Medalist Diversified REIT Inc

Previous wording

concentration in Virginia, North Carolina, South Carolina, Georgia, Florida and Alabama. We may also pursue, in an opportunistic manner, other real estate-related investments, including, among other things, equity or other ownership interests in entities that are the direct or indirect owners of real property, and indirect investments in real property, such as those that may be obtained in a joint venture. While these types of investments are not intended to be a primary focus, we may make such investments in our discretion. On October 6, 2023, we announced our plans to start evaluating options to create stand-alone, single tenant net lease assets from our existing portfolio and to explore the acquisition of single tenant net lease assets outside of our existing portfolio. On February 15, 2024, we announced that our company had entered into an agreement with a related party to acquire a single tenant net lease asset referred to as the Citibank Property (see Note 11 to the notes to our consolidated financial statements.) We continue to evaluate these options and plan to continue to provide updates when appropriate.

Current wording

Our company was formed to acquire, reposition, renovate, lease and manage income-producing properties. Our current primary focus is on (i) managing our legacy portfolio consisting of retail and flex-industrial properties in secondary and tertiary markets in Virginia, North Carolina, and South Carolina, and (ii) managing and expanding our STNL property portfolio in geographic markets across the United States. We may also pursue, in an opportunistic manner, other real estate-related investments, including, among other things, equity or other ownership interests in entities that are the direct or indirect owners of real property, and indirect investments in real property, such as those that may be obtained in a joint venture. While these types of investments are not intended to be a primary focus, we may make such investments in our discretion.

Previous wording

As of December 31, 2023, our company owned and operated eight investment properties, the Shops at Franklin Square (the “Franklin Square Property”), a 134,239 square foot retail property located in Gastonia, North Carolina, the Hanover North Shopping Center (the “Hanover Square Property”), a 73,440 square foot retail property located in Mechanicsville, Virginia, the Ashley Plaza Shopping Center (the “Ashley Plaza Property”), a 164,012 square foot retail property located in Goldsboro, North Carolina, Brookfield Center (the “Brookfield Center Property”), a 64,880 square foot mixed-use industrial/office property located in Greenville, South Carolina, the Lancer Center, a 181,590 square foot retail property located in Lancaster, South Carolina (the “Lancer Center Property”), the Greenbrier Business Center (the “Greenbrier Business Center Property”), an 89,280 square foot mixed-use industrial/office property located in Chesapeake, Virginia, Parkway 3 & 4 (the “Parkway Property”), a 64,109 square foot mixed-use industrial office property located in Virginia Beach, Virginia, and the Salisbury Marketplace Shopping Center, a 79,732 square foot retail property located in Salisbury, North Carolina (the “Salisbury Marketplace Property”). As of December 31, 2023, we owned 84% of the Hanover Square Property as a tenant in common with a noncontrolling owner which owned the remaining 16% interest and 82% of the Parkway Property as a tenant in common with a noncontrolling owner which owns the remaining 18% interest.

Current wording

As of December 31, 2024, we owned four retail properties, three flex properties and three STNL properties. As of December 31, 2024, our retail center properties consisted of (i) the Shops at Franklin Square, a 134,239 square foot retail property located in Gastonia, North Carolina (the “Franklin Square Property”), (ii) the Ashley Plaza Shopping Center, a 156,012 square foot retail property located in Goldsboro, North Carolina (the “Ashley Plaza Property”), (iii) the Lancer Center, a 181,590 square foot retail

Previous wording

For all periods prior to July 18, 2023, our company was externally managed by the Manager. On July 18, 2023, our company entered into a termination agreement with the Manager and William R. Elliott and Thomas E. Messier (the “Termination Agreement”) which provided for the immediate termination ofthe Management Agreement. Until the termination of the Management Agreement, the Manager made all investment decisions for our company. The Manager oversaw our company’s overall business and affairs and had broad discretion to make operating decisions on behalf of our company and to make investment decisions. Since the termination of the Management Agreement, our company has been managed internally as directed by our company’s Board of Directors (the “Board”). Our company’s stockholders are not involved in its day-to-day affairs.

Current wording

For all periods prior to July 18, 2023, our company was externally managed by the Manager. On July 18, 2023, our company entered into a termination agreement with the Manager and William R. Elliott and Thomas E. Messier (the “Termination Agreement”), which provided for the immediate termination of the Management Agreement. Until the termination of the Management Agreement, the Manager made all investment decisions for our company. The Manager oversaw our company’s overall business and affairs and had broad discretion to make operating decisions on behalf of our company and to make investment decisions. Since the termination of the Management Agreement, and for the full year ended December 31, 2024, our company has been managed internally as directed by the Board. Our company’s stockholders are not involved in its day-to-day affairs.

Previous wording

We establish operating segments at the property level and aggregate individual properties into reportable segments based on product types in which we have investments. As of December 31, 2023, our reportable segments were retail center properties and flex center properties. Although we sold our interest in the Clemson Best Western Hotel Property on September 29, 2022, we include hotel properties as a third reportable segment for the year ended December 31, 2022.

Current wording

We establish operating segments at the property level and aggregate individual properties into reportable segments based on product types in which we have investments. As of December 31, 2024, our reportable segments were retail center properties, flex center properties and STNL properties.

Previous wording

On May 3, 2023, our company completed a reverse stock split of its Common Shares, and a corresponding adjustment to the outstanding common units of the Operating Partnership, at a ratio of 1-for-8 (the “Reverse Stock Split”). The Reverse Stock Split took effect at 5:00 p.m. Eastern Time on May 3, 2023 (the “Effective Time”) and automatically converted every eight Common Shares outstanding at that time into one Common Share. The Reverse Stock Split was intended to help our company regain compliance with Nasdaq’s Minimum Bid Price Requirement. On May 18, 2023, our company received written notice from the Nasdaq Stock Market, LLC stating that the Company had regained compliance with the Minimum Bid Price Requirement for continued listing on the Nasdaq Capital Market (“Nasdaq”) because our company’s Common Shares had a closing bid price of at least $1.00 per share for ten consecutive business days. Accordingly, Nasdaq’s Listing Qualifications Staff considers the matter closed.

Current wording

On July 2, 2024, our company completed a reverse stock split of its Common Shares, and a corresponding adjustment to the outstanding common units of the Operating Partnership, at a ratio of 1-for-10 (the “Reverse Stock Split”). The Reverse Stock Split took effect at 5:00 p.m. Eastern Time on July 2, 2024 (the “Effective Time”) and automatically converted every ten Common Shares outstanding at that time into one Common Share. The Reverse Stock Split was intended to lower certain recordkeeping and compliance costs by reducing the number of stockholders who held less than 10 shares and to enable our company’s small stockholders (those holding fewer than 10 Common Shares) to liquidate their holdings in the company’s Common Shares without incurring brokerage commissions. On July 3, 2024, immediately following the Reverse Stock Split, our company completed a forward stock split of our Common Shares at a ratio of 5-for-1 (the “Forward Stock Split”). The Forward Stock Split took effect at 5:01 pm Eastern Time on July 2, 2024 and automatically converted every Common Share outstanding at the time into five Common Shares. The Forward Stock Split was intended to help our company maintain compliance with Nasdaq Listing Rule 5550(a)(4) (the “Publicly Held Shares Requirement”). Collectively, the Reverse Stock Split and the Forward Stock Split are referenced herein as the “2024 Stock Splits.”

Previous wording

On June 13, 2022, our company, through its wholly owned subsidiaries, entered into a loan agreement with Wells Fargo Bank for a $1,500,000 line of credit (the “Wells Fargo Line of Credit”). As of December 31, 2023 and 2022, the Wells Fargo Line of Credit had an outstanding balance of $1,000,000 and $0, respectively. Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25% above daily SOFR. As of December 31, 2023 and 2022, SOFR was 5.35% and 4.3%, respectively. The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by our company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property. On May 2, 2023, our company and Wells Fargo Bank entered into the First Amendment to Revolving Line of Credit Note which extended the maturity date of the Wells Fargo Line of Credit to June 9, 2024. Our company is currently in discussions with Wells Fargo to extend the maturity date of the Wells Fargo Line of Credit, but there can be no assurance that we will be successful. We plan to continue to use the Wells Fargo Line of Credit for general working capital needs and to help fund future acquisitions.

Current wording

On June 13, 2022, our company, through its wholly-owned subsidiaries, entered into a loan agreement with Wells Fargo Bank, National Association for a $1,500,000 line of credit (the “Original Wells Fargo Line of Credit”). On May 2, 2023, our company and Wells Fargo Bank, National Association entered into the First Amendment to the Revolving Line of Credit Note which extended the maturity date of the Original Wells Fargo Line of Credit to June 9, 2024. On June 5, 2024, our company and Wells Fargo Bank, National Association entered into the Second Amendment to the Revolving Line of Credit Note which further extended the maturity date of the Original Wells Fargo Line of Credit to October 7, 2024. As of December 31, 2024 and December 31, 2023, the Original Wells Fargo Line of Credit had an outstanding balance of $0 and $1,000,000, respectively. Outstanding balances on the Original Wells Fargo Line of Credit bore interest at a floating rate of 2.25% above daily SOFR. As of December 31, 2024 and December 31, 2023, SOFR was 4.33% and 5.35%, respectively. The Original Wells Fargo Line of Credit was secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property, was unconditionally guaranteed by our company, and any outstanding balances would have been due on the October 7, 2024 maturity date.

Previous wording

On November 22, 2022, the Compensation Committee approved a grant of 9,554 shares of our common stock to two employees of our Manager who also served as directors of our company, a grant of 14,331 shares of our common stock to our company’s three independent directors at the time, a grant of 9,555 shares of our common stock to the chief financial officer of our company, and a grant of 6,370 shares of our common stock to the vice president and senior accountant of our company under the Equity Incentive Plan. The effective date of the grants was November 22, 2022. The shares granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the shares of our common stock vested immediately, the fair value of the grants, or $250,000, was recorded to share based compensation expense on our consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our shares of our common stock on the effective date of the grant.

Current wording

On January 15, 2025, the Compensation Committee approved a grant of 5,195 Common Shares to our company’s five independent directors, a grant of 2,000 Common Shares to the President and CEO of our company, 2,000 Common Shares to the Chief Financial Officer of our company and 2,000 Common Shares to non-executive staff of our company. In addition, our company’s President and CEO and Chief Financial Officer agreed to accept a portion of their 2025 compensation in the form of Common Shares and OP Units. Accordingly, the Compensation Committee authorized the issuance of 14,547 OP Units to our company’s President and CEO and 6,235 Common Shares to our company’s Chief Financial Officer under the Equity Incentive Plan in lieu of a portion of their 2025 cash compensation. The effective date of the grants was January 15, 2025. The Common Shares granted vested immediately and are unrestricted. The OP Units granted vest immediately but are not convertible to Common Shares until January 15, 2026. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares and OP Units vested immediately, the fair value of the grants, or $384,683, was recorded to share based compensation expense on our company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our company’s Common Shares on the effective date of the grant.

Previous wording

On March 2, 2022, the Compensation Committee approved a grant of 7,500 shares of our common stock to two employees of the Manager who also served as directors of our company, a grant of 11,250 shares of our common stock to our company’s three independent directors at the time, and a grant of 7,500 shares of our common stock to the chief financial officer of our company under the Equity Incentive Plan. The effective date of the grants was March 2, 2022. The shares of our common stock granted vested immediately and are unrestricted. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the shares vested immediately, the fair value of the grants, or $233,100, was recorded to share based compensation expense on our consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our shares of our common stock on the effective date of the grant.

Current wording

On January 18, 2024, the Compensation Committee approved a grant of 7,637 Common Shares to our company’s five independent directors and a grant of 1,273 Common Shares to a consultant of our company. In addition, our company’s President and CEO agreed to accept a portion of his 2024 compensation in the form of OP Units. Accordingly, the Compensation Committee authorized the issuance of 19,348 OP Units to our company’s President and CEO under the Equity Incentive Plan. The effective date of the grants was January 18, 2024. The Common Shares granted vested immediately and are unrestricted. The OP Units granted vest immediately but are not convertible to Common Shares until January 18, 2025. However, the Equity Incentive Plan includes other restrictions on the sale of shares issued under the Equity Incentive Plan. Because the Common Shares and OP Units vested immediately, the fair value of the grants, or $277,500, was recorded to share based compensation expense on our company’s condensed consolidated statements of operations on the effective date of the grant. The fair value of the grants was determined by the market price of our company’s Common Shares on the effective date of the grant.

Previous wording

Our company financed its acquisitions of its assets held for sale through mortgages, which as of December 31, 2023 are recorded as mortgages payable, net, associated with assets held for sale, on our consolidated balance sheets, as follows:

Current wording

Our company financed its acquisitions of its assets held for sale through mortgages, which as of December 31, 2023 were recorded as mortgages payable, net, associated with assets held for sale, on our consolidated balance sheets. Our company sold the Hanover Square Shopping Center Property on March 13, 2024 and repaid the mortgage payable.

Previous wording

Principal components of our total revenues for our retail center properties and flex center properties include base rents and tenant reimbursements. We accrue minimum (base) rent on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset or deferred rent liability being recorded on the balance sheet. Certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent) which we recognize when the tenants achieve the specified targets as defined in their lease agreements. We periodically review the valuation of the asset/liability resulting from the straight-line accounting treatment of our leases in light of any changes in lease terms, financial condition or other factors concerning our tenants.

Current wording

Principal components of our total revenues for our retail center properties, flex center properties and STNL revenues include base rents and tenant reimbursements. We accrue minimum (base) rent on a straight-line basis over the terms of the respective leases which results in an unbilled rent asset or deferred rent liability being recorded on the balance sheet. Certain lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent) which we recognize when the tenants achieve the specified targets as defined in their lease agreements. We periodically review the valuation of the asset/liability resulting from the straight-line accounting treatment of our leases in light of any changes in lease terms, financial condition or other factors concerning our tenants.

Previous wording

For our retail center and flex center properties, we record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease. A past due receivable triggers certain events such as notices, fees and other actions per the lease.

Current wording

We record a tenant receivable for amounts due from tenants such as base rents, tenant reimbursements and other charges allowed under the lease terms. We periodically review tenant receivables for collectability and determine the need for an allowance for the uncollectible portion of accrued rents and other accounts receivable based upon customer creditworthiness (including expected recovery of a claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. We consider a receivable past due once it becomes delinquent per the terms of the lease. A past due receivable triggers certain events such as notices, fees and other actions per the lease.

Previous wording

The adoption of ASU 2017-01, as discussed in Note 2, “Summary of Significant Accounting Policies” of the consolidated financial statements included in this report, has impacted our accounting framework for the acquisition of investment properties. Upon acquisition of investment properties, our company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities, including in-place leases, above- and below-market leases, tenant relationships and assumed debt based on evaluation of information and estimates available at that date. Fair values for these assets are not directly observable and estimates are based on comparable market data and other information which is subjective in nature, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.

Current wording

The adoption of Accounting Standards Update (“ASU”) 2017-01,Business Combinations (Topic 805), as discussed in Note 2, “Summary of Significant Accounting Policies” of the consolidated financial statements included in this report, has impacted our accounting framework for the acquisition of investment properties. Upon acquisition of investment properties, our company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities, including in-place leases, above- and below-market leases, tenant relationships and assumed debt based on evaluation of information and estimates available at that date. Fair values for these assets are not directly observable and

Previous wording

We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Code for the year ended December 31, 2017 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on our taxable income if we annually distribute 100% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to regular federal and state corporate income taxes and may not be able to elect to qualify as a REIT for four subsequent taxable years. Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.

Current wording

We are a Maryland corporation that has elected to be treated, for U.S. federal income tax purposes, as a REIT. We elected to be taxed as a REIT under the Code for the year ended December 31, 2017 and have not revoked such election. A REIT is a corporate entity which holds real estate interests and must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to stockholders. As a REIT, we generally will not be subject to corporate level federal income tax on our taxable income if we annually distribute 100% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to regular federal and state corporate income taxes and may not be able to elect to qualify as a REIT for five subsequent taxable years. Our qualification as a REIT requires management to exercise significant judgment and consideration with respect to operational matters and accounting treatment. Therefore, we believe our REIT status is a critical accounting estimate.

Previous wording

Under the accounting guidance related to the presentation of financial statements, our company is required to evaluate, on a quarterly basis, whether or not the entity’s current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the entity to meet its obligations as they come due arising within one year of the date of the issuance of our company’s consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the entity will be able to continue as a going concern. Our company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In applying applicable accounting guidance, management considered our company’s current financial

Current wording

Under the accounting guidance related to the presentation of financial statements, our company is required to evaluate, on a quarterly basis, whether or not the entity’s current financial condition, including its sources of liquidity at the date that the consolidated financial statements are issued, will enable the entity to meet its obligations as they come due arising within one year of the date of the issuance of our company’s consolidated financial statements and to make a determination as to whether or not it is probable, under the application of this accounting guidance, that the entity will be able to continue as a going concern. Our company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In applying applicable accounting guidance, management considered our company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our company’s obligations due over the next twelve months, as well as our company’s recurring business operating expenses.

Previous wording

Internal liquidity to fund operating needs are expected to be provided primarily by the rental receipts from our retail and flex center properties.

Current wording

Internal liquidity to fund operating needs are expected to be provided primarily by the rental receipts from our retail center properties, flex center properties, and STNL properties.

Previous wording

At December 31, 2023, our consolidated cash and restricted cash on hand totaled $3,809,605 compared to consolidated cash on hand of $5,662,853 at December 31, 2022. Cash from operating activities, investing activities and financing activities for the year ended December 31, 2023 are as follows:

Current wording

At December 31, 2024, our consolidated cash and restricted cash on hand totaled $6,072,736 compared to consolidated cash on hand of $3,809,605 at December 31, 2023. Cash from operating activities, investing activities and financing activities for the year ended December 31, 2024 are as follows:

Previous wording

During the year ended December 31, 2023 our cash provided by operating activities was $104,013 compared to cash provided by operating activities of $1,194,626 for the year ended December 31, 2022, a decrease in cash provided by operating activities of $1,090,613.

Current wording

During the year ended December 31, 2024, our cash provided by operating activities was $1,796,137 compared to cash provided by operating activities of $104,013 for the year ended December 31, 2023, an increase in cash provided by operating activities of $1,692,124.

Previous wording

Cash flows from operating activities has two components. The first component consists of net operating loss adjusted for non-cash operating activities. During the year ended December 31, 2023, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $229,141. During the year ended December 31, 2022, operating activities adjusted for non-cash items resulted in net cash provided in operating activities of $1,631,040. The decrease of $1,401,899 in cash flows from operating activities for the year ended December 31, 2023 was a result of management restructuring expenses of $2,066,521, offset by improved net operating income from our investment properties.

Current wording

Cash flows from operating activities has two components. The first component consists of net operating income (loss) adjusted for non-cash operating activities. During the year ended December 31, 2024, operating activities adjusted for non-cash items resulted in net cash provided by operating activities of $2,317,671. During the year ended December 31, 2023, operating activities adjusted for non-cash items resulted in net cash provided in operating activities of $229,141. The increase of $2,088,530 in cash flows from operating activities for the year ended December 31, 2024 was primarily the result of the management restructuring expenses of $2,066,521 incurred during the year ended December 31, 2023 related to the Termination Agreement. No such management restructuring expenses were incurred during the year ended December 31, 2024. Reduced net operating income from our investment properties resulting from the sale of the Hanover Square Property on March 13, 2024 and increased corporate general and administrative expenses were offset by reduced interest expense from the sale of the Hanover Square Property.

Previous wording

The second component consists of changes in assets and liabilities. Increases in assets and decreases in liabilities result in cash used in operations. Decreases in assets and increases in liabilities result in cash provided by operations. During the year ended December 31, 2023, net changes in asset and liability accounts resulted in $125,128 in cash used operations. During the year ended December 31, 2022, net changes in asset and liability accounts resulted in $436,414 in cash used operations. This decrease of $311,286 in cash used in operations resulting from changes in assets and liabilities is a result of decreased changes in accounts payable and accrued liabilities of $6,162, increased changes in other assets of $225,544, decreased changes in unbilled rent of $49,821, offset by increased changes in rent and other receivables, net, of $29,759.

Current wording

The second component consists of changes in assets and liabilities. Increases in assets and decreases in liabilities result in cash used in operations. Decreases in assets and increases in liabilities result in cash provided by operations. During the year ended December 31, 2024, net changes in asset and liability accounts resulted in $521,534 in cash used in operations. During the year ended December 31, 2023, net changes in asset and liability accounts resulted in $125,128 in cash used in operations. This increase of $396,406 in cash used in operations resulting from changes in assets and liabilities is a result of increased changes in rent and other receivables, net, of $124,922, increased changes in other assets of $466,171, partially offset by decreased changes in accounts payable and accrued liabilities of $193,783, and decreased changes in unbilled rent of $904.

Previous wording

The net of (i) the $229,141 increase in cash provided by operations from the first category and (ii) the $125,128 cash used by operations from the second category results in a total increase of cash provided in operations of $104,013 for the year ended December 31, 2023.

Current wording

The net of (i) the $2,317,671 increase in cash provided by operations from the first category and (ii) the $521,534 cash used by operations from the second category results in a total increase of cash provided in operations of $1,796,137 for the year ended December 31, 2024.

Previous wording

During the year ended December 31, 2023, our cash used in investing activities was $1,483,117, compared to cash used in investing activities of $9,319,181 during the year ended December 31, 2022, a decrease in cash used in investing activities of $7,836,064.

Current wording

During the year ended December 31, 2024, our cash provided by investing activities was $2,062,407, compared to cash used in investing activities of $1,483,117 during the year ended December 31, 2023, an increase in cash provided by investing activities of $3,545,524.

Previous wording

During the year ended December 31, 2023, cash used in investing activities consisted of $1,483,117 in capitalized expenditures, including $210,505 in building improvements, $11,323 in site improvements, $432,613 in tenant improvements and $828,676 in leasing commissions. During the year ended December 31, 2022, cash used in investing activities consisted of $10,279,714 used for the acquisition of the Salisbury Marketplace Property, $1,019,304 in capitalized expenditures, including $274,662 in building improvements, $300,332 in capitalized leasing commissions, $253,887 in furniture, fixtures and equipment for the Clemson Best Western Hotel property, $177,373 in capitalized tenant improvements, and $13,050 in site improvements, offset by $1,979,837 in cash received from the disposal of investment properties.

Current wording

During the year ended December 31, 2024, cash provided by investing activities consisted of $3,110,149 in cash received from the disposal of the Hanover Square Shopping Center Property, which was partially offset by cash used in investing activities consisting of $902,397 in capitalized expenditures, including $159,349 in building improvements, $52,212 in site improvements, $316,878 in leasing commissions and $373,958 in tenant improvements, $145,345 for the acquisitions of the Citibank Property and the noncontrolling owner’s interest in the Hanover Square Outparcel. During the year ended December 31, 2023, cash used in investing activities consisted of $1,483,117 in capitalized expenditures, including $210,505 in building improvements, $11,323 in site improvements, $432,613 in tenant improvements and $828,676 in leasing commissions.

Previous wording

The non-cash investing activity for the year ended December 31, 2023, that did not affect our cash provided by investing activities, was the transfer of investment properties, net, to assets held for sale, net of $9,707,154. The non-cash investing activity during the year ended December 31, 2022 was $1,455,777 in restricted cash that was released upon the repayment of the Clemson Best Western Property mortgage payable.

Current wording

The non-cash investing activity for the year ended December 31, 2024, that did not affect our cash provided by investing activities, was the issuance of $2,400,000 of OP Units for the acquisition of the Citibank Property. The non-cash investing activity for

Previous wording

During the year ended December 31, 2023, our cash used by financing activities was $474,144 compared to cash provided by financing activities of $6,403,431 during the year ended December 31, 2022, an increase in cash used by financing activities of $6,877,575. During the year ended December 31, 2023, our cash used by financing activities consisted of $1,085,480 in principal payments for our company’s mortgages, $383,665 in dividends and distributions and $4,999 to retire fractional shares resulting from the reverse stock split, offset by $1,000,000 in proceeds from the line of credit, short term. During the year ended December 31, 2022, financing activities generated $18,477,304 in net proceeds from mortgages payable and $1,538,887 in net proceeds, after issuance costs, from common stock issuances under our SEPA (see above), offset by cash used in financing activities, including dividends and distributions of $1,309,180, mortgage debt principal payments of $11,932,137 (including $10,962,483 of cash used to refinance the Lancer Center, Greenbrier Business Center and Parkway properties and $969,654 in normal, monthly principal payments for our company’s other mortgages), repurchases of our company’s common stock of $286,543, including costs and fees, and $84,900 in lender fees associated with the repayment of the Clemson Best Western Property mortgage payable at the closing of its sale on September 29, 2022.

Current wording

During the year ended December 31, 2024, our cash used by financing activities was $1,595,413 compared to cash used by financing activities of $474,144 during the year ended December 31, 2023, an increase in cash used by financing activities of $1,121,269. During the year ended December 31, 2024, our cash used by financing activities consisted of $958,579 in principal payments for our company’s mortgages, $787,027 in dividends and distributions, $2,705 to retire fractional shares resulting from the reverse stock split, $1,000,000 to repay the line of credit, short term, $93,220 to redeem OP Units, $43,306 in capitalized closing costs for the Wells Fargo Line of Credit renewal and increase, $3,500,000 for the partial redemption of our company’s mandatorily redeemable preferred stock, and $32,467 to repurchase Common Shares, partially offset by $2,851,977 in proceeds from sales of Common Shares and $1,969,914 in proceeds from sales of OP Units. During the year ended December 31, 2023, our cash used by financing activities consisted of $1,085,480 in principal payments for our company’s mortgages, $383,665 in dividends and distributions and $4,999 to retire fractional shares resulting from the reverse stock split, offset by $1,000,000 in proceeds from the line of credit, short term.

Previous wording

Liquidity for general operating needs and our company’s investment properties is generally provided by the rental receipts from our retail properties and flex center properties, and revenues from our hotel properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, our company continually reviews and evaluates its outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.

Current wording

Liquidity for general operating needs and our company’s investment properties is generally provided by the rental receipts from our retail properties, flex center properties and STNL properties, if any. We expect to provide any liquidity for growth (acquisition of new investment properties) by raising additional investment capital. In addition, our company continually reviews and evaluates its outstanding mortgages payable for refinancing opportunities. While some of our mortgages payable are not pre-payable, some mortgages payable may present opportunities for refinancing.

Previous wording

The primary, non-operating liquidity needs of our company are $5,000,000 to retire our mandatorily redeemable preferred stock in February, 2025, $1,000,000 to reduce the balance on our line of credit to $0, $22,994 to pay the dividends and distributions to common shareholders and Operating Partnership Unit holders, and $100,000 to pay the dividends to holders of our mandatorily redeemable preferred stock that were declared on January 10, 2023 and payable February 6, 2024 to holders of record on February 2, 2024, and $1,093,581 in principal payments due on its mortgages payable during the 12-month period from January 1, 2024 through December 31, 2024. In addition to liquidity required to fund these dividends and principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. Our company plans to pay these obligations through a combination of cash on hand, potential dispositions and operating cash.

Current wording

The primary, non-operating liquidity needs of our company are $1,526,140 to redeem the remaining 60,000 shares of our mandatorily redeemable preferred stock on January 10, 2025, pursuant to the redemption notice issued on December 10, 2024, $114,643 to pay the dividends to common stockholders and distributions to OP Unit holders that were declared on January 7, 2024 and payable January 23, 2025 to holders of record on January 20, 2025, and $1,088,084 in principal payments due on its mortgages payable during the 12-month period from January 1, 2025 through December 31, 2025. In addition to liquidity required to fund these dividends and principal payments, we may also incur some level of capital expenditures for our existing properties that cannot be passed on to our tenants. Our company plans to pay these obligations through a combination of cash on hand, potential dispositions and operating cash.

Previous wording

Total revenue was $10,272,826 for the year ended December 31, 2023, consisting of $7,768,174 in revenues from retail center properties and $2,504,652 from flex center properties. Total revenues for the year ended December 31, 2023 decreased by $818,499 over the year ended December 31, 2022, resulting from decreased hotel property revenues from the sale of the Clemson Best Western Property and decreased flex center properties, offset by increased retail center revenues from new leasing activity in our retail center properties and our company’s acquisition of the Salisbury Marketplace properties

Current wording

Total revenue was $9,735,127 for the year ended December 31, 2024, consisting of $6,624,734 in revenues from retail center properties, $2,750,499 from flex center properties and $359,894 from STNL properties. Total revenues for the year ended December 31, 2024 decreased by $537,699 over the year ended December 31, 2023, primarily resulting from reduced revenues from

Previous wording

Revenues from retail center properties were $7,768,174 for the year ended December 31, 2023, an increase of $714,417 over retail center property revenues for the year ended December 31, 2022. Increased revenues of $280,810 from the Franklin Square Property due to new leasing activity, $7,818 from the Ashley Plaza Property, and $446,748 from the ownership of the Salisbury Marketplace Property for the full 12 months ending December 31, 2023 were offset by reduced revenues of $20,773 from the Hanover Square Property due to decreased occupancy and $226 from the Lancer Center Property.

Current wording

Revenues from retail center properties were $6,624,734 for the year ended December 31, 2024, a decrease of $917,180 over revenues from retail center properties for the year ended December 31, 2023. Decreased revenues of $1,047,479 due to the sale of the Hanover Square Property on March 13, 2024 and $58,150 from the Salisbury Marketplace Property due to decreased occupancy during the year ended December 31, 2024, were partially offset by increased revenues of $107,592 from the Franklin Square Property due to new leasing activity, $77,475 from the Lancer Center Property due to new leasing activity and $3,382 from the Ashley Plaza Property due to annual rent escalations.

Previous wording

Revenues from the flex center properties were $2,504,652 for the year ended December 31, 2023, a decrease of $25,267 over revenues from flex center properties for year ended December 31, 2023 due to reduced revenues from the Parkway Property of $52,987 offset by increased revenues from the Greenbrier Business Center Property of $26,402 and the Brookfield Center Property of $1,318.

Current wording

Revenues from the flex center properties were $2,750,499 for the year ended December 31, 2024, an increase of $245,847 over revenues from flex center properties for the year ended December 31, 2023 due to increased revenues from the Parkway Property of $39,914 and increased revenues from the Greenbrier Business Center Property of $169,423, both due to new leasing activity, and increased revenues from the Brookfield Center Property of $36,510 due to increased tenant reimbursements of common area maintenance expenses.

Previous wording

Total operating expenses were $11,269,990 for the year ended December 31, 2023, consisting of $1,932,277 in expenses from retail center properties, $731,522 in expenses from the flex center properties, $1,390,941 in legal, accounting and other professional fees, $484,345 in corporate general and administrative expenses, $2,066,521 in management restructuring expenses, a $90,221 loss on impairment, and $4,574,163 in depreciation and amortization.

Current wording

Total operating expenses were $8,723,519 for the year ended December 31, 2024, consisting of $1,661,808 in expenses from retail center properties, $697,864 in expenses from flex center properties, $31,977 in expenses from STNL properties, $277,500 in share-based compensation, $1,170,270 in legal, accounting and other professional fees, $968,435 in corporate general and administrative expenses, a $182 loss on impairment, and $3,915,483 in depreciation and amortization.

Previous wording

(1)Includes bad debt expense of $0 and $211 for the years ended December 31, 2023 and 2022, respectively.

Current wording

(1)Includes bad debt expense of $16,136 and $0 for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Operating expenses from the flex center properties were $731,522 for the year ended December 31, 2023, an increase of $38,148 over flex center property operating expenses for the year ended December 31, 2022 due to increased operating expenses from the Greenbrier Business Center Property of $72,242,due to increased utilities expense and increased bad debt expense, offset by reduced operating expenses from the Parkway Property of $29,221 and the Brookfield Center Property of $4,873.

Current wording

Operating expenses from the flex center properties were $697,864 for the year ended December 31, 2024, a decrease of $33,658 over flex center property operating expenses for the year ended December 31, 2023 due to decreased operating expenses from the Greenbrier Business Center Property of $18,590, decreased operating expenses from the Parkway Property of $8,782 and decreased operating expenses from the Brookfield Center Property of $6,286, all primarily due to the elimination of asset management fees due to the termination of the Management Agreement on July 18, 2023.

Previous wording

Operating loss for the year ended December 31, 2023 was $997,164, a decrease of $416,462 from the operating loss of $1,413,626 for the year ended December 31, 2022. This decrease was a result of increased investment property operating income of $497,388, decreased share based compensation expenses of $483,100, decreased legal, accounting and other professional fees of $236,940, decreased impairment of assets held for sale of $175,671 related to the Clemson Best Western Property, decreased other operating expenses of $227,164, decreased depreciation and amortization expenses of $132,660, decreased loss on disposition of investment properties of $421,096, and decreased loss on extinguishment of debt of $389,207, offset by increased bad debt expense of $16,350, increased corporate general and administrative expenses of $26,692, increased loss on impairment of $53,551, and increased management restructuring expenses of $2,066,521.

Current wording

Operating income for the year ended December 31, 2024 was $3,731,593, an increase of $4,728,757 from the operating loss of $997,164 for the year ended December 31, 2023. This increase was a result of the gain on the sale of the Hanover Square Property of $2,819,502, decreased bad debt expense of $23,372, decreased legal, accounting and other professional fees of $220,671 due to decreased asset management fees resulting from the termination of the Management Agreement during the year ended December 31, 2023, decreased management restructuring expenses of $2,066,521 resulting from the Termination Agreement and paid during the year ended December 31, 2023, decreased loss on impairment of $90,039, and decreased depreciation and amortization expenses of $658,680 due to the sale of the Hanover Square Shopping Center Property, offset by decreased investment property operating income of $288,921 also primarily due to the sale of the Hanover Square Shopping Center Property, increased corporate general and administrative expenses of $484,090 primarily due to increased compensation and benefit expenses, increased share based compensation expenses of $277,500, increased loss on redemption of mandatorily redeemable preferred stock of $47,680, and increased loss on extinguishment of debt of $51,837.

Previous wording

Interest expense was $3,540,900 and $3,555,088 for the years ended December 31, 2023 and 2022, respectively, as follows:

Current wording

Interest expense was $3,019,799 and $3,540,900 for the years ended December 31, 2024 and 2023, respectively, as follows:

Previous wording

Total interest expense for the year ended December 31, 2023 decreased by $14,188 over the year ended December 31, 2022. This decrease was a result of decreased interest expense from the Ashley Plaza mortgage of $8,289, decreased interest expense of $427,244 from the sale of the Clemson Best Western Property, and decreased interest expense of $3,555 from the Brookfield Center mortgage, offset by increased interest expense for the Hanover Square mortgage of $268,416 due to the rate reset on January 1, 2023, increased interest expense from the Wells Fargo Mortgage Facility, which refinanced the Lancer Center and Greenbrier Business Center mortgages payable, and financed the acquisition of the Salisbury Marketplace (total increase in interest expense of $102,338 for the three properties, combined), increased interest expense of $33,973 for the Wells Fargo Line of Credit, and increased amortization of preferred stock issuance costs of $20,173. Interest expense above includes non-cash amortization of discounts and capitalized issuance costs related to the mandatorily redeemable preferred stock and the convertible debentures. See Note 5 of the accompanying notes to the consolidated financial statements.

Current wording

Total interest expense for the year ended December 31, 2024 decreased by $521,101 over the year ended December 31, 2023. This decrease was a result of decreased interest of $578,356 from the sale of the Hanover Square Shopping Center Property, decreased interest expense from each of the Ashley Plaza mortgage of $7,462, the Brookfield mortgage of $3,185, the Wells Fargo Mortgage Facility of $45,711, all due to amortization of principal, and the amortization and preferred dividends on our company’s mandatorily redeemable preferred stock of $17,598, partially offset by increased interest from the Parkway Mortgage of $107,550 due to the variable interest rate, increased interest from the Franklin Square Mortgage of $1,401, increased interest from the Wells Fargo Line of Credit of $17,700 due to the outstanding balance during parts of the year ended December 31, 2024, and increased other interest of $4,560. Interest expense above includes non-cash amortization of discounts and capitalized issuance costs related to the mandatorily redeemable preferred stock. See Note 5 of the accompanying notes to the consolidated financial statements.

Previous wording

During the year ended December 31, 2023, other income was $49,274, a decrease of $187,226 from other income of $236,500 for the year ended December 31, 2022. Other income for the year ended December 31, 2023 consisted of interest income of $38,308 and lease termination fee income of $10,966. Other income for the year ended December 31, 2022 consisted of $220,881 in income related to the fair value change of the interest rate cap, interest income of $11,706 and miscellaneous income of $3,913.

Current wording

During the year ended December 31, 2024, other income was $88,856, an increase of $39,582 from other income of $49,274 for the year ended December 31, 2023. Other income for the year ended December 31, 2024 consisted of interest income of $54,064 and gain on the extinguishment of lease liability of $34,792. Other income for the year ended December 31, 2023 consisted of interest income of $38,308 and lease termination fee income of $10,966.

Previous wording

During the year ended December 31, 2023, other expense was $84,564, an increase of $84,564 from other expense of $0 for the year ended December 31, 2022. Other expense for the year ended December 31, 2023 consisted of $84,564 in expense related to the fair value change of the interest rate cap.

Current wording

During the year ended December 31, 2024, other expense was $56,325, a decrease of $28,239 from other expense of $84,564 for the year ended December 31,2023. Other expense for the year ended December 31, 2024 consisted of $56,325 in expense related to the fair value change of the interest rate cap. Other expense for the year ended December 31, 2023 consisted of $84,564 in expense related to the fair value change of the interest rate cap.

Previous wording

Net loss was $4,573,354 for the year ended December 31, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to our common shareholders was $4,571,279. Net loss was $4,732,214 for the year ended December 31, 2022, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common shareholders was $4,769,241, for the year ended December 31, 2022.

Current wording

Net income was $744,325 for the year ended December 31, 2024, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders was $27,524. Net loss was $4,573,354 for the year ended December 31, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to our common stockholders was $4,571,279, for the year ended December 31, 2023.

Previous wording

Net loss for the year ended December 31, 2023 decreased by $158,860 over the year ended December 31, 2022, before adjustments for net loss attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net loss attributable to Medalist common shareholders for the year ended December 31, 2023 decreased by $197,962 over the year ended December 31, 2022.

Current wording

Net income for the year ended December 31, 2024 increased by $5,317,679 over the year ended December 31, 2023, before adjustments for net income (loss) attributable to noncontrolling interests. After adjusting for noncontrolling interests, the net income attributable to our common stockholders for the year ended December 31, 2024 increased by $4,598,803 over the year ended December 31, 2023.

Previous wording

We use funds from operations (“FFO”), a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its March 1995 White Paper (as amended in November 1999, April 2002 and December 2018). As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases) and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.

Current wording

We use funds from operations (“FFO”), a non-GAAP measure, as an alternative measure of our operating performance, specifically as it relates to results of operations and liquidity. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its December 2018 White Paper (the “NAREIT White Paper”). As defined in the NAREIT White Paper, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs and above and below market leases) and after adjustments for unconsolidated partnerships and joint ventures. Most industry analysts and equity REITs, including us, consider FFO to be an appropriate supplemental measure of operating performance because, by excluding gains or losses on dispositions and excluding depreciation, FFO is a helpful tool that can assist in the comparison of the operating performance of a company’s real estate between periods, or as compared to different companies. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income alone as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, while historically real estate values have risen or fallen with market conditions. Accordingly, we believe FFO provides a valuable alternative measurement tool to GAAP when presenting our operating results.