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Money With Meaning Fund

Filed: 28 Sep 21, 5:04pm

 

 

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, 2021

  

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 (IRS Employer
incorporation or organization) Identification Number)
   
300 S Orange Ave, Suite 1000  
Orlando, Florida 32801 407-378-6868
(Address of principal executive offices) Issuer’s telephone number, including area code 

 

 

 

 

 

 

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, 2021, the Company had investments in 36 residential mortgage loans for a total of $657,180, debt consisting of investments in 2 promissory notes for a total of $143,839 and cash and cash equivalents for an amount of $43,831.

 

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, 2021, we had losses of $22,050.

 

Revenue

 

Interest Income and Realized Gain/(Loss)

 

For the six months ended June 30, 2021, we had interest income of approximately $34,762 and interest expense of $8,887. We had interest income of $62,611 for the year ended December 31, 2020. For the six months ended June 30, 2021, we had realized gain of approximately $18,369. The realized gain for the year ended December 31, 2020 was $49,084.

 

Expenses

 

General and Administrative

 

For the six months ended June 30, 2021 and year ended December 31, 2020, we incurred general and administrative expenses of approximately $75,102 and $143,394 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 $1,057,241 as of June 30, 2021 of which $1,019,279 was raised in the year ended December 31, 2020. During the six months ended June 30, 2021 we also redeemed capital of $40,568.

 

1

 

 

Asset Management Fees

 

For the six months ended June 30, 2021, there is no expense incurred for asset management fees while for the year ended December 31, 2020, we were reimbursed $4,695 by the manager.

 

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, 2021, and December 31, 2020, we had no off-balance sheet arrangements.

 

Item 2. Other Information

 

None.

 

Item 3

 

Financial Statements (UNAUDITED)

 

2

 

 

MONEY WITH MEANING FUND, LLC

 

FINANCIAL STATEMENTS

 

FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021
(UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 2020

 

3

 

 

INDEX TO FINANCIAL STATEMENTS OF 

MONEY WITH MEANING FUND, LLC

 

FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021
(UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 2020

 

Statement of Assets, Liabilities and Members’ Equity5
  
Schedules of Investments6-7
  
Statements of Operations8
  
Statements of Changes in Members’ Equity9
  
Statements of Cash Flows10
  
Notes to Financial Statements11-20

 

4

 

 

MONEY WITH MEANING FUND, LLC

STATEMENT OF ASSETS, LIABILITIES AND MEMBERS’ EQUITY

 

AS OF JUNE 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020

 

  Jun-21  Dec-20 
ASSETS      
Cash and Cash Equivalents $43,831  $76,388 
Investments in Residential Mortgage Loans (cost $657,180)  657,180   714,802 
Investment in MWM Vision I, LLC (cost $321,885)  333,336   226,195 
Contributions Receivable  -   34,560 
Interest Receivable  5,097   2,720 
Tax Fees Payable  600   - 
Receivable/Payable from Loan Servicer  -   1,985 
Total Assets $1,040,044  $1,056,650 
         
LIABILITIES AND MEMBER’S EQUITY        
Investments in Promissory Notes (cost $143,839) $143,839  $150,866 
Redemption Payable  18,102   - 
Due to Manager  140,379   135,457 
Legal Expenses Payable  -   1,111 
Professional Fees Payable  9,880   15,250 
Contributions Received in Advance  -   1,210 
Tax Fees Payable  -   2,000 
Receivable/Payable from Loan Servicer  235   - 
Interest Payable  1,509   - 
Total Liabilities  313,944   305,894 
         
Members’ Equity: (Note 5)        
Capital Addition:        
Class A Shares issued and outstanding- 1,500,000 authorized at $10.00 per share  1,057,239   1,019,279 
Class A Shares Redeemed  (58,374)  (17,806)
Members’ Equity/(Deficit)  (41,939)  (13,753)
Offering Costs  (111,420)  (111,420)
Income and Retained Earnings  (119,406)  (125,544)
Total Members’ Equity  726,100   750,756 
         
Total Liabilities and Member’s Equity $1,040,044  $1,056,650 

 

The accompanying notes are an integral part of these financial statements.

 

5

 

 

MONEY WITH MEANING FUND, LLC

SCHEDULES OF INVESTMENTS

 

AS OF JUNE 30, 2021 (UNAUDITED)

 

Date of Note Sector   Cost per  Fair Market  Percentage of  Interest  Maturity
Investments in Mortgage Loans Seller loan  Value  Members’ Equity  Rate  Date
1/31/2020 United States Mortgage Loans ARCPE 3, LLC $1,488  $1,488   0.20%  10.00% 12/1/2021
1/31/2020 United States Mortgage Loans ARCPE 3, LLC  11,474   11,474   1.53%  0.00% 4/1/2029
1/31/2020 United States Mortgage Loans ARCPE 3, LLC  14,826   14,826   1.97%  0.00% 9/1/2034
1/31/2020 United States Mortgage Loans ARCPE 3, LLC  4,551   4,551   0.61%  0.00% 2/1/2027
1/31/2020 United States Mortgage Loans ARCPE 3, LLC  9,451   9,451   1.26%  0.00% 3/1/2030
1/31/2020 United States Mortgage Loans ARCPE 3, LLC  10,738   10,738   1.43%  0.00% 1/1/2032
10/20/2020 United States Mortgage Loans NOTES ARE US, LLC  29,984   29,984   3.99%  9.00% 7/15/2032
10/20/2020 United States Mortgage Loans NOTES ARE US, LLC  20,136   20,136   2.68%  9.00% 11/15/2031
9/9/2019 United States Mortgage Loans RTE 1 LLC  28,282   28,282   3.77%  7.00% 10/1/2055
9/9/2019 United States Mortgage Loans RTE 1 LLC  43,665   43,665   5.82%  4.88% 1/1/2041
7/22/2020 United States Mortgage Loans SAGE VIEW LLC - SERIES AJ  28,868   28,868   3.85%  9.63% 1/1/2040
9/9/2019 United States Mortgage Loans RT Equity Investments LLC  47,049   47,049   6.27%  6.50% 3/1/2045
9/9/2019 United States Mortgage Loans RTE 1 LLC  34,488   34,488   4.59%  10.00% 12/13/2030
9/9/2019 United States Mortgage Loans RTE 1 LLC  27,963   27,963   3.72%  4.33% 5/1/2033
9/9/2019 United States Mortgage Loans RTE 1 LLC  31,369   31,369   4.18%  10.00% 12/1/2041
9/9/2019 United States Mortgage Loans RT Equity Investments LLC  15,810   15,810   2.11%  10.50% 10/1/2029
10/12/2020 United States Mortgage Loans ORANGE REO II LLC  18,231   18,231   2.43%  10.00% 7/15/2041
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  14,757   14,757   1.97%  10.00% 8/1/2028

 

The accompanying notes are an integral part of these financial statements.

 

6

 

 

MONEY WITH MEANING FUND, LLC

SCHEDULES OF INVESTMENTS (CONTINUED)

 

AS OF JUNE 30, 2021 (UNAUDITED)

 

      Cost per  Fair Market  Percentage of  Interest  Maturity
Date of Note Sector Seller loan  Value  Members’ Equity  Rate  Date
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST $453  $453   0.06%  10.00% 9/1/2021
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  8,616   8,616   1.15%  10.00% 4/1/2026
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  711   711   0.09%  10.00% 12/1/2021
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  7,270   7,270   0.97%  10.00% 3/1/2028
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  18,661   18,661   2.49%  10.00% 10/1/2030
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  25,955   25,955   3.46%  10.00% 2/1/2037
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  20,916   20,916   2.79%  10.00% 10/1/2032
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  9,264   9,264   1.23%  10.00% 7/1/2024
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  27,207   27,207   3.62%  10.00% 12/1/2041
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  15,847   15,847   2.11%  10.00% 8/1/2028
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  17,399   17,399   2.32%  10.00% 7/1/2028
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  2,937   2,937   0.39%  10.00% 5/1/2022
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  21,360   21,360   2.85%  10.00% 2/1/2033
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  15,270   15,270   2.03%  10.00% 3/1/2028
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  13,609   13,609   1.81%  10.00% 3/1/2028
1/31/2020 United States Mortgage Loans PALM AVENUE HIALEAH TRUST  9,596   9,596   1.28%  10.00% 9/1/2026
10/21/2020 United States Mortgage Loans ACCUMULATIVE INVESTMENTS LLC  27,733   27,733   3.69%  0.00% 7/22/2028
10/14/2020 United States Mortgage Loans NORTHWEST OHIO DEVELOPMENT AGENCY  21,246   21,246   2.83%  5.50% 5/4/2042
                   
  Total Mortgage Loans $657,180  $657,180   87.54%      
                       
Investments in Promissory Notes                  
1/31/2020 United States Promissory Note ARCPE 3, LLC $(31,712) $(31,712)  -4.22%  12.00% 1/31/2023
5/1/2020 United States Promissory Note PALM AVENUE HIALEAH TRUST  (112,127)  (112,127)  -14.94%  12.00% 1/29/2023
                       
  Total Promissory Notes $(143,839) $(143,839)  -19.16%      

 

The accompanying notes are an integral part of these financial statements.

 

7

 

 

MONEY WITH MEANING FUND, LLC

STATEMENT OF OPERATIONS

 

FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2020

 

  Jun-21  Dec-20 
INVESTMENT INCOME      
Income from MWM Vision I, LLC $7,140  $1,735 
Interest Income  34,762   62,611 
Other Income  442   3,612 
Corporate Advance Income  1,226   - 
Total Investment Income  43,570   67,958 
Interest Expense  (8,887)  (17,608)
Net Investment Income  34,683   50,350 
         
EXPENSE        
Professional Fees  3,641   1,869 
Administration Fees  22,000   37,940 
Marketing Costs  25,425   38,675 
Audit & Tax Fees  7,500   28,590 
Legal Expenses  2,161   14,014 
Corporate Advance Expenses  309   3,571 
Loan Servicing Fees  7,273   14,694 
Bank Fees  3,040   4,041 
Other expenses  3,753   - 
Total Expenses  75,102   143,394 
Expenses reimbursed by the Manager  -   (4,695)
Net Expenses  75,102   138,699 
         
Net Income/ (Loss)  (40,419)  (88,349)
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS        
Realized Gain (Loss) From Residential Mortgage Loans  18,369   49,084 
NET INCOME/(LOSS) $(22,050) $(39,265)

 

The accompanying notes are an integral part of these financial statements.

 

8

 

 

MONEY WITH MEANING FUND, LLC

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY/(DEFICIT)

 

FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2020

 

  Member’s 
  Equity/(Deficit) 
Balance, May 8, 2017 (inception) $- 
Net Loss From Operations  (1,740)
Balance, December 31, 2017 $(1,740)
     
Net Loss From Operations  (40,199)
Balance, December 31, 2018 $(41,939)
     
Class A Shares issued  606,500 
Class A Shares Redeemed  - 
Offering Costs  (111,420)
Net Income/(Loss) From Operations  (58,093)
Balance, December 31, 2019 $395,048 
     
Class A Shares issued  412,779 
Class A Shares Redeemed  (17,806)
Net Income/(Loss) From Operations  (39,265)
Balance, December 31, 2020 $750,756 
     
Class A Shares issued  37,962 
Class A Shares Redeemed  (40,568)
Net Income/(Loss) From Operations  (22,050)
Balance, June 30, 2021 $726,100 

 

The accompanying notes are an integral part of these financial statements.

 

9

 

 

MONEY WITH MEANING FUND, LLC

STATEMENT OF CASH FLOWS

 

FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021
(UNAUDITED) AND YEAR ENDED DECEMBER 31, 2020

 

  Jun-21  Dec-20 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net Income/ (Loss) $(22,050) $(39,265)
Purchases of Investments  (160,220)  (845,363)
Proceeds from sale of investments  122,044   413,540 
Adjustments to Reconcile Net Income to Net Cash provided by (used in) Operating Activities:        
Net realized gain/(loss) on investments  (18,369)  (49,084)
Net Increase/Decrease in Other Interest Receivable  (2,377)  (542)
Net Increase/Decrease in Contributions Receivable  34,560   (19,560)
Net Increase/Decrease in Receivable/Payable from Loan Servicer  2,220   (209)
Net Increase/Decrease in Administrative fees payable  -   (6,000)
Net Increase/Decrease in Accounts Payable  -   (15,791)
Net Increase/Decrease in Due to Manager  4,922   (37,852)
Net Increase/Decrease in Legal Expenses Payable  (1,111)  1,111 
Net Increase/Decrease in Professional Fees Payable  (5,370)  15,250 
Net Increase/Decrease in Tax Fees Payable  (2,600)  2,000 
Net Increase/Decrease in Interest Payable  1,509   - 
Net Increase/Decrease in Management Fees Payable  -   (5,152)
Net cash used in operating activities  (46,842)  (586,917)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Capital Addition  36,750   413,989 
Capital Redemptions  (22,465)  (17,806)
Net cash provided by financing activities  14,285   396,183 
         
Net Increase (Decrease) in Cash and Cash Equivalents  (32,557)  (190,734)
Cash and Cash Equivalents, at Beginning of Period  76,388   267,122 
Cash and Cash Equivalents, End of Period $43,831  $76,388 

 

The accompanying notes are an integral part of these financial statements.

 

10

 

 

MONEY WITH MEANING FUND, LLC

 

NOTES TO FINANCIAL STATEMENTS

 

AS OF JUNE 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020

 

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 June 30, 2021, 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 commenced its planned principal operations and has started generating revenues. The Company holds $43,831 in cash as of June 30, 2021.

 

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.

 

11

 

 

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

 

Cash Equivalents and Concentration of Cash Balance

 

The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of June 30, 2021, the Company has $43,831 in its bank accounts.

 

Fair Value of Financial Instruments

 

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:

 

12

 

 

Fair Value of Financial Instruments (continued)

 

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.

 

The following table presents information about the Company’s investments shown by major category within the fair value hierarchy as of June 30, 2021:

 

  Assets at fair value*       
Description Level 1  Level 2  Level 3  Total 
Assets            
Residential Mortgage Loans $     -  $     -  $657,180  $657,180 
Liabilities                
Promissory Notes $-  $-  $(143,839) $(143,839)

 

The following table includes a rollforward for the six months ended June 30, 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
January 1, 2021
  Transfers
Into
(Out of)
Level 3
  Purchases  Sales/
Proceeds (1)
  Realized
gain/(loss)
  Balance at
June 30,
2021
 
Assets                  
Residential Mortgage Loans $714,802  $       -  $46,053 $(122,044)$(18,369) $657,180 
                         
Liabilities                        
Promissory Notes $(150,866) $-  $7,027  $-      $(143,839)

 

(1)Includes principal payments received from residential mortgage loans.

 

13

 

 

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, 2021:

 

  Fair value  Valuation technique Unobservable inputs Range of inputs 
Assets          
Residential Mortgage Loans $657,180  Cost basis Loss severities, probabilities of defaults 0.00% - 10.75% 
Liabilities           
Promissory Notes $(143,839) Cost basis Loss severities, probabilities of defaults 12.00%

 

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. The company has net losses of $22,050 for the six months ended June 30, 2021.

 

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 complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A - “Expenses of Offering”. Deferred offering costs consist principally of legal fees incurred in connection with an offering the Company has commenced during 2019 under Regulation A. The offering under Tier 2 of Regulation A (the “Offering”) was “qualified” by the Securities and Exchange Commission on June 3, 2019. Prior to the offering, these costs are capitalized as deferred offering costs on the balance sheet. As of December 31, 2020, there were $111,420 in offering costs that were charged to the member’s equity.

 

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. The following table presents information about the deferred offering costs during the six months ended June 2021 and the year ended 2020 respectively:

 

  Amount 
Balance, December 31, 2018 $111,420 
Charged to Members’ Equity during 2019  111,420 
Balance, December 31, 2019  - 
Charged to Members’ Equity during 2020  - 
Balance, December 31, 2020 $- 
Charged to Members’ Equity during 2021  - 
Balance, June 30, 2021 $- 

 

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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

 

Loans held for investment will be carried at amortized cost, net of discounts and premiums, deferred loan origination fees and costs. Net deferred loan origination fees and costs on loans are amortized or accreted using the interest method over the expected life of the loans. Amortization of deferred loan fees and costs are discontinued for loans placed on nonaccrual. Any remaining deferred fees or costs and prepayment fees associated with loans that payoff prior to contractual maturity are included in loan interest income in the period of payoff. Loan commitment fees received to originate or purchase a loan are deferred and, if the commitment is exercised, recognized over the life of the loan as an adjustment of yield or, if the commitment expires unexercised, recognized as income upon expiration of the commitment. Loans held for investment are not adjusted to the lower of cost or estimated market value because it is management’s intention, and the Company has the ability, to hold these loans to maturity.

 

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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Loans Held for Investment (continued)

 

Interest payments received on such loans is applied as a reduction to the loan principal balance. Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to all principal and interest.

 

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.

 

Note: Manager has the option to change the specific terms due to their discretion.

 

Promissory Notes

 

On January 29, 2020, the Company entered into a promissory note agreement with Palm Avenue Hialeah Trust (the “Trust”) for $124,414 pursuant to a Loan Agreement executed as of the same date between the Trust, its affiliate, ARCPE 3, LLC (“ARCPE”) and the Company. The note incurs interest at 12% per annum payable on the 1st day of each month commencing on March 1, 2020 and shall be due and payable in full on January 29, 2023. In case of a default, the Company would incur an additional interest of 5% per annum over the initial interest rate. On May 1, 2020, the Company paid off principal of $7,028 and had an outstanding balance of $112,126 as of June 30, 2021. Interest expense incurred on the note for the six months ended June 30, 2021 was approximately $328.

 

On January 29, 2020, the Company entered into a promissory note agreement with ARCPE 3, LLC for $31,712 pursuant to a Loan Agreement executed as of the same date between ARCPE, its affiliate, the Trust and the Company. The promissory note incurs interest at 12% per annum payable on the 1st day of each month commencing on March 1, 2020 and shall be due and payable in full on January 29, 2023. In case of a default, the Company would incur an additional interest of 5% per annum over the initial interest rate. Interest expense incurred on the note for the six months ended June 30, 2021 was approximately $1,231.

 

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.

 

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NOTE 4: NOTE PAYABLE TO RELATED PARTY

 

Expenses since inception till commencement had been paid by the Manager of the Company, Cloud Capital Management, LLC (a related party), on the Company’s behalf. After October 2019, the Company is bearing all the expenses. As per the agreement, the Company will reimburse the Manager and its affiliates, without interest, for expenses they incur in connection with the formation of the Company. Amounts due to the Manager of the Company was $140,379 as of June 30, 2021.

 

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.

 

On October 3, 2019, the Company amended its agreement to denominate the Manager’s ownership of all limited liability interests of the Company to 1,000,000 units. The denomination of the Manager’s ownership interests to units did not diminish the Manager’s ownership.

 

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.

 

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.

 

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NOTE 7: MEMBER’S EQUITY/(DEFICIT)

 

Limited Liability Company Units

 

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, 2020. As of June 30, 2021, the Class A investors owned 99,589 shares for a total of $995,890.

 

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. An authorizing resolution providing for issuance of any series of Investor Shares may provide that such series shall be superior or rank equally or be junior to the Investor Shares of any other series except to the extent prohibited by the terms of the authorizing resolution establishing another series of Investor Shares. As Manager of the Company, Cloud Capital Management, LLC 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. Investor Shares do not have voting rights; however, voting rights may be conferred upon all or any series of Investor Shares by the Manager of the Company in an Authorizing Resolution. On November 1, 2017, the Manager authorized the Company to issue 5,000,000 Investor Shares designated as “Class A Investor Shares,” at no par value, priced at $10.00 each, with the rights, preferences, powers, privileges and restrictions, qualifications, and limitations set forth in a formal authorizing resolution. The minimum amount the Company was seeking to raise was $500,000. On June 24, 2019, the Manager changed the number to $250,000. As of the date of any distribution, owners of Class A Investor Shares (“Class A Members”), are entitled to receive a Class A Preferred Return equal to a compounded return of 10% with respect to its unreturned investment since the date of such Class A Member’s capital contribution. Class A Members have priority in distribution relative to owners of Common Shares (“Common Members”), wherein a Class A Member will first receive the Class A Preferred Return and next its unreturned investment prior to any remaining balance being distributed to Common Members. The Manager may at any time increase or decrease the authorized and/or outstanding number of Shares of any class, including Common Shares, provided that any increase or decrease in the number of Shares outstanding shall be made pro rata with respect to all Members owning the outstanding Shares of such class.

 

The Member’s equity balance was $726,100 as of June 30, 2021. Member’s equity as of June 30, 2021 consisted entirely of the accumulated deficits of $161,347 resulting from the net losses of $22,049 for the six months ended June 30,2021 capital activity of $998,867 which included capital additions of $37,962 and redemptions of $40,568 during the six months ended June 30, 2021 and offering cost charged to equity amounting to $111,420.

 

The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the Company, and no member of the Company is obligated personally for any such debt, obligation, or liability. The offering circular provides that Prime Trust, LLC will serve as the escrow agent of the Company. The Company has now engaged with the services of Sudrania Fund Services, LLC to act as its escrow agent and to perform other services.

 

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NOTE 8: RELATED PARTY TRANSACTIONS

 

Expenses since inception have been paid by the Manager of the Company, Cloud Capital Management, LLC (a related party), on the Company’s behalf. Per the LLC Agreement, the Company will reimburse the Manager and its affiliates, without interest, for expenses they incur in connection with the formation of the Company. Amounts due to the related party Manager of the Company was $140,379 as of June 30, 2021.

 

On November 1, 2018, the Company entered into a management services agreement with Cloud Capital Management LLC, the Manager of the Company. 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 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.

 

On October 3, 2018, the Company amended its LLC Agreement to denominate the Manager’s ownership of the limited liability interests of the Company to 1,000,000 Common Shares. The denomination of the Manager’s ownership interests to Common Shares did not diminish the Manager’s ownership, and the Manager retained all of the Common Shares of the Company.

 

NOTE 9: 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 10: FINANCIAL HIGHLIGHTS

 

Financial highlights presented are for the period from January 1, 2021 through June 30, 2021:

 

Return before expenses  9.83%
Total Expenses  10.07%
Return before management fee reimbursement  0.24%
Management fee reimbursement  0.00%
Net Return  0.24%
     
Ratios to average members’ capital:    
Net investment loss  -5.42%

 

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 11: SUBSEQUENT EVENTS

 

From July 1, 2021, through August 10, 2021, the Company had capital redemptions of $1,570.

 

In March 2020, The World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout United States and the world. As of the date the financial statements were available to be issued, there was considerable uncertainty around the expected duration of the pandemic. The Company may be significantly impacted by the pandemic, which could result in material future changes to the Company’s financial position and results of operations. The ultimate impact of COVID-19 on the financial performance of the Company’s investments cannot be reasonably estimated at this time.

 

Management’s Evaluation

 

These financial statements were approved by management and available for issuance on XXXX, 2020. Subsequent events have been evaluated through this date.

 

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Item 4

 

INDEX OF EXHIBITS

 

Exhibit 1A-2A Certificate of Formation of the Company filed with the Delaware Secretary of State on May 8, 2017.*
Exhibit 1A-2B Limited Liability Company Agreement dated November 1, 2018.*
Exhibit 1A-2C Authorizing Resolution dated November 1, 2018.*
Exhibit 1A-4 Form of Investment Agreement.*
Exhibit 1A-6A Servicing Agreement with SN Servicing Corporation.*
Exhibit 1A-6B Master Servicing Agreement with Southside Community Development & Housing Corporation.*
Exhibit 1A-6G Agreement between the Company and Mainstream Fund Services, Inc. dated January 9, 2018.*
Exhibit 1A-6D Asset Management Agreement with Neighborhood Stabilization Capital Management, LLC.*
Exhibit 1A-6E Management Services Agreement with Cloud Capital Management, LLC.*
Exhibit 1A-6F Joinder Agreement modifying Servicing Agreement with SN Servicing Corporation.*

 

*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, 2021

 

 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, 2021 

 

 

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