What changed in this filing

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Item 1A. Risk Factors

2026-03-27 compared with 2025-03-28 · 69 added, 27 removed, 352 unchanged (21% of the section changed)

34 unchanged sentences

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.

On April 16, 2025 the Petitioners filed a notice of appeal seeking to appeal the March 17, 2025 order denying the appellants motion to stay enforcement of the order dismissing the Petition pending the appeal.

On April 28, 2025 the Petitioners perfected their appeal on the original Petition.

The Petitioners’ memorandum of law largely repeats their earlier position and arguments, which the Supreme Court previously found to be an insufficient basis for overturning the Planning Board’s determinations.

Gyrodyne filed its response to the Appeal on July 25, 2025 and the Town submitted its reply to the Appeal on July 28, 2025.

Challenging a government decision in an Article 78 proceeding can lead to delay in enforcement of the government action, whether or not the suit is successful, and the government sometimes agrees to delay implementation until legal challenges are resolved.

Although Article 78 proceedings take place on an expedited timeline and generally without discovery, the Article 78 Proceeding could take an additional six months or more for a decision given the impact the pandemic has had on the court system with additional time needed for an appeal, if one is filed.

Consequently, the commencement of the Article 78 Proceeding could result in a further extension of the Company’s timeline for completing the process of securing entitlements, selling our properties and distributing net proceeds.

Nevertheless, the Company remains confident that the process of negotiating purchase agreements, securing final subdivision approval and final unappealable site plan approval and consummating the sale of our properties will culminate by year-end 2026, although the Company believes that standard market contract terms would include resolution to the Article 78 proceeding as condition to closing and there can be no assurance that the Company and the Town of Smithtown will be successful in the defense of the Planning Board’s determinations against the Petition or that other factors beyond our control (i.e., potential contract contingencies including site plan approval (excluding the existing industrial buildings situated on two separate lots which can be sold together or separately upon the resolution of the Article 78 Proceeding and the conclusion of the subdivision, without any site plan approvals)) will necessitate an extension of the timeline.

Moreover, there can be no assurances that there will not be any additional efforts to challenge decisions made by the Town of Smithtown or any other governmental agency decision impacting our properties or our efforts to enhance the value of our properties through the commencement of other Article 78 proceedings or other forms of litigation.

Although Article 78 proceedings take place on an expedited timeline and generally without discovery, we cannot provide any assurances as to the anticipated resolution of the Article 78 Proceeding, or any future Article 78 proceedings relating to our properties that may be commenced in the future, given the impact the pandemic has had on the court system.

Consequently, the Article 78 Proceeding and any future such proceedings could result in further extensions of the Company’s timeline for completing the process of securing entitlements, selling our properties and distributing net proceeds and there can be no assurance that the Company and the Town of Smithtown will be successful in the defense of the Planning Board’s determinations against the Petition.

We cannot assure you of the exact timing and amount of any further distributions to our shareholders.

15 unchanged sentences

In addition, transactional fees and expenses, environmental contamination at our properties or unknown liabilities, if any, may adversely impact the net proceeds from those properties.

Distributions to shareholders may be delayed or reduced as a result of sale agreement provisions that allow purchasers to terminate agreements, that result in purchaser defaults or that make the purchase price contingent upon site plan approval.

Purchase and sale agreements that we have entered into with respect to properties we previously sold contained provisions that gave the purchaser the right to terminate the agreement, for any reason or no reason, prior to the expiration of an evaluation period, and receive a refund of earnest money deposits, and it can be anticipated that agreements for future property sales will have similar provisions.

The consummation of property sales for which we will enter into sale agreements in the future will also be subject to satisfaction of standard closing conditions.

Moreover, we anticipate that purchase and sale agreements may also be contingent upon the purchaser obtaining (at its expense) final site plan approval for a designated number of units within a specified period of time, with the purchaser having a right to terminate the agreement or extend the approval period if it fails to secure such approval within such time period, and with the purchase price for the property being a function of agreed upon price per unit and the number of approved units.

If any property sale contemplated by future sale agreements does not close because a purchaser exercises its termination right or defaults, or because of a failure of a closing condition or for any other reason, we will need to locate a new buyer for the property, which we may be unable to do promptly or at a price or on terms that are as favorable as contained in the original sale agreement.

Distributions to shareholders may be delayed or reduced as a result of sale agreement provisions, including under our agreement with B2K, that allow purchasers to terminate agreements, that result in purchaser defaults or that make the purchase price contingent upon site plan approval.

Purchase and sale agreements for the sale of our properties may contain standard market provisions that give the purchaser the right to terminate the agreement, for any reason or no reason, prior to the expiration of an evaluation period, and receive a refund of earnest money deposits.

The consummation of property sales under such agreements, including our purchase and sale agreement with B2K (the “B2K Agreement”), are also subject to satisfaction of standard closing conditions.

The closing under the B2K Agreement is, and closings under future purchase and sale agreements are expected to be, contingent upon the purchaser obtaining (at its expense) final site plan approval for a designated number of units within a specified period of time, with the purchaser having a right to terminate the agreement or extend the approval period if it fails to secure such approval within such time period, and with the purchase price for the property being a function of agreed upon price per unit and the number of approved units.

If any property sale contemplated by the B2K Agreement or future sale agreements does not close because a purchaser exercises its termination right or defaults, or because of a failure of a closing condition or for any other reason, we will need to locate a new buyer for the property, which we may be unable to do promptly or at a price or on terms that are as favorable as contained in the original sale agreement.

Many of the costs incurred due to a sale that fails to close are sunk costs with no future value and we will also incur additional costs involved in negotiating a new sale agreement for such property.

13 unchanged sentences

The liquidation basis of accounting requires us to accrue all costs associated with implementing and completing our plan of liquidation.

Total liability for estimated costs in excess of estimated receipts during liquidation, inclusive of the costs listed above plus costs associated with the sale of real estate, payments made under the retention bonus plan, litigation costs and liquidating costs, total $11,089,746.

The total amount of land entitlement costs, transaction fees and all operating and administrative costs in the liquidation is not yet known and, therefore, we have used estimates of these costs in calculating the amounts of our projected distributions to our shareholders.

4 unchanged sentences

Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as governance changes, financial restructurings, sales of assets and changes to executive and director compensation.

In 2023, the Company was targeted by an activist campaign pursuant to which Star Equity Fund, LP (“Star Equity”) notified the Company (the “Nomination Notice”) of its intent to nominate a slate of two candidates for election as directors at the 2023 annual meeting of shareholders (the “2023 Annual Meeting”), and then 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.

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.

The Company received a notice dated June 4, 2025 from Star Equity Fund, LP (“Star Equity”), which claimed to own approximately 7.1% of our outstanding shares at the time of submission, purporting to give notice of its intent to nominate a slate of two candidates for election as directors at the 2025 annual meeting of shareholders.

On October 16, 2025, the Company entered into a letter agreement (the “Star Agreement”) with Star Equity, pursuant to which Star Equity agreed to irrevocably withdraw its June 4, 2025 notice of intent to nominate two directors at the 2025 annual meeting.

The Star Agreement also obligates Star Equity to vote all Gyrodyne shares it owns in accordance with the Board’s recommendations including on the election of directors prior to the Termination Date (as defined below), except that Star Equity will be permitted to vote (i) in its discretion on any proposal regarding certain extraordinary transactions, and (ii) in accordance with the recommendation of Institutional Shareholder Services to the extent the recommendation differs from the Board’s recommendation on any matter presented to the shareholders at a special meeting of shareholders following the 2025 annual meeting.

Star Equity’s obligations continue until December 31, 2026, or December 31, 2027 if the Board re-nominates both Nader G.M.

Salour and Jan H.

Loeb for election at the Company’s 2026 annual meeting and both Messrs.

Salour and Loeb agree to such re-nomination (the “Termination Date”).

The Star 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.

Under the Star Agreement, the Company agreed to nominate only one Board member at the 2025 annual meeting, Richard Smith, for election for an additional three-year term and to reduce the size of the board from five to four seats.

If any of Jan H.

Loeb, Nader G.M.

Salour, Richard B.

Smith or Ronald J.

Macklin (each, a “Continuing Director”) resigns or ceases to be a director due to death or disability, then the Board and Star Equity will engage in good faith discussions to identify a mutually acceptable independent (as defined under Nasdaq listing rules) replacement director (the “Replacement Director”), and if they cannot agree the size of the Board will be reduced to three directors.

In such event, if a remaining Continuing Director subsequently resigns or ceases to be a director due to death or disability, then the Board may not make an additional appointment until the Board and Star Equity identify a mutually acceptable Replacement Director.

The Company also agreed not to increase Board fees and to limit the aggregate fee paid to the Chairman of the Board to $65,000.

Star Equity also purported to deliver a notice of intent to nominate a slate of two candidates in 2023 (the “2023 Nomination Notice”), and then submitted a shareholder proposal to the Company pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Shareholder Proposal”).

The Company later entered into a letter agreement with Star Equity, pursuant to which Star Equity agreed to irrevocably withdraw both the 2023 Nomination Notice and the Shareholder Proposal.

Through December 31, 2025, the cumulative cost to the Company of responding to and resolving the foregoing shareholder activist campaigns, including changes to our incentive compensation arrangements, was approximately $1,050,000.

A proxy contest or related activities on the part of activist shareholders, including, among others, Star Equity, could adversely affect our business for a number of reasons, including, without limitation, the following:

Responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of our Board of Directors (the “Board”), management and employees, and could adversely impact the Company’s ability to achieve timely or at all our strategic objective of positioning our properties so they can be sold at higher values resulting in maximum distributions to all of our shareholders

Responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of our Board, management and employees, and could adversely impact the Company’s ability to achieve timely or at all our strategic objective of positioning our properties so they can be sold at higher values resulting in maximum distributions to all of our shareholders;

Perceived uncertainties as to our future direction may result in the loss or compromise of potential opportunities to liquidate our properties for maximum value;

41 unchanged sentences

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our business operations, strategic goals and our financial condition and results of operations.

The Company believes we are currently capitalized with adequate cash levels (after the Rights Offering which closed on March 7, 2024), including proceeds from our credit facilities, to operate our business and complete our strategic plan of positioning our remaining properties for sale at enhanced values and making distributions to our shareholders.

The Company intends to seek to modify one or more of its existing loan facilities to strengthen its financial position through the end of 2028, the forecasted completion of the liquidation process.

The Company’s goal with respect to any such modification is for its current cash and cash equivalent position post-loan modification to be adequate to fund our process of seeking entitlements and selling assets through such forecasted liquidation completion date.

Management believes the Company will need additional capital to properly fund operations through the end of 2028 absent sufficient working capital raised through the combination of property sales or the modification of its existing credit facilities and or new credit facilities, or other alternative capital raising strategies.

There can be no assurance, however, that the Company will be successful in securing any such loan modification/ and/or new credit facilities on terms that are satisfactory to the Company or on any terms at all or achieve a timely closing on the sale of a property to address its working capital needs.

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

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

Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our business operations and strategic plans to position our properties and sell them for maximum value could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general.

20 unchanged sentences

We may also decide in the event of a tenant default to restructure the lease, which could require us to substantially reduce the rent payable to us under the lease or make other modifications that are unfavorable to us.

We may be unable to renew expiring leases or re-lease vacant space on a timely basis or on attractive terms, which could have a material adverse effect on our results of operations and cash flow.

The Company has approximately 52% of its annual leasing revenue up for renewal in 2026.

Current tenants may not renew their leases upon the expiration of their terms and may attempt to terminate their leases prior to the expiration of their current terms.

This risk has been increased by tenants working from home during and after the recent pandemic which has resulted in certain tenants re-evaluating the size and/or lay-out of their existing leased premises.

If non-renewals or terminations occur, we may not be able to locate qualified replacement tenants and, as a result, we could lose a significant source of revenue while remaining responsible for the payment of our financial obligations.

Moreover, the terms of a renewal or new lease, including the amount of rent, may be less favorable to us than the current lease terms, or we may be forced to provide tenant improvements at our expense or provide other concessions or additional services to maintain or attract tenants.

Any of these factors could cause a decline in lease revenue or an increase in operating expenses, which would have a material adverse effect on our financial condition, results of operations or cash flows.

We are subject to risks associated with the financial condition of our tenants.

137 unchanged sentences

Stony Brook University and its affiliates currently have three leases with Gyrodyne comprising approximately 34,000 square feet and $534,000 in annual rental revenue.

Our investments are concentrated in a single industry, making us more vulnerable economically than if our investments were more diversified.

We are subject to risks inherent in concentrating investments in real estate.

The risks resulting from a lack of diversification become even greater as a result of our historical business strategy to invest primarily in healthcare properties.

A downturn in the real estate industry could materially adversely affect the value of our facilities.

A downturn in the healthcare industry could negatively affect our tenants’ ability to make lease payments to us.

Consequently, our ability to meet debt service obligations or make distributions to our shareholders is dependent on the real estate and healthcare industries.

Geographic concentration of our properties will make our business vulnerable to economic downturns in the New York metropolitan area.

50 unchanged sentences

The outstanding balance as of December 31, 2025 was $4,558,993.

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

To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.

On March 12, 2023, the Company had approximately $61,000 on deposit and approximately $97,000 in a real estate tax escrow account (escrow balance will not exceed approximately $109,000) at Signature Bank.

Based upon the announcement on March 12, 2023, from the U.S.

Department of the Treasury, the U.S.

Federal Reserve and the FDIC that all depositors of Signature Bank would have access to all of their deposits and the fact that the amount on deposit is below the $250,000 cap on FDIC deposit insurance, the Company expects to have access to all of its cash on deposit at Signature Bank.

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 Mortgage Loan.

There are no undrawn amounts under the 2021 Mortgage Loan.

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.

3 unchanged sentences

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.

The Company closed on a loan modification with the LLYR to extend the loan for an additional 24 months commencing January 1, 2026 at a revised interest rate of 15% which the Company may refinance with no early repayment penalty.

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 be accrued on the outstanding balance, agreement to pay all future invoices in full, and conversion of the remaining outstanding balance of $477,829 (balance 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 Company intends to seek to modify any of its existing loan facilities to strengthen its financial position through the end of 2026, the forecasted completion of the liquidation process.

There can be no assurance, however, that the Company will be successful in securing any such loan modification on terms that are satisfactory to the Company or on any terms at all.

The loan accrued interest at 0.75% per month through 2024 and is accruing interest at 1.0% per month from January 2025.

Changes in federal tax law could adversely affect the tax treatment of distributions to our shareholders.

11 unchanged sentences

If the Company is required to hire such additional person, the cost of doing so could have a material adverse effect on our business, financial condition and results of operations in general.

We have entered into an agreement to sell a significant portion of our Flowerfield property, but the transaction is contingent on receiving subdivision and site plan approval, which may take years or may not be obtained at all.

In the meantime, we expect to continue to incur operating losses and have limited cash runway.

As part of our strategic plan to position our remaining real estate assets to maximize value, sell those assets at their highest achievable prices, distribute the net proceeds to shareholders and ultimately dissolve the Company, we have entered into an agreement to sell approximately 49 undeveloped acres of our Flowerfield property to B2K Smithtown LLC (“B2K”), an affiliate of B2K Development LLC.

The closing of the sale is contingent upon receipt of all required governmental approvals, including final subdivision and site plan approvals.

The process for securing these approvals is subject to a variety of risks outside our control, and may take years, if achieved at all.

In the interim, we expect to continue incurring operating losses.

We currently have available cash resources sufficient to fund operations for approximately 18 months absent the sale of any other real estate assets which we are currently pursuing.

The Company will entertain a wide range of options to meet its capital needs through the completion of the liquidation.

These risks could materially and adversely affect the value of our shares and the timing and amount of any potential liquidation distribution.

The Company intends to seek to modify one or more of its existing loan facilities to strengthen its financial position through the end of 2028, the forecasted completion of the liquidation process.

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

What changed 10-K

Item 1A. Risk Factors