Overview

We own 100% of the Mapletree Industrial Center located in Palmer, Massachusetts. This is a multi-tenant rental facility which was originally the Wickwire-Spencer Wire Mill until 1970 at which time it became rental space. The property consists of 31 buildings located on approximately 48 acres.Major tenants include Creative Material Technologies office and lab, Consolidated Lumber Transport office, Australian natural Soapworks, ESSROC Materials (a Portland cement distributor), Michael Houle, JP Mc Carthy & Sons and American Cable Assembly. The property offers traditional office space and industrial/warehouse space along with vacant land with rail access ready for development. The buildings comprise a total of 420,797 square feet, of which 318,780 is rentable.

We own a 31.3333% non-controlling joint venture partnership interest in Avalon Jubilee LLC located in Los Lunas, New Mexico. The Avalon Property consists of 19 finished single-family subdivision lots and approximately 21.42 acres of subsequent phases of undeveloped land in Los Lunas, New Mexico





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We outsource the property management of the Mapletree Industrial Center to Signature Community Management LLC ("Signature") and our asset management to Signature Community Investment Group LLC ("SCIG"), companies owned by our CEO. We accrued a property management fee of $47,122 and an asset management fee of $14,207 during 2022.

We obtain funds for working capital and investment from our available cash, operating activities, and refinancing of mortgage loans on our real estate.

On July 28, 2015, Palmer-Mapletree LLC, a wholly-owned subsidiary of the Company entered into a Loan Agreement (the "Loan Agreement") with Natixis Real Estate Capital LLC providing for a mortgage loan in the principal amount of $1,750,000 (the "Loan") at an interest rate of 6.031%. $934,794 of the loan proceeds were used to repay the prior mortgage loan and line of credit on the Mapletree Property. $123,757 of the Loan proceeds was set aside for capital improvements and reserves for the property. We received net proceeds of $585,125. The Loan matures on August 5, 2025 and requires monthly payments of $11,308. The outstanding balance of the loan and unamortized mortgage costs at December 31, 2022 and 2021 was $1,486,191 and $40,313, respectively and $1,529,570 and $56,045, respectively. The Company is required to maintain certain Financial Covenants. The Company was compliance with the covenants at December 31, 2022.

Critical Accounting Policies

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), management is required to make estimates and assumptions that affect the financial statements and disclosures. These estimates require difficult, complex and subjective judgments. Management has discussed with the Audit Committee the implementation of the critical accounting policies described below and the estimates required with respect to such policies.





Basis of presentation

At December 31, 2022, the Company had a loss from operations. This combined with a history of operating losses and working capital deficiency, has been detrimental to our operations and could potentially affect our ability to meet our obligations and continue as a going concern. Our ability to continue as a going concern is dependent upon the successful execution of strategies to achieve profitability and increase working capital by raising debt and/or equity. The accompanying financial statements do not include any adjustments that may result from this uncertainty.





Real Estate

Real estate is carried at cost, net of accumulated depreciation. Additions and improvements are capitalized whereas repairs and maintenance are charged to rental property operating expenses as incurred. Depreciation is generally provided on the straight-line method over the estimated useful life of the asset. The useful life of each property, as well as the allocation of the costs associated with a property to its various components, requires estimates by management. If management incorrectly estimates the allocation of those costs or incorrectly estimates the useful lives of its real estate, depreciation expense may be miscalculated.

The Company reviews its properties for impairment if events or changes in circumstances warrant. If impairment were to occur, the property would be written down to its estimated fair value. The Company assesses the recoverability of its investment in real estate based on undiscounted cash flow estimates. The future estimated cash flows of a property are based on current rental revenues and operating expenses, as well as the current local economic climate affecting the property. Considerable judgment is required in making these estimates and changes in these estimates could cause the estimated cash flows to change and impairment could occur. As of December 31, 2022, the Company's net real estate was carried at $667,223.





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Rental Revenue Recognition

Rental revenues include revenues from the leasing of space at our Mapletree property, which primarily consist of monthly base rents in addition to the reimbursement of utilities. Other rental revenues, which are included as a component of rental revenue, primarily include fees related to build-out or other services performed by the Company on the property.

The Company adopted ASU 2014-09, Revenue from Contracts with Customers ( ASC 606) effective January 1, 2018, and its adoption did not have a material effect on the consolidated financial statements, as the majority of the Company's revenue is recognized under ASC 840, Leases, and subsequently ASC 842, Leases, upon its adoption, which are scoped out of ASC 606. ASC 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contract with customers and supersedes most of the existing revenue recognition guidance. This standard requires us to recognize for certain of our revenue sources the transfer of promised goods or services to customers in an amount that reflects the consideration we are entitled to in exchange for those goods or services. The Company's other rental revenues recognized in accordance with ASC 606 are recognized over time as the performance obligations are satisfied. Such revenues are not material to the consolidated financial statements.

Revenues from the leasing of space at our property to tenants includes (i) lease components, including fixed and variable lease payments, and nonlease components which include reimbursement of electric expense and (ii) reimbursement of real estate taxes. As lessor, we have elected to combine the lease and nonlease components of our operating lease agreements and account for the components as a single lease component in accordance with ASC 842.

Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable period of the lease, together with renewal options that are reasonably certain of being exercised. We commence rental revenue recognition when the underlying asset is available for use by the lessee. Revenue derived from the reimbursement of real estate taxes and electric expense are generally recognized in the same period as the related expenses are incurred, which did not change as a result of the adoption of ASU 2016-02

The Company assess the collectability of lease receivables (including future minimum rental payments) both at commencement and throughout the lease term. If our assessment of collectability changes during the lease term, any difference between the revenue that would have been received under the straight-line method and the lease payments that have been collected will be recognized as a current period adjustment to rental revenue. Rental revenue associated with leases where collectability has been deemed less than probable is recognized on a cash basis in accordance with ASC 842.

Allowance for Doubtful Accounts

The Company assesses the collectability of amounts due from tenants and other receivables, using indicators such as past-due accounts, the nature and age of the receivable, the payment history and the ability of the tenant or debtor to meet its payment obligations. Management's estimate of allowances for doubtful accounts is subject to revision as these factors change. Any subsequent recovery of tenant receivable that were previously reserved is recorded as a reduction in the allowance of bad debt. As of December 31, 2022 and 2021, the allowance relating to tenant receivables was $3,500 and $6,235, respectively.





Investments in Joint Venture

The Company has an equity investment in joint venture and accounts for this investment using the fair value method of accounting.





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Income Taxes

We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust under Sections 856 to 860 of the Code. Under those sections, a REIT which meets certain requirements is not subject to Federal income tax on that portion of its taxable income which is distributed to its shareholders, if at least 90% of its REIT taxable income (exclusive of capital gains) is so distributed. As a result of our ordinary tax loss for 2022 there was no requirement to make a distribution in 2023. In addition, no provision for income taxes was required at December 31, 2022. If the Company fails to distribute the required amounts of income to its shareholders, or otherwise fails to meet the REIT requirements, we would fail to qualify as a REIT and substantial adverse tax consequences could result. We believe that we will not be required to pay a dividend in 2023 to maintain our REIT status.





Results of Operations

Results of Operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 were as follows:





                                         2022            2021
Total Revenue                         $ 1,100,817     $ 1,030,141
General and administrative expenses       427,377         348,184
Rental property costs                     800,713         771,823
Other income                                7,585          42,116
Net (loss)                            $  (119,688 )   $   (47,750 )

Revenues increased by $70,676 for the year ended December 31, 2022, compared to the year ended December 31, 2021, as a result of higher occupancy and rent increases at the Mapletree Industrial Center.

Net loss for the year ended December 31, 2022, was $119,688 compared to net loss of $47,750 for the year ended December 31, 2021, an increased loss of $71,938 for the year. The increase was comprised of higher general and administrative expenses of $79,193 caused by increases in insurance and professional fees, an increase of $28,890 in Rental property costs, and the PPP loan forgiveness of $42,100. This was offset by increases in rental revenue of $70,676 and $7,574 of distributions from our Avalon property. We incurred additional professional fees in connection with legal fees in the exploration of strategic growth transactions for the company.





Balance Sheet

December 31, 2022, compared to December 31, 2021

Net real estate increased by approximately $23,000 as a result of additions and improvements to our Mapletree property of approximately $82,000 offset by depreciation expense of approximately $59,000 in 2022.

Prepaid expenses decreased by approximately $11,000 primarily as a result of the timing of payments for insurance costs in connection with the Mapletree property and corporate directors and officer's insurance.

Mortgage escrow increased by approximately $21,000 primarily due to increased escrow requirements for higher property insurance and the timing of improvements made to the Mapletree property during 2022.

Accounts payable and accrued liabilities increased by approximately $140,000 primarily due to higher accrued professional fees related to the exploration of strategic growth transactions for the company and accrual of our property management fees and asset management fees to Signature and SCIG.





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Liquidity and Capital Resources

We obtain funds for working capital and investment from our available cash and operating activities and refinancing of mortgage loans on our real estate.

The Company had a loss from continuing operations at December 31, 2022. This, combined with a history of operating losses and working capital deficiency, has been detrimental to our ability to grow the Company.

At December 31, 2022, we had $154,331 in available cash, a decrease of approximately $71,000 from December 31, 2021. The decrease in cash was due to cash provided by operating activities of $75,682, offset by $81,513 used for capital improvements and $43,379 in principal payments.





(a) Insurance

The Company carries comprehensive liability, fire, extended coverage, auto, workman's compensation, rental loss and acts of terrorism insurance on its properties. The Company also carries director and officer insurance. Management believes that its properties are adequately covered by insurance. In 2022, the cost for this insurance was approximately $180,000.





(b) Operating Activities

Cash from operating activities includes net cash received from rental property operations. Net cash received from rental property operations was approximately $374,000. Net cash received from rental property operations is before additions and improvements and mortgage amortization.





(c) Investing Activities

During 2022, the Company invested approximately $82,000 in additions and improvements to its property.





(d) Financing Activities

During 2022, the Company made principal payments of $43,379 in connection with the Mapletree property.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.


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