Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2022

or

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

For the transition period from ____________ to _____________

Commission File Number: 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, North Carolina		28134
(Address of principal executive offices)		(Zip Code)

(980) 273-1702

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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, a 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 comply 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 August 12, 2022, there were 12,462,013 common shares of the registrant issued and outstanding.

Manufactured Housing Properties Inc.

Quarterly Report on Form 10-Q

Period Ended June 30, 2022

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.	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	37
Item 4.	Controls and Procedures.	37

	PART II
	FINANCIAL INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39

i

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MANUFACTURED HOUSING PROPERTIES INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page

Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021		2
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)		3
Condensed Consolidated Statements of Changes in Deficit for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)		5
Notes to Unaudited Condensed Consolidated Financial Statements		6 - 25

1

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2022 AND DECEMBER 31, 2021

	June 30, 2022			December 31, 2021
Assets	(unaudited)
Investment Property
Land	$	22,508,158		$	18,854,760
Site and Land Improvements		37,703,886			35,133,079
Buildings and Improvements		19,730,527			14,666,296
Construction in Process		2,943,578			3,030,456
Total Investment Property		82,886,149			71,684,591
Accumulated Depreciation		(6,390,849	)		(4,832,300	)
Net Investment Property		76,495,300			66,852,291
Cash and Cash Equivalents, including restricted cash of $810,280 and $705,195, respectively		3,070,280			2,106,329
Accounts Receivable		287,284			175,955
Other Assets		2,430,053			913,205
TOTAL ASSETS	$	82,282,917		$	70,047,780

Liabilities
Accounts Payable	$	679,600		$	477,484
Notes Payable, net of $2,390,363 and $2,064,294 debt discount, respectively		52,723,981			48,891,483
Lines of Credit – Variable Interest Entity, net of $173,508 and $151,749 debt discount, respectively		7,787,643			6,200,607
Lines of Credit – Related Party		4,000,000			150,000
Note Payable – Related Party		1,500,000			1,500,000
Accrued Liabilities including amounts due to related parties of $9,250 and $250,000, respectively		547,575			1,235,001
Tenant Security Deposits		810,280			705,195
Series C Redeemable Preferred Stock, par value $0.01 per share; 47,000 shares authorized; 12,037 and 5,734 shares issued and outstanding; redemption value $12,036,900 and $5,734,400 as of June 30, 2022 and December 31, 2021, respectively		11,168,125			5,214,370
Total Liabilities		79,217,204			64,374,140

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; 1,886,000 shares issued and outstanding; redemption value $7,072,500 as of June 30, 2022 and December 31, 2021		6,077,521			5,841,771
Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share; 1,000,000 shares authorized; 758,551 shares issued and outstanding; redemption value $11,378,265 as of June 30, 2022 and December 31, 2021		8,887,102			8,518,594

Deficit
Common Stock, par value $0.01 per share; 200,000,000 shares authorized; 12,412,013 and 12,403,680 shares are issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		124,120			124,037
Additional Paid in Capital		(4,179,314	)		(3,160,712	)
Accumulated Deficit		(6,395,718	)		(4,672,537	)
Total Manufactured Housing Properties Inc. Deficit		(10,450,912	)		(7,709,212	)
Non-controlling interest in Variable Interest Entities		(1,447,998	)		(977,513	)
Total Deficit		(11,898,910	)		(8,686,725	)
TOTAL LIABILITIES AND DEFICIT	$	82,282,917		$	70,047,780

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

2

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue
Rental and related income	$	3,283,777		$	1,776,377		$	6,323,799		$	3,440,058
Gross revenues from home sales		87,594			23,061			102,594			65,244
Total revenues		3,371,371			1,799,438			6,426,393			3,505,302

Community operating expenses
Repair and maintenance		327,265			115,394			515,819			223,190
Real estate taxes		217,093			56,846			397,922			199,240
Utilities		239,985			142,325			475,880			299,312
Insurance		78,999			40,609			139,297			68,397
General and administrative expense		405,044			159,112			781,240			304,122
Total community operating expenses		1,268,386			514,286			2,310,158			1,094,261

Corporate payroll and overhead		1,254,918			583,733			2,163,996			1,164,467
Depreciation expense		818,975			462,042			1,578,679			903,665
Interest expense		1,235,048			447,306			2,336,741			893,354
Refinancing costs		15,751			-			15,751			16,675
Cost of home sales		122,269			-			154,734			-
Total expenses		4,715,347			2,007,367			8,560,059			4,072,422
Other income		-			139,300			-			139,300
Net loss before provision for income taxes		(1,343,976	)		(68,629	)		(2,133,666	)		(427,820	)
Provision for income taxes		-			-			-			-
Net loss	$	(1,343,976	)	$	(68,629	)	$	(2,133,666	)	$	(427,820	)

Net income (loss) attributable to non-controlling interest variable interest entities		(250,915	)		118,348			(410,485	)		173,433
Net income (loss) attributable to Manufactured Housing Properties, Inc.		(1,093,061	)		(186,977	)		(1,723,181	)		(601,253	)
Preferred stock dividends and put option value accretion
Series A preferred dividends		94,300			91,000			188,600			187,167
Series A preferred put option value accretion		117,875			118,125			235,746			236,250
Series B preferred dividends		151,785			146,322			303,570			275,731
Series B preferred put option value accretion		184,254			184,687			368,508			370,526
Total preferred stock dividends and put option value accretion		548,214			540,134			1,096,424			1,069,674
Net loss attributable to common stockholders	$	(1,641,275	)	$	(727,111	)	$	(2,819,605	)	$	(1,670,927	)

Weighted average shares - basic and fully diluted		12,835,977			12,923,355			12,833,928			12,921,463

Net loss per share – basic and fully diluted	$	(0.13	)	$	(0.06	)	$	(0.22	)	$	(0.13	)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

3

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(UNAUDITED)

	COMMON STOCK				ADDITIONAL						TOTAL MANUFACTURED			NON
	SHARES		PAR VALUE		PAID IN CAPITAL			ACCUMULATED DEFICIT			HOUSING PROPERTIES INC.			CONTROLLING INTEREST			DEFICIT
Balance at January 1, 2021		12,398,580	$	124,016	$	(1,052,611	)		(3,574,194	)	$	(4,502,789	)	$	(419,275	)	$	(4,922,064	)
Stock option expense		-		-		646			-			646			-			646
Preferred shares Series A dividends		-		-		(96,167	)		-			(96,167	)		-			(96,167	)
Preferred shares Series A put option value accretion		-		-		(118,125	)		-			(118,125	)		-			(118,125	)
Preferred shares Series B dividends		-		-		(129,409	)		-			(129,409	)		-			(129,409	)
Preferred shares Series B put option value accretion		-		-		(185,839	)		-			(185,839	)		-			(185,839	)
Common Stock issuance to preferred share holders		5,100		51		1,326			-			1,377			-			1,377
Contributions to VIE		-		-		-			-			-			12,371			12,371
Distributions from VIE		-		-		-			-			-			(20,000	)		(20,000	)
Net loss		-		-		-			(414,276	)		(414,276	)		55,085			(359,191	)
Balance at March 31, 2021		12,403,680	$	124,067	$	(1,580,179	)	$	(3,988,470	)	$	(5,444,582	)	$	(371,819	)	$	(5,816,401	)
Stock option expense		-		-		37,171			-			37,171			-			37,171
Preferred shares Series A dividends		-		-		(91,000	)		-			(91,000	)		-			(91,000	)
Preferred shares Series A put option value accretion		-		-		(118,125	)		-			(118,125	)		-			(118,125	)
Preferred shares Series B dividends		-		-		(146,322	)		-			(146,322	)		-			(146,322	)
Preferred shares Series B put option value accretion		-		-		(184,687	)		-			(184,687	)		-			(184,687	)
Distributions from VIE		-		-		-			-			-			(30,000	)		(30,000	)
Net Income (Loss)		-		-		-			(186,977	)		(186,977	)		118,348			(68,629	)
Balance at June 30, 2021		12,403,680	$	124,067	$	(2,083,142	)	$	(4,175,447	)	$	(6,134,522	)	$	(283,471	)	$	(6,417,993	)

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	)		-			(151,785	)		-			(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		-		-		-			(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 issued through 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 Income (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	)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

4

MANUFACTURED HOUSING PROPERTIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(UNAUDITED)

	June 30, 2022			June 30, 2021
Cash Flows from Operating Activities:
Net Loss	$	(2,133,666	)	$	(427,820	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock option expense		77,822			37,817
Amortization of debt discount		306,230			79,835
Write off debt issuance costs recorded as debt discount		15,751			56,691
Write off acquisition and development pursuit costs		60,759			-
Gain on debt extinguishment		-			(139,300	)
Loss on sale of homes		52,140			-
Depreciation		1,578,679			903,665
Changes in operating assets and liabilities:
Accounts receivable		(111,329	)		(10,588	)
Other assets		316,864			691,910
Accounts payable		202,116			42,181
Tenant security deposits		105,085			65,641
Accrued liabilities		(444,026	)		37,232
Net Cash Provided by Operating Activities		26,425			1,337,264
Cash Flows from Investing Activities:
Capital improvements		(1,507,382	)		(697,769	)
Proceeds from sales of homes		102,594			65,244
Purchases of investment properties		(3,697,135	)		(750,000	)
Payment of pursuit costs		(113,964	)		-
Payment of acquisition costs		(296,170	)		-
Net Cash Used in Investing Activities		(5,512,057	)		(1,382,525	)
Cash Flows from Financing Activities:
Proceeds from lines of credit, related party		4,700,000
Repayment of note payable – lines of credit, related party		(850,000	)		-
Proceeds from notes payable		1,875,000			-
Repayment of notes payable		(1,916,434	)		(292,698	)
Proceeds from lines of credit - VIEs		596,563			-
Repayment of lines of credit - VIEs		(682,646	)		-
Proceeds from exercise of options		83			-
Proceeds from issuance of preferred stock		6,297,617			1,087,485
Payment of debt costs and Series C Preferred Stock costs recorded as debt discount		(1,263,667	)		(128,052	)
Fees paid in advance for debt		(1,761,363	)		-
Series A and Series B Preferred share dividends		(485,570	)		(462,898	)
Contribution to VIE		-			12,371
Distributions from VIE		(60,000	)		(50,000	)
Net Cash Provided by Financing Activities		6,449,583			166,208
Net change in cash, cash equivalents and restricted cash		963,951			120,947
Cash, cash equivalents and restricted cash at beginning of the period		2,106,329			1,988,857
Cash, cash equivalents and restricted cash at end of the period	$	3,070,280		$	2,109,804
Cash, cash equivalents and restricted cash consist of the following:
End of period
Cash and cash equivalents	$	2,260,000		$	1,705,011
Restricted cash		810,280			404,793
Total	$	3,070,280		$	2,109,804
Cash, cash equivalents and restricted cash consist of the following:
Beginning of period
Cash and cash equivalents	$	1,401,134		$	1,649,705
Restricted cash		705,195			339,152
Total	$	2,106,329		$	1,988,857
Cash paid for:
Income Taxes	$	-		$	-
Interest	$	1,448,072		$	804,511
Series C Preferred share dividends included in interest expense	$	275,137		$	-
Non-Cash Investing and Financing Activities
Notes related to acquisitions	$	5,875,735		$	2,195,846
Non-cash Preferred stock accretion	$	604,254		$	606,776
Stock issued in connection with Series B Preferred Stock issuance	$	-		$	1,377

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(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 consolidated financial statements under the accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The December 31, 2021 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, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2022. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair statement of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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.

6

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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

Name of Subsidiary	State of Formation	Date of Formation	Ownership
Pecan Grove MHP LLC	North Carolina	October 12, 2016		100%
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*	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*	Georgia	August 8, 2022		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

*	During the three and six months ended June 30, 2022, there was no activity in Solid Rock MHP LLC, Solid Rock MHP Homes LLC, Red Fox MHP LLC, Meadowbrook MHP LLC, Sunnyland 2 MHP LLC, Country Estates MHP LLC, Northview MHP LLC, Statesville MHP LLC, Timberview 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.

7

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Revenue Recognition

Mobile home rental and related income is generated from lease agreements for our 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.

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. Revenue 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.

Acquisitions

The Company accounts for acquisitions as asset acquisitions in accordance with ASC 805, “Business Combinations,” and allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, site and land improvements, buildings and improvements and rental homes. The Company allocates the purchase price of an acquired property generally determined by internal evaluation as well as third-party appraisal of the property obtained in conjunction with the purchase.

8

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 and Gvest Warrenville 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.

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 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 six months ended June 30, 2022, the potentially dilutive penny options for the purchase of 428,176 shares of Common Stock were included in basic loss per share. Other securities outstanding as of June 30, 2022 not included in dilutive loss per share, as the effect would be anti-dilutive, were 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.

For the six months ended June 30, 2021, the potentially dilutive penny options for the purchase of 519,675 shares of Common Stock were included in basic loss per share. Other securities outstanding as of June 30, 2021 not included in dilutive loss per share, as the effect would be anti-dilutive, were 186,500 stock options and 1,890,000 shares of Series A Cumulative Redeemable Convertible Preferred Stock, which were convertible into Common Stock for a total of 1,890,000 shares.

Use of Estimates

The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Investment Property and Depreciation

Investment 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.

9

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 six months ended June 30, 2022 and 2021.

Cash and Cash Equivalents

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

The Company maintains cash balances at banks and deposits at times may exceed federally insured limits. Management believes that the financial institutions that hold the Company’s cash are financially secure and, accordingly, minimal credit risk exists. At June 30, 2022 and December 31, 2021, the Company had approximately $1,830,000 and $763,000 above the FDIC-insured limit, respectively, including restricted cash held for tenant security deposits of $810,280 and $705,195, respectively.

Stock Based Compensation

All stock based payments to employees, nonemployee consultants, and to nonemployee directors for their services as directors, including any grants of restricted stock and stock options, are measured at fair value on the grant date and recognized in the statements of operations as compensation or other expense over the relevant service period in accordance with FASB ASC Topic 718. Stock based payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are nonforfeitable, the measurement date is the date the award is issued. The Company recorded stock option expense of $77,822 and $37,817 during the six months ended June 30, 2022 and 2021, 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 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 receivables, 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.

10

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 June 30, 2022, and December 31, 2021, there were no such accrued interest or penalties.

Reclassifications

Certain amounts in the prior period presentation have been reclassified to conform with the current presentation. For the six months ended June 30, 2021, the Company reclassed $65,244 from cash used for capital improvements to proceeds from sale of homes within the net cash used in investing activities section of the unaudited condensed consolidated statement of cash flows.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2022. The Company is currently evaluating the potential impact this standard may have on the consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.

Impact of Coronavirus Pandemic

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. On March 11, 2020, the World Health Organization declared the outbreak a pandemic, and on March 13, 2020, the United States declared a national emergency.

Some states and cities, including some where the Company’s properties are located, reacted by instituting quarantines, restrictions on travel, “stay at home” rules and restrictions on the types of businesses that may continue to operate, as well as guidance in response to the pandemic and the need to contain it.

The rules and restrictions put in place had a negative impact on the economy and business activity and may adversely impact the ability of the Company’s tenants, many of whom may be restricted in their ability to work, to pay their rent as and when due. Enforcing the Company’s rights as landlord against tenants who fail to pay rent or otherwise do not comply with the terms of their leases may not be possible as many jurisdictions, including those where are properties are located, have established rules and/or regulations preventing us from evicting tenants for certain periods in response to the pandemic. If the Company is unable to enforce its rights as landlords, our business would be materially affected.

11

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

The extent to which the pandemic may impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report, including new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment present material uncertainty and risk with respect to the Company’s performance, financial condition, results of operations and cash flows.

NOTE 2 – VARIABLE INTEREST ENTITIES

During the six months ended June 30, 2022, Gvest Finance LLC formed two wholly owned subsidiaries, Gvest Sunnyland Homes LLC and Gvest Warrenville Homes LLC, both of which are considered VIEs. The Company consolidates the accounts of Gvest Finance LLC, 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, Brainerd Place LLC, and Bull Creek LLC and will continue to do so until they are no longer considered VIEs.

Included in the unaudited condensed consolidated results of operations for the three months ended June 30, 2022 and 2021 were net loss of $250,915 and net income of $118,348, respectively, after deducting an additional management fee equal to cash flow after debt service per the management agreement of $222,566 and $0, respectively.

Included in the unaudited condensed consolidated results of operations for the six months ended June 30, 2022 and 2021 were net loss of $410,485 and net income of $173,433, respectively, after deducting an additional management fee equal to cash flow after debt service per the management agreement of $305,579 and $0, respectively.

The consolidated balance sheets as of June 30, 2022 and December 31, 2021 included the following amounts related to the consolidated VIEs.

	June 30, 2022			December 31, 2021
	(Unaudited)
Assets
Investment Property	$	18,613,820		$	14,144,268
Accumulated Depreciation		(881,741	)		(597,650	)
Net Investment Property		17,732,079			13,546,618
Cash and Cash Equivalents		53,184			98,900
Accounts Receivable		95,882			60,506
Other Assets		244,108			158,920
Total Assets	$	18,125,253		$	13,864,944

Liabilities and Deficit
Accounts Payable	$	250,317		$	169,298
Notes Payable, net of 27,558 and $0 debt discount, respectively		8,557,022			6,793,319
Line of Credit, net of $173,508 and $151,749 debt discount, respectively		7,787,643			6,200,607
Accrued Liabilities*		2,978,269			1,679,233
Total Liabilities		19,573,251			14,842,457

Non-controlling Interest		(1,447,998	)		(977,513	)
Total Non-controlling Interest in Variable Interest Entities		(1,447,998	)		(977,513	)

*	Included in accrued liabilities is an intercompany balance of $2,859,303 and $1,515,715 as of June 30, 2022 and December 31, 2021, respectively. The intercompany balances have been eliminated on the consolidated balance sheet.

12

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

NOTE 3 – INVESTMENT PROPERTY

The following table summarizes the Company’s property and equipment balances are generally used to depreciate the assets on a straight-line basis:

	June 30, 2022			December 31, 2021
	(Unaudited)
Investment Property
Land	$	22,508,158		$	18,854,760
Site and Land Improvements		37,703,886			35,133,079
Buildings and Improvements		19,730,527			14,666,296
Construction in Process		2,943,578			3,030,456
Total Investment Property		82,886,149			71,684,591
Accumulated Depreciation		(6,390,849	)		(4,832,300	)
Net Investment Property	$	76,495,300		$	66,852,291

Depreciation expense totaled $818,975 and $462,042 for the three months ended June 30, 2022 and 2021, respectively, and $1,578,679 and $903,665 for the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June 30, 2022, Gvest Finance LLC, the Company’s VIE, purchased twenty-five 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 the first quarter of 2022 are not yet occupiable and still in the set-up phase as of June 30, 2022 and included in Construction in Process on the balance sheet as June 30, 2022.

During the year ended December 31, 2021, Gvest Finance LLC, acquired thirty-four new manufactured homes for approximately $1,900,000 including set up costs for use in the Springlake community and fourteen new manufactured homes for approximately $860,000 including set up costs for use in the Golden Isles community that were not yet occupiable and were still in the set-up phase as of December 31, 2021 and were included in Construction in Process on the balance sheet as of that date.

13

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

NOTE 4 – ACQUISITIONS AND DISPOSITIONS

During the six months ended June 30, 2022, the Company acquired four communities and one large parcel 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.

The Company entered into various purchase agreements during and after the year ended June 30, 2022 totaling an aggregate purchase price commitment of $21,738,000 which are inclusive of probable and non-probable acquisitions that have the potential to close at a future date. See Note 9 for more information about two community acquisitions that occurred subsequent to June 30, 2022.

During the six months ended June 30, 2021, the Company acquired one community located in Brunswick, Georgia consisting of 107 sites on approximately 17 acres for a total purchase price of $2,325,000. Golden Isles MHP LLC purchased the land and land improvements and the Company’s VIE, Gvest Finance LLC, purchased the homes. This was an acquisition from a third party and has been accounted for as an asset acquisition.

Acquisition Date	Name (number of communities)	Land		Improvements		Building		Total Purchase Price
March 2021	Golden Isles MHP	$	1,050,000	$	487,500	$	-	$	1,537,500
March 2021	Golden Isles Gvest		-		-		787,500		787,500
	Total Purchase Price	$	1,050,000	$	487,500	$	787,500	$	2,325,000
	Acquisition Costs		-		123,319		250		123,569
	Total Investment Property	$	1,050,000	$	610,819	$	787,750	$	2,448,569

January 2022	Sunnyland MHP	$	672,400	$	891,580	$	-	$	1,563,980
January 2022	Sunnyland Gvest		-		-		636,020		636,020
March 2022	Warrenville MHP (2)		975,397		853,473		-		1,828,870
March 2022	Warrenville Gvest (2)		-		-		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
	Total Purchase Price	$	3,515,432	$	2,049,462	$	2,335,106	$	7,900,000
	Acquisition Costs		139,502		78,757		60,356		278,615
	Total Investment Property	$	3,654,934	$	2,128,219	$	2,395,462	$	8,178,615

14

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Pro-forma Financial Information

The following unaudited pro-forma information presents the combined results of operations for the three and six months ended June 30, 2022 as if all acquisitions of manufactured housing communities during the three and six months ended June 30, 2022, as well as several probable future acquisitions, had all occurred on January 1, 2022.

The below also presents the combined results of operations for the three and six months ended June 30, 2021 as if all acquisitions of manufactured housing communities during the year ended December 31, 2021 and during the three and six months ended June 30, 2022, as well as several probable future acquisitions, had all occurred on January 1, 2021.

	Three Months Ended June 30,						Six Months Ended June 30,
	2022 Pro Forma			2021 Pro Forma			2022 Pro Forma			2021 Pro Forma
Revenue	$	3,922,613		$	3,633,142		$	7,708,707		$	7,270,337
Community operating expenses		1,535,595			1,348,137			2,912,618			2,806,577
Corporate payroll and overhead expenses		1,254,918			583,733			2,163,996			1,164,467
Depreciation expense		972,911			977,801			1,922,654			1,953,287
Interest expense		1,432,720			968,208			2,783,505			1,950,908
Refinance costs		15,751			-			15,751			16,675
Cost of home sales		122,269			-			154,734			-
Other income		-			139,300			-			139,300
Net income (loss)		(1,411,551	)		(105,437	)		(2,244,551	)		(482,277	)
Net income (loss) attributable to non-controlling interest		(250,915	)		58,954			(425,107	)		46,762
Net loss attributable to Manufactured Housing Properties, Inc		(1,160,636	)		(164,391	)		(1,819,444	)		(529,039	)
Preferred stock dividends / accretion		548,214			540,134			1,096,424			1,069,674
Net income (loss)	$	(1,708,852	)	$	(704,525	)	$	(2,915,868	)	$	(1,598,713	)
Net loss per share	$	(0.13	)	$	(0.05	)	$	(0.23	)	$	(0.12	)

15

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(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 these promissory notes range from 3.250% to 5.875% with 5 to 30 years principal amortization. Three of the promissory notes had an initial 12 month, one an initial 18 month, six an initial 24 month, six an initial 36 month, one an initial 60 month, and one promissory note a 180 month period of interest only payments. The promissory notes are secured by the real estate assets and twenty-one loans totaling $45,308,733 are guaranteed by Raymond M. Gee.

As of June 30, 2022, the outstanding balance on these notes was $55,114,344. The following are the terms of these notes:

	Maturity Date	Interest Rate			Balance June 30, 2022			Balance December 31, 2021
Pecan Grove MHP LLC	02/22/29		5.250	%	$	2,933,462		$	2,969,250
Azalea MHP LLC	03/01/29		5.400	%		811,027			790,481
Holly Faye MHP LLC	03/01/29		5.400	%		546,753			579,825
Chatham MHP LLC	04/01/24		5.875	%		1,679,979			1,698,800
Lakeview MHP LLC	03/01/29		5.400	%		1,789,063			1,805,569
B&D MHP LLC	05/02/29		5.500	%		1,755,502			1,779,439
Hunt Club MHP LLC	01/01/33		3.430	%		2,374,578			2,398,689
Crestview MHP LLC	12/31/30		3.250	%		4,617,309			4,682,508
Maple Hills MHP LLC	12/01/30		3.250	%		2,308,655			2,341,254
Springlake MHP LLC	12/10/26		4.750	%		4,016,250			4,016,250
ARC MHP LLC	01/01/30		5.500	%		3,770,365			3,809,742
Countryside MHP LLC	03/20/50		5.500	%		1,669,702			1,684,100
Evergreen MHP LLC	04/01/32		3.990	%		1,104,642			1,115,261
Golden Isles MHP LLC	03/31/26		4.000	%		787,500			787,500
Anderson MHP LLC*	07/10/26		5.210	%		2,153,807			2,153,807
Capital View MHP LLC*	09/10/26		5.390	%		817,064			817,064
Hidden Oaks MHP LLC*	09/10/26		5.330	%		823,440			823,440
North Raleigh MHP LLC	11/01/26		4.750	%		5,247,746			5,304,409
Charlotte 3 Park MHP LLC (Dixie, Driftwood, Meadowbrook)⁽¹⁾	03/01/22		5.000	%		-			1,500,000
Charlotte 3 Park MHP LLC (Dixie, Driftwood, Meadowbrook)*	11/01/28		4.250	%		1,875,000			-
Carolinas 4 MHP LLC (Asheboro, Morganton)*	01/10/27		5.300	%		3,105,070			3,105,070
Sunnyland MHP LLC*	02/10/27		5.370	%		1,123,980			-
Warrenville MHP LLC*	03/10/27		5.590	%		1,218,870			-
Gvest Finance LLC (B&D homes)	05/01/24		5.000	%		634,733			657,357
Gvest Finance LLC (Countryside homes)	03/20/50		5.500	%		1,276,834			1,287,843
Gvest Finance LLC (Golden Isles homes)	03/31/36		4.000	%		787,500			787,500
Gvest Anderson Homes LLC*	07/10/26		5.210	%		1,992,015			2,006,193
Gvest Capital View Homes LLC*	09/10/26		5.390	%		342,936			342,936
Gvest Hidden Oaks Homes LLC*	09/10/26		5.330	%		411,063			416,560
Gvest Carolinas 4 Homes LLC (Asheboro, Morganton)*	01/10/27		5.300	%		1,282,349			1,294,930
Gvest Sunnyland Homes LLC*	02/10/27		5.370	%		636,020			-
Gvest Warrenville Homes LLC*	03/10/27		5.590	%		1,221,130			-
Total Notes Payable					$	55,114,344		$	50,955,777
Discount Direct Lender Fees						(2,390,363	)		(2,064,294	)
Total Net of Discount					$	52,723,981		$	48,891,483

⁽¹⁾

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.

*	The notes indicated above are subject to certain financial covenants.

16

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Lines of Credit – Variable Interest Entities

Facility	Borrower	Community	Maturity Date	Interest Rate	Maximum Credit Limit		Balance June 30, 2022			Balance December 31, 2021
Occupied Home Facility⁽¹⁾	Gvest Homes I LLC	ARC, Crestview, Maple	01/01/30	8.375%	$	20,000,000	$	2,484,999		$	2,517,620
Multi-Community Rental Home Facility	Gvest Finance LLC	ARC, Golden Isles	Various ⁽³⁾	Greater of 3.25% or Prime, + 375 bps	$	4,000,000	$	1,218,259		$	838,000
Multi-Community Floorplan Home Facility⁽¹⁾⁽²⁾	Gvest Finance LLC	Golden Isles, Springlake, Sunnyland, Crestview	Various ⁽³⁾	LIBOR + 6 – 8% based on days outstanding	$	2,000,000	$	1,768,849		$	1,104,255
Springlake Home Facility⁽²⁾	Gvest Finance LLC	Springlake	12/10/26	6.75%	$	3,300,000	$	2,489,044		$	1,892,481
Total Lines of Credit - VIEs							$	7,961,151		$	6,352,356
Discount Direct Lender Fees							$	(173,508	)	$	(151,749	)
Total Net of Discount							$	7,787,643		$	6,200,607

(1)

During the six months ended June 30, 2022, the Company drew down $19,145 related to the Occupied Home Facility and $1,251,321 related to the Multi-Community Floorplan Home Facility and $414,578 was transferred from the Multi-Community Floorplan Home Facility to the Multi-Community Rental Home Facility as the homes became occupied as rental units. Also during the six month ended June 30 2022, the Company drew down $596,563 related to the Springlake Home Facility and used the proceeds to pay down the same amount on the Multi-Community Floorplan Home Facility so that all homes at Springlake were financed by one lender.

(2)	Payments on the Multi-Community Floorplan Home Facility advances are interest only until each advance is paid off or transferred to the Multi-Community Rental Home Facility and payments on the Springlake Home Facility are interest only for the first six months.

(3)	The maturity date of the of the Multi-Community Floorplan 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.

17

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Metrolina Promissory Note

On October 22, 2021, the Company issued a promissory note to Metrolina Loan Holdings, LLC (“Metrolina”), a significant stockholder, in the principal amount of $1,500,000. The note bears interest at a rate of 18% per annum and matures on April 1, 2023. During the first six months of the note, any prepayment would have required the Company to pay a yield maintenance fee equal to six months of interest. Thereafter, the loan may be prepaid at any time without penalty or fee. The note is guaranteed by Raymond M. Gee. As of June 30, 2022 and December 31, 2021, the balance on this note was $1,500,000. During the six months ended June 30, 2022 and 2021, interest expense totaled $133,890 and $0, respectively. During the three months ended June 30, 2022 and 2021, interest expense totaled $67,315 and $0, respectively.

Raymond M. Gee Promissory Note

On October 1, 2017, the Company issued a revolving promissory note to Raymond M. Gee, pursuant to which the Company could borrow up to $1,500,000 from Mr. Gee on a revolving basis for working capital purposes. In September 2020, the Company paid off the full balance; however, the line of credit remained available to the Company until it was cancelled in December 2021. As of June 30, 2022 and December 31, 2021, there was no outstanding balance on the note.

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 $1,500,000 on a revolving basis for working capital or acquisition purposes. On the same date, the Company borrowed $150,000. During the six months ended June 30, 2022, the maximum credit limit on this note was increased to $2,000,000 and the Company borrowed an aggregate of $2,700,000 and repaid $850,000. As of June 30, 2022 and December 31, 2021, the outstanding balance on this note was $2,000,000 and $150,000, respectively. This note has a five-year term and is interest-only based on an 15% annual rate through the maturity date and is unsecured. During the three and six months ended June 30, 2022 and 2021, interest expense totaled $13,657 and $0 and $28,375 and $0, 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 June 30, 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 an 15% annual rate through the maturity date and is unsecured. During the three and six months ended June 30, 2022, interest expense totaled $833.

Pending Debt Refinance

During the six months ended June 30, 2022, the Company entered into an agreement with a lender to potentially refinance several of their loans pursuant to which the Company paid $1,668,690 in financing costs which are included in other assets on the balance sheet. As of the date of this report, the company has not entered into a binding agreement and are still negotiating loan proceeds and terms of the new loans.

Maturities of Long-Term Obligations for Five Years and Beyond

The minimum annual principal payments of notes payable at June 30, 2022 by fiscal year were:

2022		434,661
2023		2,724,612
2024		5,084,441
2025		1,365,854
2026		19,111,728
Thereafter		39,854,199
Total minimum principal payments	$	68,575,494

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.

18

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(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 and Series C 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 six months ended June 30, 2022 and 2021, the Company paid dividends of $188,600 and $187,167, 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 $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 six months ended June 30, 2022 and 2021, the Company recorded a put option value accretion of $235,746 and $236,250, 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 June 30, 2022 and December 31, 2021, there were 1,886,000 shares of Series A Preferred Stock issued and outstanding. As of June 30, 2022, the Series A Preferred Stock balance was made up of Series A Preferred Stock totaling $4,715,000 and accretion of put options totaling $1,362,521. As of December 31, 2021, the Series A Preferred Stock balance was made up of Series A Preferred Stock totaling $4,715,000 and accretion of put options totaling $1,126,771.

19

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 and Series C 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 six months ended June 30, 2022 and 2021, the Company paid dividends of $303,570 and $275,731, 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. During the six months ended June 30, 2022 and 2021, the Company recorded a put option value accretion of $368,508 and $370,526, respectively.

Voting Rights. The Company may not authorize or issue any class or series of equity securities ranking senior to the Series B Preferred Stock as to dividends or distributions upon liquidation (including securities convertible into or exchangeable for any such senior securities) or amend the Company’s articles of incorporation (whether by merger, consolidation, or otherwise) to materially and adversely change the terms of the Series B Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to be cast on such matter by holders of outstanding shares of Series B Preferred Stock, voting together as a class. Otherwise, holders of the shares of Series B Preferred Stock do not have any voting rights.

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

On November 1, 2019, the Company launched an offering under Regulation A of Section 3(6) of the Securities Act of 1933, as, amended, for Tier 2 offerings, pursuant to which the Company offered up to 1,000,000 shares of Series B Preferred Stock at an offering price of $10.00 per share, for a maximum offering amount of $10,000,000. In addition, the Company offered bonus shares to early investors in this offering, whereby the first 400 investors received, in addition to Series B Preferred Stock, 100 shares of Common Stock, regardless of the amount invested, for a total of 40,000 shares of Common Stock.

This offering terminated on March 30, 2021 thus, the Company sold no shares of Series B Preferred Stock during the six months ended June 30, 2022. During the six months ended June 30, 2021, the Company sold an aggregate of 117,297 shares of Series B Preferred Stock for total gross proceeds of $1,172,970. After deducting a placement fee and other expenses, the Company received net proceeds of $1,087,485.

As of June 30, 2022, there were 758,551 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 $7,185,716 and accretion of put options totaling $1,701,386. As of December 31, 2021, there were 758,551 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 $7,185,716 and accretion of put options totaling $1,332,878.

20

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 and Series B 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 six months ended June 30, 2022, the Company paid dividends of $275,137. Due to timing of payments, the Company accrued dividends of $55,785 during the six months ended June 30, 2022 and total accrued dividends of $82,746 is presented in accrued liabilities on the balance sheet as of June 30, 2022.

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.

21

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

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 (4^th) 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 (4^th) 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 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 million.

During the six months ended June 30, 2022, the Company sold an aggregate of 6,303 shares of Series C Preferred Stock for total gross proceeds of $6,297,617. After deducting a placement fee and other expenses, the Company received net proceeds of $5,877,935.

As of June 30, 2022 there were 12,037 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 $12,032,017 net of total unamortized debt issuance costs of $863,892.

As of December 31, 2021, there were 5,734 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 $5,734,400 net of total unamortized debt issuance costs of $520,030.

Common Stock

The Company is authorized to issue up to 200,000,000 shares of Common Stock, par value $0.01 per share. As of June 30, 2022 and December 31, 2021, there were 12,412,013 and 12,403,680 shares of Common Stock issued and outstanding, respectively.

Stock Issued for Cash

During the six months ended June 30, 2022, the Company issued 8,333 shares of Common Stock upon employee exercise of stock options for total exercise price of $83.

During the six months ended June 30, 2021, the Company issued 5,100 shares of Common Stock, valued at $1,377, to early investors in the prior Regulation A offering.

22

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Equity Incentive Plan

In December 2017, the Board of Directors, with the approval of a majority of the stockholders of the Company, adopted the Manufactured Housing Properties Inc. Stock Compensation Plan (the “Plan”) which is administered by the Compensation Committee. As of June 30, 2022, there were 574,842 shares granted and 425,158 shares remaining available under the Plan. The Company has issued options to directors, officers, and employees under the Plan.

During the six months ended June 30, 2022 and 2021, the Company issued 145,000 and 50,000 options and recorded stock option expense of $77,822 and $37,817, respectively. The aggregate fair value of the options issued was $570,221. The vesting schedule for 100,000 options issued to an officer in April 2022 is as follows: one third vest after one year, and two thirds vest in equal installments over the succeeding two-year period. The vesting schedule for the other 45,000 options issued during the six months ended 2022 is as follows: one third vest immediately, and two thirds vest in equal annual installments over the succeeding two-year period. 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 following table summarizes the stock options outstanding as of June 30, 2022:

	Number of options			Weighted average exercise price (per share)			Weighted average remaining contractual term (in years)
Outstanding at December 31, 2021		706,175		$	0.01			6.6
Granted		145,000			0.01			9.7
Exercised		(8,333	)		(0.01	)		(9.6	)
Forfeited / cancelled / expired		(268,000	)		(0.01	)		(6.1	)
Outstanding at June 30, 2022		574,842		$	0.01			6.9
Exercisable at June 30, 2022		428,176			0.01			6.0

As of June 30, 2022, there were 574,842 “in-the-money” options with an aggregate intrinsic value of $1,057,709. 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 June 30, 2022.

The following table summarizes information concerning options outstanding as of June 30, 2022.

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		338,675		5.5	$	0.01		338,675	$	0.01
$	0.01		49,500		7.5	$	0.01		49,500	$	0.01
$	0.01		50,000		8.5	$	0.01		33,333	$	0.01
$	0.01		136,667		9.7	$	0.01		6,667	$	0.01

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	June 30, 2022	June 30, 2021
Risk-free interest rate	1.40-2.84%	0.26-1.40%
Expected dividend yield	0.00%	0.00%
Expected volatility	237.85-249.77%	16.03-273.98%
Expected life of options (in years)	6.5-7	6.5

23

MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

NOTE 8 – RELATED PARTY TRANSACTIONS

See Note 5 for information regarding the promissory notes issued to Metrolina, a significant stockholder, 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 six months ended June 30, 2022 and 2021, the Company paid $72,000 of rent expense to 136 Main Street LLC. During the three months ended June 30, 2022 and 2021, the Company paid $36,000 of rent expense to 136 Main Street LLC.

During the six months ended June 30, 2022, Raymond M. Gee received fees totaling $620,000 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. During the six months ended June 30, 2021, Mr. Gee received no fees for his personal guaranty.

See Note 2 for information regarding related party VIEs.

NOTE 9 – SUBSEQUENT EVENTS

Additional Closings of Regulation A Offering

Subsequent to June 30, 2022, we sold an aggregate of 1,447 shares of Series C Preferred Stock in additional closings of this offering for total gross proceeds of $1,447,000. After deducting a placement fee, we received net proceeds of approximately $1,349,728.

Red Fox Run Acquisition

On February 11, 2022, MHP Pursuits LLC entered into a purchase and sale agreement with an individual for the purchase of a manufactured housing community located in Clyde, North Carolina, a part of the Asheville Metropolitan Statistical Area, consisting of 51 sites and 51 homes on approximately 9 acres for a total purchase price of $3,050,000. On July 12, 2022, MHP Pursuits LLC assigned its rights and obligations in the purchase agreement to Red Fox MHP LLC, an entity wholly owned by the Company, pursuant to an assignment of purchase and sale agreement. On July 29, 2022, closing of the purchase agreement was completed and Red Fox MHP LLC purchased the land, land improvement, and buildings. Proforma financial information is included in the unaudited proforma combined results of operations in Note 4.

In connection with the closing of the property, on July 29, 2022, Red Fox MHP LLC entered into a loan agreement with Charlotte Metro Credit Union for a loan in the principal amount of $2,250,000 and issued a promissory note to the lender for the same amount.

Interest on the disbursed and unpaid principal balance accrues as follows: (a) from the date funds are first disbursed at a rate of 5.25% per annum, interest only for the first twenty-four months, and (b) on September 1, 2024, interest on the disbursed and unpaid principal balance accrues at a rate 5.25% per annum until maturity. Interest is calculated on the basis of a 365-day year and the actual number of calendar days elapsed. Payments will begin on September 1, 2024 and continue the 1^st of every month until maturity on August 1, 2032. Red Fox MHP LLC may prepay the note in part or in full at any time without penalty.

The note is secured by a first priority security interest in the property and is guaranteed by the Company and Raymond M. Gee. The loan agreement and note contain customary financial and other covenants and events of default for a loan of its type.

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MANUFACTURED HOUSING PROPERTIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022 AND 2021

(UNAUDITED)

Solid Rock Acquisition

On February 25, 2022, MHP Pursuits LLC entered into a purchase and sale agreement with K10 Enterprises LLC for the purchase of a manufactured housing community located in Leesville, South Carolina, consisting of 39 sites and homes on approximately 11 acres for a total purchase price of $1,700,000. On July 7, 2022, MHP Pursuits LLC assigned its rights and obligations in the purchase agreement to Solid Rock MHP LLC and Solid Rock MHP Homes LLC, wholly owned subsidiaries of the Company, pursuant to an assignment of purchase and sale agreement. On July 7, 2022, closing of the purchase agreement was completed and Solid Rock MHP LLC purchased the land and land improvements and Solid Rock MHP Home LLC purchased the buildings. Proforma financial information is included in the unaudited proforma combined results of operations in Note 4.

In connection with the closing of the property, on July 7, 2022, Solid Rock MHP LLC entered into a loan agreement with United Bank for a loan in the principal amount of $1,125,000 and issued a promissory note to the lender for the same amount.

Interest on the disbursed and unpaid principal balance accrues from the date funds are first disbursed at a rate of 5% per annum, interest only for the first twelve months. The interest rate may change on June 30, 2027 and every five years thereafter based on the Wall Street Journal U.S. Prime Rate plus 1 percentage point with the minimum rate being 5%. Interest is calculated on the basis of a 360-day year and the actual number of calendar days elapsed. Payments began on July 30, 2022 and continue the 30^th of every month until maturity on July 7, 2032. Solid Rock MHP LLC may prepay the note in part or in full at any time if it pays a prepayment premium calculated in accordance with the loan agreement.

The note is secured by a first priority security interest in the property and is guaranteed by Raymond M. Gee. The loan agreement and note contain customary financial and other covenants and events of default for a loan of its type.

Stock Options Exercise

On August 2, 2022, the Company issued 50,000 common shares upon exercise of stock options pursuant to the Stock Compensation Plan administered by the Compensation Committee and a settlement agreement and release between the Company and a former employee.

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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, or 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 that 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.

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We own and operate forty-seven manufactured housing communities containing approximately 2,260 developed sites and 1,195 company-owned, manufactured homes. Our communities are located in Georgia, North Carolina, South Carolina and Tennessee.

As of June 30, 2022, our portfolio of manufactured housing properties consisted of the following:

●

Pecan Grove – a 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 – a 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 224 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* – a 84 lot all-age community situated on 45.4 acres and located in Asheboro, North Carolina.

	●	*Sunnyland –* a 73 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 (Spaulding) –* a 72 lot all-age community situated on 17 acres and located in Brunswick, Georgia.

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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 A Offering

Subsequent to June 30, 2022, we sold an aggregate of 1,447 shares of Series C Preferred Stock in additional closings of this offering for total gross proceeds of $1,447,000. After deducting a placement fee, we received net proceeds of approximately $1,349,728.

Red Fox Run Acquisition

On February 11, 2022, MHP Pursuits LLC entered into a purchase and sale agreement with an individual for the purchase of a manufactured housing community located in Clyde, North Carolina, a part of the Asheville Metropolitan Statistical Area, consisting of 51 sites and 51 homes on approximately 9 acres for a total purchase price of $3,050,000. On July 12, 2022, MHP Pursuits LLC assigned its rights and obligations in the purchase agreement to Red Fox MHP LLC, an entity wholly owned by the Company, pursuant to an assignment of purchase and sale agreement. On July 29, 2022, closing of the purchase agreement was completed and Red Fox MHP LLC purchased the land, land improvement, and buildings. Proforma financial information is included in the unaudited proforma combined results of operations in Note 4.

In connection with the closing of the property, on July 29, 2022, Red Fox MHP LLC entered into a loan agreement with Charlotte Metro Credit Union for a loan in the principal amount of $2,250,000 and issued a promissory note to the lender for the same amount.

Interest on the disbursed and unpaid principal balance accrues as follows: (a) from the date funds are first disbursed at a rate of 5.25% per annum, interest only for the first twenty-four months, and (b) on September 1, 2024, interest on the disbursed and unpaid principal balance accrues at a rate 5.25% per annum until maturity. Interest is calculated on the basis of a 365-day year and the actual number of calendar days elapsed. Payments began on September 1, 2024 and continue the 1^st of every month until maturity on August 1, 2032. Red Fox MHP LLC may prepay the note in part or in full at any time without penalty.

The note is secured by a first priority security interest in the property and is guaranteed by the Company and Raymond M. Gee. The loan agreement and note contain customary financial and other covenants and events of default for a loan of its type.

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Solid Rock Acquisition

On February 25, 2022, MHP Pursuits LLC entered into a purchase and sale agreement with K10 Enterprises LLC for the purchase of a manufactured housing community located in Leesville, South Carolina, consisting of 39 sites and homes on approximately 11 acres for a total purchase price of $1,700,000. On July 7, 2022, MHP Pursuits LLC assigned its rights and obligations in the purchase agreement to Solid Rock MHP LLC and Solid Rock MHP Homes LLC, wholly owned subsidiaries of the Company, pursuant to an assignment of purchase and sale agreement. On July 7, 2022, closing of the purchase agreement was completed and Solid Rock MHP LLC purchased the land and land improvements and Solid Rock MHP Home LLC purchased the buildings. Proforma financial information is included in the unaudited proforma combined results of operations in Note 4.

In connection with the closing of the property, on July 7, 2022, Solid Rock MHP LLC entered into a loan agreement with United Bank for a loan in the principal amount of $1,125,000 and issued a promissory note to the lender for the same amount.

Interest on the disbursed and unpaid principal balance accrues from the date funds are first disbursed at a rate of 5% per annum, interest only for the first twelve months. The interest rate may change on June 30, 2027 and every five years thereafter based on the Wall Street Journal U.S. Prime Rate plus 1 percentage point with the minimum rate being 5%. Interest is calculated on the basis of a 360-day year and the actual number of calendar days elapsed. Payments began on July 30, 2022 and continue the 30^th of every month until maturity on July 7, 2032. Solid Rock MHP LLC may prepay the note in part or in full at any time if it pays a prepayment premium calculated in accordance with the loan agreement.

The note is secured by a first priority security interest in the property and is guaranteed by Raymond M. Gee. The loan agreement and note contain customary financial and other covenants and events of default for a loan of its type.

Impact of Coronavirus Pandemic

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. On March 11, 2020, the World Health Organization declared the outbreak a pandemic, and on March 13, 2020, the United States declared a national emergency.

Some states and cities, including some where the Company’s properties are located, reacted by instituting quarantines, restrictions on travel, “stay at home” rules and restrictions on the types of businesses that may continue to operate and is what capacity, as well as guidance in response to the pandemic and the need to contain it.

The rules and restrictions put in place have had a negative impact on the economy and business activity and may adversely impact the ability of the Company’s tenants, many of whom may be restricted in their ability to work, to pay their rent as and when due. Enforcing the Company’s rights as landlord against tenants who fail to pay rent or otherwise do not comply with the terms of their leases may not be possible as many jurisdictions, including those where are properties are located, have established rules and/or regulations preventing us from evicting tenants for certain periods in response to the pandemic. If the Company is unable to enforce its rights as landlords, our business would be materially affected.

The extent to which the pandemic may impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report, including new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment present material uncertainty and risk with respect to the Company’s performance, financial condition, results of operations and cash flows.

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Results of Operations

Comparison of Three Months Ended June 30, 2022 and 2021

The following table sets forth key components of our results of operations during the three months ended June 30, 2022 and 2021, both in dollars and as a percentage of our revenues.

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	Amount			Percent of Revenues			Amount			Percent of Revenues
Revenue
Rental and related income	$	3,283,777			97.40	%	$	1,776,377			98.72	%
Gross revenues from sales		87,594			2.60	%		23,061			1.28	%
Total revenues		3,371,371			100.00	%		1,799,438			100.00	%
Community operating expenses
Repair and maintenance		327,265			9.71	%		115,394			6.41	%
Real estate taxes		217,093			6.44	%		56,846			3.16	%
Utilities		239,985			7.12	%		142,325			7.91	%
Insurance		78,999			2.34	%		40,609			2.26	%
General and administrative expense		405,044			12.01	%		159,112			8.84	%
Total community operating expenses		1,268,386			37.62	%		514,286			28.58	%
Corporate payroll and overhead		1,254,918			37.22	%		583,733			32.44	%
Depreciation expense		818,975			24.29	%		462,042			25.68	%
Interest expense		1,235,048			36.63	%		447,306			24.86	%
Refinancing costs		15,751			0.47	%		-			-
Cost of home sales		122,269			3.63	%		-			-
Total expenses		4,715,347			136.24	%		2,007,367			111.56	%
Other income		-			-			139,300			7.74	%
Net loss	$	(1,343,976	)		(39.86	)%	$	(68,629	)		(3.81	)%
Variable interest entity share of net income (loss)		(250,915	)		(7.44	)%		118,348			6.58	%
Net loss attributable to our company	$	(1,093,061	)		(32.42	)%	$	(186,977	)		(10.39	)%
Preferred stock dividends and put option value accretion		548,214			16.26	%		540,134			30.02	%
Net loss attributable to common stockholders	$	(1,641,275	)		(48.68	)%	$	(727,111	)		(40.41	)%

Revenues. For the three months ended June 30, 2022, we earned total revenues of $3,371,371, as compared to $1,799,438 for the three months ended June 30, 2021, an increase of $1,571,933, or 87.36%. The increase in revenues between the periods was primarily due to $1,313,762 of rental income from the acquisition of twenty-seven manufactured housing communities subsequent to June 30, 2021. The remaining increase was due to occupancy and rental rate increases.

Community Operating Expenses. For the three months ended June 30, 2022, we incurred total community operating expenses of $1,268,386, as compared to $514,286 for the three months ended June 30, 2021, an increase of $754,100, or 146.63%. The increase in community operating expenses was primarily due to $454,831 of additional expenses associated with the twenty-seven properties acquired subsequent to June 30, 2021, including additional repairs and maintenance, insurance, utilities, and real estate tax expenses and additional payroll as we hired additional on-site maintenance staff at several of our new parks to increase efficiencies and decrease contract labor costs.

Corporate Payroll and Overhead Expenses. For the three months ended June 30, 2022, we incurred corporate payroll and overhead expenses of $1,254,918, as compared to $583,733 for the three months ended June 30, 2021, an increase of $671,185, or 114.98%. This increase was primarily due to increased payroll including corporate salaries and benefits expense of $572,531 due to hiring additional personnel to support our future growth, of which approximately $276,000 relates to nonrecurring sign-on bonuses and separation pay, and approximately $72,000 is due to additional marketing and travel expenses related to capital markets.

Depreciation Expense. For the three months ended June 30, 2022, we recorded depreciation of $818,975, as compared to $462,042 for the three months ended June 30, 2021, an increase of $356,933, or 77.25%. The increase in depreciation was driven by approximately $265,000 related to the depreciation of assets acquired in twenty-seven manufactured housing communities subsequent to June 30, 2021. The remaining increase was due to depreciation of capital improvement projects completed subsequent to June 30, 2021, such as home renovations and new home installations.

Interest Expense. For the three months ended June 30, 2022, we incurred interest expense of $1,235,048, as compared to $447,306 for the three months ended June 30, 2021, an increase of $787,742, or 176.11%. The increase was primarily due to $367,580 of interest on additional debt incurred to acquire new properties and new homes subsequent to June 30, 2021, $81,806 of interest on the related party notes issued subsequent to June 30, 2021, and $195,777 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.

Net Loss. The factors described above resulted in a net loss of $1,343,976 for the three months ended June 30, 2022, as compared to $68,629 for the three months ended June 30, 2021, an increase of $1,275,347, or 1,858.32%.

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Comparison of Six Months Ended June 30, 2022 and 2021

The following table sets forth key components of our results of operations during the six months ended June 30, 2022 and 2021, both in dollars and as a percentage of our revenues.

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	Amount			Percent of Revenues			Amount			Percent of Revenues
Revenue
Rental and related income	$	6,323,799			98.40	%	$	3,440,058			98.14	%
Gross revenues from home sales		102,594			1.60	%		65,244			1.86	%
Total revenues		6,426,393			100.00	%		3,505,302			100.00	%
Community operating expenses
Repair and maintenance		515,819			8.03	%		223,190			6.37	%
Real estate taxes		397,922			6.19	%		199,240			5.68	%
Utilities		475,880			7.41	%		299,312			8.54	%
Insurance		139,297			2.17	%		68,397			1.95	%
General and administrative expense		781,240			12.16	%		304,122			8.68	%
Total community operating expenses		2,310,158			35.95	%		1,094,261			31.22	%
Corporate payroll and overhead		2,163,996			33.67	%		1,164,467			33.22	%
Depreciation expense		1,578,679			24.57	%		903,665			25.78	%
Interest expense		2,336,741			36.36	%		893,354			25.49	%
Refinancing costs		15,751			0.25	%		16,675			0.48	%
Cost of home sales		154,734			2.41	%		-			-
Total expenses		8,560,059			133.20	%		4,072,422			116.18	%
Other Income		-			-			139,300			3.97	%
Net loss	$	(2,133,666	)		(33.20	)%	$	(427,820	)		(12.20	)%
Variable interest entity share of net income (loss)		(410,485	)		(6.39	)%		173,433			4.95	%
Net loss attributable to our company	$	(1,723,181	)		(26.81	)%	$	(601,253	)		(17.15	)%
Preferred stock dividends and put option value accretion		1,096,424			17.06	%		1,069,674			30.52	%
Net loss attributable to common stockholders	$	(2,819,605	)		(43.88	)%	$	(1,670,927	)		(47.67	)%

Revenues. For the six months ended June 30, 2022, we had total revenues of $6,426,393, as compared to $3,505,302 for the six months ended June 30, 2021, an increase of $2,921,091, or 83.33%. The increase in revenues between the periods was primarily due to $2,378,813 of rental income from the acquisition of twenty-seven manufactured housing communities subsequent to June 30, 2021 and increased property sales of $37,350. The remaining increase was due to occupancy and rental rate increases.

Community Operating Expenses. For the six months ended June 30, 2022, we had total community operating expenses of $2,310,158, as compared to $1,094,261 for the six months ended June 30, 2021, an increase of $1,215,897, or 111.12%. The increase in community operating expenses was primarily due to additional expenses of $887,390 associated with the twenty-seven properties acquired subsequent to June 30, 2021, including additional repairs and maintenance, insurance, utilities, and real estate tax expenses and we hired additional on-site maintenance staff at several of our new parks to increase efficiencies and decrease contract labor costs.

Corporate Payroll and Overhead Expenses. For the six months ended June 30, 2022, we had corporate payroll and overhead expenses of $2,163,996, as compared to $1,164,467 for the six months ended June 30, 2021, an increase of $999,529, or 85.84%. This increase was primarily due to increased payroll including corporate salaries and benefits expense of $451,793, one-time bonuses of $65,000 and separation payments of approximately $226,000, an increase in stock compensation expense of $49,114 due to issuance of stock options to officers hired to support our growth, approximately $161,000 of additional marketing and travel expenses, and $51,777 of pursuit costs written off in relation to abandoned potential acquisitions and development deals.

Depreciation Expense. For the six months ended June 30, 2022, we had depreciation expense of $1,578,679, as compared to $903,665 for the six months ended June 30, 2021, an increase of $675,014, or 74.70%. The increase in depreciation was driven by approximately $545,000 related to the acquisition of depreciable assets in twenty-seven manufactured housing communities subsequent to June 30, 2021. The remaining increase was due to depreciation of capital improvement projects completed subsequent to June 30, 2021, such as home renovations and new home installations.

Interest Expense. For the six months ended June 30, 2022, we had interest expense of $2,336,741, as compared to $893,354 for the six months ended June 30, 2021, an increase of $1,443,387, or 161.57%. The increase was primarily due to $657,499 of interest on additional debt incurred to acquire new properties and new homes subsequent to June 30, 2021, $163,099 of interest on the related party notes issued during the fourth quarter of 2021 described below, an increase in amortization of debt issuance costs of $143,902, and $330,922 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.

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Other Income. For the six months ended June 30, 2022, we had other income of $0 compared to $139,300 for the six months ended June 30, 2021 recognized upon the forgiveness of our Paycheck Protection Program loan by the Small Business Administration in June 2021.

Net Loss. The factors described above resulted in a net loss of $2,133,666 for the six months ended June 30, 2022, as compared to $427,820 for the six months ended June 30, 2021, an increase of $1,705,846, or 398.73%.

Liquidity and Capital Resources

As of June 30, 2022, we had cash and cash equivalents of $3,070,280, including restricted cash of $810,280. In addition to cash generated through operations, we use a variety of sources to fund our cash needs, including acquisitions and sales of properties. We intend to continue to increase our real estate investments. Our business plan includes acquiring communities that yield more than our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. Our ability to continue acquiring communities are dependent on our ability to raise capital. There is no guarantee that any of these additional opportunities will materialize or that we will be able to take advantage of such opportunities. The growth of our real estate portfolio depends on the availability of suitable properties which meet our investment criteria and appropriate financing.

We will require additional funding to finance the growth of our current and expected future operations as well as to achieve our strategic objectives. We believe that our current available cash along with anticipated revenues is sufficient to meet our cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to us, if at all.

We plan to meet our short-term liquidity requirements for the next twelve months, generally through available cash as well as cash provided by operating activities and with funds available to us under the existing two $2 million revolving promissory notes from our officers, described below. During the six months ended June 30, 2022, we entered into an agreement with a lender to potentially refinance several of our loans that would provide additional liquidity. As of the date of this report, we have not entered into a binding agreement and are still negotiating loan proceeds and terms of the new loans.

Summary of Cash Flow

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

Cash Flow

	Six Months Ended June 30,
	2022			2021
Net cash provided by operating activities	$	26,425		$	1,337,264
Net cash used in investing activities		(5,512,057	)		(1,382,525	)
Net cash provided by financing activities		6,449,583			166,208
Net increase in cash and cash equivalents		963,951			120,947
Cash and cash equivalents at beginning of period		2,106,329			1,988,857
Cash and cash equivalents at end of period	$	3,070,280		$	2,109,804

Net cash provided by operating activities was $26,425 for the six months ended June 30, 2022, as compared to $1,337,264 for the six months ended June 30, 2021. For the six months ended June 30, 2022, the net loss of $2,133,666 and decrease in accrued liabilities of $444,026 related to the payment of accrued 2021 employee bonuses, guarantee fees, and real estate taxes in January 2022, offset by depreciation in the amount of $1,578,679, amortization of debt issuance costs in the amount of $306,230, and an increase in other assets of $316,864, were the primary drivers of the net cash provided by operating activities. For the six months ended June 30, 2021, the net loss of $427,820, a decrease in other assets of $619,910, and debt extinguishment of $139,300, offset by depreciation in the amount of $903,665 and an increase in accrued liabilities of $37,232, were the primary drivers of the net cash provided by operating activities.

Net cash used in investing activities was $5,512,057 for the six months ended June 30, 2022, as compared to $1,382,525 for the six months ended June 30, 2021. Net cash used in investing activities for the six months ended June 30, 2022 consisted of purchases of investment properties in the amount of $3,697,135, payment of related acquisition costs of $296,170 and advanced pursuit costs and deposits for potential deals of $113,964, as well as cash paid for capital improvements in the amount of $1,507,381, offset by proceeds received from sale of homes of $102,594. Net cash used in investing activities for the six months ended June 30, 2021 consisted of capital improvements of $697,769 and the purchase of investment properties of $750,000, offset by proceeds from home sales of $65,244.

Net cash provided by financing activities was $6,449,583 for the six months ended June 30, 2022, as compared to $166,208 for the six months ended June 30, 2021. For the six months ended June 30, 2022, net cash provided by financing activities consisted primarily of proceeds from issuance of preferred stock of $6,297,617 and proceeds from related party lines of credit of $4,700,000, offset by repayment of notes payable of $416,434, prepayment of debt issuance costs related to upcoming potential portfolio refinance of $1,761,363, payment of mortgage costs and financing costs recorded as debt discount of $1,263,667, and preferred stock dividends of $485,570. Additionally, the Company repaid the Charlotte 3 Park MHP LLC note payable of $1,500,000 on March 1, 2022 and the community was subsequently refinanced on April 14, 2022 for $1,875,000. For the six months ended June 30, 2021, net cash provided by financing activities consisted of proceeds from the issuance of preferred stock of $1,087,485, offset by preferred share dividends of $462,898, repayment of notes payable $292,698, and payment of mortgage costs recorded as debt discount of $128,052.

32

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 million.

During the six months ended June 30, 2022, the Company sold an aggregate of 6,303 shares of Series C Cumulative Redeemable Preferred Stock for total gross proceeds of $6,297,617. After deducting a placement fee and other expenses, the Company received net proceeds of $5,877,935.

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 these promissory notes range from 3.250% to 5.875% with 5 to 30 years principal amortization. Three of the promissory notes had an initial 12 month, one an initial 18 month, six an initial 24 month, six an initial 36 month, one an initial 60 month, and one promissory note a 180 month period of interest only payments. The promissory notes are secured by the real estate assets and twenty-one loans totaling $45,308,733 are guaranteed by Raymond M. Gee.

As of June 30, 2022, the outstanding balance on these notes was $55,114,344. The following are the terms of these notes:

	Maturity Date		Interest Rate			Balance June 30, 2022			Balance December 31, 2021
Pecan Grove MHP LLC		02/22/29		5.250	%	$	2,933,462		$	2,969,250
Azalea MHP LLC		03/01/29		5.400	%		811,027			790,481
Holly Faye MHP LLC		03/01/29		5.400	%		546,753			579,825
Chatham MHP LLC		04/01/24		5.875	%		1,679,979			1,698,800
Lakeview MHP LLC		03/01/29		5.400	%		1,789,063			1,805,569
B&D MHP LLC		05/02/29		5.500	%		1,755,502			1,779,439
Hunt Club MHP LLC		01/01/33		3.430	%		2,374,578			2,398,689
Crestview MHP LLC		12/31/30		3.250	%		4,617,309			4,682,508
Maple Hills MHP LLC		12/01/30		3.250	%		2,308,655			2,341,254
Springlake MHP LLC		12/10/26		4.750	%		4,016,250			4,016,250
ARC MHP LLC		01/01/30		5.500	%		3,770,365			3,809,742
Countryside MHP LLC		03/20/50		5.500	%		1,669,702			1,684,100
Evergreen MHP LLC		04/01/32		3.990	%		1,104,642			1,115,261
Golden Isles MHP LLC		03/31/26		4.000	%		787,500			787,500
Anderson MHP LLC*		07/10/26		5.210	%		2,153,807			2,153,807
Capital View MHP LLC*		09/10/26		5.390	%		817,064			817,064
Hidden Oaks MHP LLC*		09/10/26		5.330	%		823,440			823,440
North Raleigh MHP LLC		11/01/26		4.750	%		5,247,746			5,304,409
Charlotte 3 Park MHP LLC (Dixie, Driftwood, Meadowbrook)⁽¹⁾		03/01/22		5.000	%		-			1,500,000
Charlotte 3 Park MHP LLC (Dixie, Driftwood, Meadowbrook)*		11/01/28		4.250	%		1,875,000			-
Carolinas 4 MHP LLC (Asheboro, Morganton)*		01/10/27		5.300	%		3,105,070			3,105,070
Sunnyland MHP LLC*		02/10/27		5.370	%		1,123,980			-
Warrenville MHP LLC*		03/10/27		5.590	%		1,218,870			-
Gvest Finance LLC (B&D homes)		05/01/24		5.000	%		634,733			657,357
Gvest Finance LLC (Countryside homes)		03/20/50		5.500	%		1,276,834			1,287,843
Gvest Finance LLC (Golden Isles homes)		03/31/36		4.000	%		787,500			787,500
Gvest Anderson Homes LLC*		07/10/26		5.210	%		1,992,015			2,006,193
Gvest Capital View Homes LLC*		09/10/26		5.390	%		342,936			342,936
Gvest Hidden Oaks Homes LLC*		09/10/26		5.330	%		411,063			416,560
Gvest Carolinas 4 Homes LLC (Asheboro, Morganton)*		01/10/27		5.300	%		1,282,349			1,294,930
Gvest Sunnyland Homes LLC*		02/10/27		5.370	%		636,020			-
Gvest Warrenville Homes LLC*		03/10/27		5.590	%		1,221,130			-
Total Notes Payable							55,114,344			50,955,777
Discount Direct Lender Fees							(2,390,363	)		(2,064,294	)
Total Net of Discount						$	52,723,981		$	48,891,483

⁽¹⁾

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.

*

The notes indicated above are subject to certain financial covenants.

33

Lines of Credit – Variable Interest Entities

Facility	Borrower		Community		Maturity Date		Interest Rate		Maximum Credit Limit		Balance June 30, 2022			Balance December 31, 2021
Occupied Home Facility⁽¹⁾		Gvest Homes I LLC		ARC, Crestview, Maple		01/01/30		8.375%	$	20,000,000	$	2,484,999		$	2,517,620
Multi-Community Rental Home Facility		Gvest Finance LLC		ARC, Golden Isles		Various ⁽³⁾		Greater of 3.25% or Prime, + 375 bps	$	4,000,000	$	1,218,259		$	838,000
Multi-Community Floorplan Home Facility⁽¹⁾⁽²⁾		Gvest Finance LLC		Golden Isles, Springlake, Sunnyland, Crestview		Various ⁽³⁾		LIBOR + 6 – 8% based on days outstanding	$	2,000,000	$	1,768,849		$	1,104,255
Springlake Home Facility⁽²⁾		Gvest Finance LLC		Springlake		12/10/26		6.75%	$	3,300,000	$	2,489,044		$	1,892,481
Total Lines of Credit - VIEs											$	7,961,151		$	6,352,356
Discount Direct Lender Fees											$	(173,508	)	$	(151,749	)
Total Net of Discount											$	7,787,643		$	6,200,607

(1)

During the six months ended June 30, 2022, the Company drew down $19,145 related to the Occupied Home Facility and $1,251,321 related to the Multi-Community Floorplan Home Facility and $414,578 was transferred from the Multi-Community Floorplan Home Facility to the Multi-Community Rental Home Facility as the homes became occupied as rental units. Also during the six month ended June 30 2022, the Company drew down $596,563 related to the Springlake Home Facility and used the proceeds to pay down the same amount on the Multi-Community Floorplan Home Facility so that all homes at Springlake were financed by one lender.

(2)	Payments on the Multi-Community Floorplan Home Facility advances are interest only until each advance is paid off or transferred to the Multi-Community Rental Home Facility and payments on the Springlake Home Facility are interest only for the first six months.

(3)	The maturity date of the of the Multi-Community Floorplan 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 (“Metrolina”), a significant stockholder, in the principal amount of $1,500,000. The note bears interest at a rate of 18% per annum and matures on April 1, 2023. During the first six months of the note, any prepayment would have required the Company to pay a yield maintenance fee equal to six months of interest. Thereafter, the loan may be prepaid at any time without penalty or fee. The note is guaranteed by Raymond M. Gee. As of June 30, 2022 and December 31, 2021, the balance on this note was $1,500,000. During the six months ended June 30, 2022 and 2021, interest expense totaled $133,890 and $0, respectively. During the three months ended June 30, 2022 and 2021, interest expense totaled $67,315 and $0, 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 $1,500,000 on a revolving basis for working capital or acquisition purposes. On the same date, the Company borrowed $150,000. During the six months ended June 30, 2022, the maximum credit limit on this note was increased to $2,000,000 and the Company borrowed an aggregate of $2,700,000 and repaid $850,000. As of June 30, 2022 and December 31, 2021, the outstanding balance on this note was $2,000,000 and $150,000, respectively. This note has a five-year term and is interest-only based on an 15% annual rate through the maturity date and is unsecured. During the three and six months ended June 30, 2022 and 2021, interest expense totaled $13,657 and $0 and $28,375 and $0, respectively.

34

NAV Real Estate LLC Promissory Note

On June 29, 2022, the Company issued a revolving promissory note to NAV RE, LLC, an entity whose sole owner is Adam Martin, the Company’s chief investment officer, 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 June 30, 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 an 15% annual rate through the maturity date and is unsecured. During the three and six months ended June 30, 2022, interest expense totaled $833.

Off-Balance Sheet Arrangements

As of June 30, 2022, we had no off-balance sheet arrangements.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our unaudited condensed consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that involve significant judgment and potentially could result in materially different results under different assumptions and conditions. Management believes the following critical accounting policies are affected by our more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements.

Revenue Recognition Mobile home rental and related income is generated from lease agreements for our sites and homes. The lease component of these agreements is accounted for under Topic 842 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for leases.

Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect the future lease payments. We consider the tenant’s payment history and current credit status when assessing collectability. When collectability is not deemed probable, we write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income to cash received.

Our revenues primarily consist of rental revenues and tenant fee income. We have the following revenue sources and revenue recognition policies:

●

Rental revenues include revenues from the leasing 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 our 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. We commence rental revenue recognition when the underlying asset is available for use by the lessee. Revenue derived from the reimbursement of utilities are generally recognized in the same period as the related expenses are incurred. Our leases are month-to-month.

35

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, we generally have no remaining performance obligation.

Acquisitions. We account for acquisitions as asset acquisitions in accordance with ASC 805, “Business Combinations,” and allocate the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, site and land improvements, buildings and improvements and rental homes. We allocate the purchase price of an acquired property generally determined by internal evaluation as well as third-party appraisal of the property obtained in conjunction with the purchase.

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 and Gvest Warrenville 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.

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 applicable GAAP.

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 six months ended June 30, 2022 and 2021.

36

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 June 30, 2022. 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, 2021 and further referenced below, which, due to employee turnover, we are still in the process of remediating as of June 30, 2022, our disclosure controls and procedures were not effective.

During its evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2022, 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:

●

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.

There were no changes in our internal controls over financial reporting during the second quarter of fiscal year 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

37

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 June 30, 2022 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.

During the three months ended June 30, 2022, 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.

We have no information to disclose that was required to be in a report on Form 8-K during the second quarter of fiscal year 2022 but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

38

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

10.1*		Loan Agreement, dated April 14, 2022, between Charlotte 3 Park MHP LLC, Raymond Gee, and Townebank

10.2*		Promissory Note, dated April 14, 2022, between Charlotte 3 Park MHP LLC and Townebank

10.3*		Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated April 14, 2022, between Charlotte 3 Park MHP LLC and Townebank

10.4*		Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated April 14, 2022, between Charlotte 3 Park MHP LLC and Townebank

10.5*		Assignment of Leases and Rents, dated April 14, 2022, between Charlotte 3 Park MHP LLC and Townebank

10.6*		Mortgage, dated April 14, 2022, between Charlotte 3 Park MHP LLC and Townebank

10.7*		Amended and Restated Revolving Promissory Note, dated June 23, 2022, between Manufactured Housing Properties, Inc. and Gvest Real Estate Capital LLC

10.8*		Revolving Unsecured Promissory Note, dated June 29, 2022, between Manufactured Housing Properties Inc. and NAV Real Estate LLC

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

39

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: August 15, 2022	MANUFACTURED HOUSING PROPERTIES INC.

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

	/s/ Chelsea H. Gee
	Name: Chelsea H. Gee
	Title: Chief Financial Officer
	(Principal Financial and Accounting Officer)

40

12917253 12919302 12921463 12923355 0.06 0.11 0.13 0.20 During the three and six months ended June 30, 2022, there was no activity in Solid Rock MHP LLC, Solid Rock MHP Homes LLC, Red Fox MHP LLC, Meadowbrook MHP LLC, Sunnyland 2 MHP LLC, Country Estates MHP LLC, Northview MHP LLC, Statesville MHP LLC, Timberview MHP LLC, and Dalton 3 MHP LLC. 166504 166504 The notes indicated above are subject to certain financial covenants. 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. The maturity date of the of the Multi-Community Floorplan Line of Credit will vary based on each statement of financial transaction, a report identifying the funded homes and the applicable financial terms. During the six months ended June 30, 2022, the Company drew down $19,145 related to the Occupied Home Facility and $1,251,321 related to the Multi-Community Floorplan Home Facility and $414,578 was transferred from the Multi-Community Floorplan Home Facility to the Multi-Community Rental Home Facility as the homes became occupied as rental units. Also during the six month ended June 30 2022, the Company drew down $596,563 related to the Springlake Home Facility and used the proceeds to pay down the same amount on the Multi-Community Floorplan Home Facility so that all homes at Springlake were financed by one lender. Payments on the Multi-Community Floorplan Home Facility advances are interest only until each advance is paid off or transferred to the Multi-Community Rental Home Facility and payments on the Springlake Home Facility are interest only for the first six months. false --12-31 Q2 0001277998 0001277998 2022-01-01 2022-06-30 0001277998 2022-08-12 0001277998 2022-06-30 0001277998 2021-12-31 0001277998 us-gaap:SeriesCPreferredStockMember 2022-06-30 0001277998 us-gaap:SeriesCPreferredStockMember 2021-12-31 0001277998 us-gaap:SeriesAPreferredStockMember 2022-06-30 0001277998 us-gaap:SeriesAPreferredStockMember 2021-12-31 0001277998 us-gaap:SeriesBPreferredStockMember 2022-06-30 0001277998 us-gaap:SeriesBPreferredStockMember 2021-12-31 0001277998 2022-04-01 2022-06-30 0001277998 2021-04-01 2021-06-30 0001277998 2021-01-01 2021-06-30 0001277998 us-gaap:CommonStockMember 2020-12-31 0001277998 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001277998 us-gaap:RetainedEarningsMember 2020-12-31 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