PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Medalist Diversified REIT, Inc.'s unaudited condensed consolidated financial statements for Q1 2023, including balance sheets, operations, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets decreased slightly to $86.5 million, liabilities remained stable at $69.3 million, and total equity declined to $17.3 million due to net loss Condensed Consolidated Balance Sheet Highlights (in USD) | Metric | March 31, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$86,535,677** | **$87,915,404** | | Investment properties, net | $76,242,506 | $76,514,952 | | Cash | $3,048,100 | $3,922,136 | | **Total Liabilities** | **$69,255,989** | **$69,222,965** | | Mortgages payable, net | $61,065,672 | $61,340,259 | | **Total Equity** | **$17,279,688** | **$18,692,439** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2023 total revenue decreased to $2.46 million due to a hotel property sale, widening operating loss to $340,716 and net loss to $1.22 million Q1 2023 vs Q1 2022 Performance (in USD) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Revenue | $2,460,976 | $2,903,964 | | Operating loss | $(340,716) | $(234,398) | | Net Loss | $(1,233,806) | $(980,383) | | Net Loss Attributable to Common Shareholders | $(1,221,295) | $(989,284) | | Loss per share - basic and diluted | $(0.07) | $(0.06) | - The decrease in total revenue is primarily attributed to the absence of hotel property revenue in Q1 2023 (**$0**) compared to **$765,489** in Q1 2022, following the sale of the Clemson Best Western Property[10](index=10&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from $18.7 million to $17.3 million in Q1 2023, driven by a $1.23 million net loss and $178,945 in distributions - For the three months ended March 31, 2023, total equity decreased by approximately **$1.4 million**, from **$18.69 million** to **$17.28 million**[12](index=12&type=chunk) - The decrease in equity was primarily due to a net loss of **$1,233,806** and dividends/distributions of **$178,945**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2023 operating cash flow decreased to $450,724, investing cash used increased to $647,690, and financing shifted to a $480,522 outflow, resulting in a $677,488 cash decrease Cash Flow Summary (in USD) | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash flows from operating activities | $450,724 | $692,863 | | Net cash flows from investing activities | $(647,690) | $(366,059) | | Net cash flows from financing activities | $(480,522) | $368,253 | | **(Decrease) Increase in Cash** | **$(677,488)** | **$695,057** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's organization, accounting policies, eight-property portfolio, debt, equity, related-party agreements, segment performance, and subsequent events like a reverse stock split and strategic alternatives exploration - As of March 31, 2023, the company owned and operated **eight properties**, primarily retail and flex-industrial/office properties in the southeastern U.S[18](index=18&type=chunk) - On May 3, 2023, the company completed a **1-for-8 reverse stock split** to regain compliance with Nasdaq's minimum bid price requirement[168](index=168&type=chunk) - On March 10, 2023, the Board established a **Special Committee** of independent directors to explore **strategic alternatives** to maximize stockholder value[152](index=152&type=chunk)[176](index=176&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses Q1 2023 financial performance, noting a revenue decrease to $2.5 million and increased net loss to $1.2 million, alongside strategic activities, liquidity, and non-GAAP FFO/AFFO reconciliation - Total revenue for Q1 2023 decreased by **$442,988** compared to Q1 2022, mainly due to the sale of the Clemson Best Western Hotel Property in September 2022[237](index=237&type=chunk) - Net loss attributable to common shareholders for Q1 2023 was **$1,221,295**, an increase from a net loss of **$989,284** in Q1 2022[255](index=255&type=chunk) FFO and AFFO Reconciliation (in USD) | Metric | For the three months ended March 31, 2023 | For the three months ended March 31, 2022 | | :--- | :--- | :--- | | Net loss | $(1,233,806) | $(980,383) | | **Funds from operations (FFO)** | **$(40,715)** | **$387,155** | | **Adjusted funds from operations (AFFO)** | **$(657,538)** | **$217,023** | [Recent Trends and Activities](index=37&type=section&id=Recent%20Trends%20and%20Activities) Recent activities include a 1-for-8 reverse stock split for Nasdaq compliance, formation of a Special Committee for strategic alternatives, and property transactions including the sale of Clemson Best Western and acquisition of Salisbury Marketplace - Completed a **1-for-8 Reverse Stock Split** on May 3, 2023, to regain compliance with Nasdaq's Minimum Bid Price Requirement[191](index=191&type=chunk) - Established a **Special Committee** of independent directors on March 10, 2023, to explore **strategic alternatives**, including potential sales or business combinations[192](index=192&type=chunk) - Sold the Clemson Best Western Property in September 2022 and acquired the Salisbury Marketplace Property in June 2022[194](index=194&type=chunk)[195](index=195&type=chunk) - Entered into an **$18.6 million mortgage facility** and a **$1.5 million line of credit** with Wells Fargo in June 2022[196](index=196&type=chunk)[197](index=197&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity sources include rental receipts, $3.0 million unrestricted cash, and a $1.5 million undrawn line of credit, with near-term obligations including $780,584 in mortgage principal payments - As of March 31, 2023, the company had **$3,048,100** in unrestricted cash and a **$1,500,000** undrawn line of credit with Wells Fargo[236](index=236&type=chunk) - Future liquidity needs include **$780,584** in principal payments on mortgages for the rest of 2023 and dividends declared in April 2023[234](index=234&type=chunk) - Cash flow from operations decreased to **$450,724** in Q1 2023 from **$692,863** in Q1 2022, primarily due to increased professional fees and the loss of operating income from the sold hotel property[227](index=227&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q1 2023 total revenue decreased by $443k to $2.46 million due to hotel sale, despite retail growth, leading to a widened operating loss of $341k and net loss of $1.23 million Revenue by Segment (in USD) | Segment | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Retail center properties | $1,891,679 | $1,525,085 | $366,594 | | Hotel property | $0 | $765,489 | $(765,489) | | Flex center properties | $569,297 | $613,390 | $(44,093) | | **Total Revenues** | **$2,460,976** | **$2,903,964** | **$(442,988)** | - Legal, accounting, and other professional fees increased by **$307,209** year-over-year, primarily due to costs associated with the exploration of strategic alternatives[243](index=243&type=chunk)[228](index=228&type=chunk) - Interest expense increased slightly to **$864,052** from **$841,424**, reflecting the net impact of the new Wells Fargo mortgage facility and the payoff of other mortgages[253](index=253&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is omitted as the company, a smaller reporting entity, is not required to provide market risk disclosures - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[265](index=265&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2023, with no material changes during the quarter - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were **effective**[267](index=267&type=chunk) - Based on an evaluation using the COSO framework (2013), management concluded that the company's internal control over financial reporting was **effective** as of March 31, 2023[268](index=268&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[270](index=270&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material litigation or threatened legal proceedings outside of routine business matters - The company is not presently subject to any material litigation[271](index=271&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section is omitted as the company, a smaller reporting entity, is not required to provide a discussion of risk factors - As a smaller reporting company, the registrant is not required to provide a discussion of risk factors[272](index=272&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares in Q1 2023, with 268,070 shares repurchased under the program as of December 31, 2022 - The company did not make any share repurchases during the three months ended March 31, 2023[273](index=273&type=chunk) - The Board authorized a share repurchase program in December 2021 for up to **500,000 shares**. As of the end of 2022, **268,070 shares** had been repurchased[273](index=273&type=chunk) [Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[274](index=274&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[276](index=276&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed, including charter documents, material contracts, and officer certifications - The report includes an index of exhibits, such as charter documents, material contracts (including amendments to credit facilities and consulting agreements), and Sarbanes-Oxley certifications[278](index=278&type=chunk)[279](index=279&type=chunk) Signatures

Part I [Business](index=5&type=section&id=Item%201.%20Business) Medalist Diversified REIT, Inc. is an externally managed REIT focused on acquiring and managing income-producing commercial properties in the southeastern U.S. As of December 31, 2022, its portfolio included eight properties, and in March 2023, the Board began exploring strategic alternatives - The company, a Maryland corporation, elected REIT taxation in 2017 and is externally managed by **Medalist Fund Manager, Inc.**[18](index=18&type=chunk) - The investment strategy targets commercial, multi-family, and hotel properties in secondary and tertiary markets across the southeastern U.S.[18](index=18&type=chunk) - As of year-end 2022, the portfolio consisted of **eight investments**: five retail and three flex/industrial properties, with most properties 100% owned[27](index=27&type=chunk) - On March 10, 2023, the Board formed a special committee to explore strategic alternatives to maximize stockholder value[22](index=22&type=chunk) - The company is externally managed with no employees; executive officers are employed by the Manager or third-party firms, with financial services from **Gunston Consulting, LLC**[33](index=33&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Medalist Diversified REIT, Inc. has omitted the discussion of risk factors as permitted by regulations - The company omitted risk factor discussion due to its qualification as a **smaller reporting company**[35](index=35&type=chunk) [Unresolved Staff Comments](index=7&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[36](index=36&type=chunk) [Properties](index=7&type=section&id=Item%202.%20Properties) As of December 31, 2022, the company's portfolio comprised eight properties across retail and flex segments, with a hotel segment maintained for historical reporting despite asset sale. A significant **$18,609,500** mortgage facility was secured in June 2022 [Property Portfolio Overview](index=7&type=section&id=2.1%20Property%20Portfolio%20Overview) As of December 31, 2022, the portfolio included five retail and three flex/industrial properties, with the hotel segment maintained for reporting despite its sale Property Portfolio as of December 31, 2022 | Name | Type | Location | Size (sq. ft.) | Occupancy | Anchor Tenants | | :--- | :--- | :--- | :--- | :--- | :--- | | Franklin Square Property | Retail | Gastonia, NC | 134,239 | 93.2% | Ashley Furniture, Altitude | | Hanover Square Property | Retail | Mechanicsville, VA | 73,441 | 100% | Marshalls, Old Navy | | Ashley Plaza Property | Retail | Goldsboro, NC | 164,012 | 100% | Hobby Lobby, Harbor Freight, Ashley Home Store, Planet Fitness | | Lancer Center Property | Retail | Lancaster, SC | 181,590 | 100% | Badcock Furniture, KJ's Market, Big Lots | | Salisbury Marketplace Property | Retail | Salisbury, NC | 79,732 | 91.2% | Food Lion, CitiTrends, Family Dollar | | Brookfield Center Property | Flex | Greenville, SC | 64,880 | 100% | Gravitopia Trampoline Park, S&ME, Inc. | | Greenbrier Business Center Property | Flex | Chesapeake, VA | 89,290 | 79.9% | Bridge Church | | Parkway Property | Flex | Virginia Beach, VA | 64,109 | 100% | GBRS Group, First Onsite | [Retail Properties](index=8&type=section&id=2.2%20Retail%20Properties) The retail portfolio comprises five properties totaling over **633,000 square feet**, with strong occupancy and national/regional anchor tenants, indicating manageable lease rollover risk - The **Salisbury Marketplace Property** was acquired on June 13, 2022, for **$10,025,000**, a **79,732 sq. ft.** retail property **91.2% leased** at year-end[100](index=100&type=chunk) - The **Lancer Center Property** was acquired on May 14, 2021, for **$10,100,000**, a **181,590 sq. ft.** retail property that was **100% leased** at year-end[76](index=76&type=chunk) [Flex Properties](index=12&type=section&id=2.3%20Flex%20Properties) The flex/industrial portfolio includes three properties totaling approximately **218,000 square feet**, with two properties **100% leased** and one at **79.9% occupancy** at year-end 2022 - The **Parkway Property** was acquired on November 1, 2021, as an **82% tenant-in-common interest**, a **64,109 sq. ft.** property **100% leased** and financed with a variable-rate loan[91](index=91&type=chunk)[93](index=93&type=chunk) - The **Greenbrier Business Center Property** was acquired on August 27, 2021, for **$7,250,000**, an **89,290 sq. ft.** property **79.9% leased** as of December 31, 2022[82](index=82&type=chunk) [Financing](index=19&type=section&id=2.4%20Financing) On June 13, 2022, the company secured an **$18,609,500** mortgage facility with **Wells Fargo** to acquire a new property and refinance existing ones, featuring a **5-year term** at a **4.50% fixed rate** and specific covenants - The company entered into an **$18,609,500** mortgage facility with **Wells Fargo** on June 13, 2022[105](index=105&type=chunk) - Proceeds were utilized to acquire the **Salisbury Marketplace Property** and refinance the **Lancer Center** and **Greenbrier Business Center** properties[105](index=105&type=chunk) - The loan features a **5-year term**, a **4.50% fixed rate**, and covenants requiring a debt service coverage ratio of at least **1.50x**, a minimum debt yield of **9.5%**, and at least **$1.5 million** in liquid assets[105](index=105&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The company and its subsidiaries are not currently party to any material litigation or threatened material litigation, excluding routine matters - The company is not subject to any material litigation, aside from routine actions covered by liability insurance[106](index=106&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not Applicable[107](index=107&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under **MDRR**, facing a **$1.00 minimum bid deficiency** with a July 2023 compliance deadline. As of year-end 2022, **268,070 shares** were repurchased under its program - The company's common stock (**MDRR**) and Series A Preferred Stock (**MDRRP**) are listed on the **Nasdaq Capital Market**[3](index=3&type=chunk)[110](index=110&type=chunk) - On July 11, 2022, Nasdaq issued a deficiency notice for the common stock's bid price falling below **$1.00**, with an extension until July 10, 2023, to regain compliance[112](index=112&type=chunk)[113](index=113&type=chunk) - A share repurchase program authorized up to **500,000 shares** in December 2021, with **268,070 shares** repurchased for **$278,277** as of December 31, 2022[121](index=121&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, total revenue decreased to **$11.1 million** due to hotel sales, offset by retail/flex acquisitions, while net loss attributable to common shareholders increased to **$4.8 million**; **FFO improved to $1.0 million** from a negative **$1.0 million** in 2021 [Recent Trends and Activities](index=22&type=section&id=7.1%20Recent%20Trends%20and%20Activities) In 2022, the company sold its last hotel property for **$10.0 million** and acquired **Salisbury Marketplace** for **$10.0 million**, securing an **$18.6 million** mortgage facility and raising **$1.5 million** via SEPA, while repurchasing **268,070 shares** - The **Clemson Best Western Property** was sold on September 29, 2022, for **$10,015,000**, resulting in a loss on sale of **$421,096**[130](index=130&type=chunk) - The **Salisbury Marketplace Property** was acquired on June 13, 2022, for **$10,025,000**[132](index=132&type=chunk) - An **$18.6 million** mortgage facility and a **$1.5 million** line of credit were secured with **Wells Fargo** on June 13, 2022[137](index=137&type=chunk)[138](index=138&type=chunk) - As of December 31, 2022, **$1,538,887** was raised from issuing **1,445,400 shares** under the **Standby Equity Purchase Agreement (SEPA)**[142](index=142&type=chunk)[143](index=143&type=chunk) - **268,070 shares** of common stock were repurchased for **$278,277** under the **Common Stock Repurchase Plan** as of December 31, 2022[144](index=144&type=chunk)[145](index=145&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are rental receipts and capital markets access. As of December 31, 2022, cash and restricted cash totaled **$5,662,853**, down from **$7,383,977** in 2021. Cash from operations increased to **$1,194,626** in 2022 from **$832,613** in 2021, while investing activities used **$9,319,181** and financing provided **$6,403,431**. Future liquidity needs include **$1.1 million** in mortgage principal payments due in 2023 Cash and Restricted Cash Position | Date | Amount | | :--- | :--- | | December 31, 2022 | $5,662,853 | | December 31, 2021 | $7,383,977 | Cash Flow Summary (Year Ended Dec 31) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash from Operating Activities | $1,194,626 | $832,613 | | Cash used in Investing Activities | ($9,319,181) | ($19,142,727) | | Cash from Financing Activities | $6,403,431 | $20,597,163 | - Future liquidity needs include **$1.1 million** in mortgage principal payments due in 2023 and declared dividends of **$176,810** for common shareholders and **$100,000** for preferred stockholders payable in January 2023[203](index=203&type=chunk) [Results of Operations](index=34&type=section&id=7.3%20Results%20of%20Operations) For 2022, total revenues decreased by **$381,224** to **$11,091,325**, driven by a **$3,127,682** decline in hotel revenues offset by increases in retail and flex revenues. Total operating expenses rose to **$11,694,648** from **$10,782,686**, while interest expense decreased to **$3,600,000** from **$5,500,000**. The net loss attributable to common shareholders widened to **($4,769,241)** (**$0.28 per share**) from **($4,364,264)** (**$0.33 per share**) in 2021 Revenue by Segment (Year Ended Dec 31) | Segment | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Retail center properties | $7,053,757 | $5,634,396 | $1,419,361 | | Hotel properties | $1,507,649 | $4,635,331 | ($3,127,682) | | Flex center properties | $2,529,919 | $1,202,822 | $1,327,097 | | **Total Revenues** | **$11,091,325** | **$11,472,549** | **($381,224)** | Operating Expenses Summary (Year Ended Dec 31) | Expense Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Total Investment Property Operating Expenses | $3,979,686 | $5,004,665 | ($1,024,979) | | Share based compensation | $483,100 | $149,981 | $333,119 | | Depreciation and amortization | $4,706,823 | $3,508,704 | $1,198,119 | | **Total Operating Expenses** | **$11,694,648** | **$10,782,686** | **$911,962** | Net Loss Summary (Year Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Loss | ($4,732,214) | ($4,358,282) | | Net Loss Attributable to Common Shareholders | ($4,769,241) | ($4,364,264) | | Loss per share (basic and diluted) | ($0.28) | ($0.33) | [Funds from Operations (FFO) and Adjusted FFO (AFFO)](index=39&type=section&id=7.4%20Funds%20from%20Operations%20%28FFO%29%20and%20Adjusted%20FFO%20%28AFFO%29) The company uses non-GAAP measures FFO and AFFO to evaluate performance. For 2022, **FFO was $997,253**, a significant turnaround from a loss of **($974,219)** in 2021. **AFFO was $241,024** in 2022, compared to **$332,514** in 2021 FFO and AFFO Reconciliation (Year Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net income (loss) | ($4,732,214) | ($4,358,282) | | Depreciation & Amortization | $4,389,993 | $3,508,704 | | Loss (gain) on sale of investment properties | $421,096 | ($124,641) | | Impairment & Debt Extinguishment Losses | $601,548 | $0 | | **Funds from operations (FFO)** | **$997,253** | **($974,219)** | | Adjustments for AFFO | ($756,229) | $1,306,733 | | **Adjusted funds from operations (AFFO)** | **$241,024** | **$332,514** | [Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2022, with no material changes during the quarter - The Chief Executive Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[246](index=246&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the **COSO 2013 framework**[248](index=248&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[250](index=250&type=chunk) [Other Information](index=42&type=section&id=Item%209B.%20Other%20Information) On March 10, 2023, the Board established a Special Committee to explore strategic alternatives, amending the Management Agreement and CFO/VP Consulting Agreements to clarify termination and retention payments upon a Change in Control - On March 10, 2023, the Board established a **Special Committee** to explore strategic alternatives to maximize stockholder value[251](index=251&type=chunk) - The **Management Agreement** was amended to clarify that deferred acquisition fees become payable upon a **Change in Control** or certain termination events[252](index=252&type=chunk) - The **CFO's Consulting Agreement** was amended to establish a **\"Retention Amount\"** payable upon termination without cause within 12 months of a **Change in Control**[257](index=257&type=chunk) - A **Change in Control Agreement** was established for the Vice President, Mr. C. Elliott, providing for a similar retention payment upon a triggering event related to a **Change in Control**[262](index=262&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=45&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical information for executive officers and directors, noting untimely Form 4 filings in 2022. The company has adopted a code of ethics and operates with four standing board committees: Audit, Compensation, Nominating and Corporate Governance, and Acquisition, with independent directors chairing key committees Executive Officers and Directors | Name | Position | | :--- | :--- | | Thomas E. Messier | Chairman of the Board, CEO, Secretary and Treasurer | | William R. Elliott | Vice Chairman of the Board, President and COO | | Neil P. Farmer | Independent Director | | Charles S. Pearson, Jr. | Independent Director | | Timothy O'Brien | Independent Director | - Five directors and the CFO filed **untimely Form 4 reports** during 2022 related to stock grants and a stock purchase[274](index=274&type=chunk) - The Board operates with four standing committees: **Audit, Compensation, Nominating and Corporate Governance, and Acquisition**[277](index=277&type=chunk) - Charles S. Pearson, Jr. chairs the audit committee and qualifies as an **\"audit committee financial expert\"**[279](index=279&type=chunk)[280](index=280&type=chunk) [Executive and Director Compensation](index=48&type=section&id=Item%2011.%20Executive%20and%20Director%20Compensation) Top executives receive no direct cash compensation from the company, while the CFO and VP are compensated via a consulting agreement. In 2022, CFO C. Brent Winn, Jr.'s total compensation was **$426,600**. The 2018 Equity Incentive Plan provides for accelerated vesting upon a change in control, and consulting agreements include specific severance payments. Independent directors received **$63,300** each in stock awards 2022 Summary Compensation | Name | Position | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Thomas E. Messier | CEO | — | — | 63,300 | 63,300 | | William R. Elliott | COO & President | — | — | 63,300 | 63,300 | | C. Brent Winn, Jr. | CFO | 250,000 | 50,000 | 126,600 | 426,600 | | Colin M. Elliott | Vice President | 64,516 | 50,000 | 30,000 | 144,516 | - Upon a **change in control**, all outstanding awards under the **2018 Equity Incentive Plan** will automatically vest[295](index=295&type=chunk) - The **Consulting Agreement** provides for a **\"Retention Amount\"** payment to the CFO's firm upon termination without cause within 12 months of a **Change in Control**[299](index=299&type=chunk) 2022 Director Compensation | Name | Fees Earned ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Neil P. Farmer | — | 63,300 | 63,300 | | Charles S. Pearson, Jr. | — | 63,300 | 63,300 | | Timothy O'Brien | — | 63,300 | 63,300 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=51&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of March 10, 2023, three beneficial owners held over **5%** of common stock, with all named executive officers and directors as a group owning **6.98%**. The 2018 Equity Incentive Plan had **375,672 shares** available for future issuance as of December 31, 2022 Beneficial Ownership as of March 10, 2023 | Owner | Shares Beneficially Owned | Percentage of Shares | | :--- | :--- | :--- | | Alfred Lee Finley | 2,625,000 | 14.78% | | Francis P. Kavanaugh | 1,700,000 | 9.57% | | Wells Fargo & Co. | 1,042,594 | 5.87% | | All Named Executive Officers and Directors as a Group | 1,239,664 | 6.98% | - Ownership percentages are based on **17,758,421 shares** of common stock outstanding as of March 10, 2023[307](index=307&type=chunk) - As of December 31, 2022, **375,672 securities** remained available for future issuance under the company's equity compensation plans[310](index=310&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company is externally managed, paying asset management fees (**$876,049** in 2022) and acquisition fees (**$201,524** in 2022) to its Manager, with a significant termination fee provision. Related parties receive property management and consulting fees, and three of the five board directors are independent - The company pays its external Manager a monthly asset management fee of **0.125% of stockholders' equity**, totaling **$876,049** in 2022[312](index=312&type=chunk) - The Manager receives a **2.0% acquisition fee** on property purchases, totaling **$201,524** in 2022 (half deferred), with accrued deferred fees of **$352,717** at year-end 2022[315](index=315&type=chunk)[316](index=316&type=chunk) - Termination of the **Management Agreement** without cause would trigger a termination fee equal to three times the prior 12 months' asset management and incentive fees, amounting to **$2,628,147** as of December 31, 2022[322](index=322&type=chunk)[324](index=324&type=chunk) - Colin M. Elliott, son of executive William R. Elliott, serves as Vice President via a **Consulting Agreement** with **Gunston Consulting, LLC**, with **$114,516** reimbursed for his services in 2022[325](index=325&type=chunk)[327](index=327&type=chunk) - The Board comprises five directors, with three (Messrs. Farmer, Pearson, and O'Brien) considered **independent**[331](index=331&type=chunk) [Principal Accountant Fees and Services](index=57&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Fees paid to independent registered public accounting firm **Cherry Bekaert LLP** totaled **$306,105** in 2022, a significant decrease from **$536,440** in 2021, primarily due to lower audit fees Fees Paid to Cherry Bekaert LLP | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit Fees | $228,283 | $426,565 | | Tax Fees | $77,822 | $108,952 | | All Other Fees | — | $923 | | **Total** | **$306,105** | **$536,440** | Part IV [Exhibits and Financial Statement Schedules](index=58&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section includes the company's consolidated financial statements for 2022 and 2021, the independent auditor's report, Schedule III detailing real estate properties, and a comprehensive index of all exhibits filed with the 10-K [Financial Statements](index=59&type=section&id=15.1%20Financial%20Statements) The audited consolidated financial statements present the company's financial position, results of operations, and cash flows. As of year-end 2022, total assets were **$87,915,404**, total liabilities **$69,222,965**, and a net loss of **($4,732,214)** was reported for 2022 Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Assets | $87,915,404 | $92,547,088 | | Total Liabilities | $69,222,965 | $69,548,699 | | Total Equity | $18,692,439 | $22,998,389 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $11,091,325 | $11,472,549 | | Total Operating Expenses | $11,694,648 | $10,782,686 | | Net Loss | ($4,732,214) | ($4,358,282) | | Net Loss Attributable to Common Shareholders | ($4,769,241) | ($4,364,264) | - The company adopted **ASC 842** on January 1, 2022, primarily combining lease revenue and tenant reimbursements into a single line item for lessors[418](index=418&type=chunk)[419](index=419&type=chunk) - The **Clemson Best Western Hotel Property** was sold on September 29, 2022, for **$10,015,000**, resulting in a loss on sale of **$421,096**[438](index=438&type=chunk) [Schedule III – Real Estate Properties and Accumulated Depreciation](index=97&type=section&id=15.2%20Schedule%20III%20%E2%80%93%20Real%20Estate%20Properties%20and%20Accumulated%20Depreciation) This schedule details the company's real estate assets as of December 31, 2022, showing a gross carrying amount of **$85,915,860** for investment properties, with accumulated depreciation of **$9,400,908**, resulting in a net book value of **$76,514,952** Real Estate Portfolio Summary (as of Dec 31, 2022) | Metric | Amount | | :--- | :--- | | Gross Amount of Investment Properties | $85,915,860 | | Accumulated Depreciation | $9,400,908 | | **Net Investment Properties** | **$76,514,952** |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. Maryland 47-5201540 (State or other jurisdiction of incorporation) (IRS Employer Identification No.) WASHINGTON, D.C. 20 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. Maryland 47-5201540 (State or other jurisdiction of incorporation) (IRS Emp ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. (State or other jurisdiction (IRS Employer WASHINGTON, D.C. 20549 FORM 10-K (Mark One) 1051 E. Cary Street Suite 601 Marylan ...

Table of Contents (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q MEDALIST DIVERSIFIED REIT, INC. (State or other jurisdiction of incorporation) Maryland 47-5201540 (IRS ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. (State or other jurisdiction of incorporation) Maryland 47-5201540 (IRS Empl ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. Maryland 47-5201540 (State or other jurisdiction of incorporation) (IRS Emp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. Maryland 47-5201540 (State or other jurisdiction of incorporation) (IRS Employer Identification No ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file no: 001-38719 MEDALIST DIVERSIFIED REIT, INC. Maryland 47-5201540 (State or other jurisdiction of incorporation) (IRS Employer Identifi ...