Presidio Property Trust Inc

June 30, 2024

1. ORGANIZATION

***Organization.**Presidio Property Trust, Inc. ("we", "our", "us" or the "Company") is an internally-managed real estate investment trust ("REIT"), with holdings in office, industrial, retail and model home properties. We were incorporated in the State of California on September 28, 1999,and in August 2010,we reincorporated as a Maryland corporation. In October 2017,we changed our name from "NetREIT, Inc.," to "Presidio Property Trust, Inc." Through Presidio Property Trust, Inc., its subsidiaries, and its partnerships, we own 12 commercial properties in fee interest, two of which we own as a partial interest in various affiliates, in which we serve as general partner, member and/or manager, and a special purpose acquisition company (until deconsolidation in September 2023)*as noted below.

The Company orone of its affiliates operates the following partnerships during the periods covered by these condensed consolidated financial statements:

The Company has determined that the limited partnerships in which it owns less than100% should be included in the Company's consolidated financial statements as the Company directs their activities and has control of such limited partnerships.

We have elected to be taxed as a REIT under Sections856 through860 of the Internal Revenue Code of1986, as amended (the "Code"), for federal income tax purposes. To maintain our qualification as a REIT, we are required to distribute at least90% of our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels, and diversity of stock ownership. Provided we maintain our qualification for taxation as a REIT, we are generallynot subject to corporate-level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. If we fail to maintain our qualification as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all our taxable income would be subject to federal income tax at regular corporate rates, including any applicable alternative minimum tax. We are subject to certain state and local income taxes.

We, together withone of our entities, have elected to treat certain subsidiaries as a taxable REIT subsidiary (a "TRS") for federal income tax purposes. Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our commercial tenants, and holding assets that we cannot hold directly. A TRS is subject to federal and state income taxes. The Company has concluded that there areno significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed any significant interest or penalties for tax positions by any tax jurisdictions.

Liquidity.The Company's anticipated future sources of liquidity mayinclude existing cash and cash equivalents, cash flows from operations, refinancing of existing mortgages, future real estate sales, new borrowings, and the sale of equity or debt securities. Future capital needs include paying down existing borrowings, maintaining our existing properties, funding tenant improvements on our commercial buildings, paying lease commissions (to the extent they arenot covered by lender-held reserve deposits), and the payment of dividends to our stockholders. The Company is also seeking investments that are likely to produce income and achieve long-term gains in order to pay dividends to our stockholders. To ensure that we can effectively execute these objectives, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity. If necessary, the Company mayseek other short-term liquidity alternatives, such as bridge loans, refinancing an unencumbered property or a bank line of credit depending on the credit environment. See note11 Stockholders' Equity for additional information on sale of securities.

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Short-term liquidity needs include paying our current operating costs, satisfying the debt service requirements of existing mortgages, completingtenant improvements on our commercial buildings, paying leasing commissions, and funding dividends, if any, to stockholders. Future principal payments due on mortgage notes payables, during the nexttwo quarters of2024, total approximately$12.5 million, of which$2.9 million is related to model home properties. See Note7. Mortgage Notes Payable for additional information on the Dakota Center loan that matured on* July 6, 2024.*Management expects certain model home properties can be sold, and that the underlying mortgage notes will be paid off with sales proceeds while other mortgage notes can be refinanced, as the Company has historically been able to do in the past. Additional principal payments will be made with cash flows from ongoing operations.

As the Company continues its operations, it* mayre-finance or seek additional financing. However, there can beno* assurance that any such re-financing or additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company doesnot obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company's ability to achieve its intended business objectives. Management believes that the combination of working capital on hand and the ability to refinance commercial and model home mortgages will fund operations through at least the nexttwelve months from the date of the issuance of these unaudited interim financial statements.

The Company served as the sponsor of the former special purpose acquisition company Murphy Canyon Acquisition Corp. ("Murphy Canyon" or the "SPAC") since its creation in* October 2021and certain officers and directors of the Company also served as officers and directors of the SPAC. On September 22, 2023,Murphy Canyon completed its business combination with Conduit Pharmaceuticals Limited ("Conduit Pharma") and changed its name to Conduit Pharmaceuticals Inc. ("Conduit"). Immediately prior to the business combination, the Company owned approximately 65% of the SPAC's outstanding common stock. Upon consummation of the business combination, the SPAC's shares of Class B common stock were converted into shares of its Class A common stock and the shares of Class A common stock were then reclassified as a single class of Conduit common stock. As a result of the business combination, the Company was issued (i)3,306,250 shares of Conduit's common stock due to the conversion of the shares of the SPAC's Class B common stock into shares of the SPAC's Class A common stock and then reclassification into shares of Conduit common stock, (ii)754,000 shares of Conduit common stock, which prior to the business combination were shares of the SPAC's Class A common stock and (iii) private warrants to purchase 754,000 shares of Conduit common stock, which prior to the business combination were warrants to purchase 754,000 shares of the SPAC's Class A common stock. Also in the business combination, shareholders and debtholders of Conduit Pharma were issued 65,000,000 shares of Conduit common stock. Immediately following the consummation of the business combination, the Company transferred 45,000 shares of Conduit common stock and warrants to purchase 45,000 shares of Conduit common stock to the SPAC's independent directors as compensation for their services. As a result, the Company owned approximately 6.5% of Conduit following the consummation of the business combination. In connection with the business combination, the Company's officers and directors who also served as officers and directors of the SPAC resigned from the SPAC, with the exception of the Company's former Chief Financial Officer who resigned from the Company. See Note9.* Investment in Conduit Pharmaceuticals for additional information.

2. SIGNIFICANT ACCOUNTING POLICIES

There have beenno significant changes to the Company’s accounting policies since it filed its audited financial statements in the2024 Annual Report. For further information about the Company’s accounting policies, refer to the Company’s condensed consolidated financial statements and notes thereto for the year ended* December 31, 2023*, included in the Company’s2024 Annual Report.

Basis of Presentation.The accompanying condensed consolidated financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form10-Q and Article8 of Regulation S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position as of June 30, 2024, and* December 31, 2023*, as well as results of our operations, and cash*** flows as of, and for the three andsix months ended June 30, 2024and2023*, respectively. However, the results of operations for the interim periods arenot necessarily indicative of the results that* maybe expected for the year ending December 31, 2024*, due to real estate market fluctuations, available mortgage lending rates and other unknown factors. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the2024 Annual Report. The condensed consolidated balance sheet*** as of December 31, 2023** *has been derived from the audited consolidated financial statements included in the2024 Annual Report.

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Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of Presidio Property Trust, Inc. and its subsidiaries, NetREIT Advisors, LLC and Dubose Advisors LLC (collectively, the “Advisors”), and NetREIT Dubose Model Home REIT, Inc. The condensed consolidated financial statements also include the results of the NetREIT Partnerships and the Model Home Partnerships. As used herein, references to the “Company” include references to Presidio Property Trust, Inc., its subsidiaries, and the partnerships. All significant intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated financial statements also include the accounts of (a) Murphy Canyon up until* September 22, 2023,when it completed its business combination. Murphy Canyon was a special purpose acquisition company ("SPAC") for which we served as the financial sponsor (as described herein), and which was deemed to be controlled by us as a result of our 65% equity ownership stake, the overlap ofthree* of our executive officers as executive officers of Murphy Canyon, and significant influence that we exercised over the funding and acquisition of new operations for an initial business combination (see Note2, Variable Interest Entity). All intercompany balances, prior to deconsolidation and loss of control on* September 22, 2023,*have been eliminated in consolidation.

The Company classifies the noncontrolling interests in the NetREIT Partnerships as part ofcondensed consolid ated net (loss) income in2024 and2023 and has included the accumulated amount of noncontrolling interests as part of equity since inception in* February 2010.If a change in ownership of a consolidated subsidiary results in loss of control and deconsolidation, any retained ownership interest will be remeasured, with the gain or loss reported in thecondensed consolidated statements of operations. Management has evaluated the noncontrolling interests and determined that they donot* contain any redemption features.

Use of Estimates. The condensed consolidated financial statements were prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates include, private warrants, the allocation of purchase price paid for property acquisitions between the components of land, building and intangible assets acquired including their useful lives; valuation of long-lived assets, and the allowance for doubtful accounts, which is based on an evaluation of the tenants’ ability to pay. Actual results could differ from those estimates.

***Real Estate Assets and Lease Intangibles.***Land, buildings and improvements are recorded at cost, including tenant improvements and lease acquisition costs (including leasing commissions, space planning fees, and legal fees). The Company capitalizes any expenditure that replaces, improves, or otherwise extends the economic life of an asset, while ordinary repairs and maintenance are expensed as incurred. The Company allocates the purchase price of acquired properties between the acquired tangible assets and liabilities (consisting of land, buildings, tenant improvements, and long-term debt) and identified intangible assets and liabilities (including the value of above-market and below-market leases, the value of in-place leases, unamortized lease origination costs and tenant relationships), in each case based on their respective fair values.

The Company allocates the purchase price to tangible assets of an acquired property based on the estimated fair values of those tangible assets, assuming the property was vacant. Estimates of fair value for land, building and building improvements are based on many factors, including, butnot limited to, comparisons to other properties sold in the same geographic area and independentthird-party valuations. In estimating the fair values of the tangible assets, intangible assets, and liabilities acquired, the Company also considers information obtained about each property as a result of its pre‑acquisition due diligence, marketing and leasing activities.

The value allocated to acquired lease intangibles is based on management’s evaluation of the specific characteristics of each tenant’s lease. Characteristics considered by management in allocating these values include, but arenot limited, to the nature and extent of the existing business relationships with the tenant, growth prospects for developing new business with the tenant, the remaining term of the lease, the tenant’s credit quality, and other factors.

The value attributable to the above-market or below-market component of an acquired in-place lease is determined based upon the present value (using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of rents that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above or below-market leases are amortized on a straight-line basis as an increase or reduction of rental income over the remaining non-cancelable term of the respective leases. Amortization of above and below-market rents resulted in a net increase in rental income of approximately $1,244 and $2,487 in each period for thethree andsix months ended* June 30, 2024* and for thethree andsix months ended* June 30, 2023*.

The value of in-place leases and unamortized lease origination costs are amortized to expenses over the remaining term of the respe ctive leases, which range from less than a year toten years. The amount allocated to acquired in-place leases is determined based on management’s assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased.

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The amount allocated to unamortized lease origination costs is determined by what the Company would have paid to athird-party to secure a new tenant reduced by the expired term of the respective lease. The amount allocated to tenant relationships is the benefit resulting from the likelihood of a tenant renewing its lease. Amortization expense related to these assets was approximately $4,382 and $8,763 during each period for thethree andsix months ended* June 30, 2024* and for thethree andsix months ended* June 30, 2023*.

Deferred Leasing Costs.Costs incurred in connection with successful property leases are capitalized as deferred leasing costs and amortized to leasing commission expense on a straight-line basis over the terms of the related leases which generally range fromone tofive years. Deferred leasing costs consist of third-party leasing commissions. Management re-evaluates the remaining useful lives of leasing costs as the creditworthiness of the tenants and economic and market conditions change. If management determines the estimated remaining life of the respective lease has changed, the amortization period is adjusted. At June 30, 2024 and December 31, 2023, the Company had net deferred leasing costs of approxima tely $1.6 million and $1.7 million, respectively. Total amortization expense for the three andsix months ended* June 30, 2024*, was approximately $119,278 and $244,099, respectively. Total amortization expense for thethree andsix months ended* June 30, 2023*, was approximately $122,330 and $228,151, respectively.

Cash Equivalents and Restricted Cash.At June 30, 2024 and December 31, 2023, we had approximately $8.5 million and $6.5 million in cash, cash equivalents and restricted cash, respectively, of which approximately $3.2 million and $3.7 million represented restricted cash, respectively. The Company considers all short-term, highly liquid investments that are both readily convertible to cash and have an original maturity ofthree months or less at the date of purchase to be cash equivalents. Items classified as cash equivalents include money market funds and short-term bonds. Cash balances in individual banks* mayexceed the federally insured limit of$250,000* by the Federal Deposit Insurance Corporation (the "FDIC").No losses have been experienced related to such accounts. At* June 30, 2024* and* December 31, 2023*, the Company had approximately $3.2 million and $0.7 million, respectively, in deposits in financial institutions that exceeded the federally insurable limits. Restricted cash consists of funds held in escrow for Company lenders for properties held as collateral by the lenders. The funds in escrow are for payment of property taxes, insurance, leasing costs and capital expenditures.

Real Estate Held for Sale and Discontinued Operations. We generally reclassify assets to "held for sale" when the disposition has been approved, it is available for immediate sale in its present condition, we are actively seeking a buyer, and the disposition is considered probable withinone year. Additionally, real estate sold during the current period is classified as “real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Mortgage notes payable related to the real estate sold during the current period are classified as “notes payable related to real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Additionally, we record the operating results related to real estate that has been disposed of as discontinued operations for all periods presented if the operations have been eliminated and represent a strategic shift and we willnot have any significant continuing involvement in the operations of the property following the sale. As of* June 30, 2024*,no commercial property met the criteria to be classified as "held for sale" andfive model homes were classified as held for sale.

Deferred Offering Costs. Deferred offering costs represent legal, accounting and other direct costs related to our offerings. As of* June 30, 2024* and* December 31, 2023*, we have incurred approximately zero and $5,000, respectively, in deferred offering costs as of the end of each period related to our registration statement on Form S-3.

**Impairments of Real Estate Assets.We regularly review for impairment on a property-by-property basis. Impairment is recognized on a property held for use when the expected undiscounted cash flows for a property are less than the carrying amount at which time the property is written-down to fair value. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows, including, butnot limited to, revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods. Since our properties typically have a long life, the assumptions used to estimate the future recoverability of carrying value requires significant management judgment. Actual results could be significantly different from the estimates. These estimates have a direct impact on net income because recording an impairment charge results in a negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss maybe recognized to reduce the property to fair value and such loss could be material.

We review the carrying value of each of our real estate properties regularly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During thethree andsix months ended* June 30, 2024*, we recognized non-cash impairment charges of approximately $0.1 million and $0.2 million, respectively, related to model homes. During thethree andsix months ended* June 30, 2023*, we didnot recognize non-cash impairment charges related to any commercial properties.

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The new impairment charges for the model homes, during thethree months ended* June 30, 2024*, reflects the estimated sales prices for these specific model homes in* Julyand August**2024* as a result of an abnormally short hold period, less thantwo years, on model homes purchased in2022. The builder changed their product style in the neighborhoods where these model homes are located, in Texas, after we had purchased the homes. We donot believe these losses are indicative of our overall model home portfolio. As noted below in footnote3 -Recent Real Estate Transactions, during thesix months ended* June 30, 2024*, we sold 42 model homes for approximately $20.1 million and the Company recognized a net gain of approximately $2.8 million. The Company didnot recognize a non-cash impairment to our real estate assets during thethree andsix months ended* June 30, 2023*.

Fair Value Measurements. Certain assets and liabilities are required to be carried at fair value, or if long-lived assets are deemed to be impaired, to be adjusted to reflect this condition. The guidance requires disclosure of fair values calculated under each level of inputs within the following hierarchy:

When available, we utilize quoted market prices from independentthird-party sources to determine fair value and classify such items in Level1 or Level2**. In instances where the market for a financial instrument isnot active, regardless of the availability of a nonbinding quoted market price, observable inputs mightnot be relevant and could require us to make a significant adjustment to derive a fair value measurement.

Additionally, in an inactive market, a market price quoted from an independentthird-party* mayrely more on models with inputs based on information available only to that independentthird*-party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments donot appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. As of* June 30, 2024*, we didnot hold any marketable securities, excluding our investments in Conduit's common stock and common stock warrants. As of* December 31, 2023*, our marketable securities (excluding our investments in Conduit's common stock and common stock warrants), held at athird party broker, presented on the condensed consolidated balance sheets within other assets were measured at fair value using Level1 market prices and totaled approximately $45,149, with a cost basis of approximately $40,315. There wereno financial liabilities measured at fair value as of* June 30, 2024* and* December 31, 2023**.*

On* April 22, 2024,the Company entered into a lockup agreement with Conduit pursuant to which the Company agreednot* to transfer or sell 2,700,000 of its 4,015,250 shares of Conduit common stock for a period ofone year. In consideration for entering into the lockup agreement Conduit issued the Company a warrant ("Private CDT Warrants") to purchase 540,000 shares of common stock at an exercise price of $3.12 per share, the warrant has atwo year term and is exercisableone year after the date of issue. The Private CDT Warrants meet the ASC321, Investments - Equity Securities ("ASC321") scope exception for derivative instruments and are accounted for as a derivative under ASC815, Derivatives and Hedging ("ASC815"). As such, the Private CDT Warrants were recorded at fair value on the date of issuance and subsequently measured at fair value each period, with changes in fair value reported in gain or loss on Conduit Pharmaceuticals marketable securities. As of* April 22, 2024,the Private CDT Warrants were valued at $891,000 based on a Level3* fair value measurement. As of* June 30, 2024*, the Private CDT Warrants fair value was adjusted to $156,600, and is included in the total Investment in Conduit Pharmaceuticals marketable securities on the* June 30, 2024* condensed consolidated balance sheet. Our investments in Conduit's common stock (CDT) and public common stock warrants (CDTTW) presented on the condensed consolidated balance sheets were measured at fair value using Level1 market prices, taking into account the adoption of ASU2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, and totaled approximately $4.3 million as of* June 30, 2024*. The combined value of our Investment in Conduit Pharmaceuticals marketable securities, including the Private CDT Warrants, totaled $4.4 million as of* June 30, 2024*. Our investments in Conduit's common stock and public common stock warrants presented on the condensed consolidated balance sheet were measured at fair value using Level1 market prices as of* December 31, 2023*, and totaled approximately $18.3 million. The adjustments to the fair value of our investment in Conduit Pharmaceuticals marketable securities are recorded in net change in Conduit Pharmaceuticals marketable securities on our condensed consolidated statement of operations.

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Earnings per share (“EPS”).The EPS on common stock has been computed pursuant to the guidance in FASB ASC Topic260, Earnings Per Share. The guidance requires the classification of the Company’s unvested restricted stock, which contains rights to receive non-forfeitable dividends, as participating securities requiring thetwo-class method of computing net income per share of common stock. In accordance with thetwo-class method, earnings per share have been computed by dividing the net income less net income attributable to unvested restricted shares by the weighted average number of shares of common stock outstanding less unvested restricted shares. Diluted earnings per share is computed by dividing net income by the weighted average shares of common stock and potentially dilutive securities outstanding in accordance with the treasury stock method.

Dilutive common stock equivalents include the dilutive effect of in-the-money stock equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common stock equivalents if their effect would be anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive common stock shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are:

***Variable Interest Entity.*We determine whether an entity is a Variable Interest Entity ("VIE") and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. Our determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether we participated in the design of the entity and the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk basedfirst on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in the VIE. Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative approach focused on identifying which reporting entity has both: (i) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance, including, butnot limited to, the ability to direct operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion continually. We consolidate any VIE of which we are the primary beneficiary.

The Company was involved in the formation of an entity considered to be a VIE, prior to* September 22, 2023,when Murphy Canyon completed its business combination. The Company evaluated the consolidation of this entity as required pursuant to ASC Topic810* relating to the consolidation of such VIE. The Company’s determination of whether it is the primary beneficiary of the VIE is based in part on an assessment of whether ornot the Company and its related parties have the power to direct activities of the VIE and are exposed to the majority of the risks and rewards of the entity.

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Following the completion of the Murphy Canyon IPO in* January 2022,we determined that Murphy Canyon was a VIE in which we had a variable interest because we participated in its formation and design, manage the significant activities, and Murphy Canyon didnot* have enough equity at risk to finance its activities without additional subordinated financial support. We have also determined that Murphy Canyon's public stockholders didnot have substantive rights, and their equity interest constituted temporary equity, outside of permanent equity, in accordance with ASC480-10-S99-3A. As such, we have concluded that, prior to the business combination, we were the primary beneficiary of Murphy Canyon as a VIE, as we had the right to receive benefits or the obligation to absorb losses of the entity, as well as the power to direct a majority of the activities that significantly impacted Murphy Canyon's economic performance. Since we were the primary beneficiary, Murphy Canyon was consolidated into our condensed consolidated financial statements. See Note9 Commitments and Contingencies for additional details regarding Murphy Canyon.

Shares Subject to Possible Redemption. Given that the shares of Murphy Canyon Class A common stock issued to investors in its IPO were issued with other freestanding instruments (i.e., public warrants which were classified as permanent equity as described below), the proceeds and initial carrying value of the Class A common stock classified as temporary equity was allocated in accordance with ASC470-20. The Murphy Canyon Class A common stock was subject to ASC480-10-S99. In addition, because it was probable that the equity instrument would become redeemable, we had the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it became probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occurred and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. We elected to recognize the accretion resulting from changes in redemption value immediately during thethree months ended* March 31, 2022,and every quarter since then, until September 22, 2023as noted above. See Note9* Commitments and Contingencies for additional details regarding Murphy Canyon.

Immaterial Error Corrections. During thesecond quarter of2024, management determined that its prior treatment of accruing restricted compensation expense as a liability and included in Accounts payable and accrued liabilities on the condensed consolidated balance sheets should be treated differently. Management determined that the restricted stock compensation should be treated as equity and included in additional paid in capital in the Company’s accompanying condensed consolidated balance sheet for the prior years in accordance with ASC718. Compensation - Stock Compensation. Accordingly, the Company’s accompanying condensed consolidated balance sheet and condensed consolidated statements of changes in equity as of* December 31, 2022,and December 31, 2023,respectively and for thethree* months ended* March 31, 2023,** June 30, 2023,and March 31, 2024,*respectively, reflects an adjustment to include restricted stock compensation.

On the balance sheet as of* December 31, 2023,accounts payable and accrued liabilities reflects a reduction of $21,189 and additional paid-in capital reflects an increases of $21,189. On the condensed consolidated statements of changes in equity, thethree* months ended* March 31, 2023and June 30, 2023reflect the addition of restricted stock compensation of $232,106 and $228,657, respectively and thethree* months ended* March 31, 2024includes restricted stock compensation of $317,077. The corrections didnot* affect Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows in any prior periods.

Reclassifications. Certain prior year balance sheet, statement of operations and statement of cash flows accounts have been reclassified to conform with the current year presentation. The reclassifications didnot affect net income in the prior year consolidated statement of operations.

***Subsequent Events.***We evaluate subsequent events up until the date the condensed consolidated financial statements are issued.

Recently Issued and Adopted Accounting Pronouncements. In* December 2023,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")2023-09, Income Taxes, to enhance income tax disclosures, provide more information about tax risks and opportunities present in worldwide operations, and to disaggregate existing income tax disclosures. The guidance is effective for annual periods beginning after December 15, 2024on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. We havenot* yet adopted ASU2023-09 and are currently evaluating the impact on our financial statement disclosures.

In* November 2023,FASB issued Accounting Standards Update ASU2023*-07, Segment Reporting, establishing improvements to reportable segments disclosures to enhance segment reporting under Topic280. This ASU aims to change how public entities identify and aggregate operating segments and apply quantitative thresholds to determine their reportable segments. This ASU also requires public entities that operate as a single reportable segment to provide all segment disclosures in Topic280, not just entity level disclosures. The guidance will be effective for fiscal years beginning after* December 15, 2023and interim periods within fiscal years beginning after December 15, 2024and the amendments should be applied retrospectively to all periods presented in the financial statements. We havenot* yet adopted ASU2023-07 and are currently evaluating the impact on our financial statement disclosures.

In* August 2023,the Financial Accounting Standards Board ("FASB"} issued Accounting Standards Update ("ASU") ASU2023*-05, "Business Combinations-Joint Venture Formations (Subtopic805*-60): Recognition and Initial Measurement"("ASU2023*-05"}. ASU2023-05 addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture's separate financial statements. Prior to the amendment, the FASB didnot provide specific authoritative guidance on the initial measurement of assets and liabilities assumed by a joint venture upon its formation. ASU2023-05 requires a joint venture to recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). ASU2023-05 is effective for all joint venture formations with a formation date on or after* January 1, 2025,with early adoption permitted. The Company has electednot* to early adopt ASU2023-05 and doesnot expect the adoption will have a significant impact on our consolidated financial statements.

In* March 2024,the SEC issued final climate-disclosure rules to enhance and standardize climate‐ related disclosures by public companies. With regards to financial statements, the rules requires disclosure of (i} capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, subject to applicable1o/o* and de minimis disclosure thresholds; (ii} capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs} if used as a material component of a company's plans to achieve its disclosed climate-related targets or goals; and (iii) if the estimates and assumptions the company uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted. The rules are effective for annual periods beginning* January 1, 2025and are to be applied prospectively. On April 4, 2024,*the SEC voluntarily stayed the rules pending judicial review as a result of litigation.

3. RECENT REAL ESTATE TRANSACTIONS

Acquisitions during thesix months ended June 30, 2024*******:***

Acquisitions during thesix months ended June 30, 2023:****

Dispositions during thesix months ended June 30, 2024*******:***

Dispositions during the six months ended June 30, 2023:**

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4. REAL ESTATE ASSETS

The Company owns a diverse portfolio of real estate assets. The primary types of properties the Company invests in are office, industrial, retail, and triple-net leased model home properties. We have five commercial properties located in Colorado, four in North Dakota, one in Southern California, one in Texas andone in Maryland. Our model home properties are located inthree states. As of* June 30, 2024*, the Company owned or had an equity interest in:

A summary of the properties owned by the Company as of* June 30, 2024* and* December 31, 2023* is as follows:

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5. LEASE INTANGIBLES

The following table summarizes the net value of other intangible assets acquired and the accumulated amortization for each class of intangible asset:

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At* June 30, 2024*, and* December 31, 2023*, there wereno gross lease intangible assets and accumulated amortization related to the lease intangible assets included in real estate assets held for sale.

The net value of acquired intangible liabilities was approximately $10,779 and $13,266 relating to below-market leases at* June 30, 2024* and* December 31, 2023*, respectively.

Future aggregate approximate amortization expense for the Company's lease intangible assets is as follows:

6. OTHER ASSETS

Other assets consist of the following:

Periodically, the Company* maysell an option in the marketable securities it holds to unrelatedthird* parties for the right to purchase certain securities held within its investment portfolios (“covered call options”). These option transactions are designed primarily to increase the total return associated with holding the related securities as earning assets by using fee income generated from these options. These transactions arenot designated as hedging relationships pursuant to accounting guidance ASC815 and, accordingly, changes in fair values of these contracts, are reported in other income (expense). There are several risks associated with transactions in options on securities. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transactionnot to achieve its objectives. A transaction in options or securities* maybe unsuccessful to some degree because of market behavior or unexpected events. When we write a covered call option, we forgo, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call but retain the risk of loss should the price of the underlying security decline. The writer of an option hasno* control over the time when it* may*be required to fulfill its obligation before the sold option expires, and once an option writer has received an exercise notice, it must deliver the underlying security in exchange for the strike price.

As of* June 30, 2024*, we didnot own common shares of other publicly traded REITs. As of* December 31, 2023*, we owned common shares of 3 different publicly traded REITs and covered call options inzero of those same REITs. The gross fair market value on our publicly traded REIT securities was $45,149, with covered call options totaling $0. As of* December 31, 2023*, the net fair value of our publicly traded REIT securities was $45,149 based on the* December 31, 2023* closing prices.

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7. MORTGAGE NOTES PAYABLE

Mortgage notes payable consist of the following:

The loan agreement between NetREIT Model, Homes, Inc. (“NRMH”) and its Lender has a covenant for a Fixed Charge Coverage Ratio (“FCCR”) as defined for NRMH as of any date that equals (a) the sum of (i) EBITDA for the period ended as of such date minus (ii) distributions for the period ended as of such date divided by (b) the sum of (i) principal payments paid for the period ended as of such date plus (ii) interest expense for period ended as of such date. The FCCR is to beno less than 1.10 to1.00, tested at the end of each fiscal quarter. As of* December 31, 2023,NRMH was in compliance with this covenant. The Company and standalone subsidiaries have other various quarterly and annual reporting requirements to the individual property lenders and the Company is in compliance with all material conditions and covenants on those mortgage notes payable as of June 30, 2024*.

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Scheduled principal payments of mortgage notes payable were as follows as of* June 30, 2024*:

8. NOTES PAYABLE

On* April 22, 2020,the Company received an Economic Injury Disaster Loan of $10,000 from the Small Business Administration ("SBA") to provide economic relief during the COVID-19 pandemic. This loan advance isnot* required to be repaid, hasno stipulations on use, and has been recorded as fees and other income in the condensed consolidated statements of operations during fiscal2020. On* August 17, 2020,we received an additional Economic Injury Disaster Loan ("EIDL") of $150,000, for which principal and interest payments are deferred fortwelve* months from the date of issuance, and interest accrues at3.75% per year. The loan matures on* August 17, 2050.*We have used the funds for general corporate purposes to alleviate economic damage caused by the COVID-19 pandemic, which economic injury included abating or deferring rent to certain tenants (primarily retail tenants).

As of* June 30, 2024*, we had issuedone promissory note to our majority owned subsidiary, Dubose Model Home Investors202 LP, for the refinancing ofone model home property in Texas, for approximately $0.3 million with an interest rate of 5.55% per annum and maturity date of* August 15, 2024.*This note payable and note receivable, including interest expense and interest income related to this promissory note, is eliminated through consolidation on our financial statements.

9. INVESTMENT IN CONDUIT PHARMACEUTICALS

Sponsorship of Special Purpose Acquisition Company. On* January 7, 2022,we announced our sponsorship, through our wholly-owned subsidiary, Murphy Canyon Acquisition Sponsor, LLC (the "Sponsor"), of a special purpose acquisition company ("SPAC") initial public offering. The SPAC raised $132,250,000 in capital investment to acquireone* or more businesses. We, through our wholly-owned subsidiary, owned approximately 23.5% of the issued and outstanding stock in the entity upon the initial public offering being declared effective and consummated (excluding the private placement units described below). The SPAC offered 132,250,000 units, with each unit consisting ofone share of common stock andthree-quarters ofone redeemable warrant. The warrants were evaluated using the guidance in ASC480 "Distinguishing Liabilities from Equity" and we concluded that the warrants are indexed to Murphy Canyon's common stock and meet the criteria to be classified in stockholders' equity.

The Murphy Canyon IPO of 13,225,000 units of common stock and warrants, closed on* February 7, 2022,*raising gross proceeds for Murphy Canyon of $132,250,000, including the exercise in full by the underwriters of their over-allotment option. In connection with the IPO, we purchased, through the Sponsor,754,000 placement units (the "placement units") at a price of $10.00 per unit, for an aggregate purchase price of $7,540,000. These proceeds were deposited in a trust account established for the benefit of the Murphy Canyon public shareholders and are included in Investments held in Trust. In connection with the initial public offering, Murphy Canyon incurred $7,738,161 in issuance costs, including $2,645,000 of underwriting discounts and commission, $4,628,750 of deferred underwriting fees and $464,411 of other offering costs. These costs were allocated to temporary and permanent equity and offset against the proceeds.

On* November 8, 2022,*the SPAC entered into an agreement and plan of merger with Conduit Pharmaceuticals Limited, a Cayman Islands exempted company ("Conduit Pharma"), and Conduit Merger Sub, Inc., a Cayman Islands exempted company and the SPAC's wholly owned subsidiary. The merger agreement provided that the SPAC's Cayman Island subsidiary will merge with and into Conduit Pharma, with Conduit Pharma surviving the merger as the SPAC's wholly owned subsidiary and the public company renamed "Conduit Pharmaceuticals Inc." ("Conduit").

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Initially, the SPAC was required to complete its initial business combination transaction by12 months from the consummation of its initial public offering or up to18 months if it extended the period of time to consummate a business combination in accordance with its Certificate of Incorporation. On* January 26, 2023,at a special meeting of the stockholders, the stockholders approved a proposal to amend the SPAC's certificate of incorporation to extend the date by which it has to consummate a business combination up to12* times, each such extension for an additionalone-month period, from* February 7, 2023,to February 7, 2024.The stockholders also approved a related proposal to amend the trust agreement allowing the SPAC to deposit into the trust account, for eachone*-month extension,one-third of1% of the funds remaining in the trust account following the redemptions made in connection with the approval of the extension proposal at the special meeting. The Company has committed to providing additional funds if needed to make such a deposit for the extension. In connection with the stockholders' vote at the special meeting,11,037,272 shares of common stock were tendered for redemption, which were redeemed in* February 2023.*Approximately $114.1 million in cash was removed from the Trust Account to pay such stockholders and, accordingly, after giving effect to such redemptions, income tax withdraws of $200,050 and adding $155,403 in extension payments, the balance in the Trust Account was approximately $23.3 million. After the redemptions, there were 2,187,728 shares of SPAC Class A common stock subject to possible redemption.

On* January 27, 2023,the merger agreement was amended to provide for onlyone* class of authorized common stock of the SPAC following the business combination, instead of both authorized Class A common stock and Class B common stock as set forth in the original merger agreement. On* May 11, 2023,the merger agreement was further amended to provide for (i) removal of the provision that indicates thatno* tax opinion would be delivered in connection with the closing, (ii) a closing obligation that that the SPAC either (a) be exempt from the provisions of Rule419 promulgated under the Securities Act of1933, as amended, other than through its net tangible assets or (b) have at least $5,000,001 of net tangible assets either immediately prior to or upon consummation of the merger, and (iii) extension of the outside date for the closing of the merger from* May 31, 2023to February 7, 2024.*

The investments held in Trust for the SPAC Class A common stockholders generated approximately $664,232 of income during thesix months ended* June 30, 2023*, and was included in interest and other income (expense), net on our condensed consolidated statement of operations. As of* September 22, 2023,*the Trust account balance had been deconsolidated along with the other Conduit assets and liabilities.

As of immediately prior to the consummation of the SPAC's business combination, which occurred on* September 22, 2023,the Company, through its subsidiary, had loaned the SPAC $1.0 million to fund its trust account and for operating expenses. The loan was non-interest bearing, unsecured and was repaid in full upon the SPAC's business combination on September 22, 2023.*The notes payable and notes receivable related to the SPAC were eliminated through consolidation on our financial statements.

On* September 22, 2023,*the SPAC completed its business combination with Conduit Pharma and changed its name to Conduit Pharmaceuticals Inc. ("Conduit"). Immediately prior to the business combination, the Company owned approximately 65% of the SPAC's outstanding common stock. Upon consummation of the business combination, the SPAC's shares of Class B common stock were converted into shares of its Class A common stock and the shares of Class A common stock were then reclassified as a single class of Conduit common stock. As a result of the business combination, the Company was issued (i)3,306,250 shares of Conduit's common stock due to the conversion of the shares of the SPAC's Class B common stock into shares of the SPAC's Class A common stock and then reclassification into shares of Conduit common stock, (ii)754,000 shares of Conduit common stock, which prior to the business combination were shares of the SPAC's Class A common stock and (iii) private warrants to purchase 754,000 shares of Conduit common stock, which prior to the business combination were warrants to purchase 754,000 shares of the SPAC's Class A common stock. Also in the business combination, shareholders and debtholders of Conduit Pharma were issued 65,000,000 shares of Conduit common stock. Immediately following the consummation of the business combination, the Company transferred 45,000 shares of Conduit common stock and warrants to purchase 45,000 shares of Conduit common stock to the SPAC's independent directors as compensation for their services. As a result, the Company owned approximately 6.5% of Conduit's common stock immediately following the business combination and currently owns approximately 6.3% of Conduit's common stock. In connection with the business combination, the Company's officers and directors who also served as officers and directors of the SPAC resigned from the SPAC, with the exception of the Company's former Chief Financial Officer who resigned from the Company.

Following the completion of the Murphy Canyon IPO in* February 2022,we determined that Murphy Canyon is a Variable Interest Entity ("VIE") in which we had a variable interest because Murphy Canyon didnot* have enough equity at risk to finance its activities without additional subordinated financial support. Since the business combinations with Conduit on* September 22, 2023,we have determined that Conduit's (formally Murphy Canyon) public stockholders have substantive rights and weno* longer have control of Conduit's activity. Since we areno longer the controlling party, or have a majority of the issued and outstating common stock, the Company deconsolidated Conduit from our condensed consolidated financial statements. In connection with the deconsolidation we recorded a gain of approximately $40.3 million. Of the total gain recognized on deconsolidation, approximately $34.1 million relates to the remeasurement of our retained investment in Murphy Canyon via the Sponsor shares which converted into shares of Conduit's common stock on* September 22, 2023,and approximately $6.2 million relates to the deconsolidation of Murphy Canyon's assets and liabilities as of September 22, 2023.*

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Since deconsolidating Conduit, on* September 22, 2023,our investments in Conduit's common stock (CDT) and public common stock warrants (CDTTW) and Private CDT Warrants presented on the condensed consolidated balance sheets were measured at fair value using Level1* and Level3 market prices, taking into account the adoption of ASU2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, and totaled approximately $4.4 million as of* June 30, 2024*, with a cost basis of approximately $7.5 million. The Company entered into a lock-up agreement with Conduit regarding certain of the common stock held by the Company, for180 days from the closing of the business combination which ended* March 20, 2024.*

On* April 22, 2024,the Company entered into a lockup agreement with Conduit pursuant to which the Company agreednot* to transfer or sell 2,700,000 of its 4,015,250 shares of Conduit common stock for a period ofone year. In consideration for entering into the lockup agreement Conduit issued the Company a warrant to purchase 540,000 shares of common stock at an exercise price of $3.12 per share, which Private CDT Warrant has atwo year term and is exercisableone year after the date of issue. On* June 30, 2024*, our investments in Conduit's common stock ("CDT") and common stock warrants ("CDTTW") presented on the condensed consolidated balance sheets were measured at fair value using Level1 market prices, which closed at $1.06 per share and $0.039 per warrant. The Private CDT Warrants were measured at fair value using Level3 pricing at $0.29 per warrant.

10. COMMITMENTS AND CONTINGENCIES

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties. As of * June 30, 2024* , approximately $1.0 million is estimated for such capital expenditures on existing properties, net of any construction financing, during the rest of the year.

On* March 13, 2024,a stockholder activist group announced that it intends to file a preliminary proxy statement and accompanying WHITE universal proxy card with the Securities and Exchange Commission to be used to solicit votes for the election of director nominees at our next annual meeting of stockholders. Activist stockholder activities could adversely affect our business because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. We have or in the future mayretain the services of various professionals to advise us on activist stockholder matters, including legal, financial, strategic and communication advisors, the costs of which maynegatively impact our future financial results. In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholders' initiatives mayresult in the loss of potential business opportunities, harm our ability to attract new investors, business partners, and employees, and cause our stock price to experience periods of volatility or stagnation. On May 9, 2024,the Company entered into a cooperation agreement with this stockholder group pursuant to which Elena Piliptchak was appointed to our board of directors, effective immediately, as a Class III director with a term expiring at Presidio's2026* Annual Meeting of Stockholders. In connection with this appointment, our board of directors has been increased fromsix toseven directors. Pursuant to the agreement, the stockholder group agreed to withdraw the director nominations it had previously submitted and support our board's slate of directors at the2024 Annual Meeting of Stockholders, which was held on* June 27, 2024.The stockholder group has also agreed to certain customary standstill provisions and voting commitments. We have evaluated this contingency and have determined a material loss isnot* probable or estimable at this time.

***Litigation.*From time to time, we maybecome involved in various lawsuits or legal proceedings which arise in the ordinary course of business. Neither the Company nor any of the Company's properties are presently subject to any material litigation nor, to the Company's knowledge, is there any material threatened litigation.

Environmental matters.The Company monitors its properties for the presence of hazardous or toxic substances. While there can beno assurance that a material environmental liability doesnot exist, the Company isnot currently aware of any environmental liability with respect to the properties that would have a material effect on the Company's financial condition, results of operations and cash flow. Further, the Company isnot aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that the Company believes would require additional disclosure or recording of a loss contingency.

Financial Markets. The Company monitors concerns over economic recession, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages, and inflation, any of which* maycontribute to increased volatility and diminished expectations for the economy and markets. Additionally, the economic and geopolitical ramifications of the military conflicts in the Middle East and Ukraine, including sanctions, retaliatory sanctions, nationalism, supply chain disruptions and other consequences, could impact commercial real estate fundamentals and result in lower occupancy, lower rental rates, and declining values in our real estate portfolio and in the collateral securing our loan investments. We havenot* currently experienced a direct material impact to our Company or operations; however, we will continue to monitor the financial markets for events that could impact our commercial real estate properties.

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11. STOCKHOLDERS' EQUITY

**Preferred Stock.The Company is authorized to issue up to 1,000,000 shares of Preferred Stock (the "Preferred Stock"). The Preferred Stock maybe issued from time to time inone or more series. The Board of Directors is authorized to fix the number of shares of any series of the Preferred Stock, to determine the designation of any such series, and to set the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each series of Preferred Stock.

On* June 15, 2021,the Company completed its secondary offering of 800,000 shares of our Series D Preferred Stock for cash consideration of $25.00 per share to a syndicate of underwriters led by The Benchmark Company, LLC, as representative, resulting in approximately $18.1 million in net proceeds, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company. The Company granted the underwriters a 45-day option to purchase up to an additional 120,000 shares of Series D Preferred Stock to cover over-allotments, which they exercised on June 17, 2021,*resulting in approximately $2.7 million in net proceeds, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company. In total, the Company issued 920,000 shares of Series D Preferred Stock with net proceeds of approximately $20.5 million, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company and deferred offering costs. The Series D Preferred Stock is listed for trading on The Nasdaq Capital Market under the symbol SQFTP. The Company has used these proceeds for general corporate and working capital purposes, including acquiring additional properties.

On* June 20, 2024,the Company entered into an underwriting agreement withThe Benchmark Company, LLC* pursuant to which the Company issued and sold in an underwritten public offering 109,054 shares of the Company’s Series D Preferred Stock. The shares of Series D Preferred Stock were sold to the public at a price of $16.00 per share. The Company agreed to an underwriting discount of 7% of the public offering price of the shares of Series D Preferred Stock sold in the offering. The offering closed on* June 24, 2024,*generating gross proceeds of approximately $1.74 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for general corporate and working capital purposes, including to potentially acquire additional properties. Below are some of the key terms of the Series D Preferred Stock:

Dividends:

Holders of shares of the Series D Preferred Stock are entitled to receive cumulative cash dividends at a rate of 9.375% per annum of the $25.00 per share liquidation preference (equivalent to $2.34375 per annum per share). Dividends will be payable monthly on the15th day of each month (each, a "Dividend Payment Date"), provided that if any Dividend Payment Date isnot a business day, then the dividend that would otherwise have been payable on that Dividend Payment Date* may*be paid on the next succeeding business day without adjustment in the amount of the dividend.

Voting Rights:

Holders of shares of the Series D Preferred Stock will generally haveno voting rights. However, if the Company doesnot pay dividends on the Series D Preferred Stock foreighteen or more monthly dividend periods (whether ornot consecutive), the holders of the Series D Preferred Stock (voting separately as a class with the holders of all other classes or series of the Company's preferred stock it* may*issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series D Preferred Stock in the election referred to below) will be entitled to vote for the election oftwo additional directors to serve on the Company's Board of Directors until the Company pays, or declares and sets apart funds for the payment of, all dividends that it owes on the Series D Preferred Stock, subject to certain limitations.

In addition, the affirmative vote of the holders of at leasttwo-thirds of the outstanding shares of Series D Preferred Stock (voting together as a class with all other series of parity preferred stock the Company* may*issue upon which like voting rights have been conferred and are exercisable) is required at any time for the Company to (i) authorize or issue any class or series of its stock ranking senior to the Series D Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up or (ii) to amend any provision of the Company charter so as to materially and adversely affect any rights of the Series D Preferred Stock or to take certain other actions.

Liquidation Preference:

In the event of the Company's voluntary or involuntary liquidation, dissolution or winding up, the holders of shares of Series D Preferred Stock will be entitled to be paid out of the assets the Company has legally available for distribution to its stockholders, subject to the preferential rights of the holders of any class or series of its stock the Company* mayissue ranking senior to the Series D Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of$25.00* per share, plus any accumulated and unpaid dividends to, butnot including, the date of payment, before any distribution of assets is made to holders of the Company's common stock or any other class or series of the Company's stock it* may*issue that ranks junior to the Series D Preferred Stock as to liquidation rights.

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In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the Company's available assets are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series D Preferred Stock and the corresponding amounts payable on all shares of other classes or series of the Company's stock that it issues ranking on parity with the Series D Preferred Stock in the distribution of assets, then the holders of the Series D Preferred Stock and all other such classes or series of stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

Redemption:

Commencing on or after* June 15, 2026,the Company mayredeem, at its option, the Series D Preferred Stock, in whole or in part, at a cash redemption price equal to $25.00 per share, plus any accumulated and unpaid dividends to, butnot* including the redemption date. Prior to* June 15, 2026,upon a Change of Control (as defined in the Articles Supplementary), the Company mayredeem, at its option, the Series D Preferred Stock, in whole or part, at a cash redemption price of$25.00* per share, plus any accumulated and unpaid dividends to, butnot including the redemption date. The Series D Preferred Stock hasno stated maturity, willnot be subject to any sinking fund or other mandatory redemption, and willnot be convertible into or exchangeable for any of our other securities.

In accordance with the terms of the Series D Preferred Stock, the Series D monthly dividend has been approved by the Board of Directors through* June 30, 2024in the amount of $0.19531 per share payable on the15th* of every month to stockholders of record of Series D Preferred Stock as of the last day of the prior month. Total dividends paid to Series D Preferred stockholders during thethree andsix months ended* June 30, 2024* were approximately $0.5 million and $1.1 million, in each period, respectively. Total dividends paid to Series D Preferred stockholders during thethree andsix months ended* June 30, 2023* were approximately $0.5 million and $1.1 million, in each period, respectively.

Common Stock.The Company is authorized to issue up to 100,000,000 shares of Series A Common Stock,1,000 shares of Series B Common Stock, and 9,000,000 shares of Series C Common Stock (collectively, the "Common Stock") each with $0.01 par value per share. Each class of Common Stock has identical rights, preferences, terms, and conditions except that the holders of Series B Common Stock arenot entitled to receive any portion of Company assets in the event of the Company's liquidation. No shares of Series B or Series C Common Stock have been issued. Each share of Common Stock entitles the holder toone vote. Shares of our Common Stock arenot subject to redemption and donot have any preference, conversion, exchange, or preemptive rights. The Company's charter contains restrictions on the ownership and transfer of the Common Stock that preventsone person from owning more than 9.8% of the outstanding shares of common stock.

On* July 12, 2021,the Company entered into a securities purchase agreement with a single U.S. institutional investor for the purchase and sale of 1,000,000 shares of its Series A Common Stock, Common Stock Warrants to purchase up to 2,000,000 shares of Series A Common Stock and Pre-Funded Warrants to purchase up to 1,000,000 shares of Series A Common Stock. Each share of Common Stock and accompanying Common Stock Warrants were sold together at a combined offering price of $5.00, and each share of Common Stock and accompanying Pre-Funded Warrants were sold together at a combined offering price of $4.99. The Pre-Funded Warrants were exercised in full during August 2021*at a nominal exercise price of $0.01 per share. The Common Stock Warrants have an exercise price of $5.50 per share, were exercisable upon issuance and will expire five years from the date of issuance.

In connection with this additional offering, we agreed to issue the Placement Agent Warrants to purchase up to 80,000 shares of Series A Common Stock, representing 4.0% of the Series A Common Stock and shares of Series A Common Stock issuable upon exercise of the Pre-Funded Warrant. The Placement Agent Warrants were issued in* August 2021,post exercise of the Pre-Funded Warrants with an exercise price of $6.25 and will expire five years from the date of issuance. The Company evaluated the accounting guidance in ASC480* and ASC815 regarding the classification of the Pre-Funded Warrant, Common Stock Warrants, and Placement Agent Warrants as equity or a liability and ultimately determined that it should be classified as permanent equity. As of* June 30, 2024*, none of the Common Stock Warrants and Placement Agent Warrants have been exercised.

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Stock Repurchase Program. While we will continue to pursue value creating investments, the Board of Directors believes there is significant embedded value in our assets that is yet to be realized by the market. Therefore, returning capital to stockholders through a repurchase program is an attractive use of capital currently. On* September 15, 2022,the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock, which expired in September 2023.In November 2023,the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock which shall expire in November 2024.During the year ended December 31, 2023,the Company repurchased 23,041 shares of our Series D Preferred Stock at an average price of approximately $16.06 per share, including a commission of $0.035 per share, andno* shares of our Series A Common Stock, for a total cost of $0.4 million for the Series D Preferred Stock. During thesix months ended* June 30, 2024* we repurchased 10,446 shares of our Series A Common Stock, for a total cost of $7,613, with an average price of approximately $0.73 per share. There wereno repurchases of Series D Preferred Stock during thesix months ended* June 30, 2024*. Any repurchased shares are treated as authorized and unissued in accordance with Maryland law and shown as a reduction of stockholders’ equity at cost.

Cash Dividends on Common Stock.For thethree andsix months ended June 30, 2024, the Company hasnot declared a cash dividend. For thethree andsix months ended* June 30, 2023*, the Company declared and paid approximately $0.3 million and $0.6 million, respectively, in a cash dividends. Cash permitting, the Company intends to continue to pay dividends to our common stockholders on a quarterly basis and on a monthly basis to holders of our Series D Preferred Stock going forward, but there can beno guarantee the Board of Directors will approve any future dividends. The Company is still considering how much it* maypay during the next quarter, as there wasno* cash dividend paid during thefirst two quarters of2024 on shares of Series A Common Stock. The following is a summary of distributions declared per share of our Series A Common Stock and for our Series D Preferred Stock for thesix months ended* June 30, 2024and2023*.

Series A Common Stock

Series D Preferred Stock

Partnership Interests.Through the Company, its subsidiaries, and its partnerships, we own 12 commercial properties in fee interest, two of which we own partial interests in through our holdings in various affiliates in which we serve as general partner, member and/or manager. Each of the limited partnerships is referred to as a "DownREIT." In each DownREIT, we have the right, through put and call options, to require our co-investors to exchange their interests for shares of our Common Stock at a stated price after a defined period (generallyfive years from the date theyfirst invested in the entity's real property), the occurrence of a specified event or a combination thereof. The Company is a limited partner infive partnerships and sole stockholder inone corporation, which entities purchase and leaseback model homes from homebuilders.

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12. SHARE-BASED INCENTIVE PLAN

The Company maintains a restricted stock incentive plan for the purpose of attracting and retaining officers, employees, and non-employee board members. Share awards generally vest in equal annual installments over athree-to-ten-year period from date of issuance. Non-vested shares have voting rights and are eligible for any dividends paid on shares of common stock. The Company recognized compensation cost for these fixed awards over the service vesting period, which represents the requisite service period, using the straight-line method. Prior to our IPO, the value of non-vested shares was calculated based on the offering price of the shares in the most recent private placement offering of $20.00, adjusted for stock dividends since granted and assumed selling costs, which management believed approximated fair market value as of the date of grant. Upon our IPO, the value of non-vested shares granted is generally calculated based on the closing price of our common stock on the date of the grant.

During our Annual Stockholders meeting, held on* May 26, 2022,the Company's2017* Incentive Award Plan was amended to increase the available shares for issuance from 1.1 million to 2.5 million and at our Annual Stockholders meeting, held on* June 1, 2023,the Company's2017* Incentive Award Plan was amended to increase the available shares for issuance from 2.5 million to 3.5 million and add an evergreen provision to, on* April 1st and October 1st of each year, automatically increase the maximum number of shares of common stock available under the plan to15%* of the Company's outstanding shares of common stock, if on such date 3,500,000 (as adjusted for any reverse splits) is less than15% of the Company's then-outstanding shares of common stock.

A summary of the activity for the Company's restricted stock was as follows:

The non-vested restricted shares outstanding as of* June 30, 2024*, will vest over the nextone tofour years.

Share-based compensation expense was approximately $0.3 million and $0.9 million for thethree andsix months ended* June 30, 2024*, respectively. Share-based compensation expense was approximately $0.3 million and $0.5 million for thethree andsix months ended* June 30, 2023*, respectively. As of* June 30, 2024**,* future unrecognized stock compensation related to unvested shares totaled approximately $1.9 million.

13. SEGMENTS

The Company's reportable segments consist ofthree types of real estate properties for which the Company's decision-makers internally evaluate operating performance and financial results: Office/Industrial Properties, Model Home Properties and Retail Properties. The Company also has certain corporate-level activities, including accounting, finance, legal administration, and management information systems which arenot considered separate operating segments. There isno material inter-segment activity.

The Company evaluates the performance of its segments based upon net operating income ("NOI"), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt) excluding interest expense. NOI excludes certain items that arenot considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company's real estate investments and to make decisions about resource allocations.

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The following tables compare the Company's segment activity to its results of operations and financial position as of and for thethree andsix months ended* June 30, 2024*, and* June 30, 2023*:

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14. INCOME TAX PROVISION

We have elected to be taxed as a REIT under the Internal Revenue Code of1986, as amended, commencing with the taxable year ended* December 31, 2000.As a REIT, U.S. federal income tax law generally requires us to distribute annually at least90%* of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than100% of our net taxable income. We are also subject to U.S. federal, state and local income taxes on our domestic taxable REIT subsidiaries ("TRS") based on the tax jurisdictions in which they operate.

During thesix months ended* June 30, 2024and2023*, we recorded a current income tax provision of $160,586 and $497,527 related to activities of our taxable REIT subsidiaries. There was a $346,762 income tax asset related to the operating activities of our TRS entities as of* June 30, 2024* and* December 31, 2023*, as of each date respectively.

We have calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the projected full fiscal year to the TRS pretax income or loss excluding unusual or infrequently occurring discrete items for the reporting period, and have accounted for the REIT's minimum state income taxes as a discrete item in the reporting period.

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In* December 2023,the FASB issued ASU2023*-09 "Improvements to Income Tax Disclosures" ("ASU2023-09"). ASU2023-09 intends to improve the transparency of income tax disclosures. ASU2023-09 is effective for fiscal years beginning after* December 15, 2024and is to be adopted on a prospective basis with the option to apply retrospectively. We are currently assessing the impact of this guidance, however, we donot* expect a material impact to our condensed consolidated financial statements.

15. RELATED PARTY

During thethree andsix months ended* June 30, 2024and June 30, 2023,the Company leased portions of its corporate headquarters to Puppy Toes, Inc., a company owned by the Chief Executive Officer and his wife, and to Centurion Counsel, Inc., which is owned by Puppy Toes, Inc. Rent billed to these entities from the Company totaled $2,688 and $5,376 for thethree* andsix months ended* June 30, 2024*, respectively. During thethree andsix months ended* June 30, 2023*, rent billed to these entities from the Company totaled $2,688 and $5,376, respectively. This is included in the rent paid by the Company to Genesis Plaza.

Additionally, we receive full payroll reimbursement for employee services provided to Centurion Counsel and Puppy Toes, Inc. during thethree andsix months ended* June 30, 2024*, which totaled approximately $39,799 and $75,715, respectively. During thethree andsix months ended* June 30, 2023*, full payroll reimbursement for these services totaled approximately $37,045 and $77,349, respectively. These reimbursements were at cost and werenot marked up or discounted. As of* June 30, 2024* and* December 31, 2023*, we had reimbursement receivable balances of approximately $39,799 and $52,879, which were paid in full during* July 2024and January 2024,*respectively.

16. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date the financial statements were issued. Based upon this review, except as disclosed below, the Company didnot identify any subsequent events that would have required adjustment or disclosure in the financial statements other than disclosed below.

The loan on the Dakota Center matured on* July 6, 2024.Management has been in negotiations with the special servicer of the loan in modifying and/or extending the loan or possibly selling the building. As of August 12, 2024,the Company and the lender havenot* yet agreed to the final outcome. The lender is expected to visit the property at the end of* August.*

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