What changed in this filing

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Item 9A. Controls and Procedures

2026-03-27 compared with 2025-03-28 · 208 added, 271 removed, 848 unchanged (36% of the section changed)

22 unchanged sentences

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.

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.

Paul Lamb was not re-elected to the Company’s Board of Directors at the Company ’s annual shareholder meeting on November 5, 2025, therefore his term ended at such time.

Following the 2025 annual shareholders meeting, the Board was reduced to four members.

Directors, Executive Officers and Corporate Governance.

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President, CEO CFO and Treasurer of the Company

Partner of LambZankel, LLP

Chairman of the Board of Directors of the Company

Managing Member Leap Tide Capital Management LLC

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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.

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.

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.

Fitlin 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.

Loeb, age 66, was appointed to our Board in July 2023.

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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 President, Executive Chairman and board member of Novelstem International Corp., a biotechnology company, from June 2018 to December 2024.

He has served as Chairman of Newstem Ltd., a biopharmaceutical company since June 2018.

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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.

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.

The Board has an Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act, which consists of Messrs.

Smith, Salour, and Macklin.

All members are “financially literate” and have been determined to be “independent” within the meaning of SEC regulations and Nasdaq rules.

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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.

In May 2014, the Board of Directors approved a retention bonus plan (as amended (5 amendments), 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 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)

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.

Amendment No.

Board Members (a)

Board Discretionary Amount

The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are employees of the Company:

Chief Executive Officer

Chief Operations Officer

Officer Discretionary Amount (c)

Other Employees (d)

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.

Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan.

Officer Discretionary Amount (a)

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

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 2025 and 2024.

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compensation earnings

Effective immediately following the annual shareholder meeting on November 5, 2025, Mr.

Lamb resigned from the Board at which time the Board was reduced to 4 members.

Deferred Compensation Plan.

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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.

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 the years 2020 thru 2025.

Two of the four directors have elected not to defer any fees during 2026;

the other two directors elected to defer approximately 71% of their respective 2026 director fees.

Restricted Stock Award Plan.

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As of December 31, 2025, 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.

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.

The following table sets forth certain information as of February 28, 2026, 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

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Greenwich, CT 06870

3300 South Dixie Highway, Suite 1-365

West Palm Beach, FL 33405

1 Flowerfield, Suite 24

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James, NY 11780

1 Flowerfield, Suite 24

James, NY 11780

Peter Pitsiokos

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12 to Schedule 13D was filed by David Goldman, Douglas Jamieson and Peter Goldstein.

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.

On September 8, 2025, 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 338,107 common shares.

The Form 4 was filed by Daniel R.

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.

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.

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.

Includes 4,368 shares held by LambZankel, LLP Profit Sharing Trust and 80,557 shares in an Individual Retirement Account.

Lamb is a trustee of the Profit-Sharing Trust.

On October 20, 2025, Star Equity Fund, LP filed a Schedule 13D/A 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 156,774 common shares.

The Schedule 13D/A was filed by Jeffrey Eberwein and Richard Coleman.

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.

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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.

The Company has entered into various leasing arrangements with a not-for-profit organization of which the Company’s former 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.

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A summary of the additional rent under the new arrangement is as follows:

Total Commitment (excluding

renewal options)

Total Commitment (excluding renewal options)

April 2022-Dec 2027

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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.

The former 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.

Effective immediately following the annual meeting of shareholders on November 5, 2025, Paul Lamb is no longer a director and thus is no longer deemed a “related person”.

All 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.

Loeb, Macklin, Salour and Smith.

The Company has compensation, nominating, investment and audit committees, all of the members of which are also independent as defined by the listing requirements of the Nasdaq Stock Market.

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, 2025 and 2024:

Fiscal December 31,

Audit Fees (1)

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Short Form Order of Supreme Court of the State of New York, Suffolk County, dated March 21, 2025 (19)

Purchase and Sale Agreement dated July 30, 2025 between GSD Flowerfield LLC and B2K Smithtown LLC (17)

First Amendment dated October 28, 2025 to Purchase and Sale Agreement between GSD Flowerfield LLC and B2K Smithtown LLC (18)

Second Amendment dated as of January 6, 2026 to Purchase Agreement dated as of July 30, 2025 between GSD Flowerfield LLC and B2K Smithtown LLC.

List of all subsidiaries (14)

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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.

Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on August 4, 2025.

Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 10, 2025.

Incorporated herein by reference to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2025.

Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on January 12, 2026.

** 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.

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March 27, 2026

Lamb, Director

By Jan Loeb, Director

March 27, 2026

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Short Form Order of Supreme Court of the State of New York, Suffolk County, dated March 21, 2025 (19)

Purchase and Sale Agreement dated July 30, 2025 between GSD Flowerfield LLC and B2K Smithtown LLC (17)

First Amendment dated October 28, 2025 to Purchase and Sale Agreement between GSD Flowerfield LLC and B2K Smithtown LLC (18)

Second Amendment dated as of January 6, 2026 to Purchase Agreement dated as of July 30, 2025 between GSD Flowerfield LLC and B2K Smithtown LLC.

List of all subsidiaries (14)

29 unchanged sentences

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.

Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on August 4, 2025.

Incorporated herein by reference to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 10, 2025.

Incorporated herein by reference to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2025.

Incorporated herein by reference to Form 8-K, filed with the Securities and Exchange Commission on January 12, 2026.

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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.

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.

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 capitalization 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.

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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:

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.

Assessed the reasonableness of the significant assumptions used in relevant real estate appraisals and discounted cash flow analyses, including estimates of capitalization and discount rates

Tested the source information underlying the assumptions

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Remeasurement of assets and liabilities

Net increase in value

Net decrease in value

Net assets, end of period

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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.

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 (the “Findings Statement”), 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.

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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 11, 2024, the Supreme Court of the State of New York issued a ruling in favor of the Company dismissing the 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”.

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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.

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.

GYRODYNE, LLC

2 unchanged sentences

Years Ended December 31, 2025 and 2024

Gyrodyne remains confident in its defense of the appeal, the motion to renew and reargue and the motion to appeal the denial of the Petitioners’ motion to stay enforcement of the order.

Gyrodyne believes that both the Article 78 Proceeding and 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 2028, although there can be no assurance that Gyrodyne and the Town of Smithtown will be successful in the defense of the appeals and any other motions or that other factors beyond our control will not necessitate a further extension of the timeline.

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.

Cortlandt Manor

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.

Timeline and Marketing Campaign

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.

Nevertheless, we will continue to market the properties and, although there can be no assurances, the Company believes subdivision approval will be received in the third quarter of 2026 for Flowerfield, and in 2027 for Cortlandt Manor.

On July 30, 2025, GSD Flowerfield LLC, a New York limited liability company (“GSD”) wholly-owned by the Company, entered into a Purchase and Sale Agreement (as amended, the “B2K Agreement”) for the sale of an approximately 49 acre parcel of vacant land to B2K Smithtown LLC (“B2K”), an affiliate of B2K Development LLC, which property forms a portion of the Company’s Flowerfield complex in St.

James, New York, for a purchase price of between $ 24,000,000 and $ 28,740,000 , subject to conditions and contingencies set forth in the B2K Agreement.

Included among the conditions set forth in the B2K Agreement is receipt of subdivision and site plan approval.

Based on the terms of the B2K Agreement, we estimate the gross value of the B2K Agreement is $ 28,740,000 , contingent on a pending site plan submission, which we believe will be approved by the Smithtown Planning Department.

Under the terms of the B2K Agreement, the Company is required to issue B2K a credit at closing for the industrial park’s proportionate share of costs for a sewer treatment plant (“STP”) and on-site infrastructure costs aggregating $ 4,020,222 , which is included in the Company’s estimated costs in excess of receipts.

The incremental value impact, if any, to the industrial building lots associated with access to an on-site STP is not estimable at this time as it is contingent on many unknown factors, including but not limited to the markets assessment of the probability of closing of the B2K transaction, timing for completion of the STP, and the future associated market demand for suite usage requiring an STP amenity.

We anticipate that future purchase agreements for Flowerfield or Cortlandt or any portions thereof will similarly identify receipt of subdivision and site plan approval as conditions to closing which the Company believes can be pursued simultaneously rather than sequentially.

Consistent with the Company’s plan of liquidation the Company continues to engage JLL to sell the remaining Flowerfield and Cortlandt Manor properties as individual lots or combined.

In addition, Gyrodyne would entertain offers for the acquisition of the Company itself if we believe such acquisition from a timing and value perspective would maximize the net asset in liquidation value for Gyrodyne’s shareholders.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

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.

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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 .

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:

The Company’s two remaining real estate properties, each of which is held in a single asset limited liability company wholly owned by the Company, consist of:

Cortlandt Manor:

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All inter-company balances and transactions have been eliminated.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

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.

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 (prior to any credits for contribution amounts which are reflected in the costs in excess of receipts) 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.

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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.

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 2028.

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 is actively marketing its properties and intends to 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 target of 2028.

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 2028.

8 unchanged sentences

The Company’s most significant accounting estimate relates to the determination of the value of net assets in liquidation.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

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.

10 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2024 and 2023

The net assets in liquidation as of December 31, 2025 ($ 25,858,997 ) and December 31, 2024 ($ 30,596,313 ) results in estimated distributions of approximately $ 11.76 and $ 13.91 per common share, respectively, based on 2,199,308 shares outstanding.

New Accounting Pronouncements - Management has evaluated the impact of newly issued accounting pronouncements, whether effective or not as of December 31, 2025, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Statements of Net Assets in Liquidation

Net assets as of 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).

Net assets as of December 31, 2025 and December 31, 2024 would result in estimated liquidating distributions of $ 25,858,997 and $ 30,596,313 , respectively, or approximately $ 11.76 and $ 13.91 per common share, respectively, based on 2,199,308 shares outstanding.

The decrease of $ 4,737,316 in estimated liquidating distributions is mainly attributable to an increase in estimated liquidation and operating costs net of estimated receipts for the two year timeline extension of approximately $ 3,500,000 (to allow sufficient time for the B2K Agreement (dated July 30 th , 2025 inclusive of its latest amendment dated January 6, 2026) to close), the closing credit to B2K for certain sewer treatment plant and onsite infrastructure costs of approximately $ 4,000,000 , increase in retention bonuses and selling costs due to the increased value of real estate of approximately $ 479,000 , prepayment penalty and loan extension/new loan fees of approximately $ 140,000 and additional land development fees of $ 190,000 (excluding the adjustment attributable to the timeline extension) partially offset by the increase in real estate value of approximately $ 3,600,000 .

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2028, 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, 2028:

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

Net proceeds from the sale of all the Company’s real estate holdings.

2 unchanged sentences

Retention bonus amounts (see Note 12).

Principal payments on the Company’s credit facilities.

Debt service 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.

1 unchanged sentence

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 Company also considers in its valuation estimates the receipt of any credible expressions of interest/letters from perspective buyers adjusted to reflect the Company’s best estimate of any contingent financial terms such as approved 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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2024 and 2023

To the extent the Company underestimates or overestimates forecasted cash outflows (capital improvements, lease commissions.

operating costs and credit 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.

The Company estimates that it will incur approximately $ 1,326,000 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 2026 through the end of the liquidation period, currently estimated to conclude in 2028, in an effort to obtain entitlements, including special permits.

7 unchanged sentences

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.

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

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.

The Company currently estimates that it will incur liquidation and operating costs net of estimated receipts during the remaining liquidation period of $ 17,334,618 (inclusive of selling costs and retention bonuses aggregating approximately $ 5.3 Million and certain sewer treatment plant and related (direct/indirect) onsite infrastructure costs of approximately $ 4.0 million (which will be funded as a credit from closing proceeds pursuant to the B2K Agreement, as amended), 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.

1 unchanged sentence

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2025 through December 31, 2025 is as follows:

Expenditures/

Remeasurement of

Assets and Liabilities

Expenditures/ (Receipts)

Remeasurement of Assets and Liabilities

Estimated rents and reimbursements

3 unchanged sentences

Land entitlement costs

Closing credit for infrastructure costs

Corporate expenditures

2 unchanged sentences

Liability for estimated liquidation and operating costs net of estimated receipts

* The amounts reported are based on the provisions of the retention bonus plan and the reported amount of the real estate assets estimated net realizable value.

GYRODYNE, LLC

3 unchanged sentences

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:

Expenditures/

Remeasurement of

Assets and Liabilities

Expenditures/ (Receipts)

Remeasurement of Assets and Liabilities

Estimated rents and reimbursements

5 unchanged sentences

Selling costs on real estate assets

Retention bonus payments to directors, officers and employees

Retention bonus payments to officers and employees

Liability for estimated liquidation and operating costs net of estimated receipts

* Corporate expenditures includes $ 258,600 in future legal fees to address the Article 78 proceeding.

Disposition Activities

Purchase and Sale Agreement with B2K Smithtown LLC

James, New York, for a purchase price of between $ 24,000,000 and $ 28,740,000 , subject to conditions and contingencies set forth in the B2K Agreement.

Included among the conditions set forth in the B2K Agreement is receipt of subdivision and site plan approval.

Among other provisions, the B2K Agreement provides for:

(i) an earnest money deposit of $250,000 to be delivered to the escrow agent, subject to a 90-day investigation period, during which time B2K will have the right to terminate the B2K Agreement by written notice to GSD if B2K will not be fully satisfied, in B2K’s sole discretion, as to the status of title, suitability of the Premises and all factors concerning same, prior to the expiration of the investigation period, in which case B2K will have the right to receive a refund of its earnest money deposit;

and (ii) unless B2K terminates the B2K Agreement on or prior to the end of the investigation period (the “Investigation Period Notice Date”), the closing to occur on the earlier of:

(A) that certain date that is no later than eight (8) months after the Town of Smithtown grants Site Plan Approval (as defined in the B2K Agreement), or (B) sixty (60) days after B2K waives the Site Plan Approval contingency.

Such closing date is estimated to occur no later than October 2028 or alternatively by June 30 2029 if B2K exercises both of its site plan extension options.

Based on the above, the Company is extending its estimated timeline to complete the liquidation to December 31, 2028.

The B2K Agreement is also contingent on the receipt of Subdivision Approval (as defined in the B2K Agreement) and B2K obtaining, at B2K’s sole cost and expense, certain other required approvals (the “Approvals”) beyond all relevant appeal periods within 18 months following the later of:

(i) a designated number of days following the Investigation Period Notice Date or (ii) a designated number of days following the issuance of Subdivision Approval (the “Approval Period”).

If B2K fails to obtain the Approvals prior to the expiration of the Approval Period (subject to certain extension rights), B2K may terminate the B2K Agreement or waive the foregoing approval contingencies and close title within 60 days.

The B2K Agreement also contains additional customary covenants, conditions, representations and warranties.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

The foregoing description of the B2K Agreement is only a summary of its material terms, does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of the B2K Agreement, which was filed as an exhibit to the Company’s Current Report on Form 8-K on August 4, 2025.

On October 28, 2025, the Company entered into the first amendment to the B2K Agreement which extends the investigation period to December 5, 2025.

On January 6, 2026, the Company entered into the second amendment to the B2K Agreement which among other provisions provides as follows:

On-Site Improvements.

At closing, the Company will credit B2K $ 1,520,222 toward the purchase price for specified on-site improvements to Lots 1 and 3 of Flowerfield (which is in addition to the $ 2.5 million cap for the Company’s proportionate share of the STP as reflected in the original agreement), with no increase if additional work is required.B2K will be responsible for constructing all common facilities and offsite improvements, while the Company will use commercially reasonable effects to cooperate by providing access at no cost to the Company.

Investigation Period.

The parties acknowledge that the investigation period, as extended, has expired and that B2K’s right to terminate the Agreement under Section 3.1(D) of the Agreement is null and void and of no further force nor effect.

Loans Payable

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As of December 31, 2025, 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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2024 and 2023

The Company anticipates modifying the terms of the loans following the completion of the subdivision so that the loans remain secured by the two subdivided industrial park lots only.

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 %.

Until the initial maturity date (October 10, 2026), 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.

2 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

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;

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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 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 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 loan accrued interest at 0.75 % per month through 2024 and 1.0 % per month starting January 2025.

The total debt payable mature as follows:

5 unchanged sentences

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 .

During 2025, the net realizable value of real estate increased by $ 3,602,000 and in 2024 it decreased by $ 3,392,000 .

Both the 2025 and the 2024 change is primarily driven by the current status of entitlement uses and market conditions.

12 unchanged sentences

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).

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.

The director fees and interest accrued under the deferred Compensation Plan where most directors elected to defer 100 % of their fees for the years 2020 thru 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.

Two of the four directors have elected not to defer any fees during 2026;

the other two directors elected to defer approximately 71% of their respective 2026 director fees.

This amount also includes the deferred compensation of a former Board advisor per an agreement to defer payments due under an advisor agreement and three previous Board members.

Accrued liabilities on December 31, 2025 and 2024 are as follows:

3 unchanged sentences

The Company’s open tax years are 2023, 2024 and 2025.

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.

2 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

Credit Quality of Rents Receivable

4 unchanged sentences

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.

As of December 31, 2025 and 2024, the Company had a $ 0 balance in its allowance for doubtful accounts.

Concentration of Credit Risk

10 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2024 and 2023

As of December 31, 2025 and 2024, other commitments and contingencies are summarized in the table below:

5 unchanged sentences

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.

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 :

All benefits so waived by the director participants were deemed void and not reallocated to any other participants in the Plan.

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 :

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).

GYRODYNE, LLC

2 unchanged sentences

Years Ended December 31, 2025 and 2024

Benefits generally not payable until shareholders paid :

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 :

Retention Bonus Plan- In May 2014, the Board of Directors approved a retention bonus plan (as amended (5 amendments), 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 officers by the gross sales proceeds from the sale of each property and the date of sale.

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

Amendment No.

Board Members(a)

Board Discretionary Amount

5 RSP approved

Chief Executive Officer

Chief Operations Officer

Officer Discretionary Amount (c)

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.

Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan.

Officer Discretionary Amount (a)

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

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, 2025.

3 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2024 and 2023

Directors of the Company who were participants in the Bonus Plan were eligible to receive grants under the Stock Plan.

6 unchanged sentences

There are no remaining shares issuable in the Stock Plan.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

Administration:

12 unchanged sentences

Richard Smith

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.

2 unchanged sentences

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.

Each of the Directors elected (under the DCP) to defer 100 % of their director fees for the years 2020 thru 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.

Two of the four directors have elected not to defer any fees during 2026;

the other two directors elected to defer approximately 71% of their respective 2026 director fees.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

Rights Offering

9 unchanged sentences

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.

The Company is using 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.

Fair Value of Financial Instruments

4 unchanged sentences

However, the Company adopted the liquidation basis of accounting, and therefore reports all assets and liabilities at net realizable value.

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.

4 unchanged sentences

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.

GYRODYNE, LLC

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Liquidation Basis)

Years Ended December 31, 2025 and 2024

Fair Value Measurements - The Company adopted the liquidation basis of accounting effective September 1, 2015;

2 unchanged sentences

The Company may estimate net realizable values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs.

The cash flow models include estimated cash inflows and outflows over a specified holding period.

These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted capital improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, and relevant Company experience with its current and previously owned properties.

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.

To the extent, the Company underestimates or overestimates forecasted cash outflows (capital improvements, lease commissions, operating costs and credit costs) or overestimates or understates 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.

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.

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.

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 Fund, LP (collectively with its affiliates, “Star Equity”).

Pursuant to the Star Agreement, Star Equity agreed to irrevocably withdraw its June 4, 2025 notice of intent to nominate two candidates for election to the Company’s Board of Directors (the “Board”) at the Annual Meeting.

The Star Agreement 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 Annual Meeting.

Star Equity’s obligations will 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.

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

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.

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.

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.

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 directors.

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 .

GYRODYNE, LLC

2 unchanged sentences

Years Ended December 31, 2025 and 2024

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.

Contingencies

18 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 28, 2025 the Petitioners perfected their appeal on the original Petition.

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

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.

GYRODYNE, LLC

2 unchanged sentences

Years Ended December 31, 2025 and 2024

General - In the normal course of business, the Company is a party to various legal proceedings.

Related Party Transactions

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.

6 unchanged sentences

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 former 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.

Following the annual meeting on November 5, 2025, Paul Lamb is longer a director and thus is longer deemed a “related person” (see Note 15 – Governance).

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 9A. Controls and Procedures