Variable Interest Entities

12 Months Ended

Dec. 31, 2022

Variable Interest Entities [Abstract]

NOTE 2 – VARIABLE INTEREST ENTITIES

During the year ended December 31, 2022, Gvest Finance LLC formed three wholly owned subsidiaries, Gvest Sunnyland Homes LLC, Gvest Warrenville Homes LLC and Gvest Wake Forest 2 Homes LLC, all of which are considered VIEs. The Company consolidates the accounts of Gvest Finance LLC, Gvest Homes I LLC, Gvest Anderson Homes LLC, Gvest Capital View Homes LLC, Gvest Hidden Oaks Homes LLC, Gvest Springlake Homes LLC, Gvest Carolinas 4 Homes LLC, Brainerd Place LLC, and Bull Creek LLC, Gvest Sunnyland Homes LLC, Gvest Warrenville Homes LLC, and Gvest Wake Forest 2 Homes LLC, and will continue to do so until they are no longer considered VIEs.

During the year ended December 31, 2022, the Company refinanced most of its debt and used the refinance proceeds to pay off loans totaling $4,664,384 for which homes owned by Gvest Anderson Homes LLC, Gvest Capital View Homes LLC, Gvest Hidden Oaks Homes LLC, Gvest Carolinas 4 Homes LLC and Gvest Sunnyland Homes LLC were collateral. Homes in these communities were transferred to the Company’s wholly owned subsidiary, MHP Home Holdings LLC, in exchange for the debt paid off on behalf of these VIE entities owned by Gvest Finance LLC and intercompany debt forgiven totaling $460,226. This change in ownership of the homes is reflected in the current period’s balance sheet and the difference between the debt paid off and forgiven and the cost basis of the assets exchanged is reflected as an adjustment to additional paid in capital of $278,138 on the statement of changes in deficit which is eliminated in consolidation. Furthermore, the Company used refinance proceeds to pay off loans held by Gvest Finance LLC and Gvest Springlake Homes LLC which financed homes in the Springlake and Countryside communities. An intercompany loan of $2,893,981 is included in accrued liabilities and eliminated in consolidation equal to the Countryside and Springlake debt and refinance costs paid by the Company on the VIEs’ behalf that have not yet been repaid as of the date of this report. See Note 5 for more information about the refinance.

Included in the consolidated results of operations for the year ended December 31, 2022 and 2021 were a net loss of $952,588 and $460,609, respectively, after deducting an additional management fee equal to cash flow after debt service per the management agreement of $349,417 and $579,703, respectively.

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

	2022			2021
Assets
Investment Property	$	14,688,424		$	14,144,268
Accumulated Depreciation		(997,240	)		(597,650	)
Net Investment Property		13,691,184			13,546,618
Cash and Cash Equivalents		40,080			98,900
Accounts Receivable		60,538			60,506
Other Assets		194,871			158,920
Total Assets	$	13,986,673		$	13,864,944

Liabilities and Deficit
Accounts Payable	$	206,882		$	169,298
Notes Payable, net of $45,790 and $0 debt discount, respectively		3,035,455			6,793,319
Line of Credit, net of $160,372 and $151,749 debt discount, respectively		6,208,947			6,200,607
Accrued Liabilities ⁽¹⁾		6,306,178			1,679,233
Tenant Security Deposits		-			-
Total Liabilities		15,757,462			14,842,457

Non-Controlling interest		(1,770,789	)		(977,513	)
Total Non-controlling interest in variable interest entity equity		(1,770,789	)		(977,513	)

⁽¹⁾	Included in other liabilities is an intercompany balance of $6,232,561 and $1,515,715 as of December 31, 2022 and 2021, respectively. The intercompany balances have been eliminated on the consolidated balance sheet.

MANUFACTURED HOUSING PROPERTIES INC. 10-K