6. Statement of Net Assets in Liquidation:

Following the Merger, effective September 1, 2015, the Company reports its financial results on the statement of net assets in liquidation and the statement of changes in net assets in liquidation, both of which track the Company’s estimated remaining liquidating distributions. Net assets in liquidation at September 30, 2016 would result in liquidating distributions of approximately $18.89 per common share.

The cash balance at the end of the liquidation period (currently estimated to be December 31, 2018, although the estimated completion of the liquidation period remains subject to change as we execute on our land development efforts), excluding any interim distributions, is estimated based on the September 30, 2016 combined cash balance and marketable securities of $8.7 million plus adjustments for the following items which are estimated through December 31, 2018:

Adjustments for the estimated cash receipts from the operation of the properties net of rental property related expenditures as well as costs expected to be incurred to maintain the fair value of the property at its estimated gross sales proceeds.

Proceeds from the sale of all its real estate holdings.

The net cash used to settle the working capital accounts.

The general and administrative expenses and or liabilities associated with operations and the liquidation of the Company have been included, including severance, director and officer liability inclusive of post liquidation tail policy coverage, and financial and legal fees to complete the liquidation.

In addition, the Company is incurring land development costs to determine the highest and best use for the Flowerfield and Cortlandt Manor properties.

Based on the terms of the Retention Bonus Plan (see Note 13), the Company has included estimated amounts based on the fair value of the remaining four buildings it owns in the Port Jefferson Professional Park. The fair value of the Flowerfield and Cortlandt Manor properties do not exceed the adjusted appraisals (adjusted appraisals are defined under the bonus plan as the appraisals dated November 2013 plus the estimated land development costs incurred since such appraisal), therefore, the Company has not included any bonuses on the sale of these properties. The change of zone and entitlements for such properties are under the control of the town for each related property therefore under GAAP, the potential increase in the real estate fair value from the land development effort cannot be included in the Statement of Net Assets. The value of such amounts cannot be included in the Statement of Net Assets until the Company concludes that the change of zone and the specific detailed entitlements are or will be granted.

In the initial adoption of the liquidation basis of accounting, the consolidated statement of changes in net assets in liquidation contained fair value adjustments to the August 31, 2015 going concern equity to arrive at the liquidating value.

The Company estimates the fair value of its real estate assets by using income and market valuation techniques. The Company may estimate fair values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level 3 inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows may include contractual rental revenues, projected future rental revenues and expenses and forecasted tenant improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent the Company under estimates forecasted cash outflows (tenant improvements, lease commissions and operating costs) or over estimates forecasted cash inflows (rental revenue rates), the estimated fair value of its real estate assets could be overstated.

The Company is considering various options to maximize total distributions to our shareholders during the liquidation process. The Company estimates that it will have incurred approximately $3.15 million (included in the statement of net assets as part of the estimated liquidation and operating costs net of receipts, see Footnote 7) in land development costs over calendar years 2016 and 2017, inclusively, in an effort to obtain entitlements, inclusive of zone changes and special permits that it believes will result in a higher internal rate of return through the improvement of values in the Flowerfield and Cortlandt Manor properties. During the nine months ended September 30, 2016, the Company incurred approximately $770

,000 of the estimated $3.15 million inclusive of a land purchase and closing costs of approximately $210,000. The Company believes the remaining balance of $2,380,000 will be incurred from October 2016 through the end of liquidation. The Company does not intend to develop the properties but rather to commit resources to position the properties for sale in a timely manner with all entitlements necessary to achieve maximum pre-construction values. The costs and time frame to achieve the entitlements could change due to a range of factors including a shift in the value of certain entitlements making it more profitable to pursue a different mix of zones/entitlements and that the dynamics of the real estate market. As a result, the Company has focused and will continue to focus its land development efforts on achieving the highest and best use. During the process of pursuing such entitlements, the Company may entertain offers from potential buyers who may be willing to pay premiums for the properties that the Company finds more acceptable from a timing or value perspective than completing the entitlement processes itself.

The net assets in liquidation at September 30, 2016 ($28,008,395) would result in estimated liquidating distributions of approximately $18.89 per common share (1,482,680 shares outstanding), based on estimates and other indications of sales value but excluding any actual additional sales proceeds that may result directly or indirectly from the $3.15 million in land development costs. Neither the additional value that may be derived from the land development costs, nor the retention bonuses for the sale of the Flowerfield and Cortlandt Manor properties are included in the estimated liquidating distributions as of September 30, 2016. The Company believes there will be a higher internal rate of return resulting from the land development costs that will enhance estimated distributions per share through the improved values from the sales of the Flowerfield and Cortlandt Manor properties. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the plan of liquidation. There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, improved values of the Cortlandt Manor and/or Flowerfield properties resulting from the land development efforts net of any bonuses if such values exceed the minimum values required to pay bonuses under the retention bonus plan, favorable or unfavorable changes in the land development costs, the performance of the underlying assets, the market for commercial real estate properties generally and any changes in the underlying assumptions of the projected cash flows.