(a)

The original mortgage loan for the Franklin Square Property in the amount of $14,275,000 matured on October 6, 2021. Effective on October 6, 2021, the Company entered into a forbearance agreement with the current lender extending the maturity date for thirty days with a right to extend the maturity date for an additional thirty days. On November 8, 2021, the Company closed on a new loan in the principal amount of $13,250,000 with a ten-year term and a maturity date of December 6, 2031. In addition to the funds from the new loan, the Company used $2,242,273 in cash on hand for loan issuance costs (totaling $283,721), to fund escrows and to repay the remaining balance of the original mortgage loan. The Company has guaranteed the payment and performance of the obligations of the new mortgage loan. The new mortgage loan bears interest at a fixed rate of 3.808 percent and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a 30 year amortization schedule. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470. The new mortgage includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of June 30, 2022 and December 31, 2021, the Company believes that it is compliant with these covenants.

(b)

The mortgage loan for the Hanover Square Property bears interest at a fixed rate of 4.25 percent until January 1, 2023, when the interest rate will adjust to a new fixed rate which will be determined by adding 3.00 percentage points to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25 percent. The fixed monthly payment of $56,882 which includes interest at the fixed rate, and principal, based on a 25 year amortization schedule. The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75 percent. As of June 30, 2022 and December 31, 2021, respectively, the Company believes that it is compliant with these covenants.

(c)

The mortgage loan for the Ashley Plaza Property bears interest at a fixed rate of 3.75 percent and was interest only for the first twelve months. Beginning on October 1, 2020, the monthly payment became $52,795 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a 30 year amortization schedule.

(d)

The mortgage loan for the Brookfield Property bears interest at a fixed rate of 3.90 percent and is interest only for the first twelve months. Beginning on November 1, 2020, the monthly payment became $22,876 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a 30 year amortization schedule.

(e)

The mortgage loan for the Parkway Property bears interest at a variable rate based on LIBOR with a minimum rate of 2.25 percent. The interest rate payable is the ICE LIBOR rate plus 225 basis points. As of June 30, 2022 and December 31, 2021, the rate in effect for the Parkway Property mortgage was 3.3117 percent and 2.3493 percent, respectively. The monthly

payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a 30 year amortization schedule.

(f)

On June 13, 2022, the Company entered into a mortgage loan facility with Wells Fargo Bank (the “Wells Fargo Mortgage Facility”) in the principal amount of $18,609,500. The proceeds of this mortgage were used to finance the acquisition of the Salisbury Marketplace Property and to refinance the mortgages payable on the Lancer Center Property and the Greenbrier Business Center Property (see notes (g) and (h), below). The Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50 percent for a five year term. The monthly payment, which includes interest at the fixed rate, and principal, based on a 25 year amortization schedule, is $103,438. The Company has provided an unconditional guaranty of the payment of and performance under the terms of the Wells Fargo Mortgage Facility. The Wells Fargo Mortgage Facility credit agreement includes covenants to maintain a debt service coverage ratio of not less than 1.50 to 1.00 on an annual basis, a minimum debt yield of 9.5 percent on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and the maintenance of liquid assets of not less than $1,500,000. As of June 30, 2022, the Company believes that it is compliant with these covenants.

(g)

On June 13, 2022, the Company refinanced the mortgage loan for the Lancer Center Property, using proceeds from the Wells Fargo Facility discussed above. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the three and six months ended June 30, 2022, recorded a loss on extinguishment of debt of $113,282. The original mortgage loan for the Lancer Center Property bore interest at a fixed rate of 4.00 percent. The monthly payment was $34,667 which included interest at the fixed rate and principal, based on a twenty-five year amortization schedule.

(h)

On June 13, 2022, the Company refinanced the mortgage loan for the Greenbrier Business Center Property, using proceeds from the Wells Fargo Facility discussed above. The Company accounted for this refinancing transaction under debt extinguishment accounting in accordance with ASC 470, and for the three and six months ended June 30, 2022, recorded a loss on extinguishment of debt of $56,393. The Company assumed the original mortgage loan for the Greenbrier Business Center Property from the seller. The original mortgage loan bore interest at a fixed rate of 4.00 percent and would have been interest only until August 1, 2022, at which time the monthly payment would have become $23,873, which would have included interest at the fixed rate, and principal, based on a twenty-five year amortization schedule.

Mortgages payable, net, associated with assets held for sale

The Company’s mortgages payables, net, associated with assets held for sale, consists of the following:

Balance

June 30,

Monthly

Interest

2022

December 31,

Property

Payment

Rate

Maturity

(unaudited)

2021

Clemson Best Western (b)

Interest only

Variable

October 2022

7,750,000

Unamortized issuance costs, net

(134,632)

Total mortgages payable, net, associated with assets held for sale

7,615,368

(a)

As of March 31, 2021, the Company reclassified the mortgage loan for the Clemson Best Western Property to mortgages payable, net, associated with assets held for sale. The mortgage loan for the Clemson Best Western Property bears interest at a variable rate based on LIBOR with a minimum rate of 7.15 percent. The interest rate payable is the USD LIBOR one-month rate plus 4.9 percent. As of June 30, 2022 and December 31, 2021, respectively, the rate in effect for the Clemson Best Western Property mortgage was 7.15 percent. The mortgage payable on the Clemson Best Western Property matures on October 6, 2022. The Company has an option to extend the term of the mortgage by one year, until October 6, 2023, under certain conditions which the Clemson Best Western Property may not meet. If the Company has not been successful in its efforts to sell the Clemson Best Western Property by the loan maturity date, the Company plans to refinance the mortgage. While the Company believes the fair value of the Clemson Best Western Property exceeds the outstanding balance of the mortgage payable, there is no guarantee that the Company will be successful in refinancing the mortgage.

Wells Fargo Line of Credit

On June 13, 2022, the 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”). During the three and six months ending June 30, 2022, the Company did not make any draws or repayments on the Wells Fargo Line of Credit. As of June 30, 2022, the Wells Fargo Line of Credit had an outstanding balance of $0. Outstanding balances on the Wells Fargo Line of Credit will bear interest at a floating rate of 2.25 percent above the daily secured overnight financing rate (“SOFR”). The Wells Fargo Line of Credit has a one-year, renewable term, is unconditionally guaranteed by the Company, and any outstanding balances are secured by the Lancer Center Property, the Greenbrier Business Center Property and the Salisbury Marketplace Property.

Convertible Debentures

On October 27, 2020, the Company entered into a definitive agreement with a financing entity to issue and sell convertible debentures in an aggregate principal amount of up to $5 million pursuant to a private offering exempt from registration under the Securities Act of 1933, as amended. The debentures were issued at a 5 percent discount to the principal amount, accrue interest at a rate of 5 percent per annum (payable at conversion or maturity), and were closed in three separate tranches as follows: (i) convertible debenture of $1.5 million issued and sold on October 27, 2020 upon the signing of the definitive agreement, (ii) convertible debenture of $2.0 million issued and sold on December 22, 2020 upon the filing of a registration statement with the U.S. Securities and Exchange Commission (“SEC”) relating to the shares of common stock that may be issued upon the conversion of the convertible debentures, and (iii) convertible debenture of $1.5 million issued and sold on January 5, 2021, the date the registration statement was declared effective by the SEC. The second and third closings of the convertible debentures were subject to the Company successfully obtaining approval from its common stockholders for the issuance of shares of common stock that may be issued upon the conversion of the convertible debentures. Net proceeds from the issuance and sale of the convertible debentures totaled $4,231,483.


							Debt
			Principal				Issuance		Net Cash
Tranche	Closing Date		Amount		Discount		Costs – Cash		Proceeds
Tranche 1		October 27, 2020	$	1,500,000	$	(75,000)	$	(155,555)	$	1,269,445
Tranche 2		December 22, 2020		2,000,000		(100,000)		(207,407)		1,692,593
Tranche 3		January 5, 2021		1,500,000		(75,000)		(155,555)		1,269,445
Total			$	5,000,000	$	(250,000)	$	(518,517)	$	4,231,483

The 5 percent issue discount totaled $250,000 and was amortized over the one-year term of the debentures using the effective interest method. The Company also paid a total of $518,517 in issuance costs, including legal, accounting, other professional fees, and underwriting discounts. In addition to the closing costs paid in cash, the Company paid $123,000 in debt issuance costs in common shares of the Company. These issuance costs were recorded as deferred debt issuance costs on the accompanying condensed consolidated balance sheets as a direct deduction from the carrying amount of the convertible debentures and were amortized over the one-year term of the debentures using the effective interest method.

Based on the terms and relevant conversion details, the debt component and embedded conversion option of the debentures are not bifurcated for accounting purposes under ASC 815, Derivative Instruments and Hedging Activities. Because the variable conversion price of the debentures was lower than the market price of the Company’s common stock at the commitment date, the debentures have a beneficial conversion feature as outlined in ASC 470, Debt. The intrinsic value of the beneficial conversion feature totaled $946,840 and was recorded as an increase in additional paid-in capital and a corresponding incremental discount on the carrying value of the debentures.

Each tranche of the convertible debentures had a maturity date one year from its closing date. At its option, the holder at any time may elect to convert any portion of the principal and accrued interest into shares of the Company’s common stock. Conversions into common stock occur at the lower of (1) a fixed conversion price of $2.47, or (2) a variable conversion price equal to 88 percent of the volume-weighted average price of the Company’s common shares for the ten consecutive trading days preceding the conversion date, except that the conversion price cannot be lower than $0.6175. Based on securities and stock exchange regulations, the agreement limits the percentage of the Company’s common shares that may be held at any time by the debenture holder, which effectively limits the amount of principal and interest that the debenture holder may convert without disposing of shares received in earlier conversions. The agreement includes customary representations and warranties, as well as provisions for conversion price adjustments that prevent dilution of the holder’s conversion shares in the event the Company issues additional shares of its common stock prior to the maturity or full conversion of the debentures. At its option, the Company may redeem all or any portion of the outstanding principal and accrued interest prior to the maturity date at a 15% premium to the principal amount, provided that the trading price of its common stock at that time is less than the $2.47 fixed conversion price and it provides the holder with ten business days’ written notice to allow the holder the opportunity to elect conversion of the debentures prior to the redemption.

Between January 6, 2021 and May 11, 2021, the convertible debenture holder completed the full conversion of the total $5,000,000 principal balance of the convertible debentures and $58,788 in accrued interest, to the Company’s common shares, receiving 3,181,916 common shares in a series of 17 conversions at an average conversion price of $1.59 per common share.

Interest expense

Interest expense, including amortization of capitalized issuance costs consists of the following:


	For the three months ended June 30, 2022
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	127,542	$	7,093	$	—	$	134,635
Hanover Square mortgage		106,564		3,222		—		109,786
Hampton Inn mortgage		—		—		—		—
Ashley Plaza mortgage		104,793		4,357		—		109,150
Clemson Best Western mortgage		140,071		—		180		140,251
Brookfield Center mortgage		46,548		2,837		—		49,385
Lancer Center mortgage		51,433		4,772		—		56,205
Greenbrier Business Center mortgage		36,459		462		—		36,921
Parkway Center mortgage		38,092		2,756		—		40,848
Wells Fargo Mortgage Facility		41,871		—		—		41,871
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		55,104		100,000		155,104
Total interest expense	$	693,373	$	80,603	$	100,180	$	874,156


	For the three months ended June 30, 2021
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	169,594	$	2,322	$	—	$	171,916
Hanover Square mortgage		109,233		3,223		—		112,456
Hampton Inn mortgage		170,878		—		4,511		175,389
Ashley Plaza mortgage		106,771		4,357		—		111,128
Clemson Best Western mortgage		140,071		—		3,914		143,985
Brookfield Center mortgage		47,396		2,838		—		50,234
Lancer Center mortgage		34,534		3,658		—		38,192
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		50,530		100,000		150,530
Amortization and interest on convertible debentures		—		263,163		6,267		269,430
Other interest		—		—		1,036		1,036
Total interest expense	$	778,477	$	330,091	$	115,728	$	1,224,296


	For the six months ended June 30, 2022
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	253,682	$	14,186	$	—	$	267,868
Hanover Square mortgage		211,418		6,445		—		217,863
Hampton Inn mortgage		—		—		—		—
Ashley Plaza mortgage		208,940		8,715		—		217,655
Clemson Best Western mortgage		278,602		—		566		279,168
Brookfield Center mortgage		92,802		5,675		—		98,477
Lancer Center mortgage		115,179		11,928		—		127,107
Greenbrier Business Center mortgage		81,409		1,155		—		82,564
Parkway Center mortgage		68,467		5,513		—		73,980
Wells Fargo Mortgage Facility		41,871		—		—		41,871
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		109,027		200,000		309,027
Total interest expense	$	1,352,370	$	162,644	$	200,566	$	1,715,580


	For the six months ended June 30, 2021
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square mortgage	$	337,325	$	4,644	$	—	$	341,969
Hanover Square mortgage		220,065		6,457		—		226,522
Hampton Inn mortgage		339,878		9,000		8,889		357,767
Ashley Plaza mortgage		212,857		8,716		—		221,573
Clemson Best Western mortgage		278,602		22,437		5,490		306,529
Brookfield Center mortgage		94,480		5,676		—		100,156
Lancer Center mortgage		34,534		3,658		—		38,192
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		99,979		200,000		299,979
Amortization and interest on convertible debentures		—		1,718,487		42,486		1,760,973
Other interest		—		—		4,768		4,768
Total interest expense	$	1,517,741	$	1,879,054	$	261,633	$	3,658,428

Interest accrued and accumulated amortization of capitalized issuance costs consist of the following:


	As of June 30, 2022
	(unaudited)				As of December 31, 2021
			Accumulated				Accumulated
			amortization of				amortization
			capitalized		Accrued		of capitalized
	Accrued interest		issuance costs		interest		issuance costs
Franklin Square mortgage	$	42,046	$	16,550	$	—	$	2,364
Hanover Square mortgage		35,443		53,435		38,287		46,990
Ashley Plaza mortgage		34,493		49,394		—		40,679
Clemson Best Western mortgage		46,177		134,622		47,716		134,622
Brookfield Center mortgage		15,321		31,217		15,979		25,542
Lancer Center mortgage		—		—		22,042		17,971
Greenbrier Business Center mortgage		—		—		15,482		924
Parkway Center mortgage		13,891		7,351		9,966		1,838
Amortization and accrued preferred stock dividends (1) on mandatorily redeemable preferred stock		70,004		475,785		70,004		366,758
Total	$	257,375	$	768,354	$	219,476	$	637,688

(1)

Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively.

Debt Maturity

The Company’s scheduled principal repayments on indebtedness as of June 30, 2022 are as follows:


			Mortgages
			Payable Associated
	Mortgages		With Assets
	Payable		Held for Sale		Total
For the remaining six months ending December 31, 2022	$	530,942	$	7,750,000	$	8,280,942
2023		1,100,621		—		1,100,621
2024		1,141,026		—		1,141,026
2025		1,428,252		—		1,428,252
2026		1,487,310		—		1,487,310
Thereafter		56,902,612		—		56,902,612
Total principal payments and debt maturities		62,590,763		7,750,000		70,340,763
Less unamortized issuance costs		(779,571)		(134,632)		(914,203)
Net principal payments and debt maturities	$	61,811,192	$	7,615,368	$	69,426,560