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Item 1. Financial Statements

2026-08-13 compared with 2026-05-13 · 98 added, 99 removed, 720 unchanged (21% of the section changed)

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CONSOLIDATED STATEMENTS OF NET ASSETS

AS OF MARCH 31, 2026 (UNAUDITED) AND DECEMBER 31, 2025

AS OF JUNE 30, 2026 (UNAUDITED) AND DECEMBER 31, 2025

(Liquidation Basis)

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CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE THREE-MONTHS ENDED MARCH 31, 2026

FOR THE SIX-MONTHS ENDED JUNE 30, 2026

(Liquidation Basis)

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Net increase in liquidation value

Net assets in liquidation, as of March 31, 2026

Net assets in liquidation, as of June 30, 2026

See notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE THREE-MONTHS ENDED MARCH 31, 2026 (unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (LIQUIDATION BASIS) FOR THE SIX-MONTHS ENDED JUNE 30, 2026 (unaudited)

Strategic Overview

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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 the third quarter of 2026 for Flowerfield, and in 2027 for Cortlandt Manor.

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 first quarter of 2027 for Flowerfield, and in mid-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.

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

The consolidated financial statements of the Company included herein have been prepared by the Company pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all adjustments which are necessary to present fairly the results for the three-months ended March 31, 2026.

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

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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 in liquidation as of March 31, 2026 ($ 25,924,002 ) and December 31, 2025 ($ 25,858,997 ) results in estimated distributions of approximately $ 11.79 and $ 11.76 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 March 31, 2026, 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.

The net assets in liquidation as of June 30, 2026 ($ 27,055,247 ) and December 31, 2025 ($ 25,858,997 ) results in estimated distributions of approximately $ 12.30 and $ 11.76 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 June 30, 2026, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Statements of Net Assets in Liquidation

Net assets as of March 31, 2026 and December 31, 2025 would result in estimated liquidating distributions of $ 25,924,002 and $ 25,858,997 , respectively, or approximately $ 11.79 and $ 11.76 per common share, respectively, based on 2,199,308 shares outstanding.

The increase of $ 65,005 in estimated liquidating distributions is mainly attributable to a favorable variance in the actual expenses (versus the forecast) for the quarter ending March 31, 2026.

Net assets as of June 30, 2026 and December 31, 2025 would result in estimated liquidating distributions of $ 27,055,247 and $ 25,858,997 , respectively, or approximately $ 12.30 and $ 11.76 per common share, respectively, based on 2,199,308 shares outstanding.

The increase of $ 1,196,250 in estimated liquidating distributions is mainly attributable to employee-restructuring savings of approximately $ 620,000 , a favorable variance in the actual expenses (versus the forecast) for the six-months ending June 30, 2026 of approximately $ 230,000 , a reduction in the budget for land entitlement costs relating to the Cortlandt Manor property of approximately $ 187,000 and an increase in forecasted revenue due to new leases of approximately $ 140,000 .

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.

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 the net realizable value of the properties at their estimated gross sales proceeds.

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

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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 $ 1,228,500 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 5)) from April 2026 through the end of the liquidation period, currently estimated to conclude in 2028, in an effort to obtain entitlements, including special permits.

The Company estimates that it will incur approximately $ 995,000 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 5)) from July 2026 through the end of the liquidation period, currently estimated to conclude in 2028, in an effort to obtain entitlements, including special permits.

The Company believes the commitment of these resources will enable the Company to position the properties for sale with all entitlements necessary to maximize the aggregate Flowerfield and Cortlandt Manor property values and resulting distributions.

During the three-months ended March 31, 2026, the Company incurred approximately $ 97,500 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $ 1,228,500 (inclusive of real estate taxes of $ 408,000 and regulatory fees of $ 407,000 ) will be incurred from April 2026 through the end of the liquidation period.

During the six-months ended June 30, 2026, the Company incurred approximately $ 144,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $ 995,000 (inclusive of real estate taxes of $ 369,000 and regulatory fees of $ 407,000 ) will be incurred from July 2026 through the end of the liquidation period.

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

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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.

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

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2026 through March 31, 2026 is as follows:

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2026 through June 30, 2026 is as follows:

January 1, 2026

Expenditures/ (Receipts)

Remeasurement of Assets and Liabilities

Expenditures/

Remeasurement of

Assets and Liabilities

Estimated rents and reimbursements

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(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’s estimated timeline to complete the liquidation is December 31, 2028.

The Company’s estimated timeline to complete the liquidation is December 31, 2028, as the Company believes the buyer will close on this transaction by December 31, 2028.

Nevertheless, the B2K Agreement's outside closing date, if B2K exercises its extension options, could extend to October 2029 or, if both options are exercised, February 2030 which is after our forecasted December 31, 2028 liquidation completion date.

Because we do not control the regulatory approval timing on which B2K's extension rights depend, there can be no assurance the closing will occur on or before our forecasted completion date, and any delay could increase our liquidation and operating costs and reduce or delay amounts ultimately available for distribution.

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:

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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.

B2K will be responsible for constructing all common facilities and offsite improvements, while the Company will use commercially reasonable efforts to cooperate by providing access at no cost to the Company.

Investigation Period.

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The loan will mature on April 30, 2028.

The outstanding balance as of March 31, 2026 was $ 1,806,228 .

The outstanding balance as of June 30, 2026 was $ 1,784,309 .

To secure access to additional working capital through the final sale date of the Flowerfield industrial buildings, the Company secured a second loan evidenced by a non-revolving business line of credit agreement and promissory note with the Original Line bank for up to $ 3,000,000 , which closed on January 24, 2019.

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The loan will mature on May 20, 2028.

The outstanding balance as of March 31, 2026 was $ 2,473,201 .

The outstanding balance as of June 30, 2026 was $ 2,443,339 .

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

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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 loan is currently held by Rialto Capital) , the proceeds of which were used to pay off the previous GSD Cortlandt debt facility of which $ 1,050,000 was outstanding.

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 loan is currently held by SIG CRE 2023 Venture LLC and serviced by Rialto Capital Advisors LLC), 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”).

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On December 14, 2023, the FDIC transferred the 2021 Mortgage Loan to SIG CRE 2023 Venture LLC, which continues to be the holder of the 2021 Mortgage Loan.

The outstanding balance as of March 31, 2026 was $ 4,532,886 .

The outstanding balance as of June 30, 2026 was $ 4,507,473 .

The 2021 Mortgage Loan is secured by the Cortlandt Manor property located at 1985 Crompond Road ( 5.01 acres).

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The total debt payable matures as follows:

Years Ending March 31,

Years Ending June 30,

Accounts payable and Accrued Liabilities

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Accrued Liabilities

March 31, 2026

June 30, 2026

December 31, 2025

March 31, 2026

June 30, 2026

December 31, 2025

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In accordance with generally accepted accounting principles, the Company identifies high risk collectibles, records them on a cash basis and does not include them in revenue or accounts receivable.

As of March 31, 2026 and December 31, 2025, the Company had a zero balance in its allowance for doubtful accounts.

As of March 31, 2026, one of the Company's three largest tenants, representing approximately 10 % of rental income for the three months ended March 31, 2026, a material percentage of our rental income, was in default under its lease.

As of June 30, 2026 and December 31, 2025, the Company had a zero balance in its allowance for doubtful accounts.

As of June 30, 2026, one of the Company's three largest tenants, representing approximately 10 % of rental income for the six months ended June 30, 2026, a material percentage of our rental income, was in default under its lease.

Management is actively working with the tenant to bring it back into compliance and believes it is probable that the default will be cured.

However, if the Company is unable to bring the tenant into compliance, the Company may pursue eviction proceedings, which could result in a temporary loss of rental revenue, additional legal costs and costs associated with re-leasing the space.

The Company has not recorded an allowance for doubtful accounts related to this tenant as of March 31, 2026.

The Company has not recorded an allowance for doubtful accounts related to this tenant as of June 30, 2026 as the revenue from this tenant is recorded on a cash basis only.

See Note 11 (Concentration of Credit Risk) for a discussion of the Company's increasing tenant concentration risk as it executes on the sale of its assets.

Concentration of Credit Risk

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The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash.

Management does not believe significant credit risk existed on March 31, 2026 and December 31, 2025.

Management does not believe significant credit risk existed on June 30, 2026 and December 31, 2025.

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

One of the Company’s tenants representing a material percentage of our rental income is currently in default, although management is working with this tenant to bring it back into compliance.

For the three-months ended March 31, 2026 rental income from the Company’s three largest tenants represented approximately 27 %, 18 % and 10 % of total rental income.

The three largest tenants by revenue as of March 31, 2026 consist of New York Presbyterian Medical Group located in the Cortlandt Manor Medical Center, Stony Brook University Hospital located in the industrial park and an athletic facility in the industrial park.

For the six-months ended June 30, 2026 rental income from the Company’s three largest tenants represented approximately 30 %, 18 % and 10 % of total rental income.

The three largest tenants by revenue as of June 30, 2026 consist of New York Presbyterian Medical Group located in the Cortlandt Manor Medical Center, Stony Brook University Hospital located in the industrial park and an athletic facility in the industrial park.

There can be no assurance that the Company’s leases will renew for the same square footage, at favorable rates net of tenant improvements, if at all.

As of March 31, 2026, other commitments and contingencies are summarized in the below table:

As of June 30, 2026, other commitments and contingencies are summarized in the below table:

Management employment agreements with bonus* and severance commitment contingencies

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

Under the Plan, there were no payments made during the three-months ended March 31, 2026.

Under the Plan, there were no payments made during the six-months ended June 30, 2026.

Restricted Stock Award Plan – The Gyrodyne, LLC Restricted Stock Award Plan (the “Stock Plan”) was approved by the Board on September 5, 2023 and by the shareholders of the Company on October 12, 2023 and became effective on October 12, 2023.

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Pursuant to the Restricted Stock Plan, Mr.

Lamb did not forfeit any shares as he was not nominated for another term, which meets one of the respective plans forfeiture exceptions.

Lamb did not forfeit any shares because the reason for his cessation of service as a director was due to his not being nominated for another term, which satisfies one of the forfeiture exceptions under the Stock Plan.

Deferred Compensation Plan – On December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020.

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Under the Settlement, Gyrodyne agreed that any sales of its properties would be effected only in arm's-length transactions at prices at or above their appraised values as of 2014.

As of March 31, 2026 and December 31, 2025, the value of the remaining unsold properties exceeded the respective 2014 appraised values.

As of June 30, 2026 and December 31, 2025, the value of the remaining unsold properties exceeded the respective 2014 appraised values.

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

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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.

Subsequent Events

Separation Agreement with Chief Operating Officer

On August 7, 2026, the Company entered into a Separation Agreement (the "Separation Agreement") with Peter Pitsiokos, the Company's Chief Operating Officer, providing the terms for the termination of Mr.

Pitsiokos' employment with the Company effective October 2, 2026 (the "Termination Date").

Pursuant to the Separation Agreement, the Company agreed to pay Mr.

Pitsiokos his base salary through the Termination Date, as well as a six-months' severance payment of $ 100,000 as required under the terms of Mr.

Pitsiokos' employment agreement for terminations without cause.

Pitsiokos agreed to certain standard confidentiality and non-disparagement obligations and to deliver a general release to the Company following the Termination Date.

The Separation Agreement becomes effective on the eighth day after Mr.

Pitsiokos executes the release, provided he does not revoke it by such date.

Following the Termination Date, the Company will have one full-time employee remaining to complete the liquidation process, and the Company expects the termination of Mr.

Pitsiokos' employment to result in approximately $ 620,000 of savings over the remaining liquidation timeline, which the Company currently expects to be completed by the end of 2028.

The foregoing description of the Separation Agreement is qualified in its entirety by reference to the full text of the Separation Agreement, filed as an exhibit to the Company's Current Report on Form 8-K referenced below.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the three-months ended March 31, 2026.

References herein to our Quarterly Report are to this Quarterly Report on Form 10-Q for the six-months ended June 30, 2026.

Cautionary Statements Concerning Forward – Looking Statements

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

Such risks and uncertainties include, but are not limited to, risks and uncertainties generally relating to our efforts to enhance the values of our remaining properties and seek the orderly, strategic sale of such properties as soon as reasonably practicable, risks associated with the Article 78 Proceeding against the Company and any other litigation that may develop in connection with our efforts to enhance the value of and sell our properties, risks relating to our national marketing campaign led by JLL for the sale of our Flowerfield and Cortlandt Manor properties, risks associated with our purchase and sale agreement with B2K (and future purchase and sale agreements for our remaining properties that may be contingent on years-long regulatory contingencies) in light of our financial condition, community activism risk, proxy contests and other actions of activist shareholders, regulatory enforcement risk, risks inherent in the real estate markets of Suffolk and Westchester Counties in New York, the potential residual effects of the COVID-19 pandemic, lingering risks relating to the 2023 banking crisis and closure of two major banks (including one with whom we indirectly had a mortgage loan which the FDIC transferred in December 2023 to a new holder following the banks closure), ongoing inflation risk, ongoing interest rate uncertainty, recession uncertainty and supply chain constraints or disruptions and other risks detailed from time to time in the Company’s SEC reports.

Such risks and uncertainties include, but are not limited to, risks and uncertainties generally relating to our efforts to enhance the values of our remaining properties and seek the orderly, strategic sale of such properties as soon as reasonably practicable, relating to the Company’s efforts to secure 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, risks associated with the Article 78 Proceeding against the Company and any other litigation that may develop in connection with our efforts to enhance the value of and sell our properties, risks relating to our national marketing campaign led by JLL for the sale of our Flowerfield and Cortlandt Manor properties, risks associated with our purchase and sale agreement with B2K (and future purchase and sale agreements for our remaining properties that may be contingent on years-long regulatory contingencies) in light of our financial condition, risks relating to the recent termination of employment of our Chief Operating Officer and the Company's resulting reliance on a single full-time employee to complete the entitlement, marketing, sale and liquidation process, community activism risk, proxy contests and other actions of activist shareholders, regulatory enforcement risk, risks inherent in the real estate markets of Suffolk and Westchester Counties in New York, the potential residual effects of the COVID-19 pandemic, lingering risks relating to the 2023 banking crisis and closure of two major banks (including one with whom we indirectly had a mortgage loan which the FDIC transferred in December 2023 to a new holder following the banks closure), ongoing inflation risk, ongoing interest rate uncertainty, recession uncertainty and supply chain constraints or disruptions and other risks detailed from time to time in the Company’s SEC reports.

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

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The Board and Management believe the aforementioned strategy will increase the aggregate value for such properties as a whole.

The value of the real estate reported in the consolidated statement of net assets as of March 31, 2026 and December 31, 2025 includes some, but not all of the potential value impact that may result from such value enhancement efforts.

The value of the real estate reported in the consolidated statement of net assets as of June 30, 2026 and December 31, 2025 includes some, but not all of the potential value impact that may result from such value enhancement efforts.

There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.

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

The value of the real estate reported in the consolidated statement of net assets as of March 31, 2026 includes some but not all of the potential value impact that may result from such value enhancement efforts.

The value of the real estate reported in the consolidated statement of net assets as of June 30, 2026 includes some but not all of the potential value impact that may result from such value enhancement efforts.

There can be no assurance that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.

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See, “ Property Value Enhancement – Flowerfield ” for a description of the subdivision application.

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

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

The arguments made in the Petition are substantially similar to those made by opponents of the Flowerfield Subdivision Application during the SEQRA and subdivision process.

Gyrodyne and the Town of Smithtown are vigorously defending the Planning Board’s determinations against the Petition.

In June 2022, Gyrodyne and the Town of Smithtown filed motions to dismiss the Petition.

During the third quarter of 2023, the Article 78 Proceeding was re-assigned to a different judge for the second time.

On February 6, 2024, the Supreme Court of the State of New York, Suffolk County issued an order (the “Order”), denying the Motions in part and granting them in part.

Specifically, the Order (i) denied the Motions as to three individual Petitioners and the St.

James-Head of the Harbor Neighborhood Preservation Coalition, Inc., (ii) granted the Motions as to the remaining twenty (20) individual Petitioners and the Village of Head of the Harbor, (iii) denied the branch of Gyrodyne’s motion alleging that Petitioners failed to state a claim.

On October 11, 2024, the Supreme Court of the State of New York issued a ruling in favor of the Company dismissing the 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 Petition, citing as grounds for appeal “whether the court erred in denying the petition and dismissed the Article 78 Proceeding, and any and all other issues which may arise upon further review of the record on appeal”.

On November 12, 2024, the petitioners filed a notice of motion to renew and reargue, seeking to have the court direct the respondents to undertake a supplemental environmental impact statement to address retaining of storm water at the property being developed in light of a recent storm, and to annul the resolution approving the preliminary site plan.

On March 17, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the appellants motion to stay enforcement of the order, pending hearing and determination of appeal.

On March 21, 2025, the Supreme Court of the State of New York, Suffolk County issued an order denying the Petitioners motion to renew and reargue.

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 “Appeal”).

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.

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.

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 appeal and any other motions or that other factors beyond our control will not necessitate a further extension of the timeline.

Gyrodyne believes that both the Article 78 Proceeding (see Part II, Item 1, Legal Proceedings, for a description of its current procedural status) 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 appeal 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.

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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.

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Such cash would equate to future distributions of $12.30 per share based on Gyrodyne having 2,199,308 common shares outstanding.

These estimated distributions are based on values and outstanding share numbers effective as of March 31, 2026 and include some but not all of the potential value that may be derived from the entitlement efforts.

These estimated distributions are based on values and outstanding share numbers effective as of June 30, 2026 and include some but not all of the potential value that may be derived from the entitlement efforts.

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

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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.

There can be no assurance, however, that the Company will be successful in securing any such loan modification, new credit facility or alternative capital raising transaction 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.

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

During the three-months ended March 31, 2026, the Company incurred approximately $97,500 of land entitlement costs, consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $1.2 million in additional land entitlement costs through December 31, 2028 in pursuit of entitlements (approximately $313,000 in Cortlandt Manor and $916,000 in Flowerfield).

During the six-months ended June 30, 2026, the Company incurred approximately $144,000 of land entitlement costs, consisting primarily of engineering costs, legal fees and real estate taxes to support the Company’s respective entitlement efforts.

We estimate that the Company may incur approximately $995,000 in additional land entitlement costs through December 31, 2028 in pursuit of entitlements (approximately $121,000 in Cortlandt Manor and $874,000 in Flowerfield).

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

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The Company believes, contingent on the timing for entering contracts (which we anticipate will include closing terms conditioned upon receiving site plan approval), the subdivision and site plan approval could be received in mid-2027.

The entitlement costs for the three-months ended March 31, 2026 associated with the ownership and development of this property were approximately $18,100.

The entitlement costs for the six-months ended June 30, 2026 associated with the ownership and development of this property were approximately $23,200.

Flowerfield .

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Approval of the Preliminary Subdivision was granted at that meeting.

Technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services and Suffolk County Department of Public Works on March 10, 2025, New York State Department of Environmental Conservation Wetland Permit issued on October 28, 2024, and New York State Department of Transportation plans are being submitted for NYS 25A-Stony Brook Road in March 2025 (no prior design comments) and prepared for resubmission to each agency for their final review and approvals.

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.

Final Subdivision approval is expected in the third quarter 2026.

The entitlement costs for the three-months ended March 31, 2026 associated with the ownership and development of this property consisting of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $79,400.

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

The most recent responses to technical comments on the Final Subdivision Plans received from the Suffolk County Department of Health Services and Suffolk County Department of Public Works were submitted in March 2026, New York State Department of Environmental Conservation Wetland Permit was issued on October 28, 2024, and New York State Department of Transportation plans were submitted for NYS 25A-Stony Brook Road in March 2025 (no prior design comments).

We anticipate submitting a final Town of Smithtown subdivision application in the third quarter of 2026 contingent on the owners of lot two’s approval.

Once the Town of Smithtown application is filed we expect to receive and respond to comments prior to scheduling a hearing with possible final approval in the first quarter of 2027 (assuming comments are received and responded to promptly), all of which are subject to and contingent on the remaining regulatory process.

The entitlement costs for the six-months ended June 30, 2026 associated with the ownership and development of this property consisting of architectural and engineering costs, legal expenses, economic analysis, soil management and surveys were approximately $120,900.

While we cannot predict the outcome of the subdivision application, we undertook to subdivide the Flowerfield property in a manner that we believed will result in increased development flexibility in the shortest amount of time and limited risk (i.e., included in our subdivision application is the separation of the existing industrial buildings into two separate lots which upon resolution of the Article 78 Proceeding (See Article 78 Proceeding under Part II, Item 1, Legal Proceedings) and final subdivision approval will allow us to sell the two lots together or separately, without any site plan approval).

There can be no assurance, however, that our value enhancement efforts will result in property value increases that exceed the costs we incur in such efforts, or even any increase at all.

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As a result of the foregoing developments, we are unable to determine what the ultimate impact will be on our timeline for seeking entitlements and selling properties, and ultimately on the amount of proceeds and distributions from those sales .

Transaction Summary for the Three-Months Ended March 31, 2026

The following summarizes our significant transactions and other activity during the three-months ended March 31, 2026.

Transaction Summary for the Six-Months Ended June 30, 2026

The following summarizes our significant transactions and other activity during the six-months ended June 30, 2026.

Leasing Activity.

During the three-months ended March 31, 2026, the Company executed one new lease and one renewal comprising approximately 2,300 square feet, annual revenue of approximately $28,000 and total commitments of approximately $44,600.

During the six-months ended June 30, 2026, the Company executed one new lease and five renewals comprising approximately 10,100 square feet, annual revenue of approximately $198,000 and total commitments of approximately $134,500.

There were three terminations comprising approximately 6,300 square feet and approximately $95,600 in annual revenue.

Tenant Default.

During the three-months ended March 31, 2026, one of the Company's three largest tenants, representing approximately 10% of rental income, a material portion of the Company’s rental revenue, fell into default under its lease.

During the six-months ended June 30, 2026, one of the Company's three largest tenants, representing approximately 10% of rental income, a material portion of the Company’s rental revenue, fell into default under its lease.

Management is working with the tenant to restore compliance and believes it is probable that the matter will be resolved without eviction.

Management has considered this contingency in its estimates of liquidation and operating costs and believes the current estimates remain adequate.

See Note 11 (Concentration of Credit Risk) to the consolidated financial statements for a discussion of the Company's tenant concentration risk in connection with this default.

Critical Accounting Policies

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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 March 31, 2026 ($25,924,002) and December 31, 2025 ($25,858,997) results in estimated distributions of approximately $11.79 and $11.76 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 March 31, 2026, 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.

The net assets as of June 30, 2026 ($27,055,247) and December 31, 2025 ($25,858,997) results in estimated distributions of approximately $12.30 and $11.76 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 June 30, 2026, and has concluded that they will not have a material impact on the Company’s consolidated financial statements since the Company reports on a liquidation basis.

Discussion of the Statements of Net Assets

Net assets as of March 31, 2026 and December 31, 2025 would result in estimated liquidating distributions of $25,924,002 and $25,858,997, respectively, or approximately $11.79 and $11.76 per common share, respectively, based on 2,199,308 shares outstanding.

The increase of $65,005 in estimated liquidating distributions is mainly attributable to a favorable variance in the actual expenses (versus the forecast) for the quarter ending March 31, 2026.

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 the March 31, 2026 cash balance of $3.95 million plus adjustments for the following items which are estimated through December 31,2028:

The estimated cash receipts from the operation of the properties net of rental property related expenditures as well as costs expected to be incurred to preserve or improve the net realizable value of the property at their estimated gross sales proceeds.

Net assets as of June 30, 2026 and December 31, 2025 would result in estimated liquidating distributions of $27,055,247 and $25,858,997, respectively, or approximately $12.30 and $11.76 per common share, respectively, based on 2,199,308 shares outstanding.

The increase of $1,196,250 in estimated liquidating distributions is mainly attributable to employee-restructuring savings of approximately $620,000, a favorable variance in the actual expenses (versus the forecast) for the six-months ending June 30, 2026 of approximately $230,000, a reduction in the budget for land entitlement costs relating to the Cortlandt Manor property of approximately $187,000 and an increase in forecasted revenue due to new leases $140,000.

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 the June 30, 2026 cash balance of $3.77 million plus adjustments for the following items which are estimated through December 31,2028:

The estimated cash receipts from the operation of the properties net of rental property related expenditures as well as costs expected to be incurred to preserve the net realizable value of the property at their estimated gross sales proceeds.

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

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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 $1.2 million (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from April 2026 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2028, in an effort to obtain entitlements, including special permits.

The Company estimates that it will incur approximately $995,000 (included in the consolidated statement of net assets as part of the estimated liquidation and operating costs net of receipts) in land entitlement costs from July 2026 through the end of the liquidation period, currently estimated to conclude on or about December 31, 2028, in an effort to obtain entitlements, including special permits.

During the three-months ended March 31, 2026, the Company incurred approximately $97,500 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $1.2 million (inclusive of real estate taxes of $408,000 and regulatory fees of $407,000) will be incurred from April 2026 through the end of the liquidation period.

During the six-months ended June 30, 2026, the Company incurred approximately $144,000 of land entitlement costs, consisting predominately of engineering fees, legal fees and real estate taxes.

The Company believes the remaining balance of $995,000 (inclusive of real estate taxes of $369,000 and regulatory fees of $407,000) will be incurred from July 2026 through the end of the liquidation period.

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

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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.

Net assets as of March 31, 2026 and December 31, 2025 would result in estimated liquidating distributions of $25,924,002 and $25,858,997, or approximately $11.79 and $11.76 per common share, respectively, based on 2,199,308 shares outstanding based on estimates and other indications of sales value.

Net assets as of June 30, 2026 and December 31, 2025 would result in estimated liquidating distributions of $27,055,247 and $25,858,997, or approximately $12.30 and $11.76 per common share, respectively, based on 2,199,308 shares outstanding based on estimates and other indications of sales value.

This estimate of distributions includes projections of costs and expenses to be incurred during the period required to complete the plan of liquidation.

There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, change in values of the Cortlandt Manor and/or Flowerfield properties (whether market driven or resulting from the land entitlement efforts) net of any bonuses, favorable or unfavorable changes in the land entitlement costs, the performance of the underlying assets, the market for commercial real estate properties generally and any changes in the underlying assumptions of the projected cash flows.

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of March 31, 2026 (dollars are in millions).

March 31, 2026 cash and cash equivalents balance

The following table summarizes the estimates to arrive at the Net Assets in Liquidation as of June 30, 2026 (dollars are in millions).

June 30, 2026 cash and cash equivalents balance

Principal payments on loan

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Final liquidation and dissolution costs

The Company estimates the cash proceeds from rental operations net commissions and rental costs, inclusive of expenditures to preserve or improve the properties at its current estimated market value will total $2.08.

The Company estimates the cash proceeds from rental operations net commissions and rental costs, inclusive of expenditures to preserve the properties at its current estimated market value will total $1.97.

The general and administrative expenses, excluding final liquidation costs, is estimated to be ($4.38).

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

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the three-months ended March 31, 2026 of which is discussed below:

Because the Company reports on the liquidation basis of accounting, it no longer presents a statement of operations, and accordingly this discussion addresses changes in net assets in liquidation in lieu of a traditional discussion of results of operations.

Therefore, the Company includes in its financial statements the Consolidated Statement of Changes in Net Assets for the six-months ended June 30, 2026 of which is discussed below:

Net assets in liquidation on January 1, 2026

Changes in net assets in liquidation from January 1 through March 31, 2026:

Changes in net assets in liquidation from January 1 through June 30, 2026:

Remeasurement of assets and liabilities in liquidation

Total increase in net assets in liquidation

Net assets in liquidation on March 31, 2026

Net assets in liquidation on June 30, 2026

The remeasurement of $1,196,250 in assets and liabilities in liquidation is mainly attributable to employee-restructuring savings of approximately $620,000, a favorable variance in the actual expenses (versus the forecast) for the six-months ending June 30, 2026 of approximately $230,000, a reduction in the budget for land entitlement costs relating to the Cortlandt Manor property of approximately $187,000 and an increase in forecasted revenue due to new leases $140,000.

Liquidity and Capital Resources

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While these same vendors remain committed to deferring a large portion of their deferred fees (as disclosed in footnote 8), the extended timeline to the end of 2028 is resulting in economic pressure to provide for a yet to be determined partial payment, albeit expected to be less than half of the outstanding liability).

These vendor fee deferrals are informal, unwritten arrangements and are not legally binding contractual obligations.

As a result, there can be no assurance that any vendor will continue to honor its deferral, and any vendor could demand accelerated or full payment of its deferred fees on different terms than we have assumed, which would increase demands on our limited working capital and could result in disputes over the existence, amount, or terms of the deferral.

Additionally, on December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020.

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All DCP benefits will be paid in a single lump sum cash payment on December 15, 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 ( See Deferred Compensation Plan below) .

As of March 31, 2026, the Company had cash and cash equivalents totaling approximately $3.95 million.

As of June 30, 2026, the Company had cash and cash equivalents totaling approximately $3.77 million.

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

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

Major elements of the Company’s cashflows for the three-months ended March 31, 2026 were as follows:

Major elements of the Company’s cashflows for the six-months ended June 30, 2026 were as follows:

Operating Cashflows:

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

What changed 10-Q

Item 1. Financial Statements