Gyrodyne, LLC

The following risk factor disclosure supplements the discussion of our risk factors previously disclosed in our last Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The risk factors disclosed in our last Annual Report on Form 10-K and the risk factors below could materially and adversely affect our business, financial condition and results of operations, and our business also could be impacted by other risk factors that are not presently known to us or that we currently consider to be immaterial. Further, our disclosure of a risk should not be interpreted to imply that the risk has not already developed or materialized.

We have entered into an agreement to sell a significant portion of our Flowerfield property, but the transaction is contingent on receiving subdivision and site plan approval, which may take years or may not be obtained at all. In the meantime, we expect to continue to incur operating losses and have limited cash runway.

As part of our strategic plan to position our remaining real estate assets to maximize value, sell those assets at their highest achievable prices, distribute the net proceeds to shareholders and ultimately dissolve the company, we have entered into an agreement to sell approximately 49 undeveloped acres of our Flowerfield property to B2K Smithtown LLC (“B2K”), an affiliate of B2K Development LLC. The closing of the sale is contingent upon receipt of all required governmental approvals, including final subdivision and site plan approvals. The process for securing these approvals is subject to a variety of risks outside our control, and may take years, if achieved at all.

In the interim, we expect to continue incurring operating losses. We currently have available cash resources sufficient to fund operations for approximately 18 months absent the sale of any other real estate assets which we are currently pursuing. The Company will entertain a wide range of options to meet its capital needs through the completion of the liquidation. These risks could materially and adversely affect the value of our shares and the timing and amount of any potential liquidation distribution.

We are subject to risks associated with proxy contests and other actions of activist shareholders.

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

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

Pursuant to the Star Agreement, Star Equity agreed to irrevocably withdraw its June 4, 2025 notice of intent to nominate two candidates for election to the Company’s Board of Directors (the “Board”) at the Annual Meeting. The Star Agreement obligates Star Equity to vote all Gyrodyne shares it owns in accordance with the Board’s recommendations including on the election of directors prior to the Termination Date (as defined below), except that Star Equity will be permitted to vote (i) in its discretion on any proposal regarding certain extraordinary transactions, and (ii) in accordance with the recommendation of Institutional Shareholder Services to the extent the recommendation differs from the Board’s recommendation on any matter presented to the shareholders at a special meeting of shareholders following the Annual Meeting. Star Equity’s obligations will continue until December 31, 2026, or December 31, 2027 if the Board re-nominates both Nader G.M. Salour and Jan H. Loeb for election at the Company’s 2026 annual meeting and both Messrs. Salour and Loeb agree to such re-nomination (the “Termination Date”).

The Star Agreement also prevents Star Equity until the Termination Date from, among other things, (i) nominating any person for election or submitting any shareholder proposal for consideration at any meeting of shareholders of the Company at which directors are to be elected, (ii) soliciting proxies or (iii) taking actions to change or influence the Board, management or the direction of certain Company matters. Until the Termination Date, the Company and Star Equity have also agreed not to disparage each other.

Under the Star Agreement, the Company agreed to nominate only one Board member at the 2025 Annual Meeting, Richard Smith, for election for an additional three-year term and to reduce the size of the board from, five to four directors. If any of Jan H. Loeb, Nader G.M. Salour, Richard B. Smith or Ronald J. Macklin (each, a “Continuing Director”) resigns or ceases to be a director due to death or disability, then the Board and Star Equity will engage in good faith discussions to identify a mutually acceptable independent (as defined under Nasdaq listing rules) replacement director (the “Replacement Director”), and if they cannot agree the size of the Board will be reduced to three directors. In such event, if a remaining Continuing Director subsequently resigns or ceases to be a director due to death or disability, then the Board may not make an additional appointment until the Board and Star Equity identify a mutually acceptable Replacement Director.

Previously, in 2023, Star Equity purported to deliver a notice of intent to nominate a slate of two candidates for election (the “Nomination Notice”) as directors at the 2023 annual meeting of shareholders (the “2023 Annual Meeting”). Star Equity then submitted a shareholder proposal to the Company pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Shareholder Proposal”).

On September 5, 2023, the Company entered into a letter agreement (“Cooperation Agreement”) with Star Equity, pursuant to which Star Equity agreed to irrevocably withdraw both the Nomination Notice and the Shareholder Proposal. Through December 31, 2024, the cumulative cost to the Company of responding to and resolving the foregoing shareholder activist campaign, including changes to our incentive compensation arrangements, was approximately $950,000.

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