms that Gyrodyne finds more attractive from a timing and value perspective and which may allow for a sale before 2026. 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, zoning authority 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 mid-2025 for Flowerfield, and could be received for Cortlandt Manor in mid-2026, 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. On January 5, 2024, Gyrodyne retained JLL Capital Markets to market the Company’s Flowerfield and Cortlandt Manor properties. Business Gyrodyne 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. Our efforts to generate the highest values for Flowerfield and Cortlandt Manor may involve in limited circumstances 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 pay distributions to holders of Gyrodyne common shares. The process of seeking entitlements 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 with certainty 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 a class action lawsuit settled in 2015 (See Note 16 – Contingencies) and satisfy our remaining liabilities and obligations. Under Gyrodyne’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), such dissolution may be effected upon an election to dissolve the Company by the Board that is approved by the vote of holders of a majority of Gyrodyne common shares or, in the Board’s sole discretion and without any separate approval by the holders of Gyrodyne common shares, at any time the value of Gyrodyne’s assets, as determined by the Board in good faith, is less than $ 1,000,000 . F-6 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 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; and ● Flowerfield: 63 acres in St. James, New York, including a 14 -acre multi-tenanted industrial park comprising 135,000 rentable square feet. 2. Summary of Significant Accounting Policies 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 pay 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 Board 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 Board 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 deemed to be “imminent” in accordance with the guidance provided in ASC 205-30. 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 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 in 2026. 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. The process has involved extensive analysis 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 (which may also include site plan approval of prospective purchasers) 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 with increased development flexibility. 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 values. F-7 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The Company believes the process of negotiating purchase agreements, securing final approvals and consummating the sale of our properties will culminate in 2026. The Company intends to aggressively market its properties and negotiate contracts in an effort to complete the process as soon as practicable with the ultimate timeline being largely dependent on factors outside the Company’s control, including without limitation the Article 78 Proceeding and delays in securing final regulatory approvals caused by the ongoing backlog of land use applications, zoning authority labor shortages and environmental concerns. Consequently, there can be no assurance that the Company will be able to meet our formal stated deadline of 2026. 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 in 2026. 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. The real estate market is cyclical in nature. Property values are affected by, among other things, the availability of capital, occupancy rates, rental rates, interest rates and inflation rates. As a result, determining real estate values involves many assumptions. Amounts ultimately realized may vary significantly from the net assets in liquidation values presented. The Company’s most significant accounting estimate relates to the determination of the value of net assets in liquidation. Fair Value of Real Estate - The Company also considers in its valuation estimates the receipt of any expressions of interest/letters from perspective buyers adjusted to reflect the Company’s best estimate of any contingent financial terms inclusive of approval density and related site plans. 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 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. Industry Segments - Gyrodyne’s corporate strategy is to enhance the value of Flowerfield and Cortlandt Manor by pursuing entitlement opportunities to provide purchasers increased development flexibility, and by enhancing the value of our leases, and then selling our properties in an orderly manner at higher values. The Company manages this strategy on an aggregated, single segment basis for purposes of assessing performance and making decisions (inclusive of capital allocation, leasing, entitlements and sales). Therefore, the Company has only one reporting segment. As reported, the Company is on a liquidation basis of accounting. The detailed information regularly provided to the chief operating decision maker (“CODM”), the President and CEO, is reported in Note 4 in detail supporting the estimated liquidation and operating costs net of estimated receipts. This information allows the CODM to manage and forecast any impact the operations have on the estimated real estate value and in the aggregate allows the CODM to calculate estimated distributions. The net assets as of December 31, 2024 ($ 30,596,313 ) and December 31, 2023 ($ 30,721,034 ) results in estimated distributions of approximately $ 13.91 and $ 19.51 per common share, respectively, based on 2,199,308 and 1,574,308 shares outstanding, respectively. F-8 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 New Accounting Pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of December 31, 2024, 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 in Liquidation Net assets as of December 31, 2024 and December 31, 2023 would result in estimated liquidating distributions of $ 30,596,313 and $ 30,721,034 , or approximately $ 13.91 and $ 19.51 per common share, respectively, based on 2,199,308 and 1,574,308 shares outstanding, respectively (see Note 12 – Rights Offering). The decrease of $ 124,721 in estimated liquidating distributions is mainly attributable to the decrease in real estate value of $ 3,392,000 and the increased costs associated with the one year time line extension ($ 1,912,000 ) offset by the cash raised in the rights offering (net proceeds of $ 4,418,380 ) which closed on March 7, 2024, savings in costs associated with the decrease in real estate value of 336,283 and other savings (approximately $ 425,000 of which approximately $ 350,000 is a result of a negotiated reduction in legal fees from the shareholder activist campaign). Approximately $ 3.39 per share of the $ 5.60 decrease in net assets per share is attributable to the issuance in Rights Offering of 625,000 shares at $ 8 per share (reflecting a discount of $ 8.12 per share to the proforma net assets in liquidation as of December 31, 2023). The cash balance at the end of the liquidation period (currently estimated to be December 31, 2026, 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, 2026: 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 (inclusive of the Article 78 Proceeding) to complete the liquidation. 4. Costs for the pursuit of entitlements on the Flowerfield and Cortlandt Manor properties. 5. Retention bonus amounts (See Note 11). 6. Principal payments on the Company’s credit facilities. 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 Company also considers in its valuation estimates the receipt of any expressions of interest/letters from perspective buyers adjusted to reflect the Company’s best estimate of any contingent financial terms inclusive of approval density and related site plans. 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 relevant Company experience with its current and previously owned properties. 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, local supply and demand observations and no sewage treatment plants. 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) or other unfavorable or favorable variances of the aforementioned assumptions, the estimated net realizable value of its real estate assets could be overstated or understated. F-9 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The Company estimates that it will incur approximately $ 1,239,000 in land entitlement costs (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts, (see Note 4)) from January 2025 through the end of the liquidation period, currently estimated to conclude in 2026, 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 year ended December 31, 2024, the Company incurred approximately $ 422,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes. The Company believes the remaining balance of $ 1,239,000 (inclusive of real estate taxes of $ 297,000 and regulatory fees of $ 409,000 ) will be incurred from January 2025 through the end of the liquidation period. 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. 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 December 31, 2024 ($ 30,596,313 ) and December 31, 2023 ($ 30,721,034 ) results in estimated distributions of approximately $ 13.91 and $ 19.51 per common share, respectively, based on 2,199,308 and 1,574,308 shares outstanding, respectively (see Note 12– Rights Offering), based on estimates and other indications of sales value. 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, 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 remaining liquidation period of $ 11,089,746 , excluding the gross 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, costs to defend the Article 78 Proceeding, 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, real estate commissions, 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 remaining liquidation period. The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2024 through December 31, 2024 is as follows: January 1, 2024 Expenditures/ (Receipts) Remeasurement of Assets and Liabilities December 31, 2024 Assets: Estimated rents and reimbursements $ 6,410,201 $ ( 3,105,989 ) $ 2,512,767 $ 5,816,979 Prepaid expenses and other assets 716,866 ( 205,519 ) ( 40,483 ) 470,864 Liabilities: Property operating costs ( 3,852,991 ) 1,898,920 ( 1,895,997 ) ( 3,850,068 ) Capital expenditures ( 300,000 ) 172,506 ( 275,948 ) ( 403,442 ) Land entitlement costs ( 1,210,861 ) 422,328 ( 449,974 ) ( 1,238,507 ) Corporate expenditures (7,540,106 ) 1,987,749 ( 1,337,749 ) ( 6,890,106 ) Selling costs on real estate assets ( 3,226,800 ) - 203,520 ( 3,023,280 ) Retention bonus payments to officers and employees ( 2,104,949 ) - 132,763 ( 1,972,186 ) Liability for estimated liquidation and operating costs net of estimated receipts $ ( 11,108,640 ) $ 1,169,995 $ ( 1,151,101 ) $ ( 11,089,746 ) F-10 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2023 through December 31, 2023 is as follows: January 1, 2023 Expenditures/ (Receipts) Remeasurement of Assets and Liabilities December 31, 2023 Assets: Estimated rents and reimbursements $ 6,243,080 $ ( 3,131,339 ) $ 3,298,460 $ 6,410,201 Prepaid expenses and other assets 963,457 ( 246,591 ) - 716,866 Liabilities: Property operating costs ( 3,758,067 ) 1,713,435 ( 1,808,359 ) ( 3,852,991 ) Capital expenditures ( 303,722 ) 192,255 ( 188,533 ) ( 300,000 ) Land entitlement costs ( 1,204,491 ) 449,121 ( 455,491 ) ( 1,210,861 ) Corporate expenditures ( 7,190,989 ) 3,774,615 ( 4,123,732 ) ( 7,540,106 )* Selling costs on real estate assets ( 3,822,457 ) 655,057 ( 59,400 ) ( 3,226,800 ) Retention bonus payments to directors, officers and employees ( 5,685,539 ) - 3,580,590 ( 2,104,949 ) Liability for estimated liquidation and operating costs net of estimated receipts $ ( 14,758,728 ) $ 3,406,553 $ 243,535 $ ( 11,108,640 ) * Corporate expenditures includes $ 258,600 in future legal fees to address the Article 78 proceeding. 5. 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. On April 30, 2021, the loan converted to the Permanent Phase with an outstanding principal balance of $ 2,200,000 . During the Permanent Phase, the Company is paying interest at a fixed rate of 3.85 %, plus principal based on a 20 -year amortization period. The loan will mature on April 30, 2028. The outstanding balance as of December 31, 2024 was $ 1,913,907 . 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. On May 20, 2021, the loan converted to the Permanent Phase with an outstanding principal balance of $ 3,000,000 . During the Permanent Phase, the Company pays interest at a fixed rate of 3.85 %, plus principal based on a 20 -year amortization period. The loan will mature on May 20, 2028. The outstanding balance as of December 31, 2024 was $ 2,619,498 . Both lines are secured by approximately 31.8 acres of the Flowerfield Industrial Park including the related buildings and leases. As of December 31, 2024, 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. F-11 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 On September 15, 2021, the Company, through its subsidiary GSD Cortlandt, LLC (“GSD Cortlandt”), secured a $ 4.95 million term loan (the “2021 Mortgage Loan”) with Signature Bank, the proceeds of which were used to pay off the previous GSD Cortlandt debt facility of which $ 1,050,000 was outstanding. The term of the 2021 Mortgage Loan is five years with an option to extend for an additional five years (the “Extension Period”). Until the initial maturity date, the 2021 Mortgage Loan bears interest at an annual rate equal to 3.75 %. If the maturity date is extended for the Extension Period, the rate of interest on the 2021 Mortgage Loan will adjust and be fixed for the Extension Period to the greater of (i) 3.75 % or (ii) 275 basis points in excess of the weekly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently made available by the Federal Reserve Board as of thirty days prior to the first day of the Extension Period. The 2021 Mortgage Loan will be paid in monthly installments of principal and interest calculated on the basis of a thirty-year amortization schedule. If the maturity date is extended for the Extension Period, the amount of each monthly installment will be recalculated for the Extension Period based on the adjusted interest rate on the 2021 Mortgage Loan and an amortization schedule of twenty-five years. The lender has the right, but not the obligation, to decline to extend the term of the 2021 Mortgage Loan if the loan to value ratio of the property is greater than seventy percent ( 70 %), or the property does not support a debt service coverage ratio (as calculated by the lender) of at least 1.3 to 1, in each case on the date the extension is exercised. The 2021 Mortgage Loan may be prepaid in whole or in part, at any time, provided the borrower (GSD Cortlandt) pays the bank with each prepayment a prepayment fee equal to (i) during the first loan year and, if applicable, the first loan year of the Extension Period, five percent of the amount of such prepayment; (ii) during the second loan year and, if applicable, during the second loan year of the Extension Period, four percent of the amount of such prepayment; (iii) during the third loan year and, if applicable, during the third loan year of the Extension Period, three percent of the amount of such prepayment; (iv) during the fourth loan year and, if applicable, during the fourth loan year of the Extension Period, two percent of the amount of such prepayment; and (v) during the fifth loan year and, if applicable, during the fifth loan year of the Extension Period, one percent of the amount of such prepayment. There will be no prepayment fee for any prepayment made during the sixty-day period immediately preceding the initial maturity date or the last sixty days of the Extension Period. All prepayments must include accrued and unpaid interest through the date of prepayment. On December 14, 2023, the FDIC transferred the 2021 Mortgage Loan to SIG CRE 2023 Venture LLC, which continues to be the holder of the 2021 Mortgage Loan. The outstanding balance as of December 31, 2024 was $ 4,658,688 . The 2021 Mortgage Loan is secured by the Cortlandt Manor property located at 1985 Crompond Road ( 5.01 acres). On December 27, 2023, the Company, through its subsidiaries GSD Cortlandt, LLC (“GSD Cortlandt”) and Buttonwood Acquisition, LLC (“Buttonwood”), secured a term mortgage loan (the “2023 Mortgage Loan”) in the principal amount of $ 1,500,000 with LLYR Resources, LLC. The net proceeds of the 2023 Mortgage Loan will be used for general working capital. The 2023 Mortgage Loan is unconditionally and irrevocably guaranteed by the Company. The term of the 2023 Mortgage Loan is two years. Until the maturity date, the 2023 Mortgage Loan bears interest at a floating interest rate of 1.5 % per annum in excess of the Wall Street Prime Rate, with such interest payable monthly, which may be prepaid, in whole or in part, at any time, without payment of a prepayment fee. The 2023 Mortgage Loan is secured by a first mortgage in the amount of $ 1,500,000 on the interests of GSD Cortlandt in 1989 Crompond Road and 1987 Crompond Road in Cortlandt Manor, New York, and the interests of Buttonwood in 206 Buttonwood Avenue and certain vacant land off of Buttonwood Road in Cortlandt Manor, New York. On February 1, 2024, an agreement was signed with one vendor who had previously agreed to defer 50 % of payment until the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision. The agreement called for a $ 200,000 payment on outstanding invoices plus an interest payment on such invoices, interest to accrue monthly on the outstanding balance, agreement to pay all future invoices in full, and conversion of the remaining outstanding balance of $ 477,829 (balance due after the $ 200,000 payment) to a loan payable within 15 days of the sale of one of the Company’s properties. The loan accrued interest at 0.75 % per month through 2024 and will accrue interest at 1.0 % per month starting January 2025. The total debt payable mature as follows: Years Ending December 31, 2025 $ 306,750 2026 2,296,494 2027 4,670,420 2028 3,896,258 2029 - Total $ 11,169,922 F-12 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 6. 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 2024, the net realizable value of real estate decreased by $ 3,392,000 and in 2023 it increased by $ 110,000 . Both the 2024 and the 2023 change is primarily driven by the current status of entitlement uses and market conditions. The valuation of the remaining real estate as of December 31, 2024 is $ 50,388,000 . 2024 2023 Net Realizable Value at beginning of period $ 53,780,000 $ 53,670,000 Change in Net Realizable Value Cortlandt Manor ( 3,480,000 ) 210,000 Flowerfield 88,000 ( 100,000 ) Net Realizable Value on December 31, $ 50,388,000 $ 53,780,000 7. Accounts Payable and Accrued Liabilities Accounts Payable Accrued Liabilities December 31, December 31, 2024 2023 2024 2023 Current accounts payable $ 524,355 $ 1,400,788 Accrued liabilities $ 322,548 $ 298,055 Other accounts payable (a) 999,883 1,239,874 Deferred Compensation to Directors (b) 1,723,048 1,398,453 Total $ 1,524,238 $ 2,640,662 Total $ 2,045,596 $ 1,696,508 (a) Represents amount of deferred fees pursuant to informal agreements the Company reached with certain service vendors to defer payment until certain dates, some of which include the closing of the first property lot sale that is the subject of either the Flowerfield or Cortlandt Manor subdivision, respectively. In February 2024, an agreement was made with one vendor who previously agreed to defer 50 % of their fees to pay $ 200,000 and to convert the remaining balance of $ 477,829 to an interest-bearing loan (see Note 5 – Loans Payable). (b) The director fees and interest accrued under the deferred Compensation Plan where most directors elected to defer 100 % of their fees for 2024, 2023, 2022, 2021 and 2020 excluding Jan Loeb who was nominated to the Board on July 28, 2023, and elected to a three-year term at the annual shareholder meeting on October 12, 2023. This amount also includes the deferred compensation of a former Board advisor per an agreement to defer payments due under an advisor agreement and two previous Board members. Accrued liabilities on December 31, 2024 and 2023 are as follows: December 31, 2024 2024 Payroll and related taxes $ 73,806 $ 55,161 Professional fees 248,742 242,894 Total $ 322,548 $ 298,055 8. 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 Company’s open tax years are 2022, 2023 and 2024. F-13 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 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. 9. 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, 2024 and 2023, the Company had an $ 0 and $ 8,555 balance, respectively, in its allowance for doubtful accounts. 10. 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, 2024 and 2023. 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. For the year ended December 31, 2024 rental income from the Company’s three largest tenants represented approximately 25 %, 21 % and 9 % of total rental income. The three largest tenants by revenue as of December 31, 2024 consist of a medical tenant in the Cortlandt Manor Medical Center, a New York State Agency located in the industrial park, and an athletics facility in the industrial park. For the year ended December 31, 2023 rental income from the Company’s three largest tenants represented approximately 25 %, 21 % and 9 % of total rental income. The three largest tenants by revenue as of December 31, 2023 consist of a medical tenant in the Cortlandt Manor Medical Center, a New York State Agency located in the industrial park, and an athletics 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. F-14 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 11. Commitments As of December 31, 2024 and 2023, other commitments and contingencies are summarized in the table below: 2024 2023 Management Employment agreements with bonus* and severance commitment contingencies $ 350,000 $ 350,000 Other employee severance commitment contingencies 89,000 89,000 Total $ 439,000 $ 439,000 * 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 $ 89,000 . 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. As a result of feedback we received from shareholders during our shareholder listening tours in 2022 and 2023, the Company evaluated various possible changes to the Plan to better align the interests of the Plan participants with those of the shareholders. Effective September 5, 2023, the Board of Directors approved Amendment No. 5 (“Amendment No. 5”) to the Plan. Amendment No. 5 is intended to create better alignment of interests between Plan participants and all shareholders. The primary features of Amendment No. 5 are as follows: ● $1,137,108 forfeited by retired directors returned to the Company : Prior to Amendment No. 5, the Plan provided that Bonus Plan benefits forfeited by retired director participants would be re-allocated among the remaining director participants pro rata. Nevertheless, under Amendment No. 5, such forfeited Bonus Plan benefits in the estimated amount of $ 1,137,108 have been removed from the pool and returned to the Company. ● Waiver of plan benefits by directors : Director participants agreed to waive all Plan benefits in exchange for 91,628 shares issuable under the Stock Plan (defined and described below), which received shareholder approval on October 12, 2023. All benefits so waived by the director participants were deemed void and not reallocated to any other participants in the Plan. ● Bonus rate: Bonus rate on property sale proceeds was modified for employees to 4.12 % on up to $ 50,985,000 of net proceeds (net of commissions) and 6.72 % for incremental net sales above $50,985,000. ● Delayed vesting : An employee participant will only vest in Plan benefits triggered by property sales if he or she remains continuously employed through both the date of closing and the date of the Board’s irrevocable determination of a shareholder distribution; if employment terminates by death, disability or voluntary termination following substantial reduction in compensation (assuming no “cause” grounds for involuntary termination), however, the employee participant remains entitled to benefits only with respect to any property sales occurring within three years and yielding an internal rate of return of at least 4 % (IRR ceases to apply to periods beginning after the property is under contract). F-15 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 ● Benefits generally not payable until shareholders paid : Benefits are not payable until liquidating cash distributions are paid to shareholders, except that employee participants will receive early payments if the cumulative amounts credited to the bonus pool bookkeeping account for employee participants equals or exceeds $ 500,000 . ● Early sale incentive : If any property is sold on or before September 30, 2024, the bonus pool for employee participants will be funded with an additional 1 % of net sale price. ● Removal of price floor : The price floor hurdle for the sale of properties was removed for all participants to eliminate the perception of any perverse incentive to avoid particular property sales that may not exceed the floor but which otherwise may be in the best interests of shareholders. 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 and Employees Prior to Amend. No 5 Amendment No. 5 RSP approved Board Members(a) 45.000 % 0.000 % Board Discretionary Amount 20.000 %(b) 0.000 % Chief Executive Officer 15.474 % 44.211 % Chief Operations Officer 13.926 % 39.789 % Officer Discretionary Amount (c) 1.750 % 5.000 % Other (d) 3.850 % 11.000 % Total 100.000 % 100.000 % (a) 15 % ( 18.75 %) for the Chairman and 10 % ( 12.5 %) for each of the other three remaining participant directors. Jan Loeb (nominated to the Board on July 28, 2023 and elected to a three-year term on October 12, 2023) is not a participant in the Plan. (b) Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan. (c) The officer discretionary amount will be allocated to the officers within the discretion of the Board. (d) Other employees will receive 0.75 % prior to amendment 5 or 2.143 % after amendment No. 5 and the approval of the restricted stock plan. The remaining 3.10 % (prior to amendment 5) or 8.857 % (after amendment 5) will be allocated to officers and employees within the discretion of the Board. Under the Plan, there were no payments made during the year ended December 31, 2024. Restricted Stock Award Plan – The Gyrodyne, LLC Restricted Stock Award Plan (the “Stock Plan”) was approved by the Board on September 5, 2023 and by the shareholders of the Company on October 12, 2023 and became effective on October 12, 2023. Under the Stock Plan, the Company issued to the former director participants in the Retention Bonus Plan (the “Bonus Plan”), in exchange for the waiver and forfeiture of their Bonus Plan benefits, an aggregate of 91,628 Gyrodyne shares, subject to vesting, effective November 14, 2023. The primary features of the Stock Plan are as follows: ● Purpose: The purpose of adoption of the Stock Plan was to incentivize the former director participants in the Bonus Plan to exchange their interests in the Bonus Plan for shares in the Company issuable under the Stock Plan, which would allow for compensation plan separation between directors and employees and better alignment of interests between director participants and shareholders. F-16 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 ● Eligibility: Directors of the Company who were participants in the Bonus Plan were eligible to receive grants under the Stock Plan. The eligible directors were Paul Lamb, Ronald Macklin, Nader Salour and Richard Smith. All such individuals agreed to exchange their Bonus Plan benefits for shares under the Stock Plan, subject to shareholder approval of the Stock Plan. Jan Loeb was not a participant in the Bonus Plan and was not eligible to participate in the Stock Plan. ● Maximum Shares: The total number of shares that were authorized for issuance under the Stock Plan at the effective time is 91,628 shares, or approximately 5.8 % of the common shares outstanding at the effective time of the adoption of the Stock Plan after giving effect to the issuance of the Stock Plan shares (or 4.2 % of the current total common shares outstanding after giving effect to the rights offering). All 91,628 Stock Plan shares were issued effective November 14, 2023 to Stock Plan participants. There are no remaining shares issuable in the Stock Plan. ● Administration: Pursuant to the terms of the Stock Plan, the Stock Plan is administered and interpreted by a committee consisting of either (i) the Board, or (ii) the President and at least two other directors appointed by the Board. The committee has full power and authority to administer and interpret the Stock Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Stock Plan and for the conduct of its business as it deems necessary or advisable, to waive requirements relating to formalities or other matters that do not modify the substance of rights of participants or constitute a material amendment of the Stock Plan, to correct any defect or supply any omission of the Stock Plan or any grant document and to reconcile any inconsistencies in the Stock Plan or any grant document. ● Restricted Stock: Incentives under the Stock Plan consisted of grants of restricted stock. No shares issued under the Stock Plan, or any interest therein, are transferrable by a participant, whether voluntarily or involuntarily, unless and until a liquidating distribution is made to the shareholders, except by will or by the laws of descent or distribution, and may not be subject to any voluntary or involuntary pledge, assignment, alienation, attachment, or similar encumbrance or transfer. All shares issued in connection with a grant are subject to the terms, conditions, and restrictions set forth in the Company’s articles of organization, amended and restated limited liability company agreement, or other governing documents of the Company, as amended. ● Vesting: Vesting of shares issued under the Stock Plan occurs (i) in equal one-third tranches on each of the first three anniversaries of the grant date, and (ii) at such time as a liquidating distribution is made to the shareholders of the Company. Unvested Stock Plan shares will be forfeited by a participant if such participant is no longer serving on the Board at or prior to such time that liquidating distributions are paid to the shareholders other than as a result of death, disability or failure to be reelected. ● Amendments: The Board may amend, suspend or terminate the Stock Plan at any time, in its discretion, except that shareholder approval is required for any amendment that increases the number of shares available for grant, accelerates vesting or results in a material increase in benefits or a change in eligibility requirements. The shares under the Stock Plan were distributed as follows in lieu of the director portion of the Bonus Plan of $2,702,285: Board Member Shares of Restricted Stock Paul Lamb 30,542 Ronald Macklin 20,362 Nader Salour 20,362 Richard Smith 20,362 Total 91,628 F-17 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 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, 2031, 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, 2021, 2022, 2023, 2024 and 2025 excluding Jan Loeb who was nominated to the Board on July 28, 2023 and elected to a three-year term at the annual shareholder meeting on October 12, 2023. 12. Rights Offering The Company completed a rights offering (the “Rights Offering”) on March 7, 2024 pursuant to which we generated net proceeds of approximately $ 4,400,000 . In connection to the Rights Offering the Company filed a registration statement on Form S-1 with the Securities and Exchange Commission (the “Commission”) on December 29, 2023 to distribute to holders of Gyrodyne’s common shares on the record date of January 29, 2024 one non-transferable subscription right for each five shares held. Each whole subscription right gave the shareholders the opportunity to purchase two of the Company’s common shares for $ 8.00 per share, or 625,000 shares in the aggregate. If a shareholder exercised his or her basic subscription right in full, and other shareholders did not, such shareholder was entitled to an oversubscription privilege to purchase a portion of the unsubscribed shares at the subscription price, subject to proration and certain limitations. The maximum dollar amount the Company sought to raise in the Rights Offering was $ 5 million in aggregate gross proceeds. The Commission declared the registration statement effective on February 2, 2024 and the Company commenced the Rights Offering on February 6, 2024. The Company announced on March 11, 2024 that it received subscriptions for 1,031,640 shares, greatly exceeding the maximum shares offered of 625,000 . Shareholders were allocated 100 % of their basic subscriptions. Based on the maximum 625,000 shares that were issuable in the rights offering, 271,836 shares were allocated to shareholders who properly exercised their oversubscription privilege, pro rata in proportion to the aggregate number of shares subscribed for under the over-subscription privilege, or approximately 40 % of each over-subscriber’s requested shares. The rights offering resulted in 625,000 common shares issued on March 12, 2024 and net proceeds received (after expenses) of approximately $ 4,400,000 (gross proceeds of $ 5,000,000 less direct expenses of the rights offering of approximately $ 600,000 ). The Company expects to use the net proceeds received from the Rights Offering to complete the pursuit of entitlements on the Company’s Flowerfield and Cortlandt Manor properties, for litigation fees and expenses in the Article 78 proceeding, for property purchase agreement negotiation and enforcement, for necessary capital improvements in the Company’s real estate portfolio, and for general working capital. 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. F-18 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 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 Company also considers in its valuation estimates the receipt of any expressions of interest/letters from perspective buyers adjusted to reflect the Company’s best estimate of any contingent financial terms inclusive of approval density and related site plans. 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 relevant Company experience with its current and previously owned properties. 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, local supply and demand observations. To the extent, the Company underestimates or overestimates forecasted cash outflows (capital improvements, lease commissions and operating costs) or overestimates or understates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated or understated. 14. Governance Director Nomination and Proposal from Shareholder – 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 (“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”). 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. Pursuant to the Cooperation Agreement, the Company agreed to adopt, and submit for shareholder approval at the Annual Meeting, a new stock incentive plan (the “Stock Plan”) for directors who participated in the Company’s retention bonus plan (the “Bonus Plan”), pursuant to which such director participants would exchange their benefits under the Bonus Plan for 91,628 shares under the Stock Plan, if the Stock Plan would be approved by the shareholders. Under the Stock Plan, shares would not be transferable unless and until a liquidating distribution is made to all shareholders. Additionally, the Company agreed not to increase director compensation fees. F-19 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The Cooperation Agreement also obligated Star Equity to vote all Company shares beneficially owned by it at the Annual Meeting in accordance with the Board’s recommendations. Star Equity will also vote in accordance with the Board’s recommendations at any special meeting of shareholders occurring before the date that is thirty days prior to the opening of the window for submission of shareholder nominations for the Company’s 2024 annual meeting of shareholders (the “Termination Date”), except that Star Equity may vote (i) in its discretion on any proposal regarding certain extraordinary transactions, and (ii) in accordance with the recommendation of Institutional Shareholder Services Inc. (“ISS”) to the extent the recommendation of ISS differs from the Board’s recommendation on any matter presented to shareholders. The Cooperation Agreement also prevents Star Equity until the Termination Date from, among other things, (i) nominating any person for election or submitting any shareholder proposal for consideration at any meeting of shareholders of the Company at which directors are to be elected, (ii) soliciting proxies or (iii) taking actions to change or influence the Board, Management or the direction of certain Company matters. Until the Termination Date, the Company and Star Equity have also agreed not to disparage each other. Through December 31, 2024, 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 $ 950,000 General – 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. 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 2023 Annual Meeting. Mr. 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. At the Company’s Annual Meeting held on October 12, 2023, Mr. Loeb was elected by the shareholders to serve a three-year term. 15. Pandemic and Macroeconomics 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 residual impact of the COVID-19 pandemic on the Company’s business, operations, cash flows and financial condition for the year ended December 31, 2024 and future periods. The COVID-19 pandemic has also adversely impacted, and may continue to impact adversely, the timeliness of local government in granting required approvals, as state and local staff charged with processing our subdivision applications all postponed activity due to work-from-home transitions. Accordingly, COVID-19 has caused, and may continue to cause, the completion of important stages in our efforts to secure entitlements to be delayed. The pandemic has also 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, although medical office has faced less of a challenge from work-from-home shifts. We are affected by the fiscal and monetary policies of the United States Government and its agencies, including the policies of the Federal Reserve, which regulates the supply of money and credit in the United States. The combination of elevated interest rates and persistent inflation (or the perception that any of these events may continue) have contributed to continued weakness in commercial real estate markets, including in those real estate markets in which we operate. Changes in fiscal and monetary policies are beyond our control and are difficult to predict. Although the Federal Reserve decreased the federal funds rate multiple times in 2024, the rate continues to be elevated and there can be no assurance that the rate will continue to decrease or that it will not be increased in 2025 and beyond. While lower market rates and increased capital markets liquidity supports commercial real estate property transactions and values, regulated lending institutions are adjusting their business models to increase capital requirements for direct loans to real estate and thus continue to be constrained in providing capital for commercial real estate properties. Changes in the federal funds rate as well as the other policies of the Federal Reserve affect interest rates, which have a significant impact on our financial condition. F-20 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 The extent of the continuing impact of these public health and macroeconomic risks on the Company's operational and financial performance and ultimately its Net Asset Value, will depend on current and future developments, including the residual effects of the COVID-19 pandemic and the extent to which persistently high interest rates continue to have an adverse impact on the real estate industry or have a recessionary effect generally. As a result of the foregoing developments, we are unable to determine what the ultimate impact of general economic conditions will be on our timeline for seeking entitlements and selling properties, and ultimately on the amount proceeds and distributions from those sales. 16. 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, 2024 and 2023, the value of the remaining unsold properties exceeded the respective 2014 appraised value. Article 78 Proceeding – On April 26, 2022, the Incorporated Village of Head of the Harbor and certain other parties, commenced a special proceeding (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. The Article 78 Proceeding was commenced by the filing of a petition (the “Petition”) in the Supreme Court of the State of New York, Suffolk County, pursuant to Article 78 of the N.Y. Civil Practice Law and Rules. Specifically, 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. The arguments made in the Petition are substantially similar to those made by opponents of the Flowerfield Subdivision Application during the SEQRA and subdivision process. The Company and the Town of Smithtown are vigorously defending the Planning Board’s determinations against the Petition. In June 2022, Gyrodyne and the Town of Smithtown filed motions to dismiss the Petition. During the third quarter of 2023, the Article 78 Proceeding was re-assigned to a different judge for the second time. On February 6, 2024, the Supreme Court of the State of New York, Suffolk County issued an order (the “Order”), denying the Motions in part and granting them in part. Specifically, the Order (i) denied the Motions as to three individual Petitioners and the St. James-Head of the Harbor Neighborhood Preservation Coalition, Inc., (ii) granted the Motions as to the remaining twenty (20) individual Petitioners and the Village of Head of the Harbor, (iii) denied the branch of Gyrodyne’s motion alleging that Petitioners failed to state a claim. On October 11, 2024, the Supreme Court of the State of New York issued a ruling in favor of the Company dismissing the Article 78 petition in its entirety. On October 28, 2024, the Company received a notice of appeal filed by the petitioners in this proceeding seeking to appeal the court’s dismissal of the Article 78 petition, citing as grounds for appeal “whether the court erred in denying the petition and dismissed the Article 78 proceeding, and any and all other issues which may arise upon further review of the record on appeal”. On November 12, 2024, the petitioners filed a notice of motion to renew and reargue, seeking to have the court direct the respondents to undertake a supplemental environmental impact statement to address retaining of storm water at the property being developed in light of a recent storm, and to annul the resolution approving the preliminary site plan. On March 17, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the appellants motion to stay enforcement of the order, pending hearing and determination of appeal. On March 21, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the Petitioners motion to renew and reargue. Pleadings filed in the Article 78 Proceeding may be accessed through a link (and related instructions) to the New York State Unified Court System which appears on the Company’s website at https://www.gyrodyne.com. 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-21 GYRODYNE, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements (Liquidation Basis) Years Ended December 31, 2024 and 2023 17. 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. In March 2022, a Consolidated Lease Agreement was signed between the Company and the not-for-profit organization that extended the lease to December 2027. It also changed some terms of the original leases including rent on the master lease suite, 3 % escalators and agreements on work to be done by the Company and the tenant. The signed Consolidated Lease Agreement reflects a below market lease of $ 8,829 annually and $ 44,144 during the extended period. A summary of the additional rent under the new arrangement is as follows: Term Square Feet Annual Rent Total Commitment (excluding renewal options) April 2022-Dec 2027 6,006 $ 51,051 $ 317,455 During the twelve months ended December 31, 2024 and 2023, the Company received rental revenue of $ 54,160 and $ 52,583 , respectively. The independent members of the Board of the Company approved all of the leasing transaction described above. The Chairman was also a partner of the firm LambZankel, LLP that provided pro bono legal representation to the aforementioned not-for-profit corporation on the lease. F-22