GENERATION INCOME PROPERTIES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

We make statements in this section that are forward-looking statements within
the meaning of the federal securities laws. For a complete discussion of
forward-looking statements, see the section above entitled "Cautionary Note
Regarding Forward-Looking Statements and Summary Risk Factors." Certain risk
factors may cause our actual results, performance or achievements to differ
materially from those expressed or implied by the following discussion. For a
discussion of such risk factors, see Item 1A, "Risk Factors."

Overview

We are an internally managed, Maryland corporation focused on acquiring retail,
office and industrial real estate located in major U.S. markets. We initiated
operations during the year ended December 31, 2015 and we intend to elect to be
taxed as a REIT for federal income tax purposes commencing with our taxable year
ending December 31, 2021.

Public offering and Nasdaq listing

In September 2021, the Company closed an underwritten public offering of
1,665,000 units at a price to the public of $10 per unit generating net proceeds
of $13.8 million including issuance costs incurred during the years ended
December 31, 2021 and 2020. Each unit consisted of one share of common stock and
one warrant to purchase one share of common stock at an exercise price equal to
$10 per share. The common stock and warrants included in the units (which were
separated into one share of common stock and one warrant) currently trade on the
Nasdaq Capital Market ("Nasdaq") under the symbols "GIPR" and "GIPRW,"
respectively.

Our investments

Here are the characteristics of our properties at December 31, 2021
(excluding our Tenants in Co-ownership):

• Creditworthy tenants. Around 80% of the annualized income of our portfolio

rent from December 31, 2021 (excluding our co-ownership tenant)

came from tenants who have (or whose parent company has) a

investment grade credit rating from a recognized rating agency

“BBB-” or better. Our largest tenants are General Services

Administration, PRA Group and Pratt & Whitneyeveryone with a ‘BB+’

credit rating or better than S&P Global Ratings and contributed

approximately 65% ​​of the annualized base rent of our portfolio in December

         31, 2021.


  • 100% Occupied. Our portfolio is 100% leased and occupied.

• Contractual growth in rents. Approximately 77% of the leases in our current portfolio

portfolio (based on an annualized rent at December 31, 2021) to expect

increases in the contractual base rent in future years from the current

term or during extension periods of the lease.

• Average effective annual rent per square foot. Average annual workforce

the rental per square foot is $17.12. We generally depreciate all properties

linearly over a period of 26 to 50 years.


Given the nature of our leases, our tenants either pay the real estate taxes
directly or reimburse us for such costs. We believe all of our properties are
adequately covered by insurance.



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The table below provides an overview of the nine properties in our portfolio at December 31, 2021Unless otherwise stated:

                                                                 S&P                                                    Tenant                                          Base
                            Rentable                            Credit      Lease       Remaining       Options       Contractual   Annualized       Annualized         Rent
 Property      Property      Square                             Rating    Expiration      Term          (Number          Rent        Base Rent       Base Rent        as a % of
   Type        Location       Feet            Tenant(s)          (1)         Date        (Years)        x Years)      Escalations       (2)           Sq. Ft.           Total
              Washington,                      7-Eleven
Retail            DC           3,000         Corporation          A       3/31/2026          4.2         2 x 5            Yes       $   129,804     $      43.27             3.4 %

Retail Tampa, Florida 2,200 Starbucks BBB+ 02/29/2028 6.2 4×5

            Yes       $   182,500     $      82.95             4.8 %
              Huntsville,                  Pratt & Whitney
Industrial        AL          59,091       Automation, Inc.       A-      1/31/2029          7.1         2 x 5            Yes       $   684,996     $      11.59            18.1 %
                                           General Services
                                            Administration
                                            of the United
               Norfolk,                   States of America
Office            VA          49,902             and             AA+      9/17/2028          6.7              -           No        $   882,476     $      17.68            23.3 %
               Norfolk,                      Maersk Line,
                  VA          22,247           Limited           BBB      12/31/2022         1.0         1 x 5            Yes       $   386,795     $      17.39            10.2 %
               Norfolk,                     PRA Holdings,
Office            VA          34,847           Inc.(3)           BB+      8/31/2027          5.7         1 x 5            Yes       $   742,850     $      21.32            19.6 %
Retail         Tampa, FL       3,500       Sherwin-Williams      BBB      7/31/2028          6.6         5 x 5            Yes       $   120,750     $      34.50             3.2 %
                                           General Services
                                            Administration
                                            of the United
Office        Manteo, NC       7,543      States of America      AA+      2/20/2029          7.1         1 x 5            Yes       $   161,346     $      21.39             4.3 %
                                          Irby Construction
Office         Tampa, FL       7,826           Company           BBB-     12/31/2024         3.0         2 x 5            Yes       $   148,200     $      18.94             3.9 %
                 Grand
               Junction,
Retail            CO          30,701           BestBuy           BBB+     3/31/2027          5.2         1 x 5            Yes       $   353,061     $      11.50             9.3 %

Total                         220,857                                                                                               $ 3,792,778

Tenancy in
Common
Ownership
Retail         Rockford,                       La-Z-Boy
                  IL          15,288         Corporation          NR      10/31/2027         5.8         4 x 5            Yes       $   360,100     $      23.55



(1) Lessee, or parent lessee, rated entity.

(2) Annualized cash rental income in place at December 31, 2021. Our leases are

do not include tenant concessions or abatements.

(3) The lessee has the right to terminate the lease on August 31, 2024 subject to

certain conditions.

Acquisitions of property after December 31, 2021

Since December 31, 2021we have purchased the following properties as of March 9, 2022:

• A single-tenant medical building (approximately 10,900 square feet)

leased to Fresenius Medical Care (NYSE: FMS) and located Chicago,

Illinois acquired in January 2022.


      •  A single tenant retail stand-alone property (approximately 2,600 square
         feet) located in Tampa, Florida with a corporate Starbucks Coffee
         (NASDAQ: SBUX) as the tenant acquired in January 2022.

• A leasehold interest in a land lease and the corresponding assignment of a

         single tenant retail stand-alone property (approximately 88,700 square
         feet) located in Tucson, Arizona with a Kohl's (NASDAQ: KSS) as the
         tenant acquired in March 2022.

Property disposals in 2021

On August 31, 2021 we sold our 15,100-square-foot, single tenant Walgreens in
Cocoa, Florida purchased in September 2019 for total net consideration of
approximately $5.2 million. The acquisition was initially funded with a
Redeemable Non-Controlling Interest contribution to one of our subsidiaries of
$1.2 million and by debt financing of approximately $3.4 million. We also repaid
the Redeemable Non-Controlling Interest of $1.2 million and the $3.4 million
debt from the sales proceeds.





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Operating results

Our management team's evaluation of operating results includes an assessment of
our ability to generate cash flow necessary to pay operating expenses, general
and administrative expenses, debt service, and to fund dividends to our
stockholders. As a result, our management team's assessment of operating results
gives less emphasis to the effects of unrealized gains and losses and other
non-cash charges, such as depreciation and amortization and impairment charges,
which may cause fluctuations in net income for comparable periods but have no
impact on cash flows. Our management team's evaluation of our potential for
generating cash flow includes on-going assessments of our existing portfolio of
properties, our non-stabilized properties, long-term sustainability of our real
estate portfolio, our future operating cash flow from anticipated acquisitions,
and the proceeds from the sales of our real estate assets.

In addition, our management team evaluates our portfolio and individual
properties' results of operations with a primary focus on increasing and
enhancing the value, quality and quantity of properties in our real estate
holdings. Our management team focuses its efforts on improving underperforming
assets through re-leasing efforts, including negotiation of lease renewals and
rental rates. Properties that have reached goals in occupancy and rental rates
are evaluated for potential added value appreciation and, if lacking such
potential, are sold with the equity reinvested in properties that have better
potential without foregoing cash flow. Our ability to increase assets under
management is affected by our ability to raise borrowings and/or capital,
coupled with our ability to identify appropriate investments.

Our results of operations for the years ended December 31, 2021 and 2020 are not
indicative of those expected in future periods, as we expect that rental income,
interest expense, rental operating expense, general and administrative expense,
and depreciation and amortization will significantly change in future periods as
a result of growth through future acquisitions of real estate related
investments.

Results of operations for the years ended December 31, 2021 and 2020

Income

For the year ended December 31, 2021, total revenue from operations were
$3,900 thousand as compared to $3,520 thousand for the year ended period ended
December 31, 2020. Revenue increased approximately $380 thousand due to three
additional properties generating revenue for the twelve-months ended December
31, 2021 that were purchased in February 2021, April 2021 and December 2021 as
well as $45 thousand in commission revenue offset in part by the sale of a
property in August 2021.

Functionnary costs

For the year ended December 31, 2021 and 2020, we incurred total expenses of
$5,548 thousand and $4,865 thousand, respectively which included total general,
administrative and organizational expenses ("GAO") of $1,111 thousand for 2021
and $818 thousand for 2020. The $293 thousand increase in GAO expenses is due to
increased legal fees of $139 thousand, insurance of $54 thousand, executive
recruiting fees of $55 thousand, rent expense of $15 thousand, and a net
increase in other expenses of $88 thousand offset in part by a decrease in audit
and audit-related fees of approximately $58 thousand.

For the year ended December 31, 2021 and 2020, we incurred construction expenditures of
$768,000 and $711,000, respectively. the $57,000 the increase is mainly explained by the increase in the property and casualty insurance expense $25,000and increased maintenance costs $30,000 and other costs of $38,000
partly offset by a reduction in the management costs of the real estate assets of $36,000.

For the year ended December 31, 2021 and 2020, we incurred depreciation and
amortization expense of $1,508 thousand and $1,453 thousand, respectively. The
$55 thousand increase is due to the additional properties acquired offset in
part by the sale of a property in August 2021.

For the year ended December 31, 2021 and 2020, we incurred interest expense and
amortization of debt issuance costs of $1,311 thousand and $1,400 thousand
respectively. The $89 thousand decrease in interest expense incurred is the
result of $3.4 million of loans in which the interest rates changed based on 30
day LIBOR, the payoff of a $3.4 million loan in conjunction with the sale of a
property in August 2021, the interest rate reduction for the $7.8 million loan
and the $4.9 million loan from 4.25% to 3.50% in March 2021, and the payoff of
the $1.1 million related party loan, offset in part by interest on the debt used
to acquire new properties.

For the year ended December 31, 2021 and 2020, we incurred compensation costs of
$850,000 and $483,000 respectively. the $367,000 the increase reflects the hiring of additional staff, an increase in stock-based compensation of $212,000and bonuses of $36,000.

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Gain on disposal of property

On August 31, 2021 we sold our 15,100-square-foot property, occupied by a single
tenant Walgreens, in Cocoa, Florida purchased in September 2019 for total net
consideration of approximately $5.2 million and recognized a gain on the sale of
$923 thousand.

Income Tax Benefit

We did not record an income tax benefit for the for the year ended December 31,
2021 or 2020 because we have been in a net loss situation since inception and
have recorded a valuation allowance to offset any tax benefits generated by the
operating losses.

Net Loss

For the year ended December 31, 2021 and 2020, we generated a net loss of
$712,000 and a net loss of $1,345,000respectively.

Income on investment in joint tenancy

For the year ended December 31, 2021, our share of earnings on our investment
generated income of $12 thousand as we purchased a property in 2021 in which we
own 36.8% interest. The Company accounts for the property under the equity
method.

Net income attributable to non-controlling interests

For the year ended December 31, 2021, we allocated net income attributable to
non-controlling interest of $530 thousand as compared to $487 thousand for the
year ended December 31, 2020. The increase is attributable to the distributions
provided to the additional redeemable non-controlling interests that were used
to finance the acquisition of properties in 2021.

Net loss attributable to shareholders

For the year ended December 31, 2021 and 2020, we generated a net loss attributable to our shareholders of $1,242,000 and $1,832,000respectively.

Cash and capital resources

We require capital to fund our investment activities and operating expenses. Our
capital sources may include net proceeds from offerings of our equity
securities, cash flow from operations and borrowings under credit facilities. As
of December 31, 2021, we had total cash (unrestricted and restricted) of
approximately $10.6 million, properties with a cost basis of $44.0 million and
outstanding debt of approximately $29.0 million.

In September 2021, we closed an underwritten public offering of 1,665,000 units
at a price to the public of $10 per unit generating net proceeds of $13.8
million including issuance costs incurred during the years ended December 31,
2021 and 2020. On October 26, 2021, the Operating Partnership entered into a
Commitment Letter with American Momentum Bank (the "Lender") for a $25 million
master commitment credit facility (the "Facility") to be used for the
acquisition of income producing real estate properties. Borrowings under the
Facility will accrue interest at a variable rate equal to the Wall Street
Journal Prime rate, adjusted monthly, subject to a floor interest rate of 3.25%
per annum.

We currently obtain the capital required to invest in and manage a diversified
portfolio of commercial net lease real estate investments and conduct our
operations from the proceeds of equity offerings, debt financings, preferred
minority interest obtained from third parties and from any undistributed funds
from our operations. We anticipate that our current cash on hand and
availability under the Facility combined with the revenue generated from
investment properties and proceeds from debt arrangements will provide
sufficient liquidity to meet future funding commitments for at least the next 12
months.

As of December 31, 2021 and 2020, we had total current liabilities (excluding
the current portion of the acquired lease intangible liability) which consists
of accounts payable, accrued expenses, insurance payable of $370 thousand and
$565 thousand, respectively. As of December 31, 2021, current mortgage loan
payments due within 12 months total $0.6 million. Outstanding indebtedness
consisted of the following as of December 31, 2021 and 2020:



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                                                                              As of             As of
                                                                          December 31,      December 31,
                                                                              2021              2020
                                       Interest Rate      Maturity Date
Promissory note issued for
$1,286,664 by a financial
institution, interest only
payments due monthly of
approximately $3,800 until
December 2023. Note was originally
issued on January 15, 2015 and
assumed and modified on November      3.72% fixed rate
30, 2020 and can be prepaid at any    after using SWAP
time without penalty. Secured by      whereas the loan
out Tampa Sherwin-Williams             is LIBOR plus
property.                                  2.75%            8/10/2028         1,286,664         1,286,664
Promissory note issued for
$1,275,000 by a financial
institution. Note was issued on
February 4, 2021 and can be
prepaid at any time without             Wall Street
penalty. Secured by our              Journal Prime Rate
GSA-Manteo, North Carolina            with minimum of
property.                                  3.25%            2/4/2023          1,275,000                 -
Promissory note issued for              Wall Street
$850,000 by a financial              Journal Prime Rate

institution. The note was issued at minus 0.5% with
April 21, 2021 and can be prepaid minimum 3.0% at any time without penalty.

            for first 24
Secured by our Irby - Plant City,         months;
FL property.                         thereafter, weekly
                                      average yield on
                                       U.S. Treasury
                                         Securities
                                       adjusted to a
                                     constant maturity
                                     of three tears on
                                      April 21, 2023,
                                     plus 2.75% with a
                                      minimum of 3.25%     12/31/2024           850,000                 -
Promissory note issued for
$2,350,000 by a financial
institution. Note was issued on
December 28, 2021 and can be            Wall Street

prepaid at any time without Journal Prime Rate penalty. Secured by our Best Buy – with a minimum of
Grand Junction, CO goods.

               3.25%           12/28/2023         2,350,000                 -
Promissory note issued for
$8,260,000 by a financial
institution, interest and
principal payments due monthly of
approximately $41,500. Note was
issued on September 30, 2019 and
can be prepaid at any time without
penalty. Secured by our GSA/Maersk
- Norfolk, Virginia property. The
interest rate was reduced in March
2021 from 4.25% to 3.5%.                   3.50%            9/30/2024         7,805,524         8,022,271
Promissory note issued for
$5,216,749 by a financial
institution, interest and
principal payments due monthly of
approximately $27,400. Note was
originally issued on October 23,
2017 and modified on September 30,
2019 and can be prepaid at any
time without penalty. Secured by
our PRA - Norfolk, Virginia
property. The interest rate was
reduced in March 2021 from 4.25%
to 3.5%.                                   3.50%           10/23/2024         4,889,670         5,041,935
Promissory note issued for
$1,900,000 to a Clearlake
Preferred Member, secured by all
of the personal and fixture
property of the Operating
Partnership, interest payments due
monthly. Note was issued on
December 16, 2019 and was prepaid
without penalty on September 30,
2021.                                      10.00%          12/16/2021                 -         1,100,000
Promissory note issued for
$11,287,500 by a financial
institution, interest only payment
is approximately $39,000 and
starting April 6, 2021, interest
and principal payments due monthly
of approximately $55,000. Note was
issued on February 11, 2020.
Secured by our Washington, DC,
Tampa, FL and Huntsville, AL
properties. It cannot be prepaid
without a penalty.                         4.17%            3/6/2030         11,150,130        11,287,500
Promissory note issued for
$3,407,391 by a financial
institution. Note was issued on
September 11, 2019 and prepaid
without penalty upon the sale of        30-day LIBOR
the Walgreen-Cocoa, Florida           adjusted monthly

property on August 31, 2021 which plus 225 base secured the note.

                     points           9/11/2021     $           -     $   3,407,391
Less: debt issuance costs, net                                                 (637,693 )        (689,190 )
                                                                          $  28,969,295     $  29,456,571






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The Company has amortized the costs of issuing loans during the twelve months ended
December 31, 2021 and 2020 to interest charges of $120,000 and
$135,000, respectively. The Company has paid the cost of issuing loans for the year ended December 31, 2021 and 2020 from $70,000 and $589,000respectively.

As of December 31, 2021, we had three promissory notes totaling approximately
$23.8 million require Debt Service Coverage Ratios (also known as "DSCR") of
1.25:1.0, one promissory note totaling $1.3 million require DSCR of 1.20:1.0,
one promissory note totaling $0.9 million require DSCR of 1.15:1.0, one
promissory note totaling $1.3 million require DSCR of 1.30:1.0, and one
promissory note totaling $2.4 million require DSCR of 1:50:1.0. We were in
compliance with all covenants as of December 31, 2021. As of March 9, 2022, we
added three new promissory notes with one totaling approximately $1.6 million
requiring DSCR of 1.50:1.0, one new promissory note totaling $1.1 million with
no required DSCR, and one totaling approximately $3.7 million requiring DSCR of
1.50:1.0.

As of December 31, 2021, the Company's President has personally guaranteed the
repayment of the $11.1 million due under the DC/Tampa/Huntsville loan, the
$1.3 million loan secured by our Tampa Sherwin Williams property, the
$0.9 million loan secured by our Irby property, the $1.3 million loan secured by
our GSA Manteo NC property and the $2.4 million loan secured by our Best Buy
Grand Junction, CO property. The aggregate guaranteed principal amount of these
loans total approximately $16.9 million. The Company's President has also
provided a guaranty of the Borrower's nonrecourse carveout liabilities and
obligations in favor of the lender for the Norfolk, Virginia property loans (the
"Bayport loans"), with an aggregate principal amount of approximately
$12.7 million.

On October 26, 2021, the Operating Partnership entered into a Commitment Letter
with the Lender for the $25 million Facility to be used for the acquisition of
income producing real estate properties. Borrowings under the Facility will
accrue interest at a variable rate equal to the Wall Street Journal Prime rate,
adjusted monthly, subject to a floor interest rate of 3.25% per annum. At each
loan closing under the Facility, the borrower shall pay the Lender a commitment
fee equal to 0.50% of the applicable loan amount. Each loan will have an
interest-only payment term for twenty-four months from the applicable loan
closing date and all interest and principal outstanding shall be due and payable
in full two years from the applicable loan closing date. Each loan will be
secured by the real estate property acquired and the associated rental income
and payment will be guaranteed by the Operating Partnership. David Sobelman, the
Company's President, will be required to execute a non-recourse guarantee in
connection with each loan that is subject to standard "bad-boy" carve out
provisions. Each loan agreement under the Facility will require the borrower to
maintain a debt service coverage ratio of not less than 1.50 to 1.00 over the
term of the loan and will contain customary affirmative covenants, negative
covenants and events of default. Should any event of default occur, the loan
commitments under the Facility may be terminated and any outstanding borrowings,
together with accrued interest, could be declared immediately due and
payable. All loans under the Facility must close by October 26, 2023. The
Facility is voidable at the option of the Lender in specified circumstances,
including a material adverse change in the Company's financial condition and
upon any changes in management of the Company that are unacceptable to the
Lender. As of December 31, 2021, we have borrowed approximately $2.4 million
under the Facility.

Required minimum principal payments on the Company’s debt at December 31, 2021 are the following:

                      As of
                  December 31,
                      2021
2022              $     580,740
2023                  4,240,446
2024                 12,981,450
2025                    251,011
2026                    261,675
2027 and beyond      11,291,666
                  $  29,606,988




The acquisition of the Manteo, NC property in February 2021, was funded with a
Redeemable Non-Controlling Interest contribution to one of our subsidiaries of
approximately $0.5 million and by debt financing of approximately $1.3 million.



The Company modified the Bayport loans in February 2021 for no fees and reduced
the associated interest rate from 4.25% to 3.5%. The Company determined that the
debt modification was not substantial under ASC 470-50.

The acquisition of the Plant City, FL property in April 2021, was funded with a
Redeemable Non-Controlling Interest contribution to one of our subsidiaries of
approximately $1.0 million and by debt financing of approximately $0.9 million.

The acquisition of the Rockford, IL Tenants in Common property in August 2021,
was funded with a Redeemable Non-Controlling Interest contribution to one of our
subsidiaries of $0.7 million.



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The acquisition of the Grand Junction, CO property in December 2021was funded by debt financing of approximately $2.4 million.



The primary objective of our financing strategy is to maintain financial
flexibility using retained cash flows, long-term debt and common and perpetual
preferred stock to finance our growth. We intend to have a lower-leveraged
portfolio over the long-term after we have acquired an initial substantial
portfolio of diversified investments. During the period when we are acquiring
our current portfolio, we will employ greater leverage on individual assets
(that will also result in greater leverage of the current portfolio) in order to
quickly build a diversified portfolio of assets.

Operating cash

Net cash used by operations was $174 thousand during the year ended December 31,
2021 compared with cash provided by operations of $257 thousand during the year
ended December 31, 2020.

Cash from investing activities

For the year ended December 31, 2021 net cash used in investing activities was
$3.9 million as compared to net cash used in investing activities of
$273 thousand for the year ended December 31, 2020. The change is due to the
purchase of $8.3 million in properties during the year offset in part by the
proceeds from the sale of our Walgreen-Cocoa, Florida property for $5.2 million
during the year ended December 31, 2021 versus a roofing project costing $196
thousand associated with our GSA/Maersk - Norfolk, Virginia building in the year
ended December 31, 2020.

Cash provided by financing activities

Net cash generated by financing activities was $13.6 million for the year ended
December 31, 2021 compared to net cash used in financing activities of
$260 thousand for the year ended December 31, 2020. The change is the result of
the proceeds from the sale of units in an underwritten offering of $14.4
million, issuance of redeemable non-controlling interests for $2.1 million and
mortgage loan borrowings of $4.5 million, offset in part by $560 thousand of
distributions paid to common shareholders and $493 thousand paid to redeemable
non-controlling interests as compared to 2020 activity that includes new
mortgage borrowings on three properties for $11.3 million which enabled the
company to reduce outstanding debt by $10.0 million, the payment of
$333 thousand of dividends to common shareholders, $589 thousand in debt
issuance costs and $487 thousand distribution to redeemable non-controlling
interests.

Future rent payment

The following table presents future minimum rental cash payments due to the
Company over the next five calendar years and thereafter as of December 31,
2021:

                Future
               Minimum
                 Rent
               Payments
2022         $  3,796,000
2023            3,427,000
2024            3,432,000
2025            3,296,000
2026            3,211,000
Thereafter      6,298,000
             $ 23,460,000



Off-balance sheet arrangements

We do not have any material off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.

CRITICAL ACCOUNTING METHODS

As a company primarily involved in owning income generating real estate assets,
management considers the following accounting policies critical as they reflect
our more significant judgments and estimates used in the preparation of our
financial statements and



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because they are important for understanding and evaluating our reported
financial results. These judgments affect the reported amounts of assets and
liabilities and our disclosure of contingent assets and liabilities as of the
dates of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. With different estimates or assumptions,
materially different amounts could be reported in our financial statements.
Additionally, other companies may utilize different estimates that may impact
the comparability of our results of operations to those of companies in similar
businesses.

Real Estate Assets and Lease Intangibles. Land, buildings and improvements are
recorded at cost, including tenant improvements and lease acquisition costs
(including leasing commissions, space planning fees, and legal fees). We
capitalize any expenditure that replaces, improves, or otherwise extends the
economic life of an asset, while ordinary repairs and maintenance are expensed
as incurred. We allocate the purchase price of acquired properties between the
acquired tangible assets and liabilities (consisting of land, building, tenant
improvements, land purchase options, and long-term debt) and identified
intangible assets and liabilities (including the value of above-market and
below-market leases, the value of in-place leases, unamortized lease origination
costs and tenant relationships), based in each case on their respective fair
values.

We allocate the purchase price to tangible assets of an acquired property based
on the estimated fair values of those tangible assets assuming the building was
vacant. Estimates of fair value for land, building and building improvements are
based on many factors including, but not limited to, comparisons to other
properties sold in the same geographic area and independent third party
valuations. We also consider information obtained about each property as a
result of its pre-acquisition due diligence, marketing and leasing activities in
estimating the fair values of the tangible and intangible assets and liabilities
acquired.

The value allocated to acquired lease intangibles is based on management's
evaluation of the specific characteristics of each tenant's lease.
Characteristics considered by management in allocating these values include the
nature and extent of the existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the remaining term of the
lease and the tenant's credit quality, among other factors.

The value allocable to the above-market or below-market market component of an
acquired in-place lease is determined based upon the present value (using a
market discount rate) of the difference between (i) the contractual rents to be
paid pursuant to the lease over its remaining term, and (ii) management's
estimate of rents that would be paid using fair market rates over the remaining
term of the lease.

The value of in-place leases and unamortized lease origination costs are
amortized to expense over the remaining term of the respective leases, which
range from less than a year to ten years. The amount allocated to acquire
in-place leases is determined based on management's assessment of lost revenue
and costs incurred for the period required to lease the "assumed vacant"
property to the occupancy level when purchased. The amount allocated to
unamortized lease origination costs is determined by what we would have paid to
a third party to secure a new tenant reduced by the expired term of the
respective lease.

Non-GAAP Financial Measures

Our reported results are presented in accordance with GAAP. We also disclose
funds from operations (FFO) and adjusted funds from operations (AFFO) both of
which are non-GAAP financial measures. We believe these two non-GAAP financial
measures are useful to investors because they are widely accepted industry
measures used by analysts and investors to compare the operating performance of
REITs.

FFO and AFFO do not represent cash generated from operating activities and are
not necessarily indicative of cash available to fund cash requirements;
accordingly, they should not be considered alternatives to net income as a
performance measure or cash flows from operations as reported on our statement
of cash flows as a liquidity measure and should be considered in addition to,
and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts or
NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude
extraordinary items (as defined by GAAP), net gain or loss from sales of
depreciable real estate assets, impairment write-downs associated with
depreciable real estate assets, and real estate related depreciation and
amortization, including the pro rata share of such adjustments of unconsolidated
subsidiaries. We then adjust FFO for amortization of deferred financing costs,
non-cash stock compensation, public company consulting fees, and non-recurring
litigation expenses and settlements to calculate Core Funds From Operations, or
Core FFO. We use FFO and Core FFO as measures of our performance when we
formulate corporate goals.

To derive AFFO, we modify the NAREIT computation of FFO to include other
adjustments to GAAP net income related to non-cash revenues and expenses, such
as amortization of deferred financing costs, amortization of capitalized lease
incentives, and above- and below-market lease related intangibles. We then
adjust AFFO for noncash stock compensation, public company consulting fees, and



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non-recurring litigation expenses and settlements to calculate Core Adjusted
Funds From Operations, or Core AFFO. We use AFFO and Core AFFO as measures of
our performance when we formulate corporate goals.

FFO is used by management, investors, and analysts to facilitate meaningful
comparisons of operating performance between periods and among our peers
primarily because it excludes the effect of real estate depreciation and
amortization and net gains on sales, which are based on historical costs and
implicitly assume that the value of real estate diminishes predictably over
time, rather than fluctuating based on existing market conditions. We believe
that AFFO is an additional useful supplemental measure for investors to consider
because it will help them to better assess our operating performance without the
distortions created by other non-cash revenues or expenses. FFO and AFFO may not
be comparable to similarly titled measures employed by other companies. We
believe that Core FFO and Core AFFO are useful measures for management and
investors because they further remove the effect of noncash expenses and certain
other expenses that are not directly related to real estate operations.

Because FFO excludes depreciation and amortization, gains and losses from
property dispositions that are available for distribution to stockholders and
extraordinary items, it provides a performance measure that, when compared year
over year, reflects the impact to operations from trends in occupancy rates,
rental rates, operating costs, development activities, general and
administrative expenses and interest costs, providing a perspective not
immediately apparent from net income. In addition, our management team believes
that FFO provides useful information to the investment community about our
financial performance when compared to other REITs since FFO is generally
recognized as the industry standard for reporting the operations of REITs.
However, FFO should not be viewed as an alternative measure of our operating
performance since it does not reflect either depreciation and amortization costs
or the level of capital expenditures and leasing costs necessary to maintain the
operating performance of our properties which are significant economic costs and
could materially impact our results from operations. Nor does it reflect
distributions paid to redeemable non-controlling interests (See Note 6 of our
Consolidated Financial Statements included herein).

The following tables reconcile net income (loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO and Core AFFO:

                                             Twelve Months Ended Dec 31,
                                                2021              2020

Net Loss                                   $      (712,433 )  $ (1,344,615 )
Gain on disposal of property                      (923,178 )             -
Depreciation and amortization                    1,508,340       1,452,556
Funds From Operations                             (127,271 )       107,941

Amortization of deferred financing costs           120,343         134,898
Public company consulting fees                           -          60,000
Non-cash stock compensation                        314,122         101,645
Adjustments From Operations                        434,465         296,543

Core Funds From Operations                 $       307,194    $    404,484

Net Loss                                   $      (712,433 )  $ (1,344,615 )
Gain on disposal of property                      (923,178 )             -
Depreciation and amortization                    1,508,340       1,452,556
Amortization of deferred financing costs           120,343         134,898
Below-market lease related intangibles            (147,228 )      (109,496 )
Adjustments From Operation                         558,277       1,477,958
Adjusted Funds From Operations                    (154,156 )       133,343

Non-cash stock compensation                        314,122         101,645
Public company consulting fees                           -          60,000

Adjustments From Operations                        314,122         161,645

Adjusted Base Funds from Operations $159,966 $294,988




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Jumpstart Our Business Startups Act (“JOBS Act”)

In April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted
into law. The JOBS Act provides, among other things, exemptions for emerging
growth companies from certain financial disclosure and governance requirements
for up to five years.

In general, under the JOBS Act a company is an emerging growth company if its
initial public offering ("IPO") of common equity securities was effected after
December 8, 2011 and the company had less than $1.07 billion of total annual
gross revenues during its last completed fiscal year. We currently qualify as an
emerging growth company, but will no longer qualify after the earliest of:

• the last day of the financial year in which we have the annual gross total

          revenues of $1.07 billion or more;



     •    the last day of the fiscal year following the fifth anniversary of the

first sale of our common equity securities under a registered offer

          under the Securities Act;


• the date on which we issue more than $1 billion in non-convertible debt

          securities during a previous three-year period; or


• the date we become an accelerated large filer, which is generally

          a company with a public float of at least $700 million (Exchange Act
          Rule 12b-2).

As an emerging growth company, we are eligible to include the required audited financial statements for only two fiscal years and limited information on executive compensation.

Consistent with the relief provided to emerging growth companies under the JOBS Act, our independent registered public accounting firm is not required to file an attestation report on our internal controls over financial reporting and is exempt from the mandatory auditor rotation rules.

In addition, Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standard. The decision by companies to "opt out" of
the extended transition period for complying with new or revised accounting
standards is irrevocable. We are not electing to opt out of the JOBS Act
extended accounting transition period. We intend to take advantage of the
extended transition period provided under the JOBS Act for complying with new or
revised accounting standards.

To the extent we take advantage of the reduced disclosure requirements afforded
by the JOBS Act, investors may be less likely to invest in us or may view our
shares as a riskier investment than a similarly situated company that does not
take advantage of these provisions.

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