Liability for Estimated Costs in Excess of Receipts during Liquidation

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. The Company currently estimates that it will incur costs in excess of estimated receipts during the liquidation period, excluding the net proceeds from the real estate sales. These amounts can vary significantly due to, among other things, land development costs, the timing and estimates for executing and renewing leases, capital expenditures to maintain the real estate at its current fair value and estimates of tenant improvement costs, the timing of property sales and any direct/indirect costs incurred that are related to the sales (e.g., retention bonuses on the sale of the Cortlandt Manor and Flowerfield properties, costs to address buy side due diligence inclusive of administrative fees, legal fees and property costs to address items arising from such due diligence and not previously known), the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to be paid during the liquidation period.

As of December 31, 2015, the Company accrued the following revenues and expenses expected to be earned or incurred during liquidation which is expected to be completed during 2018:

	Amount
Rents and reimbursements	$	6,440,325
Property operating expenses		(3,596,704	)
Capital expenditures excluding land development costs and land purchases		(612,704	)
Land development costs		(3,154,490	)
Corporate expenditures (1)		(7,778,675	)
Estimated real estate selling costs		(2,817,000	)
Retention bonus payments to Directors		(1,263,730	)
Retention bonus payments to executives and other employees		(680,470	)
Less prepaid expenses and other assets		443,108
Liability for estimated costs in excess of estimated receipts during liquidation	$	(13,020,340	)

(1)

Includes all general and administrative fees, litigation settlement, director and officer liability and reimbursement post liquidation insurance tail coverage policy and final liquidation costs.

The change in the liability for estimated costs in excess of estimated receipts during liquidation from January 1, 2016 through September 30, 2016 is as follows:

	January 1, 2016			Expenditures/ (Receipts)			Remeasurement of Assets and Liabilities			September 30, 2016
Assets:
Estimated rents and reimbursements	$	6,440,325		$	(2,874,829	)	$	102,313		$	3,667,809
Liabilities:
Property operating costs		(3,596,704	)		1,487,488			(30,310	)		(2,139,526	)
Capital expenditures excluding land development costs and land purchases		(612,704	)		320,286			(100,000	)		(392,418	)
Land development costs		(3,154,490	)		770,245			-			(2,384,245	)
Corporate expenditures		(7,778,675	)		2,467,330			(450,580	)		(5,761,925	)
Selling costs on real estate assets		(2,817,000	)		979,204			103,196			(1,734,600	)
Retention bonus payments to Directors (a)		(1,263,730	)		762,351			348,316			(153,063	)
Retention bonus payments to Executives and other employees (a)		(680,470	)		410,497			187,555			(82,418	)
Less prepaid expenses and other assets		443,108			(15,271	)		-			427,837
Liability for estimated costs in excess of estimated receipts during liquidation	$	(13,020,340	)	$	4,307,301		$	160,490		$	(8,552,549	)

(a)

The value of the real estate reported in the Statement of Net Assets as of September 30, 2016 does not include the appreciation that may result from the estimated land development costs. As a result, fair value as reported does not exceed the adjusted appraised value under the Retention Bonus Plan (the appraisal of the real estate in late 2013 plus the estimated development costs) and accordingly the Company has not included any retention bonuses on the sale of the Cortlandt Manor or Flowerfield Properties in the estimated costs in excess of receipt. However, if the Company concludes in future periodic filings that the value of the real estate exceeds the minimum value required to pay bonuses under the retention bonus plan (whether due to appreciation of the underlying real estate and/or a reduction in estimated land development costs), then the Company will report the updated estimated real estate value and the estimated bonuses related to the value of the Cortlandt Manor and/or Flowerfield Properties in accordance with the provisions of the retention bonus plan.