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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 9/28/22 Money With Meaning Fund, LLC 1-SA 6/30/22 1:212K EdgarAgents LLC/FA |
Document/Exhibit Description Pages Size 1: 1-SA Semiannual Report Pursuant to Regulation A HTML 211K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1-SA
SEMI-ANNUAL REPORT PURSUANT TO REGULATION A
For the semi-annual period ended June 30, 2022
MONEY WITH MEANING FUND, LLC
(Exact name of registrant as specified in its charter)
Commission File Number: 024-10961
Delaware |
82-1462270 | |
(State or other jurisdiction of
incorporation or organization) |
(IRS Employer Identification Number) | |
300 S Orange Ave, Suite 1000 |
407-378-6868 | |
(Address of principal executive offices) | Issuer’s telephone number, including area code |
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ITEM 1. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information discussed in this item should be read together with the Company’s financial statements and related notes (unaudited) appearing under Item 3 of this Report.
BUSINESS AND OUR INVESTMENTS
Money With Meaning Fund, LLC, which we refer to in this form as “Company” (and sometimes as “we”, “us” or “our”), was formed on May 8, 2017, and its offering under Tier 2 of Regulation A (the “Offering”) was “qualified” by the Securities and Exchange Commission on June 3, 2019. to invest in (buy) non-performing mortgage loans, meaning loans that are secured by a mortgage on real estate (typically a single-family residential property) and delinquent in payment.
As of June 30, 2022, the Company had investments in 27 investments in the Residential Mortgage Loans for a total of $735,008 and 1 Promissory Notes for a total of ($471,354) along with cash and cash equivalents for an amount of $621,100.
RESULTS OF OPERATIONS
On September 10, 2019, we commenced operations upon satisfying the $250,000 minimum offering requirement for our initial Offering. For the six months ended June 30, 2022, we had net profits of $108.
Revenue
Interest Income and Realized Gain/(Loss)
For the six months ended June 30, 2022, we had interest income of approximately $33,665 and interest expense of $27,006. We had interest income of $168,574 for the year ended December 31, 2021. For the six months ended June 30, 2022, we had realized gain of approximately $51,513. The realized gain for the year ended December 31, 2021, was $132,318.
Expenses
General and Administrative
For the six months ended June 30, 2022, and year ended December 31, 2021, we incurred general and administrative expenses of approximately $58,064 and $182,554 respectively, which included auditing and professional fees, bank fees, and other costs associated with operating our business.
Capital Resources
Apart from our efforts to raise money via the sale of Class A Units in the Offering, we are not aware of any material trends, favorable or unfavorable, in our capital resources, or any expected material changes in the mix and relative cost of such resources. We have raised capital of $1,057,239 as of June 30, 2022, and same amount was raised in the year ended December 31, 2021. During the six months ended June 30, 2022, we also redeemed capital of $11,064.
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Asset Management Fees
For the six months ended June 30, 2022 and year ended December 31, 2021, we incurred asset management fees of zero in both the years. For the six months ended June 30, 2022 and year ended December 31, 2021, the Manager reimbursed the expenses of $0 and $14,703, respectively to the Company.
The Manager is entitled to a monthly management fee of (i) one-sixth of one percent (0.167%) of the aggregate capital accounts of the Investor Members on the last day of such month, and (ii) $60 for each active asset of the Company. The Company is also required to reimburse the Manager for all costs and expenses incurred solely on behalf of the Company including fees paid to and expenses of third-party service providers, other than those expenses that are specifically the responsibility of the Manager pursuant to the agreement.
The increase in the amount of the asset management fee is attributable to increase in our NAV, as the fee is calculated as percentage of NAV each month and increase in the number of investments.
Liquidity and Capital Resources
The Company is seeking to raise up to $15,000,000 of capital in this Offering by selling Class A Investor Shares to Investors. To provide more “liquidity” – meaning cash – we might borrow money from banks or other lenders, secured by the loans and other property owned by the Company. Typically, we are able to borrow approximately 70% of the purchase price of loans. The Company does not currently have any capital commitments. We expect to deploy most of the capital we raise in the Offering in buying loans. Should we need more capital for any reason, we intend to either sell more Class A Investor Shares or sell other classes of securities.
In selling Class A Investor Shares or other securities, we might be constrained by the securities laws. For example, we are not allowed to sell more than $50,000,000 of securities using Regulation A during any period of 12 months.
OFF-BALANCE SHEET ARRANGEMENTS
As of June 30, 2022, and December 31, 2021, we had no off-balance sheet arrangements.
ITEM 2. OTHER INFORMATION
None.
ITEM 3
FINANCIAL STATEMENTS (UNAUDITED)
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MONEY WITH MEANING FUND, LLC
FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2022 TO JUNE 30, 2022 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 2021
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INDEX TO FINANCIAL STATEMENTS OF
MONEY WITH MEANING FUND, LLC
FINANCIAL STATEMENTS FOR THE PERIOD
FROM JANUARY 1, 2022 TO JUNE 30, 2022
(UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 2021
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MONEY WITH MEANING FUND, LLC
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS’ EQUITY
AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021
Jun-22 | Dec-21 | |||||||
Assets | ||||||||
Investments in Residential Mortgage Loans (cost $735,009) (cost $1,286,479) | $ | 735,008 | $ | 1,286,479 | ||||
Cash and cash equivalents | 621,100 | 326,413 | ||||||
Due from Manager | 53,653 | 53,653 | ||||||
Interest receivable | 1,863 | 2,601 | ||||||
Other assets | 4,081 | 4,081 | ||||||
Total Assets | $ | 1,415,705 | 1,673,227 | |||||
Liabilities and Members’ Equity | ||||||||
Promissory notes | $ | 471,354 | $ | 713,625 | ||||
Interest payable | 17,647 | 13,421 | ||||||
Professional fees payable | 18,428 | 20,035 | ||||||
Due to Manager | 8,957 | 9,959 | ||||||
Payable to Loan Servicer | 3,353 | 3,405 | ||||||
Redemptions payable | 197 | 5,357 | ||||||
Contributions received in advance | - | 700 | ||||||
Total Liabilities | 519,936 | 766,502 | ||||||
Members’ Equity: (Note 5) | ||||||||
Class A Shares issued and outstanding- 2022: 96,429 and 2021: 97,569 5,000,000 authorized at no par value priced at $10.00 per share | 1,057,240 | 1,057,240 | ||||||
Class A Shares redeemed | (106,732 | ) | (95,668 | ) | ||||
Members’ deficit | (54,847 | ) | (70,685 | ) | ||||
Income and retained earnings | 108 | 15,838 | ||||||
Total Members’ Equity | 895,769 | 906,725 | ||||||
Total Liabilities and Members’ Equity | $ | 1,415,705 | $ | 1,673,227 |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
AS OF JUNE 30, 2022 (UNAUDITED)
Date of Note | Sector | Seller | Cost per loan | Fair Market Value | Percentage of Members’ Equity | Interest Rate | Maturity Date | |||||||||||||||
Investments in Mortgage Loans | ||||||||||||||||||||||
09/28/2020 | United States Mortgage Loans | Sage View LLC - Series DA | $ | 67,110 | $ | 67,110 | 7.49 | % | 8.50 | % | 06/15/2050 | |||||||||||
11/16/2020 | United States Mortgage Loans | Sage View LLC - Series DX | 60,426 | 60,426 | 6.75 | % | 8.50 | % | 11/1/2050 | |||||||||||||
02/22/2021 | United States Mortgage Loans | Sage View LLC - Series AC | 53,657 | 53,657 | 5.99 | % | 8.50 | % | 04/15/2050 | |||||||||||||
09/9/2019 | United States Mortgage Loans | RT Equity Investments LLC | 46,157 | 46,157 | 5.15 | % | 6.50 | % | 03/1/2045 | |||||||||||||
09/9/2019 | United States Mortgage Loans | RTE 1 LLC | 42,862 | 42,862 | 4.78 | % | 4.90 | % | 01/1/2041 | |||||||||||||
07/14/2020 | United States Mortgage Loans | Sage View LLC - Series DG | 42,756 | 42,756 | 4.77 | % | 8.90 | % | 06/15/2050 | |||||||||||||
07/15/2020 | United States Mortgage Loans | Sage View LLC - Series DH | 42,245 | 42,245 | 4.72 | % | 8.50 | % | 06/15/2040 | |||||||||||||
08/4/2021 | United States Mortgage Loans | Sage View LLC - Series DC | 41,446 | 41,446 | 4.63 | % | 8.50 | % | 06/15/2050 | |||||||||||||
10/1/2020 | United States Mortgage Loans | Sage View LLC - Series DS | 36,757 | 36,757 | 4.10 | % | 8.90 | % | 09/15/2040 | |||||||||||||
07/20/2020 | United States Mortgage Loans | Sage View LLC - Series DK | 36,503 | 36,503 | 4.08 | % | 8.90 | % | 07/1/2040 | |||||||||||||
09/29/2020 | United States Mortgage Loans | Sage View LLC - Series Y | 34,193 | 34,193 | 3.82 | % | 8.90 | % | 08/15/2050 | |||||||||||||
12/31/2020 | United States Mortgage Loans | Sage View LLC - Series BM | 33,200 | 33,200 | 3.71 | % | 8.50 | % | 11/15/2050 | |||||||||||||
08/17/2021 | United States Mortgage Loans | Sage View LLC - Series DB | 30,178 | 30,178 | 3.37 | % | 8.50 | % | 06/15/2040 | |||||||||||||
10/21/2020 | United States Mortgage Loans | ACCUMULATIVE INVESTMENTS LLC | 23,507 | 23,507 | 2.62 | % | 0.00 | % | 01/22/2028 | |||||||||||||
07/16/2020 | United States Mortgage Loans | Lost Creek Acquisitions LLC | 20,571 | 20,571 | 2.30 | % | 9.10 | % | 06/15/2035 | |||||||||||||
10/20/2020 | United States Mortgage Loans | NOTES ARE US, LLC | 19,822 | 19,822 | 2.21 | % | 9.00 | % | 11/15/2031 | |||||||||||||
10/14/2020 | United States Mortgage Loans | Sage View LLC - Series L | 19,589 | 19,589 | 2.19 | % | 8.00 | % | 06/1/2050 | |||||||||||||
01/31/2020 | United States Mortgage Loans | PALM AVENUE HIALEAH TRUST | 15,509 | 15,509 | 1.73 | % | 10.00 | % | 07/1/2028 | |||||||||||||
09/9/2019 | United States Mortgage Loans | RT Equity Investments LLC | 14,550 | 14,550 | 1.62 | % | 10.50 | % | 10/1/2029 | |||||||||||||
04/16/2020 | United States Mortgage Loans | Sage View LLC - Series CO | 14,038 | 14,038 | 1.57 | % | 9.50 | % | 02/15/1930 | |||||||||||||
01/31/2020 | United States Mortgage Loans | ARCPE 3, LLC | 12,604 | 12,604 | 1.41 | % | - | 09/1/2034 |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
SCHEDULES OF INVESTMENTS (CONTINUED)
AS OF JUNE 30, 2022 (UNAUDITED)
Date of Note | Sector | Seller | Cost per loan | Fair Market Value | Percentage of Members’ Equity | Interest Rate | Maturity Date | |||||||||||||||
01/31/2020 | United States Mortgage Loans | ARCPE 3, LLC | $ | 7,553 | $ | 7,553 | 0.84 | % | - | 01/1/2032 | ||||||||||||
01/31/2020 | United States Mortgage Loans | ARCPE 3, LLC | 7,287 | 7,286 | 0.81 | % | - | 04/1/2029 | ||||||||||||||
01/31/2020 | United States Mortgage Loans | ARCPE 3, LLC | 6,844 | 6,844 | 0.76 | % | - | 03/1/2030 | ||||||||||||||
01/31/2020 | United States Mortgage Loans | PALM AVENUE HIALEAH TRUST | 5,150 | 5,150 | 0.57 | % | 10.00 | % | 03/1/2028 | |||||||||||||
01/31/2020 | United States Mortgage Loans | ARCPE 3, LLC | 270 | 270 | 0.03 | % | - | 02/1/2027 | ||||||||||||||
01/31/2020 | United States Mortgage Loans | PALM AVENUE HIALEAH TRUST | 225 | 225 | 0.03 | % | 10.00 | % | 05/1/2022 | |||||||||||||
Total Mortgage Loans | $ | 735,009 | $ | 735,008 | 82.05 | % |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
FOR THE PERIOD FROM JANUARY 1, 2022 TO JUNE 30, 2022
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2021
Jun-22 | Dec-21 | |||||||
Investment Income | ||||||||
Interest income | $ | 33,665 | $ | 168,574 | ||||
Corporate advance income | - | 986 | ||||||
Other income | - | 1,948 | ||||||
Total Investment Income | 33,665 | 171,508 | ||||||
Expenses | ||||||||
Interest expenses | 27,006 | 120,137 | ||||||
Administration fees | 30,200 | 52,000 | ||||||
Marketing costs | - | 44,328 | ||||||
Loan servicing fees | 5,147 | 19,897 | ||||||
Audit & tax fees | 9,184 | 16,978 | ||||||
Legal expenses | 5,167 | 17,308 | ||||||
Professional fees | 438 | 12,905 | ||||||
Bank fees | 2,393 | 6,249 | ||||||
Corporate advance expenses | 3,285 | 4,908 | ||||||
Insurance expenses | 1,856 | - | ||||||
Other expenses | 394 | 7,981 | ||||||
Total Expenses | 85,070 | 302,691 | ||||||
Expenses reimbursed by the Manager | - | (14,703 | ) | |||||
Net Expenses | 85,070 | 287,988 | ||||||
Net Investment Loss | (51,405 | ) | (116,480 | ) | ||||
Realized and Unrealized Gain on Investments | ||||||||
Realized gain from Residential Mortgage Loans | 51,513 | 132,318 | ||||||
Net Income | $ | 108 | $ | 15,838 |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
STATEMENTS OF CHANGES IN MEMBERS’ EQUITY/(DEFICIT)
FOR THE PERIOD FROM JANUARY
1, 2022 TO JUNE 30, 2022
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2021
Members’ Equity/(Deficit) | ||||
Balance, January 1, 2021 | $ | 743,792 | ||
Class A shares issued | 37,960 | |||
Class A shares redeemed | (77,862 | ) | ||
Offering costs | 128,474 | |||
Common share adjustment | 58,523 | |||
Net gain from operations | 15,838 | |||
Balance, December 31, 2021 | $ | 906,725 | ||
Class A shares issued | - | |||
Class A shares redeemed | (11,064 | ) | ||
Net gain from operations | 108 | |||
Balance, June 30, 2022 | $ | 895,769 |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
FOR THE PERIOD FROM JANUARY
1, 2022 TO JUNE 30, 2022
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2021
Jun-22 | Dec-21 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 108 | $ | 15,838 | ||||
Purchases of investments | - | (46,101 | ) | |||||
Proceeds from sale of investments | 602,984 | 1,102,586 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Net realized gain on investments | (51,513 | ) | (132,318 | ) | ||||
Net decrease in receivable from Loan Servicer | - | 4,279 | ||||||
Net decrease in interest receivable | 738 | 119 | ||||||
Net (increase) in other assets | - | (4,081 | ) | |||||
Net (increase) decrease in due from Manager | - | (53,653 | ) | |||||
Net (decrease) in due to Manager | (1,002 | ) | (132,462 | ) | ||||
Net increase in interest payable | 4,226 | 13,421 | ||||||
Net increase (decrease) in professional fees payable | (1,607 | ) | 2,785 | |||||
Net increase (decrease) in payable to Loan Servicer | (52 | ) | 3,405 | |||||
Net increase (decrease) in legal expenses payable | - | (1,111 | ) | |||||
Net Cash Provided by Operating Activities | 553,882 | 772,707 | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds (cost) from debt financing of investment purchases | (242,271 | ) | (709,184 | ) | ||||
Offering cost forgiveness | - | 128,474 | ||||||
Equity adjustment | - | 58,523 | ||||||
Proceeds from share issued, net of contributions received and contributions received in advance | (700 | ) | 72,010 | |||||
Payments for capital redemptions, net of capital redemptions payable | (16,224 | ) | (72,505 | ) | ||||
Net Cash (Used in) Provided by Financing Activities | (259,195 | ) | (522,682 | ) | ||||
Net Increase in Cash and Cash Equivalents | 294,687 | 250,025 | ||||||
Cash and Cash Equivalents, Beginning of Period | 326,413 | 76,388 | ||||||
Cash and Cash Equivalents, End of Period | $ | 621,100 | $ | 326,413 |
The accompanying notes are an integral part of these financial statements.
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MONEY WITH MEANING FUND, LLC
AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021
NOTE 1: NATURE OF OPERATIONS
Money With Meaning Fund, LLC (the “Company”), is a limited liability company organized May 8, 2017 under the laws of Delaware. The Company was formed to invest in (buy) primarily non- performing mortgage loans, meaning loans that are secured by a mortgage on real estate (typically a single-family residential property) and delinquent in payment, and work with homeowners to resolve the nonperforming loans in a socially conscious manner.
The Company is managed by Cloud Capital Management, LLC (the “Manager”), a Florida limited liability company and also a member of the Company. Cloud Capital Management, LLC (a related party) has exclusive control over all aspects of the Company’s business in its role as Manager.
As of May 8, 2017, the Company has commenced its planned principal operations and has started generating revenue. The Company is offering its Class A Units to raise further capital. The Company is dependent upon additional capital resources for the continuation of its planned principal operations and is subject to significant risks and uncertainties, including failing to secure funding to operationalize the Company’s planned operations or failing to profitably operate the business.
NOTE 2: GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company holds $621,100 in cash as of June 30, 2022.
If the Company is unable to obtain sufficient amounts of capital, it may be required to reduce the scope of its planned loan operations, which could harm the business, financial condition and operating results. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company adopted the calendar year as its basis of reporting.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties
The Company is dependent upon additional capital resources for its planned principal operations and is subject to significant risks and uncertainties, including failing to secure funding to continue to operationalize the Company’s plans or failing to profitably operate the business
Concentration of Cash Balance
The Company’s cash balances in bank deposit accounts, at times, may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not assumptions specific to the entity.
Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).
Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.
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NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments (continued)
The following table presents information about the Company’s investments shown by major category within the fair value hierarchy as of June 30, 2022 and December 31, 2021:
Assets at fair value
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
2022 | ||||||||||||||||
Assets | ||||||||||||||||
Residential Mortgage Loans | $ | - | $ | - | $ | 735,008 | $ | 735,008 | ||||||||
$ | - | $ | - | $ | 735,008 | $ | 735,008 | |||||||||
2021 | ||||||||||||||||
Assets | ||||||||||||||||
Residential Mortgage Loans | $ | - | $ | - | $ | 1,286,479 | $ | 1,286,479 | ||||||||
$ | - | $ | - | $ | 1,286,479 | $ | 1,286,479 |
The following table includes a roll forward for the six months ended June 30, 2022 and year ended December 31, 2021, of the financial instruments classified within Level 3. The classification of a financial instrument within Level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement.
Fair Value Measurements using Significant Unobservable Inputs (Level 3)
Balance at | Balance at | |||||||||||||||||||||||
Assets | January 1, 2022 | Transfers
Into (Out of) Level 3 | Purchases | Sales/ Proceeds (1) | Realized gain/(loss) | June
30, 2022 | ||||||||||||||||||
Residential Mortgage Loans | $ | 1,286,479 | $ | - | $ | - | $ | (602,984 | ) | $ | 51,513 | $ | 735,008 |
Balance at | Balance at | |||||||||||||||||||||||
Assets | January
1, 2021 | Transfers
Into (Out of) Level 3 | Purchases | Sales/ Proceeds (1) | Realized gain/(loss) | December
31, 2021 | ||||||||||||||||||
Residential Mortgage Loans | $ | 2,210,646 | $ | - | $ | 46,101 | $ | (1,102,586 | ) | $ | 132,318 | $ | 1,286,479 |
(1) | Includes principal payments received from residential mortgage loans. |
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NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments (continued)
The following table summarizes the valuation technique and significant unobservable inputs used for the Company’s investments that are categorized in Level 3 of the fair value hierarchy as of June 30, 2022 and December 31, 2021:
Fair value | Valuation technique | Unobservable inputs | Range of inputs | |||||||
2022 | ||||||||||
Assets | ||||||||||
Residential Mortgage Loans | $ | 735,008 | Cost basis | Loss severities, probabilities of defaults | 0.00% - 10.50% | |||||
2021 | ||||||||||
Assets | ||||||||||
Residential Mortgage Loans | $ | 1,286,479 | Cost basis | Loss severities, probabilities of defaults | 0.00% - 10.50% |
Revenue Recognition
The Company recognizes revenue when: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which products or services will be provided; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. Interest income is recorded on the accrual basis when earned.
Organizational Costs
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 720, organizational costs, including accounting fees, legal fees, and costs of incorporation, are expensed as incurred.
Deferred Offering Costs
The Company capitalizes costs of its offering of securities which will be applied against proceeds received if successful. If unsuccessful, such costs will be expensed. Deferred offering costs consist principally of expenses incurred in connection with an offering the Company has commenced during 2019 under Regulation A. The following table presents information about the deferred offering costs during the six months ended June 2022 and the year ended 2021 respectively:
Amount | ||||
Balance, December 31, 2020 | $ | 128,474 | ||
Charged to Members’ Equity during 2021 | (128,474 | ) | ||
Balance, December 31, 2021 | - | |||
Charged to Members’ Equity during 2022 | - | |||
Balance, June 31, 2022 | $ | - |
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NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company is a Delaware limited liability company and is treated as a disregarded entity for federal income tax purposes. Accordingly, under the Internal Revenue Code, all taxable income or loss flows through to its sole member. Therefore, no provision for income tax has been recorded in the accompanying financial statements. Income from the Company is reported and taxed to the member on its individual tax return.
The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more- likely-than not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.
The Company may in the future become subject to federal, state and local income taxation though it has not been since its inception. The Company is not presently subject to any income tax audit in any taxing jurisdiction.
Loans Held for Investment
Interest on loans is credited to income as earned. Interest receivable is accrued only if deemed collectible. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when principal or interest is past due 90 days based on contractual terms of the loan or when, in the opinion of management, there is reasonable doubt as to collection of interest. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest income generally is not recognized on impaired loans unless the likelihood of further loss is remote.
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NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans Held for Investment (continued)
A loan is considered to be impaired when it is probable that the Company will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. We review loans for impairment when the loan is classified as substandard or worse, delinquent 90 days, determined by management to be collateral dependent, or when the borrower files bankruptcy or is granted a troubled debt restructure. Measurement of impairment is based on the loan’s expected future cash flows discounted at the loan’s effective interest rate, measured by reference to an observable market value, if one exists, or the fair value of the collateral if the loan is deemed collateral dependent. The Company selects the measurement method on a loan-by-loan basis except those loans deemed collateral dependent. All loans are generally charged-off at such time the loan is classified as a loss. Manager has the option to change the specific terms due to their discretion.
Promissory Notes
On December 30, 2020, the Company entered into a promissory note agreement with Pikes Peak Capital LLC for $1,271,941 pursuant to a Loan Agreement executed as of the same date between the Company and Puerto Rico LLC. The promissory note incurs interest at 9.9% per annum payable on or about the 25th day of each month and shall be due and payable in full on December 30, 2023. For the six months ended June 30, 2022 and year ended December 31, 2021, the Company paid off principal of $219,755 and $558,316 and had an outstanding balance of $471,354 and $713,625, respectively. Interest expense incurred on the note for the six months ended June 30, 2022 and year ended December 31, 2021, was approximately $22,516 and $108,000 respectively.
Real Estate Owned
Real estate properties acquired through, or in lieu of, loan foreclosure are recorded at fair value less cost to sell with any excess loan balance charged against the allowance for estimated loan losses. The Company will obtain an appraisal and/or market valuation on all real estate owned at the time of possession. After foreclosure, valuations are periodically performed by management. Any subsequent fair value losses are recorded to other real estate owned operations with a corresponding write-down to the asset. All legal fees and direct costs, including foreclosure and other related costs are expensed as incurred. No real estate properties are held as of June 30, 2022 and December 31, 2021 and no such expenses were incurred for the for the six months ended June 30, 2022 and year ended December 31, 2021.
NOTE 4: RELATED PARTY TRANSACTIONS
Expenses of the Company from inception through October 2019 were paid by the Manager on the Company’s behalf. After October 2019 the Company is bearing all expenses. As per the Agreement, the Company will reimburse the Manager, without interest, for these expenses. Amounts due to the related party Manager of the Company were $8,957 and $9,959 as of June 30, 2022 and December 31, 2021.
Amounts due from the related party Manager were $53,653 and $53,653 as of June 30, 2022 and December 31, 2021, respectively.
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NOTE 4: RELATED PARTY TRANSACTIONS (continued)
On November 1, 2018, the Company entered into a management services agreement with Cloud Capital Management LLC, the Manager. Under the agreement, the Manager is entitled to a monthly management fee of (i) one-sixth of one percent (0.167%) of the aggregate capital accounts of the investors on the last day of such month, and (ii) $60 for each active asset of the Company. The Company is also required to reimburse the Manager for all costs and expenses incurred solely on behalf of the Company including fees paid to and expenses of third-party service providers, other than those expenses that are specifically the responsibility of the Manager pursuant to the agreement.
The Company has made a $100.00 US dollar capital investment in the MWM Vision I, LLC (the “Related Company”), a limited liability company organized and existing under the laws of the state of Colorado. On December 10, 2020, the Related Company is adopted and entered into on, by the company and by its special manager, Pikes Peak Capital LLC, as collateral agent on behalf of one or more lenders, a Puerto Rico limited liability company, or its designee (its “Special Manager”). The Related Company’s profits and losses are allocated 100% to the Company in accordance with its 100% ownership interest.
NOTE 5: RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
NOTE 6: COMMITMENTS AND CONTINGENCIES
On November 7, 2018, the Company entered into a joinder agreement to become a party to an existing loan servicing agreement between the Manager and a third-party loan servicing company, however, only with respect to assets owned by the Company. Under the agreement, the loan servicing company agrees to service and administer the Company’s mortgage loans and real estate owned (“REO”) properties in exchange for per asset monthly servicing fees, and if applicable, default resolution fees of up to 2.25% of related unpaid principal balances (“UPBs”), disposition/property liquidation fees of up to 2.5% of UPBs, and deboarding fees for REOs equal to 2% of net proceeds. The agreement automatically renewed for a one-year term on May 23, 2019, and on each successive anniversary unless mutually cancelled by both parties 90-days prior to the anniversary date. No expenses were incurred related to this agreement for the six months ended June 30, 2022 and year ended December 31, 2021.
On November 14, 2018, the Company entered into an asset management agreement with a third-party asset management company. Under the agreement, the asset management company agreed to provide oversight of all loan servicers with respect to the servicing of the Company’s mortgage loans, and to administer, manage and dispose of the Company’s REO properties. Such services will be provided in exchange for asset management fees comprised of acquisition fees (1% of the Company’s purchase price of its assets), mortgage loan management fees (1% per annum of the Company’s purchase price of its assets, payable monthly, and 1% of sales proceeds upon disposition), and REO management fees (1% of sales proceeds upon closing of sales). The Company may terminate the agreement with or without cause by providing 30-days’ notice to the asset management company. No expenses were incurred related to this agreement for the six months ended June 30, 2022 and year ended December 31, 2021.
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NOTE 7: MEMBER’S EQUITY
Limited Liability Company Units
In accordance with the Agreement, profits and losses of the Company are allocated to partners according to their respective interests in the Company. Limited partners have redemption rights which contain certain restrictions with respect to rights of withdrawal from the Company as specified in the Agreement.
On July 1, 2017, the Company defined the limited liability interests in the Company in the agreement. Such interests are denominated into 20,000,000 “Shares”, consisting of 1,000,000 units and 19,000,000 “Investor Shares”. The Manager of the Company, Cloud Capital Management, LLC (a related party), owned all of the 1,000,000 units as of June 30, 2022. As of June 30, 2022 and December 31, 2021, the Class A investors owned 96,429 and 97,569 shares for a total of $950,509 and $906,725, respectively.
The Manager of the Company is authorized to further divide the Investor Shares into one or more series and must document the number of shares, and the rights and preferences of such series in formal authorizing resolutions. The Manager has full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company and to make all decisions regarding such matters. Refer to the Agreement for more information.
Redemptions Payable
Redemptions payable represent amounts due to members based on withdrawals effective through June 30, 2022 and December 31, 2021 respectively.
NOTE 8: MANAGEMENT INDEMNIFICATIONS
The agreement protects the Manager and its employees and affiliates from lawsuits brought by Investors. For example, it provides that the Manager will not be responsible to Investors for mistakes, errors in judgment, or other acts or omissions (failures to act) as long as the act or omission was not the result of the Manager’s fraud or willful misconduct. This limitation on the liability of the Manager and other parties is referred to as “exculpation.” The agreement also requires the Company to indemnify (reimburse) the Manager, its affiliates, and certain other parties from losses, liabilities, and expenses they incur in performing their duties. For example, if a third party sues the Manager on a matter related to the Company’s business, the Company would be required to indemnify the Manager for any losses or expenses it incurs in connection with the lawsuit, including attorneys’ fees. However, this indemnification is not available where a court or other juridical or governmental body determines that the Manager or other person is not entitled to be exculpated under the standard described in the preceding paragraph. Notwithstanding the foregoing, no exculpation or indemnification is permitted to the extent such exculpation or indemnification would be inconsistent with the requirements of federal or state securities laws or other applicable law.
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NOTE 9: FINANCIAL HIGHLIGHTS
Financial highlights presented are for the period from January 1, 2022 through June 30, 2022 and year ended December 31, 2021:
2022 | ||||
Return before management fee | 0.01 | % | ||
Management fee | - | % | ||
Internal rate of return | 0.01 | % | ||
Ratios to average members’ capital: | ||||
Net investment loss | (5.69 | )% |
2021 | ||||
Return before management fee | 1.71 | % | ||
Management fee | - | % | ||
Internal rate of return | 1.71 | % | ||
Ratios to average members’ capital: | ||||
Net investment loss | (14.20 | )% |
The financial highlights presented are for the Fund’s limited partner class as a whole. Due to the timing of capital contributions and withdrawals, an individual limited member’s returns may vary. The net investment income (loss) ratio excludes realized and unrealized gains (losses).
The internal rate of return (IRR) of the non-managing members since inception of the Company is computed based on the actual dates of capital contributions and distributions and the ending aggregate limited member capital balance (residual value).
NOTE 10: SUBSEQUENT EVENTS
From July 1, 2022, through August 31, 2022, the Company had received no request for capital redemptions.
Management’s Evaluation
These financial statements were approved by management and available for issuance on September 20, 2022. Subsequent events have been evaluated through this date.
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Item 4
* | All Exhibits are incorporated by reference to those previously filed. |
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Signatures
Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 28, 2022
Money With Meaning Fund, LLC | ||
By: | Cloud Capital Management, LLC As Manager | |
By | /s/ Terrence Osterman | |
Terrence Osterman, Managing Member |
This statement has been signed by the following persons in the capacities and on the dates indicated.
/s/ Terrence Osterman | |
Terrence Osterman | |
Managing Member of Cloud Capital Management Chief Executive Officer | |
September 28, 2022 |
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This ‘1-SA’ Filing | Date | Other Filings | ||
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12/30/23 | ||||
Filed on: | 9/28/22 | |||
9/20/22 | ||||
8/31/22 | ||||
7/1/22 | ||||
For Period end: | 6/30/22 | |||
1/1/22 | ||||
12/31/21 | ||||
1/1/21 | ||||
12/31/20 | 1-K | |||
12/30/20 | ||||
12/10/20 | ||||
9/10/19 | ||||
6/3/19 | QUALIF | |||
5/23/19 | ||||
11/14/18 | ||||
11/7/18 | ||||
11/1/18 | ||||
7/1/17 | ||||
5/8/17 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/16/19 Money With Meaning Fund, LLC 1-U:9 7/15/19 2:368K EdgarAgents LLC/FA 3/07/19 Money With Meaning Fund, LLC 1-A 16:3M EdgarAgents LLC/FA |