CPTP 10-K & 10-Q changes, risk factors and insider trading

Critical accounting policiesestimates:

The Securities and Exchange Commission (“SEC”) has issued guidance for the disclosure of “critical accounting policies.estimates.” The SEC defines such policiesestimates as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

The number of years remaining on the Company’s leases range from twenty-sixthirty-two (2632) years to one hundred-thirtyhundred twenty nine (130129) years with total rents yet to be collected from tenants (without regard to CPI and appraisal adjustments) under the lease ranging from $19.2$18.9 million to $363.0 million. Given the length of the remaining lease term and the magnitude of the amount yet to be collected, along with the consideration of other factors, the Company has concluded that the remaining stream of lease payments is not probable of collection and as such, reports lease revenue based on the contractual amount paid.

The Company had cash and cash equivalents of $652,000$850,000 and $1,476,000$652,000 at December 31, 20232024 and 2022,2023, respectively, inclusive of a money market account totaling $461,000$761,000 and $1,273,000$461,000 in each of the aforementioned years. Additional sources of funds to fund operations include investments that mature in AprilMarch 20242025 totaling $1,244,000$1,294,000 along with a $2,000,000 unused line of credit (see Note 6 in the accompanying Consolidated Financial Statements). The Company and its subsidiary each maintain checking accounts and one money market account in a financial institution which is insured by the Federal Deposit Insurance Corporation to a maximum of $250,000. The Company periodically evaluates the financial stability of the financial institutions at which the Company’s funds are held.

In January 2024, the Company entered into a Second Amendment to its Lease Agreement whereby Metropark agreed to return to a fixed monthly rental payment of $57,000 per month effective January 1, 2024 subject to adjustment in accordance with the Lease Agreement. Additionally, the Company and Metropark settled the Company’s claim for deferred rent for all prior periods which amounted to $1,127,000 (fully reserved on the Company’s books) for $150,000 payable by Metropark in twenty (20) equal quarterly installments commencing on April 1, 2024 together with interest on the unpaid balance in the amount of 4.73% per annum. At December 31, 2024 and 2023, the$128,000 $150,000and $150,000, respectively related to this settlement is included in Prepaid and other and in Leasing revenue in the accompanying consolidated balance sheets and $150,000 is included in Leasing revenue in the accompanying statements of income and retained earnings.earnings in 2023.

The Terminal Sale Agreement and related documentation provides that the Company is required to secure an approved remediation plan and to remediate contamination caused by a leak in 1994 from a storage tank at the Terminal. At December 31, 2023,2024, the Company’s accrual for the remaining cost of remediation was $402,000$343,000 of which $132,000$114,000 is expected to be expended in 2024.2025. The Terminal Sale Agreement also contained a cost sharing provision for a breasting dolphin whereby any construction costs in excess of the contract cost of construction would be borne equally by Sprague and the Company subject to certain limitations, including, in the Company’s opinion, a 20% cap on the increase from the initial estimate subject to the sharing arrangement. In November 2019, Sprague asserted that it was owed $427,000 and the Company asserted that its obligation under the Agreement could not exceed $104,000. Mediation efforts were unsuccessful and in July 2021, Sprague commenced an action against the Company in the Rhode Island Superior Court (Superior Court) seeking monetary damages of $427,000, plus interest and attorney’s fees. In December 2022, the Superior Court denied Sprague’s Motion for Summary Judgment filed in September 2022 and granted in part and denied in part the Company’s Cross Motion for Summary Judgment also filed in September 2022. The Companymatter anticipateswent to trial before the Superior Court in May 2024. On October 28, 2024, the Superior Court rendered its decision and found that the matterCompany’s willobligation gowith respect to trialthe withinincreased cost of constructing the nextbreasting sixdolphin months.is $104,000. On January 24, 2025 the Superior Court entered judgment for Sprague in the amount of $173,000 which includes, as required by law, prejudgment interest at 12% per annum. The $173,000 judgment was paid on January 29, 2025. The Company intendsdoes not intend to vigorouslyappeal defendunless againstSprague thefiles claimsan beingappeal. assertedAt byDecember Sprague.31, 2024 and 2023 Liabilities, other includes $173,000 and $104,000, respectively, related to this matter. See Note 9, “Discontinued operations and environmental incident” in the accompanying Consolidated Financial Statements.

General and administrative expense increased $57,000$52,000 due principally to an increase in payroll and payroll related costs.costs ($72,000) offset by a net decrease in other general and administrative expenses ($20,000).

At JuneSeptember 30, 2024, the Company had cash and cash equivalents of $847,000.$973,000. In addition to these funds, the Company has $1,265,000$1,294,000 invested in U.S. Treasury securities that yield 5.08%4.86% and mature in SeptemberMarch 2024.2025. The Company and its subsidiary each maintain checking accounts and a money market account in one bank, all of which are insured by the Federal Deposit Insurance Corporation to a maximum of $250,000. The Company periodically evaluates the financial stability of the financial institutions at which the Company’s funds are held.

The Terminal Sale Agreement and related documentation provides that the Company is required to secure an approved remediation plan and to remediate contamination caused by a leak in 1994 from a storage tank at the Terminal. At JuneSeptember 30, 2024, the Company’s accrual for the remaining cost of remediation was $387,000$365,000 of which $36,000$22,000 is expected to be incurred during the balance of 2024. Any subsequent increases or decreases to the expected cost of remediation will be recorded in gain (loss) on sale of discontinued operations, net of taxes.

The Terminal Sale Agreement also contained a cost sharing provision for a breasting dolphin whereby any construction costs in excess of the contract cost of construction would be borne equally by Sprague and the Company subject to certain limitations, including, in the Company’s opinion, a 20% cap on the increase from the initial estimate subject to the sharing arrangement. In November 2019, Sprague asserted that it was owed $427,000 and the Company asserted that its obligation under the Agreement could not exceed $104,000. Mediation efforts were unsuccessful and in July 2021, Sprague commenced an action against the Company in the Rhode Island Superior Court (Superior Court) seeking monetary damages of $427,000, plus interest and attorney’s fees. In December 2022, the Superior Court denied Sprague’s Motion for Summary Judgment filed in September 2022 and granted in part and denied in part the Company’s Cross Motion for Summary Judgment also filed in September 2022. The matter went to trial before a Superior Court judge in May 2024. Post-trial briefs have beenwere filed on July 25, 2024. On October 28, 2024, the Superior Court rendered its decision and found that the Company’s obligation with respect to the increased cost of constructing the breasting dolphin is $104,000. In accordance with Rhode Island law, the Court also awarded Sprague prejudgment interest of 12% per annum from the date the claim accrued which the Company anticipates that aat decisionthe time judgment is entered by the Court will betotal renderedapproximately before$45,000. The Company and Sprague each have thirty (30) days from the enddate of 2024.entry of the judgment by the Court to file a notice of appeal. The Company is still evaluating whether to appeal. At September 30, 2024 and December 31, 2023, Liabilities, other includes $149,000 and $104,000, respectively, related to this matter.

Loss on sale of discontinued operations on the condensed consolidated statements of income and shareholders’equity includes legal and professional fees related to the Sprague Litigation of $281,000$10,000 and $351,000$386,000 for the three and sixnine months ended JuneSeptember 30, 2024, respectively and $25,000$4,000 and $29,000 in each of the same periods for 2023 related to the Sprague litigation. For the three and nine months ended September 30, 2024, the loss also includes prejudgment interest of $45,000 related to the Sprague Litigation.

Three months ended JuneSeptember 30, 2024 compared to three months ended JuneSeptember 30, 2023:

Revenue increased $2,000$59,000 from 2023 and consists of increased revenue from Metropark ($20,000$24,000), scheduled rent increases ($8,000$31,000) and a net increase in other sources of revenue ($11,000$4,000), offsetOperating byexpenses aincreased net$32,000 declinedue inprincipally rentto fromprofessional Lamarfees causedrelated byto decreasedthe contingentCompany's rentbillboard ($37,000).operations.

SixNine months ended JuneSeptember 30, 2024 compared to sixnine months ended JuneSeptember 30, 2023:

Leasing revenue increased $93,000$152,000 from 2023, due principally to Metropark ($59,000$83,000), scheduled rent increases and contingent rent associated with our land leases ($37,000$66,000) along with an increase in other revenue ($29,000$26,000) offset by a net decline in contingent rent from Lamar ($32,000$23,000). due to the decline in contingent rent.

Operating expenses increased $54,000$86,000 due to professional fees associated with billboard operations ($34,000$62,000), increased insurance costs ($10,000$16,000) and repairs and maintenance ($12,000) offset by a decline in other operating expenses ($2,000$8,000).

For the sixnine months ended JuneSeptember 30, 2024 and 2023, the Company’s effective income tax rate is approximately 27% of income before income taxes.