What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-05-14 · 348 added, 308 removed, 161 unchanged (80% of the section changed)

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our future performance or financial condition.

In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,”

“should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual

results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, including an economic

downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

a contraction of available credit and/or an inability to access the equity

markets could impair our lending and investment activities;

In some cases, stockholders can identify forward-looking statements by terminology such as "may," "might," "believe," "will," "provided," "anticipate," "future," "could," "growth," "plan," "intend,"

"expect," "should," "would," "if," "seek," "possible," "potential," "likely" or the negative of such terms or comparable terminology.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause

our actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, including an

economic downturn could impair our portfolio companies' ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

a contraction of available credit and/or an inability to access the

equity markets could impair our lending and investment activities;

and interest rate volatility could adversely affect our results, particularly if we elect to use leverage as a part of our investment strategy.

For a discussion of factors that could

cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading “Risk Factors” in our Annual Report on Form 10-K.

We may experience fluctuations in our operating results due to a number of factors, including the effect of the withdraw of our BDC election, the return on our equity

For a discussion of factors that

could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading "Risk Factors" in our Annual Report on Form 10-K.

We may experience fluctuations in our operating results due to a number of factors, including the effect of the withdrawal of our BDC election, the return on our equity

investments, the interest rates payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we

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income tax on its taxable income at regular statutory rates.

We are managed by the Real Estate Adviser and the Investment Adviser, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate.

We are managed by the Advisers, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate.

Authorization to Withdraw BDC Election

On October 23, 2020, holders of a majority of the outstanding common stock of the Company approved the authorization of the Company’s Board of Directors to withdraw the Company’s election to be

regulated as a BDC under the Investment Company Act of 1940.

regulated as a BDC under the 1940 Act.

The Company submitted the withdrawal to be effective with the SEC on December 31, 2020.

Withdrawal of our election to be regulated as a BDC does not affect our registration under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”), and we continue to file

periodic reports on Form 10-K, Form 10-Q, and Form 8-K, and file proxy statements and other reports required under the Exchange Act.

As a result of the withdrawal of our election to be regulated as a BDC, we are no longer be treated as an

investment company for purposes of applying U.S.

Withdrawal of our election to be regulated as a BDC does not affect our registration under Section 12(g) of the Exchange Act, and we continue to file periodic reports on Form 10-K, Form 10-Q, and

Form 8-K, as well as file proxy statements and other reports required under the Exchange Act.

As a result of the withdrawal of our election to be regulated as a BDC, we are no longer be treated as an investment company for purposes of applying

GAAP, which results in a significant change in our future financial statement presentation.

The most notable changes to the format of our financial statements include the removal of the Schedule of

Investments and Financial Highlights and consolidation of majority owned subsidiaries.

Exclusive of the Operating Partnership, we expect our other equity investments, both public and private, to continue to be reported at fair value within our

financial statements under provisions of GAAP.

We intend to, where appropriate, provide supplemental non-GAAP information in order to enhance our investors’ overall understanding of our financial statements.

The most notable changes to the format of our consolidated financial statements include the removal of the Consolidated Schedule of Investments and

Financial Highlights and the consolidation of majority owned subsidiaries onto our financial statements.

Exclusive of our subsidiary MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”), we expect our other equity investments,

both public and private, to continue to be reported at fair value within our consolidated financial statements under provisions of GAAP.

We intend to, where appropriate, provide supplemental non-GAAP information in order to enhance our investors’

overall understanding of our consolidated financial statements.

The Company undertook several steps to meet the requirements for withdrawal of its election to be regulated as a BDC, including (i) preparing a plan of operations in contemplation of such a

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potential capital providers, and (iv) consulting with outside counsel as to the requirements for withdrawing its election as a BDC.

During this transition period, the Company may liquidate some of its securities portfolio.

By the end of the first year after withdrawal of its election, the Company anticipates that its

securities portfolio will comprise less than 20% of its assets.

During this transition period, the Company has begun liquidating, and plans to continue to liquidate, most of its securities portfolio.

By the end of the first year after withdrawal of its

election, the Company anticipates that its securities portfolio will comprise less than 20% of its assets.

Investment Plan

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We can invest up

to 20% of our total assets in securities of real estate companies.

A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential

real estate and land;

to 20% of our total assets in investment securities of real estate companies.

A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or

residential real estate and land;

or (ii) has at least 50% of its assets invested in such real estate.

We will not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to their security holders.

limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.

When purchasing securities, we generally favor purchasing securities issued by entities that have (i)

completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or

other real estate-related investments.

Our investment objective is to generate current income and capital appreciation through debt and equity real estate-related investments.

Our independent directors review our investment policies

periodically, at least annually, to confirm that our policies are in the best interests of our stockholders.

Each such determination and the basis thereof are contained in the minutes of our Board of Directors meetings.

However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.

When purchasing securities, we generally favor purchasing securities issued by entities that

have (i) completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real

properties or other real estate related investments.

Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.

Our independent

directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders.

Each such determination and the basis thereof are contained in the minutes of our Board of

Directors meetings.

We seek to accomplish our objective by rigorously analyzing the value of and risks associated with potential acquisitions, and, for up to 20% of our total assets, by acquiring real estate

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tenant improvements or other cash needs.

Since entering the current recession, certain of our portfolio companies have encountered additional cash shortfalls, and, in some cases, we have provided additional capital to the extent that we now own

the majority of the project (such as Addison Corporate Center).

Since entering the recent recession, certain of our portfolio companies have encountered additional cash shortfalls, and, in some cases, we have provided additional capital to the extent that we now own the

majority of the project (such as Addison Corporate Center).

In such cases, we intend to consolidate the portfolio company into our financial statements, which is a key reason for dropping our BDC status.

The Company intends to continue its historical activities related to tender offers for shares of non-traded REITs in order to boost its short-term cash flow and to support its dividends, subject

to the constraint that such securities will not exceed 20% of our portfolio.

The Company believes this niche strategy will allow it to pay dividends that are supported by cash flow rather than paying back investors’ capital, although there can be

no assurance that some portion of any distribution is not a return of capital.

The Company intends to continue its historical activities related to tender offers for shares of non-traded REITs in order to boost its short-term cash flow and to support its distributions,

subject to the constraint that such securities will not exceed 20% of our portfolio.

The Company believes this niche strategy will allow it to pay distributions that are supported by cash flow rather than paying back investors’ capital, although

there can be no assurance that some portion of any distribution is not a return of capital.

Rental and reimbursement

We generate rental revenue by leasing office space and apartment units to the building’s tenants.

These tenant leases fall under the scope of ASC 842, and are classified as operating leases.

Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.

Investment income

We generate revenues in the form of operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any

debt investments that we hold.

Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based

Any such fees are generated in connection with our investments and recognized as earned.

We generate revenues in the form operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any debt

investments that we hold.

such fees are generated in connection with our investments and recognized as earned.

Our primary operating expenses include the payment of:

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the cost of operating and maintaining real estate properties

the cost of calculating our NAV;

the cost of calculating our net asset value, including the cost of any third-party valuation services;

the cost of effecting sales and repurchases of our shares and other securities;

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fees and expenses associated with marketing efforts;

federal and state registration fees, and any stock exchange listing fees in the future;

federal, state, and local taxes, if any;

federal and state registration fees, any stock exchange listing fees in the future;

federal, state and local taxes;

independent directors’ fees and expenses;

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fidelity bond, directors and officers errors and omissions liability insurance, and other insurance premiums;

direct costs and expenses of administration, including printing, mailing, and staff;

direct costs and expenses of administration and sub-administration, including printing, mailing, and staff;

fees and expenses associated with independent audits and outside legal costs;

costs associated with our reporting and compliance obligations under the 1934 Act, and applicable federal and state securities laws;

all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion of

overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the

costs of compensation and related expenses of our Chief Compliance Officer, our Chief Financial Officer, Director of Accounting and Financial Reporting, General Counsel, and any administrative support staff.

costs associated with our reporting and compliance obligations under the 1934 Act, the 1940 Act and applicable federal and state securities laws;

all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that are based upon our allocable portion of overhead and other expenses incurred

by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related

expenses of our chief compliance officer and our chief financial officer and any administrative support staff.

Portfolio Investment Composition

As of March 31, 2021, we primarily owned equity securities in various real estate limited partnerships and REITs.

As a result of the change in the Company’s status and applying the new basis of

accounting, on the effective date of the termination of the Company’s status as a BDC, the Company recorded the fair of the investments as the new carrying value of the investments.

The following table summarizes the composition of our equity

method investments with fair value option election as well as other equity investments at fair value as of March 31, 2021:

March 31, 2021

Publicly Traded Companies

Non Traded Companies

Non Traded Company (Equity method investment with fair value option election)

LP Interests (Equity method investment with fair value option election)

Investment Trust

Beginning with the withdrawal of our election to be treated as a BDC on December 31, 2020, we began transforming our portfolio of investments in an orderly fashion into one comprised of

controlled real estate investments (either wholly owned or controlled through voting securities).

As of September 30, 2021, we still owned various real estate limited partnerships and REITs that are listed in the “Investments, at fair value” in the

We also owned various investments in entities that own real estate which gave us enough control such that the investments are not securities for 1940 Act purposes, but not enough to consolidate the financials of such entities with our

these are listed below as “Unconsolidated investments (non-securities), at fair value.” As a result of the change in the Company’s status and applying the new basis of accounting, on the effective date of the termination of the Company’s

status as a BDC, the Company recorded the fair value of the investments as the new carrying value of the investments.

The following table summarizes the composition of our investments at fair value as of September 30, 2021:

Investments, at fair value

September 30, 2021

3100 Airport Way South LP

5210 Fountaingate

Benefit Street Partners Realty Trust, Inc.

Capitol Hill Partners, LLC

CBL & Associates Properties, Inc.

- Preferred D

Citrus Park Hotel Holdings, LLC

Coastal Realty Business Trust, REEP, Inc.

Corporate Property Associates 18 Global A Inc.

FSP 303 East Wacker Drive Corp.

Liquidating Trust

FSP Energy Tower I Corp.

Liquidating Trust

FSP Satellite Place Corp.

Griffin-American Healthcare REIT III, Inc.

Healthcare Trust, Inc.

Highlands REIT Inc.

HGR Liquidating Trust

InvenTrust Properties Corp.

KBS Real Estate Investment Trust II, Inc.

Lakemont Partners, LLC

Moody National REIT II, Inc.

Phillips Edison & Company, Inc.

(Phillips Edison Grocery Center REIT I)

Satellite Investment Holdings, LLC - Class B

Secured Income, LP

SmartStop Self Storage REIT, Inc Class A

SmartStop Self Storage REIT, Inc Class T

Steadfast Apartment REIT

Strategic Realty Trust, Inc.

Summit Healthcare REIT, Inc.

The Parking REIT Inc.

Unconsolidated investments (non-securities), at fair value

Bishop Berkeley, LLC

BP3 Affiliate, LLC

Britannia Preferred Members, LLC - Class 2

Britannia Preferred Members, LLC - Class 1

Dimensions28 LLP

In addition to our investment securities, we currently own and manage one commercial real estate property (Addison Corporate Center) located in Windsor, CT and two residential apartments:

Commodore Apartments and Pon De Leo Apartments, located in Oakland, CA.

The Addison Corporate Center is owned through our subsidiary, the Operating Partnership, the Commodore Apartments is owned through our subsidiary Madison-PVT Partners LLC

(“Madison”), and the Pon De Leo Apartments is owned through our subsidiary PVT-Madison Partners LLC (“PVT”).

The Addison Corporate center contains 605,392 square feet, of which approximately 185,000 square feet is office space and the remainder is designated as flex office/warehouse space.

The Addison Corporate Center is owned through our subsidiary, the Operating Partnership, the Commodore Apartments are owned through our subsidiary Madison, and the Pon De Leo

Apartments are owned through our subsidiary PVT.

Addison Corporate Center contains 605,502 square feet, of which approximately 185,000 square feet is office space and the remainder is designated as flex office/warehouse space.

As of September

30, 2021, the property is approximately 60% occupied by 6 tenants.

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Largest Tenants

Rent per annum

Aircraft Design, Manufacturing, and Engineering

Global Engineering and Consulting

Quest Diagnostics

The Commodore Apartments is a mid-rise apartments built in 1912 and has 48 units.

As of March 31, 2020, the apartment is approximately 95.8% occupied.

The Pon De Leo Apartments is also a mid-rise

apartments built in 1929 and has 39 units.

As of March 31, 2020, the apartment is approximately 94.9% occupied.

The following table summarizes the composition of our investments at cost and fair value as of June 30, 2020:

Laboratory Services

The following information pertains to lease expirations at the Addison Corporate Center:

Number of Leases Expiring

Percentage of Gross

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units.

As of September 30, 2021, Commodore Apartment building is approximately 93.8% occupied.

Pon De Leo Apartments

is also a mid-rise apartment building built in 1929 and has 39 units.

As of September 30, 2021, Pon Do Leo Apartment building is approximately 97.4% occupied.

The following table provides information regarding each of the Oakland properties:

Percentage Leased

Monthly Base Rent/Occupied Unit

Multi-Family Residential

There are no present plans for the improvement or development of any property;

each property is being held for income production and increased occupancy and/or rental rates.

We have property and

liability insurance policies on all three properties which we believe are adequate.

The annual property taxes for Addison Corporate Center are estimated to be $1,044,933, for the Commodore, $191,000, and for Pon De Leo, $230,000.

The markets in which the Company’s properties (those consolidated and those that are not yet consolidated) operate are highly competitive, and each property faces unique competitive challenges

based upon local economic, political, and legal factors.

Our West coast multi-family properties, the Pon De Leo and the Commodore, are generally restricted from raising rents by local rent control laws.

Two of our unconsolidated investments in

apartment properties, Lakemont Partners and Capitol Hill, are also subject to rent control.

Rent control can result in average rents that are significantly below market, and this provides some buffer against declining rents in a recession.

in order to encourage development, rent control usually does not apply to newer properties.

Since older properties may be unable to raise rents as needed, they may be unable to make improvements that could allow them to compete with newer

Our consolidated office property, Addison Corporate Center, is a class B suburban office property located in Windsor, Connecticut.

Addison must compete with every other office property in the

market, as well as facing the uncertainty of workers returning to the office after COVID-19.

Our unconsolidated investment in an office property, Britannia Business Center, faces the same competitive factors in its sub-market, the San Francisco

suburban East Bay.

Our unconsolidated investment in a hotel property, Citrus Park Hotel, is a Courtyard by Marriott located in the Tampa/St.

Petersburg market that competes for business and leisure travel.

Park suffered a significant decline during 2020 as a result of a drastic reduction in business and leisure travel but is expected to recover as travel returns to normal.

Investments as of June 30, 2021

The following table summarizes the composition of our investments at fair value as of June 30, 2021:

Investments, at fair value

June 30, 2021

Publicly Traded Companies

Non Traded Companies

Investment Trust

3100 Airport Way South LP

5210 Fountaingate

Benefit Street Partners Realty Trust, Inc.

Capitol Hill Partners, LLC

CBL & Associates Properties, Inc.

- Preferred D

CIM Real Estate Finance Trust, Inc.

Citrus Park Hotel Holdings, LLC

CNL Healthcare Properties, Inc.

Coastal Realty Business Trust, REEP, Inc.

Corporate Property Associates 18 Global A Inc.

FSP 303 East Wacker Drive Corp.

Liquidating Trust

FSP Energy Tower I Corp.

Liquidating Trust

FSP Grand Boulevard Corp.

Liquidating Trust (Residual)

FSP Satellite Place Corp.

Griffin-American Healthcare REIT III, Inc.

Griffin Capital Essential Asset REIT, Inc.

Healthcare Trust, Inc.

Highlands REIT Inc.

HGR Liquidating Trust

InvenTrust Properties Corp.

KBS Real Estate Investment Trust II, Inc.

KBS Real Estate Investment Trust III, Inc.

Lakemont Partners, LLC

Moody National REIT II, Inc.

New York City REIT, Inc Cl B

Phillips Edison & Company, Inc.

(Phillips Edison Grocery Center REIT I)

Satellite Investment Holdings, LLC - Class B

Secured Income, LP

Sila Realty Trust, Inc.

SmartStop Self Storage REIT, Inc Class A

SmartStop Self Storage REIT, Inc Class T

Steadfast Apartment REIT

Strategic Realty Trust, Inc.

Summit Healthcare REIT, Inc.

The Parking REIT Inc.

Unconsolidated investments (non-securities), at fair value

Bishop Berkeley, LLC

BP3 Affiliate, LLC

Britannia Preferred Members, LLC -Class 2

Britannia Preferred Members, LLC -Class 1

Dimensions28 LLP

Results of Operations

COVID-19 pandemic

Considerable uncertainty still surrounds the COVID-19 pandemic and its potential effects, and the extent of and effectiveness of any responses taken on a national and local level.

However, measures taken to limit the impact of the COVID-19 pandemic, including social distancing and other restrictions on travel, congregation, and business operations have already resulted in significant negative economic impacts, including

steep declines in certain stock market segments and in the traded prices for certain real-estate related assets.

As a result of these impacts, we have experienced a large decrease in fair values of some of our investments as of March 31,

Considerable uncertainty still surrounds the COVID-19 pandemic and its potential effects, and the extent of and

effectiveness of any responses taken on a national and local level.

However, measures taken to limit the impact of the COVID-19 pandemic, including social distancing and other restrictions on travel, congregation, and business operations have

already resulted in significant negative economic impacts, including steep declines in certain stock market segments and in the traded prices for certain real-estate related assets.

As a result of these impacts, we experienced a large decrease in

fair values of some of our investments during the year ended June 30, 2021, and 2020.

In addition, some of the companies in which we have invested have cancelled their quarterly dividends and distributions for the current and future quarters.

The long-term impact of the COVID-19 pandemic on the United States and world

economies remains uncertain, but may result in a world-wide economic downturn, the duration and scope of which cannot currently be predicted.

long-term impact of the COVID-19 pandemic on the United States and world economies remains uncertain, but may result in a world-wide economic downturn, the duration and scope of which cannot currently be predicted .

MacKenzie and our Advisers have taken numerous steps, and will continue to take further actions, to address the COVID-19 pandemic.

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This includes the evaluation

and implementation of certain efforts to help us mitigate the impact that reduced revenues from distributions and capital events may have on our 2020 financial results.

We are focusing on maintaining a strong balance sheet and liquidity position

and searching for opportunistic investments.

In anticipation of reduced revenues and uncertain future economic conditions, the board of directors discontinued dividends starting March 2020 and share redemptions

starting May 2020 .

Due to the termination of the Company’s BDC status effective December 31, 2020, during the current fiscal year, the Company operated as a BDC for the period of July 1 through December 31, 2020 and as an operating

REIT for the period of January 1, 2021 through March 31, 2021.

Therefore, the current fiscal year-to-date operating activities have been reported in two different periods;

three months ended March 31, 2021 and six months ended December 31, 2020 and

those periods have been compared to the same prior year periods.

Three Months Ended March 31, 2021 and 2020

and implementation of certain efforts to help us mitigate the impact that reduced revenues from distributions and capital events may have on our fiscal year 2022 financial results.

We are focusing on maintaining a strong balance sheet and liquidity

position and searching for opportunistic investments.

In anticipation of reduced revenues and uncertain future economic conditions, the board of directors had discontinued distributions starting March 2020 and share redemptions starting May 2020.

However, after reassessing the Company’s cash flow, the board of directors reinstated the quarterly distributions in May 2021.

The Board intends to continue quarterly distributions so long as it is supported by the previous quarter’s income, but

may increase or decrease the distribution accordingly.

Further, the Board authorized a repurchase offer in March 2021 for those who needed liquidity (at a substantial discount to NAV), and has recently opened the Share Repurchase Program in cases

of the death or disability of a stockholder.

Due to the termination of the Company’s BDC status effective December 31, 2020, during the three months ended September 30, 2021, the Company operated as an operating REIT.

However, during the three months ended

September 30, 2020, the Company operated as a BDC.

Three Months Ended September 30, 2021 and 2020

Rental and reimbursements revenues:

Rental and reimbursement revenues are generated from the Company’s one commercial real estate property and two residential apartments.

During the three months ended March 31, 2021, the Company

generated $1.76 million in rental and reimbursements revenues, of which $1.62 million was generated from the Addison Corporate Center tenants and $0.15 million from the residential Apartments.

The Company acquired the two residential apartments on

March 5, 2021;

thus, they only generated one month of rental revenues.

There were no rental revenues during the three months ended March 30, 2020 as the Company did not own any real estate properties.

During the three months ended September 30, 2021, the

Company generated $2.68 million in rental and reimbursements revenues, of which $2.18 million was generated from the Addison Corporate Center tenants and $0.54 million from the two residential apartments.

There were no rental revenues during the

three months ended September 30, 2020 as the Company did not own any real estate properties.

Investment income:

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income.

Total investment income for the

three months ended March 31, 2021 and 2020 was $1.04 million and $3.09 million respectively.

The decrease of $2.06 million or 66.55%, was primarily due to suspensions of dividends and distributions from our investments as a result of the COVID-19

During the three months ended March 31, 2021, the Company received $0.54 million of distributions from operations, sales and liquidations as compared to $2.64 million during the three months ended March 31, 2020.

During the three months

ended March 31, 2021, we received dividends, interest, and other investment income of $0.49 million as compared to $0.45 million during the three months ended March 31, 2020.

The decrease in investment income is also due to decrease in our

investment portfolio since March 31, 2020.

As of March 31, 2021 the Company has investments with total cost basis of $75.51 million as compared to $99.43 million as of March 31, 2020.

During the three months ended

September 30, 2021, we received $1.77 million of distributions from operations, sales, and liquidations as compared to $0.51 million during the three months ended September 30, 2020.

The increase of $1.26 million or 247.39% was primarily due to

sales distributions from Bishop Berkeley after the sale of its underlying property during the three months ended September 30, 2021.

We received total sales distributions of $5.3 million from Bishop Berkeley, of which $3.9 million was considered

return of capital, resulting in $1.43 million of investment income from sales distributions.

During the three months ended September 30, 2021, we received dividends, interest, and other investment income of $0.37 million which was comparable to

$0.35 million received during the three months ended September 30, 2020.

Operating Expenses:

The Company’s following base management, portfolio structuring and subordinated incentive fees were based on the investment advisory agreement that was effective through December 31, 2020.

Subsequent to December 31, 2020, the advisory agreement was amended and was effective January 1, 2021.

Asset management or base management fee:

The asset management fees under the new advisory agreement for the three months ended March 31, 2021 were $0.68 million.

The Company’s base management, portfolio structuring, and subordinated incentive fees were based on the investment advisory agreement that was effective through December 31, 2020, and, subsequent

to December 31, 2020, based upon the base management and advisory fees under the advisory agreement that was effective January 1, 2021.

Asset /base management fee:

The asset management fees under the new advisory agreement for the three months ended September 30, 2021 were $0.68 million.

The base management fee under the previous advisory agreement for the

three months ended March 31, 2020 was $0.65 million.

The asset management fees are essentially on the same terms as the base management fees it was paying the Investment Adviser prior to 2021, namely based upon a percentage of Invested Capital.

This increase of $0.03 million, or 4.07% was due to a slight increase in the Invested Capital by $7.05 million from $127.07 million as of March 31, 2020, to $134.12 million as of March 31, 2021.

three months ended September 30, 2020 was $0.66 million.

The asset management fees are essentially on the same terms as the base management fees the Company was paying the Adviser prior to 2021, namely based upon a percentage of Invested Capital,

which is equal to the amount calculated by multiplying the total number of outstanding common shares, preferred shares, and the partnership units (units in our operating partnership issued by us and held by persons other than us) issued by the

Company by the price paid for each or the value ascribed to each in connection with their issuance.

This increase of $0.02 million, or 3.03% was due to a slight increase in the invested capital by $5.16 million from $128.77 million as of September

30, 2020, to $133.93 million as of September 30, 2021.

Incentive management fee or subordinated incentive fee:

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Under the previous advisory agreement that was effective through December 31, 2020, the subordinated incentive fee had two components:

Capital Gains Fee and Income Fee.

Capital Gains Fee was based on

realized gains (including the distributions received from sales/capital transactions) and the Income Fee was based on net investment income.

The Company did not incur any incentive management fee for the three months ended March 31, 2021.

Similarly, the Company did not incur any subordinated incentive fee (Capital Gains Fee or Income Fee) during the three months ended March 31, 2020.This was because the cumulative net investment income and net realized gains were below the threshold

of 7% of Contributed Capital.

a Capital Gains Fee and an Income Fee.

The Capital Gains Fee was

based on realized gains (including the distributions received from sales/capital transactions) and the Income Fee was based on net investment income.

The Company did not incur any incentive management fee for the three months ended September 30,

Similarly, the Company did not incur any subordinated incentive fee (Capital Gains Fee or Income Fee) during the three months ended September 30, 2020.

This was because the cumulative net investment income and net realized gains were below

the threshold of 7% of Contributed Capital.

Administrative cost reimbursements and Transfer agent reimbursements:

Costs reimbursed to MacKenzie for the three months ended March 31, 2021, was $0.16 million as compared to $0.17 million for the three months ended March 31, 2020.

The slight decrease was due to a

decrease in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2020, as a result of the decrease in the Company’s capital raising activities.

Transfer agent cost reimbursement paid to MacKenzie for three months ended March 31, 2021 was $0.03 million as compared to $0.02 for the three months ended March 31, 2020.

The slight increase was

due to additional software maintenance and implementation costs incurred by MacKenzie.

Costs reimbursed to MacKenzie for the three months ended September 30, 2021, were $0.15 million as compared to $0.16 million for the three months ended September 30, 2020.

The slight decrease was

due to a decrease in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to September 30, 2020, as a result of the decrease in the Company’s capital raising activities.

Transfer agent cost reimbursement paid to MacKenzie for three months ended September 30, 2021 and 2020 were both $0.03 million.

Property operating and maintenance expenses:

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administrative expenses incurred in the operation of the Company’s commercial and residential real estate assets.

During the three months ended March 31, 2021, the Company incurred operating and maintenance expenses of $1.15 million, of which $1.09

During the three months ended September 30, 2021, the Company incurred operating and maintenance expenses of $1.39 million, of which

$1.16 million mainly incurred in the operation of Adison Corporate Center.

Operating and maintenance expenses incurred in the operation of two residential apartments were $0.06 million since the properties was acquired and in operating for only one

The Company did not have such expenses during the three months ended March 31, 2020 as it did not own and operate any real estate assets as of March 31, 2020.

Operating and maintenance expenses incurred in the operation of two residential apartments were $0.23 million.

The Company did not have such expenses during the three months

ended September 30, 2020 as it did not own and operate any real estate assets as of September 30, 2020.

Depreciation and amortization:

During the three months ended March 31, 2021, the Company recorded depreciation and amortization of $0.98 million, of which $0.80 million was the depreciation and amortization of real estate and

intangible assets it owned through the Operating Partnership.

During the three months ended September 30, 2021, the Company recorded depreciation and amortization of $0.97 million, of which $0.82 million was the depreciation and amortization of real estate

and intangible assets it owned through the Operating Partnership.

$0.15 million of the total related to the depreciation and amortization of real estate assets and intangibles owned through Madison and PVT.

The Company did not have such expenses during

the three months ended March 31, 2020 as it did not own and operate any real estate assets as of March 31, 2020.

The Company did not have such expenses

during the three months ended September 30, 2020 as it did not own and operate any real estate assets as of September 30, 2020.

During the three months ended September 30, 2020, the Company had deferred offering costs amortization of $0.14 million, which related to offering costs incurred by the Company on its third

public offering that terminated in October 2020.

The remaining unamortized balance of those deferred offering costs were fully amortized in October 2020 after the termination of the offering.

Therefore, there was no such amortization during the

three months ended September 30, 2021.

Interest Expense:

Interest expense for the three months ended March 31, 2021 was $0.27 million, of which $0.23 million the interest expense incurred on the notes payable associated with the Addison Corporate

Center and $0.04 million was the interest expense on the two mortgage notes payable associated with the two residential apartments.

The Company did not incur any interest expense during the three months ended March 31, 2020 as it did not have any

notes payable outstanding as of March 31, 2020.

Interest expense for the three months ended September 30, 2021 was $0.35 million, of which $0.23 million was incurred on the notes payable associated with the Addison Corporate Center and $0.12

million was incurred on the two mortgage notes payable associated with the two residential apartments.

The Company did not incur any interest expense during the three months ended September 30, 2020 as it did not have any notes payable outstanding

as of September 30, 2020.

Other operating expenses:

Other operating expenses include amortization of deferred offering costs, professional fees, directors’ fees printing and mailing, and other general and administrative expenses.

Other operating

expenses for the three months ended March 31, 2021 and 2020, were comparable at $0.16 million and $0.18 million, respectively.

Other operating expenses include professional fees, directors’ fees, printing and mailing expenses, and other general and administrative expenses.

Other operating expenses for the three months

ended September 30, 2021 and 2020, were $0.26 million and $0.16 million, respectively.

The increase was due to increase in audit fees.

Net realized gain/loss on investments:

During the three months ended March 31, 2021, the Company had a realized gain of $0.72 million as compared to $0.17 million during the three months ended March 31, 2020.

Total realized gains for

the three months ended March 31, 2021, were realized from sales of seventeen publicly traded REIT securities with total realized gains of $0.90 million offset by a realized loss of $0.18 million from one limited partnership interest.

During the three months ended September 30, 2021, the Company had realized gain of $0.60 million as compared to $1.02 million during the three months ended September 30, 2020.

Total realized

loss for the three months ended March 31, 2020, was realized from the final liquidation of two limited partnership interests.

gains for the three months ended September 30, 2021, were realized from sales of a publicly traded REIT security with total realized gains of $0.07 million and six non-traded REIT securities with net realized gain of $0.53 million.

Net unrealized gain/loss on investments:

During the three months ended March 31, 2021, we recorded net unrealized gains of $1.16 million and did not have any reclassification adjustments as the accumulated unrealized gains and losses as

of December 31, 2020 on all investments were recorded as carrying value adjustments due to the termination of the Company’s BDC status.

The reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period

that are realized during the current period.

Accordingly, the net unrealized gains for the three months ended March 31, 2021, resulted from fair value appreciations of $0.84 million from limited partnership interests and $0.32 million from

non-traded REIT securities.

During the three months ended March 31, 2020, we recorded net unrealized losses of $9.86 million, which were net of $1.08 million of unrealized gains reclassification adjustment.

reclassification adjustment was the accumulated unrealized gains as of December 31, 2019, that were realized during the three months ended March 31, 2020.

During the three months ended September 30, 2021, we recorded net unrealized gains of $3.29 million, which were net of $1.62 million of unrealized gains reclassification adjustment.

reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period.

Accordingly, the net unrealized gains excluding the reclassification adjustment for the three

months ended September 30, 2021, were $4.91 million, which resulted from fair value appreciations of $3.29 million from non-traded REIT securities, $1.48 million from limited partnership interests, and $0.14 million from limited partnership

During the three months ended September 30, 2020, we recorded net unrealized losses of $3.18 million, which were net of $0.81 million of unrealized gains reclassification adjustment.

reclassification adjustment was the accumulated unrealized gains as of June 30, 2020, that were realized during the three months ended September 30, 2020.

Accordingly, the net unrealized losses excluding the reclassification adjustment for the

three months ended March 31, 2020, were $8.78 million, which resulted from fair value depreciations of $4.51 million from non-traded REIT securities, $2.89 million from limited partnership interests and $1.38 million from publicly traded REIT

The significant decline in the fair value during the current quarter was mainly due to the COVID-19 pandemic resulting in steep declines in domestic stock markets and in the traded prices for other financial assets as discussed above.

three months ended September 30, 2020, were $2.37 million, which resulted from fair value depreciations of $1.88 million from non-traded REIT securities and $1.11 million from publicly traded REIT securities partly offset by a fair value

appreciation of $0.62 million from limited partnership interests.

The significant decline in the fair value during the current quarter was mainly due to the COVID-19 pandemic resulting in declines in domestic stock markets and in the traded prices

for other financial assets as discussed above.

Income tax provision (benefit):

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and, as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders,

provided that, on an annual basis, it distributes at least 90% of its REIT taxable income to the stockholders and meets certain other conditions.

To the extent that it satisfies the annual distribution requirement but distributes less than 100% of

its taxable income, it is either subject to U.S.

federal corporate income tax on its undistributed taxable income or 4% excise tax on catch-up distributions paid in the subsequent year.

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2020.

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income from operations during the quarterly periods within the tax year 2020.

Similarly, for the tax year 2020, we believe the Parent Company paid the requisite amounts of dividends during the year and met other REIT requirements such that it will

not owe any income taxes.

Similarly, for the tax year 2021, we believe the Parent Company will pay the requisite amounts of dividends during the year and meet other REIT requirements such that it

will not owe any income taxes.

Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2021.

TRS and MacKenzie NY 2 are subject to corporate federal and state income tax on its taxable income at regular statutory rates.

However, as of March 31, 2021, they did not have any taxable income

for tax years 2020 or 2021.

However, as of September 30, 2021, they did not have any taxable

income for tax years 2020 or 2021.

Therefore, TRS and MacKenzie NY 2 did not record any income tax provisions during any fiscal period within the tax year 2020 and 2021.

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Therefore, no income tax provisions are recorded for these two entities.

Six Months Ended December 31, 2020, and 2019:

While we withdrew our BDC status effective December 31, 2020, for the entire six months ended December 31, 2020, we operated as a BDC.

Therefore, the following operating activities of the Company

are reported as a BDC rather than an operating REIT.

Investment Income:

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income.

Total investment income for the

six months ended December 31, 2020 and 2019, was $1.88 million and $4.33 million, respectively.

The decrease of $2.45 million or 56.6%, was primarily due to suspensions of dividends and distributions from our investments as a result of the COVID-19

During the six months ended December 31, 2020, the Company received $0.86 million of distributions from operations, sales and liquidations as compared to $2.82 million during the same period in 2019.

Similarly, during the six months ended

December 31, 2020, we received dividend, interest and other investment income of $1.02 million as compared to $1.51 million during the same period in 2019.

Operating Expenses:

The Company’s following base management, portfolio structuring and subordinated incentive fees were based on the investment advisory agreement that was amended on October 2019 and was effective

through December 31, 2020.

Subsequently, the advisory agreement was amended and was effective January 1, 2021.

Base management fee:

The base management fee for the six months ended December 31, 2020 was $1.34 million as compared to $1.24 million for the six months ended December 31, 2019.

This increase of $0.10 million, or

8.1% was due to an increase in the Gross Invested Capital by $12.59 million from $121.41 million as of December 31, 2019, to $134.00 million as of December 31, 2020.

Portfolio structuring fee :

The portfolio structuring fee for the six months ended December 31, 2020, was less than $0.01 million as compared to $0.36 million during the same period in 2019.

This decrease was because the

Company raised lower amount of new capital during the six months ended December 31, 2020.

During the six months ended December 31, 2020, the Company raised new capital of $0.22 million as compared to $11.97 million during the same period in 2019

through issuance of new shares excluding the DRIP.

Subordinated incentive fee:

Under the advisory agreement that was effective through December 31, 2020, the subordinated incentive fee had two components;

Capital Gains Fee and Income Fee.

Capital Gains Fee was based on

realized gains (including the distributions received from sales/capital transactions) and the Income Fee was based on net investment income.

There was neither Income Fee nor Capital Gains Fee for the six months ended December 31, 2020 and 2019.

This was because the cumulative net investment income and net realized gains were below the

threshold of 7% of Contributed Capital.

Administrative cost reimbursements and Transfer agent reimbursements:

Costs reimbursed to MacKenzie for the six months ended December 31, 2020, was $0.31 million as compared to $0.34 million for the six months ended December 31, 2019.

The slight decrease was due to

a decrease in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to December 31, 2019, as a result of the decrease in the Company’s capital raising activities.

Transfer agent cost reimbursement paid to MacKenzie for six months ended December 31, 2020 was $0.06 million as compared to $0.04 for the six months ended December 31, 2019.

The slight increase

was due to additional software maintenance and implementation costs incurred by MacKenzie.

Other operating expenses:

Other operating expenses include amortization of deferred offering costs, professional fees, directors’ fees printing and mailing, and other general and administrative expenses.

Other operating

expenses for the six months ended December 31, 2020 and 2019, were $0.72 million and $0.92 million.

The decrease of $0.20 million or 21.7% was mainly due to a decrease of $0.30 million in amortization of deferred offering costs during the six

months ended December 31, 2020 partly offset by an increase of 0.09 million in professional fees during the six months ended December 31, 2020.

The decrease in the amortization of deferred offering costs was due to only $0.20 million of deferred

offering cost expensed at the termination of our third public offering as compared to $0.45 million of deferred offering costs expensed in 2019 associated with our second public offering that terminated in October 2019.

According to our accounting

policy, offering costs are capitalized as deferred offering costs as incurred by the Company and subsequently amortized to expense over a twelve-month period.

Any deferred offering costs that have not been amortized upon the expiration or earlier

termination of an offering will be accelerated and expensed upon such expiration or termination.

The increase in our professional fees was due to additional professional services obtained during the three months ended December 31, 2020 as a result

of the Company withdrawing its BDC status.

Net realized gain on investments:

During the six months ended December 31, 2020, the Company had a realized gain of $1.02 million as compared to $1.41 million during the six months ended December 31, 2019.

Total realized gains

for the six months ended December 31, 2020, were primarily realized from sales of thirteen publicly traded REIT securities with a total gain of $0.99 million and three non-traded REIT securities with a total gain of $0.3 million.

Total realized

gains for the six months ended December 31, 2019, were primarily realized from sales of three non-traded REIT securities with a total gain of $0.20 million, one limited partnership interests with a total gain of $0.58 million and one publicly

traded REIT security with a gain of 0.63 million.

Net unrealized gain/loss on investments:

During the six months ended December 31, 2020, we recorded net unrealized losses of $10.14 million, which were net of $0.81 million of unrealized gains reclassification adjustments.

reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period.

Accordingly, the net unrealized losses excluding the reclassification adjustment for the six

months ended December 31, 2020, were $9.33 million, which resulted from fair value depreciation of $7.32 million from limited partnership interests, $1.36 million from non-traded REIT securities, and $0.65 million from publicly traded REIT

The large decrease in fair value of partnership interests was mainly due to the decline in the underlying property value of the Operating Partnership before consolidation resulting from unfavorable leasing activities as a result of the

COVID-19 pandemic.

During the six months ended December 31, 2019, we recorded net unrealized losses of $1.23 million, which were net of $0.33 million of unrealized gains reclassification adjustment.

reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period.

Accordingly, the net unrealized losses excluding the reclassification adjustment for the six

months ended December 31, 2019, were $0.90 million, which resulted from fair value depreciation of $2.0 million from non-traded REIT securities and $0.78 million from publicly traded REIT securities offset by fair value appreciation of $1.88

million from limited partnership interests.

Liquidity and Capital Resources

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We offered to sell up to 5 million shares under our first public offering and up to 15 million shares each under our second and third public offerings.

As of March 31, 2021, the Company has

As of September 30, 2021, the Company has

raised total gross proceeds of $119.10 million from the issuance of shares under the three public offerings, $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which

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Of the total capital raised from the public

offerings as of March 31, 2021, we have used $9.46 million to repurchase shares under the Company’s share repurchase program.

We filed a preliminary offering statement pursuant to Regulation A with the SEC to sell up to $50,000,000 of shares of the

Company’s Series A preferred stock at an initial offering price of $25.00 per share.

The sale of shares pursuant to the offering will begin after the Offering Circular has been qualified by the SEC.

We plan to fund future investments with the net

proceeds raised from our preferred equity offering and any future offerings of securities and cash flows from operations, as well as interest earned from the temporary investment of cash in U.S.

government securities and other high-quality debt

investments that mature in one year or less.

offerings as of September 30, 2021, we have used $9.87 million to repurchase shares under the Company’s share repurchase program.

In April 2021, we filed a preliminary offering statement pursuant to Regulation A with the SEC to sell up to

$50,000,000 of shares of the Company’s Series A preferred stock at an initial offering price of $25.00 per share (the “Offering Circular”).

The sale of shares pursuant to the offering began after the Offering Circular was qualified by the SEC in

November 2021.

We plan to fund future investments with the net proceeds raised from our preferred equity offering and any future offerings of securities and cash flows from operations, as well as interest earned from the temporary investment of

government securities and other high-quality debt investments that mature in one year or less.

We may also fund a portion of our investments through borrowings from banks and issuances of senior securities.

While we were a BDC, we did not borrow money on a long-term basis or issue debt securities

at the Company level;

While we were a BDC, we did

not borrow money on a long-term basis or issue debt securities at the Company level;

however, now that our BDC status is withdrawn, we may borrow money within the underlying companies in which we have majority ownership.

In addition, from time to time we may draw on the margin line of credit on a temporary

basis to bridge our investment purchases and sales or capital raising.

In addition, from time to

time we may draw on the margin line of credit on a temporary basis to bridge our investment purchases and sales or capital raising.

We intend to utilize leverage to enhance the total returns of our portfolio, and we expect to have greater flexibility in raising debt capital, following the withdrawal of our BDC election.

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paying operating expenses.

The Company finished the quarter ended March 31, 2021 with cash and cash equivalents, restricted cash, and receivables of $5.28 million, and approximately $1.62 million of liabilities.

Additionally, it anticipates receiving approximately $3.50 million from its short-term investments during the quarter ended June 30, 2021.

Because of its strong liquidity and the liquidity preservation measures taken by the board, the Company is

currently capable of meeting all of its obligations and continue its operations for the foreseeable future.

The Company intends to continue to qualify as a REIT and to meet the associated testing requirements, including paying out at least 90% of

its taxable income.

REIT for the period of January 1, 2021 through March 31, 2021.

Therefore, the current fiscal year-to-date cash flow activities have been discussed in two different periods;

three months ended March 31, 2021 and six months ended December 31, 2020.

Three months ended March 31, 2021(As an Operating REIT):

For the three months ended March 31, 2021, we experienced a net decrease in cash of $10.15 million.

The Company finished the three months ended September 30, 2021 with cash and cash equivalents, restricted cash, and receivables of $14.39 million, and approximately $3.45 million of current

Because of its strong liquidity and the liquidity preservation measures taken by the board, the Company is currently capable of meeting all of its obligations and continue its operations for the foreseeable future.

The Company intends

to continue to qualify as a REIT and to meet the associated testing requirements, including paying out at least 90% of its taxable income.

Three months ended September 30, 2021 (Successor basis):

For the three months ended September 30, 2021, we experienced a net increase in cash of $3.89 million.

During this period, we generated cash of $1.05 million from our operating activities and

million from our financing activities and used $25.80 million in our investing activities.

$3.61 million from our investing activities and used $0.77 million in our financing activities.

The net cash inflow of $1.05 million from operating activities resulted from $2.79 million of rental revenues and $2.14 million of investment income offset by $3.88 million of cash used in

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million offset by cash inflows of $7.48 million from sale of investments and $3.86 million from distributions received from our investments that are considered return of capital.

The net cash inflow of $15.11 million from financing activities resulted from note payable proceeds of $15.13 million received for financing the real estate acquisitions and $0.20 million of

capital contributions received from the non-controlling interest holders offset by payments on existing note payable of $0.22.

Six months ended December 31, 2020 (As a BDC):

For the six months ended December 31, 2020, we experienced a net increase in cash of $5.20 million.

During this period, we generated cash of $3.14 million from our operating activities, $1.93

from investing activities and $0.13 million from our financing activities.

The net cash inflow of $5.07 million from operating activities resulted from $10.94 million from distributions received from our investments that are considered return of capital and $5.26

million from sales and liquidations of investments offset by $12.69 million of cash used in purchasing investments and $0.37 million used in operating expenses, net of investment income.

The net cash inflow of $1.93 million from investing activities resulted from the consolidation of the Operating Partnership as of December 31, 2020.

The net cash inflow of $0.13 million from financing activities resulted from the sale of shares under our third public offering with gross proceeds of $0.14 million (net of $0.09 million of

decrease in capital pending acceptance) offset by cash outflows of $0.01 million from payments of selling commissions and fees.

Nine months ended March 31, 2020:

For the nine months ended March 31, 2020, we experienced a net increase in cash of $11.79 million.

The net cash outflow of $0.77 million from financing activities resulted from payment of dividends of $0.56 million and payments on existing note payables of $0.21 million.

Three months ended September 30, 2020 (Predecessor basis):

For the three months ended September 30, 2020, we experienced a net increase in cash of $1.91 million.

During this period, we generated cash of $1.83 million from our operating activities and

$0.08 million from our financing activities.

The net cash inflow of $1.71 million from operating activities resulted from $31.37 million from distributions received from our investments that are considered return of capital, $6.45 million

from sales and liquidations of investments and $2.67 million from investment income, net of operating expenses offset by $38.78 million of cash used in purchasing investments.

The net cash inflow of $10.08 million from financing activities resulted from the sale of shares under our second and third public offering with gross proceeds of $18.54 million (adjusted for

$0.01 million of increase in capital pending acceptance) offset by cash outflows of $3.56 million from payments of cash dividends, $3.19 million from share redemptions, and $1.71 million from payments of selling commissions and fees.

The net cash inflow of $1.83 million from operating activities resulted from $4.28 million from distributions received from our investments that are considered return of capital and $5.26 million

from sales and liquidations of investments offset by $7.41 million of cash used in purchasing investments and $0.30 million used in operating expenses, net of investment income.

The net cash inflow of $0.08 million from financing activities resulted from the sale of shares under our third public offering with gross proceeds of $0.09 million (net of $0.08 million of

decrease in capital pending acceptance) offset by cash outflows of $0.01 million from payments of selling commissions and fees.

Contractual Obligations

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proper notice.

Payments under the Advisory Agreement in future periods will be (i) a percentage of the value of our Invested Capital;

(ii) Acquisition Fees, and (iii) incentive fees based on our performance above specified hurdles.

Payments under the Advisory Agreement in future periods will be (i) a percentage of the value of our Invested Capital, (ii) Acquisition Fees, and (iii) incentive fees based on our performance above specified hurdles.

Payments under

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However, if MacKenzie withdraws as our administrator, it will be liable for any expenses we incur as a result of such withdrawal.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or

expenses, results of operations, liquidity, capital expenditures, or capital resources.

We do not have any current plans to borrow money at the Company level.

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debt, merge or sell assets, make certain investments and/or distributions or engage in transactions with affiliates.

While we do not have any plans to borrow money at the Parent Company level, we borrow money within the underlying companies in

which we have majority ownership.

As of September 30, 2021, total loan outstanding at the underlying companies amounted to $38,482,787.

Critical Accounting Policies

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Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments.

Due to the termination

of the Company’s status as a BDC, the Company adopted various new accounting policies as of March 31, 2021.

Those new accounting policies are disclosed in Note 2 of the financial statements included in this Form 10-Q.

Other than those new policies,

there have been no changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended June 30, 2020, included in the Company’s annual report on Form 10-K for the fiscal year ended June 30,

Dividends to Stockholders

We pay quarterly dividends to stockholders to the extent that we have income from operations available.

Our quarterly dividends, if any, will be determined by our Board of Directors after a

review and distributed pro-rata to holders of our shares;

we declare dividends on a monthly basis, but pay each quarter.

Any dividends to our stockholders will be declared out of assets legally available for distribution.

In no event are we

permitted to borrow money to make dividends if the amount of such dividend would exceed our annual accrued and received revenues, less operating costs.

Dividends in kind are not permitted, except as provided in our Charter.

There have been no

changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended September 30, 2021, included in the Company's annual report on Form 10-K for the fiscal year ended June 30, 2021.

Distributions to Stockholders

We pay quarterly distributions to stockholders to the extent that we have income from operations available.

Our quarterly distributions, if any, will be determined by our Board of Directors after

a review and distributed pro-rata to holders of our shares;

we declare distributions on a monthly basis, but pay each quarter.

Any distributions to our stockholders will be declared out of assets legally available for distribution.

In no event are

we permitted to borrow money to make distributions if the amount of such distributions would exceed our annual accrued and received revenues, less operating costs.

Distributions in kind are not permitted, except as provided in our Charter.

We have elected to be treated as a REIT under the Code.

As a REIT, we are required to distribute at least 90% of our REIT taxable income to the stockholders and meet certain other conditions.

current intention is to make any dividends in additional shares under our DRIP out of assets legally available therefore, unless a stockholder elects to receive dividends in cash, or their participation in our DRIP is restricted by a state

securities regulator.

If one holds shares in the name of a broker or financial intermediary, they should contact the broker or financial intermediary regarding their election to receive dividends in cash.

We can offer no assurance that we will

achieve results that will permit the payment of any cash dividends and, if we issue senior securities, we are prohibited from paying dividends if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if

dividends are limited by the terms of any of our borrowings.

On March 31, 2020, after assessing the impacts of the COVID-19 pandemic, the Company’s board of directors unanimously approved the suspension of

regular quarterly dividends to the Company’s stockholders.

As a result, the Company did not pay or accrue any dividend for the quarter ended March 31, 2021.

However, on May 10, 2021, the Board of Directors reinstated the quarterly dividend at

the rate of $0.05 per common share, payable to holders of record as of May 15, 2021.

The Board intends to continue such dividend so long as it is supported by the previous quarter’s income, but may increase or decrease the dividend

As a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we distribute at

least 90% of our REIT taxable income to the stockholders and meet certain other conditions.

To the extent that we satisfy the annual distribution requirement but distribute less than 100% of the taxable income, we will either be subject to U.S.

federal corporate income tax on our undistributed taxable income or 4% excise tax on catch-up distributions paid in the subsequent year.

We are also subject to tax on built-in gains we realize during the first five years following REIT election.

We have a dividend reinvestment plan (“DRIP”) that provides for reinvestment of our dividends and other distributions on behalf of stockholders for any individual stockholder who elects to participate in the DRIP,

provided that the DRIP is permitted by the state in which the stockholders resides.

We can offer no assurance that we will achieve results that will permit the payment of any cash distributions.

On March 31, 2020, after assessing the impacts of the Covid-19 pandemic, the Company’s Board of Directors unanimously approved the suspension of regular quarterly distributions to the Company’s stockholders,

effective immediately.

On May 10, 2021, the Board of Directors reinstated the quarterly distributions after reassessing the cash flow of the Company and intends to continue such distribution so long as it is supported by the previous quarter’s

income, but may increase or decrease the distribution accordingly .

Accordingly, on July 9, 2021, the Company declared a dividend of $0.06 per common share for the quarter ended June 30, 2021, and on September 13,

2021, it declared a dividend of $0.07 per common share for the quarter ended September 30, 2021.

The dividend declared on July 9, 2021 was paid on July 26, 2021, and the dividend declared on September 13, 2021 was paid on October 29, 2021.

Board intends to continue such regular dividends so long as it is supported by the previous quarter’s income, but may increase or decrease the dividend accordingly.

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 2. Management’s Discussion and Analysis