MANUFACTURED HOUSING PROPERTIES INC. [MHPC] Filings

10-Q 1 mhpc-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 000-51229

MANUFACTURED HOUSING PROPERTIES INC.

(Exact Name of Registrant as Specified in its Charter)


Nevada	51-0482104
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
136 Main Street Pineville, NC	28134
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (908) 273-1702

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 10, 2023, there were 12,493,012 common shares of the registrant issued and outstanding.

Manufactured Housing Properties Inc.

Quarterly Report on Form 10-Q

Period Ended September 30, 2023

TABLE OF CONTENTS


	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	32
Item 4.	Controls and Procedures.	32

	PART II OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MANUFACTURED HOUSING PROPERTIES INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		Page

Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022		2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)		3
Condensed Consolidated Statements of Changes in Deficit for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)		6
Notes to Unaudited Condensed Consolidated Financial Statements		8

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022


	September 30, 2023			December 31, 2022
Assets	(unaudited)
Investment Property
Land	$	37,403,653		$	30,263,687
Site and Land Improvements		49,470,418			44,035,649
Buildings and Improvements		31,546,780			23,229,657
Construction in Process		2,395,765			2,541,376
Total Investment Property		120,816,616			100,070,369
Accumulated Depreciation		(11,564,934	)		(8,225,976	)
Net Investment Property		109,251,682			91,844,393
Cash and Cash Equivalents		1,966,633			5,090,369
Restricted Cash		5,238,797			5,315,246
Accounts Receivable		342,573			368,081
Other Assets (Net of Amortization)		1,333,796			975,064
TOTAL ASSETS	$	118,133,481		$	103,593,153

Liabilities
Accounts Payable	$	990,981		$	755,124
Notes Payable, net of $3,656,874 and $3,666,214 debt discount, respectively		86,947,646			75,883,866
Lines of Credit – Variable Interest Entities, net of $201,844 and $160,372 debt discount, respectively		7,344,733			6,208,947
Lines of Credit – Related Party		2,000,000			2,000,000
Accrued Liabilities including amounts due to related parties of $1,382,500 and $1,154,166, respectively		3,189,993			2,054,438
Tenant Security and Home Sale Deposits		1,059,403			879,676
Series C Redeemable Preferred Stock, par value $0.01 per share; 47,000 shares authorized; 26,929 and 21,584 shares issued and outstanding and redemption value $26,928,919 and $21,584,002 as of September 30, 2023 and December 31, 2022, respectively		25,443,409			20,177,187
Total Liabilities		126,976,165			107,959,238

Commitments and Contingencies (See note 6)

Redeemable Preferred Stock – subject to redemption
Series A Cumulative Redeemable Convertible Preferred Stock, par value $0.01 per share; 4,000,000 shares authorized; 1,826,000 shares issued and outstanding and redemption value $6,847,500 as of September 30, 2023 and December 31, 2022		6,450,197			6,107,916
Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share; 1,000,000 shares authorized; 747,951 shares issued and outstanding and redemption value $11,219,265 as of September 30, 2023 and December 31, 2022		9,667,030			9,122,218
Series D Cumulative Redeemable Preferred Stock, par value $0.01 per share; 75,000 shares authorized; 3,143 and 0 shares issued and outstanding and redemption value $3,146,831 and $0 as of September 30, 2023 and December 31, 2022, respectively		2,846,060			—

Deficit
Common Stock, par value $0.01 per share; 200,000,000 shares authorized; 12,493,012 shares are issued and outstanding as of September 30, 2023 and December 31, 2022		124,930			124,930
Additional Paid in Capital		(6,848,712	)		(5,428,984	)
Accumulated Deficit		(18,555,748	)		(12,521,376	)
Total Manufactured Housing Properties Inc. Deficit		(25,279,530	)		(17,825,430	)
Non-controlling interest in Variable Interest Entities		(2,526,441	)		(1,770,789	)
Total Deficit		(27,805,971	)		(19,596,219	)
TOTAL LIABILITIES AND DEFICIT	$	118,133,481		$	103,593,153

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue
Rental and related income	$	4,564,273		$	3,697,558		$	12,934,176		$	10,021,357
Gross Revenues from Home Sales		137,900			18,570			449,000			121,164
Total revenues		4,702,173			3,716,128			13,383,176			10,142,521

Community operating expenses
Repair and maintenance		531,158			287,686			1,154,804			803,505
Real estate taxes		212,353			186,358			624,848			584,280
Utilities		334,817			259,758			920,183			735,638
Insurance		121,608			87,044			345,034			226,341
General and administrative expense		661,822			510,036			2,056,537			1,291,276
Total community operating expenses		1,861,758			1,330,882			5,101,406			3,641,040

Corporate payroll and overhead		1,487,110			1,519,271			4,542,780			3,683,267
Depreciation and amortization expense		1,174,457			898,963			3,375,561			2,477,642
Interest expense		2,366,051			1,506,290			6,712,375			3,843,031
Refinancing costs		—			3,604,671			—			3,620,422
Cost of home sales		88,777			22,676			351,078			177,410
Total expenses		6,978,153			8,882,753			20,083,200			17,442,812
Other income		—			500			—			500
Net loss before provision for income taxes		(2,275,980	)		(5,166,125	)		(6,700,024	)		(7,299,791	)
Provision for income taxes		—			—			—			—
Net loss	$	(2,275,980	)	$	(5,166,125	)	$	(6,700,024	)	$	(7,299,791	)

Net loss attributable to non-controlling interest variable interest entities		(220,015	)		(376,105	)		(666,264	)		(786,590	)
Net loss attributable to Manufactured Housing Properties, Inc.		(2,055,965	)		(4,790,020	)		(6,033,760	)		(6,513,201	)
Preferred stock dividends and put option value accretion
Series A preferred dividends		86,700			94,178			269,633			282,778
Series A preferred put option value accretion		114,031			117,726			342,281			353,472
Series B preferred dividends		149,665			151,785			448,995			455,355
Series B preferred put option value accretion		181,604			159,472			544,812			527,980
Series D preferred dividends		26,924			—			28,057			—
Series D preferred put option value accretion		3,749			—			4,056			—
Total preferred stock dividends and put option value accretion		562,673			523,161			1,637,834			1,619,585
Net loss attributable to common stockholders	$	(2,618,638	)	$	(5,313,181	)	$	(7,671,594	)	$	(8,132,786	)

Weighted average shares - basic and fully diluted		12,916,854			12,812,232			12,916,854			12,779,543

Net loss per share – basic and fully diluted	$	(0.20	)	$	(0.41	)	$	(0.59	)	$	(0.64	)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)


	COMMON STOCK				ADDITIONAL PAID IN			ACCUMULATED			TOTAL MANUFACTURED HOUSING PROPERTIES			NON CONTROLLING
	SHARES		PAR VALUE		CAPITAL			DEFICIT			INC.			INTEREST			DEFICIT
Balance at January 1, 2022		12,403,680	$	124,037	$	(3,160,712	)	$	(4,672,537	)	$	(7,709,212	)	$	(977,513	)	$	(8,686,725	)
Stock option expense		—		—		49,760			—			49,760			—			49,760
Preferred shares Series A dividends		—		—		(94,300	)		—			(94,300	)		—			(94,300	)
Preferred shares Series A put option value accretion		—		—		(117,871	)		—			(117,871	)		—			(117,871	)
Preferred shares Series B dividends		—		—		(151,785	)		—			(151,875	)		—			(151,875	)
Preferred shares Series B put option value accretion		—		—		(184,254	)		—			(184,254	)		—			(184,254	)
Distributions from VIE		—		—		—			—			—			(30,000	)		(30,000	)
Net loss		—		—		—			(630,120	)		(630,120	)		(159,570	)		(789,690	)
Balance at March 31, 2022		12,403,680	$	124,037	$	(3,659,162	)	$	(5,302,657	)	$	(8,837,782	)	$	(1,167,083	)	$	(10,004,865	)

Stock option expense		—		—		28,062			—			28,062			—			28,062
Common Stock issuance exercise stock options		8,333		83		—			—			83			—			83
Preferred shares Series A dividends		—		—		(94,300	)		—			(94,300	)		—			(94,300	)
Preferred shares Series A put option value accretion		—		—		(117,875	)		—			(117,875	)		—			(117,875	)
Preferred shares Series B dividends		—		—		(151,785	)		—			(151,785	)		—			(151,785	)
Preferred shares Series B put option value accretion		—		—		(184,254	)		—			(184,254	)		—			(184,254	)
Distributions from VIE		—		—		—			—			—			(30,000	)		(30,000	)
Net Loss		—		—		—			(1,093,061	)		(1,093,061	)		(250,915	)		(1,343,976	)
Balance at June 30, 2022		12,412,013	$	124,120	$	(4,179,314	)	$	(6,395,718	)	$	(10,450,912	)	$	(1,447,998	)	$	(11,898,910	)

Stock option expense		—		—		28,062			—			28,062			—			28,062
Common Stock issuance exercise stock options		65,999		660		—						660						660
Preferred shares Series A dividends		—		—		(94,178	)		—			(94,178	)		—			(94,178	)
Preferred shares Series A put option value accretion		—		—		(117,726	)		—			(117,726	)		—			(117,726	)
Preferred shares Series B dividends		—		—		(151,785	)		—			(151,785	)		—			(151,785	)
Preferred shares Series B put option value accretion		—		—		(159,472	)		—			(159,472	)		—			(159,472	)
Distributions from VIE		—		—		—			—			—			(30,000	)		(30,000	)
Intercompany Transfer of Homes- Deemed Dividend		—		—		(278,138	)		—			(278,138	)		278,138			—
Joint Ventures Adjustment		—		—		—			(1,174	)		(1,174	)		1,174			—
Net Loss		—		—		—			(4,790,020	)		(4,790,020	)		(376,105	)		(5,166,125	)
Balance at September 30, 2022		12,478,012		124,780		(4,952,551	)		(11,186,912	)		(16,014,683	)		(1,574,791	)		(17,589,474	)

Balance at January 1, 2023		12,493,012	$	124,930	$	(5,428,985	)	$	(12,521,376	)	$	(17,825,430	)	$	(1,770,789	)	$	(19,596,219	)
Stock option expense		—		—		109,975			—			109,974			—			109,974
Preferred shares Series A dividends		—		—		(91,633	)		—			(91,633	)		—			(91,633	)
Preferred shares Series A put option value accretion		—		—		(114,125	)		—			(114,125	)		—			(114,125	)
Preferred shares Series B dividends		—		—		(149,665	)		—			(149,665	)		—			(149,665	)
Preferred shares Series B put option value accretion		—		—		(181,604	)		—			(181,604	)		—			(181,604	)
Distributions from VIE		—		—		—			(612	)		(612	)		(29,388	)		(30,000	)
Net Loss		—		—		—			(1,934,576	)		(1,934,576	)		(182,466	)		(2,117,042	)
Balance at March 31, 2023		12,493,012	$	124,930	$	(5,856,037	)	$	(14,456,564	)	$	(20,187,671	)	$	(1,982,643	)	$	(22,170,314	)


Stock option expense	—		—		116,358			—			116,358			—			116,358
Preferred shares Series A dividends	—		—		(91,300	)		—			(91,300	)		—			(91,300	)
Preferred shares Series A put option value accretion	—		—		(114,125	)		—			(114,125	)		—			(114,125	)
Preferred shares Series B dividends	—		—		(149,665	)		—			(149,665	)		—			(149,665	)
Preferred shares Series B put option value accretion	—		—		(181,604	)		—			(181,604	)		—			(181,604	)
Preferred shares Series D dividends	—		—		(1,132	)		—			(1,132	)		—			(1,132	)
Preferred shares Series D put option value accretion	—		—		(307	)		—			(307	)		—			(307	)
Distributions from VIE	—		—		—			—			—			(30,000	)		(30,000	)
Net Loss	—		—		—			(2,043,219	)		(2,043,219	)		(263,783	)		(2,307,002	)
Balance at June 30, 2023	12,493,012	$	124,930	$	(6,277,812	)	$	(16,499,783	)	$	(22,652,665	)	$	(2,276,426	)	$	(24,929,091	)

Stock option expense	—		—		(8,227	)		—			(8,227	)		—			(8,227	)
Preferred shares Series A dividends	—		—		(86,700	)		—			(86,700	)		—			(86,700	)
Preferred shares Series A put option value accretion	—		—		(114,031	)		—			(114,031	)		—			(114,031	)
Preferred shares Series B dividends	—		—		(149,665	)		—			(149,665	)		—			(149,665	)
Preferred shares Series B put option value accretion	—		—		(181,604	)		—			(181,604	)		—			(181,604	)
Preferred shares Series D dividends	—		—		(26,924	)		—			(26,924	)		—			(26,924	)
Preferred shares Series D put option value accretion	—		—		(3,749	)		—			(3,749	)		—			(3,749	)
Distributions from VIE	—		—		—			—			—			(30,000	)		(30,000	)
Net Loss	—		—		—			(2,055,965	)		(2,055,965	)		(220,015	)		(2,275,980	)
Balance at September 30, 2023	12,493,012	$	124,930	$	(6,848,712	)	$	(18,555,748	)	$	(25,279,530	)	$	(2,526,441	)	$	(27,805,971	)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)


	September 30, 2023			September 30, 2022
Cash Flows from Operating Activities:
Net Loss	$	(6,700,024	)	$	(7,299,791	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock option expense		218,106			105,884
Amortization of debt discount		1,016,116			481,545
Write off debt issuance costs recorded as debt discount		—			2,219,591
Write off acquisition and development pursuit costs		—			49,326
Prepayment penalty upon debt extinguishment		—			1,400,831
(Gain) Loss on Home Sales		(97,922	)		56,246
Depreciation and amortization		3,375,561			2,477,642
Changes in operating assets and liabilities:
Accounts receivable		25,508			(168,648	)
Other assets		154,202			413,731
Accounts payable		235,857			451,425
Tenant security deposits		94,001			158,766
Accrued liabilities		1,135,555			(348,401	)
Net Used in Operating Activities		(543,040	)		(1,853	)
Cash Flows from Investing Activities:
Capital improvements		(3,046,274	)		(1,872,803	)
Proceeds from sales of homes		449,000			121,164
Proceeds from home sale deposits		85,726			—
Purchases of investment properties		(6,528,479	)		(6,444,135	)
Purchase of intangible assets		(613,783	)		—
Net payment/reimbursement of pursuit costs		81,888			(291,742	)
Payment of acquisition costs		(161,716	)		(471,096	)
Net Cash Used in Investing Activities		(9,733,638	)		(8,958,612	)
Cash Flows from Financing Activities:
Proceeds from related party debt		—			4,700,000
Repayment of related party debt		—			(4,350,000	)
Proceeds from refinanced notes payable and lines of credit		—			66,071,563
Repayment of notes payable upon refinance		—			(52,774,771	)
Repayment of lines of credit upon refinance - VIEs		—			(3,085,607	)
Repayment of notes payable		(55,561	)		(506,656	)
Proceeds from lines of credit - VIEs		1,353,000			—
Repayment of lines of credit - VIEs		(444,242	)		(147,144	)
Proceeds from exercise of options		—			743
Proceeds from issuance of preferred stock		8,513,170			10,253,917
Payment of debt costs and Series C Preferred Stock costs recorded as debt discount		(1,126,939	)		(3,956,743	)
Prepayment penalty upon debt extinguishment		—			(1,400,831	)
Redemption of Preferred Stock		(326,250	)		(172,062	)
Fees paid in advance for debt		—			(45,000	)
Series A, Series B and Series D Preferred share dividends		(746,685	)		(728,355	)
Distributions from VIE		(90,000	)		(90,000	)
Net Cash Provided by Financing Activities		7,076,493			13,769,054
Net change in cash, cash equivalents and restricted cash		(3,200,185	)		4,808,589
Cash, cash equivalents and restricted cash at beginning of the period		10,405,615			2,106,329
Cash, cash equivalents and restricted cash at end of the period	$	7,205,430		$	6,914,918
Cash, cash equivalents and restricted cash consist of the following:


End of period
Cash and cash equivalents	$	1,966,633	$	1,896,839
Restricted cash		5,238,797		5,018,079
Total	$	7,205,430	$	6,914,918
Cash, cash equivalents and restricted cash consist of the following:
Beginning of period
Cash and cash equivalents	$	5,090,369	$	1,401,134
Restricted cash		5,315,246		705,195
Total	$	10,405,615	$	2,106,329
Cash paid for:
Income Taxes		—		—
Interest	$	3,826,823	$	2,395,384
Series C Preferred share dividends included in interest expense	$	1,288,166	$	484,521

Non-Cash Investing and Financing Activities
Notes and lines of credit related to acquisitions and capital improvements	$	11,378,498	$	13,188,735
Non-cash Series A, B and D Preferred Stock accretion	$	891,149	$	881,452
Debt issuance costs included in accounts payable and accrued liabilities	$	—	$	1,061,000

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

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 unaudited condensed 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, 2022 condensed consolidated balance sheet data was derived from audited financial statements but does 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, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 29, 2023. 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 nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company, entities controlled by the Company through its direct or indirect ownership of a majority interest, and any other entities in which the Company has a controlling financial interest. The Company consolidates variable interest entities (“VIEs”) where the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company’s formation of all subsidiaries and VIEs’ date of consolidation are as follows:

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)


Name of Subsidiary	State of Formation	Date of Formation	Ownership
Pecan Grove MHP LLC	North Carolina	October 12, 2016	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%
Golden Isles MHP LLC	Georgia	March 16, 2021	100%
Anderson MHP LLC	South Carolina	June 2, 2021	100%
Capital View MHP LLC	South Carolina	August 6, 2021	100%
Hidden Oaks MHP LLC	South Carolina	August 6, 2021	100%
North Raleigh MHP LLC	North Carolina	September 16, 2021	100%
Carolinas 4 MHP LLC	North Carolina	November 30, 2021	100%
Charlotte 3 Park MHP LLC	North Carolina	December 10, 2021	100%
Sunnyland MHP LLC	Georgia	January 7, 2022	100%
Warrenville MHP LLC	South Carolina	February 15, 2022	100%
Solid Rock MHP LLC	South Carolina	June 6, 2022	100%
Spaulding MHP LLC	Georgia	June 10, 2022	100%
Raeford MHP Development LLC	North Carolina	June 20, 2022	100%
Solid Rock MHP Homes LLC	South Carolina	June 22, 2022	100%
Country Estates MHP LLC(1)	North Carolina	July 6, 2022	100%
Statesville MHP LLC	North Carolina	July 6, 2022	100%
Timberview MHP LLC	North Carolina	July 7, 2022	100%
Red Fox MHP LLC	North Carolina	July 7, 2022	100%
Northview MHP LLC	North Carolina	July 8, 2022	100%
Meadowbrook MHP LLC	South Carolina	July 25, 2022	100%
Sunnyland 2 MHP LLC	Georgia	July 27, 2022	100%
Dalton 3 MHP LLC(1)	Georgia	August 8, 2022	100%
MHP Home Holdings LLC	North Carolina	August 17, 2022	100%
Glynn Acres MHP LLC	Georgia	September 9, 2022	100%
Wake Forest 2 MHP LLC	North Carolina	October 27, 2022	100%
Country Aire MHP LLC	South Carolina	December 1, 2022	100%
Mobile Cottage MHP LLC	North Carolina	December 7, 2022	100%
Merritt Place MHP LLC	Georgia	December 6, 2022	100%
MHR Home Development LLC	Delaware	January 19, 2023	100%
Palm Shadows LLC	Texas	April 12, 2023	100%
Gvest Finance LLC	North Carolina	December 11, 2018	VIE
Gvest Homes I LLC	Delaware	November 9, 2020	VIE
Brainerd Place LLC	Delaware	February 24, 2021	VIE
Bull Creek LLC	Delaware	April 13, 2021	VIE
Gvest Anderson Homes LLC	Delaware	June 22, 2021	VIE
Gvest Capital View Homes LLC	Delaware	August 6, 2021	VIE
Gvest Hidden Oaks Homes LLC	Delaware	August 6, 2021	VIE
Gvest Springlake Homes LLC	Delaware	September 24, 2021	VIE
Gvest Carolinas 4 Homes LLC	Delaware	November 13, 2021	VIE
Gvest Sunnyland Homes LLC	Delaware	January 6, 2022	VIE
Gvest Warrenville Homes LLC	Delaware	February 14, 2022	VIE
Gvest Wake Forest 2 Homes LLC	North Carolina	October 27, 2022	VIE

(1) During the nine months ended September 30, 2023, there was no activity in Country Estates MHP LLC and Dalton 3 MHP LLC.

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.

Revenue Recognition

Rental and related income is generated from lease agreements for our manufactured housing sites and homes. The lease component of these agreements is accounted for under Topic 842 of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, for leases.

Under ASC 842, the Company must assess on an individual lease basis whether it is probable that we 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.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

The Company’s revenues primarily consist of rental revenues and other rental related fee 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.

•

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 ASC 842.

•

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. Revenues derived from the reimbursement of utilities are generally recognized in the same period as the related expenses are incurred. The majority of the Company’s leases are month-to-month.

Revenue from sales of manufactured homes is recognized in accordance with the core principle of ASC 606, at the time of closing when control of the home transfers to the customer. After closing of the sale transaction, the Company generally has no remaining performance obligation.

Accounts Receivable

Accounts receivable consist primarily of amounts currently due from residents. Accounts receivable are reported in the balance sheet at outstanding principal adjusted for any charge-offs and allowance for losses. The Company records an allowance for bad debt when receivables are over 90 days old.

Variable Interest Entities

In December 2020, the Company entered into a property management agreement with Gvest Finance LLC, a company owned and controlled by the Company’s parent company, Gvest Real Estate Capital LLC, an entity whose sole owner is Raymond M. Gee, the Company’s chairman and chief executive officer, and has subsequently entered into property management agreements with Gvest Homes I LLC, Gvest Anderson Homes LLC, Gvest Capital View Homes LLC, Gvest Hidden Oaks Homes LLC, Gvest Springlake Homes LLC, Gvest Carolinas 4 Homes LLC, Gvest Sunnyland Homes LLC, Gvest Warrenville Homes LLC and Gvest Wake Forest 2 Homes LLC, which are all wholly owned subsidiaries of Gvest Finance LLC. Under the property management agreements, the Company manages the homes owned by the VIEs and the VIEs remit to the Company all income, less any sums paid out for operational expenses and debt service but retain 5% of the debt service payment as a reserve.

Additionally, during 2021, the Company formed two entities, Brainerd Place LLC and Bull Creek LLC, for the purpose of exploring opportunities to develop mobile home communities. The Company owns 49% of these entities and Gvest Real Estate LLC, an entity whose sole owner is Raymond M. Gee, owns 51%. The Company also executed operating agreements with these entities which designate Gvest Capital Management LLC, a company owned and controlled by Gvest Real Estate Capital LLC, as manager with the authority, power, and discretion to manage and control the entities’ business decisions. The operating agreements require the Company to make cash contributions to the entities to fund their activities, operations, and existence, if the Company approves the contribution requests from the manager, which ultimately provides the Company with power to direct the economically significant activities of these entities.

Pursuant to U.S. generally accepted accounting principles, or GAAP, a company with interests in a VIE must consolidate the entity if the company is deemed to be the primary beneficiary of the VIE; that is, if it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Such a determination requires management to evaluate circumstances and relationships that may be difficult to understand and to make a significant judgment, and to repeat the evaluation at each subsequent reporting date. Primarily due to the Company’s common ownership by Mr. Gee, its power to direct the activities of these entities that most significantly impact their economic performance, and the fact that the Company has the obligation to absorb losses or the right to receive benefits from these entities that could potentially be significant to these entities, the entities listed above are considered to be VIEs in accordance with applicable GAAP.

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, including vested penny stock options 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.

For the nine months ended September 30, 2023, the potentially dilutive penny options for the purchase of 423,842 shares of Common Stock were included in basic loss per share. Other securities outstanding as of September 30, 2023 not included in dilutive loss per share, as the effect would be anti-dilutive, were 115,000 unvested stock options and 1,826,000 shares of Series A Cumulative Redeemable Convertible Preferred Stock, which are convertible into Common Stock for a total of 1,826,000 shares.

For the nine months ended September 30, 2022, the potentially dilutive penny options for the purchase of 357,176 shares of Common Stock were included in basic loss per share. Other securities outstanding as of September 30, 2022 not included in dilutive loss per share, as the effect would be anti-dilutive, were 146,666 unvested stock options and 1,886,000 shares of Series A Cumulative Redeemable Convertible Preferred Stock, which are convertible into Common Stock for a total of 1,886,000 shares.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

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. Significant estimates include assumptions used in accounting and disclosures associated with acquisitions, depreciation of investment property, and recoverability and useful lives of long-lived assets.

Leases

Rental revenue is generated from lease agreements with tenants for lease of the Company’s sites and manufactured homes where the Company is the lessor. The terms of these leases are generally annual or month-to-month and are renewable upon the consent of both parties and contain no option to purchase the underlying asset. Therefore, these leases are accounted for as operating leases in accordance with ASC 842.

The Company is the lessee in a lease agreement for its corporate office space with a related party entity owned and controlled by Raymond M. Gee, the Company’s CEO and chairman. The lease term for the office is month-to-month, the lease is terminable by either party if written, 30-day notice is given, and the lease contains no option to purchase the facility. This lease is accounted for as an operating lease. Pursuant to ASC 842-20-25-2, the Company, as the lessee, has elected the short-term lease measurement exception whereby lease expense is recognized on a straight-line basis over the term of the lease with no right-of-use asset or lease liability recognized on the consolidated balance sheet.

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, rental homes and intangibles. The Company allocates the purchase price of an acquired property generally determined by a third-party purchase price allocation report obtained in conjunction with the purchase based on appraisals.

Intangibles

The Company's intangible assets include trademarks and trade names. These intangible assets are recorded in Other Assets on the Consolidated Balance Sheet. The valuation of intangibles is generally determined by a third-party purchase price allocation report obtained in conjunction with an acquisition purchase based on appraisals. Acquisition costs allocated to intangible assets are capitalized. The Company's intangibles and associated acquisition costs are amortized over a 15-year estimated useful life on a straight line basis commencing on the date of acquisition. As of September 30, 2023, intangibles consisted of $594,822, net of $18,961 amortization.

Debt Issuance Costs

Costs incurred in connection with obtaining financing are deferred and amortized on a straight-line basis over the term of the related obligation with the amortization included as a component of interest expense in the statement of operations. The unamortized balance of the debt issuance costs is presented in the consolidated balance sheet as direct reduction from the carrying amount of the debt. Upon prepayment, refinance, or substantial modification of a debt obligation, the related unamortized costs are written off to expense.

Investment Property and Depreciation

Investment real property and equipment are carried at cost. Depreciation of buildings, improvements to sites and buildings, rental homes, 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 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 three and nine months ended September 30, 2023 and 2022, respectively.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents.

As of September 30, 2023, the restricted cash balance of $5,238,797 was comprised of $1,059,403 of cash reserved for tenant security deposits and lender escrows for capital improvements, insurance, and real estate taxes in the amount of $4,179,394. As of December 31, 2022, the restricted cash balance of $5,315,246 was comprised of $879,676 of cash reserved for tenant security deposits and lender escrows for capital improvements, insurance, and real estate taxes in the amount of $4,435,570.

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 September 30, 2023 and December 31, 2022, the Company had approximately $1,127,000 and $4,006,000 above the FDIC-insured limit, respectively.

Liquidity and Going Concern

The unaudited condensed financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has incurred net losses each quarter since inception and has experienced slightly negative cash flows from operations during the nine months ended September 30, 2023. The Company is in an acquisitive, growth stage whereby it has more than doubled the number of home sites in its portfolio of manufactured housing communities over the past two years. The Company acquires communities and invests in physical improvements, implements operational efficiencies to cut costs, works to improve occupancy and collections, and increases rents based on each respective market all to stabilize the acquired communities to their full potential. The Company has incurred additional corporate payroll and overhead and interest expense in order to accomplish such growth which has driven losses and used operating cash flow.

As of September 30, 2023, the Company had unrestricted cash of $1,966,633. Based on current operating plans, the Company has sufficient cash and lines of credit available to fund operations, debt service, and preferred equity dividends for at least the next 12 months from the date of filing this Quarterly Report. Starting in March 2024, holders of shares of Series A Cumulative Convertible Preferred Stock have the right to put the shares to the Company. The Company will require additional capital to redeem such shares when and if shares are put to the Company. The Company expects to continue to raise capital, explore debt financing and will also continue to opportunistically sell homes and other assets to meet cash needs. The Company may not be able to raise capital when needed or on attractive terms, which could force the Company to explore other strategies to fund the redemptions. These factors potentially raise doubt about the Company's ability to continue as a going concern. The Company's future capital requirements will depend on many factors, including but not limited to:

•

general market conditions;

•

debt and equity market conditions; and

•

the timing and the amount of share redemptions.

The Company’s continued growth depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing, which includes its ability to raise capital. There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. Proceeds from issuance of Series C Cumulative Redeemable Preferred Stock and Series D Cumulative Redeemable Preferred Stock and cash held in escrow with lenders will fund the Company’s capital improvement projects and acquisitions. To the extent that funds or appropriate communities are not available, fewer acquisitions and capital improvements will be made.

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 non-employees 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 $218,106 and $105,884 during the nine months ended September 30, 2023 and 2022, 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. Most of the Company’s financial assets do not have a quoted market value. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties, future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

estimates only and, therefore, cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates.

The fair value of cash and cash equivalents, accounts receivable, and accounts payable approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable and fixed rate mortgages payable and lines of credit approximate their current carrying amounts on the balance sheet since such amounts payable are at approximately a weighted average current market rate of interest.

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 unaudited condensed consolidated statement of operations. As of September 30, 2023 and December 31, 2022, there were no such accrued interest or penalties.

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 adopted the new guidance on January 1, 2023 and determined it did not have a material impact on its 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.

NOTE 2 – VARIABLE INTEREST ENTITIES

Included in the unaudited condensed consolidated results of operations for the three months ended September 30, 2023 and 2022 were net losses of $220,015 and $376,105, respectively, after deducting an additional management fee equal to cash flow after debt service pursuant to the management agreement of $1,576 and $11,045, respectively.

Included in the unaudited condensed consolidated results of operations for the nine months ended September 30, 2023 and 2022 were net losses of $666,264 and $786,590, respectively, after deducting an additional management fee equal to cash flow after debt service pursuant to the management agreement of $144,017 and $316,624, respectively.

The consolidated balance sheets as of September 30, 2023 and December 31, 2022 included the following amounts related to the consolidated VIEs.


	September 30, 2023			December 31, 2022
	(Unaudited)
Assets
Investment Property	$	15,940,552		$	14,688,424
Accumulated Depreciation		(1,473,539	)		(997,240	)
Net Investment Property		14,467,013			13,691,184
Cash and Cash Equivalents		49,086			40,080
Accounts Receivable		85,468			60,538
Other Assets		209,852			194,871
Total Assets	$	14,811,419		$	13,986,673

Liabilities and Deficit
Accounts Payable	$	146,831		$	206,882
Notes Payable, net of $35,777 and $45,790 debt discount, respectively		3,018,581			3,035,455
Line of Credit, net of $201,844 and $160,372 debt discount, respectively		7,344,733			6,208,947
Accrued Liabilities(1)		6,827,715			6,306,178
Total Liabilities		17,337,860			15,757,462

Non-controlling Interest		(2,526,441	)		(1,770,789	)
Total Non-controlling Interest in Variable Interest Entities		(2,526,441	)		(1,770,789	)

(1) Included in accrued liabilities is an intercompany balance of $6,667,116 and $6,232,561 as of September 30, 2023 and December 31, 2022, respectively. The intercompany balances have been eliminated on the condensed consolidated balance sheet.

NOTE 3 – INVESTMENT PROPERTY

The following table summarizes the Company’s property and equipment balances. These assets are generally depreciated on a straight-line basis.


	September 30, 2023			December 31, 2022
	(Unaudited)
Investment Property
Land	$	37,403,653		$	30,263,687
Site and Land Improvements		49,470,418			44,035,649
Buildings and Improvements		31,546,780			23,229,657
Construction in Process		2,395,765			2,541,376
Total Investment Property		120,816,616			100,070,369
Accumulated Depreciation		(11,564,934	)		(8,225,976	)
Net Investment Property	$	109,251,682		$	91,844,393

Depreciation and amortization expense totaled $1,174,457 and $898,963 for the three months ended September 30, 2023 and 2022, respectively, and $3,375,561 and $2,477,642 for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, Gvest Finance LLC, the Company’s VIE, purchased four new manufactured homes for approximately $212,141 for use in the Meadowbrook community that are included in Construction in Process on the balance sheet. These recently purchased homes along with several new homes purchased during 2022 are not yet occupiable and still in the set-up phase as of September 30, 2023 and are included in Construction in Process on the balance sheet as of that date.

During the year ended December 31, 2022, Gvest Finance LLC, the Company’s VIE, purchased 25 new manufactured homes for approximately $1,300,000 for use in the Golden Isles, Springlake, Sunnyland, and Crestview communities. The majority of these recently purchased homes along with several new homes purchased during 2021 are not yet occupiable and still in the set-up phase as of December 31, 2022 and are included in Construction in Process on the balance sheet as of that date.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

NOTE 4 – ACQUISITIONS AND DISPOSITIONS

During the nine months ended September 30, 2023, the Company acquired three communities. These were acquisitions from third parties and have been accounted for as asset acquisitions.

On January 12, 2023, the Company purchased a manufactured housing community located in Simpsonville, South Carolina, consisting of 107 sites all occupied by tenant-owned manufactured homes on approximately 21 acres for a total purchase price of $5,350,000. Country Aire MHP LLC purchased the land, land improvements, and homes.

On January 27, 2023, the Company purchased a manufactured housing community located in Brunswick, Georgia consisting of 40 developed sites, 14 undeveloped sites, and 24 homes on approximately 18 acres for a total purchase price of $2,400,000. Merritt Place MHP LLC - Land purchased the land and land improvements, and Merritt Place MHP LLC – Homes purchased the homes.

On April 14, 2023, the Company purchased a manufactured housing community located in Donna, Texas consisting of 402 developed sites on approximately 27 acres for a total purchase price of $10,500,000. Palm Shadows MHP LLC purchased the land, land improvements, homes, intangibles and furniture, fixtures and equipment.

During the nine months ended September 30, 2022, the Company acquired nine communities and two large parcels of undeveloped land. These were acquisitions from third parties and have been accounted for as asset acquisitions.

On January 31, 2022, the Company purchased a manufactured housing community located in Byron, Georgia consisting of 73 sites on approximately 18.57 acres and an adjacent parcel of 15.09 acres of undeveloped land for a total purchase price of $2,200,000. Sunnyland MHP LLC purchased the land and land improvements and the Company’s VIE, Gvest Sunnyland Homes LLC, purchased the homes.

On March 31, 2022, the Company purchased two manufactured housing communities located in Warrenville, South Carolina consisting of 85 sites on approximately 45 acres for a total purchase price of $3,050,000. Warrenville MHP LLC purchased the land and land improvements and the Company’s VIE, Gvest Warrenville Homes LLC, purchased the homes.

On June 17, 2022, the Company purchased a manufactured housing community located in Brunswick, Georgia consisting of 72 sites on approximately 17 acres for a total purchase price of $2,000,000. Spaulding MHP LLC purchased the land, land improvements, and homes.

On June 28, 2022, the Company, through its wholly owned subsidiary Raeford MHP Development LLC, purchased 62 acres of undeveloped land zoned for approximately 200 mobile home lots in Raeford, North Carolina, a town in the Fayetteville Metropolitan Statistical Area, for a total purchase price of $650,000.

On July 7, 2022, the Company purchased a manufactured housing community located in Leesville, North Carolina consisting of 39 sites on approximately 11 acres for a total purchase price of $1,700,000. Solid Rock MHP LLC purchased the land and land improvements, and Solid Rock MHP Homes LLC purchased homes.

On July 29, 2022, the Company purchased a manufactured housing community located in Clyde, North Carolina consisting of 51 sites on approximately nine acres for a total purchase price of $3,044,769. Red Fox MHP LLC purchased the land, land improvements, and homes.

On September 14, 2022, the Company purchased three manufactured housing communities located in Statesville, Thomasville, and Trinity, North Carolina consisting of 122 sites on approximately 75 acres for a total purchase price of $5,350,000. Statesville MHP LLC, Northview MHP LLC, and Timberview MHP LLC purchased the land and land improvements, and MHP Home Holdings LLC purchased homes.

Nine Months Ended September 30, 2022


Acquisition Date	Name (number of communities, if multiple)	Land		Improvements		Building		Intangibles		Total Purchase Price
January 2022	Sunnyland MHP	$	672,400	$	891,580	$	—	$	—	$	1,563,980
January 2022	Sunnyland Gvest		—		—		636,020		—		636,020
March 2022	Warrenville MHP		975,397		853,473		—		—		1,828,870
March 2022	Warrenville Gvest		—		—		1,221,130		—		1,221,130
June 2022	Spaulding MHP		1,217,635		304,409		477,956		—		2,000,000
June 2022	Raeford MHP Parcel		650,000		—		—		—		650,000
July 2022	Solid Rock MHP		1,001,966		206,928		491,106		—		1,700,000
July 2022	Red Fox MHP		1,622,748		840,560		581,461		—		3,044,769
September 2022	Statesville MHP		1,078,015		1,100,473		120,729		—		2,299,217
September 2022	Northview MHP		505,319		247,045		116,979		—		869,343
September 2022	Timberview MHP		1,010,639		1,021,868		148,933		—		2,181,440
	Total Purchase Price		8,734,119		5,466,336		3,794,314		—		17,994,769
	Acquisition Costs		254,130		116,840		75,435		—		446,405
	Total Investment Property	$	8,988,249	$	5,583,176	$	3,869,749	$	—	$	18,441,174

Nine Months Ended September 30, 2023


Acquisition Date	Name (number of communities, if multiple)	Land		Improvements			Building		Intangibles		Total Purchase Price
January 2023	Country Aire MHP	$	4,661,722	$	682,724		$	5,554	$	—	$	5,350,000
January 2023	Merritt Place MHP		1,410,806		557,446	(1)		431,748		—		2,400,000
April 2023	Palm Shadows MHP		984,166		3,822,004			5,082,309		611,521		10,500,000
	Total Purchase Price	$	7,056,694	$	5,062,174		$	5,519,611	$	611,521	$	18,250,000
	Acquisition Costs		76,621		48,325			28,862		2,262		156,070
	Total Investment Property	$	7,133,315	$	5,110,499		$	5,548,473	$	613,783	$	18,406,070

(1)

Includes an allocation of $300,000 for 14 lots under development to be completed by seller and a respective note payable for the same amount has been included in accrued liabilities financial statement line item on the balance sheet as of September 30, 2023.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

NOTE 5 – PROMISSORY NOTES

Promissory Notes

The Company has issued promissory notes payable to lenders related to the acquisition of its manufactured housing communities and mobile homes. The interest rates on outstanding promissory notes range from 4% to 8% with five to 30 years principal amortization. The promissory notes are secured by the real estate assets and 34 loans totaling $86,655,293 are guaranteed by Raymond M. Gee.

As of September 30, 2023 and December 31, 2022, the outstanding principal balance on all third-party promissory notes was $90,604,520 and $79,550,080, respectively. The following are the terms of these notes:


	Maturity Date	Interest Rate			Interest Only Period (Months)		Balance September 30, 2023			Balance December 31, 2022
Pecan Grove MHP LLC(1)(2)	9/1/2032		4.870	%		60	$	4,489,000		$	4,489,000
Azalea MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,830,000			1,830,000
Holly Faye MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,608,000			1,608,000
Chatham MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,263,000			2,263,000
Lakeview MHP LLC(1)(2)	9/1/2032		4.870	%		60		3,229,000			3,229,000
B&D MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,887,000			2,887,000
Hunt Club MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,756,000			2,756,000
Crestview MHP LLC(1)(2)	9/1/2032		4.870	%		60		4,625,000			4,625,000
Maple Hills MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,570,000			2,570,000
Springlake MHP LLC(1)(2)	9/1/2032		4.870	%		60		6,590,000			6,590,000
ARC MHP LLC(1)(2)	9/1/2032		4.870	%		60		3,687,000			3,687,000
Countryside MHP LLC(1)(2)	9/1/2032		4.870	%		60		4,343,000			4,343,000
Evergreen MHP LLC (1)(2)	9/1/2032		4.870	%		60		2,604,000			2,604,000
Golden Isles MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,987,000			1,987,000
Anderson MHP LLC(1)(2)	9/1/2032		4.870	%		60		5,118,000			5,118,000
Capital View MHP LLC(1)(2)	9/1/2032		4.870	%		60		829,000			829,000
Hidden Oaks MHP LLC(1)(2)	9/1/2032		4.870	%		60		764,000			764,000
North Raleigh MHP LLC(1)(2)	9/1/2032		4.870	%		60		5,279,000			5,279,000
Charlotte 3 Park MHP LLC (Dixie) (1)(2)(3)	9/1/2032		4.870	%		60		485,000			485,000
Charlotte 3 Park MHP LLC (Driftwood) (1)(2)	9/1/2032		4.870	%		60		274,000			274,000
Carolinas 4 MHP LLC (Asheboro) (1)(2)	9/1/2032		4.870	%		60		1,374,000			1,374,000
Carolinas 4 MHP LLC (Morganton) (1)(2)	9/1/2032		4.870	%		60		1,352,000			1,352,000
Sunnyland MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,057,000			1,057,000
Warrenville MHP LLC(1)	3/10/2027		5.590	%		36		1,218,870			1,218,870
Spaulding MHP LLC	7/22/2043	WSJ Prime + 1%				12		1,600,000			1,600,000
Solid Rock MHP LLC	6/30/2032		5.000	%		12		914,151			925,000
Red Fox MHP LLC	8/1/2032		5.250	%		24		2,250,000			2,250,000
Statesville MHP LLC – land(1)	9/13/2025	SOFR + 2.35%				36		1,519,925			1,519,925
Timberview MHP LLC – land(1)	9/13/2025	SOFR + 2.35%				36		1,418,075			1,418,075
Northview MHP LLC - land (Seller Finance)	9/15/2027		6.000	%		60		792,654			792,654
Statesville, Northview, Timberview MHP LLC - homes (Seller Finance)	9/15/2027		6.000	%		60		407,345			407,345
Glynn Acres MHP LLC	11/1/2042		6.000	%		—		880,228			898,052
Wake Forest MHP LLC (Cooley’s Country road)(1)	12/10/2027		7.390	%		36		3,038,914			3,038,914
Mobile Cottage MHP LLC	12/20/2027		5.000	%		30		400,000			400,000
Gvest Finance LLC (B&D homes)	5/1/2024		5.000	%		—		587,922			614,809
Gvest Finance LLC (Golden Isles homes)	3/31/2031		4.000	%		120		684,220			684,220
Warrenville Gvest Homes LLC(1)	3/10/2027		5.590	%		36		1,221,130			1,221,130
Gvest Wake Forest 2 Homes LLC (Cooley’s, Country Road home)(1)	12/10/2027		7.390	%		36		561,086			561,086
Merritt Place MHP LLC	1/27/2024	WSJ Prime + 1%				12		1,680,000			—
Country Aire MHP LLC(1)	9/13/2025	SOFR + 2.35%				36		3,500,000			—
Palm Shadows MHP LLC(4)	4/12/2033		7.030	%		12		5,930,000			—
Total Notes Payable							$	90,604,520		$	79,550,080
Discount Direct Lender Fees								(3,656,874	)		(3,666,214	)
Total Net of Discount							$	86,947,646		$	75,883,866

(1) The notes indicated above are subject to certain financial covenants.

(2) On September 1, 2022, the Company, through its wholly owned subsidiaries, entered into 23 loan agreements with KeyBank National Association (“KeyBank”) and Fannie Mae for a total principal balance of $62,000,000. The loan proceeds were primarily used to pay off third party notes and line of credit with various other lenders totaling approximately $54,000,000, promissory note issued to Metrolina Loan Holdings, LLC for $1,500,000 and a revolving promissory Note issued to Gvest Real Estates Capital LLC for $2,000,000. KeyBank withheld approximately $4,000,000 in escrow for planned capital projects to improve the financed communities which is included in restricted cash. The Company may prepay the notes in part or in full subject to prepayment penalties if repaid before May 31, 2032, and without penalty if repaid on or subsequent to that date. The loans are secured by the real estate, which predominately excludes mobile homes, and are guaranteed by the Company and Raymond M. Gee. The Company capitalized $2,842,213 of debt issuance costs in connection with this refinancing including a $1,000,000 accrued guaranty fee owed to Raymond M. Gee to be paid at a later date.

(3) The Company repaid the Charlotte 3 Park MHP LLC note payable of $1,500,000 on March 1, 2022 and recognized refinancing cost expense totaling $15,751. This community was refinanced on April 14, 2022 with a different lender and the Company capitalized $258,023 of debt issuance costs related to the new note.

(4) The Palm Shadows MHP LLC note contains a future earn out funding option, which allows the Company to draw down on an additional $1,420,000 non-revolving straight line of credit within the first 24 months of the term assuming certain debt coverage ratios are achieved. As of September 30, 2023, the Company has not exercised this option.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

Lines of Credit – Variable Interest Entities


Facility	Borrower	Community	Maturity Date	Interest Rate	Maximum Credit Limit		Balance September 30, 2023			Balance December 31, 2022
Occupied Home Facility(1)	Gvest Homes I LLC	ARC, Crestview, Maple, Countryside	01/01/30	8.375%	$	20,000,000	$	3,653,669		$	2,424,896
Multi-Community Rental Home Facility	Gvest Finance LLC	ARC, Golden Isles, Springlake,	Various (2)	Greater of 3.25% or Prime, + 375 bps	$	5,000,000	$	2,470,655		$	2,561,380
Multi-Community Floorplan Home Facility	Gvest Finance LLC	Golden Isles, Springlake, Sunnyland, Crestview, Meadowbrook	Various (2)	LIBOR + 6 – 8% based on days outstanding	$	4,000,000	$	1,422,253		$	1,383,043
Total Lines of Credit - VIEs							$	7,546,577		$	6,369,319
Discount Direct Lender Fees							$	(201,844	)	$	(160,372	)
Total Net of Discount							$	7,344,733		$	6,208,947

(1) During the nine months ended September 30, 2023, Gvest Homes I LLC drew down $1,353,000 related to the Occupied Home Facility.

(2) The maturity date of the of the Multi-Community Floorplan and Rental Line of Credit will vary based on each statement of financial transaction, a report identifying the funded homes and the applicable financial terms.

The agreements for each of the above line of credit facilities require the maintenance of certain financial ratios or other affirmative and negative covenants. All the above line of credit facilities are guaranteed by Raymond M. Gee.

Metrolina Promissory Note

On October 22, 2021, the Company issued a promissory note to Metrolina Loan Holdings, LLC, a significant stockholder, in the principal amount of $1,500,000. On September 2, 2022, the Company repaid the full outstanding balance of the loan with proceeds from the KeyBank portfolio refinance. The note bore interest at a rate of 18% per annum and was set to mature on April 1, 2023. The note was guaranteed by Raymond M. Gee. As of September 30, 2023 and December 31, 2022, there was no outstanding balance on this note. During the three and nine months ended September 30, 2022, interest expense recognized was $47,342 and $181,233, respectively.

Gvest Revolving Promissory Note

On December 27, 2021, the Company issued a revolving promissory note to Gvest Real Estate Capital, LLC, an entity whose sole owner is Raymond M. Gee, the Company’s chairman and chief executive officer, pursuant to which the Company may borrow up to $2,000,000 on a revolving basis for working capital or acquisition purposes. On September 9, 2022, the Company paid off the full balance with proceeds from the KeyBank portfolio refinance. This note had a five-year term and was interest-only based on a 15% annual rate through the maturity date and was unsecured. As of September 30, 2023 and December 31, 2022, there was no outstanding balance on this note. During the three and nine months ended September 30, 2022, interest expense recognized was $59,167 and $87,542, respectively.

NAV Real Estate LLC Promissory Note

On June 29, 2022, the Company issued a revolving promissory note to NAV RE, LLC, an entity whose owners are Adam Martin, the Company’s chief investment officer, and his spouse, pursuant to which the Company may borrow up to $2,000,000 on a revolving basis for working capital or acquisition purposes. On the same date, the Company borrowed $2,000,000. As of September 30, 2023 and December 31, 2022, the outstanding principal balance on this note was $2,000,000. This note has a five-year term and is interest-only based on a 15% annual rate through the maturity date and is unsecured. During the three and nine months ended September 30, 2023, interest expense recognized was $76,667 and $228,333, respectively. During the three and nine months ended September 30, 2022, interest expense totaled $76,667 and $77,500, respectively.

Maturities of Long-Term Obligations for Five Years and Beyond

The minimum annual principal payments of notes payable, related party debt and lines of credit at September 30, 2023 by fiscal year were:


2023 (remainder)	$	497,639
2024	$	3,107,433
2025	$	7,328,654
2026	$	755,661
2027	$	10,498,794
Thereafter	$	77,962,915
Total minimum principal payments	$	100,151,096

NOTE 6 – 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.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

NOTE 7 – 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 Cumulative Convertible 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 and pari passu with the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (as defined below). The terms of the Series A Preferred Stock will not limit the Company’s ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the shares of Series A Preferred Stock as to distribution rights and rights upon liquidation, dissolution or winding up.

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 nine months ended September 30, 2023 and 2022, the Company paid dividends of $269,633 and $282,778, 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, before any payment or distribution is made to the holders of Common Stock and on a pari passu basis with holders of Series B Preferred Stock and Series C Preferred Stock, 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 to $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 the Company at a put price equal to $3.75, or 150% of the original issue purchase price of such shares. During the nine months ended September 30, 2023 and 2022, the Company recorded a put option value accretion of $342,281 and $353,472, 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.

As of September 30, 2023 and December 31, 2022, there were 1,826,000 shares of Series A Preferred Stock issued and outstanding. As of September 30, 2023, the Series A Preferred Stock balance was made up of Series A Preferred Stock totaling $4,565,000 and accretion of put options totaling $1,885,197. As of December 31, 2022, the Series A Preferred Stock balance was made up of Series A Preferred Stock totaling $4,565,000 and accretion of put options totaling $1,542,916.

Series B Cumulative Redeemable 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, Series C Preferred Stock and Series D Preferred Stock. The terms of the Series B Preferred Stock will not limit the Company’s ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the shares of Series B Preferred Stock as to distribution rights and rights upon liquidation, dissolution or winding up.

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 nine months ended September 30, 2023 and 2022, the Company paid dividends of $448,995 and $455,355, 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, before any payment or distribution is made to the holders of Common Stock and on a pari passu basis with holders of Series A Preferred Stock and Series C Preferred Stock, 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. The Company recorded a put option value accretion of $544,812 and $527,980 during the nine months ended September 30, 2023 and 2022.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

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.

As of September 30, 2023, there were 747,951 shares of Series B Preferred Stock issued and outstanding and the Series B Preferred Stock balance was made up of Series B Preferred Stock, net of commissions, totaling $7,079,716 and accretion of put options totaling $2,587,314. As of December 31, 2022, there were 747,951 shares of Series B Preferred Stock issued and outstanding and the Series B Preferred Stock balance was made up of Series B Preferred Stock, net of commissions, totaling $7,079,716 and accretion of put options totaling $2,042,502.

Series C Cumulative Redeemable Preferred Stock

On May 24, 2021, the Company filed an amended and restated certificate of designation with the Nevada Secretary of State pursuant to which the Company designated 47,000 shares of its preferred stock as Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”). The Series C Preferred Stock has the following voting powers, designations, preferences and relative rights, qualifications, limitations or restrictions:

Ranking. The Series C Preferred Stock ranks, as to dividend rights and rights upon liquidation, dissolution, or winding up, senior to Common Stock and pari passu with Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock. The terms of the Series C Preferred Stock do not limit the Company’s ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the shares of Series C Preferred Stock as to distribution rights and rights upon liquidation, dissolution or winding up.

Stated Value. Each share of Series C Preferred Stock has an initial stated value of $1,000, subject to appropriate adjustment in relation to certain events, such as recapitalizations, stock dividends, stock splits, stock combinations, reclassifications or similar events affecting the Series C Preferred Stock.

Dividend Rate and Payment Dates. Dividends on the Series C Preferred Stock are cumulative and payable monthly in arrears to all holders of record on the applicable record date. Holders of Series C Preferred Stock are entitled to receive cumulative monthly cash dividends at a per annum rate of 7% of the stated value (or $5.83 per share each month based on the initial stated value). Dividends on each share begin accruing on, and are cumulative from, the date of issuance and regardless of whether the board of directors declares and pays such dividends. Dividends on shares of Series C 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 nine months ended September 30, 2023 and 2022, the Company paid dividends of $1,288,445 and $484,521, respectively. Due to timing of payments, accrued dividends of $203,195 and $112,695 are presented in accrued liabilities on the balance sheet as of September 30, 2023 and 2022, respectively.

Liquidation Preference. Upon a liquidation, dissolution or winding up of the Company, holders of shares of Series C Preferred Stock are entitled to receive, before any payment or distribution is made to the holders of Common Stock and on a pari passu basis with holders of Series A Preferred Stock and Series B Preferred Stock, a liquidation preference equal to the stated value per share, plus accrued but unpaid dividends thereon.

Redemption Request at the Option of a Holder. Once per calendar quarter, a holder will have the opportunity to request that the Company redeem that holder’s Series C Preferred Stock. The board of directors may, however, suspend cash redemptions at any time in its discretion if it determines that it would not be in the best interests of the Company to effectuate cash redemptions at a given time because the Company does not have sufficient cash, including because the board believes that the Company’s cash on hand should be utilized for other business purposes. Redemptions will be limited to four percent (4%) of the total outstanding Series C Preferred Stock per quarter and any redemptions in excess of such limit or to the extent suspended, shall be redeemed in subsequent quarters on a first come, first served, basis. The Company will redeem shares at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon, less the applicable redemption fee (if any). As a percentage of the aggregate redemption price of a holder’s shares to be redeemed, the redemption fee shall be:

•

11% if the redemption is requested on or before the first anniversary of the original issuance of such shares;

•

8% if the redemption is requested after the first anniversary and on or before the second anniversary of the original issuance of such shares;

•

5% if the redemption is requested after the second anniversary and on or before the third anniversary of the original issuance of such shares; and

•

after the third anniversary of the date of original issuance of shares to be redeemed, no redemption fee shall be subtracted from the redemption price.

Optional Redemption by the Company. The Company has the right (but not the obligation) to redeem shares of Series C Preferred Stock at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon; provided, however, that if the Company redeems any shares of Series C Preferred Stock prior to the fourth (4th) anniversary of their issuance, then the redemption price shall include a premium equal to ten percent (10%) of the stated value.

Mandatory Redemption by the Company. The Company must redeem the outstanding shares of Series C Preferred Stock on the fourth (4th) anniversary of their issuance at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon.

Voting Rights. The Series C Preferred Stock has no voting rights.

No Conversion Right. The Series C Preferred Stock is not convertible into shares of Common Stock.

In accordance with ASC 480-10, the Series C Preferred Stock is treated as a liability and is presented net of unamortized debt issuance costs on the balance sheet because the Company has an unconditional obligation to redeem the Series C Preferred Stock and dividends on the Preferred C Stock are included in interest expense.

On June 11, 2021, the Company launched a new offering under Regulation A of Section 3(6) of the Securities Act of 1933, as amended (the “Securities Act”) for Tier 2 offerings, pursuant to which the Company is offering up to 47,000 shares of Series C Preferred Stock at an offering price of $1,000 per share for a maximum offering amount of $47,000,000.

During the nine months ended September 30, 2023, the Company sold an aggregate of 5,345 shares of Series C Preferred Stock for total proceeds of $5,344,917, net of aggregate redemptions of $326,250. After deducting a placement fee and broker dealer commissions, the Company received net proceeds of $4,983,279. In addition to the placement fee and broker dealer commissions, the Company capitalized an additional $43,785 of other issuance costs associated with the offering which, net of amortization expense, offset with the net proceeds on the balance sheet.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

During the nine months ended September 30, 2022, the Company sold an aggregate of 10,260 shares of Series C Preferred Stock for total gross proceeds of $10,253,917. After deducting a placement fee and other expenses, the Company received net proceeds of $9,573,085. In addition to the placement fee and broker dealer commissions, the Company capitalized an additional $18,383 of other issuance costs associated with the offering which, net of amortization expense, offset with the net proceeds on the balance sheet.

As of September 30, 2023 there were 26,929 shares of Series C Preferred Stock issued and outstanding and the Series C Preferred Stock balance was made up of Series C Preferred Stock gross proceeds totaling $26,928,919 net of total unamortized debt issuance costs of $1,485,510.

As of December 31, 2022 there were 21,584 shares of Series C Preferred Stock issued and outstanding and the Series C Preferred Stock balance was made up of Series C Preferred Stock gross proceeds totaling $21,584,002 net of total unamortized debt issuance costs of $1,406,815.

Series D Cumulative Redeemable Preferred Stock

On April 10, 2023, the Company filed a certificate of designation with the Nevada Secretary of State pursuant to which the Company designated 75,000 shares of its preferred stock as Series D Cumulative Redeemable Preferred Stock (the “Series D Preferred Stock”). The Series D Preferred Stock has the following voting powers, designations, preferences and relative rights, qualifications, limitations, or restrictions:

Ranking. The Series D Preferred Stock ranks, 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, Series B Preferred Stock and Series C Preferred Stock. The terms of the Series D Preferred Stock will not limit the Company’s ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the shares of Series D Preferred Stock as to distribution rights and rights upon liquidation, dissolution or winding up.

Stated Value. Each share of Series D Preferred Stock has an initial stated value of $1,000, subject to appropriate adjustment in relation to certain events, such as recapitalizations, stock dividends, stock splits, stock combinations, reclassifications or similar events affecting the Series D Preferred Stock.

Dividend Rate and Payment Dates. Dividends on the Series D Preferred Stock are cumulative and payable monthly in arrears to all holders of record on the applicable record date. Holders of Series D Preferred Stock are entitled to receive cumulative monthly cash dividends at a per annum rate of 9.5% of the stated value (or $7.81 per share each month based on the initial stated value); 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 10.5% of the stated value (or $8.63 per month based on the initial stated value). During the nine months ended September 30, 2023, the Company paid dividends of $28,057.

Exit Premium. Holders of Series D Preferred Stock are entitled to receive upon redemption or repurchase, or upon a liquidation, dissolution or winding up of the Company, a premium equal to 1% of the stated value per share, accruing upon each anniversary of issuance for the first five years from issuance and shall be payable to the recordholder of such stock at the time of redemption, repurchase, liquidation, dissolution or winding up of the Company (the “Exit Premium”).

Liquidation Preference. Upon a liquidation, dissolution or winding up of the Company, holders of shares of Series D Preferred Stock will be entitled to receive, before any payment or distribution is made to the holders of Common Stock and on a pari passu basis with holders of Series A Preferred Stock, Series B Stock and Series C Preferred Stock, a liquidation preference equal to the stated value per share, plus any accrued but unpaid dividends and the Exit Premium.

Redemption Request at the Option of a Holder. Once per calendar quarter, a holder will have the opportunity to request that the Company redeem that holder’s Series D Preferred Stock. The board of directors may, however, suspend cash redemptions at any time in its discretion if it determines that it would not be in the best interests of the Company to effectuate cash redemptions at a given time because the Company does not have sufficient cash, including because the board believes that the Company’s cash on hand should be utilized for other business purposes. Redemptions occurring prior to the fifth (5th) anniversary from the date of issuance will be limited to five percent (5%) of the total outstanding Series D Preferred Stock per quarter and any redemptions in excess of such limit or to the extent suspended, shall be redeemed in subsequent quarters on a first come, first served, basis. The Company will redeem shares at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon and the Exit Premium, less the applicable redemption fee (if any) specified below:

(i)

10% discount to stated value on shares redeemed on or before the first anniversary of the original issuance date of the shares;

(ii)

10% discount to stated value on shares redeemed after the first anniversary and on or before the second anniversary of the original issuance date of the shares;

(iii)

8% discount to stated value on shares redeemed after the second anniversary and on or before the third anniversary of the original issuance date of the shares;

(iv)

6% discount to stated value on shares redeemed after the third anniversary and on or before the fourth anniversary of the original issuance date;

(v)

4% discount to stated value on shares redeemed after the fourth anniversary and on or before the fifth anniversary of the original issuance date; and

(vi)

0% discount to stated value on shares redeemed after the fifth anniversary of the original issuance date.

Optional Redemption by the Company. The Company has the right (but not the obligation) to redeem shares of Series D Preferred Stock at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon and the Exit Premium.

Optional Repurchase Upon Death or Total Disability of a Holder. Within sixty (60) days of the death or Total Permanent Disability (as defined in the certificate of designation) of a holder, the holder or the estate of such holder (in the event of death) may request that the Company repurchase, in whole but not in part, without penalty, the Series D Preferred Stock held by such holder at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon.

Voting Rights. The Series D Preferred Stock has no voting rights relative to matters submitted to a vote of stockholders (other than as required by law). However, the Company may not, without the affirmative vote or written consent of the holders of a majority of the then issued and outstanding Series D Preferred Stock: (i) amend or waive any provision of the certificate of designation or otherwise take any action that modifies any powers, rights, preferences, privileges or restrictions of the Series D Preferred Stock (other than an amendment solely for the purpose of changing the number of shares of Series D Preferred Stock designated for issuance as provided in the certificate of designation); (ii) authorize, create or issue shares of any class of stock having rights, preferences or privileges as to dividends or distributions upon a liquidation that are superior to the Series D Preferred Stock; or (iii) amend the Company’s articles of incorporation in a manner that adversely and materially affects the rights of the Series D Preferred Stock.

No Conversion Right. The Series D Preferred Stock is not convertible into shares of Common Stock.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

As of September 30, 2023, there were 3,143 shares of Series D Preferred Stock issued and outstanding and the Series D Preferred Stock balance was made up of Series D Preferred Stock, net of commissions, totaling $2,842,004 and accretion of put options totaling $4,056.

During the nine months ended September 30, 2023, the Company sold an aggregate of 3,143 shares of Series D Preferred Stock for total gross proceeds of $3,142,774. After deducting a placement fee and other expenses, the Company received net proceeds of $2,842,004.

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 September 30, 2023 and December 31, 2022, there were 12,493,012 shares of Common Stock issued and outstanding.

No shares of Common Stock were issued during the nine months ended September 30, 2023.

During the nine months ended September 30, 2022, the Company issued 74,332 shares of Common Stock upon employee exercise of stock options for total exercise price of $743.

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 September 30, 2023, there were 538,842 shares granted and 461,158 shares remaining available under the Plan. The Company has issued options to directors, officers, and employees under the Plan.

During the nine months ended September 30, 2023 and 2022, the Company issued 50,000 and 145,000 options and recorded stock option expense of $218,106 and $105,884, respectively. With the exception of 50,000 options issued in January 2023 and an additional 50,000 options issued in December 2022, all options were granted at a price of $0.01 per share, which represents a price that may be deemed to be below the market value per share of the Company’s common stock as defined by the Plan. The 50,000 options issued in January 2023 were forfeited in July 2023.

The following table summarizes the stock options outstanding as of September 30, 2023:


	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)
Outstanding at December 31, 2022		538,842		$	0.01		6.6
Granted		50,000			1.32		—
Exercised		—			—		—
Forfeited / cancelled / expired		(50,000	)		1.32		—
Outstanding at September 30, 2023		538,842		$	0.06		6.1
Exercisable at September 30, 2023		423,842			0.03		5.4

As of September 30, 2023, there were 538,842 “in-the-money” options with an aggregate intrinsic value of $535,896. The aggregate intrinsic value 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 September 30, 2023.

The following table summarizes information concerning options outstanding as of September 30, 2023.


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		288,675		4.9	$	0.01		288,675	$	0.01
$		0.01		13,500		7.0	$	0.01		13,500	$	0.01
$		0.01		50,000		8.0	$	0.01		50,000	$	0.01
$	0.01 – 0.50			186,667		8.3	$	0.14		71,667	$	0.12

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.


Stock option assumptions	September 30, 2023			September 30, 2022
Risk-free interest rate	1.40-2.84%			1.40-2.84%
Expected dividend yield		0.00	%		0.00	%
Expected volatility	237.85-249.77%			237.85-249.77%
Expected life of options (in years)	6.5-7			6.5-7

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

NOTE 8 – RELATED PARTY TRANSACTIONS

See Note 5 for information regarding the revolving promissory note issued to Gvest Real Estate Capital, LLC, an entity whose sole owner is Raymond M. Gee, the Company’s chairman and chief executive officer, and the revolving promissory note issued to NAV Real Estate, LLC, an entity whose owners are Adam Martin, the Company’s chief investment officer, and his spouse.

In August 2019, the Company entered into an office lease agreement with 136 Main Street LLC, an entity whose sole owner is Gvest Real Estate LLC, whose sole owner is Mr. Gee, for the lease of the Company’s offices. The lease is $12,000 per month and is on a month-to-month term. During the nine months ended September 30, 2023 and 2022, the Company paid $108,000 of rent expense to 136 Main Street LLC. During the three months ended September 30, 2023 and 2022, the Company paid $36,000 of rent expense to 136 Main Street LLC.

On September 1, 2022, the Company entered into a consulting agreement with Gvest Real Estate Capital, LLC for development consulting and management services related to several upcoming mobile home community development projects at the Sunnyland and Raeford properties and assistance with major capital improvement projects at existing communities. The consulting agreement is $8,000 per month and is on a month-to-month term. During the nine months ended September 30, 2023 and 2022, the Company paid $72,000 and $8,000, respectively, for development consulting services to Gvest Real Estate Capital LLC. During the three months ended September 30, 2023 and 2022, the Company paid $24,000 and $8,000, respectively, for development consulting services to Gvest Real Estate Capital LLC.

On April 1, 2022, the Company entered into an agreement with Gvest Capital LLC, an entity whose sole owner is Raymond M. Gee, and its employee Michael P. Kelly, a significant beneficial stockholder, whereby the Company pays a fee per completed acquisition and a monthly retainer fee to Mr. Kelly for legal services in connection with acquisitions and other operating matters. During the three and nine months ended September 30, 2023, the company paid Mr. Kelly $15,000 and $60,000, respectively. During the three and nine months ended September 30, 2022, the company paid Mr. Kelly $35,000 and $55,000, respectively.

During the nine months ended September 30, 2023, Raymond M. Gee received fees totaling $245,000 for his personal guaranty on certain promissory notes relating to the acquisition and refinancing of mobile home communities owned by the Company, in relation to the Merritt Place MHP and County Aire MHP acquisitions paid at closing. The Company also accrued a $245,000 guaranty fee owed to Raymond M. Gee, in relation to the Palm Shadows MHP acquisition to be paid at a later date which is still outstanding and unpaid as of September 30, 2023. During the nine months ended September 30, 2022, Raymond M. Gee received fees totaling $1,080,000 for his personal guaranty on certain promissory notes relating to the acquisitions of mobile home communities owned by the Company, including $250,000 in relation to the Asheboro and Morganton acquisitions which were accrued for at December 31, 2021 and paid in January 2022. The Company also accrued a $1,000,000 guaranty fee owed to Raymond M. Gee, during the year ended December 31, 2022 for his personal guaranty of the KeyBank $62,000,000 portfolio refinance made up of several loans to be paid at a later date which is still outstanding and unpaid as of September 30, 2023.

See Note 2 for information regarding related party VIEs.

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

NOTE 9 – SUBSEQUENT EVENTS

Additional Closings of Regulation D Offering

Subsequent to September 30, 2023, the Company sold an aggregate of 571 shares of Series D Preferred Stock in additional closings of the Company's Regulation D offering for total gross proceeds of $570,785. After deducting a placement fee, the Company received net proceeds of approximately $535,946.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “our” and the “Company” refer to Manufactured Housing Properties Inc., a Nevada corporation, and its consolidated subsidiaries and variable interest entities ("VIEs").

Special Note Regarding Forward Looking Statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These forward-looking statements include, without limitation: statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of management’s goals and objectives; trends affecting our financial condition, results of operations or future prospects; statements regarding our financing plans or growth strategies; statements concerning litigation or other matters; and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes” and “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith beliefs as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. If we do update one or more forward-looking statements, no inference should be drawn as to whether we will make additional updates with respect to those or other forward-looking statements. Potential investors should not make an investment decision based solely on our projections, estimates or expectations.

The specific discussions herein about our company include financial projections and future estimates and expectations about our company’s business. The projections, estimates and expectations are presented in this report only as a guide about future possibilities and do not represent actual amounts or assured events. All the projections and estimates are based exclusively on our management’s own assessment of our business, the industry in which we operate and the economy at large and other operational factors, including capital resources and liquidity, financial condition, fulfillment of contracts and opportunities. The actual results may differ significantly from the projections.

Overview

We are a self-administered, self-managed, vertically integrated owner and operator of manufactured housing communities. We earn income from leasing manufactured home sites to tenants who own their own manufactured home and the rental of company-owned manufactured homes to residents of the communities.

As of September 30, 2023, we owned and operated 58 manufactured housing communities containing approximately 3,125 developed sites and 1,383 company-owned, manufactured homes. Our communities are located in Georgia, North Carolina, South Carolina, Tennessee and Texas.

As of September 30, 2023, our portfolio of manufactured housing properties consisted of the following:

•

Pecan Grove – an 82 lot, all-age community situated on 10.71 acres and located in Charlotte, North Carolina.

•

Azalea Hills – a 39 lot, all-age community situated on 7.46 acres and located in Gastonia, North Carolina, a suburb of Charlotte, North Carolina.

•

Holly Faye – a 35 lot all-age community situated on 8.01 acres and located in Gastonia, North Carolina, a suburb of Charlotte North Carolina.

•

Lakeview – an 84 lot all-age community situated on 17.26 acres in Spartanburg, South Carolina.

•

Chatham Pines – a 49 lot all-age community situated on 23.57 acres and located in Chapel Hill, North Carolina.

•

Maple Hills – a 74 lot all-age community situated on 21.20 acres and located in Mills River, North Carolina, which is part of the Asheville, North Carolina, Metropolitan Statistical Area.

•

Hunt Club Forest – a 78 lot all-age community situated on 13.02 acres and located in the Columbia, South Carolina metro area.

•

B&D – a 96 lot all-age community situated on 17.75 acres and located in Chester, South Carolina.

•

Crestview – a 113 lot all age community situated on 17.1 acres and located in the Asheville, North Carolina, Metropolitan Statistical Area.

•

Springlake – three all-age communities with 221 lots situated on 72.7 acres and located in Warner Robins, Georgia.

•

ARC – five all-age communities with 180 lots situated on 39.34 acres and located in Lexington, South Carolina.

•

Countryside – a 110 lot all-age community situated on 35 acres and located in Lancaster, North Carolina.

•

Evergreen – a 65 lot all-age community situated on 28.4 acres and located in Dandridge, Tennessee.

•

Golden Isles – a 107 lots all-age community situated on 16.76 acres and located in Brunswick, Georgia.

•

Anderson – ten all-age communities with 178 lots situated on 50 acres and located in Anderson, South Carolina.

•

Capital View – a 32 lot all-age community situated on 9.84 acres and located in Gaston, South Carolina.

•

Hidden Oaks - a 44 lot all-age community situated on 8.96 acres and located in West Columbia, South Carolina.

•

North Raleigh – five all-age communities with 138 lots situated on 135 acres and located in Franklin and Granville Counties, North Carolina.

•

Dixie – a 37 lot all-age community situated on 3.43 acres and located in Kings Mountain, North Carolina.

•

Driftwood – a 26 lot all-age community situated on 34.92 acres and located in Charlotte, North Carolina.

•

Meadowbrook – a 94 lot all-age community situated on 40.1 acres and located in York, South Carolina.

•

Morganton – a 61 lot all-age community situated on 31.29 acres and located in Morganton, North Carolina.

•

Asheboro – an 84 lot all-age community situated on 45.4 acres and located in Asheboro, North Carolina.

•

Sunnyland – a 72 lot all-age community situated on 18.57 acres and an adjacent parcel of 15 acres of undeveloped land both located in Byron, Georgia.

•

Warrenville – two all-age communities with 85 lots situated on 45 acres and located in Warrenville, South Carolina.

•

Lake Village (aka Spaulding) – a 73 lot all-age community situated on 17 acres and located in Brunswick, Georgia.

•

Solid Rock – a 39 lot all-age community situated on 11 acres and located in Leesville, South Carolina.

•

Red Fox – a 52 lot all-age community situated on nine acres and located in Clyde, North Carolina.

•

Statesville – a 44 lot all age community situated on 12.86 acres and located in Statesville, North Carolina.

•

Timberview – a 55 lot all age community situated on 50 acres and located in Trinity, North Carolina.

•

Northview - a 23 lot all age community situated on 3.8 acres and located in Thomasville, North Carolina

•

Glynn Acres – a 21 lot all age community situated on 2.9 acres and located in Brunswick, Georgia.

•

Cooley’s (aka Wake Forest 2) – a 44 lot all age community situated on 16 acres and located in Youngsville, North Carolina.

•

Country Road (aka Wake Forest 2) – a 28 lot all age community situated on 27 acres and located in Franklinton, North Carolina.

•

Mobile Cottage – a 23 lot all age community situated on 13 acres and located in Morganton, North Carolina.

•

Merritt Place – a 39 lot all age community situated on 13 acres and located in Morganton, North Carolina.

•

Country Aire – a 105 lot all age community situated on 21 acres and located in Simpsonville, South Carolina.

•

Palm Shadows – a 402 lot all age community situated on 27 acres and located in Donna, Texas.

Manufactured housing communities are residential developments designed and improved for the placement of detached, single-family manufactured homes that are produced off-site and installed on residential sites within the community. The owner of a manufactured home leases the site on which it is located or the lessee of a manufactured home leases both the home and site on which the home is located.

We believe that manufactured housing is one of the only non-subsidized affordable housing options in the U.S. and that manufactured housing is an economically attractive alternative to traditional single-family and multi-family housing, as it provides a housing alternative that has characteristics of single-family housing (no shared walls, dedicated parking and a yard), yet is more attainable than single-family while being competitively priced to multi-family. Demand for housing affordability continues to increase, but supply of manufactured housing remains virtually static, as there are not many new manufactured housing communities being developed, and many are redeveloped to less affordable options. We are committed to providing this attainable housing option and an improved level of service to our residents, while producing an attractive and risk adjusted return to our investors.

Recent Developments

Additional Closings of Regulation D Offering

Subsequent to September 30, 2023, we sold an aggregate of 571 shares of Series D Cumulative Redeemable Preferred Stock (the “Series D Preferred Stock”) in additional closings of the offering described below for total gross proceeds of $570,785. After deducting a placement fee, we received net proceeds of approximately $535,946.

Results of Operations

Comparison of Three Months Ended September 30, 2023 and 2022

The following table sets forth key components of our results of operations during the three months ended September 30, 2023 and 2022, both in dollars and as a percentage of our revenues.


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Amount			Percent of Revenues			Amount			Percent of Revenues
Revenue
Rental and related income	$	4,564,273			97.07	%	$	3,697,558			99.50	%
Gross revenues from home sales		137,900			2.93	%		18,570			0.50	%
Total revenues		4,702,173			100.00	%		3,716,128			100.00	%
Community operating expenses
Repair and maintenance		531,158			11.30	%		287,686			7.74	%
Real estate taxes		212,353			4.52	%		186,358			5.01	%
Utilities		334,817			7.12	%		259,758			6.99	%
Insurance		121,608			2.59	%		87,044			2.34	%
General and administrative expense		661,822			14.07	%		510,036			13.72	%
Total community operating expenses		1,861,758			39.59	%		1,330,882			35.81	%
Corporate payroll and overhead		1,487,110			31.63	%		1,519,271			40.88	%
Depreciation and amortization expense		1,174,457			24.98	%		898,963			24.19	%
Interest expense		2,366,051			50.32	%		1,506,290			40.53	%
Refinancing costs		—			—			3,604,671			97.00	%
Cost of home sales		88,777			1.89	%		22,676			0.61	%
Total expenses		6,978,153			148.40	%		8,882,753			239.03	%
Other income		—			—			500			0.01	%
Net loss	$	(2,275,980	)		(48.40	)%	$	(5,166,125	)		(139.02	)%

Revenue. For the three months ended September 30, 2023, we earned total revenues of $4,702,173, which included rental and related income of $4,564,273 and gross revenues from home sales of $137,900, as compared to $3,716,128, which included rental and related income of $3,697,558 and gross revenues from home sales of $18,570, for the three months ended September 30, 2022, an increase of $986,045, or 26.53%. The increase in revenues compared to the prior period was primarily due to $611,690 of rental income from the acquisition of seven manufactured housing communities on or subsequent to September 30, 2022, as well as an increase in revenues from home sales. The Company sold seven park-owned homes during the three months ended September 30, 2023, as compared to only three home sales during the three months ended September 30, 2022. The remaining increase was due to rental rate increases.

Community Operating Expenses. For the three months ended September 30, 2023, we incurred total community operating expenses of $1,861,758, as compared to $1,330,882 for the three months ended September 30, 2022, an increase of $530,876, or 39.89%. The increase in community operating expenses was primarily due to $226,532 of additional expenses associated with the seven properties acquired on or subsequent to September 30, 2022. Community operating expenses as a percentage of revenues were 39.59% and 35.81% for the three months ended September 30, 2023 and 2022, respectively.

Corporate Payroll and Overhead Expenses. For the three months ended September 30, 2023, we incurred corporate payroll and overhead expenses of $1,487,110, as compared to $1,519,271 for the three months ended September 30, 2022, a decrease of $32,161, or 2.12%. This decrease was primarily due to decreased payroll including corporate salaries and benefits expense and a decrease in stock compensation expense as a result of an adjustment to reflect the actual stock options issued. Corporate payroll and overhead expenses as a percentage of revenues were 31.63% and 40.88% for the three months ended September 30, 2023 and 2022, respectively.

Depreciation and Amortization Expense. For the three months ended September 30, 2023, we recorded depreciation and amortization of our assets totaling $1,174,457, as compared to $898,963 for the three months ended September 30, 2022, an increase of $275,494, or 30.65%. The increase in depreciation and amortization was driven by $215,005 related to the assets in seven manufactured housing communities that were acquired on or subsequent to September 30, 2022. The remaining increase was due to depreciation of capital improvement projects completed subsequent to September 30, 2022, such as home renovations and new home installations. Depreciation and amortization expense as a percentage of revenues were 24.98% and 24.19% for the three months ended September 30, 2023 and 2022, respectively.

Interest Expense. For the three months ended September 30, 2023, we incurred interest expense of $2,366,051, as compared to $1,506,290 for the three months ended September 30, 2022, an increase of $859,761, or 57.08%. The increase was primarily due to $373,292 of interest on additional debt incurred to acquire new properties and new homes subsequent to September 30, 2022 and $480,477 of dividends to series C preferred stockholders, which are included in interest expense given the liability treatment of the mandatorily redeemable Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”). Interest expense as a percentage of revenues were 50.32% and 40.53% for the three months ended September 30, 2023 and 2022, respectively.

Refinancing Costs. For the three months ended September 30, 2023, we incurred refinancing costs of $0, as compared to $3,604,671 for the three months ended September 30, 2022, caused by a non-recurring major portfolio refinance on September 1, 2022 through KeyBank National Association and Fannie Mae, which refinanced most of the outstanding debt in our portfolio for a total principal balance of $62,000,000. We incurred refinancing expense of $3,604,671 in connection with the debt we extinguished including write-off of net unamortized debt issuance costs totaling $2,203,841, prepayment penalties of $1,385,596, and other fees of $15,234.

Net Loss. The factors described above resulted in a net loss of $2,275,980 for the three months ended September 30, 2023, as compared to $5,166,125 for the three months ended September 30, 2022, a decrease of $2,890,145, or 55.94%, predominately driven by a 26.53% increase in total revenues, offset by a 21.44% decrease in total expenses.

Comparison of Nine Months Ended September 30, 2023 and 2022

The following table sets forth key components of our results of operations during the nine months ended September 30, 2023 and 2022, both in dollars and as a percentage of our revenues.


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Amount			Percent of Revenues			Amount			Percent of Revenues
Revenue
Rental and related income	$	12,934,176			96.65	%	$	10,021,357			98.81	%
Gross revenues from home sales		449,000			3.35	%		121,164			1.19	%
Total revenues		13,383,176			100.00	%		10,142,521			100.00	%
Community operating expenses
Repair and maintenance		1,154,804			8.63	%		803,505			7.92	%
Real estate taxes		624,848			4.67	%		584,280			5.76	%
Utilities		920,183			6.88	%		735,638			7.25	%
Insurance		345,034			2.58	%		226,341			2.23	%
General and administrative expense		2,056,537			15.37	%		1,291,276			12.73	%
Total community operating expenses		5,101,406			38.12	%		3,641,040			35.90	%
Corporate payroll and overhead		4,542,780			33.94	%		3,683,267			36.32	%
Depreciation and amortization expense		3,375,561			25.22	%		2,477,642			24.43	%
Interest expense		6,712,375			50.16	%		3,843,031			37.89	%
Refinancing costs		—			—			3,620,422			35.70	%
Cost of home sales		351,078			2.62	%		177,410			1.75	%
Total expenses		20,083,200			150.06	%		17,442,812			171.98	%
Other income		—			—			500			—
Net loss	$	(6,700,024	)		(50.06	)%	$	(7,299,791	)		(71.97	)%

Revenues. For the nine months ended September 30, 2023, we earned total revenues of $13,383,176, which included rental and related income of $12,934,176 and gross revenues from home sales of $449,000, as compared to $10,142,521, which included rental and related income of $10,021,357 and gross revenues from home sales of $121,164, for the nine months ended September 30, 2022, an increase of $3,240,655, or 31.95%. The increase in revenues compared to the prior period was primarily due to $1,420,563 of rental income from the acquisition of seven manufactured housing communities on or subsequent to September 30, 2022, as well as an increase in revenues from home sales. The Company sold 22 park-owned homes during the nine months ended September 30, 2023, as compared to only 12 home sales during the nine months ended September 30, 2022. The remaining increase was due to rental rate increases.

Community Operating Expenses. For the nine months ended September 30, 2023, we incurred total community operating expenses of $5,101,406, as compared to $3,641,040 for the nine months ended September 30, 2022, an increase of $1,460,366, or 40.11%. The increase in community operating expenses was primarily due to $448,073 of additional expenses associated with the seven properties acquired on or subsequent to September 30, 2022. Community operating expenses as a percentage of revenues were 38.12% and 35.90% for the nine months ended September 30, 2023 and 2022, respectively.

Corporate Payroll and Overhead Expenses. For the nine months ended September 30, 2023, we incurred corporate payroll and overhead expenses of $4,542,780, as compared to $3,683,267 for the nine months ended September 30, 2022, an increase of $859,513, or 23.34%. This increase was primarily due to increased payroll including corporate salaries and benefits expense due to hiring additional personnel to support our future growth and an increase in stock compensation expense due to the issuance of stock options to officers hired to support our growth. Corporate payroll and overhead expenses as a percentage of revenues were 33.94% and 36.32% for the nine months ended September 30, 2023 and 2022, respectively.

Depreciation and Amortization Expense. For the nine months ended September 30, 2023, we recorded depreciation and amortization of our assets totaling $3,375,561, as compared to $2,477,642 for the nine months ended September 30, 2022, an increase of $897,919, or 36.24%. The increase in depreciation and amortization was driven by $465,181 related to the assets in seven manufactured housing communities that were acquired on or subsequent to September 30, 2022. The remaining increase was due to depreciation of capital improvement projects completed subsequent to September 30, 2022, such as home renovations and new home installations. Depreciation expense as a percentage of revenues were 25.22% and 24.43% for the nine months ended September 30, 2023 and 2022, respectively.

Interest Expense. For the nine months ended September 30, 2023, we incurred interest expense of $6,712,375, as compared to $3,843,031 for the nine months ended September 30, 2022, an increase of $2,869,344, or 74.66%. The increase was primarily due to $903,955 of interest on additional debt incurred to acquire new properties and new homes subsequent to September 30, 2022 and $1,355,344 of dividends to series C preferred stockholders, which are included in interest expense given the liability treatment of the mandatorily redeemable Series C Preferred Stock. Interest expense as a percentage of revenues were 50.16% and 37.89% for the nine months ended September 30, 2023 and 2022, respectively.

Refinancing Costs. For the nine months ended September 30, 2023, we incurred refinancing costs of $0, as compared to $3,620,422 for the nine months ended September 30, 2022, primarily driven by a non-recurring major portfolio refinance on September 1, 2022 through KeyBank National Association and Fannie Mae, which refinanced most of the outstanding debt in our portfolio for a total new principal balance of $62,000,000. We incurred refinancing expense of $3,604,672 in connection with the debt we extinguished including write-off of net unamortized debt issuance costs totaling $2,203,841, prepayment penalties of $1,385,596, and other fees of $15,235.

Net Loss. The factors described above resulted in a net loss of $6,700,024 for the nine months ended September 30, 2023, as compared to $7,299,791 for the nine months ended September 30, 2022, a decrease of $599,767, or 8.22%, predominately driven by a 31.95% increase in total revenues, offset by a 15.14% increase in total expenses.

Liquidity, Capital Resources and Going Concern

As of September 30, 2023, we had unrestricted cash of $1,966,633. Based on our current operating plans, we have sufficient cash and lines of credit available to fund operations, debt service, and preferred equity dividends for at least the next 12 months from the date of filing this report. Starting in March 2024, the holders of shares of Series A Cumulative Convertible Preferred Stock have the right to put the shares to us. We will require additional capital to redeem the shares when and if shares are put to us. We expect to continue to raise capital, explore debt financing and will also continue to opportunistically sell homes and other assets to meet cash needs. We may not be able to raise capital when needed or on attractive terms, which could force us to explore other strategies to fund the redemptions. These factors potentially raise doubt about our ability to continue as a going concern. Our future capital requirements will depend on many factors, including but not limited to:

•

general market conditions;

•

debt and equity market conditions; and

•

timing and the amount of share redemptions.

Proceeds from issuance of Series C Preferred Stock and Series D Preferred Stock and cash held in escrow with our lenders will fund our capital improvement projects and acquisitions. To the extent that funds or appropriate communities are not available, fewer acquisitions and capital improvements will be made.

We have incurred net losses each year since inception and have experienced slightly negative cash flows from operations during the nine months ended September 30, 2023. We are in an acquisitive, growth stage whereby we have doubled the number of home sites in our portfolio of manufactured housing communities over the past two years. We have incurred additional corporate payroll and overhead and interest expense in order to accomplish such growth which has driven losses and used operating cash flow. We acquire communities and invest in physical improvements, implement operational efficiencies to cut costs, work to improve occupancy and collections, and increase rents based on each respective market all to stabilize the acquired communities to their full potential.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the period indicated:

Cash Flow


	Nine Months Ended September 30,
	2023			2022
Net cash used in operating activities	$	(543,040	)	$	(1,853	)
Net cash used in investing activities		(9,733,638	)		(8,958,612	)
Net cash provided by financing activities		7,076,493			13,769,054
Net increase (decrease) in cash, cash equivalent and restricted cash		(3,200,185	)		4,808,589
Cash, cash equivalents and restricted cash at beginning of period		10,405,615			2,106,329
Cash, cash equivalents and restricted cash at end of period	$	7,205,430		$	6,914,918

Net cash used in operating activities was $543,040 for the nine months ended September 30, 2023, as compared to $1,853 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, the net loss of $6,700,024, offset in part by non-cash depreciation and amortization expense of $3,375,561, an increase in accrued liabilities of $1,135,555 related to the payment of accrued 2022 employee bonuses, guarantee fees and accounting fees, and $1,016,116 related to the amortization of debt discount were the primary drivers of the net cash used in operating activities. For the nine months ended September 30, 2022, the net loss of $7,299,791, offset in part by non-cash depreciation expense of $2,477,642 and write-off of net unamortized debt issuance costs totaling $2,219,591 upon refinance, were primary drivers of the net cash used in operating activities. Additionally, prepayment penalties and other fees of $1,400,831 paid to old lenders upon refinance of the majority of our loans that is included in net loss is added back to net loss to present as a financing activity.

Net cash used in investing activities was $9,733,638 for the nine months ended September 30, 2023, as compared to $8,958,612 for the nine months ended September 30, 2022. Net cash used in investing activities for the nine months ended September 30, 2023 consisted of purchases of investment properties and related intangibles in the amount of $6,528,479 and $613,783, respectively, capital improvements of $3,046,274, and payment of related acquisition costs of $161,716, offset by proceeds received from sale of homes of $449,000, proceeds from home sale deposits of $85,726 and advanced pursuit costs and deposits for potential deals of $81,888. Net cash used in investing activities for the nine months ended September 30, 2022 consisted of purchases of investment properties in the amount of $6,444,135, capital improvements of $1,872,803, payment of related acquisition costs of $471,096 and advanced pursuit costs and deposits for potential deals of $291,742, offset by proceeds received from sale of homes of $121,164.

Net cash provided by financing activities was $7,076,493 for the nine months ended September 30, 2023, as compared to $13,769,054 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, net cash provided by financing activities consisted primarily of proceeds from issuance of preferred stock of $8,513,170 and proceeds received from the related party lines of credit of $1,353,000, offset by the payment of debt costs and Series C Preferred Stock costs of $1,126,939. For the nine months ended September 30, 2022, net cash provided by financing activities consisted primarily of proceeds received from refinanced notes payable and lines of credit of $66,071,563, proceeds from issuance of preferred stock of $10,253,917, proceeds from related party debt of $4,700,000, offset by repayment of notes payable upon refinance of $52,774,774, repayment of VIE lines of credit upon refinance of $3,085,607, repayment of related party debt of $4,350,000, repayment of notes payable of $506,656, repayment of VIE lines of credit of $147,144, payment of mortgage costs and financing costs recorded as debt discount of $3,956,743, payment of prepayment penalties totaling $1,400,831 to old lenders upon refinance of the majority of loans in our portfolio, preferred stock dividends of $728,355.

Regulation A Offering

On June 11, 2021, we launched a new offering under Regulation A of Section 3(6) of the Securities Act for Tier 2 offerings, pursuant to which we are offering up to 47,000 shares of Series C Preferred Stock at an offering price of $1,000 per share for a maximum offering amount of $47,000,000.

During the nine months ended September 30, 2023, we sold an aggregate of 5,345 shares of Series C Preferred Stock for total proceeds of $5,344,917, net of aggregate redemptions of $326,250. After deducting a placement fee and broker dealer commissions, we received net proceeds of $4,983,279. In addition to the placement fee and broker dealer commissions, we capitalized an additional $43,785 of other issuance costs associated with the offering which, net of amortization expense, offset with the net proceeds on the balance sheet.

Regulation D Offering

On April 10, 2023, we launched a new offering under Regulation D of the Securities Act, pursuant to which we are offering up to 75,000 shares of Series D Preferred Stock at an offering price of $1,000 per share for a maximum offering amount of $75,000,000.

During the nine months ended September 30, 2023, we sold an aggregate of 3,143 shares of Series D Preferred Stock for total gross proceeds of $3,142,774. After deducting a placement fee and broker dealer commissions, we received net proceeds of $2,842,004.

Promissory Notes

We have issued promissory notes payable to lenders related to the acquisition of our manufactured housing communities and mobile homes. The interest rates on outstanding promissory notes range from 4% to 8% with five to 30 years principal amortization. The promissory notes are secured by the real estate assets and 34 loans totaling $86,655,293 are guaranteed by Raymond M. Gee.


	Maturity Date	Interest Rate			Interest Only Period (Months)		Balance September 30, 2023			Balance December 31, 2022
Pecan Grove MHP LLC(1)(2)	9/1/2032		4.870	%		60	$	4,489,000		$	4,489,000
Azalea MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,830,000			1,830,000
Holly Faye MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,608,000			1,608,000
Chatham MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,263,000			2,263,000
Lakeview MHP LLC(1)(2)	9/1/2032		4.870	%		60		3,229,000			3,229,000
B&D MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,887,000			2,887,000
Hunt Club MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,756,000			2,756,000
Crestview MHP LLC(1)(2)	9/1/2032		4.870	%		60		4,625,000			4,625,000
Maple Hills MHP LLC(1)(2)	9/1/2032		4.870	%		60		2,570,000			2,570,000
Springlake MHP LLC(1)(2)	9/1/2032		4.870	%		60		6,590,000			6,590,000
ARC MHP LLC(1)(2)	9/1/2032		4.870	%		60		3,687,000			3,687,000
Countryside MHP LLC(1)(2)	9/1/2032		4.870	%		60		4,343,000			4,343,000
Evergreen MHP LLC (1)(2)	9/1/2032		4.870	%		60		2,604,000			2,604,000
Golden Isles MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,987,000			1,987,000
Anderson MHP LLC(1)(2)	9/1/2032		4.870	%		60		5,118,000			5,118,000
Capital View MHP LLC(1)(2)	9/1/2032		4.870	%		60		829,000			829,000
Hidden Oaks MHP LLC(1)(2)	9/1/2032		4.870	%		60		764,000			764,000
North Raleigh MHP LLC(1)(2)	9/1/2032		4.870	%		60		5,279,000			5,279,000
Charlotte 3 Park MHP LLC (Dixie) (1)(2)(3)	9/1/2032		4.870	%		60		485,000			485,000
Charlotte 3 Park MHP LLC (Driftwood) (1)(2)	9/1/2032		4.870	%		60		274,000			274,000
Carolinas 4 MHP LLC (Asheboro) (1)(2)	9/1/2032		4.870	%		60		1,374,000			1,374,000
Carolinas 4 MHP LLC (Morganton) (1)(2)	9/1/2032		4.870	%		60		1,352,000			1,352,000
Sunnyland MHP LLC(1)(2)	9/1/2032		4.870	%		60		1,057,000			1,057,000
Warrenville MHP LLC(1)	3/10/2027		5.590	%		36		1,218,870			1,218,870
Spaulding MHP LLC	7/22/2043	WSJ Prime + 1%				12		1,600,000			1,600,000
Solid Rock MHP LLC	6/30/2032		5.000	%		12		914,151			925,000
Red Fox MHP LLC	8/1/2032		5.250	%		24		2,250,000			2,250,000
Statesville MHP LLC – land(1)	9/13/2025	SOFR + 2.35%				36		1,519,925			1,519,925
Timberview MHP LLC – land(1)	9/13/2025	SOFR + 2.35%				36		1,418,075			1,418,075
Northview MHP LLC - land (Seller Finance)	9/15/2027		6.000	%		60		792,654			792,654
Statesville, Northview, Timberview MHP LLC - homes (Seller Finance)	9/15/2027		6.000	%		60		407,345			407,345
Glynn Acres MHP LLC	11/1/2042		6.000	%		0		880,228			898,052
Wake Forest MHP LLC (Cooley’s Country road)(1)	12/10/2027		7.390	%		36		3,038,914			3,038,914
Mobile Cottage MHP LLC	12/20/2027		5.000	%		30		400,000			400,000
Gvest Finance LLC (B&D homes)	5/1/2024		5.000	%		—		587,922			614,809
Gvest Finance LLC (Golden Isles homes)	3/31/2031		4.000	%		120		684,220			684,220
Warrenville Gvest Homes LLC(1)	3/10/2027		5.590	%		36		1,221,130			1,221,130
Gvest Wake Forest 2 Homes LLC (Cooley’s, Country Road home)(1)	12/10/2027		7.390	%		36		561,086			561,086
Merritt Place MHP LLC	1/25/2024	WSJ Prime + 1%				12		1,680,000			—
Country Aire MHP LLC(1)	9/13/2025	SOFR + 2.35%				36		3,500,000			—
Palm Shadows MHP LLC(4)	4/12/2033		7.030	%		12		5,930,000			—
Total Notes Payable							$	90,604,520		$	79,550,080
Discount Direct Lender Fees								(3,656,874	)		(3,666,214	)
Total Net of Discount							$	86,947,646		$	75,883,866

(1) The notes indicated above are subject to certain financial covenants.

(2) On September 1, 2022, we, through our wholly owned subsidiaries, entered into 23 loan agreements with KeyBank National Association (“KeyBank”) and Fannie Mae for a total principal balance of $62,000,000. The loan proceeds were primarily used to pay off third party notes and line of credit with various other lenders totaling approximately $54,000,000, promissory note issued to Metrolina Loan Holdings, LLC for $1,500,000 and a revolving promissory Note issued to Gvest Real Estates Capital LLC for $2,000,000. KeyBank withheld approximately $4,000,000 in escrow for planned capital projects to improve the financed communities which is included in restricted cash. We may prepay the notes in part or in full subject to prepayment penalties if repaid before May 31, 2032, and without penalty if repaid on or subsequent to that date. The loans are secured by the real estate, which predominately excludes mobile homes, and are guaranteed by us and Raymond M. Gee. We capitalized $2,842,213 of debt issuance costs in connection with this refinancing including a $1,000,000 accrued guaranty fee owed to Raymond M. Gee to be paid at a later date.

(3) We repaid the Charlotte 3 Park MHP LLC note payable of $1,500,000 on March 1, 2022, and recognized refinancing cost expense totaling $15,751. This community was refinanced on April 14, 2022, with a different lender and the Company capitalized $258,023 of debt issuance costs related to the new note.

Lines of Credit – Variable Interest Entities


Facility	Borrower	Community	Maturity Date	Interest Rate	Maximum Credit Limit		Balance September 30, 2023			Balance December 31, 2022
Occupied Home Facility(1)	Gvest Homes I LLC	ARC, Crestview, Maple, Countryside	01/01/30	8.375%	$	20,000,000	$	3,653,669		$	2,424,896
Multi-Community Rental Home Facility	Gvest Finance LLC	ARC, Golden Isles, Springlake,	Various (2)	Greater of 3.25% or Prime, + 375 bps	$	5,000,000	$	2,470,655		$	2,561,380
Multi-Community Floorplan Home Facility	Gvest Finance LLC	Golden Isles, Springlake, Sunnyland, Crestview, Meadowbrook	Various (2)	LIBOR + 6 – 8% based on days outstanding	$	4,000,000	$	1,422,253		$	1,383,043
Total Lines of Credit - VIEs							$	7,546,577		$	6,369,319
Discount Direct Lender Fees							$	(201,844	)	$	(160,372	)
Total Net of Discount							$	7,344,733		$	6,208,947

(1) During the nine months ended September 30, 2023, Gvest Homes I LLC drew down $1,353,000 related to the Occupied Home Facility.

Gvest Revolving Promissory Note

On December 27, 2021, we issued a revolving promissory note to Gvest Real Estate Capital, LLC, an entity whose sole owner is Raymond M. Gee, our chairman and chief executive officer, pursuant to which we may borrow up to $2,000,000 on a revolving basis for working capital or acquisition purposes. On September 9, 2022, we paid off the full balance with proceeds from the KeyBank portfolio refinance. This note had a five-year term and was interest-only based on a 15% annual rate through the maturity date and was unsecured. As of September 30, 2023 and December 31, 2022, there was no outstanding balance on this note. During the three and nine months ended September 30, 2022, interest expense recognized was $59,167 and $87,542, respectively.

NAV Real Estate LLC Promissory Note

On June 29, 2022, we issued a revolving promissory note to NAV RE, LLC, an entity whose owners are Adam Martin, our chief investment officer, and his spouse, pursuant to which we may borrow up to $2,000,000 on a revolving basis for working capital or acquisition purposes. On the same date, we borrowed $2,000,000. As of September 30, 2023 and December 31, 2022, the outstanding principal balance on this note was $2,000,000. This note has a five-year term and is interest-only based on a 15% annual rate through the maturity date and is unsecured. During the three and nine months ended September 30, 2023, interest expense recognized was $76,667 and $228,333, respectively. During the three and nine months ended September 30, 2022, interest expense totaled $76,667 and $77,500, respectively.

Off-Balance Sheet Arrangements

As of September 30, 2023, we had no off-balance sheet arrangements.

Critical Accounting Policies

The preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 29, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2023. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our

Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and further referenced below, which, due to employee turnover, we are still in the process of remediating as of September 30, 2023, our disclosure controls and procedures were not effective.

During its evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2023, our management identified the following material weaknesses:

•

We lack proper segregation of duties due to the limited number of employees within the accounting department.

•

We lack effective closing procedures.

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

To cure the foregoing material weakness, we have taken or plan to take the following remediation measures:

•

In 2023, we hired an accounts payable manager and a senior SEC reporting analyst who both assist with the functions of the accounting department. These hires have led to more segregation of duties and levels of review in our day-to-day accounting functions, reporting, and closing procedures which historically have been material weaknesses for us in internal controls.

•

We have added and plan to continue to add additional employees to assist in the financial closing procedures.

•

As necessary, we will continue to engage consultants or outside accounting firms to ensure proper accounting for our consolidated financial statements.

We intend to complete the remediation of the material weaknesses discussed above as soon as practicable, but we can give no assurance that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.

Changes in Internal Controls Over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over financial reporting during the third quarter of the 2023 fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we 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 from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any equity securities during the three months ended September 30, 2023 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter, except as follows:

On August 21, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 360 shares of Series D Preferred Stock for total gross proceeds of $360,000. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $327,600.

On September 5, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 360 shares of Series D Preferred Stock for total gross proceeds of $360,000. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $327,600.

On September 19, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 109 shares of Series D Preferred Stock for total gross proceeds of $109,140. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $103,540.

On October 3, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 140 shares of Series D Preferred Stock for total gross proceeds of $140,000. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $127,400.

On October 17, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 140 shares of Series D Preferred Stock for total gross proceeds of $139,785. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $137,185.

On October 31, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 70 shares of Series D Preferred Stock for total gross proceeds of $70,000. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $63,700.

On November 7, 2023, the Company completed an additional closing of the Regulation D offering, pursuant to which the Company sold an aggregate of 221 shares of Series D Preferred Stock for total gross proceeds of $221,000. After deducting the placement fee and broker dealer commissions, the Company received net proceeds of approximately $207,661.

During the three months ended September 30, 2023, we did not repurchase any shares of our common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.


Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed on April 19, 2018)

3.2		Certificate of Designation of Series A Cumulative Convertible Preferred Stock (incorporated by reference to Exhibit 2.2 to the Offering Statement on Form 1-A filed on May 9, 2019)

3.3		Certificate of Designation of Series B Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 5, 2019)

3.4		Amended and Restated Certificate of Designation of Series C Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.4 to the Quarterly Report on Form 10-Q filed on November 15, 2021)

3.5		Certificate of Designation of Series D Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.5 to the Quarterly Report on Form 10-Q filed on May 12, 2023)

3.6		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 filed on April 19, 2018)

3.7		Amendment No. 1 to Amended and Restated Bylaws of Manufactured Housing Properties Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on October 21, 2022)

31.1*		Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certifications of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: November 13, 2023	MANUFACTURED HOUSING PROPERTIES INC.

	/s/ Raymond M. Gee
	Name:	Raymond M. Gee
	Title:	Chief Executive Officer
	(Principal Executive Officer and Principal Financial and Accounting Officer)