November 15, 2021 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

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 September 30, 2021

☐ 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: 001-12681

GLOBAL SELF STORAGE, INC.

(Exact name of registrant as specified in its charter)

Maryland

13-3926714

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

Global Self Storage, Inc.

3814 Route 44

Millbrook, NY 12545

(212) 785-0900

(Address, including zip code, and telephone number, including area code, of Company’s principal executive offices)

Donald Klimoski II, Esq.

Global Self Storage, Inc.

3814 Route 44

Millbrook, NY 12545

(212) 785-0900

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common shares, $0.01 par value per share

SELF

NASDAQ

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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


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

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

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

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of October 29, 2021 was 10,708,613.

Table of Contents


STATEMENT ON FORWARD LOOKING INFORMATION			3
PART I – FINANCIAL INFORMATION			5
	Item 1.	Financial Statements (Unaudited).	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	36
	Item 4.	Controls and Procedures.	36
PART II – OTHER INFORMATION			38
	Item 1.	Legal Proceedings.	38
	Item 1A.	Risk Factors.	38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	39
	Item 3.	Defaults Upon Senior Securities.	39
	Item 4.	Mine Safety Disclosures.	39
	Item 5.	Other Information.	39
	Item 6.	Exhibits.	39
Exhibit Index			40
SIGNATURES			41

STATEMENT ON FORWARD LOOKING INFORMATION

Certain information presented in this report may contain “forward-looking statements” within the meaning of the federal securities laws including, but not limited to, the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward looking statements can be identified by terminology such as “believes,” “plans,” “intends,” “expects,” “estimates,” “may,” “will,” “should,” or “anticipates” or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements by the Company involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company, which may cause the Company’s actual results to be materially different from those expressed or implied by such statements. We may also make additional forward looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. All forward-looking statements, including without limitation, management’s examination of historical operating trends and estimates of future earnings, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved.

All forward looking statements apply only as of the date made. Except as required by law, we undertake no obligation to publicly update or revise forward looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. One of the most significant factors is the ongoing impact of the novel coronavirus (“COVID-19”) pandemic on the economy, the self storage industry and the broader financial markets. The Company is unable to predict whether the continuing effects of the COVID-19 pandemic will trigger a further economic slowdown and to what extent the Company will experience disruptions related to the COVID-19 pandemic. In particular, it is difficult to fully assess the impact of COVID-19 at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak domestically and internationally and the emergence and severity of COVID-19 variants, uncertainty regarding the effectiveness of federal, state and local governments' efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on the U.S. economy and economic activity, including the timing of the successful distribution of an effective vaccine. The outbreak of COVID-19 has also impacted, and is likely to continue to impact, directly or indirectly, many of the other important factors below and the risks described in “Item 1A. Risk Factors” included in our most recent annual report on Form 10-K and in this quarterly report and in our subsequent filings with the Securities and Exchange Commission (the “SEC”). Such factors include, but are not limited to:



general risks associated with the ownership and operation of real estate, including changes in demand, risks related to development or redevelopment (including expansions) of self storage properties, potential liability for environmental contamination, natural disasters and adverse changes in tax, real estate and zoning laws and regulations;



risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers;



the impact of competition from new and existing self storage and commercial properties and other storage alternatives;



difficulties in our ability to successfully evaluate, finance, integrate into our existing operations, and manage acquired and developed properties;



risks related to our development of new properties and expansions and related lease up at our existing properties and/or participation in joint ventures;



risks of ongoing litigation and other legal and regulatory actions, which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business;



the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing the environment, taxes and our tenant reinsurance business and real estate investment trusts (“REITs”), and risks related to the impact of new laws and regulations;



risk of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges to intercompany transactions with our taxable REIT subsidiaries;



changes in federal or state tax laws related to the taxation of REITs, which could impact our status as a REIT;



increases in taxes, fees and assessments from state and local jurisdictions;



security breaches or a failure of our networks, systems or technology;



our ability to obtain and maintain financing arrangements on favorable terms;



market trends in our industry, interest rates, the debt and lending markets or the general economy;



the timing of acquisitions and our ability to execute on our acquisition pipeline;



general volatility of the securities markets in which we participate;



changes in the value of our assets;



changes in interest rates and the degree to which our hedging strategies may or may not protect us from interest rate volatility;



our ability to continue to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes;



availability of qualified personnel;



difficulties in raising capital at a reasonable cost;



fiscal policies or inaction at the U.S. federal government level, which may lead to federal government shutdowns or negative impacts on the U.S economy;



estimates relating to our ability to make distributions to our stockholders in the future;



our ability to receive forgiveness for our proportionate share of the Paycheck Protection Program loan; and



economic uncertainty due to the impact of terrorism, infectious or contagious diseases or pandemics, or war.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2021			December 31, 2020
Assets
Real estate assets, net	$	58,790,221		$	59,768,533
Cash and cash equivalents		2,527,319			1,614,771
Restricted cash		231,505			340,672
Investments in securities		2,707,640			1,916,451
Accounts receivable		106,200			106,521
Prepaid expenses and other assets		510,420			351,764
Line of credit issuance costs, net		258,948			152,542
Goodwill		694,121			694,121
Total assets	$	65,826,374		$	64,945,375
Liabilities and equity
Note payable, net	$	18,036,797		$	18,389,176
Accounts payable and accrued expenses		1,439,711			1,373,308
Line of credit borrowing		—			5,144,000
Total liabilities		19,476,508			24,906,484
Commitments and contingencies
Equity
Preferred stock, $0.01 par value: 50,000,000 shares authorized, no shares outstanding		—			—
Common stock, $0.01 par value: 450,000,000 shares authorized, 10,708,613 and 9,343,118 issued and outstanding at September 30, 2021 and December 31, 2020, respectively		107,086			93,431
Additional paid in capital		46,766,712			40,455,409
Accumulated deficit		(523,932	)		(509,949	)
Total equity		46,349,866			40,038,891
Total liabilities and equity	$	65,826,374		$	64,945,375

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)

(Unaudited)




	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues
Rental income	$	2,608,664		$	2,237,424		$	7,402,570		$	6,521,176
Other property related income		102,428			90,989			288,249			246,148
Management fees and other income		19,426			17,496			56,408			52,341
Total revenues		2,730,518			2,345,909			7,747,227			6,819,665
Expenses
Property operations		940,372			907,350			2,831,693			2,698,639
General and administrative		594,547			564,162			1,804,371			1,822,353
Depreciation and amortization		409,763			509,219			1,221,938			1,527,901
Business development		1,797			471			6,635			10,528
Total expenses		1,946,479			1,981,202			5,864,637			6,059,421
Operating income		784,039			364,707			1,882,590			760,244
Other income (expense)
Dividend and interest income		19,533			17,648			56,396			62,017
Unrealized gain on marketable equity securities		81,992			245,571			791,189			27,402
Interest expense		(256,502	)		(290,802	)		(828,567	)		(891,107	)
Total other income (expense), net		(154,977	)		(27,583	)		19,018			(801,688	)
Net income (loss) and comprehensive income (loss)	$	629,062		$	337,124		$	1,901,608		$	(41,444	)
Earnings per share
Basic	$	0.06		$	0.04		$	0.19		$	(0.00	)
Diluted	$	0.06		$	0.04		$	0.19		$	(0.00	)
Weighted average shares outstanding
Basic		10,601,521			9,277,043			9,757,458			9,269,834
Diluted		10,635,006			9,290,984			9,787,317			9,269,834

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)


											Total
	Common Stock				Paid in			Accumulated			Stockholders'
	Shares		Par Value		Capital			Deficit			Equity
Balances at December 31, 2020		9,343,118	$	93,431	$	40,455,409		$	(509,949	)	$	40,038,891
Restricted stock grants issued		63,475		635		(635	)	—			—
Stock-based compensation	—		—			31,706		—				31,706
Net income	—		—		—				411,247			411,247
Dividends	—		—		—				(607,303	)		(607,303	)
Balances at March 31, 2021		9,406,593		94,066		40,486,480			(706,005	)		39,874,541
Restricted stock grants issued		12,300		123		(123	)	—			—
Issuance of common stock, net of expenses		1,289,720		12,897		6,171,787		—				6,184,684
Stock-based compensation	—		—			54,476		—				54,476
Net income	—		—		—				861,299			861,299
Dividends	—		—		—				(612,228	)		(612,228	)
Balances at June 30, 2021		10,708,613		107,086		46,712,620			(456,934	)		46,362,772
Stock-based compensation	—		—			54,092		—				54,092
Net income	—		—		—				629,062			629,062
Dividends	—		—		—				(696,060	)		(696,060	)
Balances at September 30, 2021		10,708,613	$	107,086	$	46,766,712		$	(523,932	)	$	46,349,866

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)


													Total
	Common Stock				Paid in				Retained				Stockholders'
	Shares		Par Value		Capital				Earnings				Equity
Balances at December 31, 2019		9,330,297	$	93,303	$	40,329,502			$	1,643,111			$	42,065,916
Restricted stock grants issued		25,905		259		(259	)		—				—
Stock-based compensation	—		—			29,162			—					29,162
Net loss	—		—		—					(356,424	)			(356,424	)
Dividends	—		—		—					(606,469	)			(606,469	)
Balances at March 31, 2020		9,356,202		93,562		40,358,405		-		680,218		-		41,132,185
Stock-based compensation	—		—			35,317			—					35,317
Net loss	—		—		—					(22,144	)			(22,144	)
Dividends	—		—		—					(608,154	)			(608,154	)
Balances at June 30, 2020		9,356,202		93,562		40,393,722				49,920				40,537,204
Stock-based compensation	—		—			35,283			—					35,283
Net income	—		—		—					337,124				337,124
Dividends	—		—		—					(608,153	)			(608,153	)
Balances at September 30, 2020		9,356,202	$	93,562	$	40,429,005			$	(221,109	)		$	40,301,458

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




	For the Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities
Net income (loss)	$	1,901,608		$	(41,444	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		1,221,938			1,527,901
Unrealized gain on marketable equity securities		(791,189	)		(27,402	)
Amortization of loan procurement costs		155,176			149,946
Stock-based compensation		140,274			99,762
Changes in operating assets and liabilities:
Accounts receivable		321			95,006
Prepaid expenses and other assets		(158,656	)		(275,825	)
Accounts payable and accrued expenses		64,324			(310,392	)
Net cash provided by operating activities		2,533,796			1,217,552
Cash flows from investing activities
Improvements and equipment additions		(243,626	)		(194,787	)
Construction	—				(1,402,573	)
Net cash used in investing activities		(243,626	)		(1,597,360	)
Cash flows from financing activities
Issuance of common stock, net of expenses		6,184,684		—
Line of credit (repayment) borrowing, net		(5,144,000	)		230,000
Issuance costs on renewal of revolving line of credit		(231,926	)	—
Principal payments on note payable		(382,035	)		(366,378	)
Dividends paid		(1,913,512	)		(1,819,845	)
Net cash used in financing activities		(1,486,789	)		(1,956,223	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		803,381			(2,336,031	)
Cash, cash equivalents, and restricted cash, beginning of period		1,955,443			4,253,565
Cash, cash equivalents, and restricted cash, end of period	$	2,758,824		$	1,917,534
Supplemental cash flow and noncash information
Cash paid for interest	$	688,695		$	757,537
Supplemental disclosure of noncash activities:
Dividends payable	$	2,079		$	2,930

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ORGANIZATION

Global Self Storage, Inc. (the “Company,” “we,” “our,” “us”) is a self-administered and self-managed Maryland real estate investment trust (“REIT”) that owns, operates, manages, acquires, develops and redevelops self storage properties (“stores” or “properties”) in the United States. As of September 30, 2021, through its wholly owned subsidiaries, the Company owned and/or managed 13 self-storage properties in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company operates primarily in one segment: rental operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Upon deregistration as an investment company, effective January 19, 2016, the Company’s status changed to an operating company from an investment company since it no longer met the assessment of an investment company under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 (“ASC 946”). The Company discontinued applying the guidance in ASC 946 and began to account for the change in status prospectively by accounting for its investments in accordance with other U.S. generally accepted accounting principles (“GAAP”) topics as of the date of the change in status.

The accompanying unaudited consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with GAAP for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The consolidated balance sheet as of December 31, 2020 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020.

Cash, Cash Equivalents, and Restricted Cash

The Company’s cash is deposited with financial institutions located throughout the United States and at times may exceed federally insured limits. Cash equivalents consists of money market fund shares and may include, among other things, highly liquid investments purchased with an original maturity of three months or less. Restricted cash is comprised of escrowed funds deposited with a bank relating to capital expenditures.

The carrying amount reported on the balance sheet for cash, cash equivalents, and restricted cash approximates fair value.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our unaudited consolidated balance sheets to the total amount shown in our consolidated statements of cash flows:


	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	2,527,319	$	1,614,771
Restricted cash		231,505		340,672
Total cash, cash equivalents, and restricted cash as shown in our unaudited consolidated statements of cash flows	$	2,758,824	$	1,955,443

Income Taxes

The Company has elected to be treated as a REIT under the IRC. In order to maintain its qualification as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to stockholders. The Company plans to continue to operate so that it meets the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail to meet these requirements, it would be subject to federal income tax. In managements’ opinion, the requirements to maintain these elections are being fulfilled. The Company is subject to certain state and local taxes.

The Company has elected to treat its corporate subsidiary, SSG TRS LLC, as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRS may perform additional services for tenants and may engage in any real estate or non-real estate related business. A TRS is subject to federal corporate income tax.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Company has reviewed its tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on federal, state, and local income tax returns for open tax years (2017 – 2020), or is expected to be taken in the Company’s 2021 tax returns.

Marketable Equity Securities

Investments in equity securities that have readily determinable fair values are measured at fair value. Gains or losses from changes in the fair value of equity securities are recorded in net income, until the investment is sold or otherwise disposed. The specific identification method is used to determine the realized gain or loss on investments sold or otherwise disposed.

Fair value is determined using a valuation hierarchy generally by reference to an active trading market, using quoted closing or bid prices. Judgment is used to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.

Real Estate Assets

Real estate assets are carried at the appreciated value as of January 19, 2016, the effective date of the Company’s change in status to an operating company, less accumulated depreciation from that date. Purchases subsequent to the effective date of the change in status are carried at cost, less accumulated depreciation. Direct and allowable internal costs associated with the development, construction, renovation, and improvement of real estate assets are capitalized. Property taxes and other costs associated with development incurred during a construction period are capitalized. A construction period begins when expenditures for a real estate asset have been made and activities that are necessary to prepare the asset for its intended use are in progress. A construction period ends when an asset is substantially complete and ready for its intended use.

Acquisition costs are accounted for in accordance with Accounting Standard Update ("ASU") No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business, which was adopted on January 1, 2018 and are generally capitalized for acquisitions that qualify as asset acquisitions. When properties are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Allocations to land, building and improvements, and equipment are recorded based upon their respective fair values as estimated by management.

In allocating the purchase price for an acquisition, the Company determines whether the acquisition includes intangible assets or liabilities. The Company allocates a portion of the purchase price to an intangible asset attributed to the value of in-place leases. This intangible is generally amortized to expense over the expected remaining term of the respective leases. Substantially all of the leases in place at acquired properties are at market rates, as the majority of the leases are month-to-month contracts.

Repairs and maintenance costs are charged to expense as incurred. Major replacements and betterments that improve or extend the life of the asset are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 39 years.

Derivative Financial Instruments

The Company carries all derivative financial instruments on the balance sheet at fair value. Fair value of derivatives is determined by reference to observable prices that are based on inputs not quoted on active markets, but corroborated by market data. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been designated and qualifies as part of a

hedging relationship. The Company’s use of derivative instruments has been limited to an interest rate cap agreement. The fair values of derivative instruments are included in prepaid expenses and other assets in the accompanying balance sheets. For derivative instruments not designated as cash flow hedges, the unrealized gains and losses are included in interest expense in the accompanying statements of operations. For derivatives designated as cash flow hedges, the effective portion of the changes in the fair value of the derivatives is initially reported in accumulated other comprehensive income (loss) in the Company’s balance sheets and subsequently reclassified into earnings when the hedged transaction affects earnings. The valuation analysis of the interest rate cap reflects the contractual terms of derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses generally consist of property tax accruals, unearned rental income, and trade payables.

Revenue and Expense Recognition

Revenues from stores, which are primarily composed of rental income earned pursuant to month-to-month leases for storage space, as well as associated late charges and administrative fees, are recognized as earned in accordance with ASC Topic 842, Leases. Promotional discounts reduce rental income over the promotional period. Ancillary revenues from sales of merchandise and tenant insurance and other income are recognized when earned.

The Company's management fees are earned subject to the terms of the related property management services agreements (“PSAs”). These PSAs provide that the Company will perform management services, which include leasing and operating the property and providing accounting, marketing, banking, maintenance and other services. These services are provided in exchange for monthly management fees, which are based on a percentage of revenues collected from stores owned by third parties. PSAs generally have original terms of three years, after which management services are provided on a month-to-month basis unless terminated. Management fees are due on the last day of each calendar month that management services are provided.

The Company accounts for the management services provided to a customer as a single performance obligation which are rendered over time each month in accordance with ASC Topic 606, Revenue from Contracts with Customers. The total amount of consideration from the contract is variable as it is based on monthly revenues, which are influenced by multiple factors, some of which are outside the Company's control. Therefore, the Company recognizes the revenue at the end of each month once the uncertainty is resolved. No disaggregated information relating to PSAs is presented as the Company currently has only one contract.

The Company accrues for property tax expense based upon actual amounts billed and, in some circumstances, estimates and historical trends when bills or assessments have not been received from the taxing authorities or such bills and assessments are in dispute. Cost of operations and general and administrative expense are expensed as incurred.

Evaluation of Asset Impairment

The Company evaluates its real estate assets and intangible assets consisting of in-place leases for indicators of impairment. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal.

The Company evaluates goodwill for impairment annually and whenever relevant events, circumstances, and other related factors indicate that fair value may be less that carrying amounts. If it is determined that the carrying amount of goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value, an impairment charge is recorded. There were no indicators of impairment to goodwill, real estate assets, and intangible assets as of September 30, 2021, and no impairment charges were recorded during for any periods presented herein.

Stock-based Compensation

The measurement and recognition of compensation expense for all stock-based compensation awards to employees are based on estimated fair values. Awards granted are measured at fair value and any compensation expense is recognized over the service periods of each award. For awards granted which contain a graded vesting schedule and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. For awards granted for which vesting is subject to a performance condition, compensation cost is recognized over the requisite service period if and when the Company concludes it is probable that the performance condition will be achieved.

Loan Procurement Costs

Loan procurement costs, net are presented as a direct deduction from the carrying amount of the related debt liability and are amortized using the effective interest method. If there is not an associated debt liability recorded on the consolidated balance sheets, the costs are recorded as an asset net of accumulated amortization. Loan procurement costs associated with the Company's revolving credit facility remain in Line of credit issuance costs, net of amortization on the Company's consolidated balance sheets. The costs associated with the line of credit are amortized using the straight-line method over the estimated life of the related debt.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Recently Issued Accounting Standards

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)." ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

3. REAL ESTATE ASSETS

The carrying value of the Company’s real estate assets is summarized as follows


	September 30, 2021			December 31, 2020
Land	$	6,122,065		$	6,122,065
Buildings, improvements, and equipment		60,561,544			60,317,918
Self storage properties		66,683,609			66,439,983
Less: Accumulated depreciation		(7,893,388	)		(6,671,450	)
Real estate assets, net	$	58,790,221		$	59,768,533

During 2020, the Company:



completed the conversion of certain commercially-leased space to all-climate-controlled units at McCordsville, IN which added approximately 13,713 leasable square feet to the property;



completed the expansion at Millbrook, NY which added approximately 11,800 of leasable square feet of all-climate-controlled units to the property; and



completed the expansion at West Henrietta, NY, which added approximately 7,300 leasable square feet of drive-up storage units to the property.

4. MARKETABLE EQUITY SECURITIES

Investments in marketable equity securities consisted of the following:


			Gross Unrealized
September 30, 2021	Cost Basis		Gains		Losses		Value
Investment in marketable equity securities
Common stocks	$	755,487	$	1,952,153	$	—	$	2,707,640
Total investment in marketable equity securities	$	755,487	$	1,952,153	$	—	$	2,707,640

			Gross Unrealized
December 31, 2020	Cost Basis		Gains		Losses		Value
Investment in marketable equity securities
Common stocks	$	755,487	$	1,160,964	$	—	$	1,916,451
Total investment in marketable equity securities	$	755,487	$	1,160,964	$	—	$	1,916,451

5. FAIR VALUE MEASUREMENTS

The use of fair value to measure the financial instruments held by the Company and its subsidiaries is fundamental to its consolidated financial statements and is a critical accounting estimate because a substantial portion of its assets and liabilities are recorded at estimated fair value. The application of fair value measurements may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability or whether management has elected to carry the item at its estimated fair value.

The hierarchy of valuation techniques is based on whether the inputs to those techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 — Quoted prices in active markets for identical instruments or liabilities.

Level 2 — Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company. These may include quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, and market-corroborated inputs.

Level 3 — Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Company’s own assumptions about the factors that market participants use in pricing an asset or liability and are based on the best information available in the circumstances.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when estimating fair value. The valuation method used to estimate fair value may produce a fair value measurement that may not be indicative of ultimate realizable value. Furthermore, while management believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methods or assumptions to estimate the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Those estimated values may differ significantly from the values that would have been used had a readily available market for such loans or investments existed, or had such loans or investments been liquidated, and those differences could be material to the financial statements.

Fair valued assets consist of shares of equity securities and an interest rate cap. The value of the equity securities is based on a traded market price and is considered to be a level 1 measurement, and the value of the interest rate cap is based on its maturity, observable market-based inputs including interest rate curves and is considered to be a level 2 measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis including assets valued at zero:


September 30, 2021	Level 1		Level 2		Level 3		Total
Assets
Marketable equity securities	$	2,707,640	$	—	$	—	$	2,707,640
Interest rate cap derivative	—			—		—		—
Total assets at fair value	$	2,707,640	$	—	$	—	$	2,707,640

December 31, 2020	Level 1		Level 2		Level 3		Total
Assets
Marketable equity securities	$	1,961,451	$	—	$	—	$	1,961,451
Interest rate cap derivative	—			4		—		4
Total assets at fair value	$	1,961,451	$	4	$	—	$	1,961,455

There were no assets transferred from level 1 to level 2 as of September 30, 2021. The Company did not have any assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of September 30, 2021.

The fair values of financial instruments including cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximated their respective carrying values as of September 30, 2021. The estimated fair value of the Company’s combined debt was approximately $18,818,353 as of September 30, 2021. This estimate was based on market interest rates for comparable obligations, general market conditions, and maturity.

6. DERIVATIVES

The Company’s objective in using an interest rate derivative is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses an interest rate cap to manage interest rate risk. The Company carries the premium paid for the interest rate cap as an asset on the balance sheet at fair value. The change in the unrealized gain or loss of the premium is recorded as an increase or decrease to interest expense.

The following table summarizes the terms of the Company’s derivative financial instrument:

Notional Amount

Effective

Maturity

Product

September 30, 2021

December 31, 2020

Strike

Date

Cap Agreement

7,500,000

3.50 % - 4.00%

12/24/2018

12/20/2021

The counterparty to this arrangement is SMBC Capital Markets. The Company is potentially exposed to credit loss in the event of non-performance by the counterparty. The Company does not anticipate the counterparty to fail to meet its obligations as they become due.

7. NOTE PAYABLE

On June 24, 2016, certain wholly-owned subsidiaries (“Secured Subsidiaries”) of the Company entered into a loan agreement and certain other related agreements (collectively, the “Loan Agreement”) between the Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Lender”). Under the Loan Agreement, the Secured Subsidiaries are borrowing from the Lender in the principal amount of $20 million pursuant to a promissory note (the “Promissory Note”). The Promissory Note bears an interest rate equal to 4.192% per annum and is due to mature on July 1, 2036. Pursuant to a security agreement (the “Security Agreement”), the obligations under the Loan Agreement are secured by certain real estate assets owned by the Secured Subsidiaries.

The Company entered into a non-recourse guaranty on June 24, 2016 (the “Guaranty,” and together with the Loan Agreement, the Promissory Note and the Security Agreement, the “Loan Documents”) to guarantee the payment to Lender of certain obligations of the Secured Subsidiaries under the Loan Agreement.

The Loan Documents require the Secured Subsidiaries and the Company to comply with certain covenants, including, among others, a minimum net worth test and other customary covenants. The Lender may accelerate amounts outstanding under the Loan Documents upon the occurrence of an event of default (as defined in the Loan Agreement) including, but not limited to, the failure to pay amounts due or commencement of bankruptcy proceedings.

The Company incurred loan procurement costs of $646,246 and such costs have been recorded net of the note payable on the consolidated balance sheet and are amortized as an adjustment to interest expense over the term of the loan. The Company recorded amortization expense of $9,817 and $10,085 for the three months ended September 30, 2021 and 2020, respectively, and $29,656 and $30,451 for the nine months ended September 30, 2021 and 2020, respectively.

The carrying value of the Company’s note payable is summarized as follows:


Note Payable	September 30, 2021			December 31, 2020
Principal balance outstanding	$	18,465,440		$	18,847,475
Less: Loan procurement costs, net		(428,643	)		(458,299	)
Total note payable, net	$	18,036,797		$	18,389,176

As of September 30, 2021, the note payable was secured by certain of the Company’s stores with an aggregate net book value of approximately $25.8 million. The following table represents the future principal payment requirements on the note payable as of September 30, 2021:


2021 (3 months)	$	173,680
2022		535,816
2023		558,714
2024		582,591
2025		607,488
2026 and thereafter		16,007,151
Total principal payments	$	18,465,440

Revolving Line of Credit

On July 6, 2021, certain wholly owned subsidiaries (“Amended Credit Facility Secured Subsidiaries”) of the Company entered into a first amendment to the Credit Facility Loan Agreement (collectively, the “Amended Credit Facility Loan Agreement”) between the Amended Credit Facility Secured Subsidiaries and The Huntington National Bank, successor by merger to TCF National Bank (“Amended Credit Facility Lender”). Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million pursuant to a promissory note (the “Amended Credit Facility Promissory Note”). The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or one-quarter of one percent (0.25%) and is due to mature on July 6, 2024. As of September 30, 2021, the effective interest rate was 3.25%. The obligations under the Amended Credit Facility Loan Agreement are secured by certain real estate assets owned by the Amended Credit Facility Secured Subsidiaries. The Company entered into an amended and restated guaranty of payment on July 6, 2021 (“Amended Credit Facility Guaranty,” and together with the Amended Credit Facility Loan Agreement, the Amended Credit Facility Promissory Note and related instruments, the “Amended Credit Facility Loan Documents” or the “Revolver”) to guarantee the payment to the Amended Credit Facility Lender of certain obligations of the Amended Credit Facility Secured Subsidiaries under the Amended Credit Facility Loan Agreement. The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents.

The Revolver requires the Subsidiaries and the Company to comply with certain covenants, including, among others, customary financial covenants. The Lender may accelerate amounts outstanding under the Loan Documents upon the occurrence of an Event of Default (as defined in the Agreement) including, but not limited to, the failure to pay amounts due to the Lender or commencement of bankruptcy proceedings.

The Company incurred issuance costs of $231,926 and $477,981 for the July 6, 2021 Revolver extension and entry into the Revolver in December 18, 2018, respectively, and such costs are amortized as an adjustment to interest expense over the term of the loan. The Company recorded amortization expense of $45,857 and $39,832 for the three months ended September 30, 2021 and 2020, respectively, and $125,521 and $119,495 for the nine months ended September 30, 2021 and 2020. The outstanding loan balance under the Revolver was $0 and $5,144,000 as of September 30, 2021 and December 31, 2020, respectively.

8. LEASES

Global Self Storage as Lessor

The Company's property rental revenue is primarily related to rents received from tenants at its operating stores. The Company's leases with its self storage tenants are generally on month-to-month terms, include automatic monthly renewals, allow flexibility to increase rental rates over time as market conditions permit, and provide for the collection of contingent fees such as late fees. These leases do not include any terms or conditions that allow the tenants to purchase the leased space. All self-storage leases for which the Company acts as lessor have been classified as operating leases. The real estate assets related to the Company's stores are included in "Real estate assets, net" on the Company's consolidated balance sheets and are presented at historical cost less accumulated depreciation and impairment, if any. Rental income related to these operating leases is included in Property rental revenue on the Company's consolidated statements of operations, and is recognized each month during the month-to-month terms at the rental rate in place during each month.

Global Self Storage as Lessee

The Company is a lessee in a lease agreement for an automobile entered into November 2019 with a lease term of three years. The lease agreement does not contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC Topic 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements have been classified as operating leases. Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the lease term.

Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based

on the information available surrounding the Company’s secured borrowing rates and implied secured spread at the lease commencement date in determining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives. The Company had right-of-use assets and lease liabilities related to its operating leases of $15,020 and $15,020 and $24,972 and $24,972, respectively, as of September 30, 2021 and December 31, 2020. Such amounts are included in Other assets, net and Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets, respectively. As of September 30, 2021, the Company’s weighted average remaining lease term and weighted average discount rate related to its operating leases were approximately 1.1 years and 4.78%, respectively.

The future minimum lease payments under the automobile lease are $3,563 for the three months ending December 31, 2021, and $11,878 for the year ending December 31, 2022.

9. EARNINGS PER SHARE

Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to potentially diluted securities. The following table sets forth the computation of basic and diluted earnings per share:




	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	629,062	$	337,124	$	1,901,608	$	(41,444	)
Weighted average common shares outstanding:
Average number of common shares outstanding - basic		10,601,521		9,277,043		9,757,458		9,269,834
Net effect of dilutive unvested restricted stock awards included for treasury stock method		33,486		13,941		29,859		—
Average number of common shares outstanding - diluted		10,635,006		9,290,984		9,787,317		9,269,834
Earnings per common share
Basic	$	0.06	$	0.04	$	0.19	$	(0.00	)
Diluted	$	0.06	$	0.04	$	0.19	$	(0.00	)

Common stock dividends totaled $696,060 ($0.065 per share) and $608,153 ($0.065 per share) for the three months ended September 30, 2021 and 2020, respectively, and $1,915,591 ($0.13 per share) and $1,822,776 ($0.13 per share) for the nine months ended September 30, 2021 and 2020, respectively.

10. RELATED PARTY TRANSACTIONS

Certain officers and directors of the Company also serve as officers and/or directors of Winmill & Co. Incorporated (“Winco”), Bexil Corporation, Tuxis Corporation (“Tuxis”), and/or their affiliates (collectively with the Company, the “Affiliates”). As of September 30, 2021, certain of the Affiliates and the Company’s directors and employees may be deemed to own approximately 7.7% of the Company’s outstanding common stock. Pursuant to an arrangement between a professional employer organization (“PEO”) and the Affiliates, the PEO provides payroll, benefits, compliance, and related services for employees of the Affiliates in accordance with applicable rules and regulations under the IRC and, in connection therewith, Midas Management Corporation (“MMC”), a subsidiary of Winco, acts as a conduit payer of compensation and benefits to the Affiliates’ employees including those who are concurrently employed by the Company and its Affiliates. Rent expense of concurrently used office space and overhead expenses for various concurrently used administrative and support functions incurred by the Affiliates are allocated at cost among them. The Affiliates participate in a 401(k) retirement savings plan for substantially all qualified employees. A matching expense based upon a percentage of contributions to the plan by eligible employees is incurred and allocated among the Affiliates. The matching expense is accrued and funded on a current basis and may not exceed the amount permitted as a deductible expense under the IRC. The aggregate rent and overhead accrued and paid by the Company to Winco was $18,104 and $18,233 for the three months ended September 30, 2021 and 2020, respectively, and $51,663 and $57,574 for the nine months ended September 30, 2021 and 2020. As of September 30, 2021, the Company had reimbursements payable to MMC and Winco for compensation and benefits and rent and overhead of $25,034.

The Company currently reimburses monthly automobile expenses of $1,000 per month to its President, Mark C. Winmill. To the extent that the monthly payment under the Company’s automobile lease exceeds the current monthly reimbursement amount, Mr. Winmill voluntarily reimburses the Company for the excess amount. In this regard, Mr. Winmill has reimbursed the Company $2,248 and $2,254 for the automobile payments paid and due in 2021and 2020, respectively.

The Company leases office space and storage to certain Affiliates under rental agreements. The terms of occupancy are month to month and automatically renew unless terminated by either party on ten days’ written notice. The Company earned rental income of $3,967 and $2,301 for the three months ended September 30, 2021 and 2020, respectively, and $8,569 and $6,303 for the nine months ended September 30, 2021 and 2020.

On May 19, 2020, MMC (the “Borrower”) entered into a Paycheck Protection Program Term Note (“PPP Note”) with Customers Bank on behalf of itself and the Affiliates under the Paycheck Protection Program (the “Program”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The Borrower received total proceeds of $486,602 from the PPP Note of which approximately $300,000 was attributable to the Company under the SBA’s loan determination formula. In accordance with the requirements of the CARES Act, the Affiliates used the proceeds from the PPP Note primarily for payroll and other eligible costs. Interest accrues on the PPP Note at the rate per annum of 1.00%. In March 2021, the Borrower applied to Customers Bank for forgiveness of the amount due on the PPP Note in an amount equal to the sum of payroll and other eligible costs incurred during the Covered Period, as defined therein, following disbursement under the PPP Note. On October 8, 2021, this application was denied and an appeal has been filed, which was pending as of the date of this report. See Note 15 “Subsequent Events” for more information.

For the three and nine months ended September 30, 2021, there has been no material impact to the Company’s operations or cash flows due to the PPP Note.

11. CAPITAL STOCK

As of September 30, 2021, the Company was authorized to issue 450,000,000 shares of $0.01 par value common stock of which 10,708,613 had been issued and was outstanding. The Company was also authorized to issue 50,000,000 shares of preferred stock, $0.01 par value, authorized, of which none has been issued.

On June 25, 2021, we completed an underwritten public offering whereby we sold and issued an aggregate of 1,121,496 shares of our common stock at the price of $5.35 per share. Subsequently, the over-allotment option was exercised, and sale completed on June 29, 2021, increasing the total number of shares sold and issued to 1,289,720. We raised aggregate gross proceeds of approximately $6.9 million in the public offering after giving effect to the exercise of the over-allotment option.

12. STOCK-BASED COMPENSATION

On October 16, 2017 (“Effective Date”), the Company’s stockholders approved the Company’s 2017 Equity Incentive Plan (the “Plan”). The Plan is designed to provide equity-based incentives to certain eligible persons, as defined in the Plan, in the form of options, share appreciation rights, restricted stock, restricted stock units, dividend equivalent rights or other forms of equity-based compensation as determined in the discretion of the Board of Directors, the Compensation Committee of the Board of Directors, or other designee thereof. The total number of shares of common stock reserved and available for issuance under the Plan on the Effective Date was 760,000.

On April 12, 2021 and March 25, 2021, the Company approved restricted stock awards under the Plan to certain of its officers and employees in the aggregate amount of 12,300 shares and 63,475 shares, respectively, of which 60,750 shares are time-based grants and 15,025 shares are performance-based grants. The Company recorded $54,092 and $35,283 for the three months ended September 30, 2021 and 2020, respectively, and $140,274 and $99,762 for the nine months ended September 30, 2021 and 2020, respectively, of expense related to restricted stock awards in general and administrative expense in its consolidated statement of operations. As of September 30, 2021, there was $312,954 and $100,584 of unrecognized compensation expense related to unvested time-based and performance-based restricted stock awards, respectively. That cost is expected to be recognized over a weighted-average period of 3.0 and 2.6 nine months ended September 30, 2021 and 2020 years for time-based and performance-based awards, respectively. The fair value of common stock awards is determined based on the closing trading price of the Company’s common stock on the grant date.

Time-Based Restricted Stock Grants

These time-based grants vest solely based on continued employment, with 6.25% of the shares eligible to vest on each three- month anniversary of the grant date during the remaining four-year time vesting period. Time-based restricted stock cannot be transferred during the vesting period. These time-based restricted stock grants entitle the holder to dividends paid by the Company on shares of its common stock.

A summary of the Company’s performance-based restricted stock grant activity is as follows:


				Weighted-Average
				Grant-Date
Time-Based Restricted Stock Grants	Stock			Fair Value
Unvested at December 31, 2020		32,230		$	4.09
Granted		60,750			4.58
Vested		(21,273	)		4.33
Unvested at September 30, 2021		71,707		$	4.44

Performance-Based Restricted Stock Grants

Performance-based restricted stock grants vest based on continued employment and the achievement of certain Funds from Operations, as adjusted (“AFFO”) and same store revenue growth (“SSRG”) goals by the Company during the year of the grant. Each of these performance components are weighted 50% and are measured over the performance cycle, which is defined as the year ending on December 31st in the year of the grant. At the end of the performance cycle, the financial performance components are reviewed to determine the number of shares actually earned, which can be as low as 0% of shares granted and up to a maximum of 200% of shares granted. The shares which are earned will remain subject to quarterly vesting during the remaining four-year time vesting period. Dividends paid by the Company prior to the determination of how many shares are earned will be retained by the Company and released only with respect to earned shares. If a Change in Control (as defined in the Plan) occurs during 2021, the number of shares earned will equal the greater of the number of shares granted and the number of shares which would have been earned based on the AFFO and SSRG through the date of the Change in Control. If following a Change in Control, a grantee is terminated by the Company without Cause or by the grantee with Good Reason (as each is defined in the Plan), all unvested restricted stock will fully vest.

A summary of the Company’s time-based restricted stock grant activity is as follows:


				Weighted-Average
				Grant-Date
Performance-Based Restricted Stock Grants	Stock			Fair Value
Unvested at December 31, 2020		18,652		$	4.13
Granted		15,025			4.51
Vested		(8,357	)		4.22
Unvested at September 30, 2021		25,320		$	4.33

Forfeitures are accounted for as they occur, compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service or performance condition is reversed in the period of the forfeiture.

13. COMMITMENTS AND CONTINGENCIES

The Company enters into contracts that contain a variety of representations and warranties and which may provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as it involves future claims that may be made against the Company under circumstances that have not occurred.

14. RISKS AND UNCERTANTIES

COVID-19

The coronavirus pandemic (“COVID-19”) has continued to impact the U.S. and global economies. The U.S. financial markets have experienced disruption and constrained credit conditions within certain sectors. Although more normalized activities have resumed, at this time the Company cannot predict the full extent of the impacts of the COVID-19 pandemic on the Company and the COVID-19 pandemic could have a delayed adverse impact on the Company's financial results. The Company will continue to monitor the pandemic's effects on a daily basis and will adjust its operations as necessary.

The full impact of COVID-19 on the real estate industry, the credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the outbreak and the emergence and severity of COVID-19 variants, (ii) the uncertainty regarding the effectiveness of federal, state and local governments' efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on the U.S. economy and economic activity,

including the timing of the successful distribution of an effective vaccine, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, and (vi) the negative impact on our properties.

Credit Risk

Credit risk - Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and certain portions of accounts receivable including rents receivable from our tenants. Cash and cash equivalents are on deposit with highly rated commercial banks.

15. SUBSEQUENT EVENTS

On October 8, 2021, the Borrower received the SBA’s final loan review decision which denied forgiveness of the loan in full. On November 4, 2021, the Borrower filed an appeal petition with the SBA’s Office of Hearings and Appeals within the 30 calendar day period after receipt of the final loan review decision. The Borrower's timely filing of the appeal has extended the loan deferment period. No assurance is provided that our appeal will be successful and that we will obtain forgiveness of our portion of the PPP Note in whole or in part. If forgiveness is not granted, interest on our portion of the PPP Note, in whole or in part, will need to be repaid by us.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY LANGUAGE

The following discussion and analysis should be read in conjunction with our unaudited “Condensed Consolidated Financial Statements” and the “Notes to Condensed Consolidated Financial Statements (unaudited)” appearing elsewhere in this report. We make statements in this section that may be forward looking statements within the meaning of the federal securities laws. For a complete discussion of forward looking statements, see the section in this report entitled “Statement on Forward Looking Information.” References to the “Company,” “we,” “us,” or “our company” refer to Global Self Storage, Inc., a Maryland corporation, including, as the context requires, its direct and indirect subsidiaries.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements contained elsewhere in this report, which have been prepared in accordance with GAAP. Our notes to the unaudited condensed consolidated financial statements contained elsewhere in this report describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments, and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments, and assumptions and actual facts, our financial statements may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. Please refer to the notes to the unaudited condensed consolidated financial statements that contain additional information regarding our critical accounting policies and other disclosures.

Management’s Discussion and Analysis Overview

The Company is a self-administered and self-managed REIT that owns, operates, manages, acquires, develops and redevelops self storage properties (“stores” or “properties”) in the United States. Our stores are designed to offer affordable, easily accessible, and secure storage space for residential and commercial customers. As of September 30, 2021, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company. The Securities and Exchange Commission’s (“SEC”) order approving the Company’s application to deregister from the 1940 Act was granted on January 19, 2016. On January 19, 2016, the Company changed its name to Global Self Storage, Inc. from Self Storage Group, Inc., changed its SEC registration from an investment company to an operating company reporting under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed its common stock on NASDAQ under the symbol “SELF”.

The Company was incorporated on December 12, 1996 under the laws of the state of Maryland. The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To the extent the Company continues to qualify as a REIT, it will not generally be subject to U.S. federal income tax, with certain limited exceptions, on its taxable income that is distributed to its stockholders.

Our store operations generated most of our net income for all periods presented herein. Accordingly, a significant portion of management’s time is devoted to seeking to maximize cash flows from our existing stores, as well as seeking investments in additional stores. The Company expects to continue to earn a majority of its gross income from its store operations as its current store operations continue to develop and as it makes additional store acquisitions. Over time, the Company expects to divest its remaining portfolio of investment securities and use the proceeds to acquire, develop, redevelop, and/or operate additional stores. The Company expects its income from investment securities to continue to decrease as it continues to divest its holdings of investment securities.

Financial Condition and Results of Operations

Our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders. For future acquisitions, the Company may use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties.

On June 24, 2016, certain wholly owned subsidiaries of the Company (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries

and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”). Under the Term Loan Agreement, the Term Loan Secured Subsidiaries are borrowing from Term Loan Lender in the principal amount of $20 million pursuant to a promissory note (the “Term Loan Promissory Note”). The Term Loan Promissory Note bears an interest rate equal to 4.192% per annum and is due to mature on July 1, 2036. Pursuant to a security agreement (the “Term Loan Security Agreement”), the obligations under the Term Loan Agreement are secured by certain real estate assets owned by the Term Loan Secured Subsidiaries. J.P. Morgan Investment Management, Inc. acted as Special Purpose Vehicle Agent of the Term Loan Lender. The Company entered into a non-recourse guaranty on June 24, 2016 (the “Term Loan Guaranty,” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) to guarantee the payment to Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement. The Term Loan Documents require the Term Loan Secured Subsidiaries and the Company to comply with certain covenants, including, among others, a minimum net worth test and other customary covenants. The Term Loan Lender may accelerate amounts outstanding under the Term Loan Documents upon the occurrence of an Event of Default (as defined in the Term Loan Agreement) including, but not limited to, the failure to pay amounts due or commencement of bankruptcy proceedings. The Company and the Term Loan Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Term Loan Documents. There is no material relationship between the Company, its Term Loan Secured Subsidiaries, or its affiliates and the Term Loan Lender, other than in respect of the Term Loan Documents.

On May 19, 2020, Midas Management Corporation (“MMC”) (the “Borrower”) entered into a Paycheck Protection Program Term Note (“PPP Note”) with Customers Bank on behalf of itself and Winmill & Co. Incorporated, Bexil Corporation, Tuxis Corporation, and/or their affiliates (collectively with the Company, the “Affiliates”) under the Paycheck Protection Program (the “Program”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). Certain officers and directors of the Company also serve as officers and/or directors of the Affiliates. Pursuant to an arrangement between a professional employer organization and the Affiliates, MMC acts as a conduit payer of compensation and benefits to the Affiliates’ employees including those who are concurrently employed by the Company and its Affiliates. The Borrower received total proceeds of $486,602 from the PPP Note of which approximately $300,000 was attributable to the Company under the SBA’s loan determination formula. In accordance with the requirements of the CARES Act, the Affiliates used the proceeds from the PPP Note primarily for payroll and other eligible costs. Interest accrues on the PPP Note at the rate per annum of 1.00%. In March 2021, the Borrower applied to Customers Bank for forgiveness of the amount due on the PPP Note in an amount equal to the sum of payroll and other eligible costs incurred during the Covered Period, as defined therein, following disbursement under the PPP Note.

For the three and nine months ended September 30, 2021, there has been no material impact to the Company’s operations or cash flows due to the PPP Note.

On July 6, 2021, certain wholly owned subsidiaries (“Amended Credit Facility Secured Subsidiaries”) of the Company entered into a first amendment to the Credit Facility Loan Agreement (collectively, the “Amended Credit Facility Loan Agreement”) between the Amended Credit Facility Secured Subsidiaries and The Huntington National Bank, successor by merger to TCF National Bank (“Amended Credit Facility Lender”). Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million pursuant to a promissory note (the “Amended Credit Facility Promissory Note”). The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or one-quarter of one percent (0.25%) and is due to mature on July 6, 2024. As of September 30, 2021, the effective interest rate was 3.25%. The obligations under the Amended Credit Facility Loan Agreement are secured by certain real estate assets owned by the Amended Credit Facility Secured Subsidiaries. The Company entered into an amended and restated guaranty of payment on July 6, 2021 (“Amended Credit Facility Guaranty,” and together with the Amended Credit Facility Loan Agreement, the Amended Credit Facility Promissory Note and related instruments, the “Amended Credit Facility Loan Documents”) to guarantee the payment to the Amended Credit Facility Lender of certain obligations of the Amended Credit Facility Secured Subsidiaries under the Amended Credit Facility Loan Agreement. The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of September 30, 2021, we have no withdrawn proceeds under the Amended Credit Facility Loan Agreement. We currently intend to strategically withdraw

proceeds available under the Amended Credit Facility Loan Agreement to fund: (i) the acquisition of additional self storage properties, (ii) expansions at existing self storage properties in our portfolio, and/or (iii) joint ventures with third parties for the acquisition and expansion of self storage properties.

We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores. We did not complete any acquisitions in the three and nine months ended September 30, 2021. In addition, we may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities. As of September 30, 2021, under our third-party management platform, Global MaxManagementSM, we managed one third-party owned property, which was rebranded as “Global Self Storage,” had 137,118-leasable square feet and was comprised of 618 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.

We expect we will have sufficient cash from current sources to meet our liquidity needs for the next twelve months. However, we may opt to supplement our equity capital and increase potential returns to our stockholders through the use of prudent levels of borrowings. We may use debt when the available terms and conditions are favorable to long-term investing and well-aligned with our business plan. In light of the novel coronavirus (“COVID-19”) pandemic and its impact on the global economy, we are closely monitoring overall liquidity levels and changes in our business performance (including our properties) to be in a position to enact changes to ensure adequate liquidity going forward.

As of September 30, 2021, we had capital resources totaling approximately $20.5 million, comprised of $2.8 million of cash, cash equivalents, and restricted cash, $2.7 million of marketable securities, and $15.0 million available for withdrawal under the Credit Facility Loan Agreement. Capital resources derived from retained cash flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores. These capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagementSM, our third-party management platform. Our board of directors regularly reviews our strategic business plan, including topics and metrices like capital formation, debt versus equity ratios, dividend policy, use of capital and debt, funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) performance, and optimal cash levels.

We expect that the results of our operations will be affected by a number of factors. Many of the factors that will affect our operating results are beyond our control. The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the COVID-19 pandemic. The COVID-19 pandemic has continued to impact the U.S. and global economies. The U.S. financial markets have experienced disruption and constrained credit conditions within certain sectors. Although more normalized activities have resumed, at this time the Company cannot predict the full extent of the impacts of the COVID-19 pandemic on the Company and the COVID-19 pandemic could have a delayed adverse impact on the Company's financial results. The Company will continue to monitor the pandemic's effects on a daily basis and will adjust its operations as necessary.

Self storage has been identified by the Department of Homeland Security as a Critical Infrastructure Sector and has been deemed an essential business in all states where we have operations. We believe this is because self-storage facilities play an important role in local supply chains, and are used by residents and businesses to store a variety of critical supplies for residential and commercial use. As such, we are proud to continue to serve our communities in this way and currently expect to remain fully operational for the duration of the COVID-19 pandemic. In addition, we are practicing social distancing and enhanced cleaning and disinfectant activities to protect our employees and tenants. We have long provided online leasing and payment options, as well as on-site contactless solutions using kiosks that can facilitate rentals and even automatically dispense locks. Our kiosks are available 24/7 at each of our stores where prospective tenants can select and rent a unit, or current tenants can pay their rent.

Nevertheless, the COVID-19 pandemic presents material uncertainty and risk with respect to the Company’s business, financial condition, results of operations and cash flows, and our tenant's ability to pay rent. The extent to which our financial condition and results of operations operating will continue to be affected by the COVID-19 pandemic will largely depend on future developments (including the timing of the successful distribution of an effective vaccine), which are highly uncertain and cannot be accurately predicted.

Results of Operations for the Three Months Ended September 30, 2021 Compared with the Three Months Ended September 30, 2020

Revenues

Total revenues increased from $2,345,909 during the three months ended September 30, 2020 to $2,730,518 during the three months ended September 30, 2021, an increase of $384,609, or 16.4%. Rental income increased from $2,237,424 during the three months ended September 30, 2020 to $2,608,664 during the three months ended September 30, 2021, an increase of $371,240, or 16.6%. The increase was primarily attributable to the Millbrook, NY and West Henrietta, NY expansions, and increases in rental rates and occupancy at our wholly-owned stores.

Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $90,989 during the three months ended September 30, 2020 to $102,428 during the three months ended September 30, 2021, an increase of $11,439, or 12.6%. This increase was primarily attributable to an increase in the percentage of administrative fees due to the Company for tenant stored items insurance and increased insurance participation.

Income from our third-party management platform consists of management fees and customer insurance fees. Management fees and other income increased from $17,496 during the three months ended September 30, 2020 to $19,426 during the three months ended September 30, 2021.

Operating Expenses

Total operating expenses decreased from $1,981,202 during the three months ended September 30, 2020 to $1,946,479 during the three months ended September 30, 2021, a decrease of $34,723, or 1.8%, which was primarily attributable to a decrease in depreciation and amortization expense. Store operating expenses increased from $907,350 during the three months ended September 30, 2020 to $940,372 during the three months ended September 30, 2021, an increase of $33,022, or 3.6%.

Depreciation and amortization decreased from $509,219 during the three months ended September 30, 2020 to $409,763 during the three months ended September 30, 2021, a decrease of $99,456, or 19.5%, which was primarily attributable to amortization of the in-place leases in 2020 related to the November 2019 store acquisition in West Henrietta, NY.

General and administrative expenses increased from $564,162 during the three months ended September 30, 2020 to $594,547 during the three months ended September 30, 2021, an increase of $30,385, or 5.4%. The increase in general and administrative expenses during this period are primarily attributable to increases in stock-based compensation for 2021 due to restricted stock grants, expenses related to the Company’s annual meeting, and increased premiums for E&O/D&O insurance.

Business development, capital raising, store acquisition, and third-party management marketing expenses increased from $471 during the three months ended September 30, 2020 to $1,797 during the three months ended September 30, 2021. These costs primarily consist of costs incurred in connection with business development, capital raising, and future potential store acquisitions, and third-party management marketing expenses. The increase is primarily attributable to more activities related to capital raising, store acquisitions, and third-party management marketing expenses. Business development costs are typically non-recurring and fluctuate based on periodic business development and acquisition activity.

Operating Income

As a result of the operating effects noted above, operating income increased from $364,707 during the three months ended September 30, 2020 to $784,039‭‬ during the three months ended September 30, 2021, an increase of $419,332, or 115.0%. ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Other income (expense)

Interest expense on loans decreased from $290,802 during the three months ended September 30, 2020 to $256,502 during the three months ended September 30, 2021. This decrease was attributable to a lower amount of funds drawn and fluctuating interest expense on funds drawn on the Credit Facility Loan Agreement. The cash payments for the $20 million loan remain the same every month until June 2036.

Dividend, interest, and other income was $17,648 during the three months ended September 30, 2020 and $19,533 during the three months ended September 30, 2021.

Unrealized gain on marketable equity securities was $245,571 during the three months ended September 30, 2020 and the unrealized gain on marketable equity securities was $81,992 during the three months ended September 30, 2021.

Net income (loss)

For the three months ended September 30, 2020, net income was $337,124, or $0.04 per fully diluted share. For the three months ended September 30, 2021, net income was $629,062, or $0.06 per fully diluted share.

Results of Operations for the Nine Months Ended September 30, 2021 Compared with the Nine Months Ended September 30, 2020

Revenues

Total revenues increased from $6,819,665 during the nine months ended September 30, 2020 to $7,747,227 during the nine months ended September 30, 2021, an increase of $927,562, or 13.6%. Rental income increased from $6,521,176 during the nine months ended September 30, 2020 to $7,402,570 during the nine months ended September 30, 2021, an increase of $881,394, or 13.5%. The increase was primarily attributable to the West Henrietta, NY acquisition, increases in rental rates at our other wholly-owned stores, and to a lesser extent, our Millbrook, NY and West Henrietta, NY expansions.

Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $246,148 during the nine months ended September 30, 2020 to $288,249 during the nine months ended September 30, 2021, an increase of $42,101, or 17.1%. This increase was primarily attributable to an increase in the percentage of administrative fees due to the Company for tenant stored items insurance and increased insurance participation.

Operating Expenses

Total operating expenses decreased from $6,059,421 during the nine months ended September 30, 2020 to $5,864,637 during the nine months ended September 30, 2021, a decrease of $194,784, or 3.2%, which was primarily attributable to a decrease in depreciation and amortization expense. Store operating expenses increased from $2,698,639 during the nine months ended September 30, 2020 to $2,831,693 during the nine months ended September 30, 2021, an increase of $133,054, or 4.9%.

Depreciation and amortization decreased from $1,527,901 during the nine months ended September 30, 2020 to $1,221,938 during the nine months ended September 30, 2021, a decrease of $305,963, or 20.0%, which was primarily attributable to amortization of the in-place leases related to the 2019 store acquisition in West Henrietta, NY.

General and administrative expenses decreased from $1,822,353 during the nine months ended September 30, 2020 to $1,804,371 during the nine months ended September 30, 2021, a decrease of $17,982, or 1.0%. The decrease in the general and administrative expenses during the period are primarily attributable to a decrease in certain professional fees.

Business development, capital raising, store acquisition, and third-party management marketing expenses decreased from $10,528 during the nine months ended September 30, 2020 to $6,635 during the nine months ended September 30, 2021. The decrease is primarily attributable to less expenses related to third-party management marketing, store acquisition, and capital raising expenses. Business development, capital raising, and store acquisition-related costs are typically non-recurring and fluctuate based on periodic business development and acquisition activity.

Operating Income

Operating income increased from $760,244 during the nine months ended September 30, 2020 to $1,882,590‬ during the nine months ended September 30, 2021, an increase of $1,122,346, or 147.6%. The increase in operating income was primarily attributable to an increase in rental income, and to a lesser extent, a decrease in depreciation and amortization expense.

Other income (expense)

Interest expense on loans decreased from $891,107 during the nine months ended September 30, 2020 to $828,567 during the nine months ended September 30, 2021. This decrease was attributable to a lower amount of funds drawn and fluctuations in interest expense on funds drawn on the credit revolver. The cash payments for the $20 million loan remain the same every month until June 2036.

Dividend, interest, and other income was $62,017 during the nine months ended September 30, 2020 and $56,396 during the nine months ended September 30, 2021.

Unrealized gain on marketable equity securities was $27,402 during the nine months ended September 30, 2020 and the unrealized gain on marketable equity securities was $791,189 during the nine months ended September 30, 2021.

Net income (loss)

For the nine months ended September 30, 2020, net loss was $41,444, or $0.00 per fully diluted share. For the nine months ended September 30, 2021, net income was $1,901,608, or $0.19 per fully diluted share.

Distributions and Closing Market Prices

Distributions for the three months ended September 30, 2021 and 2020 each totaled $0.065 per share, respectively. The Company’s closing market price as of September 30, 2021 and September 30, 2020 were $5.15 and $4.01, respectively. Past market price performance and distribution levels do not guarantee similar results in the future.

Non-GAAP Financial Measures

Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and are considered helpful measures of REIT performance by REITs and many REIT analysts. NAREIT defines FFO as a REIT’s net income, excluding gains or losses from sales of property, and adding back real estate depreciation and amortization. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. However, the Company believes that to further understand the performance of its stores, FFO should be considered along with the net income and cash flows reported in accordance with GAAP and as presented in the Company’s financial statements.

Adjusted FFO (“AFFO”) represents FFO excluding the effects of business development, capital raising, store acquisition, and third-party management marketing expenses and non-recurring items, which we believe are not indicative of the Company’s operating results. We present AFFO because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from AFFO, are not indicative of our ongoing operating results. We also believe that the investment community considers our AFFO (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute AFFO in the same manner as we do, and may use different terminology, our computation of AFFO may not be comparable to AFFO reported by other REITs or real estate companies.

We believe net operating income or “NOI” is a meaningful measure of operating performance because we utilize NOI in making decisions with respect to, among other things, capital allocations, determining current store values, evaluating store performance, and in comparing period-to-period and market-to-market store operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values and does not consider depreciation expense because it is based upon historical cost. NOI is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization.

NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results.

Self Storage Portfolio

The following discussion and analysis of our same-store self storage operations are presented on a comparative basis for the nine months ended September 30, 2021.

GLOBAL SELF STORAGE STORES


		Year Store	Number		Net Leasable		September 30, 2021 Square Foot			September 30, 2020 Square Foot
Property(1)	Address	Opened / Acquired	of Units		Square Feet		Occupancy %			Occupancy %
OWNED STORES
SSG BOLINGBROOK LLC	296 North Weber Road, Bolingbrook, IL 60440	1997 / 2013		807		113,700		96.5	%		95.1	%
SSG CLINTON LLC	6 Heritage Park Road, Clinton, CT 06413	1996 / 2016		182		30,408		90.0	%		99.8	%
SSG DOLTON LLC	14900 Woodlawn Avenue, Dolton, IL 60419	2007 / 2013		652		86,590		92.7	%		93.9	%
SSG LIMA LLC	1910 West Robb Avenue, Lima, OH 60419	1996 / 2016		756		96,883		93.4	%		93.3	%
SSG MERRILLVILLE LLC	6590 Broadway, Merrillville, IN 46410	2005 / 2013		568		80,970		96.9	%		94.2	%
SSG ROCHESTER LLC	2255 Buffalo Road, Rochester, NY 14624	2010 / 2012		644		68,121		94.5	%		96.6	%
SSG SADSBURY LLC	21 Aim Boulevard, Sadsburyville, PA 19369	2006 / 2012		694		78,857		94.4	%		94.4	%
SSG SUMMERVILLE I LLC	1713 Old Trolley Road, Summerville, SC 29485	1990 / 2013		568		76,410		92.7	%		84.3	%
SSG SUMMERVILLE II LLC	900 North Gum Street, Summerville, SC 29483	1997 / 2013		246		42,860		94.1	%		93.3	%
TOTAL/AVERAGE SAME-STORES				5,117		674,799		94.3	%		93.5	%

SSG FISHERS LLC	13942 East 96th Street, McCordsville, IN 46055	2007 / 2016		540		76,360		93.4	%		85.9	%
SSG MILLBROOK LLC	3814 Route 44, Millbrook, NY 12545	2008 / 2016		260		24,472		97.1	%		90.9	%
SSG WEST HENRIETTA LLC	70 Erie Station Road, West Henrietta, NY 14586	2016 / 2019		475		55,550		78.8	%		80.5	%
TOTAL/AVERAGE NON SAME-STORES				1,275		156,382		88.8	%		84.8	%

TOTAL/AVERAGE SAME-STORES AND NON SAME-STORES				6,392		831,180		93.3	%		91.9	%

MANAGED STORES
TPM EDMOND LLC	14000 N I 35 Service Rd, Edmond, OK 73013	2015 / 2019		618		137,118		94.8	%		92.1	%
TOTAL/AVERAGE MANAGED STORES				618		137,118		94.8	%		92.1	%

TOTAL/AVERAGE ALL OWNED/MANAGED STORES				7,010		968,298		93.5	%		91.9	%

(1)

Each store is directly owned or managed by the Company’s wholly owned subsidiary listed in the table.

Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 13,000 square feet at SSG Sadsbury LLC; 15,700 square feet at SSG Bolingbrook LLC; 9,000 square feet at SSG Dolton LLC; 1,000 square feet at SSG Merrillville LLC; 7,200 square feet at SSG Summerville II LLC and 8,750 square feet at SSG Clinton LLC. For SSG Lima LLC, included is approximately 7,700 square feet of non-storage commercial and student housing space. Approximately 33% of our total available units are climate-controlled, 59% are traditional drive-up storage, and 8% are outdoor parking storage for boats, cars and recreational vehicles.

Same-Store Self Storage Operations

We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at the end of the applicable periods presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation or expansion. We believe that same-store results are useful to investors in evaluating our performance because they provide information

relating to changes in store-level operating performance without taking into account the effects of acquisitions, dispositions, or new ground-up developments. At September 30, 2021, we owned nine same-store properties and three non same-store properties. The Company believes that, by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to, variances in occupancy, rental revenue, operating expenses, and NOI, stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions, or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of the Company’s stores as a whole.

Same-store occupancy at September 30, 2021 increased by 0.8% to 94.3% from 93.5% at September 30, 2020. This excludes the impact from the West Henrietta, NY expansion project completed in August 2020, Millbrook, NY expansion project completed in February 2020, and our McCordsville, IN conversion, which commenced in April 2020 and was completed June 2020.

Same-store revenues increased by 13.8% and 9.9% for the three and nine months ended September 30, 2021 versus the same periods in 2020. Same-store cost of operations increased by 2.9% and 3.8% for the three and nine months ended September 30, 2021 versus the same periods in 2020. Same-store NOI increased by 20.5% and 13.8% for the three and nine months ended September 30, 2021 versus the same periods in 2020. The increase in same-store NOI was due primarily to an increase in revenues.

We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped our same-store overall average occupancy maintain at or around 94% as of September 30, 2021. Also, contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty, resulting in strong referral and word-of-mouth market demand for our storage units and services. Another contributing factor to our results was our competitor move-in rate metrics analysis which employs internet data scraping and other methods to help keep our storage unit move-in rates “in the market,” and our revenue rate management program which helped increase existing tenant rates while maintaining or building store occupancy.

These results are summarized as follows:


SAME - STORE PROPERTIES

Three Months Ended September 30,	2021			2020			Variance			% Change
Revenues	$	2,138,819		$	1,879,539		$	259,280			13.8	%
Cost of operations	$	738,706		$	717,566		$	21,140			2.9	%
Net operating income	$	1,400,113		$	1,161,973		$	238,140			20.5	%
Depreciation and amortization	$	242,187		$	238,803		$	3,384			1.4	%
Net leasable square footage at period end*		674,799			675,601			(802	)		-0.1	%
Net leased square footage at period end		636,304			631,879			4,425			0.7	%
Overall square foot occupancy at period end		94.3	%		93.5	%		0.8	%		0.9	%
Total annualized revenue per leased square foot	$	13.45		$	11.90		$	1.55			13.0	%
Total available leasable storage units*		5,117			5,075			42			0.8	%
Number of leased storage units		4,783			4,738			45			0.9	%


SAME - STORE PROPERTIES

Nine Months Ended September 30,	2021			2020			Variance			% Change
Revenues	$	6,090,048		$	5,543,070		$	546,978			9.9	%
Cost of operations	$	2,256,565		$	2,174,739		$	81,826			3.8	%
Net operating income	$	3,833,483		$	3,368,331		$	465,152			13.8	%
Depreciation and amortization	$	719,402		$	713,707		$	5,695			0.8	%
Net leasable square footage at period end*		674,799			675,601			(802	)		-0.1	%
Net leased square footage at period end		636,304			631,879			4,425			0.7	%
Overall square foot occupancy at period end		94.3	%		93.5	%		0.8	%		0.9	%
Total annualized revenue per leased square foot	$	12.76		$	11.70		$	1.06			9.1	%
Total available leasable storage units*		5,117			5,075			42			0.8	%
Number of leased storage units		4,783			4,738			45			0.9	%

* From time to time, as guided by market conditions, net leasable square footage and total available leasable storage units at our properties may increase or decrease as a result of consolidation, division or reconfiguration of storage units. Similarly, leasable square footage may increase or decrease due to expansion or redevelopment of our properties.

The following table presents a reconciliation of same-store net operating income to net income (loss) as presented on our consolidated statements of operations for the periods indicated (unaudited):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income (loss)	$	629,062		$	337,124		$	1,901,608		$	(41,444	)
Adjustments:
Management fees and other income		(19,426	)		(17,496	)		(56,408	)		(52,341	)
General and administrative		594,547			564,162			1,804,371			1,822,353
Depreciation and amortization		409,763			509,219			1,221,938			1,527,901
Business development		1,797			471			6,635			10,528
Dividend, interest, and other income		(19,533	)		(17,648	)		(56,396	)		(62,017	)
Unrealized (gain) loss on marketable equity securities		(81,992	)		(245,571	)		(791,189	)		(27,402	)
Interest expense		256,502			290,802			828,567			891,107
Non same-store revenues		(572,272	)		(448,873	)		(1,600,770	)		(1,224,254	)
Non same-store cost of operations		201,665			189,783			575,127			523,900
Total same-store net operating income	$	1,400,113		$	1,161,973		$	3,833,483		$	3,368,331

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Same-store revenues	$	2,138,819		$	1,879,539		$	6,090,048		$	5,543,070
Same-store cost of operations		738,706			717,566		$	2,256,565			2,174,739
Total same-store net operating income	$	1,400,113		$	1,161,973		$	3,833,483		$	3,368,331

Analysis of Same-Store Revenue

For the three and nine months ended September 30, 2021, same-store revenue increased 13.8%, or $259,280, and 9.9%, or $546,978, respectively, versus the same periods in 2020, which was attributable to, among other things, consistent rent collections, despite the COVID-19 pandemic, and increased rental rates. Same-store average overall square foot occupancy for all of the Company’s same-store properties increased to 94.3% at September 30, 2021, up from 93.5% at September 30, 2020.

We believe that our focus on high occupancy helps us to maximize rental income at our properties. We seek to maintain an average square foot occupancy level at or above 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our online marketing efforts in seeking to generate sufficient move-in volume to replace tenants that vacate. Demand may fluctuate due to various local and regional factors, including the overall economy. Demand is generally higher in the summer months than in the winter months and, as a result, rental rates charged to new tenants are typically higher in the summer months than in the winter months.

During the period from late March 2020 through May 2020, we experienced reduced activity with fewer move-ins and move-outs, and received periodic tenant requests for the waiver of late fees due to COVID-19 related hardships. However, we have seen increased demand for self storage since June 2020, as various areas of the United States emerged from stay at home orders. These trends may be temporary or even reverse, to the extent they are driven by short-term factors such as stay at home orders and delays in our auction process. We temporarily suspended our existing tenant rental rate increase program, but have since restarted it at all of our properties as of July 2020. Because existing tenant rental rate increases have contributed significantly to increases in rental income in recent years, suspension of these increases may have a material adverse impact on our revenue growth. This temporary suspension has impacted our revenue. It is possible that the COVID-19 pandemic could change consumer behavior, either due to economic recession, uncertainty, or dislocation, as well as other factors, which could increase customer sensitivity and propensity to move-out in response to rate increases, either in the short or longer term. Other effects of the COVID-19 pandemic, such as movement from urban areas to more suburban and rural areas, has driven increased demand for self storage in the secondary and tertiary markets that we operate.

As of September 30, 2021, we observed no material degradation in rent collections. However, we believe that our bad debt losses (which are reflected as a reduction in revenues) could increase from historical levels, due to (i) cumulative stress on our customers’ financial capacity and (ii) reduced rent recoveries from auctioned units.

We may experience a change in the move-out patterns of our long-term customers due to economic uncertainty and the significant increase in unemployment recently. This could lead to lower occupancies and rent “roll down” as long-term customers are replaced with new customers at lower rates.

If and when the COVID-19 pandemic subsides, we currently expect rental income growth, if any, to come from a combination of the following: (i) continued existing tenant rent increases, (ii) higher rental rates charged to new tenants, (iii) lower promotional discounts, and (iv) higher occupancies. Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs. We currently expect existing tenant rent increases for the remainder of 2021, if any, to be higher than the prior year.

Due to the uncertainty of the COVID-19 pandemic, it is difficult to predict trends in move-in, move-out, in place contractual rents, and occupancy levels. Current trends, when viewed in the short-term, are volatile and not necessarily predictive of our revenues going forward because they may be subject to many short-term factors. Such factors include, among others, the impact of the COVID-19 pandemic, initial move-in rates, seasonal factors, unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing tenants.

Importantly, we continue to refine our ongoing revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI. We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of September 30, 2021, our average tenant duration of stay was approximately 3.2 years, up from approximately 3.0 years as of September 30, 2020.

Analysis of Same-Store Cost of Operations

For the three and nine months ended September 30, 2021, same-store cost of operations increased 2.9%, or $21,140, and 3.8%, or $81,826, respectively, versus the same periods in 2020. This increase in same-store cost of operations for the nine months ended September 30, 2020 was due primarily to increased landscaping expense from snow removal.

On-site store manager, regional manager, and district manager payroll expense decreased 5.2%, or $11,501, and decreased 1.1%, or $7,340, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. The decrease for the three and nine months ended September 30, 2021 was due primarily to routine employee departures. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores.

Store property tax expense increased 7.3%, or $20,358, and 0.8%, or $6,274, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. When compared to store property tax expense for the three months ended September 30, 2021, we currently expect store property tax expense to remain consistent for the remainder of 2021. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail.

Repairs and maintenance expense increased 47.0%, or $9,522, and increased 10.6%, or $6,674, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. These expenses increased during the three and nine months ended September 30, 2021 versus the same periods in 2020 primarily due to an increase in one-off maintenance expenses.

Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utilities expense increased 9.6%, or $3,306, and 7.4%, or $8.963, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020, primarily due to rising costs for energy and higher energy usage at most of our stores during the three and nine months ended September 30, 2021 versus the same periods in 2020. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in higher net utility costs for the remainder of 2021.

Landscaping expenses, which include snow removal costs, decreased 12.5%, or $2,559, and increased 100.6%, or $56,442, respectively for the three and nine months ended September 30, 2021 versus the same periods in 2020. The increase in landscaping expense in the nine months ended September 30, 2020 versus the same period in 2020 is primarily due to higher snow removal expenses. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense for the remainder of 2021, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense decreased 11.0%, or $5,304, and 14.4%, or $21,147, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020, primarily due to decreased marketing costs and internet advertising expenses. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase at a nominal rate for the remainder of 2021.

Other direct store costs include general and administrative expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. General expenses increased 0.1%, or $70, and 5.5%, or $8,461, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. These expenses increased during the three and nine months ended September 30, 2021 versus the same periods in 2020 primarily due to increased expenses for travel. Administrative expenses increased 13.9%, or $15,567, and 23.6%, or $82,492, for the three and nine months ended September 30, 2021 versus the same periods in 2020. We experienced an increase in administrative expenses in the nine months ended September 30, 2020 versus the same period in 2020 due primarily to higher landscaping expense in connection with snow removal. We currently expect moderate increases in direct store costs during the remainder of 2021.

Depreciation and amortization increased 1.4%, or $3,384, and 0.8%, or $5,695, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020.

Property Tax Expenses at Dolton, IL

Late in the third quarter of 2017, our Dolton, IL property was reassessed by the municipality and separately, our Class 8 tax incentive renewal hearing was held. As a result of those two events, our Dolton, IL property was reassessed at approximately 52% higher and the Class 8 tax incentive was not renewed. These events were applied retroactively to take effect on January 1, 2017. The combined impact was an increase in property tax expenses from $105,000 during 2016 to $210,000 during 2017, $240,000 during 2018, $395,000 during 2019, and $399,000 during 2020. The Class 8 tax incentive phased out over the years 2017, 2018, 2019 and 2020. We currently expect the property tax expenses at our Dolton, IL property to increase by approximately 5% in 2021. Both the property tax reassessment and our Class 8 tax incentive renewal status are currently under appeal. However, there is no guarantee that either the assessment will be reduced or our Class 8 tax incentive status will be reinstated.

Combined Same-Store and Non Same-Store Self Storage Operations

At September 30, 2021, we owned nine same-store properties and three non same-store properties. The non same-store properties are McCordsville, IN, Millbrook, NY, and West Henrietta, NY.

Combined store average overall square foot occupancy at September 30, 2021 increased by 1.4% to 93.3% from 91.9% at September 30, 2020. This includes the impact from our Millbrook, NY store expansion project completed during February 2020, our McCordsville, IN conversion completed during June 2020, and our West Henrietta, NY store expansion project completed during August 2020. Our Millbrook, NY store expansion project added approximately 11,800 leasable square feet of all-climate-controlled storage units. Our McCordsville, IN store conversion added a total of 13,713 leasable square feet of all-climate-controlled storage units. Our West Henrietta store expansion added a total of 7,300 leasable square feet of drive-up storage units. Upon completion in February 2020 of the Millbrook, NY store expansion project, its area occupancy dropped from approximately 88.6% to approximately 45.5%. Upon completion in June 2020 of the McCordsville, IN store conversion project, its area occupancy dropped from what would have been approximately 97.4% to approximately 79.1%. Upon completion in August 2020 of the West Henrietta, NY store expansion project, its area occupancy dropped from approximately 89.6% to approximately 77.9%.

We grew our top-line results by increasing combined store revenues by 16.4% and 13.6% for the three and nine months ended September 30, 2021 versus the same periods in 2020. Combined store cost of operations increased by 3.6% and 4.9% for the three and nine months ended September 30, 2021 versus the same periods in 2020. Combined store NOI increased by 24.6% and 19.4% for the three and nine months ended September 30, 2021 versus the same periods in 2020.

We believe that our results were driven by, among other things, our internet and digital marketing initiatives, drive-by curb appeal, and superior roadside signage which helped deliver new tenant inquiries and enabled our combined store overall average occupancy to maintain at or above 93% as of September 30, 2021. Also, contributing to our strong results were our customer service efforts which we believe were essential in building local brand loyalty resulting in referral and word-of-mouth market demand for our storage units and services.

These results are summarized as follows:


COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES

Three Months Ended September 30,	2021			2020			Variance			% Change
Revenues	$	2,711,092		$	2,328,413		$	382,679			16.4	%
Cost of operations	$	940,372		$	907,350		$	33,022			3.6	%
Net operating income	$	1,770,720		$	1,421,063		$	349,657			24.6	%
Depreciation and amortization	$	362,839		$	462,294		$	(99,455	)		-21.5	%
Net leasable square footage at period end*		831,180			831,982			(802	)		-0.1	%
Net leased square footage at period end		775,126			764,419			10,708			1.4	%
Overall square foot occupancy at period end		93.3	%		91.9	%		1.4	%		1.5	%
Total available leasable storage units		6,392			6,359			33			0.5	%
Number of leased storage units*		5,884			5,742			142			2.5	%


COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES

Nine Months Ended September 30,	2021			2020			Variance			% Change
Revenues	$	7,690,819		$	6,767,324		$	923,495			13.6	%
Cost of operations	$	2,831,693		$	2,698,639		$	133,054			4.9	%
Net operating income	$	4,859,126		$	4,068,685		$	790,441			19.4	%
Depreciation and amortization	$	1,081,163		$	1,398,658		$	(317,495	)		-22.7	%
Net leasable square footage at period end*		831,180			831,982			(802	)		-0.1	%
Net leased square footage at period end		775,126			764,419			10,708			1.4	%
Overall square foot occupancy at period end		93.3	%		91.9	%		1.4	%		1.5	%
Total available leasable storage units		6,392			6,359			33			0.5	%
Number of leased storage units*		5,884			5,742			142			2.5	%

The following table presents a reconciliation of combined same-store and non same-store net operating income (loss) to net income (loss) as presented on our consolidated statements of operations for the periods indicated (unaudited):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income (loss)	$	629,062		$	337,124		$	1,901,608		$	(41,444	)
Adjustments:
Management fees and other income		(19,426	)		(17,496	)		(56,408	)		(52,341	)
General and administrative		594,547			564,162			1,804,371			1,822,353
Depreciation and amortization		409,763			509,219			1,221,938			1,527,901
Business development and property acquisition costs		1,797			471			6,635			10,528
Dividend and interest income		(19,533	)		(17,648	)		(56,396	)		(62,017	)
Unrealized gain on marketable equity securities		(81,992	)		(245,571	)		(791,189	)		(27,402	)
Interest expense		256,502			290,802			828,567			891,107
Total combined same-store and non same-store net operating income	$	1,770,720		$	1,421,063		$	4,859,126		$	4,068,685

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Combined same-store and non same-store revenues	$	2,711,092		$	2,328,413		$	7,690,819		$	6,767,324
Combined same-store and non same-store cost of operations	$	940,372			907,350		$	2,831,693			2,698,639
Total combined same-store and non same-store net operating income	$	1,770,720		$	1,421,063		$	4,859,126		$	4,068,685

Analysis of Combined Same-Store and Non Same-Store Revenue

For the three and nine months ended September 30, 2021, combined store revenues increased 16.4%, or $382,679, and 13.6%, or $923,495, respectively, versus the same periods in 2020, which was primarily attributable to, among other things, increased rental rates and the results of our revenue rate management program of raising existing tenant rates.

We believe that high occupancies help maximize our rental income. We seek to maintain an average square foot occupancy level at or above 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our marketing efforts on the internet in seeking to generate sufficient move-in volume to replace tenants that vacate. Demand may fluctuate due to various local and regional factors, including the overall economy. Demand is typically higher in the summer months than in the winter months and, as a result, rental rates charged to new tenants are typically higher in the summer months than in the winter months.

During the period from late March 2020 through May 2020, we experienced reduced activity with fewer move-ins and move-outs, and received periodic tenant requests for the waiver of late fees due to COVID-19 related hardships. However, we have seen increased demand for self storage since June 2020, as various areas of the United States emerged from stay at home orders. These trends may be temporary or even reverse, to the extent they are driven by short-term factors such as stay at home orders and delays in our auction process. We temporarily suspended our existing tenant rental rate increase program, but have since restarted it at all of our properties as of July 2020. Because existing tenant rental rate increases have contributed significantly to increases in rental income in recent years, suspension of these increases may have a material adverse impact on our revenue growth. It is possible that the COVID-19 pandemic could change consumer behavior, either due to economic recession, uncertainty, or dislocation, as well as other factors, which could increase customer sensitivity and propensity to move-out in response to rate increases, either in the short or longer term. Other effects of the COVID-19 pandemic, such as movement from urban areas to more suburban and rural areas, has driven increased demand for self storage in the secondary and tertiary markets that we operate.

discounts, and (iv) higher occupancies. Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs. We currently expect existing tenant rent increases for the remainder of 2021, if any, to be higher than the prior year.

Importantly, we continue to refine our ongoing revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI. We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of September 30, 2021, our average tenant duration of stay was approximately 3.0 years, up from approximately 2.7 years as of September 30, 2020.

Analysis of Combined Same-Store and Non Same-Store Cost of Operations

Combined store cost of operations increased 3.6%, or $33,022, and 4.9%, or $133,054, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. This increase in combined store cost of operations for the three and nine months ended September 30, 2021 was due primarily to increased real estate and administrative expense for the three and nine months ended September 30, 2021 and increased snow removal expense during the first quarter of 2021 .

On-site store manager and supervisory payroll expense decreased 1.8%, or $4,994, and increased 3.1%, or $25,458, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. This increase for the nine months ended September 30, 2021 was due primarily to higher wage and administration expenses and routine employee hiring activities. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores as well as store, district, and regional managers.

Store property tax expense increased 9.0%, or $28,704, and 1.7% or $15,994, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. When compared to store property tax expense for the three months ended September 30, 2021, we currently expect store property tax expense to remain consistent for the remainder of 2021.

Repairs and maintenance expense increased 21.3%, or $6,889, and 11.1% or $9,327, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. These expenses increased during the three and nine months ended September 30, 2021 versus the same period in 2020 primarily due to an increase in one-off maintenance expenses.

Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our aforementioned ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utilities expense increased 6.6%, or $3,332, and increased 4.4%, or $7,803, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020, primarily due to rising costs for energy and higher energy usage at most of our stores during the nine months ended September 30, 2021 versus the same period in 2020. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in higher net utility costs for the remainder of 2021.

Landscaping expenses, which include snow removal costs, decreased 3.8%, or $1,029, and increased 86.7%, or $65,997, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. The increase in landscaping expense in nine months ended September 30, 2021 versus the same period in 2020 is primarily due to higher snow removal expenses in the first quarter of 2021. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense for the remainder of 2021, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense decreased 22.7%, or $17,854, and 18.4%, or $41,176, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020, primarily due to decreased marketing costs and internet advertising expenses in the nine months ended September 30, 2021. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to remain the same for the remainder of 2021.

Other direct store costs include general and administrative expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. General expenses increased 3.4%, or $2,372, and 4.9%, or $10,338, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. Expenses for the nine months ended September 30, 2021 increased primarily due to increased expenses for travel. Administrative expenses increased 12.3%, or $19,451, and 22.4%, or $106,305, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. We experienced an increase in administrative expenses for the nine months ended September 30, 2021 versus the same period in 2020 due primarily to higher snow removal expenses in the first quarter of 2021. We currently expect moderate increases in direct store costs during the remainder of 2021.

Depreciation and amortization decreased 21.5%, or $99,455, and 22.7%, or $317,495, respectively, for the three and nine months ended September 30, 2021 versus the same periods in 2020. The difference is primarily attributable to depreciation of the building and fixtures related to the 2019 store acquisition in West Henrietta, NY, the expansions of the Millbrook, NY and West Henrietta, NY stores, and amortization of the in-place leases related to the 2019 store acquisition at West Henrietta, NY.

Analysis of Global Self Storage FFO and AFFO

The following tables present reconciliation and computation of net income (loss) to funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) and earnings per share to FFO and AFFO per share (unaudited):


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income (loss)	$	629,062		$	337,124		$	1,901,608		$	(41,444	)
Eliminate items excluded from FFO:
Unrealized gain on marketable equity securities		(81,992	)		(245,571	)		(791,189	)		(27,402	)
Depreciation and amortization		409,763			509,219			1,221,938			1,527,901
FFO attributable to common stockholders		956,833			600,772			2,332,357			1,459,055
Adjustments:
Compensation expense related to stock-based awards		54,092			35,283			140,274			99,762
Business development, capital raising, store acquisition, and third-party management marketing expenses		1,797			471			6,635			10,528
AFFO attributable to common stockholders	$	1,012,722		$	636,526		$	2,479,266		$	1,569,345

Earnings per share attributable to common stockholders - basic	$	0.06		$	0.04		$	0.19		$	(0.00	)
Earnings per share attributable to common stockholders - diluted	$	0.06		$	0.04		$	0.19		$	(0.00	)
FFO per share - diluted	$	0.09		$	0.06		$	0.24		$	0.16
AFFO per share - diluted	$	0.10		$	0.07		$	0.25		$	0.17

Weighted average shares outstanding - basic		10,601,521			9,277,043			9,757,458			9,269,834
Weighted average shares outstanding - diluted		10,635,006			9,290,984			9,787,317			9,269,834

FFO increased 59.3%, or $356,061, and 59.9% or $873,302, for the three and nine months ended September 30, 2021 respectively, versus the same period in 2020. FFO per diluted share increased from $0.06 per share to $0.09 per share and from $0.16 per share to $0.24 per share, for the three and nine months ended September 30, 2021, respectively, versus the same periods in 2020. AFFO increased 59.1%, or $376,196, and 58.0% or $909,921, for the three and nine months ended September 30, 2021, respectively, versus the same

periods in 2020. AFFO per diluted share increased from $0.07 per share to $0.10 per share and from $0.17 per share to $0.25 per share for the three and nine months ended September 30, 2021 versus the same periods in 2020.

Analysis of Global Self Storage Store Expansions and Redevelopment Operations

In addition to actively reviewing a number of store and portfolio acquisition opportunities, we have been working to further develop and expand our current stores. During the year ended December 31, 2020, we completed three expansion / conversion projects at our properties located in Millbrook, NY, McCordsville, IN, and West Henrietta, NY. In the year ending December 31, 2021, we completed a conversion project at our property located in Lima, OH.

In 2019, the Company broke ground on the Millbrook, NY expansion, which, upon completion in February 2020, added approximately 11,800 leasable square feet of all-climate-controlled units. Upon completion in February 2020 of the Millbrook, NY store expansion project, its area occupancy dropped from approximately 88.6% to approximately 45.5%. Lease-up of the Millbrook, NY expansion has gone faster than expected. As of September 30, 2021, the Millbrook, NY store’s total area occupancy stood at 97.1%.

In the first quarter of 2020, the Company began reviewing plans to convert certain commercially-leased space to all-climate-controlled units at the McCordsville, IN property. In April 2020, the Company commenced such conversion, which was completed in June 2020, resulting in a new total of 535 units and 76,360 leasable square feet at the McCordsville, IN property. Upon completion in June 2020 of the McCordsville, IN store conversion project, its total area occupancy dropped from what would have been approximately 97.4% to approximately 79.1%. As of September 30, 2021, the McCordsville, IN store’s total area occupancy stood at 93.4%.

Our West Henrietta, NY store expansion project, completed in August 2020, added approximately 7,300 leasable square feet of drive-up storage units. Upon completion of the expansion project the West Henrietta, NY store’s total area occupancy dropped from approximately 89.6% to approximately 77.9%. As of September 30, 2021, the West Henrietta, NY store’s total area occupancy stood at 78.8%. There is no guarantee that we will experience demand for the newly added West Henrietta, NY expansion or that we will be able to successfully lease-up the expansion to the occupancy level of our other properties.

In 2021, the Company began reviewing plans to convert certain commercially-leased space to 3,000 leasable square feet of all-climate-controlled units at the Lima, OH property. In July 2021, the Company completed such conversion, resulting in a new total of 756 units and 96,883 leasable square feet at the Lima, OH property. Upon completion, total area occupancy was approximately 94.8%. As of September 30, 2021, the Lima, OH store’s total area occupancy stood at 93.4%. This conversion did not constitute a significant renovation or expansion. As such, our Lima, OH property remained a same store property.

Analysis of Realized and Unrealized Gains (Losses)

Unrealized gains and losses on the Company’s investment in marketable equity securities for the nine months ended September 30, 2021 and 2020 were gains of $791,189 and $27,402, respectively. As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we may liquidate our investment in marketable equity securities and potentially realize gains or losses. As of September 30, 2021, our unrealized gain on marketable equity securities was $1,952,153. There were no realized gains or losses for the nine months ended September 30, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports we file pursuant to the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, 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 based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We have a disclosure controls and procedures committee, comprised of the Chief Executive Officer and Chief Financial Officer, which meets as necessary and is responsible for considering the materiality of information and determining our disclosure obligations on a timely basis.

The disclosure controls and procedures committee carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company or its subsidiaries may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the Company will seek to include in its financial statements the necessary provisions for losses that it believes are probable and estimable. Furthermore, the Company will seek to evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. The Company currently does not have any material pending legal proceedings to which it or any of its subsidiaries is a party or of which any of their property is the subject.

Item 1A. Risk Factors.

The risk factors that affect our business and financial results are discussed in Part I, Item 1A, of our annual report on Form 10-K for the fiscal year ended December 31, 2020. There are no material changes to the risk factors previously disclosed, nor have we identified any previously undisclosed risks that could materially adversely affect our business and financial results, except as described below.

Our proportionate share of the loan entered into by an affiliate on our behalf under the Paycheck Protection Program may not be forgiven or may subject us to challenges and investigations regarding qualification for the loan.

On May 19, 2020, Midas Management Corporation (“MMC”) (the “Borrower”), a subsidiary of Winmill & Co. Incorporated (“Winco”), entered into a Paycheck Protection Program Term Note (“PPP Note”) with Customers Bank on behalf of itself and the Affiliates under the Paycheck Protection Program (the "Program") of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") administered by the U.S. Small Business Administration (the “SBA”). Certain officers and directors of the Company also serve as officers and directors of Winco, Bexil Corporation, Tuxis Corporation, and their affiliates (collectively with the Company, the “Affiliates”). Pursuant to an arrangement between a professional employer organization and the Affiliates, MMC acts as a conduit payer of compensation and benefits to the Affiliates’ employees including those who are concurrently employed by the Company and its Affiliates. The Borrower received total proceeds of $486,602 from the PPP Note of which approximately $300,000 was attributable to the Company under the SBA’s loan determination formula. In accordance with the requirements of the CARES Act, the Affiliates used the proceeds from the PPP Note primarily for payroll and other eligible costs. Interest accrues on the PPP Note at the rate per annum of 1.00%. In March 2021, the Borrower applied to Customers Bank for forgiveness of the amount due on the PPP Note in an amount equal to the sum of payroll and other eligible costs incurred during the twenty-four weeks (the “Covered Period”), following disbursement under the PPP Note. On October 8, 2021, the Borrower received the SBA’s final loan review decision which denied forgiveness of the loan in full. On November 4, 2021, the Borrower filed an appeal petition with the SBA’s Office of Hearings and Appeals within the 30 calendar day period after receipt of the final loan review decision. The Borrower's timely filing of the appeal has extended the loan deferment period.

During the period from May 19, 2020 through the ten-month period following the last day of the Covered Period (the “Deferral Expiration Date”), neither principal nor interest shall be due and payable. On the Deferral Expiration Date, the outstanding principal of the PPP Note or the amount that is not forgiven under the Program shall convert to an amortizing term loan. On May 19, 2022, all accrued interest that is not forgiven under the Program shall be due and payable. Additionally, on December 19, 2020 and continuing on the 19th day of each month thereafter until May 19, 2022 equal installments of principal shall be due and payable, each in an amount determined by the Lender (the “Monthly Principal Amount”). Interest shall be payable at the same time as the Monthly Principal Amount. Any outstanding principal and accrued interest shall be due and payable in full on May 19, 2022. We expect to contribute to the interest payable on the PPP Note in proportion to our share of payroll and other eligible costs used in the original calculation of the loan request.

For the three and nine months ended September 30, 2021, there has been no material impact to our operations or cash flows due to the PPP Note. If and when the PPP Note is, in part or wholly forgiven, and legal release is received, we expect to record a gain in an amount proportionate to our share of payroll costs and other eligible expenses incurred during the Covered Period. We expect any loan forgiveness to reduce such expenses and reduce related reimbursements to MMC and Winco accordingly.

No assurance is provided that our appeal will be successful and that we will obtain forgiveness of our portion of the PPP Note in whole or in part. If forgiveness is not granted, interest on our portion of the PPP Note, in whole or in part, will need to be repaid by us. Additionally, the Treasury Department and SBA continue to develop and issue new and updated regulations and guidance regarding the Program’s loan process, including regarding required borrower certifications and requirements for forgiveness of loans made under the

Program. We continue to track the regulations and guidance as they are released and assess and re-assess various aspects of its forgiveness application as necessary. Finally, we may be subject to CARES Act-specific lookbacks and audits conducted by the Treasury, SBA or other federal agencies, including oversight bodies created under the CARES Act. These bodies have the ability to coordinate investigations and audits and refer matters to the Department of Justice for civil or criminal enforcement and other actions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits – See Exhibit Index below.

Exhibit Index


Exhibit Item Number and Description	Incorporated by Reference to	Filed Herewith

10.1 Amended and Restated Guaranty of Payment dated July 6, 2021 by Global Self Storage, Inc. in favor of The Huntington National Bank, successor by merger to TCF National Bank (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 6, 2021 and incorporated herein by reference).	X

10.2 First Amendment to the Loan Documents dated July 6, 2021 between certain subsidiaries of Global Self Storage, Inc. and The Huntington National Bank, successor by merger to TCF National Bank (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 6, 2021 and incorporated herein by reference).	X

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		X

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		X

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X

101. The following materials from Global Self Storage, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, are formatted in Inline XBRL (eXtensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Operations, (3) the Consolidated Statements of Comprehensive Income, (4) Consolidated Statement of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows, and (6) the Notes to Financial Statements.		X

104. The cover page from the Company’s Quarterly report on Form 10-Q for the quarter ended September 30, 2021 has been formatted in Inline XBRL (eXtensible Business Reporting Language) and in included in Exhibit 101.		X

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.


	GLOBAL SELF STORAGE, INC.

Date: November 15, 2021	/s/ Mark C. Winmill
	By:	Mark C. Winmill, President
	(Signing on behalf of the registrant as Principal Executive Officer)

Date: November 15, 2021	/s/ Thomas O’Malley
	By:	Thomas O’Malley, Chief Financial Officer
	(Signing on behalf of the registrant as Principal Financial Officer and Principal Accounting Officer)