[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents unaudited consolidated financial statements, management's discussion and analysis of financial condition and results of operations, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This item provides core unaudited consolidated financial statements, including balance sheets, statements of operations, changes in equity, cash flows, and comprehensive notes on accounting policies, investments, and debt [Consolidated Balance Sheets](index=4&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights | Metric | June 30, 2022 | December 31, 2021 | Change | | :--------------------------------- | :-------------- | :---------------- | :------------- | | Total Assets | $65,299,243 | $53,420,716 | +$11,878,527 | | Net real estate investments | $53,356,152 | $41,299,681 | +$12,056,471 | | Right of use asset, net | $6,275,398 | $- | +$6,275,398 | | Cash and cash equivalents | $3,649,084 | $10,589,576 | -$6,940,492 | | Total Liabilities | $43,391,177 | $30,145,523 | +$13,245,654 | | Mortgage loans, net | $35,455,512 | $28,969,295 | +$6,486,217 | | Right of use liability, net | $6,327,851 | $- | +$6,327,851 | | Total Stockholders' equity | $11,582,048 | $13,670,502 | -$2,088,454 | [Consolidated Statements of Operations](index=5&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2022 | 2021 (As corrected) | Change | | :----------------------------------------- | :----------- | :------------------ | :----------- | | Total revenue | $1,379,103 | $988,190 | +$390,913 | | Total expenses | $2,042,938 | $1,305,855 | +$737,083 | | Operating loss | $(663,835) | $(317,665) | -$346,170 | | Net loss | $(916,697) | $(317,665) | -$599,032 | | Net loss attributable to GIP, Inc. | $(1,046,878) | $(369,989) | -$676,889 | | Basic & Diluted Loss Per Share | $(0.46) | $(0.63) | +$0.17 | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2022 | 2021 (As corrected) | Change | | :----------------------------------------- | :----------- | :------------------ | :----------- | | Total revenue | $2,561,038 | $1,925,078 | +$635,960 | | Total expenses | $3,678,938 | $2,564,446 | +$1,114,492 | | Operating loss | $(1,117,900) | $(639,368) | -$478,532 | | Net loss | $(1,362,210) | $(639,368) | -$722,842 | | Net loss attributable to GIP, Inc. | $(1,622,354) | $(837,872) | -$784,482 | | Basic & Diluted Loss Per Share | $(0.73) | $(1.44) | +$0.71 | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Consolidated Statements of Changes in Equity Highlights | Metric | June 30, 2022 | December 31, 2021 (As corrected) | Change | | :------------------------------------- | :------------ | :------------------------------- | :------------- | | Total Stockholders' equity | $11,582,048 | $13,670,502 | -$2,088,454 | | Accumulated deficit | $(7,025,510) | $(5,403,156) | -$1,622,354 | | Common stock issued and outstanding | 2,257,787 | 2,172,950 | +84,837 | | Restricted stock unit compensation (6 months) | $218,044 | N/A | N/A | | Dividends paid on common stock (6 months) | $(678,053) | $(114,373) | -$563,680 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric | 2022 | 2021 | Change | | :----------------------------------------- | :----------- | :----------- | :----------- | | Net cash used in operating activities | $(127,247) | $(38,238) | -$89,009 | | Net cash used in investing activities | $(13,161,569) | $(3,530,810) | -$9,630,759 | | Net cash generated from financing activities | $6,348,405 | $3,055,476 | +$3,292,929 | | Net decrease in cash and cash equivalents | $(6,940,411) | $(513,572) | -$6,426,839 | | Cash and cash equivalents and restricted cash - end of period | $3,683,665 | $608,792 | +$3,074,873 | - Key Non-Cash Transactions (Six Months Ended June 30, 2022): * Right of use asset and liability for ground lease related to property acquisition: **$6,304,334** * Redemption of redeemable non-controlling interests accrued: **$203,326**[15](index=15&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail explanations and breakdowns of financial statement figures, covering operations, accounting policies, investments, intangible assets/liabilities, equity structure, debt obligations, related party transactions, and subsequent events - As of June 30, 2022, the Company owned **12 properties** and held partial interests in one additional property through a tenancy-in-common investment[19](index=19&type=chunk) [Note 1 – Nature of Operations](index=9&type=section&id=Note%201%20%E2%80%93%20Nature%20of%20Operations) - Generation Income Properties, Inc. was formed as a Maryland corporation on **September 19, 2015**[17](index=17&type=chunk) - The Company is an internally managed real estate investment company focused on acquiring and managing income-producing retail, office and industrial properties net leased to high quality tenants in major markets throughout the United States[17](index=17&type=chunk) - As of June 30, 2022, the Company owned **83%** of the outstanding common units of the Operating Partnership[18](index=18&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) - The Company adopted the calendar year as its basis of reporting[21](index=21&type=chunk) - An immaterial error in classifying the partnership interest of GIP Fund 1, LLC as Redeemable Non-Controlling Interests rather than Non-Controlling Interest within Equity was identified and corrected[22](index=22&type=chunk) - The Company intends to operate and be taxed as a real estate investment trust ("REIT") under Section 856 through 860 of the Internal Revenue Code, commencing with the Company's taxable year ending December 31, 2021[44](index=44&type=chunk) [Basis of Presentation](index=9&type=section&id=Basis%20of%20Presentation) - The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading[20](index=20&type=chunk) - These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 18, 2022[20](index=20&type=chunk) [Immaterial Correction of Previously Issued Consolidated Financial Statements](index=9&type=section&id=Immaterial%20Correction%20of%20Previously%20Issued%20Consolidated%20Financial%20Statements) - Management identified an error in classifying the partnership interest of GIP Fund 1, LLC as Redeemable Non-Controlling Interests rather than Non-Controlling Interest within Equity[22](index=22&type=chunk) - The effect of the error was determined to be immaterial to the Company's previously issued consolidated financial statements[22](index=22&type=chunk) - Corrections were applied to condensed balance sheets, income statements, and statements of equity for various periods from December 31, 2020, to March 31, 2022[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Consolidation](index=13&type=section&id=Consolidation) - The consolidated financial statements include the accounts of Generation Income Properties, Inc. and the Operating Partnership and all of the direct and indirect wholly-owned subsidiaries[29](index=29&type=chunk) - All significant inter-company balances and transactions have been eliminated[29](index=29&type=chunk) [Cash](index=14&type=section&id=Cash) - The Company considers all demand deposits, cashier's checks and money market accounts to be cash equivalents[31](index=31&type=chunk) - Restricted cash represents funds related to tenant escrow reimbursements and immediate capital repair reserve[31](index=31&type=chunk) Cash and Restricted Cash | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $3,649,084 | $10,589,576 | | Restricted cash | $34,581 | $34,500 | | Total Cash and cash equivalents and restricted cash | $3,683,665 | $10,624,076 | [Revenue Recognition](index=14&type=section&id=Revenue%20Recognition) - Rental income from long-term net leases is recognized on a straight-line basis over the lease term[33](index=33&type=chunk) - Deferred rent liability includes approximately **$236,800** of prepaid rent as of June 30, 2022[33](index=33&type=chunk) - No allowances for receivables were recorded for the six months ended June 30, 2022 or 2021[34](index=34&type=chunk) [Stock-Based Compensation](index=14&type=section&id=Stock-Based%20Compensation) - Equity-based incentive grants to employees and non-employee directors are recorded in compensation costs based on their fair values determined on the date of grant[37](index=37&type=chunk) - Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award[37](index=37&type=chunk) [Investments in Real Estate](index=14&type=section&id=Investments%20in%20Real%20Estate) - Acquisitions of real estate are recorded at cost, with the purchase price assigned to tangible and intangible assets and liabilities based on fair value[38](index=38&type=chunk) - All asset transactions to date have been concluded as asset acquisitions, not business acquisitions[38](index=38&type=chunk) - The fair value of in-place leases and above/below market leases are amortized over their remaining terms as amortization expense or adjustments to rental income, respectively[39](index=39&type=chunk) [Depreciation Expense](index=14&type=section&id=Depreciation%20Expense) - Depreciation is computed using the straight-line method over the estimated useful life of the assets[41](index=41&type=chunk) - Estimated useful lives: buildings (**15-50 years**), site improvements (**5 years**), tenant improvements (**2-10 years**)[41](index=41&type=chunk) [Lease Obligations](index=15&type=section&id=Lease%20Obligations) - The Company has one property on land subject to a ground lease with a third party, classified as an operating lease[42](index=42&type=chunk) - Under ASC 842, the Company recognizes Lease liabilities and corresponding Right of use assets for its ground lease[43](index=43&type=chunk) [Income Taxes](index=15&type=section&id=Income%20Taxes) - The Company intends to operate and be taxed as a REIT, commencing with the taxable year ending December 31, 2021[44](index=44&type=chunk) - As a REIT, the Company generally will not be subject to federal corporate income tax on distributed taxable income[44](index=44&type=chunk) - Deferred income taxes are accounted for using the asset and liability method, with a valuation allowance provided if realization is unlikely[45](index=45&type=chunk) [Earnings per Share](index=15&type=section&id=Earnings%20per%20Share) - Basic EPS is computed by dividing net loss attributable to the Company by the weighted average number of common shares outstanding[47](index=47&type=chunk) - Diluted EPS excludes all potentially dilutive securities if their effect is anti-dilutive, which was the case for the six months ended June 30, 2022 and 2021[47](index=47&type=chunk) [Impairments](index=15&type=section&id=Impairments) - The Company reviews investments in real estate and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount may not be recoverable[48](index=48&type=chunk) - No impairments were recorded in the Company's investments in real estate or tenancy-in-common during the six months ended June 30, 2022 or 2021[49](index=49&type=chunk)[51](index=51&type=chunk) [Note 3 – Investments in Real Estate](index=16&type=section&id=Note%203%20%E2%80%93%20Investments%20in%20Real%20Estate) - On January 7, 2022, the Company acquired a medical-retail property in Chicago, IL (Fresenius Medical Care) financed with a **$1,550,000** promissory note and cash[52](index=52&type=chunk) - On January 14, 2022, the Company acquired a retail property in Tampa, FL (Starbucks Coffee) financed with a **$1,109,570** redeemable non-controlling interest, **$1,050,000** debt, and cash[53](index=53&type=chunk) Properties Acquired (Three and Six Months Ended June 30, 2022) | Property | Total real estate investments | Right of use asset | Less Acquired lease intangible liabilities | Less Right of use liability | Total real estate investments, net | | :-------------------- | :---------------------------- | :----------------- | :--------------------------------------- | :-------------------------- | :--------------------------------- | | Fresenius - Chicago, IL | $3,216,786 | $- | $(19,864) | $- | $3,196,922 | | Starbucks - Tampa, FL | $2,277,455 | $- | $(13,497) | $- | $2,263,958 | | Kohl's - Tucson, AZ | $7,483,747 | $6,304,334 | $(131,999) | $(6,304,334) | $7,351,748 | | **Total** | **$12,977,988** | **$6,304,334** | **$(165,360)** | **$(6,304,334)** | **$12,812,628** | [Note 4 – Acquired Lease Intangible Assets, net](index=17&type=section&id=Note%204%20%E2%80%93%20Acquired%20Lease%20Intangible%20Assets%2C%20net) Acquired Lease Intangible Assets, net | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Acquired lease intangible assets | $4,677,928 | $3,304,014 | | Accumulated amortization | $(1,246,874) | $(994,857) | | **Acquired lease intangible assets, net** | **$3,431,054** | **$2,309,157** | - Future amortization for Acquired Lease Intangible Assets, net for the remaining six months of 2022 is **$275,520**, and **$542,954** for 2023 and 2024 each[57](index=57&type=chunk) [Note 5 – Acquired Lease Intangible Liabilities, net](index=17&type=section&id=Note%205%20%E2%80%93%20Acquired%20Lease%20Intangible%20Liabilities%2C%20net) Acquired Lessor Lease Intangible Liabilities, net | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------------- | :------------ | :---------------- | | Acquired lessor lease intangible liabilities | $965,216 | $845,063 | | Accumulated accretion to Rental income | $(317,630) | $(267,675) | | **Acquired lessor lease intangible liabilities, net** | **$647,586** | **$577,388** | Acquired Lessee Lease Intangible Liabilities, net | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------------- | :------------ | :---------------- | | Acquired lessee lease intangible liabilities | $45,207 | $- | | Accumulated amortization to offset Building expenses | $(226) | $- | | **Acquired lessee lease intangible liabilities, net** | **$44,981** | **$-** | - Future amortization for Acquired Lessor Lease Intangible Liabilities, net for the remaining six months of 2022 is **$52,594**[58](index=58&type=chunk) [Note 6 – Lessee Accounting](index=18&type=section&id=Note%206%20%E2%80%93%20Lessee%20Accounting) - The Company acquired one property on March 9, 2022, that is subject to a non-cancelable, long-term ground lease expiring through the year **2084**[59](index=59&type=chunk) - Operating lease expense was approximately **$125,015** for the six months ended June 30, 2022[59](index=59&type=chunk) Ground Lease Liability Summary (As of June 30, 2022) | Metric | Amount | | :-------------------------- | :------------- | | Total undiscounted liability | $23,149,053 | | Present value discount | $(16,821,202) | | Right of use liability | $6,327,851 | | Discount rate | 4.58% | | Term | 62 years | [Note 7 – Non-Controlling Interests](index=18&type=section&id=Note%207%20%E2%80%93%20Non-Controlling%20Interests) - As of June 30, 2022, the Company owned **83%** of the common units in the Operating Partnership and outside investors owned **17%**[70](index=70&type=chunk) [Redeemable Non-Controlling Interests (Temporary Equity)](index=18&type=section&id=Redeemable%20Non-Controlling%20Interests%20(Temporary%20Equity)) - Redeemable Non-Controlling Interests are presented as temporary equity at redemption value due to redemption rights[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - Includes preferred equity agreements for property acquisitions in Manteo, NC (**$500,000**), Plant City, FL (approx. **$995,600**), and Rockford, IL (approx. **$672,900**)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[71](index=71&type=chunk) - Redemption of Operating Partnership common units occurred in March and April 2022, totaling **$406,652**[67](index=67&type=chunk)[71](index=71&type=chunk) [Non-Controlling Interest (Permanent Equity)](index=19&type=section&id=Non-Controlling%20Interest%20(Permanent%20Equity)) - Non-Controlling Interest arises from a contribution agreement with GIP Fund 1, LLC, for a Tampa, FL property acquisition in November 2020[69](index=69&type=chunk) - The total value of units issued to GIP Fund 1, LLC was **$486,180**[69](index=69&type=chunk) - Former members of GIP Fund 1, LLC can require the Operating Partnership to redeem their units for common stock of the Company[69](index=69&type=chunk) [Note 8 – Equity](index=20&type=section&id=Note%208%20%E2%80%93%20Equity) - The Company is authorized to issue up to **100,000,000** shares of common stock and **10,000,000** of undesignated preferred stock[72](index=72&type=chunk) - In September 2021, the Company issued and sold **1,665,000** units (common stock and warrants) in a public offering, generating net proceeds of **$13.8 million**[75](index=75&type=chunk)[76](index=76&type=chunk) - During the six months ended June 30, 2022, **373,380** warrants were exercised on a cashless basis, resulting in the issuance of **37,338** shares of common stock[78](index=78&type=chunk) [Authorized Equity](index=20&type=section&id=Authorized%20Equity) - Authorized common stock: **100,000,000** shares[72](index=72&type=chunk) - Authorized undesignated preferred stock: **10,000,000** shares (none issued)[72](index=72&type=chunk) [Equity Issuances](index=20&type=section&id=Equity%20Issuances) - Public offerings in April 2019, November 2020, and September 2021 involved issuing units of common stock and warrants[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - The September 2021 Public Offering generated net proceeds of **$13.8 million** from **1,665,000** units sold at **$10.00** per unit[75](index=75&type=chunk)[76](index=76&type=chunk) - Approximately **$87,000** of stock issuance costs were recorded to Deferred Financing Costs during the six months ended June 30, 2022[77](index=77&type=chunk) [Warrants](index=21&type=section&id=Warrants) Warrants Outstanding (As of June 30, 2022) | Issue Date | Exercise Price | Number of Warrants | | :--------------------------------- | :------------- | :----------------- | | April 25, 2019 | $20.00 | 50,000 | | November 13, 2020 | $20.00 | 50,000 | | September 8, 2021 | $10.00 | 1,126,620 | | September 8, 2021 | $12.50 | 135,000 | | September 30, 2021 | $10.00 | 165,000 | | September 30, 2021 | $12.50 | 14,850 | | **Total** | | **1,541,470** | - During the six months ended June 30, 2022, **373,380** warrants were exercised on a cashless basis, resulting in the issuance of **37,338** shares of common stock[78](index=78&type=chunk) - There was no intrinsic value for the warrants as of June 30, 2022 or December 31, 2021[81](index=81&type=chunk) [Stock Compensation](index=22&type=section&id=Stock%20Compensation) - The Generation Income Properties, Inc. 2020 Omnibus Incentive Plan reserves **2.0 million** shares of common stock for various equity awards[82](index=82&type=chunk) - As of June 30, 2022, **76,449** shares had been granted under the Omnibus Incentive Plan[82](index=82&type=chunk) - Stock based compensation expense was **$218,044** for the six months ended June 30, 2022, compared to **$99,749** in 2021[84](index=84&type=chunk) [Restricted Common Shares issued to the Board and Employees](index=22&type=section&id=Restricted%20Common%20Shares%20issued%20to%20the%20Board%20and%20Employees) Restricted Shares Summary | Metric | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Number of Shares Outstanding (beginning) | 23,167 | 14,582 | | Restricted Shares Issued | 47,499 | 14,000 | | Restricted Shares Vested | (10,500) | (3,749) | | **Number of Shares Outstanding (end)** | **60,166** | **24,833** | - On January 6, 2022, **47,142** restricted shares were granted to directors, officers and employees[85](index=85&type=chunk) - On April 12, 2022, **357** restricted shares were granted to a non-employee for chaplain services[85](index=85&type=chunk) [Common stock issued for services](index=22&type=section&id=Common%20stock%20issued%20for%20services) - In March 2021, the Company issued **2,200** shares of stock to its former chief financial officer for compensation from December 2020 to March 2021[85](index=85&type=chunk) - These shares are valued at **$20.00** per share[86](index=86&type=chunk) [Common Shareholders Cash Distributions](index=23&type=section&id=Common%20Shareholders%20Cash%20Distributions) - The Company expects to continue to declare and pay distributions to its stockholders for the foreseeable future, though it is not obligated to do so other than as necessary to meet REIT qualification standards[87](index=87&type=chunk) - Monthly cash distributions of **$0.054** per share/unit were authorized for July, August, and September 2022[88](index=88&type=chunk) - The Company's CEO waived his right to receive distributions with respect to the shares held by him as of the completion of the Public Offering through June 2022[88](index=88&type=chunk) [Note 9 – Leases](index=23&type=section&id=Note%209%20%E2%80%93%20Leases) - During the six months ended June 30, 2022, four tenants each accounted for more than **10%** of rental revenue: General Services Administration (**21%**), PRA Holdings, Inc. (**15%**), Pratt & Whitney Automation, Inc. (**14%**), and Kohl's Corporation (**11%**)[89](index=89&type=chunk) Future Minimum Base Rental Cash Payments (As of June 30, 2022) | Year | Amount | | :--------- | :------------- | | 2022 | $2,517,849 | | 2023 | $4,628,195 | | 2024 | $4,674,729 | | 2025 | $4,547,481 | | 2026 | $4,425,322 | | Thereafter | $8,987,943 | | **Total** | **$29,781,519** | [Note 10 – Mortgage Loans](index=23&type=section&id=Note%2010%20%E2%80%93%20Mortgage%20Loans) Mortgage Loans Outstanding (Net of Debt Issuance Costs) | Date | Amount | | :---------------- | :------------- | | June 30, 2022 | $35,455,512 | | December 31, 2021 | $28,969,295 | - On April 1, 2022, the Company entered into two loan agreements with an aggregate balance of **$13.5 million** to refinance seven properties[90](index=90&type=chunk) - During the three months ended June 30, 2022, the Company incurred a loss on debt extinguishment of **$144,029** related to the write off of unamortized debt issuance costs and a prepayment penalty of **$21,000**[91](index=91&type=chunk) - The Company was in compliance with all debt covenants as of June 30, 2022[93](index=93&type=chunk) Minimum Required Principal Payments on Debt (As of June 30, 2022) | Year | Amount | | :--------- | :------------- | | 2022 | $291,328 | | 2023 | $785,524 | | 2024 | $12,427,090 | | 2025 | $546,280 | | 2026 | $568,514 | | Thereafter | $21,623,266 | | **Total** | **$36,242,002** | [Note 11 – Related Party](index=25&type=section&id=Note%2011%20%E2%80%93%20Related%20Party) - On November 30, 2020, the Company acquired a property from GIP Fund 1, LLC, a related party that was **11%** owned by the CEO[97](index=97&type=chunk) - Following the dissolution of GIP Fund 1, LLC, the CEO's ownership in GIP LP was reduced to **0.09%** as of June 30, 2022[97](index=97&type=chunk) [Note 12 – Tenant in Common Investment](index=25&type=section&id=Note%2012%20%E2%80%93%20Tenant%20in%20Common%20Investment) - On August 13, 2021, the Company acquired a **36.8%** interest in a tenancy-in-common (TIC) structure for a property in Rockford, IL[98](index=98&type=chunk) - On April 1, 2022, the Company contributed **$455,889** to the TIC, increasing its ownership to **50%**[100](index=100&type=chunk) - The TIC debt was refinanced to **$2.1 million** with an interest rate of **3.85%**[99](index=99&type=chunk) - The investment is accounted for under the equity method and had a value of **$1,188,061** as of June 30, 2022[100](index=100&type=chunk) [Note 13 – Subsequent Events](index=26&type=section&id=Note%2013%20%E2%80%93%20Subsequent%20Events) - On June 27, 2022, the Board authorized a monthly cash distribution of **$0.054** per share for July, August, and September 2022[102](index=102&type=chunk) - Subsequent to June 30, 2022, **32,110** Investor Warrants were exercised on a cashless basis, resulting in **3,211** shares of common stock issued[103](index=103&type=chunk) - On August 9, 2022, a Redemption Agreement was entered into with an Operating Partnership common unit holder for **205,615** units, involving cash and common stock issuance, with redemptions scheduled through December 2024[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, strategy as an internally managed REIT, impact of acquisitions, liquidity, capital resources, and reconciliation of GAAP net loss to non-GAAP measures - The Company is an internally managed, Maryland corporation focused on acquiring retail, office and industrial real estate located in major U.S. markets[107](index=107&type=chunk) - In September 2021, the Company closed an underwritten public offering, generating net proceeds of **$13.8 million** and listing its common stock and warrants on Nasdaq[108](index=108&type=chunk) - As of June 30, 2022, approximately **85%** of the portfolio's annualized base rent was derived from investment-grade tenants, and **92%** of leases provide for contractual rent increases[110](index=110&type=chunk) [Cautionary Note Regarding Forward‑Looking Statements](index=25&type=section&id=Cautionary%20Note%20Regarding%20Forward%EF%B9%A3Looking%20Statements) - This report contains 'forward-looking statements' subject to risks and uncertainties that could cause actual results to differ materially[105](index=105&type=chunk) - Readers should be aware of important factors that could affect actual results, including risk factors listed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021[105](index=105&type=chunk) [Overview](index=27&type=section&id=Overview) - The Company is an internally managed, Maryland corporation focused on acquiring retail, office and industrial real estate in major U.S. markets[107](index=107&type=chunk) - The Company intends to elect to be taxed as a REIT for federal income tax purposes commencing with its taxable year ending December 31, 2021[107](index=107&type=chunk) - As of June 30, 2022, the Company owned **83%** of the outstanding common units of the Operating Partnership[107](index=107&type=chunk) [Public Offering and Nasdaq Listing](index=27&type=section&id=Public%20Of%20ering%20and%20Nasdaq%20Listing) - In September 2021, the Company closed an underwritten public offering of **1,665,000** units at **$10** per unit[108](index=108&type=chunk) - The offering generated net proceeds of **$13.8 million**[108](index=108&type=chunk) - The common stock (GIPR) and warrants (GIPRW) trade on the Nasdaq Capital Market[108](index=108&type=chunk) [Our Investments](index=27&type=section&id=Our%20Investments) - As of June 30, 2022, the Company's portfolio is **100%** leased and occupied, consisting of **twelve assets** and a **50%** tenancy in common interest in one property[110](index=110&type=chunk)[111](index=111&type=chunk) - Approximately **85%** of the portfolio's annualized base rent (ABR) is derived from tenants with an investment grade credit rating (BBB- or better)[110](index=110&type=chunk) - Approximately **92%** of the leases in the current portfolio provide for increases in contractual base rent during future years[110](index=110&type=chunk) [Distributions](index=28&type=section&id=Distributions) - From inception through June 30, 2022, the Company distributed approximately **$1,976,893** to common stockholders[112](index=112&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) - On July 20, 2022, an Operating Partnership common unit holder issued a notice of redemption for **25,000** units[113](index=113&type=chunk) - On August 9, 2022, a Redemption Agreement was entered into, outlining the redemption of **205,615** units through a combination of cash and common stock issuance, with tranches extending through December 2024[114](index=114&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) - Total revenue increased due to the acquisition of five additional properties[115](index=115&type=chunk)[124](index=124&type=chunk) - Total expenses increased significantly across all categories, including general, administrative, building, depreciation, interest, and compensation costs[116](index=116&type=chunk)[125](index=125&type=chunk) - The Company incurred dead deal expense of **$107,371** and a loss on debt extinguishment of **$144,029** in 2022[119](index=119&type=chunk)[120](index=120&type=chunk)[129](index=129&type=chunk) [Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021](index=29&type=section&id=Three%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202021) - Total revenue increased by **$390,913 (39.6%)** to **$1,379,103**[115](index=115&type=chunk) - Total expenses increased by **$737,083 (56.4%)** to **$2,042,938**[116](index=116&type=chunk) - Net loss increased by **$599,032 (188.6%)** to **$916,697**[121](index=121&type=chunk) [Revenue](index=29&type=section&id=Revenue_Q2_2022) - Total revenue for Q2 2022 was **$1,379,103**, an increase of **$390,913** from Q2 2021 (**$988,190**)[115](index=115&type=chunk) - Revenue increase was primarily from the acquisition of five additional properties, partially offset by revenue from one property sold in August 2021[115](index=115&type=chunk) [Expenses](index=29&type=section&id=Expenses_Q2_2022) Expense Changes (Three Months Ended June 30) | Expense Category | 2022 | 2021 | Change | | :------------------------------------ | :--------- | :--------- | :--------- | | General, administrative and organizational costs | $472,736 | $251,825 | +$220,911 | | Building expenses | $325,201 | $163,722 | +$161,479 | | Depreciation and amortization | $558,676 | $397,186 | +$161,490 | | Interest expense, net | $375,627 | $337,432 | +$38,195 | | Compensation costs | $310,698 | $155,690 | +$155,008 | | **Total expenses** | **$2,042,938** | **$1,305,855** | **+$737,083** | [Income Tax Benefit](index=29&type=section&id=Income%20Tax%20Benefit_Q2_2022) - No income tax benefit was recorded for Q2 2022 or Q2 2021 due to a cumulative net loss situation and a valuation allowance[117](index=117&type=chunk) [Loss on investment in tenancy-in-common](index=29&type=section&id=Loss%20on%20investment%20in%20tenancy-in-common_Q2_2022) - The Company's share of earnings on its tenancy-in-common investment generated a loss of **$1,462** for Q2 2022[118](index=118&type=chunk) [Other expenses](index=29&type=section&id=Other%20expenses_Q2_2022) - Incurred **$107,371** in dead deal expense related to abandoned acquisition pursuits[119](index=119&type=chunk) - Incurred a loss on debt extinguishment of **$144,029**, including a **$21,000** prepayment penalty, from refinanced mortgage loans[120](index=120&type=chunk) [Net Loss](index=30&type=section&id=Net%20Loss_Q2_2022) - Net loss for Q2 2022 was **$916,697**, compared to **$317,665** for Q2 2021[121](index=121&type=chunk) [Net Income Attributable to Non-controlling Interests](index=30&type=section&id=Net%20Income%20Attributable%20to%20Non-controlling%20Interests_Q2_2022) - Net income attributable to non-controlling interests was **$130,181** for Q2 2022, up from **$52,434** in Q2 2021[122](index=122&type=chunk) - The variance is attributable to an increase from additional redeemable non-controlling interests issued to finance property acquisitions[122](index=122&type=chunk) [Net Loss Attributable to Shareholders](index=30&type=section&id=Net%20Loss%20Attributable%20to%20Shareholders_Q2_2022) - Net loss attributable to Generation Income Properties, Inc. shareholders was **$1,046,878** for Q2 2022, compared to **$369,989** for Q2 2021[123](index=123&type=chunk) [Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021](index=30&type=section&id=Six%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202021) - Total revenue increased by **$635,960 (33.0%)** to **$2,561,038**[124](index=124&type=chunk) - Total expenses increased by **$1,114,492 (43.5%)** to **$3,678,938**[125](index=125&type=chunk) - Net loss increased by **$722,842 (113.0%)** to **$1,362,210**[129](index=129&type=chunk) [Revenue](index=30&type=section&id=Revenue_H1_2022) - Total revenue for H1 2022 was **$2,561,038**, an increase of **$635,960** from H1 2021 (**$1,925,078**)[124](index=124&type=chunk) - Revenue increase was primarily from the acquisition of five additional properties, partially offset by revenue from one property sold in August 2021[124](index=124&type=chunk) [Expenses](index=30&type=section&id=Expenses_H1_2022) Expense Changes (Six Months Ended June 30) | Expense Category | 2022 | 2021 | Change | | :------------------------------------ | :--------- | :--------- | :--------- | | General, administrative and organizational costs | $814,416 | $440,242 | +$374,174 | | Building expenses | $578,592 | $344,275 | +$234,317 | | Depreciation and amortization | $989,569 | $776,697 | +$212,872 | | Interest expense, net | $705,921 | $692,421 | +$13,500 | | Compensation costs | $590,440 | $310,811 | +$279,629 | | **Total expenses** | **$3,678,938** | **$2,564,446** | **+$1,114,492** | [Income Tax Benefit](index=31&type=section&id=Income%20Tax%20Benefit_H1_2022) - No income tax benefit was recorded for H1 2022 or H1 2021 due to a cumulative net loss situation and a valuation allowance[127](index=127&type=chunk) [Income on investment in tenancy-in-common](index=31&type=section&id=Income%20on%20investment%20in%20tenancy-in-common_H1_2022) - The Company's share of earnings on its tenancy-in-common investment generated income of **$7,090** for H1 2022[128](index=128&type=chunk) [Other expenses](index=31&type=section&id=Other%20expenses_H1_2022) - Incurred **$107,371** in dead deal expense related to abandoned acquisition pursuits[129](index=129&type=chunk) - Incurred a loss on debt extinguishment of **$144,029**, including a **$21,000** prepayment penalty, from refinanced mortgage loans[129](index=129&type=chunk) [Net Loss](index=31&type=section&id=Net%20Loss_H1_2022) - Net loss for H1 2022 was **$1,362,210**, compared to **$639,368** for H1 2021[129](index=129&type=chunk) [Net Income Attributable to Non-controlling Interests](index=31&type=section&id=Net%20Income%20Attributable%20to%20Non-controlling%20Interests_H1_2022) - Net income attributable to non-controlling interests was **$260,144** for H1 2022, up from **$198,504** in H1 2021[130](index=130&type=chunk) - The variance is attributable to an increase from additional redeemable non-controlling interests issued to finance property acquisitions[130](index=130&type=chunk) [Net Loss Attributable to Shareholders](index=31&type=section&id=Net%20Loss%20Attributable%20to%20Shareholders_H1_2022) - Net loss attributable to Generation Income Properties, Inc. shareholders was **$1,622,354** for H1 2022, compared to **$837,872** for H1 2021[131](index=131&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2022, the Company had total cash of **$3,683,665**, properties with a cost basis of **$56,847,641**, and outstanding debt of **$36,242,002**[132](index=132&type=chunk) - The **$25 million** master credit facility was increased to **$50 million** in May 2022, contingent upon the Company completing a future capital raise of **$25.0 million** or more[135](index=135&type=chunk) - Net cash used in operating activities was **$127,247** for H1 2022, an increase from **$38,238** in H1 2021[144](index=144&type=chunk) - Net cash used in investing activities was **$13,161,569** for H1 2022, primarily due to property acquisitions[145](index=145&type=chunk) - Net cash generated from financing activities was **$6,348,405** for H1 2022, primarily due to an increase in net Mortgage loan borrowings[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company does not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues, or liquidity[148](index=148&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - The Company discloses Funds From Operations (FFO), Adjusted Funds From Operations (AFFO), Core Funds From Operations (Core FFO), and Core Adjusted Funds of Operations (Core AFFO) as non-GAAP financial measures[149](index=149&type=chunk) - These non-GAAP measures are useful for comparing operating performance of REITs but should not be considered alternatives to GAAP net income or cash flows from operations[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) Non-GAAP Financial Measures (Three Months Ended June 30) | Metric | 2022 | 2021 | | :--------------------------------- | :----------- | :----------- | | Net Loss (GAAP) | $(916,697) | $(317,665) | | Funds From Operations (FFO) | $(358,021) | $79,521 | | Core Funds From Operations (Core FFO) | $(205,970) | $162,618 | | Adjusted Funds From Operations (AFFO) | $(339,225) | $57,638 | | Core Adjusted Funds From Operations (Core AFFO) | $36,293 | $107,916 | Non-GAAP Financial Measures (Six Months Ended June 30) | Metric | 2022 | 2021 | | :--------------------------------- | :----------- | :----------- | | Net Loss (GAAP) | $(1,362,210) | $(639,368) | | Funds From Operations (FFO) | $(372,641) | $137,329 | | Core Funds From Operations (Core FFO) | $(92,991) | $334,000 | | Adjusted Funds From Operations (AFFO) | $(345,156) | $97,670 | | Core Adjusted Funds From Operations (Core AFFO) | $124,288 | $230,419 | [Critical Accounting Policies](index=35&type=section&id=Critical%20Accounting%20Policies) - The Company's financial statements are affected by the accounting policies used and the estimates and assumptions made by management[156](index=156&type=chunk) - A summary of significant accounting policies is included in the audited consolidated financial statements[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Generation Income Properties, Inc. is not required to provide disclosures under this item - As a smaller reporting company, the registrant is not required to make disclosures under this item[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022, concluding they were effective, with no material changes in internal control over financial reporting - Management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022[159](index=159&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the three months ended June 30, 2022[160](index=160&type=chunk) [Evaluation of disclosure controls and procedures](index=35&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022[158](index=158&type=chunk) - Based on that evaluation, management concluded that disclosure controls and procedures were effective as of June 30, 2022[159](index=159&type=chunk) [Changes in internal control over financial reporting](index=35&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) - There were no changes in internal control over financial reporting that occurred during the three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[160](index=160&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers various non-financial disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and a list of exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) There are no material legal proceedings that require disclosure in this Quarterly Report on Form 10-Q - There are no material legal proceedings that are required to be disclosed[163](index=163&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes from the risk factors previously disclosed in Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2021[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company had no unregistered sales of equity securities and detailed the use of proceeds from its September 2021 public offering, with no material change in planned use - No unregistered sales of equity securities[165](index=165&type=chunk) - The September 2021 Public Offering generated total net proceeds of approximately **$13.8 million**[166](index=166&type=chunk) - As of June 30, 2022, **$1.1 million** of proceeds from the Public Offering has been used for repayment of related party debt[169](index=169&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reports no defaults upon senior securities - No defaults upon senior securities[171](index=171&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[172](index=172&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) An Operating Partnership unit holder issued a redemption notice for 25,000 units, followed by a Redemption Agreement for 205,615 units, involving cash and common stock issuance through December 2024 - On July 20, 2022, an Operating Partnership common unit holder, Thomas E. Robinson, issued a notice of redemption for **25,000** units[173](index=173&type=chunk) - On August 9, 2022, a Redemption Agreement was entered into, outlining the redemption of **205,615** units through a combination of cash and common stock issuance, with tranches extending through December 2024[173](index=173&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This item lists all documents filed as part of the report or incorporated by reference, including articles of incorporation, bylaws, partnership agreements, warrants, and various certifications - The section lists all documents filed as a part of this report or incorporated herein by reference[175](index=175&type=chunk)[176](index=176&type=chunk) - Exhibits include Articles of Amendment, Bylaws, Warrant Agreements, and various certifications[176](index=176&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) The report is duly signed on behalf of Generation Income Properties, Inc. by David Sobelman, CEO and Chair of the Board, and Allison Davies, CFO, on August 15, 2022 - The report is signed by David Sobelman, Chief Executive Officer and Chair of the Board[179](index=179&type=chunk) - The report is signed by Allison Davies, Chief Financial Officer[179](index=179&type=chunk) - The signing date for the report is **August 15, 2022**[179](index=179&type=chunk)

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 March 31, 2022 OR ☐ 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 ot ...

Generation Income Properties, Inc. (NASDAQ:GIPR) Q1 2022 Earnings Conference Call May 13, 2022 9:00 AM ET Company Participants Mary Jensen - Investor Relations David Sobelman - Chief Executive Officer Allison Davies - Chief Financial Officer Conference Call Participants Michael Diana - Maxim Group Operator Good morning, ladies and gentlemen and welcome to the Generation Income Properties First Quarter 2022 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. Please note ...

Generation Income Properties, Inc. (NASDAQ:GIPR) Q4 2021 Results Conference Call March 18, 2022 9:00 AM ET Company Participants Mary Jensen - Investor Relations Representative David Sobelman - Chief Executive Officer Allison Davies - Chief Financial Officer Conference Call Participants Michael Diana - Maxim Group Operator Good morning, ladies and gentlemen, welcome to the Generation Income Properties Fourth Quarter and Fiscal Year 2021 Earnings Call. At this time, all lines have been placed in a list only m ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Generation Income Properties (GIPR) is a REIT focused on acquiring and managing single-tenant net-leased retail, office, and industrial properties in major U.S. markets - The company focuses on acquiring and managing income-producing retail, office, and industrial properties net leased to high-quality tenants in major U.S. markets[17](index=17&type=chunk) - GIPR utilizes an Umbrella Partnership Real Estate Investment Trust (UPREIT) structure, which allows property sellers to defer taxable gains by exchanging property for common units in the Operating Partnership. As of December 31, 2021, the company owned **85.3%** of the outstanding common units[22](index=22&type=chunk) Portfolio Overview as of December 31, 2021 | Property Type | Location | Rentable Square Feet | Tenant(s) | S&P Credit Rating | Annualized Base Rent | % of Total Base Rent | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Retail | Washington, DC | 3,000 | 7-Eleven Corporation | A | $129,804 | 3.4% | | Retail | Tampa, FL | 2,200 | Starbucks | BBB+ | $182,500 | 4.8% | | Industrial | Huntsville, AL | 59,091 | Pratt & Whitney Automation, Inc. | A- | $684,996 | 18.1% | | Office | Norfolk, VA | 49,902 | General Services Administration | AA+ | $882,476 | 23.3% | | Office | Norfolk, VA | 22,247 | Maersk Line, Limited | BBB | $386,795 | 10.2% | | Office | Norfolk, VA | 34,847 | PRA Holdings, Inc. | BB+ | $742,850 | 19.6% | | Retail | Tampa, FL | 3,500 | Sherwin-Williams | BBB | $120,750 | 3.2% | | Office | Manteo, NC | 7,543 | General Services Administration | AA+ | $161,346 | 4.3% | | Office | Tampa, FL | 7,826 | Irby Construction Company | BBB- | $148,200 | 3.9% | | Retail | Boulder Springs, CO | 30,701 | BestBuy | BBB+ | $353,061 | 9.3% | | **Total** | | **220,857** | | | **$3,792,778** | **100.0%** | - In September 2021, the company closed an underwritten public offering, generating net proceeds of approximately **$13.8 million**. Its common stock and warrants began trading on the Nasdaq Capital Market under symbols "GIPR" and "GIPRW"[34](index=34&type=chunk) - Subsequent to year-end 2021, the company acquired three additional properties: a medical building leased to Fresenius Medical Care in Chicago, a Starbucks in Tampa, and a Kohl's in Tucson[42](index=42&type=chunk) - On August 31, 2021, the company sold a Walgreens property in Cocoa, Florida for net consideration of approximately **$5.2 million**[43](index=43&type=chunk) [Risk Factors](index=12&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant risks including limited operating history, tenant dependency, net losses, debt financing, REIT compliance, and stock price volatility [Risks Related to Our Business and Properties](index=12&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Properties) Risks include limited operating history, small portfolio size, dependence on single tenants, cumulative net losses, and unsustainable distribution funding - The company has a limited operating history and owned only **twelve properties** as of March 9, 2022, making the loss of any single tenant a material risk[63](index=63&type=chunk)[65](index=65&type=chunk) - From inception through December 31, 2021, the company had a cumulative net loss of approximately **$5.4 million**, attributed to start-up costs, high administrative expenses relative to portfolio size, and acquisition-related costs[67](index=67&type=chunk) - Many properties depend on a single tenant, making the company's financial condition susceptible to tenant bankruptcy, business downturns, or lease terminations[66](index=66&type=chunk) - Distributions have been and may continue to be paid from offering proceeds, not cash flow from operations. This reduces funds available for property acquisitions and may reduce overall investor return[82](index=82&type=chunk)[83](index=83&type=chunk) [General Risks Related to Investments in Real Estate](index=15&type=section&id=General%20Risks%20Related%20to%20Investments%20in%20Real%20Estate) Real estate investment risks include economic downturns, tenant bankruptcies, competition, geographic and tenant concentration, and environmental liabilities - The bankruptcy of a major tenant could significantly impact financial condition. As of March 9, 2022, four tenants (Pratt and Whitney, GSA, PRA Holding, and Kohl's) each account for more than **10%** of annualized rent[92](index=92&type=chunk) - The portfolio has geographic concentration, with properties located primarily in Virginia and Florida. An adverse event in these areas could have a magnified negative effect[94](index=94&type=chunk) - The company faces competition from other real estate investors, including REITs and private equity funds with greater financial resources, which may increase acquisition prices and reduce profitability[120](index=120&type=chunk) - The company could be exposed to significant environmental liabilities, as federal, state, and local laws can impose cleanup costs on property owners regardless of fault[114](index=114&type=chunk)[122](index=122&type=chunk) [Risks Associated with Debt Financing](index=23&type=section&id=Risks%20Associated%20with%20Debt%20Financing) Debt financing risks include increased expenses, foreclosure risk, restrictive covenants, interest rate fluctuations, and potential impact on cash flow and distributions - As of December 31, 2021, the company had approximately **$29.0 million** in outstanding debt against properties with a cost basis of **$44.0 million**[139](index=139&type=chunk) - The company's loan agreements contain financial covenants, including Debt Service Coverage Ratios (DSCRs) ranging from **1.15:1.0 to 1.50:1.0**, which could inhibit financial flexibility[145](index=145&type=chunk)[151](index=151&type=chunk) - High mortgage rates or the unavailability of financing could reduce the number of properties the company can acquire and hinder its ability to refinance existing debt on favorable terms[149](index=149&type=chunk) [Federal Income Tax Risks](index=27&type=section&id=Federal%20Income%20Tax%20Risks) Risks include failing to qualify or maintain REIT status, liquidity challenges from distribution requirements, and liabilities from tax protection agreements - The company intends to elect to be taxed as a REIT for the year ending December 31, 2021. Failure to qualify would subject it to federal income tax at corporate rates and reduce net earnings available for distribution[168](index=168&type=chunk)[169](index=169&type=chunk) - The requirement to distribute at least **90%** of REIT taxable income annually could adversely affect liquidity, potentially forcing the company to borrow funds or sell assets to meet distribution requirements[173](index=173&type=chunk) - Tax protection agreements related to two properties contributed in 2019 limit the company's ability to sell them in a taxable transaction before the seventh anniversary of their contribution, creating a potential material liability[177](index=177&type=chunk) [Risks Related to our Securities](index=29&type=section&id=Risks%20Related%20to%20our%20Securities) Securities risks include stock price volatility, potential delisting, shareholder dilution, reduced disclosure as an emerging growth company, and anti-takeover provisions - The market price of the company's common stock may be volatile, and there is no assurance it will not decline significantly[183](index=183&type=chunk) - The company has **100 million** authorized shares of common stock and **10 million** of preferred stock, allowing management to issue additional shares that could dilute existing shareholders[187](index=187&type=chunk) - The company is an emerging growth company and has elected to use the extended transition period for new accounting standards, which may make its financial statements not comparable to other public companies[192](index=192&type=chunk)[193](index=193&type=chunk) - The company's charter limits stock ownership to **9.8%** to preserve its REIT status, which may delay or prevent a change in control[195](index=195&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[200](index=200&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company's 2021 portfolio comprised nine 100% occupied properties, concentrated geographically and by key tenants, with most leases expiring after 2026 Geographic Diversification as of December 31, 2021 | State | Number of Properties | Aggregate Square Feet | % of Square Feet | Aggregate Annual Rent | % of Aggregate Annual Rent | | :--- | :--- | :--- | :--- | :--- | :--- | | Alabama | 1 | 59,091 | 26.8% | $684,996 | 18.1% | | Florida | 3 | 13,526 | 6.1% | $451,450 | 11.9% | | Colorado | 1 | 30,701 | 13.9% | $353,061 | 9.3% | | North Carolina | 1 | 7,543 | 3.4% | $161,346 | 4.3% | | Virginia | 2 | 106,996 | 48.4% | $2,012,121 | 53.0% | | District of Columbia | 1 | 3,000 | 1.4% | $129,804 | 3.4% | | **Total** | **9** | **220,857** | **100%** | **$3,792,778** | **100.0%** | Top Tenants by Annualized Base Rent as of December 31, 2021 | Tenant | Number of Leases | Annualized Base Rent | % of Total Annualized Base Rent | | :--- | :--- | :--- | :--- | | General Services Administration | 2 | $1,043,822 | 28% | | PRA Holdings Inc. | 1 | $742,850 | 20% | | Pratt & Whitney | 1 | $684,996 | 18% | | Maersk Line Limited | 1 | $386,795 | 10% | | BestBuy | 1 | $353,061 | 9% | Lease Expiration Schedule as of December 31, 2021 | Expiration Year | Number of Leases Expiring | Square Footage | Annualized Base Rent | % of Total Annualized Base Rent | | :--- | :--- | :--- | :--- | :--- | | 2022 | 1 | 22,247 | $386,795 | 10% | | 2023 | - | — | — | — | | 2024 | 1 | 7,826 | $148,200 | 4% | | 2025 | - | — | — | — | | 2026 | 1 | 3,000 | $129,804 | 3% | | Thereafter | 7 | 187,784 | $3,127,979 | 82% | | **Total** | **10** | **220,857** | **$3,792,778** | **100%** | - All properties have maintained **100% occupancy** during the company's ownership[207](index=207&type=chunk) [Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[210](index=210&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[211](index=211&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GIPR common stock and warrants began trading on Nasdaq in October 2021 after a public offering, with distributions funded from offering proceeds - The company's common stock and warrants commenced trading on The Nasdaq Capital Market under the symbols "GIPR" and "GIPRW," respectively, on **October 4, 2021**[213](index=213&type=chunk) - In September 2021, the company completed a public offering of **1,665,000 units** at **$10.00 per unit**, raising total net proceeds of approximately **$13.8 million** after expenses[214](index=214&type=chunk) - From inception through December 31, 2021, the company distributed approximately **$1,299,000** to common stockholders. Because the company has not yet generated a cumulative profit, these distributions were made from proceeds of prior capital raises[221](index=221&type=chunk)[219](index=219&type=chunk) - As part of the public offering, the company redeemed **112,500 shares** of common stock from the CEO for **$100** on September 8, 2021[223](index=223&type=chunk) [Reserved](index=36&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased in 2021 due to acquisitions, net loss decreased due to a property sale gain, and liquidity is sufficient with new credit facility [Results of Operations](index=39&type=section&id=Results%20of%20Operations%20For%20The%20Years%20Ended%20December%2031%2C%202021%20and%202020) Total revenue increased in 2021 due to acquisitions, while a property sale gain significantly reduced the net loss compared to 2020 Comparison of Operating Results (in thousands) | | 2021 | 2020 | | :--- | :--- | :--- | | **Total Revenue** | **$3,900** | **$3,520** | | General, administrative and organizational costs | $1,111 | $818 | | Building expenses | $768 | $711 | | Depreciation and amortization | $1,508 | $1,453 | | Interest expense, net | $1,311 | $1,400 | | Compensation costs | $850 | $483 | | **Total Expenses** | **$5,548** | **$4,865** | | Gain on disposal of property | $923 | $0 | | **Net Loss** | **($712)** | **($1,345)** | | Net Loss attributable to Shareholders | ($1,242) | ($1,832) | - Revenue increased by **$380,000** in 2021 primarily due to the acquisition of three additional properties[236](index=236&type=chunk) - The company recognized a gain of **$923,000** on the sale of its Walgreens property in Cocoa, Florida, which was a key factor in reducing the net loss for 2021[242](index=242&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 2021, the company had $10.6 million cash and $29.0 million debt, with liquidity boosted by a public offering and new credit facility Financial Position Summary | Metric | As of Dec 31, 2021 | | :--- | :--- | | Total Cash (unrestricted and restricted) | ~$10.6 million | | Properties Cost Basis | $44.0 million | | Outstanding Debt | ~$29.0 million | - In October 2021, the company entered into a **$25 million** master commitment credit facility with American Momentum Bank to fund future property acquisitions[249](index=249&type=chunk)[256](index=256&type=chunk) - The Company's President has personally guaranteed approximately **$16.9 million** of the company's outstanding debt as of December 31, 2021[255](index=255&type=chunk) Debt Maturity Schedule as of December 31, 2021 | Year | Minimum Principal Payments | | :--- | :--- | | 2022 | $580,740 | | 2023 | $4,240,446 | | 2024 | $12,981,450 | | 2025 | $251,011 | | 2026 | $261,675 | | 2027 and beyond | $11,291,666 | | **Total** | **$29,606,988** | [Non-GAAP Financial Measures](index=44&type=section&id=Non-GAAP%20Financial%20Measures) The company uses FFO and AFFO as non-GAAP measures, with Core FFO and Core AFFO decreasing in 2021 compared to 2020 Reconciliation of Net Loss to FFO and AFFO (in thousands) | | Twelve Months Ended Dec 31, 2021 | Twelve Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Loss | $(712) | $(1,345) | | Gain on disposal of property | $(923) | - | | Depreciation and amortization | $1,508 | $1,453 | | **Funds From Operations (FFO)** | **$(127)** | **$108** | | Adjustments for Core FFO | $434 | $297 | | **Core Funds From Operations** | **$307** | **$404** | | Adjustments for AFFO | $431 | $1,368 | | **Adjusted Funds From Operations (AFFO)** | **$(154)** | **$133** | | Adjustments for Core AFFO | $314 | $162 | | **Core Adjusted Funds From Operations** | **$160** | **$295** | - The company computes FFO in accordance with the NAREIT definition and further adjusts it to derive Core FFO, AFFO, and Core AFFO to provide what it believes are useful supplemental measures of operating performance[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide disclosures under this item as a smaller reporting company - The company is not required to make disclosures under this item as it qualifies as a smaller reporting company[287](index=287&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the auditor's report and consolidated financial statements for 2021 and 2020, including balance sheets, operations, equity, cash flows, and notes Consolidated Balance Sheet Highlights (in thousands) | | As of Dec 31, 2021 | As of Dec 31, 2020 | | :--- | :--- | :--- | | Total Investments, net | $41,300 | $38,532 | | Cash and cash equivalents | $10,590 | $938 | | **Total Assets** | **$53,421** | **$40,681** | | Mortgage loans, net | $28,969 | $28,357 | | Total Liabilities | $30,146 | $30,626 | | Redeemable Non-Controlling Interests | $9,621 | $8,684 | | Total Stockholders' Equity | $13,654 | $1,370 | | **Total Liabilities and Stockholders' Equity** | **$53,421** | **$40,681** | Consolidated Statement of Operations Highlights (in thousands) | | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Total Revenue | $3,900 | $3,520 | | Total Expenses | $5,548 | $4,865 | | Operating Loss | $(1,648) | $(1,345) | | Gain on disposal of property | $923 | $0 | | **Net Loss** | **$(712)** | **$(1,345)** | [Notes to the Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, real estate investments, debt, equity, and related-party transactions, including 2021 acquisitions, sales, and tax loss carryforwards - In 2021, the company acquired three properties for a total cost of approximately **$8.2 million** and sold one property for net proceeds of approximately **$5.2 million**, recognizing a gain of **$923,178**[337](index=337&type=chunk)[344](index=344&type=chunk) - As of December 31, 2021, the company had Redeemable Non-Controlling Interests totaling **$9.6 million**, which includes preferred equity with redemption rights and specified rates of return, as well as common units in the Operating Partnership with redemption features[349](index=349&type=chunk) - As of December 31, 2021, the company had **1,914,850 warrants** outstanding with exercise prices ranging from **$10.00 to $20.00**[370](index=370&type=chunk) - The company's net operating loss carryforwards were approximately **$4.6 million** as of December 31, 2021. A full valuation allowance of **$1.7 million** has been recorded against the deferred tax assets, resulting in no recognized tax benefit[397](index=397&type=chunk)[400](index=400&type=chunk) - Subsequent to year-end, the company acquired three properties for a total consideration of approximately **$12.6 million** and announced monthly cash distributions of **$0.054 per share** for the first quarter of 2022[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=72&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants regarding accounting and financial disclosure - None[408](index=408&type=chunk) [Controls and Procedures](index=72&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of December 31, 2021, with no material changes to internal controls identified - Based on an evaluation, the chief executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[409](index=409&type=chunk) - The annual report does not include a report of management's assessment regarding internal control over financial reporting, as permitted for newly public companies[410](index=410&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2021 that materially affected, or are reasonably likely to materially affect, internal controls[411](index=411&type=chunk) [Other Information](index=72&type=section&id=Item%209B.%20Other%20Information) The company reports no other information under this item - None[412](index=412&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=72&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[413](index=413&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=73&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's proxy statement for its 2022 annual meeting of stockholders[415](index=415&type=chunk) [Executive Compensation](index=73&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's proxy statement for its 2022 annual meeting of stockholders[416](index=416&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=73&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's proxy statement for its 2022 annual meeting of stockholders[417](index=417&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=73&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's proxy statement for its 2022 annual meeting of stockholders[418](index=418&type=chunk) [Principal Accountant Fees and Services](index=73&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's proxy statement for its 2022 annual meeting of stockholders[419](index=419&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits filed with the Form 10-K, with all financial schedules omitted as inapplicable - This section lists the financial statements and exhibits filed as part of the annual report. All financial statement schedules are omitted as inapplicable or otherwise included in the consolidated financial statements[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) [Form 10-K Summary](index=77&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided under this item - None[426](index=426&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements for the period ended September 30, 2021 [Consolidated Balance Sheets](index=3&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Unaudited) | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$52,408,808** | **$40,680,740** | | Total investments | $36,885,038 | $38,531,843 | | Cash and cash equivalents | $14,194,639 | $937,564 | | **Total Liabilities** | **$28,094,698** | **$30,626,270** | | Mortgage loans, net | $26,765,781 | $28,356,571 | | **Total Stockholders' Equity** | **$14,709,082** | **$1,370,039** | - The significant increase in cash and cash equivalents from **$0.9 million to $14.2 million** is primarily due to the proceeds from the public offering in September 2021[9](index=9&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$1,033,494** | **$871,825** | **$2,958,572** | **$2,630,067** | | Total Expenses | $1,305,594 | $1,275,028 | $3,870,040 | $3,627,182 | | Gain on disposal of property | $923,178 | - | $923,178 | - | | **Net Income (Loss)** | **$655,828** | **($403,203)** | **$16,460** | **($997,115)** | | Net Income (Loss) Attributable to GIP | $456,112 | ($555,226) | ($393,230) | ($1,331,833) | | **Basic EPS** | **$0.49** | **($1.06)** | **($0.56)** | **($2.54)** | - The company reported a **net income of $656k for Q3 2021**, a significant turnaround from a net loss of $403k in Q3 2020, largely driven by a **$923k gain on the disposal of a property**[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Generation%20Income%20Properties%2C%20Inc.%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Summary (Unaudited, Nine Months Ended) | Metric | September 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $172,678 | $176,699 | | Net cash provided by (used in) investing activities | $1,002,462 | ($196,016) | | Net cash generated from (used in) financing activities | $11,931,635 | ($756,293) | | **Net increase (decrease) in cash** | **$13,106,775** | **($775,610)** | - Financing activities generated **$11.9 million in cash** for the nine months ended Sep 30, 2021, primarily from the issuance of stock and warrants ($14.4 million), a major reversal from the cash used in financing activities in the same period of 2020[13](index=13&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) - The Company is an internally managed real estate investment company focused on acquiring and managing income-producing retail, office, and industrial properties net leased to high-quality tenants[18](index=18&type=chunk) - During the nine months ended September 30, 2021, the Company acquired two properties in Manteo, NC and Plant City, FL for a total investment of approximately **$3.5 million**[44](index=44&type=chunk)[45](index=45&type=chunk) - On August 31, 2021, the Company sold its property in Cocoa Beach, FL for **$5.2 million**, recognizing a **gain of $923 thousand**[48](index=48&type=chunk) - In September 2021, the Company completed an underwritten public offering, issuing 1,665,000 units (stock and warrants) and generating **net proceeds of approximately $14.4 million** after including the over-allotment option[66](index=66&type=chunk)[68](index=68&type=chunk) - Subsequent to the quarter end, the Company entered into agreements to acquire four properties/portfolios in Colorado, Illinois, Florida, and Texas for a combined total consideration of approximately **$18 million**[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - On October 26, 2021, the Operating Partnership secured a Commitment Letter for a **$25 million master credit facility** from American Momentum Bank to fund future property acquisitions[100](index=100&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition, operational results, liquidity, and non-GAAP measures for the period [Overview and Portfolio](index=22&type=section&id=Overview%20and%20Portfolio) - In September 2021, the company closed an underwritten public offering of 1,665,000 units, generating **net proceeds of $14.4 million** and its common stock and warrants began trading on the Nasdaq under symbols "GIPR" and "GIPRW"[106](index=106&type=chunk) - As of September 30, 2021, the company's property portfolio was **100% occupied**[107](index=107&type=chunk) - Approximately **78% of the portfolio's annualized rent** is derived from tenants with an investment-grade credit rating of 'BBB-' or better[107](index=107&type=chunk) Property Portfolio Overview as of September 30, 2021 | Property Type | Location | Tenant(s) | S&P Credit Rating | Annualized Base Rent | % of Total Base Rent | | :--- | :--- | :--- | :--- | :--- | :--- | | Office | Norfolk, VA | General Services Admin. | AA+ | $882,476 | 25.6% | | Office | Norfolk, VA | PRA Holdings, Inc. | BB+ | $742,850 | 21.7% | | Industrial | Huntsville, AL | Pratt & Whitney | A- | $684,996 | 20.0% | | Office | Norfolk, VA | Maersk Line, Limited | BBB | $375,588 | 11.0% | | *Other Properties* | *Various* | *Various* | *Various* | *$742,800* | *21.7%* | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenue Comparison | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | **Three Months Ended Sep 30** | $1,033k | $872k | +$162k | | **Nine Months Ended Sep 30** | $2,959k | $2,630k | +$329k | - The increase in revenue for both the three and nine-month periods was primarily due to three additional properties acquired in November 2020, February 2021, and April 2021[113](index=113&type=chunk)[125](index=125&type=chunk) - A **gain of $923k** was recognized on the sale of the Walgreens property in Cocoa, Florida on August 31, 2021, which was a key driver of net income for the third quarter[119](index=119&type=chunk)[131](index=131&type=chunk) Net Income (Loss) Attributable to Shareholders Comparison | Period | 2021 | 2020 | | :--- | :--- | :--- | | **Three Months Ended Sep 30** | $456k | ($555k) | | **Nine Months Ended Sep 30** | ($393k) | ($1,332k) | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2021, the company had **total cash of approximately $14.2 million** and **outstanding debt of approximately $26.8 million**[137](index=137&type=chunk) - The company significantly improved its liquidity through a September 2021 public offering that generated **net proceeds of $14.4 million**[138](index=138&type=chunk) - Subsequent to the quarter, the company secured a commitment for a **$25 million master credit facility** to be used for acquiring income-producing real estate[138](index=138&type=chunk)[148](index=148&type=chunk) - The Company's President has personally guaranteed approximately **$14.6 million in loans** and provided nonrecourse carveout guarantees for another **$12.8 million**[145](index=145&type=chunk)[146](index=146&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) - The company uses non-GAAP measures such as Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to evaluate operating performance[159](index=159&type=chunk) Reconciliation of Net Income (Loss) to FFO and Core AFFO (Unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | **$655,828** | **($403,203)** | **$16,460** | **($997,115)** | | Gain on disposal of property | ($923,178) | - | ($923,178) | - | | Depreciation and amortization | $388,141 | $363,898 | $1,164,838 | $1,083,917 | | **Funds From Operations (FFO)** | **$120,791** | **($39,305)** | **$258,120** | **$86,802** | | **Core Adjusted Funds From Operations (Core AFFO)** | **$165,027** | **$9,051** | **$423,435** | **$235,227** | [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - The company is not required to make disclosures under this item as it qualifies as a smaller reporting company[168](index=168&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures with no material changes - Based on an evaluation as of September 30, 2021, the company's management, including the CEO and CFO, concluded that **disclosure controls and procedures were effective**[170](index=170&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[171](index=171&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings for the period - There are **no material legal proceedings** to be disclosed[174](index=174&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors are reported - There have been **no material changes** from the risk factors previously disclosed in the company's S-11 registration statement[175](index=175&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the use of proceeds from the September 2021 public offering - The company completed a public offering in September 2021, which, including the partial exercise of the over-allotment option, resulted in **total net proceeds of approximately $14.4 million**[177](index=177&type=chunk) - As of October 31, 2021, the company has used **$1.1 million of the proceeds** from the public offering to repay related party debt[180](index=180&type=chunk) [Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None reported[181](index=181&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - None reported, as this section is not applicable[182](index=182&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - None reported[183](index=183&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) Lists all documents filed as exhibits with the quarterly report - The report includes various exhibits, such as the Representative's Warrant, Form of Investor Warrant, Certifications by the CEO and CFO, and Inline XBRL documents[188](index=188&type=chunk)