Item 8.01 Other Events.
The registrant was not able to file its Quarterly Report on Form 10-Q for the
quarterly period ended
As the registrant disclosed in its Form 8-K filed on
The registrant had previously communicated to Whitestone REIT of its plan to
internalize the management of the Real Estate Assets, but the registrant had not
made efforts to terminate the management agreements. However, Whitestone REIT's
notice letter states that, while it had not received written notice of the
termination of the management agreements, it "confirms receipt of your intent to
terminate, and hereby confirms termination of the Agreements effective 30 days
from"
Whitestone REIT performed and maintained the records and processes for much of the registrant's accounting and financial reporting functions. As part of the termination of the management agreements, Whitestone REIT removed the registrant's access to its accounting and financial software platform. To date, Whitestone REIT has not provided Pillarstone with a complete electronic copy of its financial and accounting records, as kept and maintained on the software platform. As a result of the abrupt termination of the management agreements, inadequate assistance in the transition of the management of the Real Estate Assets, and Whitestone's REIT's failure to provide a complete copy of the registrant's accounting and financial reporting information that was maintained on Whitestone's accounting and software platform, the registrant is having to rebuild its internal accounting and financial reporting processes.
To assist with and expedite this process, the registrant has retained accounting consultants to (i) develop the accounting records, processes, and systems that Whitestone has not released in usable native format to the registrant, and (ii) incorporate those records that registrant has received, and is continuing to receive, from Whitestone related to the Real Estate Assets and their management. In the meantime, the registrant is directly overseeing the maintenance and operations of the Real Estate Assets. In the course of doing so, the registrant has confirmed that certain Real Estate Assets have deteriorated following significant deferred maintenance and neglect while under Whitestone's management. The registrant is working to address these deferred maintenance and other operating issues.
Based upon issues, including those discussed in this Form 8-K, the registrant
filed a lawsuit on
In the meantime, the registrant is continuing to rebuild its accounting and
financial reporting system and intends as soon as possible to resume timely
filing of its current, quarterly and annual reports under the Securities
Exchange Act of 1934, as amended, and to file any delinquent reports, including
its Quarterly Report on Form 10-Q for the quarterly period ended
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