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 September 30, 2023


☐	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 2,619,507 shares of Common Stock, par value $0.01 per share, outstanding as of November 11, 2023.

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 as of September 30, 2023 (unaudited) and December 31, 2022	3

	Generation Income Properties, Inc. Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	4

	Generation Income Properties, Inc. Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	5

	Generation Income Properties, Inc. Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	6
	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

PART II.	OTHER INFORMATION	40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 3.	Defaults Upon Senior Securities	42

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	43

SIGNATURES		45

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements GENERATION INCOME PROPERTIES, INC.

Consolidated Balance Sheets


	As of September 30,			As of December 31,
	2023			2022
	(unaudited)
Assets
Investments in real estate
Land	$	21,996,902		$	12,577,544
Building and site improvements		71,623,505			39,764,890
Acquired tenant improvements		2,247,081			907,382
Acquired lease intangible assets		10,573,535			4,677,928
Less: accumulated depreciation and amortization		(7,478,372	)		(5,623,318	)
Net real estate investments	$	98,962,651		$	52,304,426
Investment in tenancy-in-common		-			1,218,268
Cash and cash equivalents		4,338,172			3,718,496
Restricted cash		34,500			34,500
Deferred rent asset		340,198			288,797
Prepaid expenses		318,622			132,642
Accounts receivable		305,888			96,063
Escrow deposits and other assets		303,568			184,241
Right of use asset, net		6,169,714			6,232,662
Total Assets	$	110,773,313		$	64,210,095

Liabilities and Equity
Liabilities
Accounts payable	$	304,278		$	173,461
Accrued expenses		1,007,486			365,624
Accrued expense - related party		587,022			128,901
Acquired lease intangible liabilities, net		1,051,624			639,973
Insurance payable		138,291			46,368
Deferred rent liability		317,449			251,798
Lease liability, net		6,380,708			6,356,288
Other payable - related party		1,809,840			2,587,300
Loan payable - related party		5,500,000			1,500,000
Mortgage loans, net of unamortized debt discount of $1,374,035 and $717,381 at September 30, 2023 and December 31, 2022, respectively		57,078,131			35,233,878
Total liabilities	$	74,174,829		$	47,283,591

Redeemable Non-Controlling Interests	$	18,424,559		$	5,789,731

Preferred Stock
Series A Redeemable Preferred stock, net, $0.01 par value, 2,400,000 shares authorized, issued, and outstanding at September 30, 2023 with liquidation preferences of $5 per share and no shares authorized or issued at December 31, 2022	$	11,637,616		$	-
Stockholders' Equity
Common stock, $0.01 par value, 100,000,000 shares authorized; 2,619,232 and 2,501,644 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		26,192		$	25,016
Additional paid-in capital		18,683,617			19,307,518
Accumulated other comprehensive income		78,969			-
Accumulated deficit		(12,668,727	)		(8,640,796	)
Total Generation Income Properties, Inc. Stockholders' Equity	$	6,120,051		$	10,691,738

Non-Controlling Interest	$	416,258		$	445,035
Total equity	$	6,536,309		$	11,136,773

Total Liabilities and Equity	$	110,773,313		$	64,210,095

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

GENERATION INCOME PROPERTIES, INC.

Consolidated Statements of Statements of Operations and Comprehensive Income (Loss)

(unaudited)


	Three Months ended September 30,						Nine Months ended September 30,
	2023			2022			2023			2022
Revenue
Rental income	$	1,841,044		$	1,473,789		$	4,486,501		$	4,034,286
Other income		3,104			296			23,564			837
Total revenue	$	1,844,148		$	1,474,085		$	4,510,065		$	4,035,123

Expenses
General and administrative expense	$	530,538		$	408,570		$	1,233,674		$	1,222,986
Building expenses		431,359			269,781			1,065,214			848,373
Depreciation and amortization		981,419			561,510			2,096,970			1,551,079
Interest expense, net		770,624			382,440			1,706,585			1,088,361
Compensation costs		346,196			334,992			980,202			925,432
Total expenses	$	3,060,136		$	1,957,293		$	7,082,645		$	5,636,231
Operating loss		(1,215,988	)		(483,208	)		(2,572,580	)		(1,601,108	)
Other expense		(639	)		-			(506,639	)		-
Income on investment in tenancy-in-common		3,362			16,751			32,773			23,841
Dead deal expense		-			(45,660	)		(109,569	)		(153,031	)
Loss on debt extinguishment		-			-			-			(144,029	)
Net loss	$	(1,213,265	)	$	(512,117	)	$	(3,156,015	)	$	(1,874,327	)
Less: Net income attributable to non-controlling interests		425,637			126,803			681,916			386,947
Net loss attributable to Generation Income Properties, Inc.	$	(1,638,902	)	$	(638,920	)	$	(3,837,931	)	$	(2,261,274	)
Less: Preferred stock dividends		190,000			-			190,000			-
Net loss attributable to common shareholders	$	(1,828,902	)	$	(638,920	)	$	(4,027,931	)	$	(2,261,274	)
Other comprehensive income:
Gain on change in fair value of derivative instrument		78,969			-			78,969			-
Comprehensive loss attributable to common shareholders	$	(1,749,933	)	$	(638,920	)	$	(3,948,962	)	$	(2,261,274	)

Total Weighted Average Shares of Common Stock Outstanding – Basic & Diluted		2,618,077			2,304,841			2,591,956			2,251,522

Basic & Diluted Loss Per Share Attributable to Common Stockholders	$	(0.70	)	$	(0.28	)	$	(1.55	)	$	(1.00	)

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 Capital			Accumulated Other Comprehensive Income		Accumulated Deficit			Stockholders' Equity			Non-Controlling Interest			Total Equity			Preferred Stock		Redeemable Non-Controlling Interest
	Shares		Amount
Balance, December 31, 2021		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		-		-		-			-		(575,476	)		(575,476	)		(1,120	)		(576,596	)		-		131,083
Balance, March 31, 2022		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		-		-		-			-		-			-			(3,938	)		(3,938	)		-		(118,556	)
Dividends paid on common stock		-		-		(343,254	)		-		-			(343,254	)		-			(343,254	)		-		-
Net (loss) income for the quarter									-		(1,046,878	)		(1,046,878	)		(4,329	)		(1,051,207	)		-		134,510
Balance, June 30, 2022		2,257,787	$	22,577	$	18,584,981		$	-	$	(7,025,510	)	$	11,582,048		$	456,387		$	12,038,435		$	-	$	9,869,631
Restricted stock unit compensation		-		-		110,869			-		-			110,869			-			110,869			-		-
Cashless exercise of warrants		31,495		315		(315	)							-			-			-			-		-
Common stock issued to redeem Redeemable Non-Controlling Interest		200,000		2,000		1,198,000			-		-			1,200,000			-			1,200,000			-		(1,200,000	)
Issuance of Other payable - related party for redemption of Redeemable Non-Controlling Interest		-		-		-			-		-			-			-			-			-		(2,912,300	)
Distribution on Non-Controlling Interest		-		-		-			-		-			-			(3,938	)		(3,938	)		-		(111,278	)
Dividends paid on common stock		-		-		(386,765	)		-		-			(386,765	)		-			(386,765	)		-		-
Net (loss) income for the quarter									-		(638,920	)		(638,920	)		(780	)		(639,700	)		-		127,583
Balance, September 30, 2022		2,489,282	$	24,892	$	19,506,770		$	-	$	(7,664,430	)	$	11,867,232		$	451,669		$	12,318,901		$	-	$	5,773,636

Balance, December 31, 2022		2,501,644	$	25,016	$	19,307,518		$	-	$	(8,640,796	)	$	10,691,738		$	445,035		$	11,136,773		$	-	$	5,789,731
Restricted stock unit compensation		98,593		986		89,662			-		-			90,648			-			90,648			-		-
Cashless exercise of warrants		10,648		106		(106	)		-		-			-			-			-			-		-
Issuance of Redeemable Non-Controlling Interest		-		-		-			-		-			-			-			-			-		3,000,000
Redemption of Redeemable Non-Controlling Interest		-		-		-			-		-			-			-			-			-		(2,479,299	)
Distribution on Non-Controlling Interest		-		-		-			-		-			-			(2,844	)		(2,844	)		-		(115,817	)
Dividends paid on common stock		-