FORM 1-A DISCLOSURE FORMAT

PART II

OFFERING CIRCULAR

 Groundfloor Real Estate 1, LLC.

Fourteen Series of Limited Recourse Obligations

Totaling $2,331,370

Dated: March 12, 2020

This Post-Qualification Offering Circular Amendment No. 5 (this “PQA”), made on the Form 1-A disclosure format, amends the offering circular of Groundfloor Real Estate 1, LLC, dated November 15, 2019, as qualified on November 27, 2019, and as may be amended and supplemented from time to time (the “Offering Circular”), to add additional securities to be offered pursuant to the Offering Circular. This PQA relates to the offer and sale of up to an additional $2,331,370 in aggregate amount of Limited Recourse Obligations (the “LROs”) to be issued by Groundfloor Real Estate 1, LLC. (the “Company,” “we,” “us,” or “our”). Unless otherwise defined below, capitalized terms used herein shall have the same meanings as set forth in the Offering Circular. See “Incorporation by Reference of Offering Circular” below.

We make LROs available for investment on our web-based investment platform www.groundfloor.com (the “Groundfloor Platform”). Our principal offices and mailing address are located at 600 Peachtree Street, Suite 810, Atlanta, GA 30308. The phone number for these offices is (404) 850-9225.

We will issue the LROs in distinct series, each corresponding to a real estate development project (each, a “Project”) financed by a commercial loan from us (each, a “Loan”). The borrower for each Project is a legal entity (the “Borrower”) that owns the underlying property and has been organized by one or more individuals (each, a “Principal”) that own and operate the Borrower. This PQA relates to the offer and sale of each separate series of LROs corresponding to the Projects for which we extend Loans, as described below (the “Offering”).

The LROs will be unsecured special, limited obligations of the Company. The LROs are not listed on any national securities exchange or on the over-the-counter inter-dealer quotation system. There is no market for the LROs. Our obligation to make payments on a LRO is limited to an amount equal to each holder’s pro rata share of amount of payments, if any, actually received on the corresponding Loan, net of certain fees and expenses retained by us. See the sections titled “General Terms of the LROs,” “The LROs Covered by this Offering Circular,” and “Project Summaries” of the Offering Circular, as amended hereby, for the specific terms of the LROs covered by this PQA.

We do not guarantee payment of the LROs in the amount or on the time frame expected. The LROs are not obligations of the Borrowers or their Principals, and we do not guarantee payment on the corresponding Loans. We have the authority to modify the terms of the corresponding Loans which could, in certain circumstances, reduce (or eliminate) the expected return on your investment. See the “General Terms of the LROs—Administration, Service, Collection, and Enforcement of Loan Documents” section on page 106 of the Offering Circular.

The LROs are speculative securities. Investment in the LROs involves significant risk, and you may be required to hold your investment for an indefinite period of time. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 12 of the Offering Circular.

Generally, no sale may be made to you in this offering to the extent that the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

We will commence the offering of each series of LROs promptly after the date this PQA is qualified by posting on the Groundfloor Platform a separate landing page corresponding to each particular Loan and Project (each, a “Project Summary”). The offering of each series of LROs covered by this PQA will remain open until the earlier of (1) 30 days, unless extended, or (2) the date the offering of a particular series of LROs is fully subscribed with irrevocable funding commitments (the “Offering Period”); however, we may extend the Offering Period for a particular series of LROs in our sole discretion (with notice to potential investors) up to a maximum of 45 days. We will notify investors who have previously committed funds to purchase such series of LROs of any such extension by email and will post a notice of the extension on the corresponding Project Summary on the Groundfloor Platform.

This Offering is being conducted on a “best-efforts” basis, which means that our officers will use their commercially reasonable best efforts in an attempt to sell the LROs. Such officers will not receive any commission or any other remuneration for these sales. In offering the LROs on our behalf, the officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

⁽¹⁾ We estimate all expenses for this Offering to be approximately $1,000, which will not be financed with the proceeds of the Offering.

⁽²⁾ Assumes no promotions or discounts applied to any offerings covered by this PQA.

Incorporation by Reference of Offering Circular

The Offering Circular, including this PQA, is part of an offering statement (File No. 024-11094) that we filed with the Securities and Exchange Commission. We hereby incorporate by reference into this PQA all of the information contained in the following:

Note that any statement that we make in this PQA (or have made in the Offering Circular) will be modified or superseded by any inconsistent statement made by us in a subsequent offering circular supplement or post-qualification amendment.

The LROs Covered by the Offering Circular and Use of Proceeds

The following disclosure is added on pages 98 and 101 of the Offering Circular under the table included under “The LROs Covered by this Offering Circular” and “Use of Proceeds,” respectively:

The table below lists the additional Projects covered by this PQA. Each series of LROs is denominated by the corresponding Project’s name.

Project Summaries

Each Project Summary attached below is included in the Offering Circular following page PS-75.

PROJECT SUMMARIES FOR PQA NO. 5

Rate Loan ToARV Loan Amount Investors 7 940 1 L 8 Project Cost ,. , <.. Address: 210 MCKINLEY AVENUE,PITTSBURGH,PA 15202 q "' View larger map " 0 l -<>'-/ s, ••· ! ' Pizz, <f' ?,.. ' T Blue Thrift Store intends to sell the property to repay the Groundfloor loan. e-po map TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Katherine E. Stoddard Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER WHILE WE BELIEVE THE DATA K TOO, LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 12/12/2019 IPRINCPI AL FOCUS Fix & Fliploans Funded ®Loans Repaid ®PerYear ®Revenue ® '-----1 oJII oIIoII$O On Time Average Project Average Total Repayment ®Time ®Project Costs ® I N/A'-----1 N/_AJII$0 Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to begin renovation of this property on February 13,2020 by Groundfloor Finance Inc.("Groundfloor;'"we';"us'; or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower has now begun renovation of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the Offering Circular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o The Principal has not yet completed or sold any projects. As such,the Principal's average revenue,costs,and margins cannot be calculated. o The Borrower is using $25,000 of the loan proceeds to pay off an existing loan that was used to acquire the property.Groundfloor will assume the first lien position. The rest of the loan proceeds will be put towards the renovation of the property,much like an acquisition and renovation loan. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSING CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS , .t, i' '•. ••·-•••...)' :.>.• ' N '\, " 210 McKinl ey AvenueThe Borrower intends to use the loan proceeds to renovate the property.Upon completion,the Borrower 1.:.\ Red White & Map data 02020 Terms of Use R " "r''t a"'0 '... err orClick here to view the LRO Agreement INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $205,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value (ARV) (1} $205,000 TotalCosts ®$122,940 0% ----Skin-in-theFirst Lien LoanCushion ® Game ® Purchase Price$50,000 Loan ToARV47.8% Purchase Date12/31/2019Loan To Total79.2% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report4 Skin-in-the·Game ®10 Location Borrower Experience5 Borrower Commitment ®1 $97,940 GRADE FACTORS FINANCIAL OVERVIEW PurposeLoan Position TotalLoan AmountRepayment Terms _ _ F·_rs_t_Li_e_n _JII$9 , . . BORROWER KToo, LLC Katherine E. Stoddard principalClick here to view the LRO Agreement INVEST NOW ,....M:.-'-onth_l_y _pay_m_e_n_t_-in_t_ere_s_t -er tur_n_e_d--, monthly,principaldue at maturity. Refinance Rehab

1620 L Project Cost Address: 1TREMONT STREET,OXFORD,MA 01540 ::;; View larger map '1 Tremont S1reet V The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion,the adis Funeral Home 9 Click here to view the LRO Agreement - ..J n..t..l :... , :t.. ... .Mapdata 02020 TermsofUse R eport amaperr or TotalDebt ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES MATTHEW NAHIGIAN-GOLDING Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER WHILE WE BELIEVE THE DATA GOLDING LIMITED, LLCFINANCIAL DATAPROJECTS/REVENUE DATE OF FORMATION * 03/15/2019 IPRINCIPAL FOCUS Multifamily 2-4Units Loans Funded ®Loans Repaid ®PerYear ®Revenue ® Ll0 ,11°IIoII$O On Time Average Project Average Total Repayment ®Time ®Project Costs ® IN/A LlN/A----'II $0 Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS • The Borrower was advanced the money it needed to purchase this property on February 14,2020 by Groundfloor Finance Inc.("Groundfloor;·"we," "us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. • The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. • The renovation will require permitting, and permits may not be obtained on time or may be denied. • The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. • The Principal has not yet completed or sold any projects. As such,the Principal's average revenue,costs,and margins cannot be calculated. • Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSNI G CONDITIONS • Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES • We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. • We do not take a "spread" on any part of the interest payments. • Borrowers may capitalize the cost of closing into the principalamount of their request.These closing costs typically range from $500 to $1500. • Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION • The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS ...5. Borrower intends to sell the property to repay the Groundfloor loan. \V terSt '1/atorSt @ GoSgle INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $220,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value (ARV) (1} $220,000 TotalCosts ®$143,620 0% ----Skin-in-the First Lien LoanCushion ® Game ® Purchase Price$100,000 Loan ToARV 55.3% Purchase Date 02/14/2020Loan To Total84.3% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report4 Skin-in-the·Game ®10 Location8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW RateLoan ToARVLoan Amount Investors PurposeLoan Position TotalLoan Amount Repayment Terms _Fir_s_t_L_ei_n _,ll $12 , . . BORROWER Golding Limited,LLC MATTHEW NAHIGIANClick here to view the LRO Agreement GOLDING - principal INVEST NOW r--'M--'-onthly pa_y_m_e_n_t__ _inter_e_s_t re-tu_r_n_e_d---, monthly,principaldue at maturity. Purchase & Renovation

123720 L Edward Bolden - principaI Project Cost ,2516 Semmes Street f< ""..',<>' Sumner Park "''o, Tri-Cities H .,...&. Lexington A Google Map d.ata 02020 Terms of Use ,Report-a map ttrr or Value of Properties ® TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Edward Bolden Completed ProjectsAverage Project II II ° Ll 0 ,11 5 $1.7M --'II I N/A $72.3K CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FORA FUNDING DECISION. THE COMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA BOLDEN CAPITAL GROUP,LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 01/14/2016 Gross Margin% ® IPRINCPI AL FOCUS Multifamily 2-4 Units Loans Funded ®Loans Repaid ®PerYear ®Revenue ® On Time Average ProjectAverage Total Repayment ®Time ®Project Costs ® Lls__mon_t_h_s Reportingperiod:three years ending 2019 44.6% $722.3K $489K $162K Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 7, 2020 by Groundfloor Finance Inc.("Groundfloor," "we," "us," or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower is now in possession of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSNI G CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principal amount of their request.These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS View larger map"'Address: 2516 SEMMES STREET,ATLANTA, GA 30344 oroao AVCI The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the t;;;Borrower intends to sell the property to repay the Groundfloor loan. o, "e$f.A t\., J'fA •l•-• -r . ..:,..:. ... - "'Click here to view the LRO Agreement ., INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $200,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value (ARV) {1) $200,000 TotalCosts ®$143,720 0% ----Skin-in-theFirst Lien LoanCushoi n ® Game ® Purchase Price$130,000Loan ToARV61.9% Purchase Date02/07/2020 Loan To Total85.7% ® {1) ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report 4 Skin-in-the·Game ®10 Location8 Borrower Experience5 Borrower Commitment ®1 $123,720 GRADE FACTORS FINANCIAL OVERVIEW RateLoan ToARV Loan Amount Investors PurposeLoan Position TotalLoan Amount Repayment Terms _Fir_s_t_L_ei_n _,ll $, 's--'-a-1l'o-_o_n_p_ay_ment--- prn-icp-i a1 a_n_d_inte-re_s_t, BORROWER. .returned on repayment I due at maturity. Bolden CaP-italGrouP-,LLC Click here to view the LRO Agreement INVEST NOW Purchase & Renovation

131 40 maturity. BORROWER RG Shekinah LLC Raynold Gilles - principal Project Cost il< View larger map ISW Beec.ller St Road Southwest #1 !<I Borrower intends to sell the property to repay the Groundfloor loan. "' d'<a_gJ.!! ... " - c ... y g Map data 02020 Terms ofUse Report a map err or TotalDebt ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Raynold Gilles Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FORA FUNDING DECISION. THE COMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCES OR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA RG SHEKINAH LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 11/01/2016 IPRINCPI AL FOCUS Multifamily 4+ Units Loans Funded ®Loans Repaid ®PerYear ®Revenue ® '-----1°,11° II 4 II$282K On Time Average Project Average Total Repayment ®Time ®Project Costs ® IN/A '--l s__mon_t_hs__--'11$215K Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 7, 2020 by Groundfloor Finance Inc.("Groundfloor," "we," "us," or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower is now in possession of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o There will be two loans on this project, each representing subsequent draws. The loans are $131,440 each. The Financial Overview box represents the aggregate amount of all loans to be secured by this property, giving a complete financialpicture of the project. o This loan represents the first draw for the project. o Each draw on this project is structured as an individual loan. We will fund each draw from our own capitalor credit facilities as and when requested by the Borrower,provided conditions for each draw are met as described in our OfferingCircular. Once a draw has been approved and funded, we will then sell the corresponding series of LROs on our platform,each of which will be due 1 2 months from the time such series of LRO is deemed issued,as described in our Offering Circular. Subsequent draws are expected to be requested every two months from the date we advanced the first draw, but may be requested sooner,or later, depending on the progress of construction. o The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.All LRO holders investing in LROs corresponding to notes secured by this property share the same priority in any recovery and recovered proceeds willbe distributed on a pro-rata basis. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSING CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request.These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time). including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS r-ca• • n& L ag '+' Address: 1674 RICHLAND ROAD SW #1,ATLANTA,GA 30310 : (,CIIlCI y--- 1674 Rci hland The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the 1 C,A slc A D E R 0 A D <!' I f fidv1Jo'(3,fl. Click here to view the LRO Agreement INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $425,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value$425,000 TotalCosts ®$292,180 0% ----Skin-in-theFirst Lien Loan Cushoi n ® Game ® Purchase Price$143,000Loan ToARV61.9% Purchase Date02/07/2020 Loan To Total92.9% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report 4 Skin-in-the·Game ®10 Location 8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW Rate Loan ToARV Loan Amount Investors PurposeLoan Position TotalLoan AmountRepayment Terms '-----Fi_rs_t_L_ei_n _,ll $,4 r-"B"ac::.llc.o:.c.o.::c..:.n::..pc..a:::.y.:.:m.:.::.e. nt---Prn-icp-ia1 a_n_d_i nte-re_s_ _ . .retu rned on repayment I due at ' ' Click here to view the LRO Agreement t' INVEST NOW Purchase & Renovation

Rate Loan ToARV Loan Amount Investors Purpose Loan Position TotalLoan Amount Repayment Terms ...__ F·rs_t_L_ei_n _,ll $ , ,:.:.B:.o:a.:::I.!ICo.:c.o.:.:::.n.:.p..:..:a::.:.y:::.m:.:._e_nt - prn-i cpi a1 a_n_d_i_nte-re--st' returned on repayment I due at maturity. _ . . Project Cost I Address: 1674 RICHLAND ROAD SW #2,ATLANTA,GA 30310 & Lounge "f' il< View larger map ISW : (,CittCI y - The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the 1674 Richland -c I f ft ._,. " dVJ/o'(3, fh 'l' Click here to view the LRO Agreement Map data 02020 Terms of Use Report a map err or ' TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Raynold Gilles Completed Projects Average Project THE CONTAINED THEREIN IS HELPFUL,WE DO NOTUSE ITAS THE SOLE BASIS FOR A FUNDING DECISION. COMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCES OR ANY OTHER MATERIALS PROVIDED BY THE BORROWER WHILE WE BELIEVE THE DATA RG SHEKINAH LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 11/01/2016 IPRINCIPAL FOCUS Multifamily 4+ Units loans Funded ®Loans Repaid ®PerYear ®Revenue ® .I0-----'11 °II4 II$282K On Time Average Project Average Total Repayment ®Time ®Project Costs ® IN/A ._l_5 m_on_t_h_s ---'II$215K Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 7, 2020 by Groundfloor Finance Inc.("Groundfloor," "we," "us," or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower is now in possession of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o There will be two loans on this project, each representing subsequent draws. The loans are $131,440 each. The Financial Overview box represents the aggregate amount of all loans to be secured by this property, giving a complete financialpicture of the project. o This loan represents the second draw for the project. o Each draw on this project is structured as an individual loan. We will fund each draw from our own capitalor credit facilities as and when requested by the Borrower,provided conditions for each draw are met as described in our OfferingCircular. Once a draw has been approved and funded, we will then sell the corresponding series of LROs on our platform,each of which will be due 12 months from the time such series of LRO is deemed issued,as described in our Offering Circular. Subsequent draws are expected to be requested every two months from the date we advanced the first draw, but may be requested sooner,or later, depending on the progress of construction. o The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.AII LRO holders investing in LROs corresponding to notes secured by this property share the same priority in any recovery and recovered proceeds willbe distributed on a pro-rata basis. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSNI G CONOITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principal amount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS PROPERTY DESCRIPTION lt::OI I 1"\l:: ldUIdill\lJ Beec:ller St " ,Road Southwest #2 !!1Borrower intends to sell the property to repay the Groundfloor loan. C,A slc A 0 E R 0 A 0.4, ' ... Yd'a,9] ... g INVEST NOW ·--As Complete (ARV) $425,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value$425,000 TotalCosts ®$292,180 0% ----Skin-in-theFirst Lien Loan Cushoi n ® Game ® Purchase Price$143,000 Loan ToARV 61.9% Purchase Date02/07/2020 Loan To Total92.9% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report 4 Skin-in-the·Game ®10 Location 8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW 1131440 BORROWER RG Shekinah LLC Raynold Gilles - principal Click here to view the LRO Agreement INVEST NOW Purchase & Renovation

145250 maturity. 02/11/2020 Project Cost View larger map Larkspur Ln The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the Borrower intends to sell the property to repay the Groundfloor loan. 11 Si' Rice Rd Click here to view the LRO Agreement OovP TrPP. Map data 02020 Terms of Use Report amap error TotalDebt ® Revenue ® HISTORICAL AVERAGES GROUNDFLOOR HISTORY * Dekerrian Cooper Completed Projects Average Project On Time Average Project Average Total CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE ITAS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA BIG TEX HOME INVESTMENTS LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 12/30/2019 Gross Margin% ® IPRINCPI AL FOCUS Single FamliyLoans Funded ®Loans Repaid ®PerYear ®Revenue ® '-----1° ,11° II 1II $147K Repayment ®Time ®Project Costs ® IN/A '-l 6_m_o_nt_h_s __,II$95K Reportingperiod:three years ending 2019 35.0% $146K Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 11,2020 by Groundfloor Finance Inc.("Groundfloor;·"we," "us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSNI G CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principal amount of their request.These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS Address: 5113 FOXGLOVE CIRCLE,TYLER,TX 75703 \lice Rd 5113 Foxglove Circle 1o"\'Becl Spr.ng Credc Dt Go gle INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $230,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value $230,000 TotalCosts ®$176,250 0% ----Skin-in-theFirst Lien LoanCushion ® Game ® Purchase Price$133,000Loan ToARV 63.2% Purchase Date Loan To Total81.7% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report 4 Skin-in-the·Game ®10 Location8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW Rate Loan ToARV Loan Amount Investors PurposeLoan Position TotalLoan AmountRepayment Terms '-----Fi_rs_t_L_ei_n _,ll $, i-'-B""ac::.lcl.o:.c.o.::c..:.n::.p.c..a:::.y.:...m::.::.e._n_t--- prn-icp-ia1 a_n_d_inte-re_s _ . . returned on repayment I due at BORROWER Big Tex Home Investments LLC Dekerrian Cooper - principal Click here to view the LRO Agreement _t' INVEST NOW Purchase & Renovation

147 250 02/14/2020 91.2% Purchase Date Project Cost Address: 1791-93 W GRAND BLVD #1,DETROIT,Ml48208 n....... u 8. c. .. !1 Boulevard #1 Borrower intends to sell the property to repay the Groundfloor loan. na Ciub Y MillordSt Stephen Church 0 Milfo1d St $ . 0 gle :;; Click here to view the LRO Agreement TotalDebt ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Tajh Whittingham Completed Projects Average Project CONTAINED THEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA NORTHSIDE HOMES, LLCFINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 01/10/2020 IPRINCPI AL FOCUS Fix & FlipLoans Funded ®Loans Repaid (1)PerYear (1)Revenue (1) Ll0 ,11°II 3II $385.7K On Time Average ProjectAverage Total Repayment ® Time (1) Project Costs (1) IN/A _Ll _1_1_mon_th_s_-'ll$220K Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS • The Borrower was advanced the money it needed to purchase this property on February 14,2020 by Groundfloor Finance Inc.("Groundfloor;·"we," "us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. • The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. • The renovation willrequire permitting, and permits may not be obtained on time or may be denied. • The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. • There will be two loans on this project, each representing subsequent draws. The first loan is $147,250 and the second loan is $147,260.The Financial Overview box represents the aggregate amount of all loans to be secured by this property,giving a complete financial picture of the project. • This loan represents the first draw for the project. • Each draw on this project is structured as an individual loan. We will fund each draw from our own capitalor credit facilities as and when requested by the Borrower,provided conditions for each draw are met as described in our OfferingCircular. Once a draw has been approved and funded, we will then sell the corresponding series of LROs on our platform,each of which will be due 12 months from the time such series of LRO is deemed issued,as described in our Offering Circular. Subsequent draws are expected to be requested every two months from the date we advanced the first draw, but may be requested sooner,or later, depending on the progress of construction. • The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.All LRO holders investing in LROs corresponding to notes secured by this property share the same priority in any recovery and recovered proceeds willbe distributed on a pro-rata basis. • Please consult the OfferingCircular. for further discussion of general risk factors. CLOSNI G CONDITIONS • Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES • We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. • We do not take a "spread" on any part of the interest payments. • Borrowers may capitalize the cost of closing into the principal amount of their request.These closing costs typically range from $500 to $1500. • Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION • The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time). including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS ! .............' 1 View larger map "<'E<lstem PI 111oorePI1791 West GrandThe Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the BrownPI ,e c<>< !::!. Map data 02020 Terms of Use Report a map err or INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $420,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value $420,000 TotalCosts ®$336,010 0% ----Skin-in-the First Lien LoanCushion ® Game (1) Purchase Price$85,000Loan ToARV70.1% Loan To Total (1) {1) (1) VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score (1)10 Quality of Valuation Report 4 Skin-in-the·Game (1)10 Location 8 Borrower Experience5 Borrower Commitment (1)1 GRADE FACTORS FINANCIAL OVERVIEW RateLoan ToARV Loan Amount Investors Purpose Loan Position TotalLoan Amount Repayment Terms _Fir_s_t_L_ei_n _,ll $ , 's--'-a-1l'o-_o_n_p_ay_ment--- prn-icp-i_a_l a_n_d_inte-re_s_t, L. .returned on repayment I due at maturity. BORROWERClick here to view the LRO Agreement Northside Homes, LLC Tajh Whittingham - principal INVEST NOW Purchase & Renovation

147 260 1 maturity. 02/14/2020 91.2% Purchase Date Project Cost Address: 1791-93 W GRAND BLVD #2,DETROIT,M148208 n........ .... 8. • !!2 c. BrownPI naCiubYA Millord St Stephen Church 0 "b Milfo1d St 5"0 gle :;;; Click here to view the LRO Agreement TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Tajh Whittingham Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER WHILE WE BELIEVE THE DATA NORTHSIDE HOMES, llCFINANCIAL DATAPROJECTS/REVENUE DATE OF FORMATION * 01/10/2020 IPRINCPI AL FOCUS Fix & FlipLoans Funded ®Loans Repaid ®PerYear ®Revenue ® .IoJII oII 3 II $385.7K On Time Average ProjectAverage Total Repayment ®Time ®Project Costs ® IN/A '-l11_m_o_nt_h_s__,ll$220K Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 14,2020 by Groundfloor Finance Inc.("Groundfloor;·"we," "us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o There will be two loans on this project, each representing subsequent draws. The first loan is $147,250 and the second loan is $147,260.The FinancialOverview box represents the aggregate amount of all loans to be secured by this property,giving a complete financial picture of the project. o This loan represents the second draw for the project. o Each draw on this project is structured as an individual loan. We will fund each draw from our own capitalor credit facilities as and when requested by the Borrower,provided conditions for each draw are met as described in our OfferingCircular. Once a draw has been approved and funded,we will then sell the corresponding series of LROs on our platform,each of which will be due 12 months from the time such series of LRO is deemed issued,as described in our Offering Circular. Subsequent draws are expected to be requested every two months from the date we advanced the first draw, but may be requested sooner,or later, depending on the progress of construction. o The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.All LRO holders investing in LROs corresponding to notes secured by this property share the same priority in any recovery and recovered proceeds willbe distributed on a pro-rata basis. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSNI G CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time). including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS !.........' 1 View larger map "<'Eolstern PI <Aoore PI 1791 West GrandThe Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the ,Boulevard #2 Borrower intends to sell the property to repay the Groundfloor loan. ,e c<>< !::!. Map data 02020 Terms of Use R eport a map error INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $420,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value (ARV) (1} $420,000 TotalCosts ®$336,010 0% ------' Skin-in-the First Lien LoanCushoi n ® Game ® Purchase Price$85,000 Loan ToARV 70.1% Loan To Total ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report 4 Skin-in-the-Game ®10 Location8 Borrower Experience5 Borrower Commitment ®1 $294,510 GRADE FACTORS FINANCIAL OVERVIEW I RateLoan ToARV Loan AmountInvestors PurposeLoan Position TotalLoan Amount Repayment Terms ...__ F·rs_t_L_ei_n _,ll $ ,i-'-B"-':a.:::I.!ICo.cco.::.:::.n.:.p..:..:a::.:.y:::.m:.:._e_nt - prn-i cpi a1 a_n_d_i_nte-re-_ . . returned on repayment I due at BORROWERClick here to view the LRO Agreement Northside Homes, LLC Tajh Whittingham - principal -st' INVEST NOW Purchase & Renovation 1791-93 W GRAND BLVD ##2, DETROIT, Ml48208 PROJECT SUMMARY

BORROWER 151580 1 maturity. L Game (2) 78.9% 02/14/2020 Purchase Date Project Cost , Legacy Lane Compactor Site T G 1 £ Map data 02020 : Terms of Use R eport a map error Click here to view the LRO Agreement TotalDebt (2) GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Kristina Stephens Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THE COMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATION SOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER WHILE WE BELIEVE THE DATA RE-WIRED RENOVATIONS, LLCFINANCIAL DATAPROJECTS/REVENUE DATE OF FORMATION * 09/09/2019 IPRINCIPAL FOCUS Single Famliyloans Funded (2)Loans Repaid (2)PerYear (2)Revenue (2) Ll0-----'11 °IIoII$O On Time Average ProjectAverage Total Repayment (2)Time (2)Project Costs (2) IN/A LlN/_A JII $0 Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 14,2020 by Groundfloor Finance Inc.("Groundfloor;·"we," "us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o The Principal has not yet completed or sold any projects. As such,the Principal's average revenue,costs,and margins cannot be calculated. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSNI G CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS Address: 11LEGACY LANE,NEWNAN,GA 30265 The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the Borrower intends to sell the property to repay the Groundfloor loan. Lora Smith ft Ma'Ytrnn\.J\ o g e INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $234,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Camps After Value (ARV) {2) $234,000 TotalCosts (2)$190,580 0% ----Skin-in-theFirst Lien LoanCushoi n (2) Purchase Price$165,000Loan To ARV 64.8% Loan To Total (2) {2) (2) VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score (2)10 Quality of Valuation Report4 Skin-in-the·Game (2)10 Location8 Borrower Experience5 Borrower Commitment (2)1 GRADE FACTORS FINANCIAL OVERVIEW RateLoan ToARV Loan AmountInvestors PurposeLoan Position TotalLoan AmountRepayment Terms _ _ F·_rs_t_L_ei_n _JII, ,...B.:.a-l.:l..o.._o_n_p_a_ym_ _ent - prn-i cp-i a-1a_n_d_i_nte-re--s . . returned on repayment/ due at Re-wired Renovations,LLC Kristina Stephens-principal Click here to view the LRO Agreement t-, INVEST NOW Purchase & Renovation

I Loan ToARV Loan Amount Investors Rate Purpose Loan Position TotalLoan AmountRepayment Terms '-----F·-rs_t_L_ei_n _,ll , i-'-B"-':a.:::I.!ICo.c:o.:.:::.n.:.p..:..:a::.:.y:::.m:.:._e_nt - prn-i cpi a1 a_n_d_i_nte-re--st' 156 660 1 BORROWER Project Cost Address: 2419 NORTH 44TH STREET,MILWAUKEE,WI 53210 Pre The Borrower intends to use the loan proceeds to renovate the property.Upon completion,the Borrower r ow N ,2419 North 44th Street Click here to view the LRO Agreement Map data 02020 Terms of Use Report a map error z z TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Stephen Cotton 1\\IC .. CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA ELITE INVESTMENT PROPERTIES LLC FINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 11/11/2011 Gross Margin% <2) IPRINCIPAL FOCUSr"r"'"'rlotc,.{ o..-......jor-tc-:r.oc o........jcr+ Fix & FlipLoans Funded ®Loans Repaid ®PerYear ®Revenue ® .IoJII oII 3II $290.8K On Time Average Project Average Total Repayment <2)Time ®Project Costs ® IN/A ._l 1_1_m_o_nt_h_s ,ll $221.5K Reportingperiod:three years ending 2019 33.2% $199K Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to begin renovation of this property on February 13,2020 by Groundfloor Finance Inc.("Groundfloor;·"we;·"us;· or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower has now begun renovation of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the Offering Circular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation willrequire permitting, and permits may not be obtained on time or may be denied. o The Borrower is using $$410 of the loan proceeds to pay off an existing loan that was used to acquire the property.Groundfloor will assume the first lien position. The rest of the loan proceeds will be put towards the renovation of the property,much like an acquisition and renovation loan. o This is a collateralloan secured by three properties,3140 North 29th Street,3277 North 20th Street, and 2419 North 44th Street,Milwaukee,WI 53210. The ARV represents the combined value of all properties. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSING CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time),including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS .;)I .. IUUIVI IIIIUIIIIdliU I ••. T View larger mapMilw< WWrightSt ETintends to sell the property to repay the Groundfloor loan. , \\1 Mtinttcko Ave W Moinec:keAvo Pick >rill 0 We6ogle INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $225,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Camps After Value$225,000 TotalCosts ® $198,960 0% ----Skin in the· First Lien LoanCushion <2) Game <2) Purchase Price$42,710Loan To ARV70.0% Purchase Date02/13/2020Loan To Total78.0% ® <2) <2) VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report4 Skin in·the·Game ®10 Location8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW _ . . returned on repayment I due at maturity. Elite Investment ProQerties LLC Stephen Cotton - principal Click here to view the LRO Agreement INVEST NOW Refinance Rehab 2419 NORTH 44TH STREET,MILWAUKEE, Wl53210 PROJECT SUMMARY

212 570 maturity. 10/01/2019 78.8% Purchase Date Project Cost View larger map Avenue Northwest Detroit A Borrower intends to sell the property to repay the Groundfloor loan. Apartments T Click here to view the LRO Agreement Map data 02020 Terms of Use R eport a map error TotalDebt ® Revenue (2) GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Otacilio Filho Completed Projects Average Project On Time Average Project Average Total CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE ITAS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA CONCRETE A PLUS CLEANING CAREFINANCIAL DATA PROJECTS/REVENUE USA, LLC DATE OF FORMATION * 02/19/2019 IPRINCPI AL FOCUS Buy& Hold Loans Funded (2)Loans Repaid (2)PerYear (2)Revenue (2) '-----1° ,11° IIoII$O Repayment ® Time (2)Project Costs (2) IN/A'-----1 N/A ---'II$0 Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12131/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needs to beginconstruction of this property on February 13,2019 by Groundfloor Finance Inc.("Groundfloor;·"we;·"us'; or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower will has begun construction of the property.If this offeringis fully subscribed, Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o The Principal has not yet completed or sold any projects. As such,the Principal's average revenue,costs,and margins cannot be calculated. o The construction of the property may be extensive, and therefore subject to delays and other unexpected issues. o The construction will require permitting,and permits may not be obtained on time or may be denied. o There is no existing structure on this property,or if there is,it will be demolished,and a new structure built in its place. o The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.All LRO holders investing in LROs corresponding to notes secured by this property share the same priority in any recovery and recovered proceeds willbe distributed on a pro-rata basis. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSNI G CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principal amount of their request.These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS Address: 2062 DETROIT AVE NW,ATLANTA,GA 30314 2062 Detroit The Borrower intends to use the loan proceeds to complete a new construction. Upon completion,the Collier Heights ftPineda\e o11e1 'hing Simple Cafe INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $304,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value $304,000 TotalCosts ® $267,070 0% ----Skin-in-the First Lien Loan Cushoi n (2) Game (2) Purchase Price$22,500Loan To ARV69.9% Loan To Total (2) (2} (2) VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score (2)10 Quality of Valuation Report 4 Skin-in-the·Game (2)10 Location 8 Borrower Experience5 Borrower Commitment (2)1 $212,570 GRADE FACTORS FINANCIAL OVERVIEW Rate Loan ToARV Loan AmountInvestors Purpose Loan Position TotalLoan AmountRepayment Terms '-----Fi_rs_t_L_ei_n _,ll $ , i-'-B""ac::.lcl.o:..:.o.::c..:.n::.p.c..a:::.y.:..m::.::.e. nt--- prn-icp-i a1 a_n_d_inte-re_s BORROWER_ . . returned on repayment I due at Concrete A Plus Cleaning Care USA,LLC Otacilio Filho - principal Click here to view the LRO Agreement _t' INVEST NOW New Construction

, ,....:.aBl-.:l..o.._o_n_p_a_ym_ _ent - prn-i cp-i_a_la_n_d_i_nte--re--st..., returned on repayment I due at maturity. BORROWER 1 . . Project Cost I View larger map 730 Bonita Road 0'/f!t ""'be<••<J< '" BEACHES Click here to view the LRO Agreement "'c Map data C\2020 Google Terms of Use .Report a map error TotalDebt ® Revenue ® GROUNDFLOOR HISTORY * HISTORICAL AVERAGES Hunter Hayden Completed Projects Average Project CONTAINEDTHEREIN IS HELPFUL,WE DO NOTUSE ITAS THE SOLE BASIS FOR A FUNDING DECISION. THE COMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA H & H REAL ESTATE INVESTING LLC FINANCIAL DATAPROJECTS/REVENUE DATE OF FORMATION * 07/11/2013 Gross Margin% ® IPRINCIPAL FOCUS Fix & FlipLoans Funded ®Loans Repaid ®PerYear ®Revenue ® Ll0-----'11 °II21 II$163.4K On Time Average ProjectAverage Total Repayment ®Time ®Project Costs ® IN/A Ll 1_m_o_nt_h_s_ JII$145.8K Reportingperiod:three years ending 2019 7.2% $354.8K Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on January 24, 2020 by Groundfloor Finance Inc.("Groundfloor," "we;' "us," or "our") or a wholly-owned subsidiary of Groundfloor.The Borrower is now in possession of the property. If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSING CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time),including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS araees wAddress: 730 BONITA ROAD,ATLANTIC BEACH,FL 32233 S&ilfl!ihDr£ O<Hlfloers Rd , The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the ......8onft.aRdBorrower intends to sell the property to repay the Groundfloor loan. ATLANTICJack Russell Pa• ,,GoogleVilq", "•tn INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $390,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Camps After Value (ARV) (1} $390,000 TotalCosts ®$290,800 0% ----Skin-in-theFri st Lien LoanCushion ® Game ® Purchase Price$270,000LoanToARV60.5% Purchase DateOV24/2020Loan To Total84.3% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report4 Skin in·the·Game ®10 Location 8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW I RateLoanToARV Loan AmountInvestors PurposeLoan PositionTotalLoan Amount Repayment Terms _ _ F·_rs_t_L_ei_n ....JII235 800 L H & H RealEstate Investing LLC Hunter Hayden - principal Click here to view the LRO Agreement INVEST NOW Purchase & Renovation 730 BONITA ROAD,ATLANTIC BEACH,FL 32233 PROJECT SUMMARY

Loan ToARV Loan Amount Investors Rate Purpose Loan Position TotalLoan Amount Repayment Terms 239 040 Anthony Hansen - principal 12/17/2019 92.3% Purchase Date Project Cost I Address: 293 ORMOND STREET SOUTHEAST [2ND],ATLANTA,GA 30315 South Ave SE g ! Atlanta Ave SE Mediterranea The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the T Restaurant &,Bakery )t SE Atlant :=r t . m Click here to view the LRO Agreement Academy Y l Map data 02020 Terms of Use R eport a map error ' TotalDebt ® HISTORICAL AVERAGES GROUNDFLOOR HISTORY * Anthony Hansen Completed Projects Average Project II II ° 0-----'11 4 .I $250K --'II I N/A $50K CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FOR A FUNDING DECISION. THECOMPANY PlAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA BLACKSTONE REALTY LLC FINANCIAL DATA PROJECTS/REVENUE DATE OF FORMATION * 08/16/2017 IPRINCIPAL FOCUS Fix & FlipLoans Funded ®Loans Repaid (2)PerYear ®Revenue (2) On Time Average ProjectAverage Total Repayment ®Time (2)Project Costs (2) Ll _ 9_m_o_nt_h_s Reportingperiod:three years ending 2019 Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on December 17,2019 by Groundfloor Finance Inc.("Groundfloor;·"we;·"us;·or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o The Borrower has not completed or sold any projects in the past year. As such,the Borrower's average revenue,costs,and margins cannot be calculated. o There will be two loans on this project, each representing subsequent draws. The first loan is $202,200 and the second loan is for $239,040. The Financial Overview box represents the aggregate amount of allloans to be secured by this property, givinga complete financial picture of the project. o This loan represents the second draw for the project. o Each draw on this project is structured as an individual loan. We will fund each draw from our own capitalor credit facilities as and when requested by the Borrower,provided conditions for each draw are met as described in our OfferingCircular. Once a draw has been approved and funded, we will then sell the corresponding series of LROs on our platform,each of which will be due 12 months from the time such series of LRO is deemed issued,as described in our Offering Circular. Subsequent draws are expected to be requested every two months from the date we advanced the first draw, but may be requested sooner,or later, depending on the progress of construction. o The event of default on one Groundfloor note secured by this property will trigger default on all Groundfloor notes secured by this property.However, LRO holders investingin LROs corresponding to notes secured by this property have different priorities in any recovery. Holders of LRO series 293 Ormond Street Southeast [1st] share first priority and any recovery will be distributed on a pro-rata basis to these LRO holders first. Holders of LRO Series 293 Ormond Street Southeast [2nd] have a subordinated priority,and any remaining recovery willbe distributed to them if and when LRO holders of the first priority notes are made whole. o Please consult the OfferingCircular. for further discussion of generalrisk factors. CLOSNI G CONOITIONS o Loan is conditioned upon a clean title search subject to liens held by the primary lender and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time),including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS PROPERTY DESCRIPTION il)r SE I.I.I.V ...I .Ill\ "' . View larger map Augu.sra Ave SE :e --\ !2 ''Borrower intends to sell the property to repay the Groundfloor loan. Michelle OGe"glemdnck Ave se INVEST NOW As Complete (ARV) $675,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value$675,000 TotalCosts ®$483,985 0% Skin-in-theFirst Lien Second LienCushi on (2) Game ®Loan Loan Purchase Price$250,000 Loan ToARV64.5% Loan To Total (2) {2) (2) VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score (2)10 Quality of Valuation Report4 Skin-in-the·Game (2)10 Location 8 Borrower Experience5 Borrower Commitment (2)1 GRADE FACTORS FINANCIAL OVERVIEW .__ se_c_o_n_d_Li_e_n ,ll $ ,;..:.B.:::::a.:::1.l'-'o-c:o..::.:::.n.:.p..:..:a::.:.y:::.m:.:._e_nt - prn-i cpi a1 a_n_d_i_nte-re--st' BORROWER_ . . returned on repayment I due at maturity. Blackstone RealtY. LLC Click here to view the LRO Agreement INVEST NOW Purchase & Renovation

289 800 BORROWER 1 . . returned on repayment/ due at maturity. Project Cost ' " c.(,v . View larger map !-!> m SE 111hSt f' SE 1111' SE 111h TCluace ; c,tv" e;, , Click here to view the LRO Agreement ., Map data 02020 Google Terms of Use Report a map error ' Value of Properties ® TotalDebt ® Revenue ® Brenda Schlosser Completed Projects Average Project II II ° 1-----'11 1 Ll $230K ---'II I N/A $181K CONTAINEDTHEREIN IS HELPFUL,WE DO NOT USE IT AS THE SOLE BASIS FORA FUNDING DECISION. THECOMPANY PLAYED NO ROLE IN THE PREPARATIONOF ANY OF THE VALUATIONSOURCESOR ANY OTHER MATERIALS PROVIDED BY THE BORROWER. WHILE WE BELIEVE THE DATA PLATINUM BAY HOLDINGS 20150804,FINANCIAL DATA PROJECTS/REVENUE LLC DATE OF FORMATION * 02/19/2016 Gross Margin% ® IPRINCIPALGROUNOFLOOR HISTORY *HISTORICAL AVERAGES FOCUS Fix & FlipLoans Funded ®Loans Repaid ®PerYear ®Revenue ® On Time Average ProjectAverage Total Repayment ®Time ®Project Costs ® Ll _ 8 m_on_t_h_s Reportingperiod:three years ending 2019 21.2% $27.5K $230K Reporting period: 2019 Reporting date: 12/31/19 PROJECT SPECIFIC RISK FACTORS o The Borrower was advanced the money it needed to purchase this property on February 5th,2020 by Groundfloor Finance Inc.("Groundfloor';"we;·"us," or "our") or a wholly-owned subsidiary of Groundfloor. The Borrower is now in possession of the property.If this offering is fully subscribed,Groundfloor will continue to administer and service the loan as further described in the OfferingCircular. o The renovation of the property may be extensive,and therefore subject to delays and other unexpected issues. o The renovation will require permitting, and permits may not be obtained on time or may be denied. o Please consult the OfferingCircular. for further discussion of general risk factors. CLOSING CONDITIONS o Loan is conditioned upon a clean title search and valid title insurance at the time of close. DEVELOPER FEES o We generally charge borrowers an origination fee (which typically ranges between 2% and 6% of the principal loan amount) and a servicing fee (which typically ranges between 0.5% and 2%) for our services. o We do not take a "spread" on any part of the interest payments. o Borrowers may capitalize the cost of closing into the principalamount of their request. These closing costs typically range from $500 to $1500. o Unless otherwise limited by applicable law,we will charge a penalty of up to 2% for any extension made to the Borrower. See "Fees and Related Expenses" in the Offering Circular. SEC FlUNG INFORMATION o The series of LROs corresponding to this Project are offered pursuant to Post Qualification Amendment No.5 to the Offering Circular dated November 15,2019 (each,as amended and supplemented from time to time), including the documents incorporated by reference therein.You may access and review these documents on the InternalFilings Directory located on our Platform. MISCELLANEOUS '<,., Address: 1414 SE 12TH TERRACE,CAPE CORAL,FL 33990 - "")"' SE 1211'1 Sl1414 Solrtheast5The Borrower intends to use the loan proceeds to purchase and renovate the property.Upon completion, the SE 12th Terrace12th Terrace , 2,"renac Borrower intends to sell the property to repay the Groundfloor loan. :.13thStDenny's • sE ""'51 se 13th TerraceTwisted Lot se 1.un stGo glese 14th st INVEST NOW PROPERTY DESCRIPTION As Complete (ARV) $414,000 Broker's Price Opinion Borrower Provided Appraisal Borrower Provided Comps After Value (ARV) (1} $414,000 TotalCosts ®$333,950 0% ------' Skin-in-theFirst Lien LoanCushion ® Game ® Purchase Price$256,500 Loan ToARV70.0% Purchase Date02/05/2020Loan To Total86.4% ® (1} ® VALUATION REPORTS The following factors determine in part how the loan was graded: (indescending order of importance) Loan To ARV Score ®10 Quality of Valuation Report4 Skin-in-the·Game ®10 Location 8 Borrower Experience5 Borrower Commitment ®1 GRADE FACTORS FINANCIAL OVERVIEW RateLoan ToARV Loan AmountInvestors Purpose Loan Position TotalLoan AmountRepayment Terms _ _ F·_rs_t_L_ei_n _JII $ ,,...B.:.a-l.:l..o.._o_n_p_a_ym_ _ent - principa-1a_n_d_i_nte-re--st-, L Platinum Bav. Holding2 20150804, LLC Brenda Schlosser - principal Click here to view the LRO Agreement INVEST NOW Purchase & Renovation

*               *               *

Financial Statements

The following consolidated financial statements for the periods ended June 30, 2019, December 31, 2018 and December 31, 2017 and the notes thereto are added to the Offering Circular starting on page F-1:

GROUNDFLOOR REAL ESTATE 1, LLC

Condensed Financial Statements

June 30, 2019 and 2018

GROUNDFLOOR REAL ESTATE 1, LLC

Table of Contents

GROUNDFLOOR REAL ESTATE 1, LLC

Condensed Balance Sheets

See accompanying notes to condensed financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Condensed Statements of Operations

See accompanying notes to condensed financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Condensed Statements of Member’s (Deficit) Equity

See accompanying notes to condensed financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Condensed Statements of Cash Flows

See accompanying notes to condensed financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

GROUNDFLOOR Real Estate 1, LLC (the “Company”), a Georgia limited liability company formed on December 16, 2016. The Company is a wholly-owned subsidiary of GROUNDFLOOR Finance Inc. (“GROUNDFLOOR”), a Georgia corporation.

Description of Business

GROUNDFLOOR has developed an online investment platform designed to crowdsource financing for real estate development projects, which GROUNDFLOOR utilizes to provide investment opportunities to investors. With this online investment platform, investors are able to choose between multiple real estate development investment opportunities, and developers of the projects are able to obtain financing. GROUNDFLOOR believes this method of financing real estate has many advantages including reduced project origination and financing costs, lower interest rates for real estate development financing, and attractive returns for investors. GROUNDFLOOR will identify which loans it seeks to originate, and will sell limited recourse obligations (“LROs”) which correspond to those loans. GROUNDFLOOR’s primary business is the sale of LROs and the Company’s primary purpose is the servicing of loans which correspond to those LROs.

Basis of Accounting and Liquidity

The Company’s condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

Operations since inception have consisted primarily of organizing the Company. The accompanying condensed financial statements have been prepared on a basis which assumes that the Company will continue as a going concern. The Company has earned limited revenue since its inception. The ultimate success of the Company is dependent on management’s ability to develop and market its products and services at levels sufficient to generate operating revenues in excess of expenses. Management evaluated the condition of the Company and has determined that until such sales levels can be achieved, management will need to secure additional capital to continue to fund product development and sales and marketing.

Management intends to fund operations by capital obtained from GROUNDFLOOR. However, there are no assurances that the Company can be successful in obtaining the additional capital or such financing will be on terms favorable or acceptable to the Company or GROUNDFLOOR. These matters raise substantial doubt about the ability of the Company to continue as a going concern.

The condensed financial statements do not include any adjustments that might result from the outcome of uncertainties described in the condensed financial statements. In addition, the condensed financial statements do not include any adjustments relating to the recoverability and classification of assets nor the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of Condensed Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue primarily results from fees earned on the loans to the Developers (the “Loans”). Fees include “Loan servicing revenue” which are paid by the Developers.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loan Servicing Revenue

The loan servicing revenue is recognized by the Company, upon recovery, for costs incurred in servicing the Developer’s Loan, including managing payments to and from Developers and payments to Investors. The Company records loan servicing revenue as a component of revenue when collected.

Interest Income on Loans to Developers and Interest Expense on Limited Recourse Obligations

The Company recognizes “Interest income” on Loans and “Interest expense” on the corresponding LROs (if issued by GROUNDFLOOR Real Estate 1, LLC) using the accrual method based on the stated interest rate to the extent the Company believes it to be collectable. For the purposes of these Condensed Financial Statements, “Limited recourse obligations, net” refers to LROs. LROs are the Company’s currently registered securities.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2018 and 2017. From time to time, the Company could maintain cash deposits in excess of federally insured limits. The Company believes credit risk related to its cash and cash equivalents to be minimal.

Loans to Developers and Limited Recourse Obligations

“Loans to developers, net” and the corresponding “Limited recourse obligations, net”, used to fund the Loans are originally recorded at outstanding principal. The interest rate associated with a Loan is the same as the interest rate associated with the corresponding LROs.

The Company’s obligation to pay principal and interest on an LRO is equal to the pro rata portion of the total principal and interest payments collected from the corresponding Loan. The Company obtains a lien against the property being financed and attempts reasonable collection efforts upon the default of a Loan. The Company’s lien may be senior or junior to the Borrower’s other financing obligations. The Company is not responsible for repaying “Limited recourse obligations, net” associated with uncollectable “Loans to developers, net”. Amounts collected related to a Loan default are returned to the Investors based on their pro rata portion of the corresponding LROs, if applicable, less collection costs incurred by the Company.

The Loan and corresponding LROs are recorded on the Company’s Condensed Balance Sheets to “Loans to developers, net” and “Limited recourse obligations, net”, respectively, once the Loan has closed. Loans are considered closed after the promissory note for that Loan has been signed and the security interest has been perfected.

Nonaccrual and Past Due Loans

“Interest income” is accrued on the outstanding principal balance. The accrual of interest on “Loans to developers, net” and corresponding “Limited recourse obligations, net” is discontinued when, in management’s opinion, the borrower may be unable to make payments as they become due, unless the Loan is well secured and in the process of collection. “Interest income” and “Interest expense” on the “Loans to developers, net” and the corresponding “Limited recourse obligations, net” are discontinued and placed on nonaccrual status at the time the Loan is 90 days delinquent unless the Loan is well secured and in process of collection. The “Loans to developers, net” and corresponding “Limited recourse obligations, net” are charged off to the extent principal or interest is deemed uncollectible. Non-accrual Loans and Loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. All interest accrued, but not collected for “Loans to developers, net” and “Limited recourse obligations, net” that are placed on nonaccrual or charged off, is reversed against “Interest income” and the corresponding LROs recorded “Interest expense”.

Interest income collected on nonaccrual Loans is applied against principal until the Loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include Loans on nonaccrual status. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial position, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as collateral value and guarantor support. The Company individually assesses for impairment all nonaccrual Loans and all Loans in fundamental default. If a Loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the Loan is reported net, at the present value of estimated future cash flows using the Loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

Other Real Estate Owned

Foreclosed assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized up to the fair value of the property, whereas costs relating to holding foreclosed assets and subsequent adjustments to the value are charged to operations. 

Income Taxes

As a limited liability company, the Company is not a taxpaying entity for federal income tax purposes. Accordingly, its taxable income or losses are allocated to its member based on the provisions of the operating agreement and are included in the members’ income tax returns. The condensed financial statements, therefore, do not include a provision for income taxes. Similar provisions apply for state income tax purposes.

Management has assessed the effect of the guidance provided by U.S. GAAP on accounting for uncertainty in income taxes. Management has evaluated all tax positions that could have a significant effect on the condensed financial statements and determined the Company had no uncertain income tax positions at June 30, 2019 and December 31, 2018.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

The Company has evaluated the recent pronouncements issued since filing its annual audited Condensed Financial Statements for the year-ended December 31, 2018 and believes that none of them will have a material effect on the Company’s Condensed Financial Statements.

NOTE 2: LOANS TO DEVELOPERS, NET

The Company purchases notes that provide financing to borrowers for real estate-related loans. Real estate loans include loans for unoccupied single family or multifamily renovations costing between $20,000 and $2,000,000 over six months to a year.

The Company uses three performance states to better monitor the credit quality of outstanding loans. Outstanding loans are characterized as follows:

Current - This status indicates that no events of default have occurred, all payment obligations have been met or none are yet triggered.

Workout - This status indicates there has been one or more payment defaults on the Loan and the Company has negotiated a modification of the original terms that does not amount to a fundamental default.

Fundamental Default - This status indicates a Loan has defaulted and there is a chance the Company will not be able to collect 100% of the principal amount of the Loan by the extended payment date of the corresponding LROs. The Company has commenced a formal foreclosure process to secure the real estate property. 

GROUNDFLOOR uses a proprietary grading algorithm to assign one of seven letter grades, from A to G, to each Loan. The letter grade generally reflects the overall risk of the Loan, with A indicating less risk and G indicating higher risk.

The following table presents the carrying amount of “Loans to developers, net” by letter grade and performance state as of June 30, 2019 and December 31, 2018, respectively:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 2: LOANS TO DEVELOPERS, NET (continued)

Nonaccrual and Past Due Loans

A Loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. “Interest receivable on loans to developers” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest income” and the corresponding “Accrued interest on limited recourse obligations” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest expense”. Interest income on Loans that are classified as nonaccrual is subsequently applied to principal until the Loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due Loans are loans whose principal or interest is past due 30 days or more. As of June 30, 2019, the Company placed Loans of $157,070 recorded to “Loans to developers, net” on nonaccrual status.

The following table presents an analysis of past due Loans as of June 30, 2019 and December 31, 2018:

Impaired Loans

The following is a summary of information pertaining to impaired loans as of June 30, 2019:

The following table presents an analysis of information pertaining to impaired loans as of June 30, 2019:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 2: LOANS TO DEVELOPERS, NET (continued)

The following is a summary of information pertaining to impaired loans as of December 31, 2018:

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2018:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 2: LOANS TO DEVELOPERS, NET (continued)

Credit Quality Monitoring

The following table presents “Loans to developers, net” by performance state as of June 30, 2019 and December 31, 2018:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Condensed Financial Statements

NOTE 3: OTHER REAL ESTATE OWNED

“Other real estate owned” in the Company’s Condensed Balance Sheet was $23,569 at June 30, 2019 and December 31, 2018.

NOTE 4: RELATED PARTY ARRANGEMENTS

GROUNDFLOOR Finance Inc.

GROUNDFLOOR will receive fees and compensation in connection with the Company’s Offering, and the servicing and sale of the Company’s LROs.

The Company will also reimburse GROUNDFLOOR for actual expenses incurred on behalf of the Company in connection with the servicing of a Loan, to the extent not reimbursed by the borrower. The Company will reimburse GROUNDFLOOR for out-of-pocket expenses paid to third parties in connection with providing services to the Company. This does not include GROUNDFLOOR’s overhead, employee costs borne by GROUNDFLOOR, utilities or technology costs. For the six months ended June 30, 2019 and 2018, GROUNDFLOOR incurred $0 and $5,100 of costs on the Company’s behalf, respectively. No such costs were due and payable to GROUNDFLOOR as of June 30, 2019 and December 31, 2018, respectively.

GROUNDFLOOR GA Holdings LLC

GROUNDFLOOR GA Holdings LLC may close and fund a Loan prior to it being acquired by the Company. The ability to warehouse Loans allows us the flexibility to deploy the offering proceeds as funds are raised. The Company then will acquire such LROs at a price equal to the fair market value of the Loan (including reimbursements for servicing fees and accrued interest, if any), so there is no mark-up (or mark-down) at the time of purchase. 

NOTE 5: SUBSEQUENT EVENTS

Subsequent events were evaluated through September 27, 2019, the date the Condensed Financial Statements were available to be issued. On August 2, 2019, the Company recovered $23,569 in sale proceeds on real estate owned.

GROUNDFLOOR REAL ESTATE 1, LLC

Financial Statements

December 31, 2018 and 2017

GROUNDFLOOR REAL ESTATE 1, LLC
 

Table of Contents

Independent Auditors’ Report

To the Board of Directors

Groundfloor Real Estate 1, LLC
Atlanta, Georgia

We have audited the accompanying financial statements of Groundfloor Real Estate 1, LLC (the “Company”), which comprise the balance sheets as of December 31, 2018 and 2017, and the related statements of operations, member’s (deficit) equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not earned any significant revenues since its inception which result in substantial doubt about the ability of the Company to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans in regard to that matter also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

September 27, 2019

GROUNDFLOOR REAL ESTATE 1, LLC

Balance Sheets

See accompanying notes to financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Statements of Operations

See accompanying notes to financial statements

GROUNDFLOOR REAL ESTATE 1, LLC
 

Statements of Member’s (Deficit) Equity

See accompanying notes to financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Statements of Cash Flows

See accompanying notes to financial statements

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

GROUNDFLOOR Real Estate 1, LLC (the “Company”), a Georgia limited liability company formed on December 16, 2016. The Company is a wholly-owned subsidiary of GROUNDFLOOR Finance Inc. (“GROUNDFLOOR”), a Georgia corporation.

Description of Business

GROUNDFLOOR has developed an online investment platform designed to crowdsource financing for real estate development projects, which GROUNDFLOOR utilizes to provide investment opportunities to investors. With this online investment platform, investors are able to choose between multiple real estate development investment opportunities, and developers of the projects are able to obtain financing. GROUNDFLOOR believes this method of financing real estate has many advantages including reduced project origination and financing costs, lower interest rates for real estate development financing, and attractive returns for investors. GROUNDFLOOR will identify which loans it seeks to originate, and will sell limited recourse obligations (“LROs”) which correspond to those loans. GROUNDFLOOR’s primary business is the sale of LROs and the Company’s primary purpose is the servicing of loans which correspond to those LROs.

Basis of Accounting and Liquidity

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

Operations since inception have consisted primarily of organizing the Company. The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern. The Company has not earned limited revenue since its inception. The ultimate success of the Company is dependent on management’s ability to develop and market its products and services at levels sufficient to generate operating revenues in excess of expenses. Management evaluated the condition of the Company and has determined that until such sales levels can be achieved, management will need to secure additional capital to continue to fund product development and sales and marketing.

Management intends to fund operations by capital obtained from GROUNDFLOOR. However, there are no assurances that the Company can be successful in obtaining the additional capital or such financing will be on terms favorable or acceptable to the Company or GROUNDFLOOR. These matters raise substantial doubt about the ability of the Company to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of uncertainties described in the financial statements. In addition, the financial statements do not include any adjustments relating to the recoverability and classification of assets nor the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.

Revenue Recognition

Revenue primarily results from fees earned on the loans to the Developers (the “Loans”). Fees include “Loan servicing revenue” which are paid by the Developers.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loan Servicing Revenue

The loan servicing revenue is recognized by the Company, upon recovery, for costs incurred in servicing the Developer’s Loan, including managing payments to and from Developers and payments to Investors. The Company records loan servicing revenue as a component of revenue when collected.

Interest Income on Loans to Developers and Interest Expense on Limited Recourse Obligations

The Company recognizes “Interest income” on Loans and “Interest expense” on the corresponding LROs (if issued by GROUNDFLOOR Real Estate 1, LLC) using the accrual method based on the stated interest rate to the extent the Company believes it to be collectable. For the purposes of these Financial Statements, “Limited recourse obligations, net” refers to LROs. LROs are the Company’s currently registered securities.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2018 and 2017. From time to time, the Company could maintain cash deposits in excess of federally insured limits. The Company believes credit risk related to its cash and cash equivalents to be minimal.

Loans to Developers and Limited Recourse Obligations

“Loans to developers, net” and the corresponding “Limited recourse obligations, net”, used to fund the Loans are originally recorded at outstanding principal. The interest rate associated with a Loan is the same as the interest rate associated with the corresponding LROs.

The Company’s obligation to pay principal and interest on an LRO is equal to the pro rata portion of the total principal and interest payments collected from the corresponding Loan. The Company obtains a lien against the property being financed and attempts reasonable collection efforts upon the default of a Loan. The Company’s lien may be senior or junior to the Borrower’s other financing obligations. The Company is not responsible for repaying “Limited recourse obligations, net” associated with uncollectable “Loans to developers, net”. Amounts collected related to a Loan default are returned to the Investors based on their pro rata portion of the corresponding LROs, if applicable, less collection costs incurred by the Company.

The Loan and corresponding LROs are recorded on the Company’s Balance Sheets to “Loans to developers, net” and “Limited recourse obligations, net”, respectively, once the Loan has closed. Loans are considered closed after the promissory note for that Loan has been signed and the security interest has been perfected.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Nonaccrual and Past Due Loans

“Interest income” is accrued on the outstanding principal balance. The accrual of interest on “Loans to developers, net” and corresponding “Limited recourse obligations, net” is discontinued when, in management’s opinion, the borrower may be unable to make payments as they become due, unless the Loan is well secured and in the process of collection. “Interest income” and “Interest expense” on the “Loans to developers, net” and the corresponding “Limited recourse obligations, net” are discontinued and placed on nonaccrual status at the time the Loan is 90 days delinquent unless the Loan is well secured and in process of collection. The “Loans to developers, net” and corresponding “Limited recourse obligations, net” are charged off to the extent principal or interest is deemed uncollectible. Non-accrual Loans and Loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. All interest accrued, but not collected for “Loans to developers, net” and “Limited recourse obligations, net” that are placed on nonaccrual or charged off, is reversed against “Interest income” and the corresponding LROs recorded “Interest expense”.

Interest income collected on nonaccrual Loans is applied against principal until the Loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include Loans on nonaccrual status. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial position, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as collateral value and guarantor support. The Company individually assesses for impairment all nonaccrual Loans and all Loans in fundamental default. If a Loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the Loan is reported net, at the present value of estimated future cash flows using the Loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

Allowance for Uncollectable Loans and Undeliverable Limited Recourse Obligations

Payments to holders of LROs, as applicable, depend on the payments received on the corresponding Loans; a reduction or increase of the expected future payments on Loans will decrease or increase the reserve for the associated LROs. The Company recognizes a reserve for uncollectable Loans and corresponding reserve for undeliverable LROs in an amount equal to the estimated probable losses net of recoveries. The allowance is based on management’s estimates and analysis of historical bad debt experience, existing economic conditions, current loan aging schedules, and expected future write-offs, as well as an assessment of specific, identifiable Developer accounts considered at risk or uncollectible. Expected losses and actual charge-offs on Loans are offset to the extent that the Loans are financed by LROs, as applicable, that effectively absorb the related Loan losses.

“Loans to developers, net” are presented net of a reserve for doubtful accounts of $0 and $0 as of December 31, 2018 and 2017, respectively. “Limited recourse obligations, net” are presented net of a reserve for doubtful accounts of $35,054 and $0 as of December 31, 2018 and 2017, respectively.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

Other Real Estate Owned

Foreclosed assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized up to the fair value of the property, whereas costs relating to holding foreclosed assets and subsequent adjustments to the value are charged to operations.

Income Taxes

As a limited liability company, the Company is not a taxpaying entity for federal income tax purposes. Accordingly, its taxable income or losses are allocated to its member based on the provisions of the operating agreement and are included in the members’ income tax returns. The financial statements, therefore, do not include a provision for income taxes. Similar provisions apply for state income tax purposes.

Management has assessed the effect of the guidance provided by U.S. GAAP on accounting for uncertainty in income taxes. Management has evaluated all tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2018 and 2017.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which will be effective January 1, 2019, for the Company. The Company had the option to early adopt the ASU as of January 1, 2017. The guidance clarifies that revenue from contracts with customers should be recognized in a manner that depicts both the likelihood of payment and the timing of the related transfer of goods or performance of services. In March 2016, the FASB issued an amendment ASU 2016-12, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to the new revenue recognition guidance clarifying how to determine if an entity is a principal or agent in a transaction. In April 2016 ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing and May 2016 ASU 2016-12, Revenue from Contracts with Customers: Scope Improvements and Practical Expedients, the FASB further amended the guidance to include performance obligation identification, licensing implementation, collectability assessment and other presentation and transition clarifications. The effective date and transition requirements for the amendments is the same as for ASU 2014-09. The Company is currently evaluating the impact of this accounting standard update on its Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is effective. The Company is currently evaluating the impact this standard will have on the Company’s Financial Statements.

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 3: LOANS TO DEVELOPERS, NET

The Company purchases notes that provide financing to borrowers for real estate-related loans. Real estate loans include loans for unoccupied single family or multifamily renovations costing between $20,000 and $2,000,000 over six months to a year.

The Company uses three performance states to better monitor the credit quality of outstanding loans. Outstanding loans are characterized as follows:

Current - This status indicates that no events of default have occurred, all payment obligations have been met or none are yet triggered.

Workout - This status indicates there has been one or more payment defaults on the Loan and the Company has negotiated a modification of the original terms that does not amount to a fundamental default.

Fundamental Default - This status indicates a Loan has defaulted and there is a chance the Company will not be able to collect 100% of the principal amount of the Loan by the extended payment date of the corresponding LROs. The Company has commenced a formal foreclosure process to secure the real estate property.

GROUNDFLOOR uses a proprietary grading algorithm to assign one of seven letter grades, from A to G, to each Project. The letter grade generally reflects the overall risk of the Loan, with A indicating less risk and G indicating higher risk. The following table presents the carrying amount of “Loans to developers, net” by letter grade and performance state as of December 31, 2018 and 2017, respectively:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 3: LOANS TO DEVELOPERS, NET (continued)

Nonaccrual and Past Due Loans

A Loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. “Interest receivable on loans to developers” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest income” and the corresponding “Accrued interest on limited recourse obligations” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest expense”. Interest income on Loans that are classified as nonaccrual is subsequently applied to principal until the Loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due Loans are loans whose principal or interest is past due 30 days or more. As of December 31, 2018, the Company placed Loans of $157,070 recorded to “Loans to developers, net” on nonaccrual status.

The following table presents an analysis of past due Loans as of December 31, 2018 and 2017:

Impaired Loans

The following is a summary of information pertaining to impaired loans as of December 31, 2018:

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2018:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 3: LOANS TO DEVELOPERS, NET (continued)

The following is a summary of information pertaining to impaired loans as of December 31, 2017:

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2017:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 3: LOANS TO DEVELOPERS, NET (continued)

Credit Quality Monitoring

The following table presents “Loans to developers, net” by performance state as of December 31, 2018 and 2017:

GROUNDFLOOR REAL ESTATE 1, LLC
 

Notes to Financial Statements

NOTE 3: LOANS TO DEVELOPERS, NET (concluded)

Allowance for Loan Losses

The following table details activity in the allowance for loan losses for the years ended December 31, 2018 and 2017:

GROUNDFLOOR REAL ESTATE 1, LLC

Notes to Financial Statements

NOTE 4: OTHER REAL ESTATE OWNED

“Other real estate owned” in the Company’s Balance Sheet was $23,569 and $0 at December 31, 2018 and 2017, respectively. During the year ended December 31, 2018 the Company transferred $58,623 from “Loans to developers, net” to “Other real estate owned”. Other real estate owned met the held for sale criteria and have been recorded at the lower of carrying amount or fair value less cost to sell. There was no impact to the Company’s Statements of Operation from this transfer. The Company recorded a decrease of $35,054 to “Loans to developers, net” and an offsetting decrease to “Limited recourse obligations, net”.

NOTE 5: RELATED PARTY ARRANGEMENTS
 

GROUNDFLOOR Finance Inc.

GROUNDFLOOR will receive fees and compensation in connection with the Company’s Offering, and the servicing and sale of the Company’s LROs.

The Company will also reimburse GROUNDFLOOR for actual expenses incurred on behalf of the Company in connection with the servicing of a Loan, to the extent not reimbursed by the borrower. The Company will reimburse GROUNDFLOOR for out-of-pocket expenses paid to third parties in connection with providing services to the Company. This does not include GROUNDFLOOR’s overhead, employee costs borne by GROUNDFLOOR, utilities or technology costs. For the year ended December 31, 2018 and 2017, GROUNDFLOOR incurred $5,100 and $1,950 of costs on the Company’s behalf, respectively. No such costs were due and payable to GROUNDFLOOR as of December 31, 2018 and 2017, respectively.

GROUNDFLOOR GA Holdings LLC

GROUNDFLOOR GA Holdings LLC may close and fund a Loan prior to it being acquired by the Company. The ability to warehouse Loans allows us the flexibility to deploy the offering proceeds as funds are raised. The Company then will acquire such LROs at a price equal to the fair market value of the Loan (including reimbursements for servicing fees and accrued interest, if any), so there is no mark-up (or mark-down) at the time of purchase.

NOTE 6: SUBSEQUENT EVENTS

Subsequent events were evaluated through September 27, 2019, the date the Financial Statements were available to be issued. On August 2, 2019, the Company recovered $23,569 in sale proceeds on real estate owned.

GROUNDFLOOR FINANCE INC.

AND SUBSIDIARIES

Condensed Consolidated Financial Statements

June 30, 2019 and 2018

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Table of Contents

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

See accompanying notes to condensed consolidated financial statements

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

See accompanying notes to condensed consolidated financial statements

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholder’s Deficit

See accompanying notes to condensed consolidated financial statements

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows