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Bimini’s Federal tax losses of $19,036,242 expire starting in 2030 through 2039. Management of Bimini may spin-off its ownership interest in Royal Palm to shareholders of Bimini once the tax losses have either been fully utilized or expire.  Just prior to doing so Royal Palm would transfer its ownership interest in Bimini Advisors back to Bimini.  Once Royal Palm was spun-off to its shareholders by Bimini, Bimini business would be exclusively an asset manager – of Orchid Island and Royal Palm.  It would also be management’s intention to have Royal Palm elect REIT status once it was spun-off.

Applicant has consistently represented itself publicly as being primarily engaged in the business of managing an investment portfolio of Agency RMBS securities on a levered basis since its inception in 2003. Bimini consistently states in its press releases, SEC filings, and website that it is engaged in this type of business.  Bimini is also the external manager, through a wholly owned subsidiary, of Orchid Island Capital, Inc. a NYSE listed REIT.  In doing so, Bimini consistently demonstrates its sole focus as being that of an RMBS portfolio manager, and not as a manager of equity securities. Bimini has never represented itself as a manager of equity portfolios, even though it has owned shares of ORC since Orchid’s IPO in early 2013.

Management has always referenced such holdings as either the remaining balance of the shares it owned prior to Orchid’s IPO, or as an alternative use of its investment capital when returns available on shares of Orchid exceeded returns available to the levered RMBS strategy.  Bimini has never sold any of its shares of Orchid, and as a condition of the Commission granting relief, commit that it will not sell shares until it is necessary to do so in anticipation of the possible spin-off of Royal Palm.

In contrast, Applicant has never publicly held itself out, and will not publicly hold itself out, as having expertise in the active management of portfolios of equity securities. Applicant’s website, public statements, prospectus, and public reporting do not have, and will not have, any content that suggests that an investor in Applicant is investing in an actively managed portfolio of equity securities.

Applicant has attempted to communicate to investors its strategy/goal is to maximize the utilization of the tax losses, particularly those of Royal Palm, through the retention of earnings when available in an effort to organically grow the RMBS portfolio and generate as much taxable income as possible before the NOL’s expire.  This has been the case for many years and management believes investors are well aware of the strategy/goal.

Applicant’s wholly-owned subsidiary Bimini Advisors LLC is an SEC registered investment adviser and subject to extensive regulation under the Investment Advisers Act of 1940, as amended, as a result. In addition, the Applicant and its subsidiaries continue to be subject to the provisions of the Securities Act of 1933, as amended, and in particular, the anti-fraud protections provided under Section 17 thereof.

Based on the operations and economics of Applicant and its business described above, relief should be granted as the Company will not have changed its business model, will not operate like an investment company the Act was designed to regulate, and relief is only sought for a finite period of time needed to allow applicant to maximize the utilization of tax NOLs available.

Absent exemptive relief, and as described in greater detail below, the further acquisition of Orchid securities by Royal Palm may result in a scenario where Royal Palm meets the definition of an investment company under the Act. However, should relief be granted, Applicant will continue to pursue its’ stated goal of maximizing the utilization of the $248.1 million of tax NOLs of Royal Palm before they fully expire in 2029.  The transition of the portfolio from an RMBS portfolio to shares of Orchid will not change the business model the Company has employed since inception, nor how the Company is viewed by investors.

If exemptive relief is granted it will enhance the chances the Company is successful by reducing the risk the levered RMBS strategy poses to the Company given it minimal tangible equity base. Owing to the use of leverage in the RMBS model, typically four to ten times equity in the mortgage REIT industry, earnings can be quite volatile. The Applicants equity capital, specifically its tangible equity capital, is not sufficient to support such leverage.  The episode described above that occurred in March of 2020 nearly forced the Applicant to liquidate and left the Applicant with negative tangible equity.  While the Applicant has been able to restore its tangible equity somewhat, it is still negative and leaves the Applicant with no capacity to weather another such episode.  Further, the lack of tangible equity limits and/or impedes its ability to access sufficient funding or execute hedge transactions to the extent needed to grow the RMBS portfolio.  Replicating the RMBS portfolio by owning shares of Orchid, without the need for leverage, will substantially reduce the earnings volatility it can no longer tolerate and allow it to fully invest its idle cash into an income generating asset that offers more substantial returns than cash.

This is in the best interest of investors and the investing public.

A company is an “investment company” under Section 3(a)(1) and required to register with the SEC if it is an “issuer” and (i) it “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities,” or (ii) “it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and it owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis.”

Section 3(a)(2) defines “investment securities” as “all securities except (A) Government securities, (B) securities issued by employees’ securities companies, and (C) securities issued by majority-owned subsidiaries of the owner which (i) are not investment companies, and (ii) are not relying on the exception from the definition of investment company in [Sections 3(c)(1) or 3(c)(7)].”

Section 3(c)(5)(C) of the Act excepts any person from the definition of an “investment company” who is “not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in. . . purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.”

In addition, the staff of the Commission has taken the position that the exclusion in Section 3(c)(5)(C) may be available to an issuer if: at least 55% of its assets consist of “mortgages and other liens on and interests in real estate” (called “qualifying interests”) and the remaining 45% of its assets consist primarily of “real estate-type interests;” at least 80% of its total assets consist of qualifying interests and real estate-type interests; and no more than 20% of its total assets consist of assets (“miscellaneous assets”) that have no relationship to real estate (these factors together, the “Asset Composition Test”).

Applicant is not engaged in the business of issuing face-amount certificates of the installment type within the meaning of section 3(a)(1)(B) of the Act. Accordingly, Section 3(a)(1)(B) of the Act does not apply.

As of December 31, 2021, based on the audited financial statements, the value, as such term is defined under the Act, of Orchid common shares held constitute 11% of the value of Applicant's assets, exclusive of government securities and cash items, on a consolidated basis. In addition, subject to the availability of exemptive relief as set forth herein, Applicant intends to liquidate its RMBS investment portfolio and instead concentrate its investment portfolio exclusively in common shares of Orchid. It is anticipated that, on a consolidated basis, the Applicant’s total assets will consist of approximately 0% qualifying interests, 39% real estate-type interests, and 61% miscellaneous assets (primarily the deferred tax asset associated with the net operating losses) , as understood pursuant to the Asset Composition Test.

It is anticipated that, if Royal Palm were to acquire Orchid common shares to the extent contemplated, Royal Palm’s holdings would constitute approximately 3% of the outstanding voting securities of Orchid. Because this does not result in a situation where Orchid would be a majority-owned subsidiary of the Applicant, those holdings of Orchid securities would constitute “investment securities” for purposes of Section 3(a)(2) of the Act. As a consequence, and absent any exemptions or exceptions, Royal Palm may, or would be, an “investment company” under Section 3(a)(1) of the Act.

Notwithstanding the application of the aforementioned criteria, Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule or regulation under the Act, if and to the extent such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.

Applicant requests an order under Section 6(c) to permit the Applicant, directly and through its wholly-owned subsidiaries, to engage in its proposed business activities as described herein without being subject to registration under the Act. Applicant believes that the requested exemption is necessary and appropriate in the public interest, and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.

When viewed as a totality, the Applicant is primarily engaged in the business of managing a portfolio of Agency RMBS assets on a levered basis. The structure of its business, including the prior and proposed acquisition of the investment securities Applicant holds, was not established, and is not operated, for the purpose of creating an investment company within the contemplation of the Act, and Applicant’s business activities are not of the type intended to be regulated under the Act.

Applicant believes that the requested relief is narrow and specific, and that the conduct of Applicant’s business in accordance with the requested relief would not represent a material deviation from the Act.  In particular, an investment in Orchid shares in accordance with the requested relief would represent an investment in an RMBS portfolio that has the same investment objectives, investment strategies, management team and administrative personnel as the Royal Palm portfolio, which has been owned and managed in compliance with the Act.  In effect, an investment in Orchid shares is a proxy for the Royal Palm RMBS portfolio with reduced risk to investors.  The requested relief would therefore address what would otherwise be a technical, limited deviation from the Act, and such relief can be granted without compromising in any way the protection of investors.

Applicant believes that exempting it from regulation under the Act is necessary or appropriate in the public interest because it is clear that Applicant is not primarily engaged, nor does it intend to become primarily engaged, in the business of investing in securities other than qualifying interests and real estate-related assets. As noted above, Applicant views itself, and has consistently represented itself publicly, as being primarily engaged in the business of managing a portfolio of Agency RMBS assets on a levered basis.  Until 2015, Applicant was a REIT for federal income tax purposes and was not subject to registration as an investment company under the Act under Section 3(c)(5)(C).  While Applicant is no longer a REIT it has continued to operate as one.  Shares of other REITs are good REIT assets for the asset tests under the Code and the income they produce is qualifying income as well.  If Applicant were to dispose of its RMBS portfolio and replace it with shares of Orchid, it would be an investment company in form only, but not in substance, as it would essentially be identical to any REIT that avoids regulation under the Act.

Applicant is not and will not become the type of company that is necessary to regulate under the Act to protect the public interest.

Applicant submits that granting an order pursuant to Section 6(c) is also “consistent with the protection of investors” because the activities it engages in are not the type of activities the Act is designed to address. As noted above, the Act presently provides, in Section 3(c)(5), an exception to the definition of an investment company for issuers who are in the business of acquiring certain real estate- and/or mortgage-related interests. Qualitatively, the Applicant’s business is focused on the acquisition and disposition of such interests.

Ultimately, compliance with the Act’s reporting and other requirements would not be particularly appropriate in light of Applicant’s business, and would potentially entail greater costs and harm to Applicant and its shareholders: Among other reasons, this is because the assets-based definition under Section 3(a)(1) of the Act focuses on a company’s holdings, but Applicant’s shares of Orchid are of little relevance to investors in Applicant, in that they will not directly affect any returns by investors or change the nature of the Applicants business model. In addition, substantive regulations such as the limitations on affiliate transactions in Section 17 of the Act would be unworkable for Applicant and ultimately detrimental to shareholders, in light of the fact that Applicant has material management responsibilities to an affiliate, Orchid. The information and disclosure requirements of Form N-1A, if imposed on the Applicant, would provide little to no additional information regarding the Applicant’s activities and of its holdings, relative to information that is already presently available to investors. If Applicant were subject to these provisions, Applicant would need to halt these business activities or obtain significant additional exemptive relief.

If Applicant were forced to terminate its relationship with Orchid, it would materially reduce its revenues and make utilization of its NOL’s strategy likely impossible.  Over the first nine months of 2021, Applicant received $6.8 million of advisory service revenues from Orchid and an additional $1.5 million of dividends from its Orchid shares.  Total revenues from all sources for the period were $10.0 million.  Similarly, Applicant could not comply with the Act’s leverage limitations if it became necessary to re-establish its levered RMBS portfolio in anticipation of the potential spin-off of Royal Palm to shareholders.  Applicant currently, and mortgage REITs generally (in Applicant’s view), operate with leverage well in excess of 150% of their net assets.

The use of leverage and hedging an RMBS portfolio can, in extreme cases, threaten the viability of the company, as was the case in March of 2020 when the COVID-19 pandemic first emerged in the United States.  During the first quarter of 2020 Bimini incurred a loss of $22.3 million that resulted in a reduction of its shareholders equity from $40.0 million to $17.7 million. More importantly, Bimini tangible shareholders equity (excluding the deferred tax asset) was reduced from $6.7 million at December 31, 2019, to ($8.2) million at March 31, 2020, and has recovered since to only ($0.5) million as of September 30, 2021.  The extreme margin calls caused by the severe market disruption, form both lenders as RMBS assets declined in value, as well as counterparties on the Company’s hedge transactions, as interest rates also declined, forced the Company to sell assets at substantial losses, unwind hedges and deplete its cash balances.  The Company recorded $5.8 million of realized losses and was forced to shrink its RMBS investment portfolio from $217.8 million at December 31, 2019, to $54.4 million at March 30, 2020, a 75% reduction.  While the Company has since been profitable and able to grow the investment portfolio slightly, the Company has been reluctant to do so, and has not replaced most of the hedge positions that were in place at the end of 2019.  The Company is not in a position to withstand additional significant losses if they were to occur, nor would it be able to secure repo borrowings necessary to the operation of the levered portfolio if its tangible equity become materially negative.  At its current level of tangible equity Royal Palm is already constrained in terms of its ability to secure access to borrowing or engage in hedge transactions. As a result, the Company had a cash balance of approximately $9.5 million as of September 30, 2021.  It is very inefficient for the Company to maintain such large cash balances given the essentially 0% returns on cash available in the market, versus returns in excess of 10% available with either a levered RMBS portfolio or shares of Orchid.  The levered RMBS portfolio strategy exposes the Company to risk it no longer has the capacity to take (i.e., absorbing losses) therefore the strategy of owning shares of Orchid is far more appropriate.

If granted exemptive relief and permitted to do so to the extent proposed by the Applicant, owning shares of Orchid has material advantages over the levered RMBS portfolio. Orchid owns an RMBS portfolio very similar to the RMBS portfolio historically owned by Royal Palm, featuring the same investment objectives and strategies; same management personnel; same trading and management resources.  Therefore, investing in Orchid shares replicates the Bimini business model/RMBS portfolio that shareholders invested in.  It helps to preserve, rather than change, the nature of Bimini’s business model.

In addition, the Company would not apply leverage to the shares. The lack of leverage means the Company would not be exposed to margin calls should the value of the Orchid shares decline. The lack of leverage also eliminates the need to hedge the value of the shares. Applying leverage to the Orchid shares would in effect increase the leverage applied to the RMBS portfolio of Orchid and expose the Company to even greater risk than its own RMBS portfolio represents. Owning shares without the need for leverage eliminates the need to hedge the Company’s funding costs and net interest margin – other than for the $26 million of trust preferred debt. The lack of leverage means the Company can deploy essentially all of its cash balances into income generating assets.

Declines in the value of the shares of Orchid, should they occur, have no bearing on the Company’s taxable income tabulations as they would be unrealized until the Company prepared to spin-off Royal Palm, if it chose to do so. The Company does not intend to actively trade its shares of Orchid.

There is the potential, should the Company be able to acquire newly issues shares directly form Orchid, to enhance its return on the shares as each additional share issued would increase the equity base upon which the management fee is calculated, therefore increasing management fee revenue to Bimini Advisors. Note such share acquisitions directly from the Orchid, where they to occur, would be fully arms-length transactions in that the shares would be acquired in connection with an offering in the open market. This would not be possible with the shares of any other REIT, or any entity. As a condition of the Commission granting the requested exemptive relief, the Company would commit to limiting its equity holding to shares of Orchid. As an aside, the purchase of such shares would not lead to redundant fees being paid by shareholders of either Orchid or the Applicant.

In light of the foregoing, compliance by the Applicant with the Act’s registration and other requirements would advance no clear public purpose.

Applicant agrees that any order granting the requested relief will be subject to the following conditions:

1. Applicant will not hold itself out as being engaged in investing, reinvesting or trading in equity securities

2. Applicant will limit is equity share holdings to shares of Orchid Island Capital as described in the Application.

3. Applicant will hold its shares of Orchid Island through the end of the Utilization Period and not seek to generate returns by actively trading them.

Pursuant to Rule 0-2(f) under the Act, each Applicant states that its address is as indicated on the first page of this Application. Each Applicant further states that all written or oral communications concerning this Application should be directed to:

Robert E. Cauley

Bimini Capital Management, Inc

3305 Flamingo Drive

Vero Beach, Florida 32963

(772) 231-1400

And

Peter H. Schwartz, Esq.

Davis Graham & Stubbs LLP

1550 17^th Street, Suite 500

Denver, Colorado 80202

All requirements for the execution and filing of this Application by Applicants have been complied with in accordance with each Applicant’s respective Certificate of Incorporation and By-Laws (or equivalent organizational documents), and the undersigned officer of each Applicant is fully authorized to execute this Application.

For the foregoing reasons, Applicant requests an order under Section 6(c) of the Act to permit it to, directly and/or indirectly, hold “investment securities”, as such term is defined in the Act, in excess of forty percent (40%) of the particular issuer’s total assets on the terms and conditions as set forth herein, without being subject to the provisions of the Act. Applicant submits that the exemption is necessary and appropriate in the public interest, consistent with the protection of investors and with the purposes fairly intended by the policy and provisions of the Act.

Pursuant to Rule 0-2(c)(1) and 0-2(c)(2) under the Investment Company Act of 1940, the Applicant hereby states that the officer signing and filing with Application on behalf of the Applicant is fully authorized to do so. Under the provisions of the Applicant’s certificate of incorporation, responsibility for the oversight of the affairs and business of Applicant is vested in its board of directors. Resolutions duly adopted by the Applicant’s board of directors authorizing the preparation and filing of this Application are attached to this Application as Exhibit A. The Verification required by Rule 0-2(d) under the Investment Company Act of 1940 is attached hereto as Exhibit B.

BIMINI CAPITAL MANAGEMENT, INC.

By: /s/ Robert E. Cauley

Name: Robert E. Cauley

Title: CEO, Bimini Capital Management, Inc.

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EXHIBIT A

CERTIFICATION

I, Robert E. Cauley, CEO of Bimini Capital Management, Inc., a Maryland corporation (the “Company”), do hereby certify that the following resolutions were duly adopted at a meeting of the Board of Directors of the Company on January 12, 2022. I further certify that said resolutions are still in full force and effect and have not been amended or repealed.

WHEREAS, Bimini Capital Management, Inc. (the “Company”) does not intend to conduct its business in a manner that would cause it to become an “investment company” within the meaning of the Investment Company Act of 1940 (the “1940 Act”);

WHEREAS, based on the language of Section 2(a)(36) and Section 3(a)(2) of the 1940 Act, the conduct of the Company’s business could cause it to meet the definition of an investment company under the 1940 Act; and

WHEREAS, the Company therefore intends to submit an application to the Securities and Exchange Commission (the “Commission”) for an order of exemption pursuant to Section 6(c) of the 1940 Act (the “Application”), in order to conduct its business without being regulated under the 1940 Act as an investment company.

NOW, THEREFORE, BE IT

 RESOLVED: that the officers of the Company, or any of them, be, and they hereby are, authorized and directed in the name and on behalf of the Company to submit, as the Application, an application in substantially the form attached to this document as Exhibit A to the Commission for an order of exemption pursuant to Section 6(c) of the 1940 Act in order to dispel any ambiguity as to its status under the 1940 Act, provided that the officers of the Company may approve reasonable changes to the Application as requested by the Commission and its staff; and

RESOLVED FURTHER: that the officers of the Company, or any of them, be, and they hereby are, authorized and directed, in the name and on behalf of the Company, to take any additional action or actions any such officer deems necessary or advisable, in such officer’s discretion, to ensure that the Company shall not be deemed an investment company under the 1940 Act.

[Signature Page Follows]

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IN WITNESS WHEREOF, I have set my name this 28th day of January, 2022.

Name: Robert E. Cauley

Title: CEO, Bimini Capital Management, Inc.

Mr. Cauley has been Chairman and Chief Executive Officer (“CEO”) since April 2008. He served as Vice-Chairman, Chief Financial Officer and Chief Investment Officer prior to April 2008. Prior to co-founding Bimini in 2003, Mr. Cauley was a vice-president and portfolio manager at Federated Investors in Pittsburgh from 1996 to 2003. Prior to 1996, Mr. Cauley was a member of the ABS/MBS structuring desk at Lehman Brothers from 1994 to 1996 and a credit analyst at Barclays Bank, PLC from 1992 to 1994. Mr. Cauley is a CPA (inactive status) and served in the United States Marine Corps for four years.

Mr. Haas has been the Applicants President, Chief Investment Officer and Chief Financial Officer of Applicant since April 2008. Prior to assuming those roles with Applicant, he was Applicant’s Senior Vice President and Head of Research and Trading. Mr. Haas joined Applicant in May 2004 as Vice President and Head of Mortgage Research. He has over 15 years of experience in this industry and has managed trading operations for the portfolio since his arrival in May 2004. Mr. Haas has approximately twelve years of experience as a member of senior management of a publicly-traded REIT. He has also been a member of the Board of Managers of Royal Palm Capital, LLC since 2007. Prior to joining Applicant, Mr. Haas worked in the mortgage industry as a member of a team responsible for hedging a servicing portfolio at both National City Mortgage and Homeside Lending, Inc.