Form: 10-12B/A

Initial general form for registration of a class of securities pursuant to Section 12(b)

October 28, 2015

Documents

Exhibit 99 - Unaudited pro forma condensed consolidated financial statements
 
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Upon receiving the deregistration order from the Securities and Exchange Commission declaring that the Company has ceased to be an investment company, the Company will prepare financial statements on a consolidated basis to include the financial position, results of operations, and cash flows of the Company and its wholly owned subsidiaries, rather than by the current investment company fair valuation approach.

The following table presents the Company's unaudited pro forma balance sheet and has been prepared as if the deregistration order was effective on June 30, 2015 and the unaudited pro forma statement of operations of the Company for the six months ended June 30, 2015 assumes that the deregistration order was effective on January 1, 2015.

The unaudited pro forma financial statements are based upon available information and upon certain assumptions, as set forth in the notes to the unaudited pro forma financial statements that the Company believes are reasonable under the circumstances. The unaudited pro forma financial statements present the Company's change in status from an investment company to an operating company that is no longer regulated as an investment company under the Investment Company Act of 1940 (the "Act"). These unaudited pro forma financial statements do not purport to represent what the Company's financial position or results of operations would actually have been if the deregistration order in fact had occurred on such dates or at the beginning of such periods or the Company's financial position or results of operations for any future dates or periods.
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 June 30, 2015
 
       
Pro Forma Adjustments
        
   
SELF
    
Self Storage
           
Pro Forma
  
   
Historical (A)
    
Properties (B)
    
Other
      
Combined
  
Assets
                  
Self storage properties
  
$
-
    
$
27,949,770
      
5,775,005
  
(C)
  
$
33,724,775
  
Less accumulated depreciation
    
-
      
(1,314,103
)
    
-
        
(1,314,103
)
Self storage properties, net
    
-
      
26,635,667
      
5,775,005
        
32,410,672
  
Investments, at value
                                  
Wholly-owned subsidiaries (cost $27,725,000 )
    
33,500,005
      
-
      
(33,500,005
)
(C)
    
-
  
Unaffiliated issuers (cost $6,090,663)
    
7,104,192
      
-
      
(7,104,192
)
(D) (E)
    
-
  
Cash / Cash and cash equivalents
    
29,754
      
477,432
      
3,565,353
  
(D)
    
4,072,539
  
Available-for-sale securities
    
-
      
-
      
3,538,839
  
(E)
    
3,538,839
  
Accounts receivable
    
-
      
89,659
      
-
        
89,659
  
Dividends receivable
    
13,200
      
-
      
-
        
13,200
  
Prepaid expenses
    
-
      
203,988
      
-
        
203,988
  
Other assets
    
4,765
      
-
      
-
        
4,765
  
                                   
Total assets
  
$
40,651,916
    
$
27,406,746
    
$
(27,725,000
)
    
$
40,333,662
  
                                   
Liabilities
                                  
Accounts payable and accrued expenses
  
$
165,870
    
$
348,189
      
-
      
$
514,059
  
Due to affiliates
    
62,891
      
-
      
-
        
62,891
  
Deferred revenue
    
-
      
80,408
      
-
        
80,408
  
                                   
   Total liabilities
    
228,761
      
428,597
      
-
        
657,358
  
                                   
Net Assets / Stockholders Equity
                                  
Capital stock and additional paid in capital
    
33,159,940
      
-
      
-
        
33,159,940
  
Undistributed net realized gains
    
428,165
      
-
      
-
        
428,165
  
Net unrealized appreciation on investments
    
6,835,050
      
-
      
(6,835,050
)
(F) (G)
    
-
  
Member capital
    
-
      
27,725,000
      
(27,725,000
)
(C)
    
-
  
Accumulated other comprehensive income
    
-
      
-
      
1,060,045
  
(G)
    
1,060,045
  
Retained earnings (deficit)
    
-
      
(746,851
)
    
5,775,005
  
(F)
    
5,028,154
  
                                   
Total net assets / stockholders equity
    
40,423,155
      
26,978,149
      
(27,725,000
)
      
39,676,304
  
                                   
Total liabilities and net assets / stockholders equity
  
$
40,651,916
    
$
27,406,746
    
$
(27,725,000
)
    
$
40,333,662
  
 
See notes to unaudited pro forma condensed consolidated financial statements.
 
 
SELF STORAGE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 Six Months Ended June 30, 2015
 
       
Pro Forma Adjustments
        
   
SELF
    
Self Storage
           
Pro Forma
  
   
Historical (AA)
    
Properties (BB)
    
Other
      
Combined
  
Investment Income / Revenue
                  
Rental revenue
  
$
-
    
$
2,101,005
           
$
2,101,005
  
Other property related revenue
    
-
      
74,293
            
74,293
  
Dividends
                              
Wholly-owned subsidiaries
    
1,140,000
      
-
      
(1,140,000
)
 (CC)
    
-
  
Unaffiliated issuers
    
80,217
      
-
      
(80,217
)
 (DD)
    
-
  
                                   
Total investment income / Total revenue
    
1,220,217
      
2,175,298
      
(1,220,217
)
      
2,175,298
  
                                   
Expenses
                                  
Compensation and benefits
    
363,056
      
238,049
                
601,105
  
Property operating expenses
    
-
      
592,398
                
592,398
  
General and administrative
    
-
      
96,977
      
162,631
  
 (EE)
    
259,608
  
Depreciation and amortization
    
-
      
312,230
                
312,230
  
Professional services
    
-
      
-
      
60,130
  
 (FF)
    
60,130
  
Occupancy and other office expenses
    
74,656
      
-
      
(74,656
)
 (EE)
    
-
  
Registration
    
62,860
      
-
      
(62,860
)
 (EE)
    
-
  
Bookkeeping and pricing
    
37,795
      
-
      
(37,795
)
 (GG)
    
-
  
Auditing
    
20,915
      
-
      
(20,915
)
 (FF)
    
-
  
Directors
    
20,415
      
-
      
(20,415
)
 (FF)
    
-
  
Legal
    
18,800
      
-
      
(18,800
)
 (FF)
    
-
  
Stockholder communications
    
11,698
      
-
      
(11,698
)
 (EE)
    
-
  
Custodian
    
6,900
      
-
      
(6,900
)
 (GG)
    
-
  
Insurance
    
5,430
      
-
      
(5,430
)
 (EE)
    
-
  
Transfer agent
    
5,110
      
-
      
(5,110
)
 (EE)
    
-
  
Other
    
2,877
      
-
      
(2,877
)
 (EE)
    
-
  
                                   
Total expenses
    
630,512
      
1,239,654
      
(44,695
)
      
1,825,471
  
                                   
Net investment income / Income from operations
    
589,705
      
935,644
      
(1,175,522
)
      
349,827
  
                                   
Realized and Unrealized Gain (Loss) / Other Income
                                  
Dividend income
    
-
      
-
      
80,217
  
 (DD)
    
80,217
  
Net realized gain on investments in unaffiliated issuers
    
900,368
      
-
                
900,368
  
Net unrealized appreciation
                                  
Wholly-owned subsidiaries
    
2,220,006
      
-
      
(2,220,006
)
 (HH)
    
-
  
Unaffiliated issuers
    
(423,652
)
    
-
      
423,652
  
 (HH)
    
-
  
                                   
Net realized and unrealized gain /  Other income
    
2,696,722
      
-
      
(1,796,354
)
      
900,368
  
                                   
Net increase in net assets resulting from operations / Net income before taxes
    
3,286,427
      
935,644
      
(2,971,876
)
      
1,250,195
  
Income taxes (a)
   
-
      
5,438
                
5,438
  
                                   
Net increase in net assets resulting from operations / Net income
  
$
3,286,427
    
$
930,206
    
$
(2,971,876
)
    
$
1,244,757
  
                                   
Earnings per share
                               
$
0.17
  
Weighted average shares outstanding
                              
7,416,766
  
                                   
 

 (a) As a real estate investment trust, 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, however the Company is subject to certain state and local taxes.

See notes to unaudited pro forma condensed consolidated financial statements
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated financial statements have been prepared to show the Company's change in status from an investment company fair valuation accounting approach to an operating company consolidated basis to  include the accounts of the Company and its wholly owned subsidiaries SSG Bolingbrook LLC ("Bolingbrook"), SSG Dolton LLC ("Dolton"), SSG Merrillville LLC ("Merrillville"), SSG Rochester LLC ("Rochester"), SSG Sadsbury LLC ("Sadsbury"), SSG Summerville I LLC ("Summerville I"), and SSG Summerville II LLC ("Summerville II") (collectively the "Self Storage Properties"). All intercompany balances and transactions have been eliminated in consolidation.

2. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(A) Historical Unaudited Statement of Assets and Liabilities. Represents the historical accounting of assets and liabilities of the Company as a registered investment company with its investments carried at fair value as of June 30, 2015.

(B) Represents the unaudited combined balance sheets of the Company's Self Storage Properties as of June 30, 2015. Each subsidiary owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded its investment in the Self Storage Properties at fair value and recorded the changes in the fair value as an unrealized gain or loss. Upon the effective date of the deregistration (assumed to be on June 30, 2015) of the Company as a registered investment company, the fair value accounting as a registered investment company will no longer apply to the Company, rather the Company will present on a consolidated basis, the underlying assets and liabilities of the Self Storage Properties. The Company's initial carrying value of the Self Storage Properties will be the fair value on the effective date of the change in status.
 
   
Combined
                        
 
    
 
  
  Balance Sheets   
Bolingbrook
    
Dolton
    
Merrillville
    
Rochester
    
Sadsbury
     Summerville I 
 
  
Summerville II
  
Assets
                                    
Land
  
$
2,661,000
    
$
572,500
    
$
517,500
    
$
486,000
    
$
350,000
    
$
375,000
    
$
230,000
    
$
130,000
  
Buildings and improvements
    
25,288,770
      
5,174,441
      
4,655,096
      
4,391,521
      
3,376,872
      
4,425,486
      
2,095,831
      
1,169,523
  
                                                                 
Total self storage properties
    
27,949,770
      
5,746,941
      
5,172,596
      
4,877,521
      
3,726,872
      
4,800,486
      
2,325,831
      
1,299,523
  
Accumulated depreciation
    
(1,314,103
)
    
(257,533
)
    
(232,917
)
    
(221,024
)
    
(214,255
)
    
(225,294
)
    
(106,833
)
    
(56,247
)
                                                                 
Self storage properties, net
    
26,635,667
      
5,489,408
      
4,939,679
      
4,656,497
      
3,512,617
      
4,575,192
      
2,218,998
      
1,243,276
  
                                                                 
Cash and cash equivalents
    
477,432
      
159,319
      
105,913
      
77,870
      
95,052
      
7,910
      
21,862
      
9,506
  
Accounts receivable
    
89,659
      
7,220
      
20,123
      
23,999
      
7,009
      
7,349
      
13,622
      
10,337
  
Prepaid expenses
    
203,988
      
7,922
      
9,947
      
8,804
      
39,579
      
118,073
      
12,142
      
7,521
  
                                                                 
Total assets
  
$
27,406,746
    
$
5,663,869
    
$
5,075,662
    
$
4,767,170
    
$
3,654,257
    
$
4,708,524
    
$
2,266,624
    
$
1,270,640
  
                                                                 
Liabilities and member capital
                                                                
Accounts payable and accrued expenses
  
$
348,189
    
$
119,367
    
$
93,471
    
$
70,066
    
$
8,351
    
$
9,826
    
$
27,766
    
$
19,342
  
Deferred revenue
    
80,408
      
12,108
      
10,558
      
9,235
      
20,015
      
9,137
      
14,976
      
4,379
  
                                                                 
Total liabilities
    
428,597
      
131,475
      
104,029
      
79,301
      
28,366
      
18,963
      
42,742
      
23,721
  
                                                                 
Member Capital
                                                                
Member capital
    
27,725,000
      
5,700,000
      
5,100,000
      
4,825,000
      
3,750,000
      
4,750,000
      
2,300,000
      
1,300,000
  
Retained earnings (deficit)
    
(746,851
)
    
(167,606
)
    
(128,367
)
    
(137,131
)
    
(124,109
)
    
(60,439
)
    
(76,118
)
    
(53,081
)
                                                                 
Total member capital
    
26,978,149
      
5,532,394
      
4,971,633
      
4,687,869
      
3,625,891
      
4,689,561
      
2,223,882
      
1,246,919
  
                                                                 
Total liabilities and member capital
  
$
27,406,746
    
$
5,663,869
    
$
5,075,662
    
$
4,767,170
    
$
3,654,257
    
$
4,708,524
    
$
2,266,624
    
$
1,270,640
  
 
(C) Represents the elimination of carrying the ownership of the Self Storage Properties as an investment at fair value as a registered investment company and providing for the recording of the underlying assets and liabilities of these companies (as detailed in Note B) on a consolidated basis. The initial carrying basis of the underlying Self Storage Properties is the fair value on the effective date of the Company's deregistration as an investment company under the Act which is assumed to be effective June 30, 2015. The unrealized gain of $5,775,005 on the Self Storage Properties is adjusted to the underlying costs of such properties.
 
(D) Represents the reclassification of the Company's investment in a money market fund which is deemed a cash equivalent to cash and cash equivalents.

(E) Represents the reclassification of common and preferred stock investments in securities to available-for-sale securities. Such investments will be accounted for at fair value with unrealized changes in fair value reflected as a separate component of "Other Comprehensive Income" a component of stockholders' equity.

 (F) Represents the adjustment to reclassify the unrealized gain on the Self Storage Properties to pro forma retained earnings (deficit).

(G) Represents the adjustment to reclassify the unrealized gain on the Company's investments in available-for-sale securities to pro forma accumulated other comprehensive income.
 
SELF STORAGE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(AA) Historical Unaudited Statement of Operations. Represents the historical accounting of the Company's statement of operations as a registered investment company with its investments carried at fair value for the six months ended June 30, 2015.

(BB) Represents the unaudited combined statements of income of the Company's Self Storage Properties for the six months ended June 30, 2015. Each subsidiary owns and operates a self storage facility and each subsidiary maintains its own accounting books and records separate from the Company. Prior to the change in status as a registered investment company the Company recorded the change in the fair value of its Self Storage Properties as an unrealized gain or loss in the statement of operations. Upon the effective date of the deregistration (assumed to be January 1, 2015) of the Company as a registered investment company, the Company will consolidate the revenues and expenses of the Self Storage Properties presented in the statement of operations and no longer fair value the Self Storage Properties.
 
   
Combined
                                  
   
Statements of
                            
 
    
 
  
   
Income
    
Bolingbrook
    
Dolton
    
Merrillville
    
Rochester
    
Sadsbury
      
Summerville I
 
  
Summerville II
  
Revenue
                                    
Rental revenue
  
$
2,101,005
    
$
324,589
    
$
361,436
    
$
301,381
    
$
474,333
    
$
294,535
    
$
221,114
    
$
123,617
  
Other property related revenue
    
74,293
      
9,328
      
16,598
      
9,832
      
16,038
      
11,827
      
7,190
      
3,480
  
                                                                 
Total revenue
    
2,175,298
      
333,917
      
378,034
      
311,213
      
490,371
      
306,362
      
228,304
      
127,097
  
                                                                 
Expenses
                                                                
Property operating expenses
    
592,398
      
91,940
      
87,160
      
76,125
      
150,482
      
97,865
      
56,596
      
32,230
  
Depreciation and amortization
    
312,230
      
64,424
      
58,492
      
56,197
      
42,783
      
47,871
      
27,101
      
15,362
  
Compensation and benefits
    
238,049
      
32,620
      
25,929
      
29,787
      
54,624
      
54,170
      
31,814
      
9,105
  
General and administrative
    
96,977
      
10,334
      
12,684
      
11,447
      
24,274
      
18,721
      
11,883
      
7,634
  
                                                                 
Total expenses
    
1,239,654
      
199,318
      
184,265
      
173,556
      
272,163
      
218,627
      
127,394
      
64,331
  
                                                                 
Net income before taxes
    
935,644
      
134,599
      
193,769
      
137,657
      
218,208
      
87,735
      
100,910
      
62,766
  
Income taxes
    
5,438
      
-
      
-
      
314
      
-
      
-
      
2,562
      
2,562
  
                                                                 
Net income
  
$
930,206
    
$
134,599
    
$
193,769
    
$
137,343
    
$
218,208
    
$
87,735
    
$
98,348
    
$
60,204
  
 
(CC) Represents the elimination of the fair value accounting as a registered investment company for the underlying Self Storage Properties and providing for the underlying revenue and expenses of the Self Storage Properties (as detailed in Note BB) on a consolidated basis as of the Company's deregistration as an investment company under the Act, which is assumed to be January 1, 2015.
(DD) Represents the reclassification of dividend income from the unaffiliated issuers to Other Income.

(EE) Represents the reclassification of the following historical expenses of the Company incurred for the six months ended June 30, 2015 to General and administrative.
 

         General and administrative
            $162,631
Occupancy and other office expenses
  
                             74,656
Registration
  
                             62,860
Stockholder communications
  
                             11,698
Transfer agent
  
                               5,110
Insurance
  
                               5,430
Other
  
                               2,877


(FF) Represents the reclassification of the following historical expenses of the Company incurred for the six months ended June 30, 2015 to Professional services.

         Professional services
  
          $60,130
Legal
  
                            18,800
Directors
  
                            20,415
Auditing
  
                            20,915

 (GG) Represents the adjustment to eliminate the expenses which are attributable to the Company operating as an investment company.

(HH) Represents the adjustment to net unrealized appreciation to eliminate the income statement effect that was previously recorded by the Company under its existing accounting policy as an investment company, assuming that the deregistration order was effective on January 1, 2015. Available-for-sale securities would have been accounted for at fair value with unrealized changes in fair value recorded as a separate component of "other comprehensive income", a component of stockholders' equity.