Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Equity

Note 7 – Equity

Authorized Equity

The Company is authorized to issue up to 100,000,000 shares of common stock and 10,000,000 of undesignated preferred stock. No preferred shares have been issued as of the date of this report. Holders of the Company’s common stock are entitled to receive dividends when authorized by the Company’s Board of Directors.

Equity Issuances

On April 25, 2019, the Company raised $1,000,000 by issuing 50,000 Units with each Unit being comprised of one share of its Common Stock, and one warrant to purchase one share of its Common Stock. Each Unit was sold for a price of $20.00 per Unit. The shares of the Company’s Common Stock and warrants included in the Units, were offered together, but the securities included in the Units are issued separately. The warrants are exercisable at a price of $20.00 per share of Common Stock, subject to adjustment in certain circumstances, and will expire seven years from the date of issuance.

On November 13, 2020, the Company raised $1,000,000 by issuing 50,000 Units with each Unit being comprised of one share of its Common Stock, and one warrant to purchase one share of its Common Stock. Each Unit was sold for a price of $20.00 per Unit. The shares of the Company’s Common Stock and warrants included in the Units, were offered together, but the securities included in the Units are issued separately. The warrants are exercisable at a price of $20.00 per share of Common Stock, subject to adjustment in certain circumstances, and will expire seven years from the date of issuance.

On September 8, 2021, the Company issued and sold, in an underwritten public offering (the “Public Offering”), 1,500,000 Units, with each unit consisting of one share of Common Stock, and one warrant to purchase one share of Common Stock (the “Investor Warrants”). The units were sold to the public at the price of $10.00 per unit and generated proceeds of $13.5 million, net of underwriter discounts.

As part of the Public Offering, on September 8, 2021, the Company entered into an agreement with the CEO to redeem 112,500 shares of common stock for $100. As of September 30, 2021, these shares had not yet been physically returned to our transfer agent nor has the agent’s records been adjusted and the CEO has not been paid.  The Company has recorded this transaction in the current period in accounts payable – related party and treasury shares since it was effective upon the Public Offering.  

On September 30, 2021, the Company issued and sold as part of the underwriter’s Over-Allotment Option an additional 165,000 Units and generated additional proceeds of $1.5 million, net of underwriter discounts. The Investor Warrants issued in the offering entitle the holder to purchase one share of Common Stock at a price equal to $10.00 for a period of five years.

The Investor Warrants may be exercised on a cashless basis if there is no effective registration statement available for the resale of the shares of common stock underlying such warrants. In addition, after 120 days after the Investor Warrants are issued, any Investor Warrant may be exercised on a cashless basis for 10% of the shares of Common Stock underlying the Investor Warrant if the volume-weighted average trading price of the Company’s shares of Common Stock on Nasdaq is below the then-effective exercise price of the Investor Warrant for 10 consecutive trading days.

In addition, the Company issued to Maxim Group LLC (or its designee) warrants to purchase an aggregate of 149,850 shares of Common Stock, which is equal to an aggregate of 9% of the number of shares of Common Stock sold in the offering (the “Representative’s Warrants”). The Representative’s Warrants have an exercise price equal to $12.50, may be exercised on a cashless basis and will be exercisable six months following the closing date and until September 2, 2026.

For the nine months ended September 30, 2021, the Company moved approximately $1.3 million of deferred financing costs into additional paid in capital of which $614,088 had been incurred as of December 31, 2020.

Warrants

The Company has 1,914,850 warrants outstanding as of September 30, 2021, subject to certain circumstances, and which will expire five to seven years from the date of issuance.

Issue Date	Warrants Issued
April 25, 2019 exercise price of $20.00	50,000
November 13, 2020 exercise price of $20.00	50,000
September 8, 2021 exercise price of $10.00	1,500,000
September 8, 2021 exercise price of $12.50	135,000
September 30, 2021 exercise price of $10.00	165,000
September 30, 2021 exercise price of $12.50	14,850

The following is a summary of warrants outstanding as of September 30:

	2021				2020
	Number of Warrants	Weighted Average Price	Weighted Average Remaining Life	Number of Warrants		Weighted Average Price	Weighted Average Remaining Life
Beginning of the year	100,000	$20.00	5.3	50,000		$20.00	6.3
Issuance	1,814,850	$10.21	5.0	-		-	-
Ending balance	1,914,850	$10.72	4.97	50,000		$20.00	5.6
Warrants exercisable	1,765,000	$10.57	4.99	50,000		$20.00	5.6

There was no intrinsic value for the warrants as of September 30, 2021.

Stock Compensation

On July 15, 2019, the board of directors granted 2,500 restricted shares to each of the two independent directors that vest every 12 months on an annual basis over 36 months. The award is valued at $50,000 for each grant and was based on the equity pricing issuance of $20.00 per share. The pro-rated vested share restriction will be removed upon the annual anniversary of the award. The 1,668 and 1,666 restricted shares were issued to the two directors in September 2020 and September 2021, respectively and another 1,666 restricted shares were issued to the two directors in September 2021.

On February 3, 2020, the board of directors granted 2,500 restricted shares to two new independent directors that vest every 12 months on an annual basis over 36 months. The award is valued at $50,000 for each grant and was based on the equity pricing issuance of $20.00 per share. The pro-rated vested share restrictions will be removed upon the annual anniversary of the award. The 1,666 unrestricted shares were issued to the two directors in February 2021 and another 3,334 restricted shares were issued to the two directors in September 2021.

On February 3, 2020, the board of directors granted 6,250 restricted shares to its chief financial officer that will vest every 12 months on an annual basis over 36 months. The award is valued at $125,000 for each grant and was based on the equity pricing issuance of $20.00 per share. The pro-rated vested share restrictions will be removed upon the annual anniversary of the award. The 2,083 unrestricted shares were issued to the chief financial officer in February 2021 and another 4,167 restricted shares were issued to the chief financial officer in September 2021.

Pursuant to an amended employment agreement in which the chief financial officer waived his right to cash compensation in lieu of being awarded 550 restricted shares of common stock each month until the closing of an initial underwritten public offering, we issued the chief financial officer 2,200 shares of stock in March 2021 representing four months of compensation from December 2020 to March 2021. These shares are valued at $20.00 per share and are accrued as compensation expense until issued by the Company.

The board granted 14,000 restricted shares to directors, officers and employees effective January 1, 2021 valued at $20.00 per share that vest annually over 3 years. The pro-rated vested share restrictions will be removed upon the annual anniversary of the award. The 14,000 restricted shares were issued to the directors, officers and employees in September 2021.

Generation Income Properties, Inc. 2020 Omnibus Incentive Plan

In connection with the Public Offering, the Company board has adopted, and stockholders have approved, the Generation Income Properties, Inc. 2020 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which became effective upon the completion of the Public Offering.  The Omnibus Incentive Plan reserves 2.0 million shares of Common Stock upon the award of grant stock options, stock appreciation rights, performance shares, performance units, shares of common stock, restricted stock, restricted stock units, cash incentive awards, dividend equivalent units, or any other type of award permitted under the Omnibus Incentive Plan.  As of September 30, 2021, no shares had been granted under the Omnibus Incentive Plan.

Restricted Common Shares issued to the Board and Management

	2021	2020
Number of Shares Outstanding at beginning of the period	14,582	5,000
Restricted Shares Issued	14,000	11,250
Restricted Shares Vested	(5,415)	(1,668)
Number of Restricted Shares Outstanding at end of the period	23,167	14,582
Compensation expense	$153,636	$74,338

Common Shareholders Cash Distributions – Nine-Month Periods ended September 30, 2021 and 2020

Board of Directors Authorized Date	Record Date	Per Share Cash Dividend to Common Shareholders	Total Dividends Paid	President Ownership at time of Distribution*
August 25, 2021	August 31, 2021	$    0.325	$    116,307	39.0%
February 26, 2021	March 15, 2021	$    0.325	$    114,373	39.0%
June 23, 2020	July 2, 2020	$    0.35	$    105,084	42.8%
January 31, 2020	February 28, 2020	$    0.35	$    105,101	42.8%

* Our president and chairman waived his right to receive a dividend for all of these periods mentioned above.

Operating Partnership Cash Distributions – Nine-Month Periods ended September 30, 2021 and 2020

Board of Directors Authorized Date	Record Date	Per Share Cash Dividend to Operating Partnership LP Holders	Total Dividends Paid
August 25, 2021	August 31, 2021	$    0.325	$    121,801
February 26, 2021	March 15, 2021	$    0.325	$    116,470
June 23, 2020	July 2, 2020	$    0.35	$    122,470
January 31, 2020	February 28, 2020	$    0.35	$    122,469

While we are under no obligation to do so, we expect to declare and pay dividends to our stockholders. The issuance of a dividend will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. We have not established a minimum dividend, and our charter does not require that we issue dividends to our stockholders other than as necessary to meet IRS REIT qualification standards.