November 10, 2022 - 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, 2022

☐ 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 21, 2022 was 11,105,533.

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.	32
	Item 4.	Controls and Procedures.	32
PART II – OTHER INFORMATION			34
	Item 1.	Legal Proceedings.	34
	Item 1A.	Risk Factors.	34
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	34
	Item 3.	Defaults Upon Senior Securities.	34
	Item 4.	Mine Safety Disclosures.	34
	Item 5.	Other Information.	34
	Item 6.	Exhibits.	34
Exhibit Index			35
SIGNATURES			36

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 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 made 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, including the impact of the COVID-19 pandemic, that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks referenced in “Item 1A. Risk Factors” included in our most recent annual report on Form 10-K and in other 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 expansion) 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; 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, 2022			December 31, 2021
Assets
Real estate assets, net	$	57,257,626		$	58,390,066
Cash and cash equivalents		6,341,502			2,899,701
Restricted cash		132,104			163,998
Investments in securities		2,593,297			3,483,182
Accounts receivable		162,701			120,641
Prepaid expenses and other assets		546,420			534,120
Line of credit issuance costs, net		177,803			254,004
Interest rate cap		111,801			9,408
Goodwill		694,121			694,121
Total assets	$	68,017,375		$	66,549,241
Liabilities and equity
Note payable, net	$	17,546,978		$	17,916,513
Accounts payable and accrued expenses		1,835,004			1,514,631
Total liabilities		19,381,982			19,431,144
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value: 50,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $0.01 par value: 450,000,000 shares authorized; 11,100,842 shares and 10,708,613 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		111,008			107,086
Additional paid in capital		48,960,578			46,851,360
Retained earnings (accumulated deficit)		(436,193	)		159,651
Total stockholders' equity		48,635,393			47,118,097
Total liabilities and stockholders' equity	$	68,017,375		$	66,549,241

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME

(Unaudited)




	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues
Rental income	$	2,970,875		$	2,608,664		$	8,542,221		$	7,402,570
Other property related income		93,630			102,428			281,702			288,249
Management fees and other income		21,907			19,426			62,218			56,408
Total revenues		3,086,412			2,730,518			8,886,141			7,747,227
Expenses
Property operations		1,010,495			940,372			3,053,481			2,831,693
General and administrative		560,675			594,547			1,892,382			1,804,371
Depreciation and amortization		404,961			409,763			1,214,344			1,221,938
Business development		4,598			1,797			46,708			6,635
Total expenses		1,980,729			1,946,479			6,206,915			5,864,637
Operating income		1,105,683			784,039			2,679,226			1,882,590
Other income (expense)
Dividend and interest income		46,846			19,533			92,894			56,396
Unrealized (loss) gain on marketable equity securities		(59,512	)		81,992			(889,885	)		791,189
Interest expense		(163,153	)		(256,502	)		(572,174	)		(828,567	)
Gain on Paycheck Protection Program (PPP) loan forgiveness	—			—				307,210		—
Total other income (expense), net		(175,819	)		(154,977	)		(1,061,955	)		19,018
Net income and comprehensive income	$	929,864		$	629,062		$	1,617,271		$	1,901,608
Earnings per share
Basic	$	0.08		$	0.06		$	0.15		$	0.19
Diluted	$	0.08		$	0.06		$	0.15		$	0.19
Weighted average shares outstanding
Basic		10,924,646			10,601,521			10,785,362			9,757,458
Diluted		10,978,000			10,635,006			10,842,515			9,787,317

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)



										Retained
										earnings			Total
	Common stock						Additional paid in			(accumulated			stockholders'
	Shares			Par value			capital			deficit)			equity
Balances at December 31, 2021		10,708,613		$	107,086		$	46,851,360		$	159,651		$	47,118,097
Restricted stock grants issued		26,025			260			(260	)	—			—
Restricted stock grant forfeiture		(203	)		(2	)		2		—			—
Issuance of common stock, net of expenses		65,843			659			197,711		—				198,370
Stock-based compensation	—			—				52,604		—				52,604
Net income	—			—			—				283,207			283,207
Dividends	—			—			—				(700,339	)		(700,339	)
Balances at March 31, 2022		10,800,278			108,003			47,101,417			(257,481	)		46,951,939
Restricted stock grant forfeiture		(406	)		(4	)		4		—			—
Issuance of common stock, net of expenses		165,808			1,658			984,295		—				985,953
Stock-based compensation	—			—				39,329		—				39,329
Net income	—			—			—				404,200			404,200
Dividends	—			—			—				(708,487	)		(708,487	)
Balances at June 30, 2022		10,965,680			109,657			48,125,045			(561,768	)		47,672,934
Restricted stock grant forfeiture		(2,329	)		(23	)		23		—			—
Issuance of common stock, net of expenses		137,491			1,374			796,331		—				797,705
Stock-based compensation	—			—				39,179		—				39,179
Net income	—			—			—				929,864			929,864
Dividends	—			—			—				(804,289	)		(804,289	)
Balances at September 30, 2022		11,100,842		$	111,008		$	48,960,578		$	(436,193	)	$	48,635,393

See notes to unaudited consolidated financial statements.

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)




											Total
	Common stock				Additional 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	)	—			—
Restricted stock grant forfeiture	—		—			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 grant forfeiture		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 STATEMENTS OF CASH FLOWS

(Unaudited)




	For the Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities
Net income	$	1,617,271		$	1,901,608
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		1,214,344			1,221,938
Unrealized loss (gain) on marketable equity securities		889,885			(791,189	)
Unrealized (gain) loss on interest rate cap premium		(102,393	)		4
Amortization of loan procurement costs		105,027			155,176
Stock-based compensation		131,112			140,274
Gain on PPP loan forgiveness		(307,210	)	—
Changes in operating assets and liabilities:
Accounts receivable		(42,060	)		321
Prepaid expenses and other assets		(12,300	)		(158,660	)
Accounts payable and accrued expenses		317,330			64,324
Net cash provided by operating activities		3,811,006			2,533,796
Cash flows from investing activities
Improvements and equipment additions		(81,904	)		(243,626	)
Net cash used in investing activities		(81,904	)		(243,626	)
Cash flows from financing activities
Issuance of common stock, net of expenses		1,982,028			6,184,684
Proceeds received on PPP loan forgiveness		307,210		—
Line of credit repayment, net	—				(5,144,000	)
Issuance costs on renewal of revolving line of credit	—				(231,926	)
Principal payments on note payable		(398,361	)		(382,035	)
Dividends paid		(2,210,072	)		(1,913,512	)
Net cash used in financing activities		(319,195	)		(1,486,789	)
Net increase in cash, cash equivalents, and restricted cash

Form: 10-Q

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