[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for June 30, 2025, reflect decreased assets, an equity deficit, increased net loss, negative operating cash flow, and a going concern warning [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets slightly decreased, liabilities remained stable, and stockholders' equity shifted to a deficit due to increased accumulated deficit Consolidated Balance Sheet Summary (unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$104,962,278** | **$106,563,790** | | Net real estate investments | $94,498,835 | $91,362,786 | | Cash and cash equivalents | $356,130 | $612,939 | | Held for sale assets | $2,657,414 | $6,732,001 | | **Total Liabilities** | **$73,996,772** | **$73,710,451** | | Mortgage loans, net | $54,787,093 | $58,340,234 | | Redeemable Non-Controlling Interests | $31,931,200 | $26,664,545 | | **Total Equity** | **($965,694)** | **$6,188,794** | | Accumulated deficit | ($30,432,033) | ($23,277,545) | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the periods ended June 30, 2025, total revenues modestly increased, but significantly higher expenses, particularly interest, led to a substantially larger net loss and increased loss per share Consolidated Statements of Operations Highlights (unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$2,432,270** | **$2,259,235** | **$4,813,865** | **$4,692,408** | | **Total Expenses** | **$4,805,285** | **$3,729,846** | **$8,662,661** | **$7,363,671** | | Interest expense, net | $2,084,751 | $1,023,140 | $3,267,018 | $2,043,881 | | **Net Loss** | **($3,466,521)** | **($1,461,488)** | **($5,263,981)** | **($3,340,584)** | | Net loss attributable to common shareholders | ($4,422,628) | ($2,261,722) | ($7,154,487) | ($5,181,942) | | **Basic & Diluted Loss Per Share** | **($0.81)** | **($0.42)** | **($1.31)** | **($1.05)** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, operating cash flow turned negative, investing activities provided cash from property sales, financing activities used cash, resulting in a net decrease in cash and cash equivalents Consolidated Statements of Cash Flows Summary (unaudited) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($519,833) | $226,605 | | Net cash provided by investing activities | $10,333,595 | $0 | | Net cash used in financing activities | ($10,070,571) | ($790,817) | | **Net decrease in cash and cash equivalents** | **($256,809)** | **($564,212)** | | Cash and cash equivalents - end of period | $390,630 | $2,587,734 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail the company's REIT operations, disclose a going concern uncertainty due to recurring losses and negative cash flow, and cover major tenants, debt covenants, related-party transactions, and subsequent events - Management has identified substantial doubt about the Company's ability to continue as a going concern due to recurring losses, negative operating cash flow of **$519,833** for the six months ended June 30, 2025, and its current liquidity position[23](index=23&type=chunk)[24](index=24&type=chunk) - As of June 30, 2025, the company owned **28 properties** Major tenants accounting for over **10%** of rental revenue include the General Services Administration (**16%**), Dollar General (**13%**), Pre-K San Antonio (**10%**), Kohl's (**10%**), and exp U.S. Services (**10%**)[22](index=22&type=chunk)[60](index=60&type=chunk) - Subsequent to the quarter end, on August 7, 2025, the company extended the mandatory redemption date for the LC2 preferred equity to August 10, 2026, which increased the preferred return rate from **15.5%** to **18%** per annum[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion covers the company's highly leased portfolio, analyzes operations highlighting increased net loss due to higher interest expense, reiterates going concern doubt, and reconciles net loss to negative non-GAAP FFO and AFFO [Our Investments](index=44&type=section&id=Our%20Investments) As of June 30, 2025, the company's property portfolio was **98.6%** leased, with approximately **60%** of annualized base rent from investment-grade tenants and **92%** of leases having contractual rent increases - The portfolio is **98.6%** leased and occupied as of June 30, 2025[144](index=144&type=chunk) - Approximately **60%** of the portfolio's annualized base rent (ABR) comes from tenants with investment-grade credit ratings (BBB- or better)[144](index=144&type=chunk) - The largest tenants (General Service Administration, Dollar General, EXP Services, Kohl’s, City of San Antonio) account for approximately **59%** of the portfolio's ABR[144](index=144&type=chunk) [Recent Developments](index=45&type=section&id=Recent%20Developments) Recent developments include the sale of two properties for **$10.65 million**, securing short-term promissory notes including a **$610,000** CEO loan for transaction costs, and obtaining a new **$1.1 million** mortgage loan - On May 29, 2025, the company sold its Starbucks-occupied building in Tampa, FL for **$3.45 million** and its Auburn University-occupied building in Huntsville, AL for **$7.2 million**[150](index=150&type=chunk)[151](index=151&type=chunk) - The company entered into several promissory notes to cover transaction costs, including a **$610,000** loan from CEO David Sobelman with a **5.75%** interest rate, due August 31, 2025[155](index=155&type=chunk) - On June 13, 2025, the company secured a new **$1.1 million** mortgage loan from Valley National Bank on its 7-Eleven property in Washington, D.C., with a fixed interest rate of **6.50%**[156](index=156&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, total revenue increased, but operating expenses, driven by a significant rise in interest expense, led to a widened net loss attributable to shareholders Change in Operating Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | General and administrative | $1,058,271 | $1,054,453 | $3,818 | | Building expenses | $1,339,343 | $1,338,294 | $1,049 | | Depreciation and amortization | $2,557,342 | $2,406,837 | $150,505 | | **Interest expense, net** | **$3,267,018** | **$2,043,881** | **$1,223,137** | | Compensation costs | $440,687 | $520,206 | ($79,519) | | **Total expenses** | **$8,662,661** | **$7,363,671** | **$1,298,990** | [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company's critical liquidity position, with limited cash and reliance on external capital, leads management to express substantial doubt about its going concern ability, despite compliance with debt covenants - The company explicitly states that "substantial doubt exists about the Company's ability to continue as a going concern" due to recurring losses, projected cash needs, and current liquidity[180](index=180&type=chunk) - As of June 30, 2025, the company had a total cash balance of **$390,630** and outstanding mortgage loans with a principal balance of **$56.0 million**[167](index=167&type=chunk) - The company is in compliance with all mortgage loan covenants as of June 30, 2025, which include maintaining specific debt service coverage ratios (DSCR) and loan-to-value ratios[186](index=186&type=chunk) [Non-GAAP Financial Measures](index=58&type=section&id=Non-GAAP%20Financial%20Measures) The company's non-GAAP financial measures, FFO and Core AFFO, were negative for the six months ended June 30, 2025, reflecting increased net loss and higher interest-related costs Reconciliation of Net Loss to FFO and Core AFFO (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net loss | ($5,263,981) | ($3,340,584) | | Depreciation and amortization | $2,557,342 | $2,406,837 | | **Funds From Operations (FFO)** | **($2,290,528)** | **($1,359,293)** | | **Adjusted Funds From Operations (AFFO)** | **($1,998,441)** | **($37,886)** | | **Core Adjusted Funds From Operations (Core AFFO)** | **($757,930)** | **$187,857** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing disclosures regarding market risk - As a smaller reporting company, the company is not required to make disclosures under this item[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[210](index=210&type=chunk) - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2025[211](index=211&type=chunk) [PART II. OTHER INFORMATION](index=63&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings requiring disclosure in this quarterly report - There are no material legal proceedings to be disclosed[213](index=213&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) A new material risk factor highlights the potential delisting of the company's common stock and warrants from Nasdaq due to non-compliance with minimum stockholders' equity and bid price requirements - The company is at risk of being delisted from Nasdaq for failing to meet continued listing requirements[215](index=215&type=chunk) - As of June 30, 2025, the company's reported stockholders' equity is below the **$2.5 million** minimum required by Nasdaq[215](index=215&type=chunk) - The company's common stock bid price has recently fallen below the **$1.00** per share minimum requirement, which could trigger a deficiency notice from Nasdaq if it persists for **30** consecutive business days[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities[218](index=218&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[220](index=220&type=chunk)

Core Viewpoint - Resurgent Realty Trust criticizes the management and board of Generation Income Properties, Inc. for failing to fulfill their fiduciary duties and mismanaging the company, leading to significant shareholder losses [1][3][4]. Financial Performance - Generation Income Properties has not been profitable since its IPO in September 2021, marking 3.9 years of continuous losses under the current leadership [3]. - The company's stock price has plummeted from $10 to $1.40, representing an 86% decline, indicating severe destruction of shareholder value [3]. Management and Governance Issues - The CEO, David Sobelman, and the board are accused of operating recklessly and lacking an understanding of their fiduciary responsibilities as stewards of a publicly traded company [2][4]. - There is a call for the removal of current management and reconstitution of the board to stabilize the company, which is described as a "wayward and sinking ship" [4].

Group 1 - Resurgent Realty Trust has amended its offer to purchase shares of Generation Income Properties, Inc. at $1.45 per share due to a reduction in the company's net asset value (NAV) resulting from two recent asset sales [1] - The previous offers of $2.50, $2.75, and $3.00 have been withdrawn as GIPR's share price continues to decline, reflecting a lack of confidence in the current leadership by the investment community [1] - The current offer represents a discount of approximately 15% to Resurgent's estimated NAV for GIPR, which is $1.70 [1] Group 2 - Resurgent Realty Trust intends to pursue all legal remedies to maximize the value of its investment in GIPR, including a request for a non-disclosure agreement and proxy questionnaire [2] - The company plans to nominate an alternate slate of directors for election at GIPR's next annual meeting [2]

Portfolio Performance - As of March 31, 2025, approximately 65% of the portfolio's annualized base rent (ABR) was derived from tenants with an investment grade credit rating of "BBB-" or better[140] - The portfolio is 93% leased and occupied, indicating strong demand for the properties[140] - Approximately 92% of the leases in the current portfolio provide for increases in contractual base rent during future years[140] - The average effective annual rental per square foot is $15.24[140] - The largest tenants, including the General Service Administration and Dollar General, contributed approximately 36% of the portfolio's ABR[140] Financial Performance - Total revenue for the three months ended March 31, 2025, was $2,381,595, a decrease of 2.1% compared to $2,433,173 for the same period in 2024[149] - Total operating expenses increased by 6.2% to $3,857,376 for the three months ended March 31, 2025, compared to $3,633,825 in 2024[150] - Net loss for the three months ended March 31, 2025, was $1,797,460, an improvement from a net loss of $1,879,096 in 2024[151] - Net loss attributable to common shareholders decreased to $2,731,859 for the three months ended March 31, 2025, from $2,920,220 in 2024[153] - Funds From Operations (FFO) for the three months ended March 31, 2025, was $(211,486), compared to $(1,033,041) for the same period in 2024, indicating improved operational performance[189] - Core Adjusted Funds From Operations (Core AFFO) for the three months ended March 31, 2025, was $(39,589), a significant improvement from $241,218 in the same period of 2024[189] Cash and Debt Management - As of March 31, 2025, the company had total cash of $665,057 and outstanding mortgage loans with a principal balance of $66,184,027[154] - A loan agreement was entered into on August 10, 2023, for $21.0 million to finance the acquisition of the Modiv Portfolio, with a fixed interest rate of 7.47%[157] - The company has a loan of $5.5 million due on October 14, 2026, with a fixed interest rate of 9%[162] - As of March 31, 2025, the total outstanding mortgage loans payable amounted to $66,184,027, with a debt service coverage ratio (DSCR) requirement of 1.25 for several loans[166] - Minimum required principal payments on debt for 2025 total $1,138,148, with significant payments of $21,846,023 due in 2028 and $13,311,313 in 2029[170] Equity and Financing Activities - From inception through March 31, 2025, the company has distributed $5,024,622 to common stockholders[142] - The company closed a public offering generating net proceeds of $13.8 million in September 2021[155] - The company executed a purchase and sale agreement to sell a property for $7.2 million, expected to close in June 2025[169] - The company entered into new agreements for Norfolk properties, raising $3,000,000 in temporary equity as of March 31, 2025[170] - The preferred equity interest from the LC2 Investment has a cumulative distribution preference of 15.5% per year, with a current preferred return of 5% per annum[171] Tax and Regulatory Compliance - The company has elected to be taxed as a REIT for federal income tax purposes since the taxable year ending December 31, 2021[135] - The company was in compliance with all covenants except for one project level DSCR covenant, which was below the required 1.25 threshold due to a six-month vacancy[169] - The company does not have any material off-balance sheet arrangements that could materially affect its financial condition[181] Going Concern and Financial Flexibility - The company has substantial doubt about its ability to continue as a going concern due to recurring losses and projected cash needs[164] - The company aims to maintain financial flexibility through retained cash flows, long-term debt, and preferred stock to finance growth, targeting a lower-leveraged portfolio in the long term[177] - The redemption value of the preferred interest is $14,100,000 plus accrued but unpaid preferred interest of $3,403,728 as of March 31, 2025[175] Interest and Debt Costs - Interest expense increased by $161,526 year-over-year, driven by debt financing related to property acquisitions[158] - Debt issuance costs amortized during Q1 2025 were approximately $42,533, compared to $47,780 in Q1 2024[168] - The preferred return increased from 15.5% to 18%, with accrued preferred return rising from 10.5% to 13%[174]

Core Viewpoint - Resurgent Realty Trust (RRT) is urging Generation Income Properties, Inc. (GIPR) to engage in discussions regarding a non-binding term sheet submitted on January 30, 2025, highlighting the need for immediate action to address governance and financial issues facing GIPR [1][2]. Financial Obligations - GIPR has a $6 million obligation to LOCI Capital due on May 15, 2025, which, if not redeemed, could lead to a governance crisis where LOCI gains board control and the interest rate on the obligation increases to 18.5% upon default [3]. - GIPR also has $3 million in preferred equity from Brown Family Enterprises, which is draining liquidity despite an extended maturity to 2027 [4]. Upcoming Financial Reporting - The Q1 2025 Form 10-Q is due on May 15, coinciding with the LOCI redemption deadline, making it a critical moment for GIPR to clarify its financial position and plans regarding LOCI and preferred equity restructuring [4][5]. Executive Compensation Concerns - CEO David Sobelman received over $700,072 in 2024, including unusual "guarantee fees," while the company has recorded cumulative net losses of $8.6 million through 2022 and has never been profitable [6][7]. Operational and Governance Issues - GIPR's portfolio has significant concerns, including reliance on a few major tenants for 62% of base rent and unresolved material weaknesses in internal controls over financial reporting [13]. - The leadership of GIPR is criticized for misaligned interests and ineffective decision-making, necessitating experienced leadership to navigate the current crisis [9][10]. Call to Action - RRT is proposing immediate actions, including convening an emergency board meeting, engaging with RRT for potential solutions, ensuring full disclosure in the upcoming 10-Q, and considering new leadership capable of restructuring [14].

[Annual Highlights](index=1&type=section&id=Annual%20Highlights) Generation Income Properties reported a net loss of $8.44 million in FY2024 despite revenue growth to $9.8 million, with Core FFO at $179 thousand and Core AFFO at $373 thousand Key Financial Results (FY 2024 vs FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $9.8 million | $7.6 million | +28.9% | | Net Loss Attributable to Common Shareholders | ($8.44 million) | ($6.2 million) | Increased Loss | | Basic & Diluted Loss Per Share | ($1.64) | ($2.46) | Loss per share decreased | | Core FFO | $179 thousand | $534 thousand | -66.5% | | Core AFFO | $373 thousand | $706 thousand | -47.2% | - The property portfolio is **99% leased and occupied**, with tenants being **100% rent paying** and approximately **60% of annualized rent** from investment-grade credit ratings[5](index=5&type=chunk) - The company's largest tenants, General Service Administration, Dollar General, and the City of San Antonio, contribute about **39% of the portfolio's annualized base rent**[5](index=5&type=chunk) - Liquidity is limited, with total cash and cash equivalents at **$647 thousand** as of December 31, 2024, against total mortgage loans of **$56.3 million**[5](index=5&type=chunk) [Letter from the CEO](index=2&type=section&id=Letter%20from%20the%20CEO) CEO David Sobelman addresses the all-time low stock price, attributing it to the dividend suspension, and outlines a 2025 plan to return to profitability and reinstate the dividend [Stock Price and Dividend Policy](index=2&type=section&id=Stock%20Price%20and%20Dividend%20Policy) The CEO links the company's all-time low stock price to the 2024 dividend suspension, prioritizing profitability for reinstatement - The CEO acknowledges the stock price is at an **all-time low**, primarily due to the absence of a dividend, which the market expects from REIT investments[6](index=6&type=chunk)[9](index=9&type=chunk) - The dividend was suspended in 2024 because it was not fully covered by company profits, prioritizing long-term financial health[9](index=9&type=chunk)[12](index=12&type=chunk) - Restoring the dividend is a top priority, contingent on achieving or nearing profitability with a sustainable payout model[13](index=13&type=chunk)[16](index=16&type=chunk) [Accomplishments in 2024](index=3&type=section&id=Accomplishments%20in%202024) Despite challenges, the company added new investment-grade tenants, executed lease and debt extensions, acquired a Best Buy property, and raised $2.5 million in capital - Added new high-quality tenants, including **Auburn University (S&P: AA)** and the Armed Services YMCA[23](index=23&type=chunk) - Completed lease extensions with Fresenius Dialysis and Dollar Tree, and acquired a Best Buy property at an effective **8.1% cap rate**[23](index=23&type=chunk) - Raised **$2.5 million in capital** via common LP units with a redemption value of **$7.15/unit**, avoiding dilution to common shareholders[23](index=23&type=chunk) - Successfully extended the expiration date of two loans to **2029** and an equity partner's redemption date from **2025 to 2027**[23](index=23&type=chunk) [Subsequent Events](index=3&type=section&id=Subsequent%20Events) Subsequent to year-end, on February 6, 2025, GIPR closed an UPREIT transaction for three properties, valued at over $11 million, increasing GAV to $115 million - On February 6, 2025, the company closed an UPREIT contribution transaction involving three properties for a gross price of just over **$11 million**[18](index=18&type=chunk) - This transaction increased the company's Gross Asset Value (GAV) to approximately **$115 million**[18](index=18&type=chunk) [Capital Strategy](index=4&type=section&id=Capital%20Strategy) The company's capital strategy targets a minimum 150-basis point spread between its cost of capital and acquisition cap rates, leveraging a $14 million preferred equity investment for growth - GIPR's strategy targets a minimum **150-basis point spread** between its cost of capital and acquisition cap rates[25](index=25&type=chunk) - The company utilized a **$14 million preferred equity investment** from Loci Capital to purchase a 13-property portfolio from Modiv Industrial in August 2023[26](index=26&type=chunk) - This transaction allowed GIPR to **double in size**, executed with the belief that expensive debt and equity could be recapitalized as financial markets stabilized[27](index=27&type=chunk) [The Plan for 2025](index=4&type=section&id=The%20Plan%20for%202025) The 2025 strategic plan focuses on balance sheet improvement and dividend reinstatement through debt refinancing, capital recycling, UPREIT transactions, and expense reduction - The company is focused on refinancing expensive debt and replacing preferred equity with less expensive capital to improve profitability[28](index=28&type=chunk)[29](index=29&type=chunk) - A key strategy is to 'Recycle Capital' by selling underperforming or non-core assets and reinvesting proceeds into new assets, debt paydown, or operations[30](index=30&type=chunk)[32](index=32&type=chunk) - GIPR has developed a large pipeline of potential UPREIT transactions, viewing it as a primary growth mechanism in the current market[33](index=33&type=chunk) - The company plans to decrease General and Administrative expenses and raise new capital at the operating partnership level, aiming to reinstate the dividend[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) The 2024 consolidated financial statements show a wider net loss of $8.44 million, or ($1.64) per share, despite revenue growth to $9.76 million, primarily due to increased operating expenses [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2024, total assets slightly decreased to $106.6 million, with a notable drop in cash, while total liabilities remained stable and stockholders' equity increased to $5.8 million Selected Balance Sheet Data (As of Dec 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $612,939 | $3,117,446 | | Net real estate investments | $91,362,786 | $97,406,605 | | **Total Assets** | **$106,563,790** | **$108,691,416** | | Mortgage loans, net | $58,340,234 | $56,817,310 | | **Total Liabilities** | **$73,710,451** | **$74,170,048** | | **Total Stockholders' Equity** | **$5,795,933** | **$3,665,198** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For FY2024, total revenue grew 28% to $9.76 million, but total expenses rose 34% to $14.89 million, resulting in a wider net loss of $8.44 million Selected Statement of Operations Data (Year ended Dec 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total revenue | $9,762,636 | $7,632,600 | | Total expenses | $14,894,980 | $11,088,848 | | Operating loss | ($5,132,344) | ($3,456,248) | | **Net loss attributable to common shareholders** | **($8,444,487)** | **($6,192,262)** | | **Basic & Diluted Loss Per Share** | **($1.64)** | **($2.46)** | [Reconciliation of Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles GAAP net loss to non-GAAP real estate metrics, showing increased NOI to $7.1 million but significant declines in Core FFO to $179 thousand and Core AFFO to $373 thousand for FY2024 [Reconciliation to Net Operating Income (NOI)](index=10&type=section&id=Reconciliation%20to%20Net%20Operating%20Income%20(NOI)) The company reconciles its GAAP net loss of $4.87 million for FY2024 to a Net Operating Income (NOI) of $7.09 million, an increase from $5.93 million in 2023 NOI Reconciliation (Year ended Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income (loss) | ($4,872,888) | ($4,441,465) | | Adjustments (G&A, D&A, Interest, etc.) | $11,961,900 | $10,374,865 | | **Net Operating Income (NOI)** | **$7,089,012** | **$5,933,400** | [Reconciliation to FFO and Related Measures](index=11&type=section&id=Reconciliation%20to%20FFO%20and%20Related%20Measures) For FY2024, core operational profitability declined significantly, with Core FFO at $179 thousand and Core AFFO at $373 thousand, down from $534 thousand and $706 thousand respectively in 2023 FFO and Related Measures (Year ended Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Funds From Operations (FFO) | ($403,014) | $5,525 | | **Core Funds From Operations (Core FFO)** | **$179,346** | **$534,272** | | Adjusted Funds From Operations (AFFO) | ($42,692) | $213,969 | | **Core Adjusted Funds From Operations (Core AFFO)** | **$372,920** | **$705,540** | [Explanation of Non-GAAP Measures](index=12&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures like FFO, Core FFO, and Core AFFO as widely accepted industry metrics to provide a clearer view of operating performance and aid investor comparisons - The company uses non-GAAP measures like FFO and AFFO because they are widely accepted industry standards for comparing REIT operating performance[55](index=55&type=chunk) - FFO is computed according to NAREIT standards, excluding real estate depreciation and gains/losses on sales, to provide a better measure of operational trends[57](index=57&type=chunk)[59](index=59&type=chunk) - Core FFO and Core AFFO further remove non-cash expenses and other items not directly related to real estate operations, used by management for corporate goal formulation[58](index=58&type=chunk)

Property Ownership and Rental Income - As of March 19, 2025, the company owns thirty properties, with 40% of total base rent derived from office properties and 60% from retail/medical-retail properties[63][75]. - The company has five tenants that each account for more than 10% of annualized rent, collectively contributing approximately 64% of the portfolio's annualized base rent as of March 19, 2025[102]. - Approximately 94,000 square feet leased to the General Services Administration (GSA) are under non-firm terms, allowing the tenant to terminate without a fee, which poses a risk to future rental income[96]. - A significant portion of rental income is derived from net leases, which may not result in fair market lease rates over time, impacting income and distributions[149]. Financial Performance and Risks - The company has experienced a cumulative net loss of approximately $19.7 million from inception through December 31, 2024, primarily due to start-up costs and high corporate expenses[65]. - The company may incur additional indebtedness in the future, which could restrict operational flexibility and increase vulnerability to economic conditions[71]. - The company is dependent on its Operating Partnership for cash flow, which may limit its ability to make distributions to shareholders[79]. - The bankruptcy of a major tenant could significantly harm the company's financial condition and ability to pay distributions[104]. - Economic downturns may result in tenant defaults, reduced rental income, and increased insurance premiums, negatively impacting cash flow[126]. Capital and Financing - The company anticipates needing to raise additional capital to acquire more properties, which may dilute existing shareholders' interests[70]. - The company continues to rely on external financing, primarily through equity securities and mortgages, but faces challenges due to rising interest rates and market volatility[162]. - The company may incur mortgage debt to acquire properties or pay distributions, which increases expenses and risks of foreclosure if cash flow is insufficient[157]. - The company's ability to acquire properties or make capital improvements is limited by its requirement to distribute at least 90% of annual taxable income to stockholders[164]. Operational Challenges - The company may face challenges in identifying and consummating suitable investment opportunities due to competition from other investors, which could impede growth[69][76]. - The GIP SPE Operating Agreement requires approval from LC2 for significant operational decisions, potentially limiting the company's operational flexibility[72][74]. - The company lacks geographic and tenant diversity due to its current size, which may hinder its ability to achieve overall portfolio diversity[75]. - The company has a risk management framework in place, but limited personnel may restrict its ability to identify and mitigate risks effectively[82]. Regulatory and Compliance Issues - Compliance with governmental laws and regulations, including environmental matters, may impose significant costs that adversely affect income and cash available for distributions[139]. - The company faces risks related to federal income tax laws that could adversely affect its operations and investors[199]. - The company must ensure it does not become closely held, as this could jeopardize its REIT status[189]. - Future legislative or regulatory changes could impact the company's tax status and investor returns[200]. Market and Economic Conditions - High inflation and rising interest rates may adversely impact tenants' ability to pay rent, affecting the company's cash flow[142]. - Government budgetary pressures and remote work trends have reduced demand for government-leased space, potentially affecting rental income[95]. - Future pandemics or health crises could negatively impact tenants' financial conditions and the company's overall financial performance[92]. Shareholder and Stockholder Considerations - The company has 110 million authorized shares of stock, which could lead to significant dilution of current shareholders' equity if additional shares are issued[208]. - The company’s charter limits ownership of its common stock to 9.8%, which may discourage takeovers that could benefit shareholders[217]. - The stock price of the company's common stock may be volatile, influenced by various market factors and operational performance[203]. - The company has the option to issue preferred stock that could subordinate the rights of common stockholders, affecting their potential returns[218]. Environmental and Property Risks - Environmental liabilities could arise from hazardous substances on properties, potentially leading to significant costs and operational impacts[131]. - Properties may contain mold or asbestos, leading to health-related litigation and potential loss of tenants[132]. - Limited warranties on property purchases increase the risk of losing invested capital and rental income[109]. - Rising operating expenses could reduce cash flow and funds available for future acquisitions[117].

Core Viewpoint - Resurgent Realty Trust (RRT) believes that Generation Income Properties, Inc. (GIPR) is currently underperforming and proposes to acquire a majority stake to implement changes in management and strategic direction [1]. Group 1: Proposed Acquisition Details - RRT proposes to acquire 51% of GIPR's common stock at a price of $3.00 per share, representing a 42% premium [2][3]. - The acquisition aims to maintain GIPR's status as a real estate investment trust (REIT) [3]. - Following the acquisition, GIPR's Board of Directors will expand from five to eleven members, with new directors selected by the Investors [3]. Group 2: Due Diligence and Exclusivity - The Investors will conduct due diligence, including access to GIPR's legal and accounting records, property inspections, and meetings with management [3]. - GIPR agrees not to engage in discussions with other parties regarding similar transactions for a specified period [3][4]. Group 3: Conditions and Confidentiality - The transaction is subject to customary conditions, including necessary approvals from equity holders and regulatory bodies [4]. - The terms of the Letter of Intent (LOI) and the term sheet are confidential, with disclosure only permitted under specific legal circumstances [4].

Financial Performance - Generated a net loss attributable to GIP common shareholders of $2.1 million, or ($0.55) per basic and diluted share for Q3 2024[1] - Net loss attributable to common shareholders for Q3 2024 was $(2,969,596), compared to $(1,828,902) in Q3 2023, reflecting a 62.3% increase in losses[16] - The company reported a comprehensive loss attributable to common shareholders of $(2,969,596) for Q3 2024, compared to $(1,749,933) in Q3 2023[16] - Net loss for the three months ended September 30, 2024, was $(2,103,549), compared to $(1,213,265) for the same period in 2023[18] - Core Funds From Operations (Core FFO) for the three months ended September 30, 2024, was $(145,885), compared to $(65,567) in 2023[18] - Funds From Operations (FFO) for the nine months ended September 30, 2024, was $(601,651), a slight increase from $(552,406) in 2023[18] - Adjusted Funds From Operations (AFFO) for the nine months ended September 30, 2024, was $(1,226,944), compared to $(468,990) in 2023[18] Revenue and Income - Total revenue from operations for Q3 2024 was $2.4 million, up from $1.8 million in Q3 2023, driven by the integration of a 13-property portfolio acquired from Modiv[3] - Total revenue for Q3 2024 was $2,400,282, a 30.1% increase from $1,844,148 in Q3 2023[16] - Rental income for Q3 2024 reached $2,326,980, up 26.4% from $1,841,044 in Q3 2023[16] - GIPR's net operating income (NOI) for Q3 2024 was $1.7 million, compared to $1.4 million for the same period last year[3] - Net Operating Income (NOI) for Q3 2024 was $1,671,220, a 18.3% increase from $1,412,789 in Q3 2023[17] Assets and Liabilities - Total assets as of September 30, 2024, were $107,972,756, a slight decrease from $108,691,416 as of December 31, 2023[14] - Total liabilities increased to $75,244,921 as of September 30, 2024, compared to $74,170,048 at the end of 2023[14] - Cash and cash equivalents decreased to $1,547,110 from $3,117,446 at the end of 2023, indicating a liquidity contraction[14] Expenses - General and administrative expenses for Q3 2024 were $577,565, up from $530,538 in Q3 2023, representing an increase of 8.9%[16] - Interest expense for Q3 2024 was $1,098,608, a significant increase from $770,624 in Q3 2023, reflecting higher borrowing costs[16] Portfolio and Tenants - The portfolio is 89% leased and occupied, with tenants paying 100% of rent[2] - Approximately 60% of the portfolio's annualized base rent is derived from tenants with an investment-grade credit rating of "BBB-" or better[2] - Average effective annual rental per square foot is $14.75[2] Capital and Dividends - The company suspended its dividend in July 2024 to focus on growth and plans to reinstate it when feasible[4] - The company raised $2.5 million in new capital through preferred units from a new investor in July 2024[4] - GIPR has no debt obligations due until 2028 and no cash redemptions due until 2026, allowing for strategic flexibility[9] Stock and Shares - Total weighted average shares of common stock outstanding for the three months ended September 30, 2024, was 5,433,833, compared to 2,618,077 in 2023[18] - Non-cash stock compensation for the three months ended September 30, 2024, was $94,935, down from $119,380 in 2023[18] Adjustments and Revisions - Adjustments to net loss for the three months ended September 30, 2024, amounted to $2,109,058, compared to $1,069,658 in 2023[18] - The company revised its FFO calculation to include loss on held for sale asset valuation as an add-back[18] - FFO and related measures are considered useful by the company for comparing operating performance among REITs[19]

Financial Performance - Total revenue for the three months ended September 30, 2024, was $2,400,282, an increase of $556,134 (30.1%) compared to $1,844,148 for the same period in 2023[140]. - Total revenue for the nine months ended September 30, 2024, was $7,092,690, an increase of $2,582,625 (57.3%) compared to $4,510,065 for the same period in 2023[140]. - Total operating expenses for the three months ended September 30, 2024, were $3,769,715, an increase of $709,578 (23.2%) compared to $3,060,136 for the same period in 2023[141]. - Total operating expenses for the nine months ended September 30, 2024, were $11,133,386, an increase of $4,050,741 (57.2%) compared to $7,082,645 for the same period in 2023[144]. - Net loss for the three months ended September 30, 2024, was $2,103,549, compared to a net loss of $1,213,265 for the same period in 2023[145]. - Net loss for the nine months ended September 30, 2024, was $5,444,133, compared to a net loss of $3,156,015 for the same period in 2023[145]. - Funds from Operations (FFO) for the nine months ended September 30, 2024, was $(601,651), compared to $(552,406) for the same period in 2023[185]. - Core Adjusted Funds From Operations for the nine months ended September 30, 2024, was $(906,267), compared to $(72,354) for the same period in 2023[185]. Portfolio and Leasing - As of September 30, 2024, approximately 60% of the portfolio's annualized base rent (ABR) was derived from tenants with an investment grade credit rating of "BBB-" or better[128]. - The portfolio is 89% leased and occupied, indicating strong demand for the properties[128]. - Approximately 92% of the leases in the current portfolio provide for increases in contractual base rent during future years[128]. - The average effective annual rental per square foot is $14.75[128]. - The largest tenants, including the General Service Administration and Dollar General, contributed approximately 69% of the portfolio's ABR[128]. Cash Flow and Liquidity - As of September 30, 2024, the company had total cash of $1,581,610 and outstanding mortgage loans with a principal balance of $59,707,772[149]. - For the nine months ended September 30, 2024, the Company generated positive operating cash flows of $783,511 and had cash on hand of $1.58 million[159]. - Net cash provided by operating activities increased to $783,511 for the nine months ended September 30, 2024, compared to $18,537 for the same period in 2023, attributed to the doubling of income-generating assets through the Modiv acquisition[175]. - Net cash used in investing activities was $5,960,893 for the nine months ended September 30, 2024, a significant decrease from $33,314,973 in the same period of 2023[176]. - Net cash provided by financing activities decreased to $3,607,045 for the nine months ended September 30, 2024, down from $33,916,112 in 2023, due to increased mortgage principal repayments and dividend payments[177]. Debt and Financing - Minimum required principal payments on the Company's debt total $65.66 million as of September 30, 2024, with significant payments due in 2028 and thereafter[168]. - The Company is required to maintain a debt service coverage ratio (DSCR) of 1.50 for certain mortgage loans, and as of September 30, 2024, it was in compliance with all covenants[167]. - The Company modified terms for two secured mortgage loans, extending maturity dates to August 2029, to improve liquidity and profitability[159]. - The Company had outstanding mortgage loans payable totaling $59.71 million as of September 30, 2024[161]. - The company aims to maintain financial flexibility through retained cash flows, long-term debt, and preferred stock to finance growth, targeting a lower-leveraged portfolio in the long term[174]. Dividends and Shareholder Returns - From inception through September 30, 2024, the company has distributed $5,031,549 to common stockholders[131]. - On July 3, 2024, the company announced the suspension of its regular dividend, effective from July 2024[132]. Corporate Governance and Changes - The company appointed CohnReznick LLP as its new independent registered public accounting firm on July 19, 2024[135]. - The company entered into a Fifth Amendment to the Amended and Restated Limited Partnership Agreement, issuing Series B-1 Preferred Units on July 24, 2024[136]. Concerns and Projections - The Company reported a substantial doubt about its ability to continue as a going concern one year after the issuance of the financial statements due to recurring losses and projected cash needs[159]. - The Company has cash needs projected due to recurring losses, indicating a focus on improving financial health[159].