See Accompanying Notes to Unaudited Condensed
Consolidated Financial Statements
See Accompanying Notes to Unaudited Condensed
Consolidated Financial Statements
See Accompanying Notes to Unaudited Condensed
Consolidated Financial Statements
See Accompanying Notes to Unaudited Condensed
Consolidated Financial Statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION
Organization
Manufactured Housing Properties Inc. (the
“Company”) is a Nevada corporation whose principal activities are to acquire, own, and operate manufactured housing
communities.
Basis of Presentation
The Company prepares its consolidated financial
statements under the accrual basis of accounting, in conformity with accounting principles generally accepted in the United States
of America (“GAAP”).
The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions
to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements.
The December 31, 2019 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures
required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes
to the consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on
Form 10-K, as filed with the Securities and Exchange Commission on April 14, 2020. The interim unaudited condensed consolidated
financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the
opinion of management, all adjustments considered necessary for a fair statement of the financial statements, consisting solely
of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2020 are not necessarily
indicative of the results that may be expected for the year ending December 31, 2020.
The Company’s formation of all subsidiaries
and date of consolidation are as follows:
Name of Subsidiary
|
|
State of Formation
|
|
Date of Formation
|
|
Ownership
|
Pecan Grove MHP LLC
|
|
North Carolina
|
|
October 12, 2016
|
|
100%*
|
Butternut MHP Land LLC
|
|
Delaware
|
|
March 1, 2017
|
|
100%
|
Azalea MHP LLC
|
|
North Carolina
|
|
October 25, 2017
|
|
100%
|
Holly Faye MHP LLC
|
|
North Carolina
|
|
October 25, 2017
|
|
100%
|
Chatham Pines MHP LLC
|
|
North Carolina
|
|
October 31, 2017
|
|
100%
|
Maple Hills MHP LLC
|
|
North Carolina
|
|
October 31, 2017
|
|
100%
|
Lakeview MHP LLC
|
|
South Carolina
|
|
November 1, 2017
|
|
100%
|
MHP Pursuits LLC
|
|
North Carolina
|
|
January 31, 2019
|
|
100%
|
Mobile Home Rentals LLC
|
|
North Carolina
|
|
September 30, 2016
|
|
100%
|
Hunt Club MHP LLC
|
|
South Carolina
|
|
March 8, 2019
|
|
100%
|
B&D MHP LLC
|
|
South Carolina
|
|
April 4, 2019
|
|
100%
|
Crestview MHP LLC
|
|
North Carolina
|
|
June 28, 2019
|
|
100%
|
Springlake MHP LLC
|
|
Georgia
|
|
October 10, 2019
|
|
100%
|
ARC MHP LLC
|
|
South Carolina
|
|
November 13, 2019
|
|
100%
|
Countryside MHP LLC
|
|
South Carolina
|
|
March 12, 2020
|
|
100%
|
Evergreen MHP LLC
|
|
Tennessee
|
|
March 17, 2020
|
|
100%
|
|
*
|
The Company originally acquired a 75% interest. In January
2019, the Company acquired the remaining 25% interest from a related party.
|
All intercompany transactions and balances
have been eliminated in consolidation. The Company does not have a majority or minority interest in any other company, either consolidated
or unconsolidated.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Revenue Recognition
The Company’s revenues primarily
consist of rental revenues and fee and other income. The Company has the following revenue sources and revenue recognition policies:
|
●
|
Rental revenues include revenues from the leasing of land lot or a combination of both, the mobile
home and land at our properties to tenants.
|
|
o
|
Revenues from the leasing of land lot or a combination of both, the mobile home and land at the
Company’s properties to tenants include (i) lease components, including land lot or a combination of both, the mobile home
and land, and (ii) reimbursement of utilities and account for the components as a single lease component in accordance with Accounting
Standards Codification (“ASC”) 842.
|
|
o
|
Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable
period of the lease. The Company commences rental revenue recognition when the underlying asset is available for use by the lessee.
Revenue derived from the reimbursement of utilities are generally recognized in the same period as the related expenses are incurred.
The Company’s leases are month-to-month.
|
|
●
|
Fee and other income include late fees, violation fees and other revenue arising from contractual
agreements with third parties. This revenue is recognized as the services are transferred in accordance with ASC 606.
|
|
●
|
Mobile home sale revenues are recognized in accordance with Topic 606 of the Financial Accounting
Standards Board (“FASB”) ASC for revenue recognition. On January 1, 2018, the Company adopted Accounting Standards
Update (“ASU”) 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized
in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to
be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the
five following criteria are met: (1) identification of the contract with a customer, (2) identification of the performance obligations
in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations
in the contract, and (5) recognition of revenue when (or as) we satisfy a performance obligation.
|
Under ASC 842, the Company must assess
on an individual lease basis whether it is probable that the Company will collect the future lease payments. The Company considers
the tenant’s payment history and current credit status when assessing collectability. When collectability is not deemed probable,
the Company will write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income to cash received.
Accounts Receivable
Accounts receivable consist primarily of
amounts currently due from residents. Accounts receivables are reported in the balance sheet at outstanding principal adjusted
for any charge-offs and the allowance for losses. The Company records an allowance for bad debt when receivables are over 90 days
old.
Acquisitions
The Company accounts for acquisitions as
asset acquisitions in accordance with ASC 805, “Business Combinations,” and allocates the purchase price of the property
based upon the fair value of the assets acquired, which generally consist of land, site and land improvements, buildings and improvements
and rental homes. The Company allocates the purchase price of an acquired property generally determined by internal evaluation
as well as third-party appraisal of the property obtained in conjunction with the purchase.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Net Income (Loss) Per Share
Basic net income (loss) per share is calculated
by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income
(loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding plus the
weighted average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method.
Total dilutive securities outstanding as of June 30, 2020 and 2019 totaled 656,175 and 541,334 stock options, respectively, 1,890,000
and 570,000 convertible Preferred Series A shares, respectively, which are convertible into common shares at $2.50 per share
for a total of 756,000 and 228,000, respectively, which are not included in dilutive loss per share as the effect would be anti-dilutive.
Use of Estimates
The presentation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from those estimates.
Investment Property and Depreciation
Investment property which consists of property
and equipment are carried at cost. Depreciation for Sites and Building is computed principally on the straight-line method over
the estimated useful lives of the assets (ranging from 15 to 25 years). Depreciation of Improvements to Sites and Buildings, Rental
Homes and Equipment and Vehicles is computed principally on the straight-line method over the estimated useful lives of the assets
(ranging from 3 to 25 years). Land Development Costs are not depreciated until they are put in use, at which time they are capitalized
as Sites and Land Improvements. Interest Expense pertaining to Land Development Costs are capitalized. Maintenance and Repairs
are charged to expense as incurred and improvements are capitalized. The costs and related accumulated depreciation of property
sold or otherwise disposed of are removed from the financial statement and any gain or loss is reflected in the current period’s
results of operations.
Impairment Policy
The Company applies FASB ASC 360-10, “Property,
Plant & Equipment,” to measure impairment in real estate investments. Rental properties are individually evaluated for
impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted
basis without interest) from a rental property is less than the carrying value under its historical net cost basis. These expected
future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand,
competition and other factors. Upon determination that a permanent impairment has occurred, rental properties are reduced to their
fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated
cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property
and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or
its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense
is not recorded. There was no impairment during the six months ended June 30, 2020 and 2019.
Cash and Cash Equivalents
The Company considers all highly liquid
financial instruments purchased with an original maturity of three months or less to be cash equivalents.
The Company maintains cash balances at
banks and deposits at times may exceed federally insured limits. Management believes that the financial institutions that hold
the Company’s cash are financially secure and, accordingly, minimal credit risk exists. At June 30, 2020 and December 31,
2019, the Company had approximately $1,417,000 and $2,553,000 above the FDIC-insured limit, respectively, including restricted
cash held for tenant security deposits of $349,927 and $316,035, respectively.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Stock Based Compensation
All stock based payments to employees,
nonemployee consultants, and to nonemployee directors for their services as directors, including any grants of restricted stock
and stock options, are measured at fair value on the grant date and recognized in the statements of operations as compensation
or other expense over the relevant service period in accordance with FASB ASC Topic 718. Stock based payments to nonemployees are
recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a
performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are nonforfeitable
the measurement date is the date the award is issued. The Company recorded stock option expense of $1,078 and $16 during the six
months ended June 30, 2020 and 2019, respectively.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10
of the FASB ASC for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB ASC to measure
the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP and
expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related
disclosures, paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used
to measure fair value into broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs.
Reclassifications
Certain amounts in the prior period presentation
have been reclassified to conform with the current presentation.
Income Taxes
The Company accounts for income taxes under
the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements. Under this method, the Company determines deferred
tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities
by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax
rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets
to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination,
the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would
be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment
to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions
in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than
not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions
that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more
than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The Company recognizes interest and penalties,
if any, with income tax expense in the accompanying consolidated statement of operations. As of June 30, 2020, and December 31,
2019, there were no such accrued interest or penalties.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13,
“Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU
2016-13 requires that entities use a new forward looking “expected loss” model that generally will result in the earlier
recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current
conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is
effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15,
2022. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements.
In March 2019, the FASB issued ASU No.
2019-01, “Leases (Topic 842): Codification Improvements.” ASU 2019-01 aligns the guidance for fair value of the underlying
asset by lessors with existing guidance in Topic 842. The ASU requires that the fair value of the underlying asset at lease commencement
is its cost reflecting in volume or trade discounts that may apply. However, if there has been a significant lapse of time between
the date the asset was acquired and the lease commencement date, the definition of fair value as outlined in Topic 820 should be
applied. In addition, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal
year in which a company adopts the new leases standard. The update is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2019. The Company has evaluated the impact this standard had on the consolidated financial
statements and determined that it had no impact on the consolidated financial statements.
Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
unaudited condensed consolidated financial statements.
Impact of Coronavirus Pandemic
In December 2019, a novel strain of coronavirus
was reported to have surfaced in Wuhan, China. The virus has since spread to over 150 countries and every state in the United States.
On March 11, 2020, the World Health Organization declared the outbreak a pandemic, and on March 13, 2020, the United
States declared a national emergency.
Most states and cities, including where
the Company’s properties are located, have reacted by instituting quarantines, restrictions on travel, “stay at home”
rules and restrictions on the types of businesses that may continue to operate, as well as guidance in response to the pandemic
and the need to contain it.
The Company is carefully reviewing all
rules, regulations, and orders and responding accordingly. The Company has taken steps to take care of its employees, including
providing the ability for employees to work remotely and implementing strategies to support appropriate social distancing techniques
for those employees who are not able to work remotely. The Company has also taken precautions with regard to employee, facility
and office hygiene as well as implementing significant travel restrictions. The Company is also assessing its business continuity
plans for all business units in the context of the pandemic. This is a rapidly evolving situation, and the Company will continue
to monitor and mitigate developments affecting its workforce, its tenants, and the public at large to the extent the Company is
able to do so.
The rules and restrictions put in place
have had a negative impact on the economy and business activity and may adversely impact the ability of the Company’s tenants,
many of whom may be restricted in their ability to work, to pay their rent as and when due. In addition, the Company’s
property managers may be limited in their ability to properly maintain the Company’s properties. Enforcing the
Company’s rights as landlord against tenants who fail to pay rent or otherwise do not comply with the terms of
their leases may not be possible as many jurisdictions, including those where are properties are located, have established rules
and/or regulations preventing us from evicting tenants for certain periods in response to the pandemic. If the Company is unable
to enforce its rights as landlords, our business would be materially affected.
If the current pace of the pandemic
cannot be slowed and the spread of the virus is not contained, the Company’s business operations could be further delayed
or interrupted. The Company expects that government and health authorities may announce new or extend existing restrictions, which
could require the Company to make further adjustments to its operations in order to comply with any such restrictions. The duration
of any business disruption cannot be reasonably estimated at this time but may materially affect the Company’s ability to
operate its business and result in additional costs.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The extent to which the pandemic may
impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted as of
the date hereof, including new information that may emerge concerning the severity of the pandemic and steps taken to
contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic
and capital markets environment present material uncertainty and risk with respect to the Company’s performance, financial
condition, results of operations and cash flows.
NOTE 2 – Revision of Prior
Year Immaterial Misstatement
During the six months ended June 30, 2020,
the Company identified a certain error in recording our minority interest buyout for Pecan Grove during the first quarter of 2019.
This error resulted in decreasing our land Investment Property and Equity by $244,321 and had no impact on our income statements.
The Company assessed the materiality of
this error considering both qualitative and quantitative factors and determined that for both the quarter and fiscal year ended
December 31, 2019, the error was immaterial. The Company has decided to correct this error as revisions to our previously issued
financial statements and will adjust the Form 10-K when filed in succeeding periods of this fiscal year.
The table below present the impact of the
revision in the Company’s condensed consolidated financial statements.
|
|
December 31, 2019
|
|
|
|
As previously reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Balance Sheet / Statement of Changes in Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Investment Property
|
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
11,130,259
|
|
|
$
|
(244,321
|
)
|
|
$
|
10,885,938
|
|
Total Investment Property
|
|
|
34,811,785
|
|
|
|
(244,321
|
)
|
|
|
34,567,464
|
|
Net Investment Property
|
|
|
33,416,827
|
|
|
|
(244,321
|
)
|
|
|
33,172,506
|
|
Total Assets
|
|
|
38,152,131
|
|
|
|
(244,321
|
)
|
|
|
37,907,810
|
|
Additional Paid in Capital
|
|
|
1,004,170
|
|
|
|
(244,321
|
)
|
|
|
759,849
|
|
Total Stockholders’ Deficit
|
|
|
(2,712,554
|
)
|
|
|
(244,321
|
)
|
|
|
(2,956,875
|
)
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
38,152,131
|
|
|
$
|
(244,321
|
)
|
|
$
|
37,907,810
|
|
The unaudited condensed consolidated income
statement and statement of cash flows are not presented because there is no impact to these statements.
NOTE 3 – INVESTMENT PROPERTY
Investment Property consists of the following
as of:
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
Investment Property
|
|
|
|
|
|
|
Land
|
|
$
|
11,378,818
|
|
|
$
|
10,885,938
|
|
Site and Land Improvements
|
|
|
21,845,771
|
|
|
|
17,466,801
|
|
Buildings and Improvements
|
|
|
6,791,371
|
|
|
|
6,214,725
|
|
Total Investment Property
|
|
|
40,015,960
|
|
|
|
34,567,464
|
|
Less: accumulated depreciation and amortization
|
|
|
(2,186,493
|
)
|
|
|
(1,394,958
|
)
|
Net Investment Property
|
|
$
|
37,829,467
|
|
|
$
|
33,172,506
|
|
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Depreciation and amortization expense totaled
$482,259 and $157,321 for the three months ended June 30, 2020 and 2019, respectively, and $872,252 and $292,247 for the six months
ended June 30, 2020 and 2019, respectively.
During the six months ended June 30, 2019,
the Company acquired the 25% minority interest in Pecan Grove MHP LLC. The Company also acquired two manufactured housing communities
and accounted for them as asset acquisitions during the six months ended June 30, 2020 totaling $5,310,767 (See note 8).
NOTE 4 – PROMISSORY NOTES
Promissory Notes
The Company has issued promissory notes
payable to lenders related to the acquisition of its manufactured housing communities. These promissory notes range from 3.3% to
7.0% with 5 to 30 years principal amortization. Two of the promissory notes had an initial 6 months period on interest only payments.
The promissory notes are secured by the real estate assets and $7,434,450 for four assets were guaranteed by Raymond M. Gee, the
Company’s chairman, chief executive officer and owner of the principal stockholder of the Company.
In addition, on May 1, 2020, the Company
received a $139,300 Payroll Protection Program (the “PPP”) loan from the United States Small Business Administration
(the “SBA”) under provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).
The PPP loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred
for six months after the date of disbursement. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties.
The PPP loan contains events of default and other provisions customary for a loan of this type. The PPP provides that the loan
may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company
intends to use the proceeds from the PPP loan for qualifying expenses and to apply for forgiveness of the PPP loan in accordance
with the terms of the CARES Act.
During the six months ended June 30, 2019,
the Company refinanced a total of $4,940,750 from current loans payable to $8,241,000 of new notes payable from five of the communities,
resulting in an additional loan payable of $3,320,859. The Company used the additional loans payable proceeds from the refinance
to retire the related party note payable described below. During the six months ended June 30, 2019, the Company wrote off mortgage
costs of $68,195 and capitalized $110,039 of mortgage costs due to the refinancing.
On April 1, 2020, the Company refinanced
the loans for Butternut MHP Land LLC with the existing lender to increase the loan amount to $1,382,269 and to extend the maturity
date to April 10, 2025. In addition, the interest rate was changed to 6% per annum, provided that on April 10, 2023 and thereafter,
the interest rate shall be equal to (i) the per annum rate of interest identified as the “Prime Rate” as published
in the monthly rates section of the Wall Street Journal plus (ii) 1% per annum, adjusted as the first day of each calendar quarter.
The loan, as modified, is secured by the real estate assets of Butternut MHP Land LLC and is guaranteed by the Company and Raymond
M. Gee. The Company used the proceeds to extinguish and pay off the Butternut MHP Land LLC Mezz loan.
As of June 30, 2020, the Company recorded
$222,586 of mortgage cost related to the two acquisitions.
The following are terms of these notes:
|
|
Maturity Date
|
|
Interest Rate
|
|
|
Balance 06/30/20
|
|
|
Balance 12/31/19
|
|
Butternut MHP Land LLC
|
|
04/10/25
|
|
|
6.000
|
%
|
|
$
|
1,382,269
|
|
|
$
|
1,114,819
|
|
Butternut MHP Land LLC Mezz
|
|
04/01/27
|
|
|
7.000
|
%
|
|
|
-
|
|
|
|
280,013
|
|
Pecan Grove MHP LLC
|
|
02/22/29
|
|
|
5.250
|
%
|
|
|
3,070,251
|
|
|
|
3,095,274
|
|
Azalea MHP LLC
|
|
03/01/29
|
|
|
5.400
|
%
|
|
|
820,359
|
|
|
|
835,445
|
|
Holly Faye MHP LLC
|
|
03/01/29
|
|
|
5.400
|
%
|
|
|
579,825
|
|
|
|
574,096
|
|
Chatham MHP LLC
|
|
04/01/24
|
|
|
5.875
|
%
|
|
|
1,752,066
|
|
|
|
1,771,506
|
|
Lake View MHP LLC
|
|
03/01/29
|
|
|
5.400
|
%
|
|
|
1,844,936
|
|
|
|
1,857,266
|
|
B&D MHP LLC
|
|
04/25/29
|
|
|
5.500
|
%
|
|
|
1,836,799
|
|
|
|
1,854,788
|
|
Hunt Club MHP LLC
|
|
05/01/24
|
|
|
5.750
|
%
|
|
|
1,431,325
|
|
|
|
1,447,364
|
|
Crestview MHP LLC
|
|
07/31/24
|
|
|
5.500
|
%
|
|
|
4,126,370
|
|
|
|
4,173,652
|
|
Maple MHP LLC
|
|
01/01/23
|
|
|
5.125
|
%
|
|
|
2,652,653
|
|
|
|
2,688,653
|
|
Springlake MHP LLC
|
|
11/14/22
|
|
|
3.310
|
%
|
|
|
4,000,000
|
|
|
|
4,000,000
|
|
ARC MHP LLC
|
|
01/01/30
|
|
|
5.500
|
%
|
|
|
5,249,899
|
|
|
|
5,300,000
|
|
Countryside MHP LLC
|
|
03/20/50
|
|
|
5.500
|
%
|
|
|
3,000,000
|
|
|
|
-
|
|
Evergreen MHP LLC
|
|
04/01/32
|
|
|
3.990
|
%
|
|
|
1,145,131
|
|
|
|
-
|
|
Manufactured Housing Properties Inc. PPP*
|
|
05/01/22
|
|
|
1.000
|
%
|
|
|
139,300
|
|
|
|
-
|
|
Totals note payables
|
|
|
|
|
|
|
|
|
33,031,183
|
|
|
|
28,992,876
|
|
Discount Direct Lender Fees
|
|
|
|
|
|
|
|
|
(868,297
|
)
|
|
|
(633,629
|
)
|
Total net of Discount
|
|
|
|
|
|
|
|
$
|
32,162,886
|
|
|
$
|
28,359,247
|
|
|
*
|
Manufactured Housing Properties - Payroll Protection
Program Loan
|
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Related Party Promissory Note
On May 8, 2017, the Company issued a promissory
note to Metrolina Loan Holdings, LLC (“Metrolina”) in the principal amount of $3,000,000. The note is interest only
payment based on 8%, and 10% deferred until maturity to be paid with principal balance. The note originally awarded Metrolina 455,000
shares of Common Stock as consideration, which resulted in making Metrolina a related party due to its significant ownership. During
the year ended December 31, 2019, the Company paid off the entire balance on the note of $2,754,550 plus interest and amended the
agreement to allow for the redeployment of the $3,000,000 available, eliminated the conversion option whereby Metrolina could convert
the ratio of total outstanding debt at time of exercise of the option into an amount of newly issued shares of the Company’s
Common Stock determined by dividing the outstanding indebtedness by $3,000,000 multiplied by 10% with a cap of 864,500 shares.
The amendment resulted in issuing an additional 545,000 shares with a fair value of $305,200 for a total of 1,000,000 shares awarded
to Metrolina. The note gives Metrolina the right and option to purchase its pro rata share of debt or equity securities issued
to maintain up to 10% equity interest in the Company at the most recent price of any equity transaction for seven years from the
amendment dated February 26, 2019. This note matures in May of 2023. As of June 30, 2020, and December 31, 2019, the balance on
this note was $816,500 and $1,730,000, respectively. During the six months ended June 30, 2020 and 2019, the Company recorded interest
expense related to the note totaling $56,441 and $143,338, respectively and $36,028 and $86,238 for the three months ended June
30, 2020 and 2019, respectively. The related party note is guaranteed by Mr. Gee, the Company’s Chief Executive Officer.
Revolving Promissory Note
On October 1, 2017, the Company issued
a revolving promissory note to Raymond M. Gee, the Company’s chairman and chief executive officer, pursuant to which the
Company may borrow up to $1,500,000 from Mr. Gee on a revolving basis for working capital purposes. This note has a five-year term
with no annual interest and principal payment is deferred until the maturity date. As of June 30, 2020 and December 31, 2019, the
outstanding balance on this note was $621,061 and $797,906, respectively. During the six months ended June 30, 2020 and 2019, the
Company recorded imputed interest related to the note of $36,934 and $27,861, respectively, and $17,777 and $13,857 for the three
months ended June 30, 2020 and 2019, respectively.
Maturities of Long-Term Obligations
for Five Years and Beyond
The minimum annual principal payments of
notes payable at June 30, 2020 by fiscal year were:
2020 (remainder of year)
|
|
$
|
240,973
|
|
2021
|
|
|
665,537
|
|
2022
|
|
|
4,646,074
|
|
2023
|
|
|
3,065,286
|
|
2024
|
|
|
7,192,359
|
|
Thereafter
|
|
|
17,220,954
|
|
Total minimum principal payments
|
|
$
|
33,031,183
|
|
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 5 – COMMITMENTS AND CONTINGENCIES
From time to time, the Company may become
involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is
currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material
adverse effect on its business, financial condition or operating results.
NOTE 6 – STOCKHOLDERS’
EQUITY
Preferred Stock
The Company is authorized to issue up to
10,000,000 shares of preferred stock, $0.01 par value.
Series A Preferred Stock
On May 8, 2019, the Company filed a certificate
of designation with the Nevada Secretary of State pursuant to which the Company designated 4,000,000 shares of its preferred stock
as Series A Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”). The Series A Preferred Stock has
the following voting powers, designations, preferences and relative rights, qualifications, limitations or restrictions:
Ranking. The Series A Preferred
Stock ranks, as to dividend rights and rights upon our liquidation, dissolution, or winding up, senior to the Common Stock.
Dividend Rate and Payment Dates.
Dividends on the Series A Preferred Stock are cumulative and payable monthly in arrears to all holders of record on the applicable
record date. Holders of Series A Preferred Stock will be entitled to receive cumulative dividends in the amount of $0.017 per share
each month, which is equivalent to the rate of 8% of the $2.50 liquidation preference per share. Dividends on shares of Series
A Preferred Stock will continue to accrue even if any of the Company’s agreements prohibit the current payment of dividends
or the Company does not have earnings. During the six months ended June 30, 2020 and 2019, the Company paid dividends of $192,220
and $24,334, respectively.
Liquidation Preference. The
liquidation preference for each share of Series A Preferred Stock is $2.50. Upon a liquidation, dissolution or winding up of the
Company, holders of shares of Series A Preferred Stock will be entitled to receive the liquidation preference with respect to their
shares plus an amount equal to any accrued but unpaid dividends (whether or not declared) to, but not including, the date of payment
with respect to such shares.
Stockholder Optional Conversion.
Each share of Series A Preferred Stock is convertible, at any time and from time to time, at the option of the holder thereof and
without the payment of additional consideration, into that number of shares of Common Stock determined by dividing the liquidation
preference of such share by the conversion price then in effect. The conversion price is initially equal $2.50, subject to adjustment
as set forth in the certificate of designation. In addition, if at any time the trading price of the Common Stock is greater than
the liquidation preference of $2.50, the Company may deliver a written notice to all holders to cause each holder to convert all
or part of such holders’ Series A Preferred Stock.
Company Call and Stockholder Put
Options. Commencing on the fifth anniversary of the initial issuance of shares of Series A Preferred Stock and continuing
indefinitely thereafter, the Company will have a right to call for redemption the outstanding shares of Series A Preferred Stock
at a call price equal to $3.75, or 150% of the original issue price of the Series A Preferred Stock, and correspondingly, each
holder of shares of Series A Preferred Stock shall have a right to put the shares of Series A Preferred Stock held by such holder
back to us at a put price equal to $3.75, or 150% of the original issue purchase price of such shares. During the six months ended
June 30, 2020 and 2019, the Company recorded a put option value accretion of $236,250 and $23,750, respectively.
Voting Rights. The Company
may not authorize or issue any class or series of equity securities ranking senior to the Series A Preferred Stock as to dividends
or distributions upon liquidation (including securities convertible into or exchangeable for any such senior securities) or amend
the Company’s articles of incorporation (whether by merger, consolidation, or otherwise) to materially and adversely change
the terms of the Series A Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to be cast
on such matter by holders of the outstanding shares of Series A Preferred Stock, voting together as a class. Otherwise, holders
of the shares of Series A Preferred Stock do not have any voting rights.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
As of June 30, 2020, there were 1,890,000
shares of Series A Preferred Stock issued and outstanding. As of June 30, 2020, the Series A Preferred Stock balance was made up
of Series A Preferred Stock totaling $4,725,000 and accretion of put options totaling $420,250. As of December 31, 2019, the Series
A Preferred Stock balance was made up of Series A Preferred Stock totaling $4,725,000 and accretion of put options totaling $184,000.
Series B Preferred Stock
On December 2, 2019, the Company filed
a certificate of designation with the Nevada Secretary of State pursuant to which the Company designated 1,000,000 shares of its
preferred stock as Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”). The Series B Preferred
Stock has the following voting powers, designations, preferences and relative rights, qualifications, limitations or restrictions:
Ranking. The Series B Preferred
Stock rank, as to dividend rights and rights upon liquidation, dissolution, or winding up, senior to the Common Stock and pari
passu with the Series A Preferred Stock.
Dividend Rate and Payment Dates.
Dividends on the Series B Preferred Stock are cumulative and payable monthly in arrears to all holders of record on the applicable
record date. Holders of Series B Preferred Stock will be entitled to receive cumulative dividends in the amount of $0.067 per share
each month, which is equivalent to the annual rate of 8% of the $10.00 liquidation preference per share; provided that upon an
event of default (generally defined as the Company’s failure to pay dividends when due or to redeem shares when requested
by a holder), such amount shall be increased to $0.083 per month, which is equivalent to the annual rate of 10% of the $10.00 liquidation
preference per share. During the six months ended June 30, 2020 and 2019, the Company paid dividends of $195,875 and $0, respectively.
Liquidation Preference. The
liquidation preference for each share of Series B Preferred Stock is $10.00. Upon a liquidation, dissolution or winding up of the
Company, holders of shares of Series B Preferred Stock will be entitled to receive the liquidation preference with respect to their
shares plus an amount equal to any accrued but unpaid dividends (whether or not declared) to, but not including, the date of payment
with respect to such shares.
Company Call and Stockholder Put
Options. Commencing on the fifth anniversary of the initial issuance of shares of Series B Preferred Stock and continuing
indefinitely thereafter, the Company will have a right to call for redemption the outstanding shares of Series B Preferred Stock
at a call price equal to $15.00, or 150% of the original issue price of the Series B Preferred Stock, and correspondingly, each
holder of shares of Series B Preferred Stock shall have a right to put the shares of Series B Preferred Stock held by such holder
back to the Company at a put price equal to $15.00, or 150% of the original issue purchase price of such shares. During the six
months ended June 30, 2020 and 2019, the Company recorded a put option value accretion of $298,027 and $0, respectively.
Voting Rights. The Company
may not authorize or issue any class or series of equity securities ranking senior to the Series B Preferred Stock as to dividends
or distributions upon liquidation (including securities convertible into or exchangeable for any such senior securities) or amend
the Company’s articles of incorporation (whether by merger, consolidation, or otherwise) to materially and adversely change
the terms of the Series B Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to be cast
on such matter by holders of outstanding shares of Series B Preferred Stock, voting together as a class. Otherwise, holders of
the shares of Series B Preferred Stock do not have any voting rights.
No Conversion Right. The
Series B Preferred Stock is not convertible into shares of Common Stock.
On November 1, 2019, the Company launched
an offering under Regulation A of Section 3(6) of the Securities Act of 1933, as, amended, for Tier 2 offerings, pursuant to which
the Company is offering up to 1,000,000 shares of Series B Preferred Stock at an offering price of $10.00 per share, for a maximum
offering amount of $10,000,000. In addition, the Company is offering bonus shares to early investors in this offering, whereby
the first 400 investors will receive, in addition to Series B Preferred Stock, 100 shares of Common Stock, regardless of the amount
invested, for a total of 40,000 shares of Common Stock.
During the six months ended June 30, 2020,
the Company sold an aggregate of 167,283 shares of Series B Preferred Stock for total gross proceeds of $1,672,830. After deducting
a placement fee and other expenses, the Company received net proceeds of $1,555,732. During the six months ended June 30, 2020
and 2019, the Company recorded a put option value accretion of $298,027 and $0, respectively.
As of June 30, 2020, there were 577,005
shares of Series B Preferred Stock issued and outstanding.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Common Stock
The Company is authorized to issue up to
200,000,000 shares of Common Stock, par value $0.01 per share. As of June 30, 2020, there were 12,394,180 shares of Common Stock
issued and outstanding.
Stock Issued for Service
In November 2018, the Company issued 350,000
shares of Common Stock for services to an investment bank for advisory services with a fair value of $171,500, and $24,500 of that
fair value was expensed during the three months ended June 30, 2019. During year ended December 31, 2019, the Company purchased
these shares back for a total of $61,837 and canceled the shares due to the termination of the advisory service agreement with
the investment bank.
In February 2019, the Company issued an
additional 545,000 shares of Common Stock for services to Metrolina with a fair value of $305,200.
In April 2020, the Company issued 50,000
shares of Common Stock to board members with a value of $32,500.
Stock Issued for Cash
In June 2019, the Company issued an additional
254,506 shares of Common Stock for cash of $68,717 to Metrolina upon its exercise of its option to purchase additional stock to
maintain up to 10% ownership of the Company’s Common Stock outstanding.
During the six months ended June 30, 2020
and 2019, the Company issued 8,100 and 0 shares of Common Stock, respectively, to early investors in the Regulation A offering,
valued at $2,187 and $0, respectively.
Stock issued for Acquisition
In January 2019, the Company issued 2,000,000
shares of Common Stock to Gvest Real Estate Capital LLC, which is controlled and owned by Mr. Gee, the Company’s Chief Executive
Officer, to acquire the 25% minority interest in Pecan Grove, which were valued at the historical cost value of $293,241.
Equity Incentive Plan
In December 2017, the Board of Directors,
with the approval of a majority of the stockholders of the Company, adopted the Manufactured Housing Properties Inc. Stock Compensation
Plan (the “Plan”) which is administered by the Compensation Committee. As of June 30, 2020, there were 656,175 shares
granted and 343,825 shares remaining available under the Plan.
The Company has issued options to directors
and officers under the Plan. One third of the options vest immediately, and two thirds vest in equal annual installments over a
two-year period. The Company issued 519,675 shares in December 2017 and 136,500 shares in December 2019. The Company recorded stock
option expense of $1,078 and $16 during the six months ended June 30, 2020 and 2019, respectively.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following table summarizes the stock
options outstanding as of June 30, 2020:
|
|
Number of options
|
|
|
Weighted average exercise price (per share)
|
|
|
Weighted average remaining contractual term
(in years)
|
|
Outstanding at December 31, 2019
|
|
|
656,175
|
|
|
$
|
0.03
|
|
|
|
8.7
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited / cancelled / expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding at June 30, 2020
|
|
|
656,175
|
|
|
$
|
0.03
|
|
|
|
8.2
|
|
The aggregate intrinsic value in the table
above represents the total intrinsic value (the difference between the Company’s closing stock price at fiscal year-end and
the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holder had all
options holders exercised their options on June 30, 2020. As of June 30, 2020, there were 519,675 “in-the-money” options
with an aggregate intrinsic value of $1,283,597.
The following table summarizes information
concerning options outstanding as of June 30, 2020.
Strike Price Range ($)
|
|
|
Outstanding stock options
|
|
|
Weighted
average remaining contractual term
(in years)
|
|
|
Weighted
average outstanding
strike price
|
|
|
Vested stock options
|
|
|
Weighted
average vested
strike price
|
|
$
|
0.01
|
|
|
|
519,675
|
|
|
|
8.0
|
|
|
$
|
0.01
|
|
|
|
519,675
|
|
|
$
|
0.01
|
|
$
|
0.27
|
|
|
|
136,500
|
|
|
|
10.0
|
|
|
$
|
0.27
|
|
|
|
45,500
|
|
|
$
|
0.27
|
|
The table below presents the weighted average
expected life in years of options granted under the Plan as described above. The risk-free rate of the stock options is based on
the U.S. Treasury yield curve in effect at the time of grant, which corresponds with the expected term of the option granted.
The fair value of stock options was estimated
using the Black Scholes option pricing model with the following assumptions for grants made during the periods indicated.
|
|
June
30,
2020
|
|
|
December 31,
2019
|
|
Stock
option assumptions
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
-
|
|
|
|
0.26
|
%
|
Expected dividend yield
|
|
|
-
|
|
|
|
0.00
|
%
|
Expected volatility
|
|
|
-
|
|
|
|
15.17
|
%
|
Expected life of options (in years)
|
|
|
-
|
|
|
|
10.0
|
|
NOTE 7 – RELATED PARTY TRANSACTIONS
On October 1, 2017, the Company issued
a revolving promissory note to Raymond M. Gee, the Company’s chairman and chief executive officer, pursuant to which the
Company may borrow up to $1,500,000 from Mr. Gee on a revolving basis for working capital purposes. This note has a five-year term
with no annual interest and principal payment is deferred until the maturity date. As of June 30, 2020 and December 31, 2019, the
outstanding balance on this note was $621,061 and $797,906, respectively. During the six months ended June 30, 2020 and 2019, the
Company recorded imputed interest related to the note of $36,934 and $27,861, respectively, and $17,777 and $13,857 during the
three months ended June 30, 2020 and 2019, respectively.
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
On May 8, 2017, the Company issued a promissory
note to Metrolina in the principal amount of $3,000,000. The note is interest only payment based on 8%, and 10% deferred until
maturity to be paid with principal balance. The note originally awarded Metrolina 455,000 shares of Common Stock as consideration,
which resulted in making Metrolina a related party due to its significant ownership. During the year ended December 31, 2019, the
Company paid off the entire balance on the note of $2,754,550 plus interest and amended the agreement to allow for the redeployment
of the $3,000,000 available, eliminated the conversion option whereby Metrolina could convert the ratio of total outstanding debt
at time of exercise of the option into an amount of newly issued shares of the Company’s Common Stock determined by dividing
the outstanding indebtedness by $3,000,000 multiplied by 10% with a cap of 864,500 shares. The amendment resulted in issuing an
additional 545,000 shares with a fair value of $305,200 for a total of 1,000,000 shares awarded to Metrolina. The note gives Metrolina
the right and option to purchase its pro rata share of debt or equity securities issued to maintain up to 10% equity interest in
the Company at the most recent price of any equity transaction for seven years from the amendment dated February 26, 2019. This
note matures in May of 2023. As of June 30, 2020 and December 31, 2019, the balance on this note was $816,500 and $1,270,000, respectively.
During the six months ended June 30, 2020 and 2019, the Company recorded interest expense related to the note totaling $56,441
and $143,338, respectively, and $36,028 and $86,238 during the three months ended June 30, 2020 and 2019, respectively. The related
party note is guaranteed by Mr. Gee, the Company’s Chief Executive Officer.
In January 2019, the Company issued 2,000,000
shares of Common Stock to Gvest Real Estate Capital LLC, an entity controlled by Mr. Gee, the Company’s Chief Executive Officer,
to acquire the 25% minority interest in Pecan Grove, which were valued at the historical cost value of $293,241.
In August 2019, the Company entered into
an office lease agreement with Gvest Real Estate Capital LLC for the lease of its offices. The lease is $4,000 per month and is
on a month-to-month term. Total rent expense for the six months ended June 30, 2020 and 2019 was $24,000 and $0, respectively,
and $12,000 and $0 for the three months ended June 30, 2020 and 2019, respectively.
During the three and six months ended June
30, 2020, the Company recorded $4,538 and $8,263, respectively, in revenues related to property management consulting services
provided to Gvest Real Estate Capital LLC, compared to $3,284 and $15,284 during the three and six months ended June 30, 2019,
respectively.
During the six months ended June 30, 2020,
Mr. Gee, the Company’s Chief Executive Officer, received a $50,000 fee for his personal guarantee on a promissory note relating
to a loan for one of the Company’s acquisitions, and $70,000 fee for his personal guarantee on a promissory note relating
to the refinance of our loans for Butternut MHP Land LLC.
NOTE 8 – ACQUISITIONS
The Company completed two acquisitions
during the six months ended June 30, 2020. These were asset acquisitions from third parties and have been accounted for as asset
acquisitions. The acquisition date estimated fair value was determined by third party appraisals.
Acquisition Date
|
|
Name
|
|
Land
|
|
|
Improvements
|
|
|
Building
|
|
|
Acquisition Cost
|
|
|
Total Purchase Price
|
|
March 2020
|
|
Countryside MHP
|
|
$
|
152,880
|
|
|
$
|
3,194,245
|
|
|
$
|
352,875
|
|
|
$
|
21,642
|
|
|
$
|
3,721,642
|
|
March 2020
|
|
Evergreen MHP
|
|
|
340,000
|
|
|
|
1,111,000
|
|
|
|
-
|
|
|
|
138,125
|
|
|
|
1,589,125
|
|
|
|
|
|
$
|
492,880
|
|
|
$
|
4,305,245
|
|
|
$
|
352,875
|
|
|
$
|
159,767
|
|
|
$
|
5,310,767
|
|
MANUFACTURED HOUSING PROPERTIES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Pro-forma Financial Information
The following unaudited pro-forma information
presents the combined results of operations for the six months ended June 30, 2020 and 2019 as if the above acquisitions of manufactured
housing communities had been completed on January 1, 2020 and 2019. Pro-forma for the six months ended June 30, 2019 includes the
five acquisitions during 2019.
|
|
Six months ended
June 30, 2020 Consolidated
|
|
|
Acquisitions
|
|
|
Adjustment
|
|
|
Six months ended
June 30, 2020
Pro Forma
|
|
Total revenue
|
|
$
|
2,814,271
|
|
|
$
|
167,618
|
|
|
$
|
|
|
|
$
|
2,981,889
|
|
Total expenses
|
|
|
3,415,098
|
|
|
|
60,297
|
|
|
|
|
|
|
|
3,475,395
|
|
Depreciation and amortization expense
|
|
|
-
|
|
|
|
-
|
|
|
|
49,445
|
|
|
|
49,445
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
40,719
|
|
|
|
40,719
|
|
Net income (loss)
|
|
$
|
(600,827
|
)
|
|
$
|
107,321
|
|
|
|
|
|
|
|
(583,670
|
)
|
Preferred stock dividends and put option value accretion
|
|
|
922,372
|
|
|
|
-
|
|
|
|
|
|
|
|
922,372
|
|
Net loss attributable to common shareholders
|
|
$
|
(1,523,199
|
)
|
|
$
|
107,321
|
|
|
|
|
|
|
$
|
(1,506,042
|
)
|
Weighted average - basic and fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.12
|
)
|
|
|
Six months ended
June 30, 2019 Consolidated
|
|
|
Acquisitions
|
|
|
Adjustment
|
|
|
Six months ended
June 30, 2019
Pro Forma
|
|
Total revenue
|
|
$
|
1,184,576
|
|
|
$
|
1,284,470
|
|
|
$
|
|
|
|
$
|
2,469,046
|
|
Total expenses
|
|
|
2,258,156
|
|
|
|
654,781
|
|
|
|
|
|
|
|
2,912,937
|
|
Depreciation and amortization expense
|
|
|
-
|
|
|
|
-
|
|
|
|
617,049
|
|
|
|
617,049
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
466,878
|
|
|
|
466,878
|
|
Net income (loss)
|
|
$
|
(1,073,580
|
)
|
|
$
|
629,689
|
|
|
|
|
|
|
|
(1,527,818
|
)
|
Preferred stock dividends and put option value accretion
|
|
|
48,084
|
|
|
|
-
|
|
|
|
|
|
|
|
48,084
|
|
Net loss attributable to common shareholders
|
|
$
|
(1,121,664
|
)
|
|
$
|
629,689
|
|
|
|
|
|
|
$
|
(1,575,902
|
)
|
Weighted average - basic and fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.12
|
)
|
|
|
Three months ended June 30, 2019 Consolidated
|
|
|
Acquisitions
|
|
|
Adjustment
|
|
|
Three months ended
June 30, 2019
Pro Forma
|
|
Total revenue
|
|
$
|
648,202
|
|
|
$
|
654,785
|
|
|
$
|
|
|
|
$
|
1,302,987
|
|
Total expenses
|
|
|
1,002,468
|
|
|
|
335,689
|
|
|
|
|
|
|
|
1,338,157
|
|
Depreciation and amortization expense
|
|
|
-
|
|
|
|
-
|
|
|
|
308,525
|
|
|
|
308,525
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
233,439
|
|
|
|
233,439
|
|
Net income (loss)
|
|
$
|
(354,266
|
)
|
|
$
|
319,096
|
|
|
|
|
|
|
|
(577,134
|
)
|
Preferred stock dividends and put option value accretion
|
|
|
43,417
|
|
|
|
-
|
|
|
|
|
|
|
|
43,417
|
|
Net loss attributable to common shareholders
|
|
$
|
(397,683
|
)
|
|
$
|
319,096
|
|
|
|
|
|
|
$
|
(620,551
|
)
|
Weighted average - basic and fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.05
|
)
|
NOTE 9 – SUBSEQUENT EVENTS
Loan Payoff
On July 7, 2020, the Company paid off the
remaining balance of $816,500 on its promissory note due to Metrolina with accrued interest totaling $37,266, and terminated the
loan agreement (see Note 4).
Series B Preferred Stock
On
July 30, 2020, the Company completed an additional closing of the Regulation A offering (see Note 6), pursuant to which the Company
sold an aggregate of 15,214 shares of Series B Preferred Stock to investors for total gross proceeds of $152,140. After deducting
the placement fee, the Company received net proceeds of $141,490. The Company also issued 1,300 shares of Common Stock to additional
early investors.