10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40771

GENERATION INCOME PROPERTIES, INC.

(Exact name of Registrant as specified in its charter)


Maryland	47-4427295
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

401 E. Jackson Street Suite 3300 Tampa, FL	33602
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: 813-448-1234

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading symbol	Name of each exchange on which registered
Common Stock par value $0.01 per share	GIPR	The Nasdaq Stock Market LLC
Warrants to purchase Common Stock	GIPRW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has 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 of 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 ☑

The registrant had 2,260,998 shares of Common Stock, par value $0.01 per share, outstanding as of August 12, 2022.

GENERATION INCOME PROPERTIES, INC.

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	Generation Income Properties, Inc. Consolidated Balance Sheets June 30, 2022 (unaudited) and December 31, 2021	3

	Generation Income Properties, Inc. Consolidated Statements of Operations Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	4

	Generation Income Properties, Inc. Consolidated Statements of Changes in Equity for the Six Months Ended June 30, 2022 and 2021 (unaudited)	5

	Generation Income Properties, Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)	7
	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION	35

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

SIGNATURES		38

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Generation Income Properties, Inc. Consolidated Balance Sheets (unaudited)


	As of June 30,			As of December 31,
	2022			2021 (As corrected, see Note 2)

Assets

Investments in real estate
Land	$	12,577,544		$	9,443,445
Building and site improvements		39,695,210			31,581,864
Tenant improvements		907,382			482,701
Acquired lease intangible assets		4,677,928			3,304,014
Less: accumulated depreciation and amortization		(4,501,912	)		(3,512,343	)
Net real estate investments	$	53,356,152		$	41,299,681
Investment in tenancy-in-common		1,188,061			725,082
Cash and cash equivalents		3,649,084			10,589,576
Restricted cash		34,581			34,500
Deferred rent asset		197,364			156,842
Deferred financing costs		87,020			-
Prepaid expenses		256,817			237,592
Accounts receivable		94,797			88,661
Escrow deposits and other assets		159,969			288,782
Right of use asset, net		6,275,398			-
Total Assets	$	65,299,243		$	53,420,716

Liabilities and Equity

Liabilities
Accounts payable	$	21,769		$	201,727
Accrued expenses		398,710			134,816
Acquired lease intangible liabilities, net		692,567			577,388
Insurance payable		207,837			33,359
Deferred rent liability		286,931			228,938
Right of use liability, net		6,327,851			-
Mortgage loans, net of unamortized debt issuance costs of $786,490 and $637,693 at June 30, 2022 and December 31, 2021, respectively		35,455,512			28,969,295
Total liabilities	$	43,391,177		$	30,145,523

Redeemable Non-Controlling Interests	$	9,869,631		$	9,134,979

Stockholders' Equity
Common stock, $0.01 par value, 100,000,000 shares authorized; 2,257,787 and 2,172,950 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		22,577			21,729
Additional paid-in capital		18,584,981			19,051,929
Accumulated deficit		(7,025,510	)		(5,403,156	)
Total Generation Income Properties, Inc. Stockholders' equity	$	11,582,048		$	13,670,502

Non-Controlling Interest	$	456,387		$	469,712
Total equity	$	12,038,435		$	14,140,214

Total Liabilities and Equity	$	65,299,243		$	53,420,716

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

Generation Income Properties, Inc. Consolidated Statements of Operations (unaudited)


	Three Months ended June 30,						Six Months ended June 30,
	2022			2021 (As corrected, see Note 2)			2022			2021 (As corrected, see Note 2)
Revenue
Rental income	$	1,378,562		$	988,190		$	2,560,497		$	1,925,078
Other income		541			-			541			-
Total revenue	$	1,379,103		$	988,190		$	2,561,038		$	1,925,078

Expenses
General, administrative and organizational costs	$	472,736		$	251,825		$	814,416		$	440,242
Building expenses		325,201			163,722			578,592			344,275
Depreciation and amortization		558,676			397,186			989,569			776,697
Interest expense, net		375,627			337,432			705,921			692,421
Compensation costs		310,698			155,690			590,440			310,811
Total expenses	$	2,042,938		$	1,305,855		$	3,678,938		$	2,564,446
Operating loss		(663,835	)		(317,665	)		(1,117,900	)		(639,368	)
Income (loss) on investment in tenancy-in-common		(1,462	)		-			7,090			-
Dead deal expense		(107,371	)		-			(107,371	)		-
Loss on debt extinguishment		(144,029	)		-			(144,029	)		-
Net loss	$	(916,697	)	$	(317,665	)	$	(1,362,210	)	$	(639,368	)
Less: Net income attributable to non-controlling interests		130,181			52,324			260,144			198,504
Net loss attributable to Generation Income Properties, Inc.	$	(1,046,878	)	$	(369,989	)	$	(1,622,354	)	$	(837,872	)

Total Weighted Average Shares of Common Stock Outstanding – Basic & Diluted		2,255,441			582,867			2,224,419			581,264

Basic & Diluted Loss Per Share Attributable to Common Stockholders	$	(0.46	)	$	(0.63	)	$	(0.73	)	$	(1.44	)

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

Generation Income Properties, Inc. Consolidated Statements of Changes in Equity

(unaudited)


	Common Stock				Additional Paid-In			Accumulated			Stockholders'			Non-Controlling						Redeemable Non-Controlling
	Shares		Amount		Capital			Deficit			Equity			Interest			Total Equity			Interest
Balance, December 31, 2020 (As corrected, see Note 2)		576,918	$	5,770	$	5,541,411		$	(4,177,142	)	$	1,370,039		$	486,180		$	1,856,219		$	8,198,251
Common stock issued for services		2,200		22		43,978						44,000			-			44,000			-
Restricted stock unit compensation		3,749		37		49,434						49,471			-			49,471			-
Issuance of Redeemable Non-Controlling Interest for property acquisition		-		-		-			-			-			-			-			500,000
Distribution on Non-Controlling Interest		-		-		-			-			-			-			-			(150,826	)
Dividends paid on common stock		-				(114,373	)					(114,373	)		-			(114,373	)		-
Net (loss) income for the quarter (As corrected, see Note 2)		-		-		-			(467,883	)		(467,883	)		(4,646	)		(472,529	)		150,826
Balance, March 31, 2021 (As corrected, see Note 2)		582,867	$	5,829	$	5,520,450		$	(4,645,025	)	$	881,254		$	481,534		$	1,362,788		$	8,698,251
Restricted stock unit compensation		-		-		50,278			-			50,278			-			50,278			-
Issuance of Redeemable Non-Controlling Interest for property acquisition		-		-		-			-			-			-			-			950,000
Distribution on Non-Controlling Interest		-		-		-			-			-			(2,748	)		(2,748	)		(56,400	)
Net (loss) income for the quarter (As corrected, see Note 2)		-		-		-			(369,989	)		(369,989	)		(4,076	)		(374,065	)		56,400
Balance, June 30, 2021 (As corrected, see Note 2)		582,867	$	5,829	$	5,570,728		$	(5,015,014	)	$	561,543		$	474,710		$	1,036,253		$	9,648,251
																		-
Balance, December 31, 2021 (As corrected, see Note 2)		2,172,950	$	21,729	$	19,051,929		$	(5,403,156	)	$	13,670,502		$	469,712		$	14,140,214		$	9,134,979
Restricted stock unit compensation		47,142		471		93,455			-			93,926			-			93,926			-
Stock issuance costs		-		-		(6,091	)		-			(6,091	)					(6,091	)
Cashless exercise of warrants		27,676		277		(277	)		-			-			-			-			-
Issuance of Redeemable Non-Controlling Interest for property acquisition		-		-		-			-			-			-			-			1,109,570
Distribution on Non-Controlling Interest		-		-		-			-			-			(3,938	)		(3,938	)		(115,303	)
Dividends paid on common stock		-		-		(334,799	)		-			(334,799	)		-			(334,799	)		-
Net (loss) income for the quarter (As corrected, see Note 2)		-		-		-			(575,476	)		(575,476	)		(1,120	)		(576,596	)		131,083
Balance, March 31, 2022 (As corrected, see Note 2)		2,247,768	$	22,477	$	18,804,217		$	(5,978,632	)	$	12,848,062		$	464,654		$	13,312,716		$	10,260,329
Restricted stock unit compensation		357		4		124,114			-			124,118			-			124,118			-
Cashless exercise of warrants		9,662		96		(96	)					-			-			-			-
Redemption of Redeemable Non-Controlling Interest		-		-		-			-			-			-			-			(406,652	)
Distribution on Non-Controlling Interest		-		-		-