UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
Form 10-Q
(Mark one)
☑	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 000-55006
MacKenzie Realty Capital, Inc.
(Exact name of registrant as specified in its charter)
Maryland		45-4355424
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
89 Davis Road, Suite 100, Orinda, CA 94563
(Address of principal executive offices)
(925) 631-9100
(Registrant's telephone number, including area code)
________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes☑  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 or Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)  Yes  ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐              Accelerated filer ☐              Non-accelerated filer ☑    Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No  ☑   Securities registered under Section 12(b) of the Act: None
The number of the shares of issuer's Common Stock outstanding as of May 13, 2019 was 10,845,985.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Statements of Assets and Liabilities as of March 31, 2019 (Unaudited) and June 30, 2018	1
	Consolidated Schedule of Investments as of March 31, 2019 (Unaudited)	2
	Consolidated Schedule of Investments as of June 30, 2018	3
	Consolidated Statements of Operations for the three and nine months ended March 31, 2019 and 2018 (Unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three and nine months ended March 31, 2019 and 2018 (Unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2019 and 2018 (Unaudited)	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
SIGNATURES		32

Part I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Statements of Assets and Liabilities

	March 31, 2019		June 30, 2018
	(Unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (cost of $47,999,830 and $55,163,892, respectively)	$	51,003,914	$	62,481,216
Affiliated investments (cost of $6,792,247 and $4,001,172, respectively)		8,004,934		4,596,068
Controlled investments (cost of $38,666,173 and $5,449,901, respectively)		41,364,386		7,507,222
Total investments, at fair value (cost of $93,458,250 and $64,614,965, respectively)		100,373,234		74,584,506
Cash and cash equivalents		1,788,298		8,442,249
Accounts receivable		2,032,419		5,878,293
Other assets		249,329		374,634
Deferred offering costs, net		445,925		286,614
Total assets	$	104,889,205	$	89,566,296
Liabilities
Accounts payable and accrued liabilities	$	35,500	$	38,170
Income tax payable		1,280		37,153
Dividend payable		1,794,012		1,438,808
Capital pending acceptance		1,000,108		646,300
Due to related entities		2,004,548		1,807,028
Deferred tax liability, net		-		3,518
Total liabilities		4,835,448		3,970,977
Net assets
Common stock, $0.0001 par value, 80,000,000 shares authorized; 10,471,987.24 and 8,496,141.57 shares issued and outstanding, respectively		1,047		850
Capital in excess of par value		94,988,358		77,205,361
Total distributable earnings (loss)		5,064,352		8,389,108
Total net assets		100,053,757		85,595,319
Total liabilities and net assets	$	104,889,205	$	89,566,296
Net asset value per share	$	9.55	$	10.07

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

1

MacKenzie Realty Capital, Inc.

Consolidated Schedule of Investments

March 31, 2019

(Unaudited)

Name		Asset Type	Shares/Units	Cost Basis	Total Fair Value	% of Net Assets
American Finance Trust Inc., Class A	(3)	Publicly Traded Company	258,889.40	$                    3,118,754	$                           2,796,006	2.79
Total Publicly Traded Company				3,118,754	2,796,006	2.79
American Realty Capital New York City REIT, Inc.	(4)(5)	Non Traded Company	240,137.33	3,019,225	3,100,173	3.09
Benefit Street Partners Realty Trust, Inc.	(4)	Non Traded Company	201,429.04	3,013,141	2,983,164	2.98
BRE Select Hotels Corp. - Preferred A	(4)	Non Traded Company	613,271.00	1,050,451	1,122,286	1.12
Carter Validus Mission Critical REIT	(4)	Non Traded Company	137,666.92	497,712	589,214	0.59
Cole Credit Property Trust IV, Inc.	(4)	Non Traded Company	174,223.97	1,055,210	1,277,062	1.28
Cole Credit Property Trust V, Inc.	(4)	Non Traded Company	8,631.50	120,776	112,555	0.11
Cole Credit Property Trust V, Inc. Class T	(4)	Non Traded Company	395.88	5,492	5,162	0.01
CNL Healthcare Properties, Inc.	(4)(5)	Non Traded Company	104,158.67	866,933	908,264	0.91
Hines Global REIT, Inc.	(4)	Non Traded Company	17,936.21	107,939	89,681	0.09
Corporate Property Associates  18 Global A Inc.	(4)	Non Traded Company	4,695.14	39,627	39,580	0.04
First Capital Real Estate Trust, Inc.	(4)(5)	Non Traded Company	3,792.51	15,161	21,276	0.02
FSP 1441 Main Street	(4)(5)	Non Traded Company	15.73	8,559	31,010	0.03
FSP 303 East Wacker Drive Corp. Liquidating Trust	(4)(5)	Non Traded Company	3.00	30	30	-
FSP Energy Tower	(2)(4)(5)	Non Traded Company	19.35	718,874	891,660	0.89
FSP Grand Boulevard Liquidating Trust	(4)(5)	Non Traded Company	7.50	8	8	-
FSP Satellite Place	(2)(4)(5)	Non Traded Company	14.03	401,138	571,192	0.57
Griffin-American Healthcare REIT III, Inc.	(4)	Non Traded Company	686.48	4,494	5,258	0.01
Griffin Capital Essential Asset REIT, Inc.	(4)	Non Traded Company	28,641.60	196,636	246,318	0.25
GTJ REIT, Inc.	(4)	Non Traded Company	1,000.00	11,620	11,680	0.01
Healthcare Trust, Inc.	(4)	Non Traded Company	304,034.25	3,459,195	3,991,970	3.99
Highlands REIT Inc.	(4)(5)	Non Traded Company	21,164,760.26	3,952,202	3,598,009	3.60
Hospitality Investors Trust, Inc.	(4)(5)	Non Traded Company	716.18	5,232	6,517	0.01
InvenTrust Properties Corp.	(4)	Non Traded Company	14,799.52	22,603	27,379	0.03
KBS Real Estate Investment Trust II, Inc.	(4)	Non Traded Company	2,354,544.43	8,527,425	9,559,450	9.55
KBS Real Estate Investment Trust III, Inc.	(4)	Non Traded Company	62,516.45	515,050	606,410	0.61
NorthStar Healthcare Income, Inc.	(4)(5)	Non Traded Company	43,573.29	161,927	180,829	0.18
Phillips Edison & Company, Inc	(4)	Non Traded Company	430,203.03	3,166,644	3,704,048	3.70
Steadfast Apartment REIT	(4)	Non Traded Company	2,083.29	17,197	25,624	0.03
Steadfast Income REIT	(4)	Non Traded Company	109,471.94	735,436	813,376	0.81
Strategic Realty Trust, Inc.	(4)	Non Traded Company	148,104.91	581,147	660,548	0.66
Summit Healthcare REIT, Inc.	(2)(4)(5)	Non Traded Company	1,362,256.55	1,849,058	2,479,307	2.48
The Parking REIT Inc.	(4)(5)	Non Traded Company	17,989.90	230,880	242,504	0.24
Total Non Traded Company (1)				34,357,022	37,901,544	37.89
3100 Airport Way South LP	(4)	LP Interest	1.00	355,000	385,355	0.38
5210 Fountaingate, LP	(2)(4)	LP Interest	9.89	500,000	564,598	0.56
Addison NC, LLC	(2)(4)(5)	LP Interest	200,000.00	2,000,000	3,450,000	3.45
Addison Property Member, LLC	(2)(4)	LP Interest	731,485.60	7,316,326	7,314,856	7.31
Arrowpoint Burlington LLC	(2)(4)	LP Interest	7.50	750,000	889,584	0.89
Bandon PV Holdings, LLC	(2)(4)	LP Interest	5,250,000.00	650,000	649,950	0.65
Bishop Berkeley, LLC	(2)(4)	LP Interest	4,050.00	4,050,000	4,050,000	4.05
BP3 Affliliate, LLC	(2)(4)(5)	LP Interest	1,250.00	1,250,000	1,250,000	1.25
BR Cabrillo LLC	(4)	LP Interest	346,723.32	104,942	83,214	0.08
BR Gate Investment Co, LLC	(2)(4)	LP Interest	2,475,000.00	2,475,000	2,475,000	2.47
Britannia Preferred Members, LLC -Class 1	(2)(4)(5)	LP Interest	103.88	2,597,000	2,856,700	2.86
Britannia Preferred Members, LLC -Class 2	(2)(4)(5)	LP Interest	514,858.30	6,826,931	7,882,481	7.88
Capitol Hill Partners, LLC	(2)(4)(5)	LP Interest	190,000.00	1,900,000	1,844,900	1.84
CRP I Roll Up, LLC	(4)	LP Interest	4,500,000.00	4,500,000	4,950,000	4.95
CRP III Roll Up, LLC	(4)	LP Interest	6,000,000.00	6,000,000	6,480,000	6.48
Dimensions28 LLP	(2)(4)(5)	LP Interest	10,800.00	10,801,015	10,800,000	10.79
Lakemont Partners, LLC	(2)(4)	LP Interest	1,000.00	1,000,000	1,035,530	1.03
MPF Pacific Gateway - Class B	(2)(4)(5)	LP Interest	23.20	6,287	7,473	0.01
Redwood Mortgage Investors VIII	(4)	LP Interest	56,300.04	29,700	38,847	0.04
Satellite Investment Holdings, LLC - Class A	(4)	LP Interest	22.00	2,200,000	2,200,000	2.20
Secured Income, LP	(2)(4)(5)	LP Interest	64,670.00	316,890	315,590	0.32
The Weatherly Building, LLC	(4)(5)	LP Interest	17.50	118,721	47,846	0.05
The Weatherly, LTD	(4)(5)	LP Interest	60.00	184,761	63,261	0.06
Total LP Interest				55,932,573	59,635,185	59.60
Coastal Realty Business Trust, REEP, Inc. - A	(2)(4)(5)	Investment Trust	72,320.00	49,901	40,499	0.04
Total Investment Trust				49,901	40,499	0.04
Total Investments				$                  93,458,250	$                       100,373,234	100.32

(1) Investments primarily in non-traded public REITs or their successors.

(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2019, the Company is deemed to be either “affiliated” with, or in “control” of, these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 5.

(3) Non-qualifying assets under Section 55(a) of the 1940 Act. As of March 31, 2019, the total percentage of non-qualifying assets is 2.67%, and, as a business development company, non-qualifying assets may not exceed 30% of our total assets.

(4) Investments in illiquid securities, or securities that are not traded on a national exchange. As of March 31, 2019, 93.03% of the Company's total assets are in illiquid securities.

(5) Investments in non-income producing securities. As of March 31, 2019, 38.70% of the Company's total assets are in non-income producing securities.

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

2

MacKenzie Realty Capital, Inc.

Consolidated Schedule of Investments

June 30, 2018

Name		Asset Type	Shares/Units	Cost Basis	Total Fair Value	% of Net Assets
Ashford Hospitality Trust, Inc.	(3)	Publicly Traded Company	175,000.00	$                    1,406,834	$                           1,417,501	1.65
Bluerock Residential Growth REIT, Inc.	(3)	Publicly Traded Company	20,600.00	182,202	183,752	0.21
Braemar Hotels & Resorts Inc.	(3)	Publicly Traded Company	26,627.00	302,176	304,080	0.36
CBL & Associates Properties, Inc.	(3)	Publicly Traded Company	90,000.00	499,361	501,300	0.59
Independence Realty Trust, Inc.	(3)	Publicly Traded Company	75,000.00	775,750	773,250	0.90
Omega Healthcare Investors, Inc.	(3)	Publicly Traded Company	40,000.00	1,240,862	1,240,000	1.45
RLJ Lodging Trust	(3)	Publicly Traded Company	22,000.00	485,195	485,100	0.57
Sabra Health Care REIT, Inc.	(3)	Publicly Traded Company	50,000.00	1,089,260	1,086,500	1.27
VEREIT Inc.	(3)	Publicly Traded Company	90,000.00	671,176	669,600	0.78
Total Publicly Traded Company				6,652,816	6,661,083	7.78
American Finance Trust, Inc.	(4)	Non Traded Company	30,640.52	396,760	528,550	0.63
American Realty Capital Healthcare Trust III, Inc.	(4)(5)	Non Traded Company	3,365.50	6,024	6,495	0.01
American Realty Capital New York City REIT, Inc.	(4)(5)	Non Traded Company	94,009.22	1,248,021	1,222,120	1.43
Behringer Harvard Opportunity REIT I, Inc.	(4)(5)	Non Traded Company	1,174,053.09	1,361,313	2,289,404	2.67
Benefit Street Partners Realty Trust, Inc.	(4)	Non Traded Company	61,599.19	786,860	830,357	0.97
BRE Select Hotels Corp. - Preferred A	(4)	Non Traded Company	271,720.00	472,572	472,793	0.55
Carter Validus Mission Critical REIT	(4)	Non Traded Company	1,750.00	9,636	8,330	0.01
Cole Credit Property Trust IV, Inc.	(4)	Non Traded Company	4,146.04	32,235	35,863	0.04
First Capital Real Estate Trust, Inc.	(4)(5)	Non Traded Company	3,792.51	15,161	21,883	0.03
FSP 1441 Main Street	(4)(5)	Non Traded Company	15.73	8,559	28,847	0.03
FSP 303 East Wacker Drive Corp.	(4)	Non Traded Company	3.00	87,115	188,760	0.22
FSP Energy Tower	(2)(4)(5)	Non Traded Company	7.25	303,500	301,373	0.35
FSP Grand Boulevard	(4)	Non Traded Company	7.50	294,179	239,625	0.28
FSP Satellite Place	(2)(4)(5)	Non Traded Company	13.78	395,313	499,140	0.58
Griffin-American Healthcare REIT III, Inc.	(4)	Non Traded Company	686.48	4,494	4,469	0.01
Griffin Capital Essential Asset REIT, Inc.	(4)	Non Traded Company	28,641.60	196,636	245,745	0.29
GTJ REIT, Inc.	(4)	Non Traded Company	1,000.00	11,620	11,750	0.01
Healthcare Trust, Inc.	(4)	Non Traded Company	166,597.06	1,932,444	2,329,027	2.72
Highlands REIT Inc.	(4)(5)	Non Traded Company	14,105,177.43	2,798,421	2,397,880	2.80
Hospitality Investors Trust, Inc.	(4)	Non Traded Company	154,881.43	1,084,916	1,355,213	1.58
InvenTrust Properties Corp.	(4)	Non Traded Company	5,250,278.49	9,319,713	9,292,993	10.86
KBS Legacy Partners Apartment REIT, Inc.	(4)(5)	Non Traded Company	79,630.53	15,926	15,926	0.02
KBS Real Estate Investment Trust II, Inc.	(4)	Non Traded Company	1,556,922.33	5,699,860	6,336,674	7.40
KBS Real Estate Investment Trust III, Inc.	(4)	Non Traded Company	46,397.55	368,523	400,411	0.47
NorthStar Healthcare Income, Inc.	(4)	Non Traded Company	800.00	5,608	5,360	0.01
Phillips Edison & Company, Inc	(4)	Non Traded Company	57,695.27	419,976	534,258	0.62
Phillips Edison Grocery Center REIT II, Inc.	(4)	Non Traded Company	13,845.24	203,263	257,383	0.30
Steadfast Income REIT	(4)	Non Traded Company	49,904.48	377,718	448,641	0.52
Strategic Realty Trust, Inc.	(4)	Non Traded Company	123,181.24	484,741	561,706	0.66
Summit Healthcare REIT, Inc.	(2)(4)(5)	Non Traded Company	1,293,278.16	1,729,182	2,043,379	2.39
The Parking REIT Inc.	(4)	Non Traded Company	13,045.00	164,282	182,760	0.21
Total Non Traded Company (1)				30,234,571	33,097,115	38.67
3100 Airport Way South LP	(4)	LP Interest	1.00	355,000	378,060	0.44
5210 Fountaingate, LP	(2)(4)	LP Interest	9.89	500,000	555,728	0.65
Addison NC, LLC	(2)(4)(5)	LP Interest	200,000.00	2,000,000	3,000,000	3.50
Arrowpoint Burlington LLC	(2)(4)	LP Interest	7.50	750,000	869,072	1.02
BR Axis West Investment Co. LLC	(4)	LP Interest	3,403,633.00	3,403,633	3,403,633	3.98
BR Cabrillo LLC	(4)(5)	LP Interest	346,723.32	104,942	86,681	0.10
Britannia Preferred Members, LLC -Class 2	(2)(4)(5)	LP Interest	150,000.00	1,500,000	2,547,000	2.98
Capitol Hill Partners, LLC	(2)(4)	LP Interest	190,000.00	1,900,000	1,919,000	2.24
CRP I Roll Up, LLC	(4)	LP Interest	4,500,000.00	4,500,000	4,672,350	5.46
CRP III Roll Up, LLC	(4)	LP Interest	6,000,000.00	6,000,000	6,101,400	7.13
MPF Pacific Gateway - Class B	(2)(4)(5)	LP Interest	23.20	6,287	6,613	0.01
Redwood Mortgage Investors VIII	(4)	LP Interest	56,300.04	29,700	37,158	0.04
Rosewood Hillsboro Holdings, LLC	(4)	LP Interest	3,200,000.00	1,300,000	1,300,000	1.52
Satellite Investment Holdings, LLC - Class A	(4)	LP Interest	22.00	2,200,000	2,200,000	2.57
Secured Income, LP	(2)(4)(5)	LP Interest	64,670.00	316,890	320,763	0.37
The Weatherly Building, LLC	(4)(5)	LP Interest	17.50	392,000	1,784,033	2.08
The Weatherly, LTD	(4)(5)	LP Interest	60.00	672,000	3,058,343	3.57
Uniprop Manufactured Housing Income Fund II, LP	(4)	LP Interest	155,070.00	647,225	1,445,252	1.69
Total LP Interest				26,577,677	33,685,086	39.35
Coastal Realty Business Trust, REEP, Inc. - A	(2)(4)(5)	Investment Trust	72,320.00	49,901	41,222	0.05
Total Investment Trust				49,901	41,222	0.05
OrCal and MIC Promissory Note	(4)	Note		1,100,000	1,100,000	1.29
Total Note				1,100,000	1,100,000	1.29
Total Investments				$                  64,614,965	$                         74,584,506	87.14

(1) Investments primarily in non-traded public REITs or their successors.

(2) Investments in affiliated companies. See additional disclosures in note 5.

(3) Non-qualifying assets under Section 55(a) of the 1940 Act. As of June 30, 2018, the total percentage of non-qualifying assets is 7.44%, and as a business development company non-qualifying assets may not exceed 30% of our total assets.

(4) Investments in illiquid securities, or securities that are not traded on a national exchange. As of June 30, 2018, 75.84% of the Company's total assets are in illiquid securities.

(5) Investments in non-income producing securities. As of June 30, 2018, 21.96% of the Company's total assets are in non-income producing securities.

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

3

MacKenzie Realty Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018
Investment income
Non-controlled/non-affiliated investments:
Dividend and operational/sales distributions	$	879,815		$	1,085,916		$	7,382,313		$	3,369,524
Interest and other income		139,490			139,339			351,678			379,751
Affiliated investments:
Dividend and operational/sales distributions		111,162			39,737			168,474			128,783
Controlled investments:
Dividend and operational/sales distributions		610,679			1,650,000			610,679			1,650,000
Total investment income		1,741,146			2,914,992			8,513,144			5,528,058
Operating expenses
Base management fee (note 5)		567,699			442,375			1,621,490			1,250,366
Portfolio structuring fee (note 5)		186,343			135,746			557,366			508,867
Subordinated incentive fee (reversal) (note 5)		81,620			-			1,291,168			-
Administrative cost reimbursements (note 5)		156,000			108,000			468,000			324,000
Amortization of deferred offering costs		149,545			38,073			384,347			302,186
Professional fees		17,767			45,567			129,795			182,362
Directors' fees		15,500			15,500			46,500			49,500
Printing and mailing		7,995			2,562			49,493			36,948
Other general and administrative		49,766			36,158			109,089			93,774
Total operating expenses		1,232,235			823,981			4,657,248			2,748,003
Net investment income before taxes		508,911			2,091,011			3,855,896			2,780,055
Income tax provision (benefit) - (note 2)		-			7,526			(12,968	)		3,431
Net investment income		508,911			2,083,485			3,868,864			2,776,624
Realized and unrealized gain (loss) on investments
Net realized gain (loss)
Non-controlled/non-affiliated investments		(812,058	)		53,645			1,221,474			1,806,531
Controlled investments		-			-			-			(54,413	)
Total net realized gain (loss)		(812,058	)		53,645			1,221,474			1,752,118
Net unrealized gain (loss)
Non-controlled/non-affiliated investments		(119,004	)		(547,004	)		(4,313,240	)		(1,267,815	)
Affiliated investments		346,276			69,033			617,790			215,263
Controlled investments		(75,091	)		(1,100,723	)		640,891			242,674
Total net unrealized gain (loss)		152,181			(1,578,694	)		(3,054,559	)		(809,878	)
Total net realized and unrealized gain (loss) on investments		(659,877	)		(1,525,049	)		(1,833,085	)		942,240
Net increase (decrease) in net assets resulting from operations	$	(150,966	)	$	558,436		$	2,035,779		$	3,718,864
Net increase (decrease) in net assets resulting from operations per share	$	(0.01	)	$	0.07		$	0.21		$	0.52
Weighted average common shares outstanding		10,314,925			7,723,757			9,655,180			7,164,877

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

4

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Net Assets

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
Operations
Net investment income	$	508,911		$	2,083,485		$	3,868,864		$	2,776,624
Net realized gain (loss)		(812,058	)		53,645			1,221,474			1,752,118
Net unrealized gain (loss)		152,181			(1,578,694	)		(3,054,559	)		(809,878	)
Net increase (decrease) in net assets resulting from operations		(150,966	)		558,436			2,035,779			3,718,864
Dividends
Dividends to stockholders		(1,794,012	)		(1,345,491	)		(5,360,535	)		(5,320,676	)
Capital share transactions
Issuance of common stock		6,075,689			4,213,281			18,334,137			16,650,630
Issuance of common stock through reinvestment of dividends		870,438			792,324			2,223,629			1,719,987
Redemption of common stock		(704,268	)		(390,252	)		(1,167,903	)		(949,089	)
Selling commissions and fees		(483,917	)		(421,328	)		(1,606,669	)		(1,660,096	)
Net increase in net assets resulting from capital share transactions		5,757,942			4,194,025			17,783,194			15,761,432
Total increase in net assets		3,812,964			3,406,970			14,458,438			14,159,620
Net assets at beginning of the period		96,240,793			70,742,175			85,595,319			59,989,525
Net assets at end of the period	$	100,053,757		$	74,149,145		$	100,053,757		$	74,149,145

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

5

MacKenzie Realty Capital, Inc.

Consolidated Statements of Cash Flows

 (Unaudited)

	Nine Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	2,035,779		$	3,718,864
Adjustments to reconcile net increase in net assets resulting from
operations to net cash from operating activities:
Proceeds from sale of investments, net		51,649,110			25,181,336
Return of capital		15,442,937			9,712,523
Purchase of investments		(94,713,860	)		(57,237,161	)
Net realized gain on investments		(1,221,474	)		(1,752,118	)
Net unrealized loss on investments		3,054,559			809,878
Amortization of deferred offering costs		384,347			302,186
Changes in assets and liabilities:
Accounts receivable		3,845,874			1,700,663
Other assets		173,901			(227,454	)
Payment of deferred offering costs		(543,658	)		(167,783	)
Accounts payable and accrued liabilities		7,601			(38,425	)
Income tax payable		(35,873	)		44,679
Due to related entities		197,520			(141,182	)
Deferred tax liability		(3,518	)		(41,845	)
Net cash from operating activities		(19,726,755	)		(18,135,839	)
Cash flows from financing activities:
Borrowings on margin loan		-			6,012,413
Payments on margin loan		-			(6,012,413	)
Proceeds from issuance of common stock		18,334,137			16,650,630
Redemption of common stock		(1,167,903	)		(949,089	)
Dividends to stockholders		(2,781,702	)		(2,255,198	)
Payment of selling commissions and fees		(1,665,536	)		(1,594,152	)
Change in capital pending acceptance		353,808			(1,101,390	)
Net cash from financing activities		13,072,804			10,750,801
Net decrease in cash and cash equivalents		(6,653,951	)		(7,385,038	)
Cash and cash equivalents at beginning of the period		8,442,249			11,849,712
Cash and cash equivalents at end of the period	$	1,788,298		$	4,464,674
Non-cash financing activities:
Issuance of common stock through reinvestment of dividends	$	2,223,629		$	1,719,987
Supplemental disclosures:
Taxes paid	$	800		$	20,026

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

6

MacKenzie Realty Capital, Inc.

Notes to Consolidated Financial Statements

March 31, 2019

(Unaudited)

NOTE 1 – PRINCIPAL BUSINESS AND ORGANIZATION

MacKenzie Realty Capital, Inc. (the "Parent Company" together with its subsidiary as discussed below, the "Company") was incorporated under the general corporation laws of the State of Maryland on January 25, 2012. It is a non-diversified, closed-end investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended ("1940 Act"). The Parent Company has elected to be treated as a real estate investment trust ("REIT") as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Parent Company is authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as Common Stock, with a $0.0001 par value per share; and (ii) 20,000,000 are designated as Preferred Stock, with a $0.0001 par value per share. The Parent Company commenced its operations on February 28, 2013, and its fiscal year-end is June 30.

The Parent Company filed its initial registration statement in June 2012 with the Securities and Exchange Commission ("SEC") to register the initial public offering (“IPO”) of 5,000,000 shares of its common stock. The IPO commenced in January 2014 and concluded in October 2016. The Parent Company filed a second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of its common stock that was declared effective by the SEC on December 20, 2016, and the offering commenced shortly thereafter.

The Parent Company’s wholly owned subsidiary, MRC TRS, Inc., (“TRS”) was incorporated under the general corporation laws of the State of California on February 22, 2016, and operates as a taxable REIT subsidiary. TRS started its operation on January 1, 2017, and the financial statements of TRS have been consolidated with the Parent Company beginning with the year ended June 30, 2017. On December 20, 2017, a wholly owned subsidiary of TRS, MacKenzie NY Real Estate 2 Corp., (“MacKenzie NY 2”), was formed for the purpose of making certain limited investments in New York companies. The financial statements of MacKenzie NY 2 have been consolidated with the Company beginning with the quarter ended March 31, 2018.

The Company is externally managed by MacKenzie Capital Management, LP ("MacKenzie") under the administration agreement dated and effective as of February 28, 2013 (the "Administration Agreement"). Pursuant to the Administration Agreement, MacKenzie manages all of the Company's affairs except for providing investment advice. The Company is advised by MCM Advisers, LP (the "Adviser") under the advisory agreement amended and restated effective October 1, 2017, and subsequently amended October 23, 2018 (the "Amended and Restated Investment Advisory Agreement"). The Company pursues a strategy focused on investing primarily in illiquid or non-traded debt and equity securities issued by U.S. companies generally owning commercial real estate.  These companies are likely to be non-traded REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships and limited liability companies.

As of March 31, 2019, the Company has raised approximately $102.0 million from the public offerings, including proceeds from the Company’s dividend reinvestment plan ("DRIP") of approximately $7.5 million. Of the shares issued by the Company in exchange for the total capital raised as of March 31, 2019, approximately $5.1 million worth of shares have been repurchased under the Company’s share repurchase program.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation Policy

The accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company’s wholly owned consolidated subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Under the 1940 Act rules, regulations pursuant to Article 6 of Regulation S-X and Topic 946 of the Accounting Standards Codification, as amended (the "ASC"), of the Financial Accounting Standards Board ("FASB"), Financial Services-Investment Companies, the Company is precluded from consolidating portfolio company investments, including those in which the Company has a controlling interest, unless the portfolio company is an investment company or a controlled operating company which provides substantially all of its services to benefit the Company, such as an investment adviser or transfer agent. None of the Company’s investments qualifies for these exceptions. Therefore, the Company’s portfolio company investments, including those in which the Company has a controlling interest, are carried on the consolidated statements of assets and liabilities at fair value with changes to fair value recognized as net unrealized gain (loss) on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss on exit being recognized as a realized gain or loss. However, in the event that any controlled subsidiary exceeds the tests of significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, the Company will include required financial information for such subsidiary in the notes or as an attachment to its consolidated financial statements.

7

The unaudited consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the Company’s results for the interim periods presented. The results of operations for interim periods are not indicative of results to be expected for the full year.

These unaudited consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2018, included in the Company's annual report on Form 10-K filed with the SEC.

There have been no changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended June 30, 2018, other than those expanded upon and described below.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These balances are insured by the Federal Deposit Insurance Corporation ("FDIC") up to certain limits. At times the cash balances held in financial institutions by the Company may exceed these insured limits. Cash and cash equivalents are carried at cost which approximates fair value. There were no cash equivalents held as of March 31, 2019, and June 30, 2018.

Accounts Receivable

Accounts receivable represent dividends, distributions and sales proceeds recognized in accordance with our revenue recognition policy but not yet received as of the date of the financial statements. The amounts are generally fully collectible as they are recognized based on completed transactions. The Company monitors and adjusts its receivables and those deemed to be uncollectible are written-off only after all reasonable collection efforts are exhausted. The Company has determined that all account receivable balances outstanding as of March 31, 2019, are collectible and do not require recording any uncollectible allowance.

Capital Pending Acceptance

The Company conducts closings for new purchases of the Company’s common stock twice per month and admits new stockholders effective beginning the first of each month. Subscriptions are effective only upon the Company's acceptance. Any gross proceeds received from subscriptions which are not accepted as of the period-end are classified as capital pending acceptance in the consolidated statements of assets and liabilities. As of March 31, 2019, and June 30, 2018, capital pending acceptance was $1,000,108 and $646,300, respectively.

Organization and Deferred Offering Costs

Organization costs include, among other things, the cost of legal services pertaining to the organization and incorporation of the business, incorporation fees and audit fees relating to the IPO and the initial statement of assets and liabilities. These costs are expensed as incurred. Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the registration statements and pre- and post-effective amendments. Offering costs are capitalized as deferred offering costs as incurred by the Company and subsequently amortized to expense over a twelve-month period. Any deferred offering costs that have not been amortized upon the expiration or earlier termination of an offering will be accelerated and expensed upon such expiration or termination.

8

The offering costs incurred in connection with the current public offering through March 31, 2019, was $1,519,213. These offering costs are deferred and expensed over a twelve-month period beginning from the date the registration was declared effective by the SEC. The offering costs incurred and paid by the Company in excess of $1,650,000 on this public offering will be reimbursed by the Adviser as discussed in Note 5. Amortization of these deferred costs for the nine months ended March 31, 2019 and 2018 were $384,347 and $302,186, respectively. Accumulated amortization of these deferred costs as of March 31, 2019, and June 30, 2018, were $1,073,288 and $688,941, respectively.

Reclassifications

Certain amounts in the consolidated statements of assets and liabilities as of June 30, 2018 related to non-controlled/non-affiliated investments have been reclassified as affiliated or controlled investments. In addition, the corresponding investment income, net realized gains (losses) and net unrealized gains (losses) from those non-controlled/non-affiliated investments have been reclassified to respective line items under affiliated or controlled investments in the consolidated statements of operations for the three and nine months ended March 31, 2018.

Income Taxes and Deferred Tax Liability

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, it is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it distributes at least 90% of its REIT taxable income to the stockholders and meets certain other conditions. To the extent that it satisfies the annual distribution requirement but distributes less than 100% of its taxable income, it is either subject to U.S. federal corporate income tax on its undistributed taxable income or 4% excise tax on catch-up distributions paid in the subsequent year.

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax years ended December 31, 2017. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2017. Similarly, for the tax year 2018, we believe the Parent Company paid the requisite amounts of dividends during the year such that it will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during the quarterly periods within the tax year 2018.

The Parent Company was subject to tax on built-in gains it realized during the first five years following REIT election. Prior to the REIT effective date, the Parent Company recorded an estimated built-in gains liability on the entire unrealized built-in gains as deferred tax liabilities and in each subsequent period it only recorded the difference between the actual and the previously recorded estimated tax liability on the built-in gains it realized during the period as built-in gain tax adjustment. As of December 31, 2018, the final date realized built-in gains were taxable, the company recorded a tax liability of $1,280 for the built-in gains realized during tax year 2018 and reversed the remaining deferred tax liabilities of $12,968 as income tax benefit in the consolidated statements of operations since the remaining unrealized built-in gains are not taxable after December 31, 2018. The Parent Company had elected to be treated as a REIT effective January 1, 2014.

TRS and MacKenzie NY 2 are subject to corporate federal and state income tax on its taxable income at regular statutory rates. However, as of March 31, 2019, they did not have any taxable income for tax year 2018 or 2019. Therefore, TRS and MacKenzie NY 2 did not record any income tax provisions during the nine months ended March 31, 2019.

The Company and its subsidiaries follow ASC 740, Income Taxes, (“ASC 740”) to account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to the net unrealized investment gain (losses) on existing investments. In estimating future tax consequences, the Company considers all future events, other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period of enactment. In addition, ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. As of March 31, 2019, and June 30, 2018, there were no uncertain tax positions. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.

9

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers (Topic 606). ASU 2014‑09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry‑specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All of the Company’s income is not within the scope of ASU 2014-09. As a result, the Company’s timing of its revenue recognition remains the same and the adoption of the standard did not have any impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued guidance which changes the fair value disclosure requirements. The new guidance includes new, eliminated and modified fair value disclosures. Among other requirements, the guidance requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way it is calculated. The guidance also eliminated the following disclosures: (1) amount and reason for transfers between Level I and Level II, (2) policy for timing of transfers between levels of the fair value hierarchy and (3) valuation processes for Level 3 fair value measurement. The guidance is effective for all entities for interim and annual periods beginning after December 15, 2019. Early adoption is permitted upon issuance of the guidance. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

SEC Disclosure Update and Simplification

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. As a result of the amendments, we are required to present a reconciliation of changes in stockholders’ equity in the notes or as a separate statement. This analysis should reconcile the beginning balance to the ending balance of each caption in stockholders’ equity for each period for which an income statement is required to be filed and comply with the remaining content requirements of Rule 3-04 of Regulation S-X. In October 2018, the SEC announced that this final rule will become effective on November 5, 2018. In light of the timing of effectiveness of the amendments and proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC staff commented that it would not object if the first presentation of the changes in shareholders’ equity is included in a filer’s Form 10-Q for the quarter that begins after the effective date of the amendments. Accordingly, the Company changed the periods presented in the consolidated statements of changes in net assets beginning our third quarter ended March 31, 2019.

NOTE 3 –INVESTMENTS

The following table summarizes the composition of the Company's investments at cost and fair value as of March 31, 2019, and June 30, 2018:

	March 31, 2019				June 30, 2018
Asset Type	Cost		Fair Value		Cost		Fair Value
Publicly Traded Companies	$	3,118,754	$	2,796,006	$	6,652,816	$	6,661,083
Non Traded Companies		34,357,022		37,901,544		30,234,571		33,097,115
LP Interests		55,932,573		59,635,185		26,577,677		33,685,086
Investment Trust		49,901		40,499		49,901		41,222
Note		-		-		1,100,000		1,100,000
Total	$	93,458,250	$	100,373,234	$	64,614,965	$	74,584,506

10

The following table presents fair value measurements of the Company's investments as of March 31, 2019, according to the fair value hierarchy that is described in our annual report on Form 10-K:

Asset Type	Total		Level I		Level II		Level III
Publicly Traded Company	$	2,796,006	$	2,796,006	$	-	$	-
Non Traded Companies		37,901,544		-		-		37,901,544
LP Interests		59,635,185		-		-		59,635,185
Investment Trust		40,499		-		-		40,499
Total	$	100,373,234	$	2,796,006	$	-	$	97,577,228

The following table presents fair value measurements of the Company's investments as of June 30, 2018, according to the fair value hierarchy that is described in our annual report on Form 10-K:

Asset Type	Total		Level I		Level II		Level III
Publicly Traded Companies	$	6,661,083	$	6,661,083	$	-	$	-
Non Traded Companies		33,097,115		-		-		33,097,115
LP Interests		33,685,086		-		-		33,685,086
Investment Trust		41,222		-		-		41,222
Notes		1,100,000		-		-		1,100,000
Total	$	74,584,506	$	6,661,083	$	-	$	67,923,423

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair value hierarchy) for the nine months ended March 31, 2019:

Balance at July 1, 2018	$	67,923,423
Purchases of investments		62,969,383
Transfers to Level I		(1,991,230	)
Proceeds from sales, net		(16,072,651	)
Return of capital		(15,442,938	)
Net realized gains		2,914,784
Net unrealized losses		(2,723,543	)
Ending balance at March 31, 2019	$	97,577,228

The transfers of $1,991,230 from Level III to Level I category during the nine months ended March 31, 2019 resulted from two of the Company's investments converting from a private REIT to publicly traded REIT. Transfers are assumed to have occurred at the beginning of the year.

For the nine months ended March 31, 2019, changes in unrealized loss included in earnings relating to Level III investments still held at March 31, 2019, were $811,045.

11

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair value hierarchy) for the nine months ended March 31, 2018:

Balance at July 1, 2017	$	31,023,069
Purchases of investments		43,173,032
Proceeds from sales, net		(9,103,926	)
Return of capital		(9,255,060	)
Net realized gains		2,542,873
Net unrealized gains		950,459
Ending balance at March 31, 2018	$	59,330,447

For the nine months ended March 31, 2018, changes in unrealized gains included in earnings relating to Level III investments still held at March 31, 2018 were $1,833,283.

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at March 31, 2019:

Asset Type	Fair Value	Primary Valuation Techniques	Unobservable Inputs Used	Range	Wt. Average
Non Traded Companies	$                   3,570,658	Direct Capitalization Method	Capitalization rate	5.2% - 7.7%	6.9%
			Liquidity discount	19.0% - 34.0%	21.0%
Non Traded Companies	1,122,286	Discounted Cash Flow	Discount rate	24.0%
			Discount term (months)	18.0
Non Traded Companies	52,324	Estimated Liquidation Value	Sponsor provided value
			Liquidity discount	14.0% - 65.0%	34.7%
Non Traded Companies	33,156,276	Market Activity	Contracted sale price of security
			Secondary market industry publication
LP Interests	12,918,039	Direct Capitalization Method	Capitalization rate	4.0% - 7.5%	5.8%
			Liquidity discount	19.0% - 25.0%	19.3%
LP Interests	30,376,506	Discounted Cash Flow	Discount rate	9.0% - 30.0%	16.8%
			Discount term (months)	2.0 - 24.0	20.1
LP Interests	201,793	Estimated Liquidation Value	Sponsor provided value
			Underlying contracted agreement
			Liquidity discount	19.0% - 50.0%	47.4%
LP Interests	16,138,847	Market Activity	Acquisition Cost
			Book value of underlying loans
			Liquidity discount	30.0%
Investment Trust	40,499	Direct Capitalization Method	Capitalization rate	6.0%
			Liquidity discount	25.0%
	$                 97,577,228

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The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2018:

Asset Type	Fair Value	Primary Valuation Techniques	Unobservable Inputs Used	Range	Wt. Average
Non Traded Companies	$               28,675,305	Market Activity	Acquisition Cost
			Secondary market industry publication
			Contracted sale price of security
Non Traded Companies	4,421,810	Net Asset Value (1)	Capitalization rate	8.0% - 8.9%	8.6%
			Liquidity discount	10.0% - 64.0%	25.4%
			Sponsor provided value
LP Interests	4,703,633	Market Activity	Acquisition Cost
LP Interests	12,973,750	Discounted Cash Flow	Underlying note discount rate	15%
			Discount term (months)	30.0
LP Interests	16,007,703	Net Asset Value (1)	Capitalization rate	5.4% - 8.0%	5.6%
			Discount rate	20.0% - 30.0%	25.4%
			Liquidity discount	6.0% - 50.0%	11.9%
			Discount term (months)	4.0 - 13.0	8.9
			Sponsor provided value
			Contracted sale price of underlying property
Investment Trust	41,222	Net Asset Value (1)	Capitalization rate	6.00%
			Liquidity discount	25.0%
Note	1,100,000	Discounted Cash Flow	Discount rate	24.0%
			Discount term (months)	2.0
	$               67,923,423

Valuation Technique Terms:

(1) The net asset value of the issuer's shares was calculated by the Company.

NOTE 4—MARGIN LOANS

The Company has a brokerage account through which it buys and sells publicly traded securities. The provisions of the account allow the Company to borrow on certain securities held in the account. Amounts borrowed are collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly. Securities pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account. As of March 31, 2019, the Company had $62,083 of margin credit available for cash withdrawal or the ability to purchase up to $259,214 in additional shares. As of June 30, 2018, the Company had $10,946,343 of margin credit available for cash withdrawal or the ability to purchase up to $22,198,676 in additional shares. In December 2017, the Company borrowed $6,012,413 which was paid back in full in January 2018, under this short-term credit line. The Company hasn't borrowed any amount or purchased any shares under this credit line since then.

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NOTE 5 –RELATED PARTY TRANSACTIONS

Amended and Restated Investment Advisory Agreement:

Under the Amended and Restated Investment Advisory Agreement, the Company will pay the Adviser a fee for its services consisting of three components — a portfolio structuring fee, a base management fee, and a subordinated incentive fee.

The portfolio structuring fee is for the Adviser's initial work performed in identifying, evaluating and structuring the acquisition of assets. The fee equals 3.0% of the gross invested capital (“Gross Invested Capital”), which equals the number of shares issued, multiplied by the offering price of the shares sold ($10.00, regardless of whether or not shares were issued with volume or commission discounts), plus any borrowed funds. These services are performed on an ongoing basis in anticipation of deploying new capital, generally within 15 days of the receipt of capital.  Therefore, this fee is expensed in the period the capital is accepted.

The base management fee is calculated based on the Company's Gross Invested Capital plus any borrowing for investment purposes. The base management fees range from 1.5% to 3.0%, depending on the level of Gross Invested Capital.

The subordinated incentive fee has two parts—income and capital gains. The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor the capital gains incentive fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee; a fiscal year, for the capital gains incentive fee).

The income incentive fee (“Income Fee”) is calculated and payable quarterly in arrears as follows: (i) the sum of preliminary net investment income for each fiscal quarter since the effective date of the Amended and Restated Investment Advisory Agreement (October 1, 2017) exceeding 7% of the “Contributed Capital” (which equals the number of shares issued multiplied by the maximum public offering price at the time such shares were sold, regardless of whether or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital;  and (ii) 20.0% of our preliminary net investment income for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate; minus (iii) the sum of all previously paid income incentive fees since the effective date, plus (iv) any incremental income incentive fee payable resulting from the reanalysis after calculation of the capital gains incentive fee.

The capital gains incentive fee (“Capital Gains Fee”) is calculated and payable in arrears as of the end of each fiscal year as follows: (i) the sum of all "capital gains" (calculated as net realized capital gains less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income);  and (ii) 20.0% of all capital gains for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income); minus (iii) the sum of all previously paid income incentive fees since the effective date and prior to the end of such fiscal year; less (iv) the aggregate amount of all capital gains incentive fees paid in prior fiscal years ending after the effective date. To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital gains for the measurement period, the capital gains incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

The portfolio structuring fees for the three and nine months ended March 31, 2019, were $186,343 and $557,336, respectively. The portfolio structuring fees for the three and nine months ended March 31, 2018, were $135,746 and $508,867, respectively.

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The base management fees for the three and nine months ended March 31, 2019, were $567,699 and $1,621,490, respectively. The base management fees for the three and nine months ended March 31, 2018, were $442,375 and $1,250,366, respectively. These base management fees were based on the following quarter ended Gross Invested Capital segregated in two columns based on the annual fee rate:

Base Management Fee Annual %		3.0%		2.0%		1.5%	Total Gross Invested Capital
Quarter ended:
September 30, 2018	$	20,000,000	$	72,435,844	$	-	$	92,435,844
December 31, 2018		20,000,000		78,322,307		-		98,322,307
March 31, 2019		20,000,000		80,000,000		4,719,872		104,719,872
Quarter ended:
September 30, 2017	$	20,000,000	$	47,783,337	$	-	$	67,783,337
December 31, 2017		20,000,000		53,814,885		-		73,814,885
March 31, 2018		20,000,000		58,474,911		-		78,474,911

The Company records the Capital Gains Fee accrual on the consolidated statements of operations and statements of assets and liabilities when net realized capital gains less unrealized capital depreciation on its investments exceed the incentive fee threshold of 7% of Contributed Capital. However, the actual incentive fee payable to the Adviser related to capital gains will be determined and payable in arrears at the end of each fiscal year.

The Capital Gains fee accrual for the three and nine months ended March 31, 2019, were $81,620 and $1,291,168, respectively. There was no Income Fee for the three or nine months ended March 31, 2019. There was no Income Fee or Capital Gains Fee accrual for the three and nine months ended March 31, 2018.

Organization and Offering Costs Reimbursement:

As provided in the Amended and Restated Investment Advisory Agreement, offering costs incurred and paid by the Company in excess of $1,650,000 on the second public offering will be reimbursed by the Adviser. The offering costs incurred in connection with this public offering as of March 31, 2019 and June 30, 2018 were $1,519,213 and $975,555, respectively, both of which were below the reimbursement threshold. Accordingly, there were no amounts reimbursable from the Adviser as of March 31, 2019 and June 30, 2018. Of the total offering costs incurred by the Company as of March 31, 2019 and June 30, 2018, MacKenzie had paid $631,942 and $237,149 on behalf of the Company. Of those amounts paid by MacKenzie, $128,141 and $237,149, were payable to MacKenzie as of March 31, 2019, and June 30, 2018. Therefore, these amounts were recorded as payable to MacKenzie and included as a part of due to related entities in the statements of assets and liabilities as of March 31, 2019 and June 30, 2018.

Administration Agreement:

Under the Administration Agreement, the Company reimburses MacKenzie for the Company’s allocable portion of overhead and other expenses that MacKenzie incurs in performing its obligations under the Administration Agreement, including furnishing the Company with office facilities, equipment and clerical, bookkeeping and record keeping services, performing compliance functions, providing the investor transfer agent services, providing the services of the Chief Financial Officer, Chief Compliance Officer, Director of Financial Reporting, and any administrative support staff, as well as providing the Company with other administrative services, subject to the Independent Directors' approval. In addition, effective November 1, 2018, transfer agent services are provided by MacKenzie inhouse and costs associated with the service are also included in the administrative cost reimbursements. No fee (only cost reimbursement) is being paid by the Company to MacKenzie for this service.  The administrative cost reimbursements for the three and nine months ended March 31, 2019, were $156,000 and $468,000, respectively. The administrative cost reimbursements for the three and nine months ended March 31, 2018, were $108,000 and $324,000, respectively.

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The table below outlines the related party expenses incurred for the three months ended March 31, 2019, and 2018 and unpaid as of March 31, 2019, and June 30, 2018.

	Nine Months Ended				Unpaid as of
Types and Recipient	March 31, 2019		March 31, 2018		March 31, 2019		June 30, 2018
Portfolio Structuring fee- the Adviser	$	557,366	$	508,867	$	-	$	-
Base Management fees- the Adviser		1,621,490		1,250,366		567,699		474,807
Subordinated Incentive fee - the Adviser		1,291,168		-		1,291,168		1,092,351
Administrative Cost Reimbursements- MacKenzie		468,000		324,000		-		-
Organization & Offering Cost (2) - MacKenzie						128,141		237,149
Other expenses (1)- MacKenzie						17,540		2,721
Due to related entities					$	2,004,548	$	1,807,028

⁽¹⁾ Expenses paid by MacKenzie on behalf of the Company to be reimbursed to MacKenzie.

⁽²⁾ Offering costs paid by MacKenzie- discussed in Note 5 under organization and offering costs reimbursements. These are amortized over twelve-month period as discussed in Note 2.

Controlled or Affiliated Investments:

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2019, the Company is deemed to be either “affiliated” with, or in “control” of, the below portfolio companies despite the fact that the Company does not have the power to exercise control over the management or policies of these portfolio companies.

March 31, 2019
Name of issuer and title of issue			Fair Value at		Gross Additions										Fair Value at		Interest/Dividend/Other incomeNine Months Ended
			June 30, 2018				Gross Reductions (1)			Net Realized Gains (losses)		Net Change in Unrealized Gains/(Losses)			March 31, 2019		March 31, 2019
Affiliated Investments:
5210 Fountaingate, LP	(2	)	$	555,728	$	-	$	-		$	-	$	8,870		$	564,598	$	18,125
Arrowpoint Burlington LLC	(2	)		869,072		-		-			-		20,512			889,584		61,667
BP3 Affliliate, LLC				-		1,250,000		-			-		-			1,250,000		-
FSP Energy Tower	(2	)		301,373		415,375		-			-		174,912			891,660		-
FSP Satellite Place	(2	)		499,140		5,825		-			-		66,227			571,192		-
Lakemont Partners, LLC				-		1,000,000		-			-		35,530			1,035,530		-
MPF Pacific Gateway - Class B				6,613		-		-			-		860			7,473		-
Secured Income, LP	(2	)		320,763		-		-			-		(5,173	)		315,590		-
Summit Healthcare REIT, Inc.	(2	)		2,043,379		119,876		-			-		316,052			2,479,307		88,682
			$	4,596,068	$	2,791,076	$	-		$	-	$	617,790		$	8,004,934	$	168,474
Controlled Investments:
Addison NC, LLC	(2	)	$	3,000,000	$	-	$	-		$	-	$	450,000		$	3,450,000	$	302,347
Addison Property Member, LLC				-		7,316,326		-			-		(1,470	)		7,314,856		-
Bandon PV Holdings, LLC				-		5,250,000		(4,600,000	)		-		(50	)		649,950		157,344
Bishop Berkeley, LLC				-		4,050,000		-			-		-			4,050,000		-
BR Gate Investment Co, LLC				-		3,475,000		(1,000,000	)		-		-			2,475,000		150,988
Britannia Preferred Members, LLC -Class 1				-		2,597,000		-			-		259,700			2,856,700		-
Britannia Preferred Members, LLC -Class 2	(2	)		2,547,000		5,326,932		-			-		8,549			7,882,481		-
Capitol Hill Partners, LLC	(2	)		1,919,000		-		-			-		(74,100	)		1,844,900		-
Coastal Realty Business Trust, REEP, Inc. - A				41,222		-		-			-		(723	)		40,499		-
Dimensions28 LLP				-		10,801,015		-			-		(1,015	)		10,800,000		-
			$	7,507,222	$	38,816,273	$	(5,600,000	)	$	-	$	640,891		$	41,364,386	$	610,679

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June 30, 2018
Name of issuer and title of issue			Fair Value at June 30, 2017		Gross Additions		Gross Reductions (1)			Net Realized Gains (losses)			Net Change in Unrealized Gains/(Losses)			Fair Value at June 30, 2018		Interest/Dividend/Other income Year Ended June 30, 2018
Affiliated Investment:
5210 Fountaingate, LP	(2	)	$	511,730	$	-	$	-		$	-		$	43,998		$	555,728	$	37,994
Arrowpoint Burlington LLC	(2	)		736,394		-		-			-			132,678			869,072		113,333
FSP Energy Tower	(2	)		270,177		9,150		-			-			22,046			301,373		-
FSP Satellite Place	(2	)		193,117		200,278		-			-			105,745			499,140		5,000
Secured Income, LP	(2	)		235,530		1,780		-			-			83,453			320,763		-
Summit Healthcare REIT, Inc.	(2	)		822,636		994,389		-			-			226,354			2,043,379		-
MPF Pacific Gateway - Class B				7,309		-		-			-			(696	)		6,613		789
			$	2,776,893	$	1,205,597	$	-		$	-		$	613,578		$	4,596,068	$	157,116
Controlled Investments:
Addison NC, LLC	(2	)	$	2,400,000	$	-	$	-		$	-		$	600,000		$	3,000,000	$	-
Britannia Preferred Members, LLC -Class 2	(2	)		2,017,500		-		-			-			529,500			2,547,000		-
Coastal Realty Business Trust, REEP, Inc. - A				30,374		-		-			-			10,848			41,222		-
Coastal Realty Business Trust, Series H2- A				3,783		-		(7,705	)		(54,413	)		58,335			-		-
Capitol Hill Partners, LLC	(2	)		-		1,900,000		-			-			19,000			1,919,000		-
MC 15 Preferred Equity, LLC				3,250,000		-		(2,501,557	)		1,557			(750,000	)		-		1,690,000
			$	7,701,657	$	1,900,000	$	(2,509,262	)	$	(52,856	)	$	467,683		$	7,507,222	$	1,690,000

(1) Gross reductions include decreases in the cost basis of investments resulting from return of capital distributions.

(2) Investments that are now deemed affiliated or controlled, as defined under the Investment company Act of 1940, after the amendment to Article 6 of Regulation S-X became effective in November 2018. These investments have been added in the June 30, 2018 table to conform to the presentation as of December 30, 2018.

Of the investments listed above, the Company (or its affiliates) has the power to exercise control over the management or policies of the portfolio companies listed below:

Coastal Realty Business Trust ("CRBT"):

CRBT is a Nevada business trust whose trustee is MacKenzie. Each series of the trust has its own beneficiaries and own assets. The Company owns two series of CRBT and is the only beneficiary of such series. Under the terms of the agreement, there are no redemption rights to any of the series participants. The Company and TRS are the sole beneficiaries of the following series as of March 31, 2019, and June 30, 2018:

· CRBT, REEP, Inc.-A, which has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland.

· CRBT, Series H2-A, which invests in shares of a REIT that owns a real estate portfolio totaling 105 properties within asset classes of ski and mountain lifestyle, senior housing, attractions, marinas and other lifestyle properties located in the United States and Canada. During the quarter ended March 31, 2018, the underlying REIT made liquidating distributions of $7,705 and dissolved. The Company had a cost basis of $62,118 at the time of the final liquidation.

MC 15 Preferred Equity, LLC:

MC 15 Preferred Equity, LLC is a holding company that owns preferred equity of a company that owns a commercial real estate property in Austin, Texas. The Company is a co-manager of MC 15 Preferred Equity, LLC and owns 55.8% ownership interest in the company. During the year ended June 30, 2018, MC 15 Preferred Equity, LLC dissolved after it received the preferred equity distributions from the underlying real estate company and distributed the proceeds to its members in accordance with the operating agreement.

MPF Pacific Gateway:

MPF Pacific Gateway, which is managed by MacKenzie, is a holding company that owns an investment in a REIT Liquidating Trust. As of March 31, 2019, and June 30, 2018, the Company had a 15.82% of ownership interest in MPF Pacific Gateway.

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NOTE 6 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights of the Company for the three months ended March 31, 2019, and the year ended June 30, 2018.

	For The Nine Months Ended			For The Year Ended
	March 31, 2019			June 30, 2018
Per Share Data:	(Unaudited)
Beginning net asset value ("NAV")	$	10.07		$	9.84
Net investment income (1)		0.40			0.30
Net realized gain (1)		0.13			0.36
Net unrealized gain (loss) (1)		(0.32	)		0.79
Net increase in net assets resulting from operations		0.21			1.45
Issuance of common stock above (below) NAV (1) (4)		(0.18	)		(0.32	)
Redemption of common stock below NAV (1) (6)		0.01			0.01
Dividends to stockholders (1) (5)		(0.56	)		(0.91	)
Ending NAV	$	9.55		$	10.07
Weighted average common Shares outstanding		9,655,180			7,440,841
Shares outstanding at the end of period		10,471,987			8,496,142
Net assets at the end of period	$	100,053,757		$	85,595,319
Average net assets (2)	$	92,824,538		$	72,792,422
Ratios to average net assets
Total expenses (7)		5.00	%		6.52	%
Net investment income (7)		4.17	%		3.06	%
Total rate of return (2) (3) (7)		2.19	%		14.79	%

(1)       Based on weighted average number of shares of common stock outstanding for the period.

(2)       Average net assets were derived from the beginning and ending period-end net assets.

(3)       Total rate of return is based on net increases (decreases) in net assets resulting from operations. An individual stockholder’s return may vary from this return based on the time of capital transactions.

(4)       Net of sales commissions and dealer manager fees of $1.00 per share.

(5)       Dividends are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under GAAP.

(6)       Amounts based on differences between the actual redemption price and the NAVs preceding the redemptions.

(7)       Not annualized for interim reporting periods.

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NOTE 7 – SHARE OFFERINGS AND FEES

During the nine months ended March 31, 2019, the Company issued 1,858,542 shares with gross proceeds of $18,334,137 and 247,070 shares pursuant to the DRIP at $9 per share with gross proceeds of $2,223,629. For the nine months ended March 31, 2019, the Company incurred selling commissions and fees of $1,606,669.

During the nine months ended March 31, 2018, the Company issued 1,665,063 shares with gross proceeds of $16,650,630 and 191,110 shares under the DRIP at $9 per share with gross proceeds of $1,719,987. For the nine months ended March 31, 2018, the Company incurred selling commissions and fees of $1,660,096.

NOTE 8 – SHARE REPURCHASE PLAN

Pursuant to the Company's share repurchase program, during the nine months ended March 31, 2019, the Company made tender offers to purchase its own shares at $9 per share. The Company repurchased 129,767 shares for a total of $1,167,903. Similarly, during the nine months ended March 31, 2018, the Company submitted tender offers and repurchased a total of 105,454 shares for a total of $949,089.

NOTE 9 –STOCKHOLDER DIVIDENDS AND INCOME TAXES

The following table reflects the dividends the Company declared on its common stock:

	Dividends
During the Quarter Ended	Per Share		Amount
September 30, 2018	$	0.175	$	1,571,551
December 31, 2018		0.206		1,994,972
March 31, 2019		0.175		1,794,012
	$	0.556	$	5,360,535

During the nine months ended March 31, 2019, the Company paid dividends of $5,005,331, of which $2,223,629 were reinvested in the DRIP. Total cash dividends paid during the nine months ended March 31, 2019 was $2,781,702.

The following table reflects the dividends the Company declared on its common stock:

	Dividends
During the Quarter Ended	Per Share		Amount
September 30, 2017	$	0.175	$	1,033,816
December 31, 2017		0.425		2,941,369
March 31, 2018		0.175		1,345,491
	$	0.775	$	5,320,676

During the nine months ended March 31, 2018, the Company paid dividends of $3,975,185, of which $1,719,987 were reinvested in the DRIP. Total cash dividends paid during the nine months ended March 31, 2018 was $2,255,198.

On April 25, 2019, the Company's Board of Directors approved a monthly dividend of $0.05833 per share for the quarter ending June 30, 2019, payable on or about the quarterly payment date of July 31, 2019, to record holders as of April 30, 2019, May 31, 2019, and June 30, 2019.

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Income Taxes

While our fiscal year end for financial reporting purposes is June 30 of each year, our tax year end is December 31 of each year. The information presented in this footnote is based on our tax year end for each period presented, unless otherwise specified.

For income tax purposes, dividends paid to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of dividends paid to stockholders for the tax years ended December 31, 2017, (the most recent tax year end completed and filed) were as follows:

	December 31, 2017
Capital gain	$	3,798,189
Ordinary income		1,046,997
Total dividends	$	4,845,186

Because of the difference between our fiscal and tax year ends, the final determination of the tax character of dividends will not be made until we file our tax return for the tax year ended December 31, 2018.

The components of undistributed earnings on a tax basis as of December 31, 2017 (the most recent tax year end completed and filed) were as follows:

	December 31, 2017
Undistributed long term capital gain	$	114,401
Unrealized fair value appreciation		4,939,463
	$	5,053,864

The following table presents the aggregate gross unrealized appreciation, depreciation, and cost basis of investments for income tax purposes as of:

	March 31, 2019			June 30, 2018
Aggregate gross unrealized appreciation	$	8,478,084		$	11,257,709
Aggregate gross unrealized depreciation		(1,093,001	)		(840,942	)
Net unrealized appreciation	$	7,385,083		$	10,416,767
Aggregate cost (tax basis)	$	92,988,151		$	64,167,738

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements by MacKenzie Realty Capital, Inc. and its wholly owned subsidiary MRC TRS, Inc. (the "Company," "we," or "us") contained herein, other than historical facts, may constitute "forward-looking statements."  These statements may relate to, among other things, future events or our future performance or financial condition.  In some cases, you can identify forward-looking statements by terminology such as "may," "might," "believe," "will," "provided," "anticipate," "future," "could," "growth," "plan," "intend," "expect," "should," "would," "if," "seek," "possible," "potential," "likely" or the negative of such terms or comparable terminology.  These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, including an economic downturn could impair our portfolio companies' ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies; a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities; and interest rate volatility could adversely affect our results, particularly if we elect to use leverage as a part of our investment strategy.  For a discussion of factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading "Risk Factors" in our Annual Report on Form 10-K.

We may experience fluctuations in our operating results due to a number of factors, including the return on our equity investments, the interest rates payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Overview

We are an externally managed non-diversified closed-end management investment company that has elected to be treated as a BDC under the 1940 Act. Our objective is to generate both current income and capital appreciation through real estate-related investments. We have elected to be treated as a REIT under the Code and as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we distribute at least 90% of our REIT taxable income to the stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our taxable income, we will be subject to an excise tax on our undistributed taxable income. Our wholly owned subsidiary, MRC TRS, Inc., is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

We are managed by the Adviser, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate.

Investment Plan

Our investments are generally expected to range in size from $10,000 to $3 million. However, we may make smaller or larger investments from time to time on an opportunistic basis. We focus primarily on real estate-related securities. We purchase most of our securities (i) directly from existing security holders, (ii) through established securities markets, and (iii) in the case of unregistered, privately offered securities, directly from issuers. We invest primarily in debt and equity securities issued by U.S. companies that primarily own commercial real estate that are either illiquid or not listed on any exchange.

We generally seek to invest in interests of real estate-related limited partnerships and REITs. Under normal market conditions, we invest at least 80.0% of our total assets in common stocks and other equity or debt securities issued by real estate companies, including REITs and similar REIT-like entities. A real estate company is one that (i) derives at least 50.0% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate and land; or (ii) has at least 50.0% of its assets invested in such real estate. We do not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to their security holders.  However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities. We generally consider purchasing securities issued by entities that have (i) completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or other real estate-related investments.

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We may also acquire (i) individual mortgages secured by real property (i.e., we may originate such loans or we may purchase outstanding loans secured by real estate), (ii) securities of issuers that own mortgages secured by income producing real property, and (iii) using no more than 20.0% of our available capital, securities of issuers that own assets other than real estate.

Investment income

We generate revenues in the form of capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any debt investments that we hold. Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees are generated in connection with our investments and recognized as earned.

Expenses

Our primary operating expenses include the payment of: (i) investment advisory fees to our Adviser; (ii) our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement; and (iii) other operating expenses as detailed below. Our investment advisory fees compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing, monitoring and servicing our investments. Our expenses must be billed to and paid by us, except that MacKenzie may be reimbursed for actual cost of goods and services used by us and certain necessary administrative expenses. We will bear all other expenses of our operations and transactions, including:

· the cost of calculating our NAV;

· the cost of effecting sales and repurchases of our shares and other securities;

· interest payable on debt, if any, to finance our investments;

· fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and third-party advisory fees;

· transfer agent and safekeeping fees;

· fees and expenses associated with marketing efforts;

· federal and state registration fees, and any stock exchange listing fees in the future;

· federal, state, and local taxes, if any;

· Independent Directors' fees and expenses;

· brokerage commissions;

· fidelity bond, directors and officers errors and omissions liability insurance, and other insurance premiums;

· direct costs and expenses of administration, including printing, mailing, and staff;

· fees and expenses associated with independent audits and outside legal costs;

· costs associated with our reporting and compliance obligations under the 1934 Act, the 1940 Act, and applicable federal and state securities laws; and

· all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, our Chief Financial Officer, Director of Accounting and Financial Reporting, General Counsel, and any administrative support staff.

In addition, we will bear organization and offering expenses in connection with our current public offering up to $1,650,000. Any additional organization and offering expenses will be paid by our Adviser.

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Portfolio Investment Composition

The following table summarizes the composition of our investments at cost and fair value as of March 31, 2019, and June 30, 2018:

	March 31, 2019				June 30, 2018
Asset Type	Cost		Fair Value		Cost		Fair Value
Publicly Traded Companies	$	3,118,754	$	2,796,006	$	6,652,816	$	6,661,083
Non Traded Companies		34,357,022		37,901,544		30,234,571		33,097,115
LP Interests		55,932,573		59,635,185		26,577,677		33,685,086
Investment Trust		49,901		40,499		49,901		41,222
Note		-		-		1,100,000		1,100,000
Total	$	93,458,250	$	100,373,234	$	64,614,965	$	74,584,506

Net Asset Value

March 31, 2019 vs. December 31, 2018:

Our NAV as of March 31, 2019, was $9.55 per share compared to $9.79 per share as of December 31, 2018, a $0.24 per share decrease of approximately 2.45%. The net decrease during the three months was due to decreases resulting from (i) a dividend to stockholders of $0.18 per share (on a weighted average basis), (ii) net realized loss on sale of investments of $0.08 per share and (iii) issuance of shares (net of selling commissions and dealer manager fees) below NAV per share resulting in a decrease of a $0.05 per share. The decreases were partly offset by increases resulting from (i) net investment income of $0.05 per share and (ii) net unrealized gain on investments of $0.02 per share.

March 31, 2019 vs. June 30, 2018:

Our NAV as of March 31, 2019, was $9.55 per share compared to $10.07 per share as of June 30, 2018, a $0.52 per share decrease of approximately 5.16%. The net decrease during the nine months was due to decreases resulting from (i) a dividend to stockholders of $0.56 per share (on a weighted average basis) (ii) net unrealized loss of $0.32 per share and (iii) issuance of shares (net of selling commissions and dealer manager fees) below NAV per share resulting in a decrease of a $0.18 per share. The decreases were partly offset by increases resulting from (i) net investment income of $0.40 per share (ii) net realized gain on sale of investments of $0.13 per share and (iii) redemption of shares below NAV resulting in gain of $0.01 per share.

Results of Operations

Three Months Ended March 31, 2019, and 2018:

Investment Income:

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income for the three months ended March 31, 2019, and 2018, was $1.74 million and $2.91 million, respectively. The decrease of $1.17 million or 40.2%, was due to a decrease of $1.65 million in our distribution income from sales or capital transactions during 2019 partly offset by an increase of $0.47 million in dividends and distribution income from operations. During the three months ended March 31, 2019, the Company did not receive any distributions from sales or capital transactions as compared to $1.65 million of sales distributions from one limited partnership security during the three months ended March 31, 2018. The increase of $0.47 million in dividend and distribution income from operations was attributed to the increase in our overall investment portfolio since March 31, 2018.

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Operating Expenses:

Base management fee: The base management fee for the three months ended March 31, 2019 was $0.57 million as compared to $0.44 million for the three months ended March 31, 2018. This increase of $0.13 million, or 29.5% was due to an increase in the Gross Invested Capital by $26.25 million from $78.47 million as of March 31, 2018, to $104.72 million as of March 31, 2019.

Portfolio structuring fee: The portfolio structuring fees for the three months ended March 31, 2019, and 2018 were $0.19 million and $0.14 million, respectively. The increase in fees of $0.05 million or 35.7% was due to a higher amount of capital raised during 2019 compared to 2018. During the three months ended March 31, 2019, the Company raised $6.08 million of new capital through issuance of new shares excluding the DRIP as compared to $4.21 million during the same period in 2018.

Subordinated incentive fee: The subordinated incentive fee has two components; Capital Gains Fee and Income Fee. Capital Gains Fee is based on realized gains (including the distributions received from sales/capital transactions) and the Income Fee is based on net investment income.

There was no Income Fee for the three months ended March 31, 2019, as the net investment income for the period was below the threshold of 7% Contributed Capital. Capital Gains Fee for the three months ended March 31, 2019 was $0.08 million as the cumulative realized capital gains as of March 31, 2019, were over the threshold of 7% of Contributed capital. The Company records the Capital Gains Fee accrual on the consolidated statements of operations and statements of assets and liabilities when net realized capital gains less unrealized capital depreciation on its investments exceed the incentive fee threshold of 7% of Contributed Capital. However, the actual incentive fee payable to the Adviser related to capital gains will be determined and payable in arrears at the end of each fiscal year.

There was neither Income Fee nor Capital Gains Fee for the three months ended March 31, 2018. This was because the cumulative net investment income and net realized gains were below the threshold of 7% of Contributed Capital.

Administrative cost reimbursements: Costs reimbursed to MacKenzie for the three months ended March 31, 2019, was $0.16 million as compared to $0.11 million for the three months ended March 31, 2018. The increase was primarily due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie since March 31, 2018, as a result of the increase in the Company’s operating activities. In addition, effective November 1, 2018, transfer agent services are provided by MacKenzie inhouse and costs associated with the service are included in the administrative cost reimbursements. This service was previously provided by a third party and the cost incurred were expensed under other general and administrative expenses.

Other operating expenses: Other operating expenses include amortization of deferred offering costs, professional fees, directors’ fees printing and mailing, and other general and administrative expenses. Other operating expenses for the three months ended March 31, 2019 and 2018, were $0.25 million and $0.15 million. The increase of 0.10 million or 66.7% increase was due a larger amount of amortization of deferred offering costs for the three months ended March 31, 2019 as compared to the same period in 2018. Offering costs that are deferred and amortized over twelve-month period, as of March 31, 2018 was $0.73 million as compared to $1.52 million as of March 31, 2019.

Net realized gain on investments:

During the three months ended March 31, 2019, the Company had a realized loss of $0.81 million as compared to a realized gain of $0.05 million during the three months ended March 31, 2018. Total realized losses for the three months ended March 31, 2019, were primarily realized from sales of sixteen publicly traded securities. Total realized gains for the three months ended March 31, 2018, were realized from a sale of one non-traded REIT security and liquidation of one limited partnership security with total realized gain of $0.37 million, which was offset by net realized loss of $0.32 million from sales of two publicly traded REIT securities.

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Net unrealized gain/loss on investments:

During the three months ended March 31, 2019, we recorded net unrealized gain of $0.15 million; however, this is net of $0.96 million of unrealized losses reclassification adjustment. The reclassification adjustment was the accumulated unrealized losses as of December 31, 2018, that were realized during the three months ended March 31, 2019. Accordingly, the net unrealized losses excluding the reclassification adjustment for the three months ended March 31, 2019, were $0.81 million, which resulted from fair value depreciation of $0.64 million from publicly traded REIT securities, $0.16 from non-traded REIT securities and $0.01 million from limited partnership interests.

During the three months ended March 31, 2018, we recorded a net unrealized loss of $1.58 million, which was net of $0.47 million of unrealized gains reclassification adjustment. The reclassification adjustment was the accumulated unrealized gains as of December 31, 2017, that was realized during the three months ended March 31, 2018. Accordingly, the net unrealized loss excluding the reclassification adjustment for the three months ended March 31, 2018, was $1.11 million, which resulted from fair value depreciation of $1.05 million from publicly traded REIT securities and $0.54 million from limited partnership interests, offset by fair value appreciation of $0.48 million from non-traded REIT securities.

Income tax provision (benefit):

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax years ended December 31, 2017. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2017. Similarly, for the tax year 2018, we believe the Parent Company paid the requisite amounts of dividends during the year such that it will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during the quarterly periods within the tax year 2018.

The Parent Company was subject to tax on built-in gains it realized during the first five years following REIT election. Prior to the REIT effective date, the Parent Company recorded an estimated built-in gains liability on the entire unrealized built-in gains as deferred tax liabilities and in each subsequent period it only recorded the difference between the actual and the previously recorded estimated tax liability on the built-in gains it realized during the period as built-in gain tax adjustment. As of December 31, 2018, the final date realized built-in gains were taxable, the company recorded a tax liability of $1,280 for the built-in gains realized during tax year 2018 and reversed the remaining deferred tax liabilities of $12,968 as income tax benefit in the consolidated statements of operations since the remaining unrealized built-in gains are not taxable after December 31, 2018. The Parent Company had elected to be treated as a REIT effective January 1, 2014.

TRS and MacKenzie NY 2 are subject to corporate federal and state income tax on its taxable income at regular statutory rates. However, as of March 31, 2019, they did not have any taxable income for tax year 2018 or 2019. Therefore, TRS and MacKenzie NY 2 did not record any income tax provisions during the nine months ended March 31, 2019.

Nine months Ended March 31, 2019, and 2018:

Investment Income:

Total investment income for the nine months ended March 31, 2019, and 2018, was $8.51 million and $5.53 million, respectively. The increase of $2.98 million or 53.9%, was primarily due to larger amount of sales distributions received during the nine months ended March 31, 2019, that resulted in an increase of $1.79 million in total investment income. During the nine months ended March 30, 2019, the Company received sales or liquidating distributions of $4.43 million from four investments compared to $2.64 million from six investments during the nine months ended March 31, 2018. The remaining increase of $1.19 million was attributed to increases in dividend, distributions from operation, interest and other investment income as a result of a net increase in our overall investment portfolio by $25.60 million in cost basis since March 31, 2018.

Operating Expenses:

Base management fee: The base management fee for the nine months ended March 31, 2019 was $1.62 million as compared to $1.25 million for the nine months ended March 31, 2018. This increase of $0.37 million, or 29.6% was due to an increase in the Gross Invested Capital by $26.25 million from $78.47 million as of March 31, 2018, to $104.72 million as of March 31, 2019.

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Portfolio structuring fee: The portfolio structuring fees for the nine months ended March 31, 2019, and 2018 were $0.56 million and $0.51 million, respectively. The increase in fees of $0.05 million or 9.8% was due to a higher amount of capital raised during 2019 compared to 2018. During the nine months ended March 31, 2019, the Company raised $18.33 million of new capital through issuance of new shares excluding the DRIP as compared to $16.65 million during the same period in 2018.

Subordinated incentive fee: There was no Income Fee for the nine months ended March 31, 2019, as the net investment income for these periods was below the threshold of 7% Contributed Capital. Capital Gains Fee for the nine months ended March 31, 2019 was $1.29 million as the cumulative realized capital gains as of March 31, 2019, were over the threshold of 7% of Contributed capital. The Company records the Capital Gains Fee accrual on the consolidated statements of operations and statements of assets and liabilities when net realized capital gains less unrealized capital depreciation on its investments exceed the incentive fee threshold of 7% of Contributed Capital. However, the actual incentive fee payable to the Adviser related to capital gains will be determined and payable in arrears at the end of each fiscal year.

There was neither Income Fee nor Capital Gains Fee for the nine months ended March 31, 2018. This was because the cumulative net investment income and net realized gains were below the threshold of 7% of Contributed Capital.

Administrative cost reimbursements: Costs reimbursed to MacKenzie for the nine months ended March 31, 2019, was $0.47 million as compared to $0.32 million for the nine months ended March 31, 2018. The increase of 0.15 million or 46.9% was primarily due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie since March 31, 2018, as a result of the increase in the Company’s operating activities. In addition, effective November 1, 2018, transfer agent services are provided by MacKenzie inhouse and costs associated with the service are included in the administrative cost reimbursements. This service was previously provided by a third party and the cost incurred were expensed under other general and administrative expenses.

Other operating expenses: Other operating expenses for the nine months ended March 31, 2019, were $0.72 million as compared to $0.67 million for the nine months ended March 31, 2018. The increase of $0.05 million or 7.5% was due to increases of $0.08 million in amortization of the deferred offering costs and $0.02 million in other general and administrative costs offset by a decrease of $0.05 million professional fees incurred during the nine months ended March 31, 2019. The increase in amortization of deferred offering costs was due to an increase in the deferred offering costs since March 31, 2018. Offering costs that are deferred and amortized over twelve-month period, as of March 31, 2018 was $0.73 million as compared to $1.52 million as of March 31, 2019. The increase in other general and administrative costs was due to the increase in the Company’s operating activities. The decrease in professional fees was due to the Company incurring additional professional fees in the second half of 2017 for the amendment of the Advisory Agreement.

Net realized gain on investments:

Total net realized gains for nine months ended March 31, 2019 and 2018, were $1.22 million and $1.75 million, respectively. Total realized gains for the nine months ended March 31, 2019, were realized from liquidations of eight non-traded REIT securities with total realized gain of $2.93 million offset by losses of $1.71 million realized from sales of twenty-three publicly traded REIT securities and liquidation of two limited partnership securities.

Total realized gains of $1.75 million for the nine months ended March 31, 2018, were realized from liquidations of five non-traded REIT securities with total realized gain of $2.07 million and three limited partnership securities with realized gain of $0.53 million offset by net realized loss of $0.85 million from liquidation of nineteen publicly traded REIT securities and one investment trust security.

Net unrealized gain/loss on investments:

During the nine months ended March 31, 2019, we recorded net unrealized loss of $3.05 million, which was net of $1.98 million of unrealized gains reclassification adjustment. The reclassification adjustment was the accumulated unrealized gains as of June 30, 2018, that was realized during the nine months ended March 31, 2019. Accordingly, the net unrealized losses excluding the reclassification adjustment for the nine months ended March 31, 2019, were $1.07 million, which resulted from fair value depreciation of $2.61 million from limited partnership interests and $0.31 million from publicly traded REIT securities offset by fair value appreciation of $1.85 million from non-traded REIT securities. The large fair value depreciation in limited partnership interests mostly resulted from distributions of sales proceeds by three partnerships (The Weatherly, LTD, The Weatherly Building, LLC and Uniprop Manufactured Housing Income Fund II) following the sales of underlying properties. The Company recorded $4.43 million of distribution income from sales transactions, which is a part of the investment income discussed above, from these three partnerships during the nine months ended March 31, 2019.

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During the nine months ended March 31, 2018, we recorded net unrealized loss of $0.81 million, which was net of $1.00 million of unrealized gains reclassification adjustment. The reclassification adjustment was the accumulated unrealized gain as of June 30, 2017, that was realized during the nine months ended March 31, 2018. Accordingly, the net unrealized gain excluding the reclassification adjustment for the nine months ended March 31, 2018, was $0.19 million, which resulted from fair value appreciation $1.54 million from non-traded REIT securities and $0.36 million from limited partnership securities offset by fair value depreciation of $1.71 million from publicly-traded REIT securities.

Income tax provision (benefit):

Income tax provision for nine months ended March 31, 2019, and 2018 are discussed above under the three months ended section.

Liquidity and Capital Resources

Capital Resources

We are offering to sell shares under the offering with total gross proceeds of $150 million, although the Company believes it is improbable that all such shares will be sold prior to the end of the offering. As of March 31, 2019, the Company has raised total gross proceeds of $94.47 million from the issuance of shares under two public offerings, $42.46 million from the IPO, which concluded in October 2016, and $52.01 million from the current public offering. In addition, we have raised $7.48 million from the issuance of shares under the DRIP . Of the total capital raised as of March 31, 2019, $5.06 million worth of shares have been repurchased under the Company’s share repurchase program. We do not have any plans to issue any preferred equity. We plan to fund future investments with the net proceeds raised from our second offering and any future offerings of securities and cash flows from operations, as well as interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. We may also fund a portion of our investments through borrowings from banks and issuances of senior securities. We currently do not have any plans to borrow money on a long-term basis or issue debt securities; however, from time to time we may draw on the margin line of credit on a temporary basis to bridge our investment purchases and sales or capital raising. As of March 31, 2019, we were selling our shares on a continuous basis at a price of $10 which may be below NAV per share from time to time, as approved by our stockholders.

Our aggregate borrowings (if any), secured and unsecured, are expected to be reasonable in relation to our net assets and will be reviewed by the Board of Directors at least quarterly.  The maximum amount of such borrowing is limited by the 1940 Act.

Our primary uses of funds are investing in portfolio companies, paying cash dividends to holders of our common stock (primarily from investment income and realized capital gains), and the payment of operating expenses.  If all the shares registered under our second registration statement in the second public offering are sold, we would receive investable cash totaling approximately $130.5 million, of which approximately $45.47 million has been received as of March 31, 2019.

Cash Flows:

Nine months ended March 31, 2019:

For the nine months ended March 31, 2019, we experienced a net decrease in cash of $6.65 million. During this period, we generated cash of $13.07 million from our financing activities and used $19.72 million for our operating activities.

The net cash outflow of $19.72 million from operating activities resulted from $94.71 million of cash used in purchasing investments that was offset by cash inflows of $56.96 million from sales and liquidations of investments, $14.04 million from distributions received that are considered return of capital, and $3.99 million from investment income, net of operating expenses.

The net cash inflow of $13.07 million from financing activities resulted from the sale of shares under our current public offering with gross proceeds of $18.69 million (adjusted for $0.36 million of increase in capital pending acceptance) offset by cash outflows of $2.78 million from payments of cash dividends, $1.17 million from share redemptions, and $1.67 million from payments of selling commissions and fees.

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Nine months ended March 31, 2018:

For the nine months ended March 31, 2018, we experienced a net decrease in cash of $7.39 million. During this period, we generated cash of $10.75 million from our financing activities and used $18.14 million in our operating activities.

The net cash outflow of $18.14 million from operating activities resulted from $57.24 million of cash used for purchases of investments offset by cash inflows of $26.33 million from sales of investments, $9.71 million from distributions received from our investments that are considered return of capital and $3.06 million from investment income, net of operating expenses.

The net cash inflow of $10.75 million from financing activities resulted from the sale of shares under our current public offering with gross proceeds of $15.54 million (adjusted for $1.11 million of decrease in capital pending acceptance) offset by cash outflows of $0.95 million from share redemptions, $2.25 million from payments of cash dividends, and $1.59 million from payments of selling commissions and fees.

Contractual Obligations

We have entered into two contracts under which we have material future commitments: (i) the Amended and Restated Investment Advisory Agreement, under which the Adviser serves as our investment adviser, and (ii) the Administration Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations. Each of these agreements is terminable by either party upon proper notice. Payments under the Amended and Restated Investment Advisory Agreement in future periods (after the up-front payment of the portfolio structuring fee during the public offering) will be (i) a percentage of the value of our Gross Invested Capital; and (ii) incentive fees based on our income and our performance above specified hurdles (except in the year of liquidation).  Payments under the Administration Agreement will occur on an ongoing basis as expenses are incurred on our behalf by MacKenzie. However, if MacKenzie withdraws as our administrator, it will be liable for any expenses we incur as a result of such withdrawal.

Off-Balance Sheet Arrangements

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

Borrowings

We do not have any current plans to borrow money or issue preferred securities. In the event that we do so borrow, we would expect to be subject to various customary covenants and restrictions on our operations, such as covenants which would (i) require us to maintain certain financial ratios, including asset coverage, debt to equity and interest coverage, and a minimum net worth, and/or (ii) restrict our ability to incur liens, additional debt, merge or sell assets, make certain investments and/or distributions or engage in transactions with affiliates.

Critical Accounting Policies

The financial statements included in this report are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions.  Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management's most difficult, complex or subjective judgments. There have been no changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended June 30, 2018, included in the Company's annual report on Form 10-K for the fiscal year ended June 30, 2018.

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Dividends to Stockholders

We intend to pay quarterly dividends to our stockholders to the extent that we have income from operations available. Our quarterly dividends, if any, will be determined by our Board of Directors near the beginning of each quarter based on the estimated quarterly income and will be paid pro-rata to holders of our shares. Any dividends to our stockholders will be declared out of assets legally available for distribution.  In no event are we permitted to borrow money to pay dividends (or make distributions) if the amount of such distribution would exceed our annual accrued and received revenues, less operating costs. During the quarter ended March 31, 2019, the Company declared a quarterly dividend of $0.175 per share, which equals to $0.0583 per share per month. This dividend was paid on April 30, 2019.

We qualified and elected to be taxed as a REIT beginning with the tax year ended December 31, 2014. As a REIT, we are required to distribute at least 90% of our REIT taxable income to the stockholders and meet certain other conditions. Our current intention is to make any dividends in additional shares under our DRIP out of assets legally available therefore, unless a stockholder elects to receive dividends in cash, or their participation in our DRIP is restricted by a state securities regulator. If one holds shares in the name of a broker or financial intermediary, they should contact the broker or financial intermediary regarding their election to receive dividends in cash. We can offer no assurance that we will achieve results that will permit the payment of any cash dividends and, if we issue senior securities, we are prohibited from paying dividends if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if dividends are limited by the terms of any of our borrowings.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our current investment portfolio, as well as our future investments, primarily consists of equity and debt securities issued by smaller U.S. companies that primarily own commercial real estate that are either illiquid or not listed on any exchange, and our investments in these securities are considered speculative in nature. Our investments often include securities that are subject to legal or contractual restrictions on resale that adversely affect the liquidity and marketability of such securities. As a result, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation, dividend distributions and a return of their capital.

At March 31, 2019, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented 96% of our total assets as of that date. As discussed in Note 3 to our financial statements ("Investments"), these investments primarily consist of securities in companies with no readily determinable market values and as such are valued in accordance with our fair value policies and procedures. Our investment strategy exposes us to a high degree of business and financial risk because portfolio company investments are generally illiquid and in small and middle market companies. We may make short-term investments in cash equivalents, U.S. government securities and other high-quality investments that mature in one year or less, pending investments in portfolio companies made according to our principal investment strategy.

Item 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the 1934 Act) as of the end of the period covered by this report as required by paragraph (b) of Rule 13a-15 or 15d-15 of the 1934 Act. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed by us in the reports we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting (identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the 1934 Act) during the fiscal quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

There have been no material changes to our risk factors discussed in "Risk Factors" in our annual report on Form 10-K for the fiscal year ended June 30, 2018 and in our quarterly report on Form 10Q for the quarter ended September 30, 2018.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Issuer Purchases of Equity Securities

The following table presents information with respect to the Company’s purchases of its common stockduring the period covered by this report:

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans
During the year ended June 30, 2019:
August 17, 2018 through September 17, 2018	31,570.04	$                             9.00	31,570.04	-
November 14, 2018 through December 18, 2018	19,944.93	$                             9.00	19,944.93	-
February 14, 2019 through March 18, 2019	78,252.02	$                             9.00	78,252.02	-
	129,766.98	$                             9.00	129,766.98

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6.  EXHIBITS

Exhibit	Description
10.1	Form of Investor Services Agreement with MacKenzie Capital Management, LP dated November 1, 2018 (incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement on Form N-2 (File No. 333-212804), filed on May 10, 2019)
31.1	Section 302 Certification of Robert Dixon (President and Chief Executive Officer)
31.2	Section 302 Certification of Paul Koslosky (Treasurer and Chief Financial Officer)
32.1	Section 1350 Certification of Robert Dixon (President and Chief Executive Officer)
32.2	Section 1350 Certification of Paul Koslosky (Treasurer and Chief Financial Officer)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MACKENZIE REALTY CAPITAL, INC.
Date: May 13, 2019	By: /s/ Robert Dixon
	President and Chief Executive Officer
Date: May 13, 2019	By:  /s/ Paul Koslosky
	Treasurer and Chief Financial Officer

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