AN OFFERING CIRCULAR PURSUANT TO THE REQUIREMENTS OF REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING INVESTORS A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

As filed with the Securities & Exchange Commission on March 12, 2020

OFFERING CIRCULAR

For

CIRCLE OF WEALTH FUND III LLC

an Idaho Limited Liability Company

CIRCLE OF WEALTH FUND III LLC (the “Fund” or “Company”) is an Idaho limited liability company. The Company is offering (the “Offering”) by means of this offering circular (the “Offering Circular”) to repurchase __ units of limited liability company membership interests (“Membership Interests”) and further offer Membership Interests on a “best efforts” and ongoing basis to investors who meet the Investor Suitability standards as set forth herein. (See “Investor Suitability” below.) The Company will offer Membership Interests through a third party online platform https://invest.securedinvestmentcorp.com (“Platform”), without any brokers or selling commissions. (See “Terms of the Offering” below.)

The Fund is offering to repurchase 625 units of Membership Interests from members (“Members”) who purchased Membership Interests between August 30, 2019 and December 20, 2019 (the “Purchase Period”). The repurchase price is $1,000 per unit, plus interest at the current statutory rate, which varies from state to state as is set out below. The rescission offer will expire on December 20, 2020. The initial offering of Membership Interests in the Fund was made after the Offering was qualified by the Securities and Exchange Commission (“SEC”) on August 30, 2019. However, the Offering Circular submitted to the SEC omitted the Consent Order (as described below), thereby causing the Offering to be ineligible for an exemption from registration under Regulation A Tier 2. This may be a violation of the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and, if a violation, gives rise to rescission rights under Section 12(a)(1) of the Securities Act. We are offering Members the opportunity to rescind, the transactions that occurred during the Purchase Period. Members who accept the rescission offer must also return the Membership Interests purchased. Interest will accrue on a monthly basis. We intend to use the legal rates of interest based on the state in which a Member resides on the date that the Member completed the subscription agreement (“Subscription Agreement”). If your state of residence has changed since you completed the award transaction, the applicable interest rate will be the legal rate of interest for your current state of residence. These interest rates are set forth under “Rescission Offer – Rescission Offer and Price.”

The minimum investment amount per Investor is One Thousand Dollars ($1,000) for a total of Fifty Thousand (50,000) units of Membership Interests. The units of Membership Interests offered by the Company may also be purchased by the Members pursuant to the reinvestment plan provided herein. The Offering price for reinvestment will be One Thousand Dollars ($1,000) per Membership Interests. The Member may purchase additional Membership Interests on a fractional basis. (See “Terms of the Offering – Election to Reinvest” below). Although the Company does not intend to list the Membership Interests for trading on a stock exchange or other trading market, the Company has adopted a redemption plan designed to provide Members with limited liquidity for their investment in the Company’s Membership Interests. (See “Terms of the Offering – Withdrawal / Redemptions” below.)

The Company will be managed by Secured Investment Corp., a Wyoming corporation (hereinafter referred to as the “Manager”). As further described in the Offering Circular, the Company has been organized to: (i) make, fund, originate, refinance, purchase, sell and/or otherwise acquire loans (“Loans”) secured by first or junior position deeds of trust or mortgages on non-owner occupied residential and commercial properties located throughout the United States; and (ii) acquire, develop, rehabilitate, and/or hold and/or sell non-owner occupied residential real estate located throughout the United States. (See “Lending Standards and Policies” and “General Standards for Purchasing Properties” below).

The Offering will commence immediately upon qualification of the Offering by the Securities and Exchange Commission (the “Effective Date”) and will terminate at the discretion of the Manager. The maximum amount of the Offering shall not exceed $49,375,000 in any Twelve (12) month period (“Maximum Offering Amount”) in accordance with Tier II of Regulation A as set forth under the Securities Act of 1933, as amended, (“Reg A Tier II”). The Company intends to offer the Membership Interests described herein on a continuous and ongoing basis pursuant to Rule 251(d)(3)(i)(f).  Further, the acceptance of Investor subscriptions, may be briefly paused at times to allow the Company to effectively and accurately process and settle subscriptions that have been received.  (See “Terms of the Offering” below.) The Company may increase the Maximum Offering Amount at its sole and absolute discretion, subject to qualification by the SEC of a post-qualification amendment.

Prior to this Offering, there has been no public market for the Membership Interests, and none is expected to develop. The Offering price is arbitrary and does not bear any relationship to the value of the assets of the Company. The Company does not currently have plans to list any Membership Interests on any securities market. Investing in the Membership Interests involves risk, some of which are set forth below. See the section titled “Risk Factors” to read about the factors an investor should consider prior to purchasing any Membership Interests.

Prospective investors (“Investors”) who execute a subscription agreement (“Subscription Agreement”) to invest in the Company will become a member of the Company (“Member”) once the Manager deposits the investor’s investment into the Company’s main operating bank account and subject to terms and conditions in the Offering Circular and Subscription Agreement.

Generally, no sale may be made in this Offering if the aggregate purchase price paid is more than Ten Percent (10%) of the greater of the investor’s annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that the investment does not exceed applicable thresholds, Investors are encouraged to review rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, Investors are encouraged to refer to www.investor.gov.

In addition, an investment in the Company is subject to restrictions on withdrawal (See “Summary of the Operating Agreement – Withdrawal / Redemption” below.) Subject to the terms and conditions provided herein, Members will have the option to either receive income distributions from the Company or reinvest their distributable share of Company earnings back into the Company. As stated above, the Offering price for reinvestment will be One Thousand Dollars ($1,000) per Membership Interests. The Member may purchase fractional interests of Membership Interests provided that the Member has already purchased a minimum of One (1) Membership Interest and has elected to reinvest distributions received from the Company at the time of subscription. For example, if the Company allocated One Hundred Dollars ($100) to a Member for distribution, and the Member had elected to reinvest its shares at the time of subscription, such Member may reinvest to purchase One-Tenth of One (1/10^th of 1) Membership Interests. (See “Preferred Return, Cash Distributions; Election to Reinvest” below.) Reinvestments of distributions will be allowed to the extent that the Offering remains ongoing. Members will be allowed to withdraw and redeem their Membership Interests as set forth below. (See “Terms of the Offering – Withdrawal / Redemptions” below.)

The Manager will receive compensation and income from the Company and is subject to certain conflicts of interest. (See “Risk Factors”, “Manager’s Compensation” and “Conflicts of Interest” below.) Investing in the Membership Interests is speculative and involves substantial risks. Prospective Investors should purchase these securities only if they can afford a complete loss of their investment. (See “Risk Factors” below.) There are material income tax risks associated with investing in the Company that prospective investors should consider. (See “Income Tax Considerations” below.)

As of the date of this Offering Circular, the Company has not engaged a transfer agent, and does not intend to engage a transfer agent until such time as the Company is required to do so in order to satisfy the conditional exemption contained in Rule 12g5-1(a)(7) of the Securities Exchange Act of 1934, as applicable, or the Exchange Act.

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

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”) 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 SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THIS INVESTMENT INVOLVES A DEGREE OF RISK THAT MAY NOT BE SUITABLE FOR ALL PERSONS. ONLY THOSE INVESTORS WHO CAN BEAR THE LOSS OF A SIGNIFICANT PORTION OF THEIR INVESTMENT SHOULD PARTICIPATE IN THE INVESTMENT. (SEE “RISK FACTORS” BELOW.)

THE SECURITIES OFFERED HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE REGULATORY AUTHORITY NOR HAS ANY STATE REGULATORY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION. THIS OFFERING CIRCULAR CONTAINS INFORMATION AND DISCLOSURES IN ACCORDANCE TO THE FORMAT SET FORTH IN SEC FORM S-11.

GENERALLY, NO SALE MAY BE MADE TO INVESTORS IF THE AGGREGATE PURCHASE PRICE BY INVESTORS EXCEEDS $49,375,000 ANNUALLY, PURSUANT TO THE TERMS OF RULE 251 OF REGULATION A TIER II SET FORTH UNDER THE SECURITIES ACT OF 1933 (THE “ACT”).

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THAT INFORMATION AND THOSE REPRESENTATIONS SPECIFICALLY CONTAINED IN THIS OFFERING CIRCULAR; ANY OTHER INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON. ANY PROSPECTIVE PURCHASER OF THE SECURITIES WHO RECEIVES ANY OTHER INFORMATION OR REPRESENTATIONS SHOULD CONTACT THE COMPANY IMMEDIATELY TO DETERMINE THE ACCURACY OF SUCH INFORMATION AND REPRESENTATIONS. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF THIS OFFERING CIRCULAR SET FORTH ABOVE.

PROSPECTIVE PURCHASERS SHOULD NOT REGARD THE CONTENTS OF THIS OFFERING CIRCULAR OR ANY OTHER COMMUNICATION FROM THE COMPANY AS A SUBSTITUTE FOR CAREFUL AND INDEPENDENT TAX AND FINANCIAL PLANNING. EACH POTENTIAL INVESTOR IS ENCOURAGED TO CONSULT WITH HIS, HER OR ITS OWN INDEPENDENT LEGAL COUNSEL, ACCOUNTANT AND OTHER PROFESSIONALS WITH RESPECT TO THE LEGAL AND TAX ASPECTS OF THIS INVESTMENT AND WITH SPECIFIC REFERENCE TO HIS, HER OR ITS OWN TAX SITUATION, PRIOR TO SUBSCRIBING FOR THE MEMBERSHIP INTERESTS. THE PURCHASE OF MEMBERSHIP INTERESTS BY AN INDIVIDUAL RETIREMENT ACCOUNT, KEOGH PLAN OR OTHER QUALIFIED RETIREMENT PLAN INVOLVES SPECIAL TAX RISKS AND OTHER CONSIDERATIONS THAT SHOULD BE CAREFULLY CONSIDERED. INCOME EARNED BY QUALIFIED PLANS AS A RESULT OF AN INVESTMENT IN THE COMPANY MAY BE SUBJECT TO FEDERAL INCOME TAXES, EVEN THOUGH SUCH PLANS ARE OTHERWISE TAX EXEMPT. (SEE “INCOME TAX CONSIDERATIONS” AND “ERISA CONSIDERATIONS.”)

THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR HAS BEEN SUPPLIED BY THE COMPANY. THIS OFFERING CIRCULAR CONTAINS SUMMARIES OF DOCUMENTS NOT CONTAINED IN THIS OFFERING CIRCULAR, BUT ALL SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCES TO THE ACTUAL DOCUMENTS. COPIES OF DOCUMENTS REFERRED TO IN THIS OFFERING CIRCULAR, BUT NOT INCLUDED AS AN EXHIBIT, WILL BE MADE AVAILABLE TO QUALIFIED PROSPECTIVE INVESTORS UPON REQUEST.

RULE 251(D)(3)(I)(F) DISCLOSURE. RULE 251(D)(3)(I)((F) PERMITS REGULATION A OFFERINGS TO CONDUCT ONGOING CONTINUOUS OFFERINGS OF SECURITIES FOR MORE THAN THIRTY (30) DAYS AFTER THE QUALIFICATION DATE IF: (1) THE OFFERING WILL COMMENCE WITHIN TWO (2) DAYS AFTER THE QUALIFICATION DATE; (2) THE OFFERING WILL BE MADE ON A CONTINUOUS AND ONGOING BASIS FOR A PERIOD THAT MAY BE IN EXCESS OF THIRTY (30) DAYS OF THE INITIAL QUALIFICATION DATE; (3) THE OFFERING WILL BE IN AN AMOUNT THAT, AT THE TIME THE OFFERING CIRCULAR IS QUALIFIED, IS REASONABLY EXPECTED TO BE OFFERED AND SOLD WITHIN TWO (2) YEARS FROM THE INITIAL QUALIFICATION DATE; AND (4) THE SECURITIES MAY BE OFFERED AND SOLD ONLY IF NOT MORE THAN THREE (3) YEARS HAVE ELAPSED SINCE THE INITIAL QUALIFICATION DATE OF THE OFFERING, UNLESS A NEW OFFERING CIRCULAR IS SUBMITTED AND FILED BY THE COMPANY PURSUANT TO RULE 251(D)(3)(I)((F) WITH THE SEC COVERING THE REMAINING SECURITIES OFFERED UNDER THE PREVIOUS OFFERING; THEN THE SECURITIES MAY CONTINUE TO BE OFFERED AND SOLD UNTIL THE EARLIER OF THE QUALIFICATION DATE OF THE NEW OFFERING CIRCULAR OR THE ONE HUNDRED EIGHTY (180) CALENDAR DAYS AFTER THE THIRD ANNIVERSARY OF THE INITIAL QUALIFICATION DATE OF THE PRIOR OFFERING CIRCULAR.

THE COMPANY INTENDS TO OFFER THE MEMBERSHIP INTERESTS DESCRIBED HEREIN ON A CONTINUOUS AND ONGOING BASIS PURSUANT TO RULE 251(D)(3)(I)(F). PURSUANT TO RULE 251(D)(3)(I)(F), THE COMPANY INTENDS TO COMMENCE THE OFFERING IMMEDIATELY AND NO LATER THAN TWO (2) DAYS FROM THE INITIAL QUALIFICATION DATE. THE COMPANY REASONABLY EXPECTS TO OFFER AND SELL THE SECURITIES STATED IN THIS OFFERING CIRCULAR WITHIN TWO (2) YEARS FROM THE INITIAL QUALIFICATION DATE.

ANY REMAINING SECURITIES THAT ARE NOT SOLD IN THIS OFFERING SHALL BE INCORPORATED INTO A FUTURE OFFERING CIRCULAR AFTER TWO (2) YEARS FROM THE INITIAL QUALIFICATION DATE TO “INCLUDE AS PART OF SUCH NEW OFFERING CIRCULAR ANY UNSOLD SECURITIES COVERED BY THE EARLIER OFFERING CIRCULAR BY IDENTIFYING ON THE COVER PAGE OF THE NEW OFFERING CIRCULAR OF THE LATEST AMENDMENT, THE AMOUNT OF SUCH UNSOLD SECURITIES BEING INCLUDED.”

CERTAIN TERMS OF THE OFFERING

1. The Offering price to investors was arbitrarily determined by the Manager.

2. The Company will not use an underwriter for the sale of any Membership Interests.

3. Membership Interests will be offered and sold directly by the Company, the Manager and the Company’s and Manager’s respective officers and employees. No commissions for selling Membership Interests will be paid to the Company, the Manager or the Company’s or Manager’s respective officers or employees. While most Membership Interests are expected to be offered and sold directly by the Company, the Manager and their respective officers and employees, the Company or Manager has reserved the right to offer and sell Membership Interests through the services of independent broker/dealers who are member firms of the Financial Industry Regulatory Authority (“FINRA”). As of the date of this Offering Circular, the Company or Manager has not engaged any broker-dealer, and has no agreement for paying a broker-dealer commissions or fees. In the event the Company enters into an agreement with a licensed broker-dealer, the Company will amend the Offering Circular and other necessary documents, and notify Investors of such engagement. It is anticipated that the customary and standard commissions of a licensed broker-dealer may be up to Eight Percent (8%) of the proceeds received for the sale of Membership Interests. Notwithstanding the foregoing, the amount and nature of commissions payable to broker/dealers is expected to vary in specific instances and may be lower than the one listed herein. The Investor who is admitted to the Company through such broker/dealer (and not the Company nor the Manager) will be responsible for all such commissions payable to broker/dealers (and such payments may reduce the Investor’s invested capital).

4. Net proceeds to the Company do not reflect the deduction of organization and offering expenses. The Company intends to reimburse the Manager of organization and Offering costs and expenses. As of the date of this Offering Circular, the Company or Manager has not engaged any broker-dealer, and has no agreement for paying a broker-dealer commissions or fees. In the event the Company enters into an agreement with a licensed broker-dealer, the Company will amend the Offering Circular and other necessary documents, and notify Investors of such engagement. It is anticipated that the customary and standard commissions of up to Eight Percent (8%) of the value of Membership Interests may be sold by FINRA broker/dealers, which may be paid by Investors who are in admitted to the Company through such broker/dealer. Notwithstanding the foregoing, if an investor seeks to purchase Membership Interests via an individual retirement account, 401(k), Keogh plans, or other similar tax exempt vehicles for a purchase price of less than Fifty Thousand Dollars ($50,000) the Company will charge an additional processing fee of Two Hundred Fifty Dollars ($250). Such investors will be responsible to pay this in addition to their purchase of Membership Interests.

5. The Maximum Offering Amount for the Company is $49,375,000 in any Twelve (12) month period. The Company may increase the Maximum Offering Amount at its sole and absolute discretion, subject to qualification by the SEC of a post-qualification amendment.

FOR RESIDENTS OF ALL STATES. THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN ANY PARTICULAR STATE. THIS OFFERING CIRCULAR MAY BE SUPPLEMENTED BY ADDITIONAL STATE LEGENDS. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE ADVISED TO CONTACT THE COMPANY FOR A CURRENT LIST OF STATES IN WHICH OFFERS OR SALES MAY BE LAWFULLY MADE. AN INVESTMENT IN THIS OFFERING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF FINANCIAL RISK. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSIDER ALL OF THE RISK FACTORS DESCRIBED BELOW.

UNITED STATES TERRITORIES AND POSSESSIONS. THESE SECURITIES ARE NOT AUTHORIZED FOR OFFERING OR SALE IN ANY TERRITORY OR POSSESSION OF THE UNITED STATES IN LIEU OF APPLICABLE SECURITIES LAWS TO THE CONTRARY. SECURITIES AND/OR CAPITAL GUARDIANSHIPS ARE NOT AUTHORIZED FOR SALE IN SUCH TERRITORIES OR POSSESSIONS.

TABLE OF CONTENTS

EXHIBITS

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

The Membership Interests are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Act). As a Tier 2 Offering pursuant to Regulation A under the Act, this Offering is exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that the Membership Interests offered hereby are offered and sold only to “qualified purchasers” or at a time when the Membership Interests are listed on a national securities exchange, if at all.

“Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D; and (ii) all other non-accredited Investors so long as their investment in the Membership Interests does not represent more than Ten Percent (10%) of the greater of the Investor’s, alone or together with a spouse, annual income or net worth (excluding the value of the Investor’s primary residence and any loans secured by the residence (up to the value of the residence)), or Ten Percent (10% ) of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).

The Membership Interests are offered hereby and sold to Investors that are within the both categories (i.e., Accredited Investors and non-accredited Investors whose investment in the Membership Interests does not represent more than Ten Percent (10%) of the applicable amount). Accordingly, the Company reserves the right to reject any Investor’s subscription in whole or in part for any reason, including if the Company determines in its sole and absolute discretion that such Investor is not a “qualified purchaser” for purposes of Regulation A.

For purposes of determining whether a potential Investor is a “Qualified purchaser” (who is not an Accredited Investor), annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an Investor’s home, home furnishings and automobiles.

Forward Looking Statements

Investors should not rely on forward-looking statements because they are inherently uncertain. Investors should not rely on forward-looking statements in this Offering Circular. This Offering Circular contains forward-looking statements that involve risks and uncertainties. We use words such as “anticipated,” “projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” “plans” “future” “intends,”, “should,” “can”, “could”, “might”, “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which may apply only as of the date of this Offering Circular.

RESCISSION OFFER

Background

Under Commission rules, an issuer that is offering securities on a continuous basis under Rule 262(d) of Regulation A must include a description of any matters that would have triggered disqualification under Rule 262 (a)(3) and (5) but occurred before June 19, 2015. The company did not include in its offering statement that was qualified by the Commission on August 30, 2019 that a Washington Department of Financial Institutions (“DFI”) consent order (“Consent Order”) would have disqualified the Fund as a bad actor but for the consent order being issued prior to June 19, 2015. As a result, that offering statement omitted a material statement of fact. As soon as the omission was discovered, sale of the Membership Interests was suspended and efforts were made to amend the Offering Circular to include this disclosure and permit Members who purchased Membership Interests between August 30, 2019 and December 20, 2019 to accept a rescission offer from the Fund. Membership Interests purchased during that period may not have been exempt from the registration or qualification requirements under federal securities laws and may be subject to rescission. In order to address this issue, we are making this rescission offer to all customers who purchased Membership Interests from August 30, 2019 and December 20, 2019 inclusive, whether or not they subsequently transferred those shares.

Rescission Offer and Price

As of February 1, 2020, we are making the rescission offer to 60 persons who purchased Membership Interest during that period. If the rescission offer is accepted by all offerees, the Company could be required to make an aggregate payment to the Members of up to $625,000, plus statutory interest.  The Company believes this amount represents our aggregate exposure under federal securities laws. We expect to use a portion of the net proceeds from our primary offering, in addition to proceeds from business operations, to fund the costs of the rescission offer (See “Management Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources).

The rescission offer is open until 5:00 p.m. PST on December 20, 2020. 

The company is offering to rescind the entire purchase of Membership Interests on behalf of Members who made purchases through the Fund. For a Member eligible to participate in the rescission offer to accept the rescission offer, we must first establish the Member’s eligibility for issuance of Membership Interest under the Offering. That means the member must:

We will be conducting KYC due diligence on Members who participate in this rescission offer. As a participant in the rescission offer, you are required to complete and sign the election form that will be sent to those who qualify for the rescission offer. If you accept the rescission offer, then you must accept the rescission offer with respect to all of the Membership Interests you purchased from August 30, 2019 and December 20, 2019.

If you complete those steps, we will repurchase the Membership Interests that are subject to the rescission offer at the price of your initial capital contribution, plus interest at the current statutory rate per year, from the date they were purchased through the date the rescission offer expires.

Federal law does not provide a specific interest rate to be used in the calculation of the consideration to be received in connection with the repurchases of securities by an issuer in a rescission offer. We intend to use the legal rates of interest for the repurchase of shares based on the state in which a member resides on the date that the member completed or completes the award transaction. If your state of residence has changed since you completed the award transaction, the applicable interest rate will be the legal rate of interest for your current state of residence. These interest rates are as follows:

Acceptance

The Fund will inform affected members by email twice, once within seven days of the qualification of the rescission offer, and once halfway through the offer period. It will use the last known good email address as recorded by the member on the Fund’s records. The Fund will ignore any email preferences or membership preferences in informing qualified members of this offer.

The email will include the FORM OF RESCISSION OFFER ELECTION FORM, an outline of the offer, and the details specific to that member. That acceptance process will be a duplicate of the process used to purchase Membership Interests (“Subscription Process”). First, the end result will be the issuance of a check to the member, rather than issuance of Membership Interests. Second, the entire sale will be reversed. Third, the Member will need to execute a form specific to his or her agreement with the rescission offer. Finally, a statement will be issued informing the Member that there may be Federal or State income tax consequences as a result of accepting the rescission offer, along with a 1099 if appropriate.

As with the Subscription Process, if the Member fails to complete any step, the process will be suspended until the Member completes that step. If the rescission process is suspended because the Member failed to complete a step, the Fund will inform the Member by email of the suspension of the process one day prior to the expiration of the rescission offer.

We will deliver the cash representing the repurchase price for the Membership Interests in U.S. dollars by check sent via U.S. mail.

Statutory Interest Rates

Solicitation

We have not retained, nor do we intend to retain, any person to make solicitations or recommendations to you in connection with the rescission offer. 

Neither we nor our principals make any recommendations with respect to the rescission offer. Members covered by the rescission offer are urged to read this Offering Circular carefully and to make an independent evaluation with respect to its terms when it is available.

Effect of Rescission Offer

Our making the rescission offer may not terminate a purchaser’s right to rescind a sale of securities that was not registered or qualified under the Securities Act or applicable state securities laws and was not otherwise exempt from registration or qualification. If a court were to impose a greater remedy, our exposure as a result of the rescission offer could be higher.

SUMMARY OF THE OFFERING

The following information is only a brief summary of, and is qualified in its entirety by, the detailed information appearing elsewhere in this Offering. This Offering Circular, together with the exhibits attached including, but not limited to, the Limited Liability Company Operating Agreement of the Company (the “Operating Agreement”), a copy of which is attached hereto as Exhibit A-2, should be carefully read in its entirety before any investment decision is made. If there is a conflict between the terms contained in this Offering Circular and the Operating Agreement, the Operating Agreement shall prevail, and control and no Investor should rely on any reference herein to the Articles or Operating Agreement without consulting the actual underlying documents.

SUMMARY OF FINANCIAL INFORMATION

The statements of operations data set forth below with respect to the period from December 3, 2018 to December 31, 2018, are derived from, and are qualified by reference to, the audited financial statements included in this Offering Circular and should be read in conjunction with those financial statements and notes thereto.

PLAN OF DISTRIBUTION

The Offering will be made to Investors through general solicitation, direct solicitation, and marketing efforts. The Company will not utilize an underwriter for the sale of the Membership Interests. The Offering is being conducted on a “best-efforts” basis, which means the principals and officers of the Company will use commercially reasonable best efforts in an attempt to sell the Membership Interests. Such officers will not receive any commission or any other remuneration for these sales. In offering the Membership Interests on behalf of the Company, the principals and officers will rely on the safe harbor from broker-dealer registration set forth in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.

Currently, the Company or Manager has not engaged any broker-dealer, and has no agreement for paying a broker-dealer commissions or fees. However, the Company may sell the Membership Interests through the services of an independent broker-dealers who are members of the Financial Industry Regulatory Authority. In the event the Company engages a licensed broker-dealer, the Company will amend the Offering Circular and notify Investors of such engagement. It is anticipated that the customary and standard commissions for FINRA member broker-dealers may be up to Eight percent (8%) of gross proceeds for the sale of the Membership Interests. These commissions will be paid by the Investor. Investors understand that these commissions may reduce their capital contribution and reduce the total Membership Interests purchased from the Company. The Membership Interests will be offered on an on-going basis and on an as-needed basis based on the demand of Loans and/or opportunities to purchase real property.

The Minimum Investment Amount is One Thousand Dollars ($1,000) and the Maximum Offering Amount is $49,375,000, subject to an increase of the Maximum Offering Amount through a qualification by the SEC of a post-qualification amendment.

USE OF PROCEEDS

The Company intends to raise Offering proceeds to engage in the following: (i) make, fund, originate, refinance, purchase, sell and/or otherwise acquire Loans secured by first or junior position deeds of trust or mortgages on non-owner occupied residential and commercial properties located throughout the United States; and (ii) acquire, develop, rehabilitate, and/or hold and/or sell non-owner occupied real estate located throughout the United States. (See “Lending Standards and Policies” and “General Standards for Purchasing Properties” below).

The net proceeds from this Offering will not be used to compensate or otherwise make payments to officers, directors or Members of the Company, unless and to the extent it is as otherwise stated below. All Offering proceeds raised by the Company and the Manager will be sourced from business conducted per the Operational Plan set forth below.

1. Membership Interests will be offered and sold directly by the Company, the Manager and the Company’s and Manager’s respective officers and employees. No commissions for selling Membership Interests will be paid to the Company, the Manager or the Company’s or Manager’s respective officers or employees. While most Membership Interests are expected to be offered and sold directly by the Company, the Manager and their respective officers and employees, the Company or Manager may also, in limited instances, offer and sell Membership Interests through the services of independent broker/dealers who are member firms of the Financial Industry Regulatory Authority (“FINRA”). As of the date of this Offering Circular, the Company or Manager has not engaged any broker-dealer, and has no agreement for paying a broker-dealer commissions or fees. In the event the Company enters into an agreement with a licensed broker-dealer, the Company will amend the Offering Circular and other necessary documents, and notify Investors of such engagement. It is anticipated that the customary and standard commissions may be up to Eight Percent (8%) of the gross proceeds received for the sale of Membership Interests. Notwithstanding the foregoing, the amount and nature of commissions payable to broker/dealers is expected to vary in specific instances and may be lower than the one listed herein. The Investor who is admitted to the Company through such broker/dealer (and not the Company nor the Manager) will be responsible for all such commissions payable to broker/dealers (and such payments may reduce the Investor’s invested capital).

2. The initial expenses associated with this Offering, including legal and accounting expenses, total approximately Seventy Eight Thousand Dollars ($78,000). The Manager has agreed to pay for all legal costs associated with the organization of the Fund. Notwithstanding the foregoing, the Company intends to reimburse the Manager for any non-legal organization and Offering costs and expenses incurred on behalf of the Company, which are approximately Ten Thousand Dollars ($10,000)

3. Net proceeds to the Company only reflect an approximation of the deduction of organization and offering expenses that may be reimbursed to the Manager. Any expenses associated with the Membership Interests, Loans and/or other investments of the Company shall be paid by the Company in accordance with the terms set forth herein and in the Operating Agreement.

The foregoing represents the Company’s best estimate of the allocation of the proceeds of this Offering based on planned use of funds for the Company’s operations and current objectives. The Company will not raise funds from other sources in order to achieve its investments. Notwithstanding the foregoing, the Company may borrow money from financiers, other lenders, or banks to fund its investments, who are not identified at this moment as the Company does not have any agreements with any financers, lender, or banks to borrow money from.

TERMS OF THE OFFERING

This Offering is made to Qualified purchasers to purchase Membership Interests in the Company. The Minimum Investment Amount per Investor is One Thousand Dollars ($1,000). (See “Investor Suitability” below.) While the Offering is still open, Members that have subscribed for at least the Minimum Investment Amount may purchase additional Membership Interests in increments of One Thousand Dollars ($1,000), provided that such additional purchase of Membership Interests complies with Regulation A, Tier II requirements. The Company generally shall not offer fractional Membership Interests for sale, except for Members who seek to reinvest their distributions. The Manager currently does not intend to adjust the price of the Membership Interests. However, in the event the Manager adjust the purchase price of the Membership Interests, the Manager shall update and amend the Offering Circular and other necessary documents to indicate such adjustments.

The Offering will continue until the Company has raised the Maximum Offering Amount or is terminated by the Company, in its sole and absolute discretion. At such time, the Offering will be deemed closed. The Company may, at its sole and absolute discretion, at any time during the period of the Offering, increase or decrease the Minimum Investment Amount or the Maximum Offering Amount.

Notwithstanding the foregoing in “Terms of the Offering”, the Company reserves the right, in its sole and absolute discretion to, at any time, and for any reason or no reason, accept subscriptions in a lesser amount or to require a higher amount or to reject any subscription(s) in whole or in part.

The Platform

The Platform will be hosted by CrowdEngine and operated by the Company. The following information shall be available to each Member on the Company’s website and Platform: (i) the Subscription Agreement, Offering Circular, and Operating Agreement. Investors will be required to visit the Company’s online Platform in order to receive, review, execute and deliver the Subscription Agreement electronically.

Investors will be able to transact entirely online, including executing and reviewing digital legal documentation, funds transfer, and ownership recordation. Once accepted by the Company, a Member will be able to manage and view his, her or its account, receive distributions and Company reports (such as a Member’s K-1 Form).

Subscription Agreements; Admission to the Company; Investor Rights prior to Admission

To subscribe with the Company and purchase any Membership Interests, an Investor must meet certain eligibility and suitability standards, some of which are set forth below. (See “Investor Suitability” below.) Additionally, an Investor who wishes to become a Member of the Company must sign and execute a subscription agreement (“Subscription Agreement”) in the form attached hereto as Exhibit B (together with a check, or a payment via Automated Clearing House (“ACH”), wire transfer, or a payment card (i.e., credit or debit card), in the amount of the purchase price payable to the Company), which shall be accepted or rejected by the Manager in its sole and absolute discretion. By executing the Subscription Agreement, an Investor makes certain representations and warranties upon which the Manager will rely on in accepting the Investor’s subscription funds. Investors are encouraged to read the Subscription Agreement carefully and in its entirety. INVESTORS SHOULD CAREFULLY READ AND COMPLETE THE SUBSCRIPTION AGREEMENT (WITH POWER OF ATTORNEY AND INVESTOR QUESTIONNAIRE).

Investors will be required to complete a Subscription Agreement on the Company’s Platform, after creating a user account. The Company reserves the sole and absolute right to reject any subscription tendered for any reason or no reason, or to accept it in part only. (See “Use of Proceeds” below.) Investors will be required to fund and receive their Membership Interests through the Platform.

Investors will be required to fund their Platform account via Automated Clearing House system (“ACH”), wire transfer, and card payment. If authorized by the Investor, the Company may also initiate an ACH transaction and draw money from the Investor’s bank account upon admission as a Member, provided the Investor has agreed to such transaction. Investors will need to indicate on the Platform the amount they would like to invest in the Company.

In order to asses each prospective Investor’s suitability as a Member, each Investor’s Subscription Agreement will be accepted or rejected by the Company within Fifteen (15) days or sooner of its receipt. In addition, Subscription Agreements are non-cancelable and irrevocable by the Investor and subscription funds are non-refundable, except with the express written consent of the Company and/or as expressly set forth herein or in the Subscription Agreement. If accepted by the Company, an Investor shall become a Member only when the Company deposits the Investor’s contribution into the Company’s Operating Account.

The Manager may reject an Investor’s Subscription Agreement for any reason or no reason at all. If accepted by the Manager, an Investor shall become a Member when the Manager deposits the Investor’s contribution into the Company’s main operating bank account (“Operating Account”). Until then, an Investor’s subscription agreement is non-revocable, and subscription funds shall be held by the Manager and may, at the sole discretion of the Manager, be deposited in a call account (the “Subscription Account”).

After funding the Platform account but prior to admission as a Member of the Company, the Investor has the right to seek (and receive) his, her, or its funds subject to the procedure provided herein. Specifically, should the process from depositing an Investor’s funds into the Operating Account and admission as a Member take longer than Fifteen (15) days, the Investor may request in writing to recover his, her or its investment funds. If, upon receipt of such request in writing, the Manager has not yet admitted the Investor as a Member, then Manager will return the Investor’s funds to the investor and revoke the Subscription Agreement within Ten (10) business days of receipt of such request from the Investor.

Subscription Agreements are non-cancelable and irrevocable by the Investor and subscription funds are non-refundable for any reason, except with the express written consent of the Manager or as expressly set forth herein or in the Subscription Agreement.

Preferred Return; Cash Distributions; Election to Reinvest

Preferred Return

Members will generally be entitled to receive an annualized Preferred Return on their investment, payable after the end of each month (and prorated as applicable for the amount of time that a Member was a member of the Company during such month). This Preferred Return will be payable prior to any other distributions to Members or profit participation by the Manager (however, all expenses and fees other than profit participation will be paid to the Manager and any allocation of income for a loan loss reserve will be made prior to the distribution of the Preferred Return). The Preferred Return for any Member shall be equal to a non-cumulative annualized rate of Six Percent (6%), calculated and payable on a monthly basis.

For purposes of illustration only, assume that a Member received the full annualized amount of the Preferred Return for the first monthly distribution of a fiscal year. In the remaining monthly period of such fiscal year, if the Company was unable to return to the Member the full annualized amount of the Preferred Return, such amount would not cumulate and compound into the following fiscal year as a Preferred Return distribution owing or required to be distributed to the Member in the succeeding fiscal year. In addition, in this example, if the Company had posted a substantial loss in the second monthly period, the loss may be large enough such that Members may have received too large a distribution of Preferred Return during the first monthly distribution period of the fiscal year; in such a case, there is no mechanism for the Company to necessarily claw-back or recall excess distributions already made to Members during the earlier part of the fiscal year. All investors should understand that due to differences in timing and amounts of distributions and actual income/losses and profits of the Company, there may be a significant disparity between amounts distributed to Members and their distributable share of income and losses; such amounts and disparities may fluctuate and change from year to year.

Investors should understand that Preferred Returns may necessarily fluctuate in accordance with the business and operations of the Company. At the end of the fiscal year, the Company will review all Preferred Returns paid during the year just ended and make ratable adjustments to the Preferred Return distributions paid or payable to Members in order to ensure that Members receive accurate Preferred Return distributions for the annual year in accordance with the intent and provisions of the Operating Agreement and the Offering Circular.

DISTRIBUTIONS OF THE PREFERRED RETURN ARE NOT A GUARANTEED DISTRIBUTION AND ARE SUBJECT TO THE CASH AVAILABILITY OF THE COMPANY. THE MANAGER AND THE COMPANY MAKE NO GUARANTEES, ASSURANCES OR COMMITMENTS TO THE DISTRIBUTION OF ANY RETURNS. THE MANAGER WILL ONLY MAKE DISTRIBUTIONS TO THE EXTENT CASH IS AVAILABLE AND, IN THE SOLE AND ABSOLUTE DISCRETION OF THE MANAGER, AND TO THE EXTENT THAT ANY DISTRIBUTIONS WILL NOT IMPACT THE CONTINUING OPERATIONS OF THE COMPANY.

Cash Distributions

Net Profits in excess of the Preferred Return shall be distributed to the Members on a monthly basis as follows: Fifty Percent (50%) of the Net Profits of the Company shall be distributed to the Members on a pro-rata basis, and the remaining Fifty Percent (50%) of the Net Profits shall be distributed to the Manager.

“Net Profits” means the Company’s monthly gross income less (1) the Company’s monthly operating expenses (including payment of outstanding debt (if any), administrative costs, legal expenses and accounting fees) (2) an allocation of income for a loan loss reserve; and (3) payment of the Asset Management Fee and any other fees to the Manager.

All distributions of Net Profits will be made on a monthly basis, in arrears, and distributions to Members shall be prorated as applicable for the amount of time that a Member was a member of the Company during such accounting period.

DISTRIBUTION OF NET PROFITS IS NOT GUARANTEED. NET PROFITS SHALL ONLY BE DISTRIBUTED TO THE EXTENT CASH IS AVAILABLE AND PROVIDED THAT THE MONTHLY NET PROFIT DISTRIBUTIONS WILL NOT IMPACT THE CONTINUING OPERATIONS OF THE COMPANY, SUBJECT TO THE SOLE AND ABSOLUTE DISCRETION OF THE MANAGER.

Election to Reinvest

Each Member has the option of receiving cash distributions for his, her or its share of the earnings of the Company (including any Preferred Return) that is payable to the Member, or having such amount(s) credited to his, her or its capital accounts and reinvested in the Company at the price of One Thousand Dollars ($1,000) per Membership Interests. Fractional interests of Membership Interests may be purchased by the Member for reinvestment purposes. For example, if the Company allocated One Hundred Dollars ($100) to a Member for distribution, and the Member had elected to reinvest such distributions, the Member may reinvest and purchase One-Tenth of One (1/10^th of 1) Membership Interest. Upon reinvestment, the capital account of the Member will be increased to reflect the additional purchase of Membership Interests. Notwithstanding the foregoing, the Manager reserves the right to commence making cash distributions at any time to any Member(s) in order for the Company to remain exempt from the ERISA plan asset regulations. (See “ERISA Considerations” and “Summary of the Operating Agreement” below)

Members must select at the time of subscription to receive cash or reinvest all of their monthly income distributions including their Preferred Returns. If no election is made, then the monthly income distribution will be automatically reinvested into the Company to purchase additional Membership Interests. No partial reinvestment is permitted.

Reinvestments will be allowed to the extent that the Offering is qualified with the SEC and provided that such reinvestments do not exceed the offering amount that may be sold in any given Twelve (12) month period in accordance with Regulation A, Tier II requirements.

Members may change their election at any time upon Thirty (30) days written notice to the Company. Upon receipt and after the Thirty (30) day notice has occurred, the Member’s selection shall be changed and reflected on the following first day of the month in which the Member is entitled to receive a distribution. Notwithstanding the preceding sentences, the Manager may at any time immediately commence with income distributions in cash only (hence, suspending the reinvestment option for such Member(s)) to any Member(s) in order for the Company to remain exempt from the ERISA plan asset regulations. (See “ERISA Considerations” and “Summary of the Operating Agreement” below).

This investment is appropriate only for Investors who have no need for immediate liquidity in their investments and who have adequate means of providing for their current financial needs, obligations and contingencies, even if such investment results in a total loss. Investment in the Membership Interests involves a high degree of risk and is suitable only for an investor whose business and investment experience, either alone or together with a purchaser representative, renders the investor capable of evaluating each and every risk of the proposed investment. PROSPECTIVE INVESTORS SHOULD CAREFULLY READ THE ENTIRE “RISK FACTORS” SECTION OF THIS OFFERING CIRCULAR.

Member Withdrawals

Members will be required to hold their Membership Interests for a minimum of Twelve (12) months before they may request to withdraw from the Company and have their Membership Interests redeemed. Thereafter, a Member may request withdrawal from the Company and give at least Ninety (90) days’ prior written notice prior to the Manager. The Company will use its best efforts to return capital subject to, among other things, the Company’s then cash flow, financial condition, and prospective investments in assets. Furthermore, any Member requesting redemption will be responsible for any third-party costs incurred in effecting such redemption, including but not limited to, bank transaction charges, custody fees, and/or transfer agent charges (as applicable).

A Member’s redemption amount shall be based on the capital account balance with the Company. (See “Summary of the Operating Agreement – Membership Interest” below). In requesting for redemption, the Member shall specify the amount the Member requests to withdraw and shall be subject to the Manager’s approval. While the Company intends to allow Members to request redemptions on an ongoing basis, the Company has imposed limitations on the amount of individual redemption requests per calendar quarter in order to maintain liquidity to satisfy redemption requests without impacting the Company’s ability to invest in Loans and properties. Accordingly, each request for withdrawal or redemption shall be limited to Twenty-Five Percent (25%) of such Member’s withdrawal request such that it will take at least Four (4) quarters for a Member to withdraw the requested amount; provided, however, that the maximum aggregate amount of capital that the Company will return to the Members each fiscal year is limited to Ten Percent (10%) of the total outstanding capital of the Company. Withdrawal requests will be processed by the Company on a first-come, first-served basis.

The above requirements regarding the withdrawal amount and the timing of any specific withdrawal may be modified by the Manager, in its sole and absolute discretion, based on, amongst other things, the Company’s current cash flow, the amount of the Company’s reserves, and the Company’s then-current financial condition. However, in the event that the Company amends, suspends or terminates withdrawals, the Company will file an offering circular supplement and/or Form 1-U, as necessary, and inform Members of such amendment.

The Manager may at any time suspend the withdrawal of funds from the Company, upon the occurrence of any of the following circumstances: (i) whenever, as a result of events, conditions or circumstances beyond the control or responsibility of the Manager or the Company, disposal of the assets of the Company is not reasonably practicable without being detrimental to the interests of the Company or its Members, determined in the sole and absolute discretion of the Manager; or (ii) if the Manager has determined to dissolve the Company. Notice of any suspension will be given within Ten (10) business days from the time the decision was made to suspend distributions to any Member who has submitted a withdrawal request and to whom full payment of the redemption proceeds has not yet been remitted. If a redemption request is not rescinded by a Member following notification of a suspension, the redemption will be effected as of the last day of the calendar month in which the suspension is lifted.

Maximum Offering

The Maximum Offering Amount of this Offering Circular is $49,375,000, subject to qualification by the SEC of a post-qualification amendment. The Company may, at its sole and absolute discretion, at any time during the period of the Offering, increase or decrease the Maximum Offering Amount or the Minimum Investment Amount.

Subject to the limitations set forth under Regulation A Tier II, the Maximum Offering Amount will be limited to $49,375,000 annually.

The maximum gross proceeds will be the Maximum Offering Amount which will comprise, subject to adjustments as described elsewhere in this Offering Circular, the total equity capitalization of the Company. This Offering may, however, be terminated at the sole option of the Manager at any time and for any reason (or no reason) before the Maximum Offering Amount is received.

Restrictions on Transfer

As a condition to this Offering, restrictions have been placed upon the ability of Members to resell or otherwise transfer any Membership Interests purchased hereunder. Specifically, no Member may resell or otherwise transfer any Membership Interests without the satisfaction of certain conditions designed to ensure compliance with applicable tax and securities laws including, without limitation: (i) the requirement that certain legal opinions be provided to the Company with respect to such matters and the requirement that any transfer of shares to a transferee does not violate any state or federal securities laws; (ii) the limitation set forth under Regulation A Tier 2 limiting secondary sales by security holders who are affiliates of the Company to Fifteen Million Dollars ($15,000,000) and for all security holders to no more than Thirty Percent (30%) of the Maximum Offering Amount for the first Twelve (12) months of the Offering; and (iii) the prior written consent of the Manager, whose consent may be withheld in its sole and absolute discretion. (See “Summary of the Operating Agreement — Transfer Restrictions” below.)

Transfer Agent and Registrar

As of the date of this Offering Circular, the Company has not engaged a transfer agent, and does not intend to engage a transfer agent until such time as the Company is required to do so in order to satisfy the conditional exemption contained in Rule 12g5-1(a)(7) of the Securities Exchange Act of 1934, as applicable, or the Exchange Act.

INVESTOR SUITABILITY AND LIMITATIONS

The Membership Interests are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Act). “Qualified purchasers” include:

(i) “accredited investors” under Rule 501(a) of Regulation D (as explained below); and

(ii) all other Investors so long as their investment in the Membership Interests does not represent more than Ten Percent (10%) of the greater of the Investor’s, alone or together with a spouse, annual income or net worth (for natural persons), or Ten Percent (10%) of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).

The Membership Interests are offered hereby and sold to Investors that meet one of the categories (i.e., Accredited Investors and Investors whose investment in the Membership Interests does not represent more than Ten Percent (10%) of the applicable amount).

To qualify as an “Accredited Investor”, for purposes of satisfying one of the tests in the “qualified purchaser” definition, an Investor must meet ONE of the following conditions:

(i) Any natural person who had an individual income in excess of Two Hundred Thousand Dollars ($200,000) in each of the two most recent years or joint income with that person’s spouse in excess of Three Hundred Thousand Dollars ($300,000) in each of those years and who has a reasonable expectation of reaching the same income level in the current year;

(ii) Any natural person whose individual net worth or joint net worth, with that person’s spouse, at the time of their purchase exceeds One Million Dollars ($1,000,000) (excluding the value of such person’s primary residence);

(iii) Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities and Exchange Act of 1934 (the “Exchange Act”); any insurance company as defined in Section 2(13) of the Exchange Act; any investment company registered under the Investment Fund Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Fund (SBIC) licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a State, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of Five Million Dollars ($5,000,000); any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of Five Million Dollars ($5,000,000) or, if a self-directed plan, with investment decisions made solely by persons who are Accredited Investors;

(iv)  Any private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;

(v)  Any organization described in Section 501(c)(3)(d) of the Internal Revenue Code of 1986, as amended (the “Code”), corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of Five Million Dollars ($5,000,000);

(vi)  Any director or executive officer, or Fund of the issuer of the securities being sold, or any director, executive officer, or Fund of a Fund of that issuer;

(vii)  Any trust, with total assets in excess of Five Million Dollars ($5,000,000), not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 506(B)(b)(2)(ii) of the Code; or

(viii)  Any entity in which all the equity owners are accredited investors as defined above.

For Investors who are not Accredited Investors, there are limitations on the aggregate purchase price of Membership Interests that may be paid by the Investor which is not more than Ten percent (10%) of the greater of such Investor’s:

(i)  Annual income or net worth if a natural person (with annual income and net worth for such natural person purchaser determined as provided in Rule 501); or

(ii)  Revenue or net assets for such purchaser’s most recently completed fiscal year end if a non-natural person.

Annual income and net worth should be calculated as provided in the Accredited Investor definition under Rule 501 of Regulation D, as explained above. In particular, net worth in all cases should be calculated excluding the value of an Investor’s home, home furnishings and automobiles.

DESCRIPTION OF THE BUSINESS OF THE COMPANY

The Company will use the Offering proceeds to fund the Company’s investments in Loans and/or properties. The Company will seek opportunities to fund deals in Loans and properties by advertising its services as a private lender in the market. In the event a Loan is paid off early by a borrower, the Company intends to redeploy those proceeds into funding new Loans or to acquire properties. If a Loan is paid off early and there are no new Loans or properties the Company can redeploy the capital into within a reasonable time period, the Company may redeem Membership Interests, at its discretion. The Company will do this to reduce its expenses when necessary but does not anticipate this happening very often.

The Company will fund a wide variety of Loan products, while many of the products are not of a conventional nature, the Loans must meet the standards set forth in the “Lending Standards and Policies” section below. The Company will primarily fund and/or otherwise acquire Loans secured by non-owner occupied residential and commercial property. (See “Lending Standards and Policies” below.)

Sources of income to the Company will come from the interest and fees charged to borrowers on the Loans, as well as from the sale of any properties acquired by the Company for rehabilitation and/or resale. All Loans will be owned by the Company and all revenue received from the Loans and investments in properties shall be distributed into the Company, less applicable fees to the Manager. (See “Manager’s Compensation” below.)

LENDING STANDARDS AND POLICIES

General Standards for Mortgage Loans

The Company will use the proceeds from this Offering to primarily engage in the funding, originating, acquiring, managing or selling Loans secured by first or junior position deeds of trust or mortgages secured by non-owner occupied and commercial properties located throughout the United States. The value and balance of Loans or properties will not be guaranteed by any governmental agency or private entity but may be guaranteed by affiliates and associates of the underlying borrowers.

The Company will select Loans according to the standards provided below:

1.  Lien Priority. The deeds of trusts and mortgages securing the Company’s loans will be first, junior or subordinated lien positions. The Company will lend money and secure the Loan by such deeds of trusts and mortgages if the Loan-to-Value ratios in Section 8 below are met.

2.  Borrowers. The Company will only make loans to borrowers who are properly formed, validly existing U.S. entities. Loans will not be made to individuals or foreign entities. The Company will make Loans to borrowers who seek to purchase and renovate or rehabilitate investment properties for the purpose of selling such properties (or holding and selling such property). The Company will identify these borrowers based on the borrower’s credit history, verifiable income, and real estate experience.

3.  Location of Real Property Securing the Loans. Most deeds of trusts and mortgages will be secured by real property across the United States.

4.  Loan Types. The Company will arrange business and commercial purpose loans. The Company will not make any consumer loans or transactions (i.e. personal, family or household loans). All properties must be non-owner occupied at the time of funding and for the duration of the Loan. The Company considers the property to be “owner-occupied” if any owner of the borrowing entity or any guarantor resides (or intends to reside) at the property, or if any person who is a close family member of an individual applicant or an owner of the borrowing entity or a guarantor resides (or intends to reside) at the property.

5.  Types of Properties Securing the Loans. Investment in Loans may involve underlying assets of real property that will primarily consist of non-owner-occupied residential properties. Investments may also involve underlying assets of real property that will include mixed use properties and commercial properties.

6.  Minimum Loan Amount. The Company will make loans with a minimum principal loan amount of Thirty Thousand Dollars ($30,000).

7.  State Licensing Requirements. The Company will obtain a mortgage lending license in states where it intends to operate and require a mortgage lending license to originate and/or otherwise fund a Loan. The Company presently intends to obtain lending licenses in California, Arizona, Idaho, Oregon, Nevada, Utah, and Minnesota. Lending licensing requirements will vary from state to state. If required by a state, the Company will obtain all licenses prior to making or funding a Loan. To the extent that the Company is not able to obtain a license, the Company will not make and/or otherwise fund Loans in any states where it is not properly licensed as a mortgage lender (or the state’s equivalent thereof).

8.  Loan-to-Value Ratio. A Loan from the Company will generally not exceed the Loan-to-Value percentage ratios set forth below. The Loan-to-Value ratio is calculated by taking the amount of the Company’s loan combined with the amount of outstanding debt secured by other liens on the property, dividing that by the value of the real property securing the deed of trust or mortgage and multiplying that figure by One Hundred (100) to come to a percentage. “Value” shall be determined by an independent certified appraiser or non-certified appraiser doing an appraisal on the real property or the Manager or commercial or residential real estate broker giving his, her, or its opinion of value of the real property. Notwithstanding the foregoing, the Company may exceed the below stated Loan-to-Value ratios if the Manager determines in its sole business judgment that a higher Loan amount is warranted by the circumstances of that particular loan, such as being able to secure multiple properties, called “cross-collateralization”, personal guaranties, prior loan history with the borrower, market conditions, if mortgage insurance is obtained, or other compensating factors that would support the Manager in making its decision in the best interest of the Company.

The Company plans to routinely re-evaluate the portfolio and Loan-to-Value ratio maximums set forth herein and may revise the Loan-to-Value ratio maximums at any time if it considers it to be in its best interests. Subject to the specific ratios set forth below, the Company will maintain a weighted Loan-to-Value ratio of no more than Seventy Percent (70%). The value of the property will be calculated on an “after completion” or post-rehabilitation basis. Prospective investors should carefully evaluate and understand that calculation of the ration using such “after completion” values exposes the Loans to additional risks in the event that the rehabilitation is not completed, or the value of the rehabilitation is not timely or ultimately achieved.

In general, the Company will seek to maintain a weighted Loan-to-Value ratio for the Company of approximately Sixty Percent to Sixty Five Percent (60% to 65%); provided that the maximum Loan-to-Value ratio for the Company shall not exceed Seventy Percent (70%), unless the Manager determines in its sole discretion that it is in the best interests of the Company to exceed such ratio in any single or multiple instances.

The foregoing Loan-to-Value ratios do not apply to purchase-money financing offered by the Company. Examples of these types of loans may be, but are not limited to, real estate owned by the Company whereby the Company decides to sell the property and carry back a loan on the property to make it cash flow positive.

9.  Loan Programs. The Manager, operating under a fictious business name of The Lee Arnold System of Real Estate Investing, offers educational real estate programs and seminars to private real estate investors (“Arnold Program”). These programs and seminars operate separately and independently from the Company. The Company may make Loans to real estate investors who have attended and/or are part of the Arnold Program and need financing to make investments in real estate. Loans may also be made to borrowers who are not part of the Arnold Program.

The following represents a brief description of the Company’s non-owner occupied residential loan programs.

(a)  Purchasers of Master Rehabber Certification Program, Master Lien Abatement Certification Program, Regional Real Estate Clinic, One-on-One Real Estate Mentorship, and/or Lee’s Inner Circle. The Manager has developed various real estate investing training programs under the fictitious business name of the Lee Arnold System of Real Estate Investing, which are offered for a fee. None of the fees received by the Arnold Programs will be payable to the Company.

Individuals (and entities in which the enrollee owns a majority interest in) who have become certified by the Arnold Program as a Master Rehabber, Master Lien Abatement Specialist, Regional Real Estate Clinic, One-on-One Real Estate Mentorship, or is a member of Lee’s Inner Circle (collectively referred to as the “Arnold Programs”) will receive benefits that uncertified borrowers will not be entitled to, including the following: (i) One Hundred Percent (100%) financing of the property purchase price, closing costs, and rehabilitation costs; (ii) up to Seventy Percent (70%) of the After Repair Value (“ARV”) of the property; and (iii) the certified individuals may borrow based on the LTV ratio stated herein for up to Four (4) properties concurrently. There are no additional benefits or preferential treatments to the Arnold Program participants or certified individuals. To become certified, the individuals must take certain courses offered by the Lee Arnold System of Real Estate Investing and, in certain instances, pass a written examination, as noted below. The Arnold Programs are for borrowers who have built reputational collateral with the Manager by attending advanced real estate education trainings offered by The Lee Arnold System of Real Estate Investing.

A more detailed explanation of the Lee Programs is provided below:

(i) Master Rehabber Certification Program: The Master Rehabber Certificate Program is a four-day training program with a written examination. The program focuses on teaching the fundamentals of identification, budgeting, project management, and marketing “fix-and-flip” investing strategies for real properties.

(ii) Master Lien Abatement Certification Program: The Master Lien Abatement Certification Program is a four-day training program with a written examination. The individuals learn the methods of procurement, market research, and negotiation with the municipalities related to investing in distressed and nuisance properties.

(iii) Regional Real Estate Clinic / One-on-One Real Estate Mentorship. The Regional Real Estate Clinic and One-on-One Real Estate Mentorship programs are each a three-day program, which involves training on how to identify and locate investment properties, marketing techniques, and exit strategies tailored to a specific geographic region.

(iv) Lee’s Inner Circle. Lee’s Inner Circle is a three-day training program held in Spokane, Washington area taught by Lee Arnold, the Manager’s President, Chief Executive Officer, and Director of the Manager. The program offers training and information related to property research, purchase and sale of properties, exit strategies, and implementation of investment strategies.

There are additional risk factors that are unique pertaining to the certified individuals or participants of Arnold Program. (See “Risk Factors – Business Risk” below).

(b)  All other Borrowers. All other borrowers who are not part of or have not been certified by any of the Arnold Programs will not be able to obtain the benefits listed in (a) above.

10.  Terms of Loans. The terms of the Company loans will vary. Loans generally have a term between Three (3) months and Two (2) years. Notwithstanding the foregoing, loans may be shorter or longer in term if the Company decides, in its sole discretion, it is in the best interests of the Company. Many loans that the Company will originate or acquire may provide for interest-only payments followed by a balloon payment at the end of the term. For risk hedging purpose, borrowers may be required to make principal and interest payments. At the end of the term, the Company will require the borrower to pay the loan in full, to refinance the loan, or to sell the real property to pay back the loan. The Company may allow Six to Twelve (6-12) month extensions for a fee paid by Company borrowers. Finally, the Company may also charge exit fees on Loans based on the existing Loan balance at maturity. These exit fees may range from Zero Percent (0%) to Ten Percent (10%) of the remaining Loan balance at maturity.

11.  Title Insurance. Satisfactory title insurance coverage will be obtained for all loans and will usually be paid by the borrower. The title insurance policy will name the Company as the insured and provide title insurance in an amount not less than the principal amount of the loan unless there are multiple forms of security for the loan, in which case the Manager shall use its sole business judgment in determining whether and to what extent title insurance shall be required. Title insurance insures only the validity and priority of the Company’s deed of trust or mortgage, and does not insure the Company against loss from other causes, such as diminution in the value of the secured property, loan defaults, and other such losses.

12.  Fire and Casualty Insurance. Satisfactory fire and casualty insurance will be obtained for all improved real property loans which insurance will name the Company as its loss payee in the amount equal to the improvements on the real property. (See “Business Risks – Uninsured Losses” below.)

13.  Mortgage Insurance. The Manager does not intend to, but may if the property otherwise qualifies, arrange for mortgage insurance, which would afford some protection against loss if the Company foreclosed on a loan and there existed insufficient equity in the security property to repay all sums owed.

14.  Acquiring Loans from Third Parties. The Company may acquire Loans and/or notes secured by non-owner occupied real estate that were originated and funded by a third party. In the event the Company acquires loans from other third parties, the Company will receive assignments of all beneficial interest in any Loans purchased.

15.  Fractionalized Interests in Loans. The Company may also participate in Loans with other lenders (including other businesses organized by business partners or Affiliates of the Company¹), by providing funds for or purchasing a fractional undivided interest in a loan meeting the requirements set forth above.

16.  Purchase of Loans from Affiliates. The Company may purchase loans from the Manager or Affiliates so long as it meets the lending requirements set forth above. For the purposes hereof, the term “Affiliates” shall mean any of the following: (1) a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Manager, (2) a Person who, directly or indirectly, owns or controls at least Ten Percent (10%) of the outstanding voting interests of the Manager, (3) a Person who is an officer, director, manager or member of the Manager, or (4) a Person who is an officer, director, manager, member, general partner, trustee or owns at least Ten Percent (10%) of the outstanding voting interests of a Person described in clauses (1) through (3) of this sentence. The term “Person” shall mean a natural person or Entity. The term “Entity” shall mean an association, relationship or artificial person through or by means of which an enterprise or activity may be lawfully conducted, including, without limitation, a partnership, trust, limited liability company, corporation, joint venture, cooperative or association.

17.  Property Acquisition. Properties acquired by the Company will be acquired through the Company’s lending activities, including but not limited to, properties acquired as a result of a borrower defaulting on a Loan. The Company may establish limited liability companies that are wholly owned subsidiaries of the Company to own and hold title of a property which the Company has acquired and intends to improve, rent, and/or sell. These wholly owned subsidiaries will be single purpose entities (“SPE”) created solely for the purpose of owning, improving, renting and/or selling the properties the Company acquires. The Manager shall serve as the sole manager of these SPEs.

¹ The Company may participate and co-fund Loans with Secured Investment High Yield Fund II, LLC, an Idaho limited liability company (“SIHYF II”). SIHYF II was organized by the Manager and is currently undergoing an offering of securities exempt from SEC registration requirements under Regulation D of the Securities Act of 1933.

18.  Foreclosure. Statutory guidelines for foreclosures in each state are to be followed by the Manager until the underlying property is liquidated and/or the account is brought current. Any costs of this process are to be posted to the borrower’s account for reimbursement to Company. If a Loan is completely foreclosed upon and the property reverts back to the Company, the Company will be responsible for paying the costs and fees associated with the foreclosure process, maintenance and repair of the property, service of senior liens and resale expenses.

Credit Evaluations

The Manager will consider the income level and general creditworthiness of a borrower to determine his, her or its ability to repay the Loan according to its terms in addition to considering the Loan-to-value ratios described above and secondary sources of security for repayment. The Company may acquire loans made to borrowers who are in default under other obligations (e.g., to consolidate their debts) or who do not have sources of income that would be sufficient to qualify for loans from other lenders such as banks or savings and loan associations.

Loan Application Process

Loans funded and/or otherwise acquired by the Company will be originated by the Manager, operating under the fictitious business name of Cogo Capital. Loan application will be reviewed on a continuous basis and may be submitted by borrowers via e-mail to a loan officer or via web based portal operated by Liquid Logics. Potential borrowers will be required to submit a completed Loan application and provide the required documents necessary to determine eligibility for a Loan. A loan officer will conduct an initial evaluation of the Loan package and potential borrowers against the guidelines set forth herein and Exhibit D (as applicable),and ensure that the Loan package and application are not subject to any disqualifying factors. Disqualifying factor may include, without limitation, a potential borrower’s adverse credit history, such as foreclosure, bankruptcy within the last Twelve (12) months, and/or unpaid tax lien or child support lien. Once a Loan is approved or denied by the Manager’s underwriting department, the loan officer will notify the potential borrower of the decision.

Loan Committee

A loan committee (“Loan Committee”) has been formed by the Manager. The Loan Committee consists of at least Five (5) individual members within the Manager, who shall review loan applications that fall outside the Company’s lending standards set forth herein, but are in the best interests of the Company to fund. If approved by the Loan Committee, the Company may participate in funding the Loan. Notwithstanding the foregoing, the majority of instances these loans will be funded by third parties and the Manager may be entitled to receive a fee for originating the loan. Any fees earned by the Manager will not be payable to the Company. Accordingly, conflict of interest exists in connection with originating certain loans that do not qualify within the Company’s lending standards as the Manager may earn fees for such transactions. (See “Conflicts of Interest” below.)

Loan Servicing

It is presently anticipated that all Company Loans will be serviced (i.e., loan payments collected and other services relating to the loan) by the Manager operating under the fictitious business name of Lake City Servicing (in its capacity as Servicer). Notwithstanding the foregoing, the Manager may, at its sole and absolute discretion, appoint an Affiliate or third party loan servicer to service the Company Loans. The servicer, whether a third party or the Manager or its Affiliate, shall be herein referred to as the “Servicer.” The Servicer will be compensated by the Company and/or borrowers for such loan servicing activities, as is agreed upon by the Manager and Servicer. (See “Manager’s Compensation” below.) To the extent applicable, the Manager will oversee the activities and performance of the Servicer. (See “The Manager and Affiliates” below.)

Borrowers will make Loan payments in arrears (i.e. with respect to the preceding month) and will be instructed to send their loan payments either to the Manager or to the Servicer (as applicable) for deposit in the respective party’s trust account.

The following are the servicing activities by the Manager operating under the fictitious business name of Lake City Servicing.

Sale of Loans

The Company plans on investing in mortgage Loans for the primary purpose of reselling such Loans in the course of business. The Company may sell mortgage Loans, or fractional interests in such Loans, when the Manager determines (in its sole and absolute discretion) that it appears to be advantageous for the Company to do so, based upon then current interest rates, the length of time that the loan has been held by the Company, the Company’s investment portfolio, and the overall investment objectives of the Company.

Borrowing/Note Hypothecation

The Company will borrow funds for the purpose of making and purchasing Loans and may assign all or a portion of its Loan portfolio as security for such loan(s). The Company anticipates engaging in this type of transaction when the interest rate at which the Company can borrow funds is significantly less than the rate that can be earned by the Company on its loans, giving the Company the opportunity to earn a profit as a “spread.” Such a transaction involves certain elements of risk and also entails possible adverse tax consequences. (See herein “Risk Factors”, “Income Tax Considerations”, and “ERISA Considerations” below.) The Company may also in its sole discretion elect to finance the Company’s investments with borrowed funds.

Leveraging the Company

The Company may borrow funds from a third party lender to fund investments in loans. These loans would be secured by the Loans held by the Company. Leveraging involves additional risks that are detailed later in this Offering Circular. (See “Risk Factors – Business Risks – Risks of Leveraging the Company” below.)

GENERAL STANDARDS FOR PURCHASING PROPERTIES

The Company will also invest, on an opportunistic basis, in the following business: acquiring, managing, remodeling, developing, repairing, leasing and/or selling non-owner occupied residential real estate located throughout the United States. Properties may be acquired from (without limitation) individuals, entities, institutional investors, financial institutions, governmental agencies and other sellers of real or personal property and may put properties into special purpose entities for the benefit of the Company. Unless the Manager decides in its sole and absolute discretion that it is in the best interests of the Company to do otherwise, the Company intends to generally acquire, and purchase Properties based on the following criteria:

1.  Location of Real Property. Properties will be located across the United States.

2.  Distressed Properties. The Company will acquire distressed properties. The Company intends to acquire and otherwise invest in distressed properties for purposes of holding, developing, remodeling, rehabilitating, improving, renting and selling the associated and secured properties. Distressed properties are typically properties secured by non-performing notes, or properties impacted by specific issues such as, but not limited to, dilapidation, physical damage, devaluation caused by rezoning, and environmental contamination. The primary intent of the Company is to purchase, invest, or otherwise acquire the distressed properties and properties tied to nonperforming notes and remodel, improve, develop, rehabilitate, hold and rent, and subsequently sell the properties for profit. The Company will use an opportunistic investment strategy to identify and invest in distressed properties, unless the Manager, in its sole and absolute discretion, determines it is no longer in the best interests of the Company.

3.  Remodeling Timeline. The average time it takes to remodel a property, from purchase to finished, is anticipated to last between Five (5) to Twelve (12) months. Notwithstanding the foregoing, these estimates are not guaranteed, and certain properties may take longer to remodel due to, without limitation, the following: construction issues, unexpected environmental conditions, changes in supply and demand, governmental regulations, zoning restrictions, changes in material and labor shortages, increases in the costs of labor and materials, and changes in construction plans and specifications. (See “Business Risks” below.)

4.  Fire and Casualty Insurance. Satisfactory fire and casualty insurance will be obtained for all properties and will name the Company as its loss payee. (See “Business Risks – Uninsured Losses”).

5.  Title Insurance. Satisfactory title insurance coverage will be obtained for all properties. The title insurance policy will name the Company as the insured and provide title insurance in an amount not less than the principal amount of the value of the property.

6.  Environmental Reports. Environmental reports will not typically be ordered on properties purchased or otherwise acquired by the Company. It is presently anticipated that all Company properties will be managed by the Servicer. The Servicer will be compensated by the Company for such property management activities.

7. Property Rental. Additional sources of income to the Company may be from the potential purchase, rehabilitation and resale of Company owned properties. The Company will purchase properties that can be rehabilitated and resold for profit. The Company intends to purchase properties and distressed properties at a discount to current (or projected) fair market value and subsequently seek to sell these properties for profit. The Company will purchase and otherwise invest in distressed properties and properties in order to remodel, improve, develop, rehabilitate these properties and either (1) hold and sell the property, or (2) sell the property for profit.

MANAGER’S ANALYSIS AND DISCUSSION OF THE FINANCIAL CONDITION AND PLAN OF OPERATIONS

The Manager’s Discussion and Analysis may contain forward-looking statements. Investors should not place undue reliance on forward-looking statements, and should consider carefully the statements made in “Risk Factors” and elsewhere in this Offering Circular that identify important factors that could cause actual outcomes to differ from those expressed or implied in the Company’s forward-looking statements, and that could materially and adversely affect the Company’s business, operating results and financial condition.

The Manager’s Discussion and Analysis should be read together with the financial statements and notes thereto, included elsewhere in this Offering Circular.

Overview

The Company is a newly formed company formed on November 26, 2018 and has a limited operating history. The Company’s current cash balance is $179,641, with total assets at $640,675 as of December 31, 2019. The cash balance is not sufficient to fund the limited levels of operations for any period of time. In order to execute the plan of operations, the Company will require varying amounts of capital based on the Loans and/or properties the Company intends to fund or acquire. The Company intends to continuously offer Membership Interests to Investors on an ongoing basis to operate is business plan. (See “Lending Standards” above.)

Operating History of the Company

The Company has limited operating history and has not yet earned any revenues, which may make it difficult for potential Investors to evaluate the Company’s business and assess the future viability and prospects of the Company. The Company, at this time, has limited assets and resources. In addition, the Manager provides the Company with management and administrative services, as well as services relating to other support operations, administration, and accounting.

Results of Operations

As of the date of this Offering Circular, the Company has not commenced operations. Having not commenced active operations, the Manager is not aware of any material trends or uncertainties, favorable or unfavorable, other than economic conditions affecting the commercial and residential real estate industry and real estate generally, which may be reasonably anticipated to have a material impact on the capital resources and the revenue or income to be derived from the operation of our assets.

Liquidity and Capital Resources

As of the date of this Offering Circular, the Company is in the earliest stages of development and its cash balance is $179,641, with total assets at $640,675. The Company will likely have liquidity problems if it cannot raise sufficient funds to operate. In addition, in order to execute the plan of operations, the Company will require varying amounts of capital based on the Loans and/or properties the Company intends to fund or acquire. The Company intends to continuously offer Membership Interests to Investors on an as needed basis to operate its business plan.

The Company will receive income from the Loans it makes in the form of interest, fee and points and in some situations profit sharing in certain equity transactions. A loss reserve may be maintained by the Company, as determined by the Manager, in its sole and absolute discretion.

Off-balance Sheet Arrangements

None.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

As of the date of this Offering Circular Membership Interests have only been issued to the Manager. Upon admission of additional Members, the Manager may withdraw as a Member of the Company, but shall continue to serve as Manager.

KEY PERSONNEL

The Manager of the Company is Secured Investment Corp., a Wyoming corporation. The Manager was formed under the laws of Wyoming on December 9, 2011. The Manager will manage and direct the affairs of the Company. The principals, officers, and directors of the Manager, and their biographies, are as follows:

Mr. Lee Aaron Arnold, President and CEO, and Director of the Manager

Lee Arnold is the founder and Chief Executive Officer of the Manager and has served as a Director since its inception on December 9, 2011. Mr. Arnold is an international speaker, trainer, author and licensed real estate broker who has spent many years perfecting the real estate and private money mortgage lending process through thousands of transactions. Lee is a leading expert on private money mortgages and has been featured as an investment strategy expert by Forbes, the Boston Globe, Market Watch, Reuters and Business Week. Since January 2006, Mr. Arnold is also the owner and Chief Executive Officer of Arnold Professional Holdings. Mr. Arnold has led Arnold Professional Holdings in providing variety of real estate related services, including repairing, renovation, or improvement of property. He has also consulted and taught for a number of national financial literacy companies.

Mr. Jaclyn Genemarie Olsen-Arnold, Chief Financial Officer and Director of the Manager

Jaclyn Olsen is the Chief Financial Officer and a Director of the Manager since January 2012. However, Ms. Olsen started with the Manager’s predecessor from 2007 until January 2012 as a tax and financial accounting consultant in Olsen Financial Consulting. During her service as a consultant it was immediately realized that she would bring great value and strength to the real estate investment and private mortgage loan firm. Ms. Olsen has been serving as Chief Financial Officer for the Manager. Ms. Olsen holds her BS in Accounting and her MBA in Finance and Investments. Ms. Olsen brings experience from both public and private accounting in tax, auditing, financial reporting, financial analysis and strategy. She has worked with start-ups to mature companies where her expertise guided growth and manageable, scalable, accounting infrastructure.

Mr. John Kane, Chief Operating Officer and Director of the Manager

John Kane joined the Manager as its Chief Operations Officer and has served as a Director since May 2014. With 30 years’ experience in leading real estate education companies, starting financial services and software companies, Mr. Kane lends his hand to the technology, marketing, operational and educational aspects of the Manager. Mr. Kane formerly led a publicly traded company — Whitney Information Network, now Legacy Education — to create Rich Dad Education with Robert Kiyosaki, and under his leadership grew revenues to over $250,000,000. Mr. Kane left in 2008 and has since served as a Senior Vice President and consultant in various companies. For example, from August 2012 to December 2013, he was a Senior Vice President and a consultant with Manhattan Professional Group, where he guided the company to higher revenue and overall profits. After his brief retirement in early 2014, he joined the Manager as the Chief Operations Officer.

Managers / Directors / Executive Officers / Significant Employees Information

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

^{1 ..}The Company has no officers or directors. It is managed solely by Secured Investment Corp., a Wyoming corporation. The Company is a newly formed entity with no operating history. For these reasons, the Manager has yet to receive any compensation.

² No portion of the officer’s compensation was paid from or will be paid from the income generated by the Company. The Company will not directly pay any compensation to the officers of the Manager.

INDEX TO FINANCIAL STATEMENTS 

TABLE OF CONTENTS

INDEPENDENT AUDITOR’S REPORT

To the Members

Circle of Wealth Fund III LLC

Coeur D’Alene, Idaho

We have audited the accompanying financial statements of Circle of Wealth Fund III LLC (an Idaho limited liability company) (the “Fund”), which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations and changes in members’ 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 audit. We conducted our audit 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 entity’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 entity’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 Circle of Wealth Fund III LLC as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Fund has adopted ASU 2014-09, Revenues from Contracts with Customers. Our opinion is not modified with respect to that matter.

	Armanino LLP
	San Ramon, California

March 5, 2020

Circle of Wealth Fund III LLC
Balance Sheets

December 31, 2019, and 2018

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

Circle of Wealth Fund III LLC

Statements of Operations and Changes in Members’ Equity
For the Years Ended December 31, 2019 and 2018

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

Circle of Wealth Fund III LLC
Statements of Cash Flows

For the Years Ended December 31, 2019 and 2018

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

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2019 and 2018

Circle of Wealth Fund III, LLC (the “Fund”) is an Idaho limited liability company that was organized to make, fund, originate, refinance, purchase, sell and/or otherwise acquire loans secured by first or junior position deeds of trust or mortgages on non-owner occupied residential and commercial properties located throughout the United States; and acquire, develop, rehabilitate, and/or hold and/or sell non-owner occupied real estate located throughout the United States. The Fund is managed by Secured Investment Corp., a Wyoming corporation (the “Manager”). The Fund receives certain operating and administrative services from the Manager, some of which are not reimbursed to the Manager. The Fund’s financial position and results of operations would likely be different absent this relationship with the Manager.

The Fund was organized to continue indefinitely unless dissolved and terminated pursuant to the provisions of the Fund’s operating agreement.

Cash

The Fund considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Cash on deposit occasionally exceeds federally insured limits. The Fund believes that it mitigates this risk by maintaining deposits with major financial institutions.

Risks and uncertainties

The Fund’s business and operations are sensitive to general business and economic conditions in the U.S. along with local, state, and federal governmental policy decisions. A host of factors beyond the Fund’s control could cause fluctuations in these conditions, including but not limited to: its ability to raise sufficient funds from investors to fund loans and acquire real estate as well as potential changes to Regulation A. Adverse developments in these general business and economic conditions could have a material adverse effect on the Fund’s financial condition and the results of its operations.

Management estimates and related risks

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 about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Such estimates relate principally to the determination of the allowance for loan losses, interest-only strip receivables on loans sold and fair value of real estate held and serving as collateral for Fund loans. Although these estimates reflect management’s best estimate, it is at least reasonably possible that a material change to these estimates could occur in the near term.

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2019 and 2018

Management estimates and related risks

The fair value of real estate, in general, is impacted by current real estate and financial market conditions. Should these markets experience any significant declines, the resulting collateral values of the Fund’s loans will likely be negatively impacted. The impact to such values could be significant and as a result, the Fund’s actual loan losses could differ significantly from management’s current estimates.

Mortgage loans receivable

Mortgage loans, the majority of which the Fund intends to make available for sale to prospective investors, generally are stated at the lower of cost or fair value. Subordinate mortgage loans represent the Fund’s retained portion of certain mortgage loans sold to third-party buyers after having been originated by the Fund. The subordinate mortgage loans, which the Fund has the intent and ability to hold for the foreseeable future or to maturity, generally are stated at their outstanding principal balance with interest thereon being accrued as earned. Mortgage loans receivable make up the only class of financing receivables within the Fund’s lending portfolio. As a result, further segmentation of the loan portfolio is not considered necessary.

If the probable ultimate recovery of the carrying amount of a loan, with due consideration for the fair value of collateral, is less than amounts due according to the contractual terms of the loan agreement and the shortfall in the amounts due are not insignificant, the carrying amount of the investment shall be reduced to the present value of estimated future cash flows discounted at the loan’s effective interest rate. If a loan is collateral dependent, it is valued at the estimated fair value of the related collateral.

Interest is accrued daily on the principal of the loans. If events and or changes in circumstances cause management to have serious doubts about the further collectability of the contractual payments, a loan may be categorized as impaired and interest is no longer accrued. Any subsequent payments on impaired loans are applied to reduce the outstanding loan balances including accrued interest and advances.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

Allowance for loan losses

Loans and the related accrued interest are analyzed on a periodic basis for recoverability. Delinquencies are identified and followed as part of the loan system. A provision is made for losses on loans to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral value, to provide for unrecoverable loans and receivables, including impaired loans, accrued interest and advances on loans. As a collateral-based lender, the Fund does not consider credit risks which may be inherent in a further segmented loan portfolio as a basis for determining the adequacy of its allowance for loan losses but rather focuses solely on the underlying collateral value of the loans in its portfolio to do so. As a result, the Fund does not consider further segmentation of its loan portfolio and related disclosures necessary. The Fund writes off uncollectible loans and related receivables directly to the allowance for loan losses once it is determined that the full amount is not collectible.

Interest-only strip receivables

Interest-only strip receivables represent the present value of residual cash flows the Fund expects to receive on mortgage loans receivable sold to third-party investors after having been originated by the Fund. The value of these receivables is determined by estimating the future cash flows using assumptions of key factors, such as prepayment and default rates and discount rates appropriate for the type of asset and risk. The value of interest-only strip receivables could be affected by external factors, such as changes in the behavior patterns of customers and changes in the strength of the economy; therefore, actual performance could differ from these assumptions. The Fund evaluates the performance of the receivables relative to these assumptions on a regular basis. The Manager negotiates the participation interest to be earned by the Fund for loans sold on a case-by-case basis. The interest-only strip rates earned by the Fund during 2019 ranged from 2% to 4%. The Fund sold and retained a beneficial interest in the interest-only strip receivables of 4 loans totaling approximately $250,000 during the year ended December 31, 2019.

Real estate owned

Real estate purchased is recorded at cost. Costs of real estate improvements are capitalized, whereas costs relating to holding real estate are expensed. The portion of interest costs relating to development of real estate is capitalized.

Impairment losses of real estate held and held for sale are measured as the amount by which the carrying amount of a property exceeds its fair value less estimated costs to sell. Impairment losses of real estate held for use are determined by comparing the expected future undiscounted cash flows of the property, including any costs that must be incurred to achieve those cash flows, to the carrying amount of the property. If those cash flows are less than the carrying amount of the property, impairment is measured as the amount by which the carrying amount of the asset exceeds its fair value. Valuations are periodically performed by management, and any subsequent write downs are recorded as a charge to operations.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

Fair value measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Fund determines the fair values of its assets and liabilities based on a fair value hierarchy that includes three levels of inputs that may be used to measure fair value (Level 1, Level 2 and Level 3).

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Fund’s own data.

The Fund does not record loans at fair value on a recurring basis but uses fair value measurements of collateral security in the determination of its allowance for loan losses. The fair value for impaired secured loans is determined using the sales comparison, income and other commonly used valuation approaches.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Deferred loan origination fees

Loan origination fees represent amounts charged by the Fund to the borrowers for such things as points, loan processing fees, underwriting fees and other similar charges. As the majority of the Fund’s loans are expected to be held for sale, the Fund defers recognition of the fees until the loan is sold.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

Subscription liabilities and subscription funds in transit

The Fund accepts subscription agreements and funds from prospective investors who wish to become members of the Fund. If the subscription funds are needed in the normal course of the Fund’s operations on any day other than the first day of the month, the subscription funds will be borrowed at an annual rate of 6% for the odd days within the month the borrowing took place. There were no subscription funds held or borrowings at December 31, 2019 and 2018.

Income taxes

The Fund is a limited liability company for federal and state income tax purposes. Under the laws pertaining to income taxation of limited liability companies, no federal income tax is paid by the Fund as an entity. Each individual member reports on their federal and state income tax returns their distributive share of Fund income, gains, losses, deductions and credits, whether or not any actual distribution is made to such member during a taxable year.

The Fund has evaluated its current tax positions and has concluded that as of December 31, 2019, the Fund does not have any significant uncertain tax positions for which a reserve would be necessary.

Change in accounting principal

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenues from Contracts with Customers (Topic 606). The standards core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In effect, companies are required to exercise further judgment and make more estimates prospectively. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 was effective January 1, 2019 for the Fund. The Fund has evaluated the new guidance and determined that interest income and income from servicing mortgage loans are outside the scope of ASC No. 606. The Fund also determined that fee income on mortgage loan originations is outside the scope of ASC No. 606 as it continues to be accounted for in accordance with ASC No. 948. As a result, the adoption of ASU No. 2014-09 did not have a material impact on its financial statements.

Subsequent events

The Fund has evaluated subsequent events through March 5, 2020, the date the financial statements were available to be issued. No subsequent events have occurred that would have a material impact on the presentation of the Fund’s financial statements.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

The Fund is an Idaho limited liability company. The rights, duties and powers of the members of the Fund are governed by the operating agreement and the Idaho Limited Liability Company Act. The following description of the Fund’s operating agreement provides only general information. Members should refer to the Fund’s operating agreement and private placement memorandum for a more complete description of the provisions. The Manager is in complete control of the Fund business, subject to the voting rights of the members on specified matters. The Manager acting alone has the power and authority to act for and bind the Fund.

Members representing a majority of the outstanding Fund membership interests may approve or disapprove any of the following matters: (i) the Fund’s merger with or conversion into another entity; (ii) causing the Fund to incur debt which would exceed the amount provided for in the offering circular; (iii) a transaction, not expressly permitted by the operating agreement or offering circular, involving a conflict of interest between the Manager and the Fund; (iv) remove the Manager if: (1) the Manager is convicted or found liable for an act of gross negligence or fraud which materially lowers the net asset value of the Fund, and (2) the holders of at least a majority of the outstanding membership interests vote in favor of such removal; (v) election of a successor manager; (vi) amendments to the operating agreement.

Profits and losses

Profits and losses accrued during any accounting period shall be allocated among the members in accordance with their respective membership interests maintained throughout that accounting period.

Fund expenses

The Fund shall bear all costs and expenses associated with the operation of the Fund, including, but not limited to, the annual tax preparation of the Fund’s tax returns, any state and federal income tax due, legal fees, accounting fees, filing fees, and any required independent audit reports required by agencies governing the business activities of the Fund, foreclosure costs and expenses associated with the foreclosing on assets, costs associated with force placed insurance, and costs and expenses associated with the disposition of assets. For the years ended December 31, 2019 and 2018, the Manager elected to absorb all operating and administrative expenses of the Fund besides those which have been reflected in the Fund’s statement of operations and changes in members’ equity.

Distributions

The Fund will make distributions of one hundred percent of net available proceeds from operations at least quarterly to all members. The Fund will make all distributions to the members in proportion to the membership interest they held during the period for which the distribution is declared until each member has received six percent (6%) cumulative annual return. If returns are higher than 6% cumulative annual return, the remaining funds will be distributed 50% to the members in proportion to their membership interest and 50% to the Manager as a performance fee.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

Liquidity, capital withdrawals and early withdrawals

There is no public market for interests of the Fund and none is expected to develop in the foreseeable future. There are substantial restrictions on transferability of membership interests. Any transferee must be a person that would have been qualified to purchase a member unit in the offering and a transferee may not become a substituted member without the consent of the Manager.

A member may withdraw as a member of the Fund and may receive a return of capital provided that the following conditions have been met: (i) the member has been a member of the Fund for a period of at least twelve (12) months; and (ii) the member provides the Manager with a written request for a return of capital at least 90 days prior to such withdrawal. Once the withdrawal is approved by the Manager, the Member may only withdraw up to 25% percent of the total withdrawal amount each following calendar quarter until the full amount is withdrawn. The Fund will use its best efforts to honor requests for a return of capital subject to, among other things, the Fund’s then cash flow, the amount of Fund reserves and the Fund’s then-current financial condition.

Mortgage loans receivable, net consisted of the following:

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2019 and 2018

The following table sets forth by level, within the fair value hierarchy, the Funds assets measured at fair value as of December 31, 2019:

Loan servicing fees

Fund loans are serviced by a third-party servicer and a related party servicer selected by the Manager. The loan servicing companies will receive compensation from the Fund for performing these loan servicing activities. The loan servicing companies may also be entitled to retain up to 100% of any late fees and all fees for payoff demand statements and related documents, and return check charges. Loan servicing fees paid amounted to $95 during the year ended December 31, 2019. There were no loan servicing fees incurred during the year ended December 31, 2018.

Loan origination fees

At the closing of a target asset, a borrower will pay origination points. The origination points shall be disbursed at the closing of a target asset in the following manner: 80% to the Manager or an affiliated company and 20% to the Fund. The Fund recognized loan origination fees of $1,465 for the year ended December 31, 2019. Deferred loan origination fees of $7,993 at December 31, 2019 have been included in mortgage loans receivable held for sale, net on the accompanying balance sheet. There were no deferred loan origination fees at December 31, 2018.

Asset management fees

The Manager earns asset management fees of 1.75% of the Fund’s total asset base as of the last day of the calendar month. The asset management fees are payable beginning on the first day of the first calendar month after the first deployment. Asset management fees earned by the Manager amounted to $1,895 for the year ended December 31, 2019. Asset management fees payable to the Manager amounted to $1,895 at December 31, 2019. There were no asset management fees incurred during the year ended December 31, 2018.

Performance fees

As described in Note 3, after payment to members of a priority return, the Manager is eligible to receive performance fees. There were no performance fees earned by the Manager in 2019 and 2018.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2019 and 2018

Operating expenses

The Manager shall be entitled to reimbursement by the Fund for all reasonable and customary expenses incurred in the formation of the Fund and in the ongoing management of the Fund.

Loan brokerage fees

For its services in connection with the selection and origination of Fund loans, the Manager charges loan brokerage fees to the borrowers. These fees are paid directly by the borrowers and are not expenses of the Fund.

Rehabilitation services

Arnold Professional Holdings, Inc. (“APH”), a Washington corporation, is owned by the Chief Executive Officer (“CEO”) of the Manager. APH is a Washington licensed, bonded and insured general contractor. APH provides general construction services to the Fund in the state of Washington, which may include repairing, renovating and improving real estate investments. APH will receive compensation for its services equal to cost plus twenty percent (20%) plus an additional fifteen percent (15%) bonus on the net profit from the sale of the real estate investment after deducting all costs (including rehabilitation expenses) and selling expenses. No properties were acquired during the years ended December 31, 2019 and 2018.

Selling expenses

The CEO of the Manager, is a licensed real estate agent with Keller Williams. The CEO will be retained as the exclusive listing agent for all real estate investments in the state of Washington. The Fund will pay the customary six percent (6%) real estate commission for all real estate investment sold to be shared equally by the listing agent and buyer’s agent unless otherwise agreed.

The loans are secured by recorded deeds of trust or mortgages with the following characteristics:

Circle of Wealth Fund III LLC
Notes to Financial Statements

December 31, 2019 and 2018

The Fund’s secured loans are located in various states and counties as follows:

Circle of Wealth Fund III LLC
Notes to Financial Statements

December 31, 2019 and 2018

The following categories of secured loans were held as follows:

The schedule below presents the status of the secured loans with regards to interest payments as follows:

The future maturities of secured loans are as follows:

Legal proceedings

The Fund is involved in various legal actions arising in the normal course of business. In the opinion of management, such matters will not have a significant adverse effect on the results of operations or financial position of the Fund.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in the Offering Circular constituting a part of this Offering Statement on Form 1-A, related to post-qualification amendment, of our Independent Auditor's Report dated March 5, 2020 relating to the balance sheets of Circle of Wealth Fund III LLC as of December 31, 2019 and 2018, and the related statements of operations and changes in members' equity, and cash flows for the years then ended, and the related notes to the financial statements.

Armanino LLP
San Ramon, California
March 10, 2020

TABLE OF CONTENTS

INDEPENDENT AUDITOR’S REPORT

To the Member of

Circle of Wealth Fund III LLC

Coeur D’Alene, Idaho

We have audited the accompanying financial statements of Circle of Wealth Fund III LLC (an Idaho limited liability company), which comprise the balance sheet as of December 31, 2018, and the related statements of operations and changes in member’s equity, and cash flows for the period from December 3, 2018 (inception) through December 31, 2018, 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 audit. We conducted our audit 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 entity’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 entity’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 Circle of Wealth Fund III LLC as of December 31, 2018, and the results of its operations and its cash flows for the period from December 3, 2018 (inception) through December 31, 2018, in accordance with accounting principles generally accepted in the United States of America.

	Armanino LLP
	San Ramon, California

February 4, 2019

Circle of Wealth Fund III LLC
Balance Sheet

December 31, 2018

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

Circle of Wealth Fund III LLC

Statement of Operations and Changes in Member’s Equity

For the Period from December 3, 2018 (Inception) through December 31, 2018

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

Circle of Wealth Fund III LLC

Statement of Cash Flows

For the Period from December 3, 2018 (Inception) through December 31, 2018

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

Circle of Wealth Fund III LLC
Notes to Financial Statements

December 31, 2018

Circle of Wealth Fund III, LLC (the “Fund”) is an Idaho limited liability company that was organized to make, fund, originate, refinance, purchase, sell and/or otherwise acquire loans secured by first or junior position deeds of trust or mortgages on non-owner occupied residential and commercial properties located throughout the United States; and acquire, develop, rehabilitate, and/or hold and/or sell non-owner occupied real estate located throughout the United States. The Fund is managed by Secured Investment Corp., a Wyoming corporation (the “Manager”). The Fund receives certain operating and administrative services from the Manager, some of which are not reimbursed to the Manager. The Fund’s financial position and results of operations would likely be different absent this relationship with the Manager.

The Fund was organized to continue indefinitely unless dissolved and terminated pursuant to the provisions of the Fund’s operating agreement.

As of December 31, 2018, the Fund has not commenced planned principal operations nor generated revenue. The Fund’s activities since inception have consisted of formation activities and preparations for raising capital. Once the Fund commences planned principal operations, it will incur significant additional expenses. The Fund is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and uncertainties; including failing to secure funding to operationalize the Fund’s planned operations or failing to profitably operate the business.

Cash and cash equivalents

The Fund considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Cash on deposit occasionally exceeds federally insured limits. The Fund believes that it mitigates this risk by maintaining deposits with major financial institutions.

Risks and uncertainties

The Fund has no operating history and has not generated revenue from operations. The Fund’s business and operations are sensitive to general business and economic conditions in the U.S. along with local, state, and federal governmental policy decisions. A host of factors beyond the Fund’s control could cause fluctuations in these conditions, including but not limited to: its ability to raise sufficient funds from investors to fund loans and acquire real estate as well as potential changes to Regulation A. Adverse developments in these general business and economic conditions could have a material adverse effect on the Fund’s financial conditions and the results of operations.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2018

Management estimates and related risks

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 about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Such estimates will relate principally to the determination of the allowance for loan losses, interest-only strip receivables on loans sold and fair value of real estate held and serving as collateral for Fund loans. Although these estimates will reflect management’s best estimate, it is at least reasonably possible that a material change to these estimates could occur in the near term.

The fair value of real estate, in general, is impacted by current real estate and financial market conditions. Should these markets experience any significant declines, the resulting collateral values of the Fund’s loans, if any, will likely be negatively impacted. The impact to such values could be significant and as a result, the Fund’s actual loan losses could differ significantly from management’s current estimates.

Mortgage loans receivable

Mortgage loans, the majority of which the Fund intends to make available for sale to prospective investors, will generally be stated at the lower of cost or fair value. Subordinate mortgage loans will represent the Fund’s retained portion of any mortgage loans sold to third-party buyers after having been originated by the Fund. The subordinate mortgage loans, which the Fund has the intent and ability to hold for the foreseeable future or to maturity, will generally be stated at their outstanding principal balance with interest thereon being accrued as earned. Mortgage loans receivable are expected to make up the only class of financing receivables within the Fund’s lending portfolio. As a result, further segmentation of the loan portfolio will not be considered necessary.

If the probable ultimate recovery of the carrying amount of a loan, with due consideration for the fair value of collateral, is less than amounts due according to the contractual terms of the loan agreement and the shortfall in the amounts due are not insignificant, the carrying amount of the investment shall be reduced to the present value of estimated future cash flows discounted at the loan’s effective interest rate. If a loan is collateral dependent, it is valued at the estimated fair value of the related collateral.

Interest is accrued daily on the principal of the loans. If events and or changes in circumstances cause management to have serious doubts about the further collectability of the contractual payments, a loan may be categorized as impaired and interest is no longer accrued. Any subsequent payments on impaired loans are applied to reduce the outstanding loan balances including accrued interest and advances.

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2018

Allowance for loan losses

Loans and the related accrued interest are analyzed on a periodic basis for recoverability. Delinquencies are identified and followed as part of the loan system. A provision is made for losses on loans to adjust the allowance for loan losses to an amount considered by management to be adequate, with due consideration to collateral value, to provide for unrecoverable loans and receivables, including impaired loans, accrued interest and advances on loans. As a collateral-based lender, the Fund does not consider credit risks which may be inherent in a further segmented loan portfolio as a basis for determining the adequacy of its allowance for loan losses but rather focuses solely on the underlying collateral value of the loans in its portfolio to do so. As a result, the Fund does not consider further segmentation of its loan portfolio and related disclosures necessary. The Fund writes off uncollectible loans and related receivables directly to the allowance for loan losses once it is determined that the full amount is not collectible.

Interest-only strip receivables

Interest-only strip receivables represent the present value of residual cash flows the Fund expects to receive on mortgage loans receivable sold to third-party investors after having been originated by the Fund. The value of these receivables is determined by estimating the future cash flows using assumptions of key factors, such as prepayment and default rates and discount rates appropriate for the type of asset and risk. The value of interest-only strip receivables could be affected by external factors, such as changes in the behavior patterns of customers and changes in the strength of the economy; therefore, actual performance could differ from these assumptions. The Fund evaluates the performance of the receivables relative to these assumptions on a regular basis. The Manager negotiates the participation interest to be earned by the Fund for loans sold on a case-by-case basis.

Real estate owned

Real estate purchased is recorded at cost. Costs of real estate improvements are capitalized, whereas costs relating to holding real estate are expensed. The portion of interest costs relating to development of real estate is capitalized.

Impairment losses of real estate held and held for sale are measured as the amount by which the carrying amount of a property exceeds its fair value less estimated costs to sell Impairment losses of real estate held for use are determined by comparing the expected future undiscounted cash flows of the property, including any costs that must be incurred to achieve those cash flows, to the carrying amount of the property. If those cash flows are less than the carrying amount of the property, impairment is measured as the amount by which the carrying amount of the asset exceeds its fair value. Valuations are periodically performed by management, and any subsequent write downs are recorded as a charge to operations.

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2018

Fair value measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Fund determines the fair values of its assets and liabilities based on a fair value hierarchy that includes three levels of inputs that may be used to measure fair value (Level 1, Level 2 and Level 3).

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Fund’s own data.

The Fund does not record loans at fair value on a recurring basis but uses fair value measurements of collateral security in the determination of its allowance for loan losses. The fair value for impaired secured loans is determined using the sale comparison, income and other commonly used valuation approaches.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Deferred loan origination fees

Loan origination fees represent amounts charged by the Fund to the borrowers for such things as points, loan processing fees, underwriting fees and other similar charges. As the majority of the Fund’s loans are expected to be held for sale, the Fund defers recognition of the fees until the loan is sold.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2018

Subscription liabilities and subscription funds in transit

The Fund accepts subscription agreements and funds from prospective investors who wish to become members of the Fund. If the subscription funds are needed in the normal course of the Fund’s operations on any day other than the first day of the month, the subscription funds will be borrowed at an annual rate of 6% for the odd days within the month the borrowing took place.

Income taxes

The Fund is a limited liability company for federal and state income tax purposes. Under the laws pertaining to income taxation of limited liability companies, no federal income tax is paid by the Fund as an entity. Each individual member reports on their federal and state income tax returns their distributive share of Fund income, gains, losses, deductions and credits, whether or not any actual distribution is made to such member during a taxable year.

The Fund has evaluated its current tax positions and has concluded that as of December 31, 2018, the Fund does not have any significant uncertain tax positions for which a reserve would be necessary.

Subsequent events

The Fund has evaluated subsequent events through February 4, 2019, the date the financial statements were available to be issued. No subsequent events have occurred that would have a material impact on the presentation of the Fund’s financial statements.

The Fund is an Idaho limited liability company. The rights, duties and powers of the members of the Fund are governed by the operating agreement and the Idaho Limited Liability Company Act. The following description of the Fund’s operating agreement provides only general information. Members should refer to the Fund’s operating agreement and offering circular for a more complete description of the provisions. The Manager is in complete control of the Fund business, subject to the voting rights of the members on specified matters. The Manager acting alone has the power and authority to act for and bind the Fund.

Members representing a majority of the outstanding Fund membership interests may approve or disapprove any of the following matters: (i) the Fund’s merger with or conversion into another entity; (ii) causing the Fund to incur debt which would exceed the amount provided for in the offering circular; (iii) a transaction, not expressly permitted by the operating agreement or offering circular, involving a conflict of interest between the Manager and the Fund; (iv) remove the Manager if: (1) the Manager is convicted or found liable for an act of gross negligence or fraud which materially lowers the net asset value of the Fund, and (2) the holders of at least a majority of the outstanding membership interests vote in favor of such removal; (v) election of a successor manager; (vi) amendments to the operating agreement.

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2018

Profits and losses

Profits and losses accrued during any accounting period shall be allocated among the members in accordance with their respective membership interests maintained throughout that accounting period.

Fund expenses

The Fund shall bear all costs and expenses associated with the operation of the Fund, including, but not limited to, the annual tax preparation of the Fund’s tax returns, any state and federal income tax due, legal fees, accounting fees, filing fees, and any required independent audit reports required by agencies governing the business activities of the Fund, foreclosure costs and expenses associated with the foreclosing on assets, costs associated with force placed insurance, and costs and expenses associated with the disposition of assets. For the period ended December 31, 2018, the Manager elected to absorb all operating and administrative expenses of the Fund.

Distributions

Members will be eligible for monthly distributions of the Fund’s net profits. The Fund will make all distributions to the members in proportion to the membership interest they held during the period for which the distribution is declared until each member has received six percent (6%) cumulative annual preferred return. If returns are higher than 6% cumulative annual preferred return, the remaining funds will be distributed 50% to the members in proportion to the membership interest and 50% to the Manager as a performance fee. In the event that the Fund is unable to pay to the members the full preferred return in any accounting period, the shortfall shall neither cumulate nor compound into the following accounting period, and the Fund shall not be required to pay the shortfall in any succeeding accounting period.

Liquidity, capital withdrawals and early withdrawals

There is no public market for interests of the Fund and none is expected to develop in the foreseeable future. There are substantial restrictions on transferability of membership interests. Any transferee must be a person that would have been qualified to purchase a member unit in the offering and a transferee may not become a substituted member without the consent of the Manager.

A member may withdraw as a member of the Fund and may receive a return of capital if approved by the Manager, and provided that the following conditions have been met: (i) the member has been a member of the Fund for a period of at least twelve (12) months; and (ii) the member provides the Manager with a written request for return of capital at least 90 days prior to such withdrawal. If a withdrawal is approved by the Manager, the member may only withdraw up to 25% of the total withdrawal amount each following calendar quarter until the full amount is withdrawn. The Fund will use its best efforts to honor requests for a return of capital subject to, among other things, the Fund’s then cash flow, the amount of Fund reserves and the Fund’s then-current financial condition.

Circle of Wealth Fund III LLC

Notes to Financial Statements

December 31, 2018

Loan servicing fees

Fund loans are serviced by a third-party servicer and a related party servicer selected by the Manager. The loan servicing companies will receive compensation from the Fund for performing these loan servicing activities. The loan servicing companies may also be entitled to retain up to 50% of any late fees and all fees for payoff demand statements and related documents and return check charges.

Loan origination fees

At the closing of a loan, a borrower will pay origination points. The origination points shall be disbursed at the closing of a loan in the following manner: 80% to the Manager or an affiliated company and 20% to the Fund.

Asset management fees

The Manager earns asset management fees of 1.75% per annum based on the Fund’s net assets under management, calculated and payable monthly. The asset management fee will typically be paid on the last day of each calendar month with respect to the net assets under management as of last day of such month.

Performance fees

As described in Note 3, after payment to members of a priority return, the Manager is eligible to receive performance fees.

Operating expenses

The Manager shall be entitled to reimbursement by the Fund for all reasonable and customary expenses incurred in the formation of the Fund and in the ongoing management of the Fund.

Loan fees

The operating agreement provides for other loan fees, such as loan processing and documentation fees, to be charged by the Manager. These fees are paid directly by the borrowers and are not expenses of the Fund.

Circle of Wealth Fund III LLC
Notes to Financial Statements
December 31, 2018

Rehabilitation services

In the event that the Fund acquires ownership of distressed real property, whether through foreclosure or otherwise, the Fund may decide to rehabilitate the property to lease or sell. To rehabilitate the property, the Fund will primarily retain the services of Arnold Professional Holdings, Inc. (“APH”), an Idaho corporation, owned by the Chief Executive Officer (“CEO”) of the Manager. APH is a licensed, bonded and insured general contractor in the state of Washington. APH will receive compensation for its services equal to a fee based on the prevailing industry rate, as agreed between the Manager and APH.

Real estate commissions

The Manager or its affiliates may earn real estate commissions to list and sell real estate that the Company has acquired through foreclosure or otherwise. The Manager or its affiliates may generally earn up to six percent (6%) for such a sale. In addition, the Manager may pay a referral fee ranging from twenty percent (20%) to forty percent (40%) of the real estate commissions paid to the Manager to third party sales agents for properties where the Manager does not presently operate in.

Property management fee

In the event that the Fund acquires any real property, the Manager may cause the Fund to engage a third party to provide property management services with respect to such real property, or may elect to provide property management services itself. In the event that the Manager or its affiliates provides any such property management services, the Fund will pay the Manager or its affiliate a market rate property management fee.

Member contributions

The Manager made member’s equity contributions totaling $25,000 for the period ended December 31, 2018.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in the Offering Circular constituting a part of this Offering Statement on Form 1-A, related to post-qualification amendment, of our Independent Auditor's Report dated February 4, 2019 relating to the balance sheet of Circle of Wealth Fund III LLC as of December 31, 2018, and the related statements of operations and changes in member's equity, and cash flows for the period then ended and the related notes to the financial statements.

Armanino LLP
San Ramon, California

February 5, 2020

PRIOR PERFORMANCE SUMMARY

The information presented in this section, and the Index to Financial Statements below, represents the historical operating results for the Company’s Manager and sponsor, Secured Investment Corp., an Idaho corporation. The Manager has prior experience in managing SIHYF and SIHYF II (collectively, “SIHYF Funds”), both of which are real estate companies with similar investment objectives with that of the Company. Investors in the Company should not assume that they will experience returns, if any, comparable to those experienced by the investors in the SIHYF Funds. Members of the Company will not acquire any ownership interests in any of the SIHYF Funds from this Offering.

As stated above, the Members will receive their returns on thir investments derived from the Company’s business operations. Although SIHYF Funds’ business objectives may be similar to that of the Company’s objectives, the Company’s portfolio may not mirror the portfolios of SIHYF Funds. Investors should also acknowledge that any past performance of the sponsor or SIHYF Funds described below will be indicative of any of the Company’s future performances.

APPENDIX A: PAST PERFORMANCE TABLES

The following prior performance tables provide information relating to the SIHYF Funds managed by Secured Investment Corp.. The SIHYF Funds are Two (2) separate and independent real estate companies that have been raising capital pursuant to Rule 506(c) of Regulation D of the Securities Act of 1933, as amended. The SIHYF Funds have similar investment objectives as that of the Company, in that, SIHYF Funds were formed in order to acquire, own, develop, hold, manage, sell, transfer or otherwise dispose of real estate assets, primarily loans secured by real property.

As of March 31, 2019, the total assets under management for the SIHYF Funds are $11,352,597 with a total number of accredited investors at 63. The sponsor and its affiliates are responsible for loan origination, due diligence, structuring, closing, acquiring, and asset management of all real property acquisition and loans made by the SIHYF Funds.

As of December 31, 2018, SIHYF Funds have originated approximately 1,140 real estate loans and/or real property acquisition with aggregate asset values of approximately $96 million, consisting primarily of non-owner occupied single family residential or multifamily properties secured loans.

This information should be read together with the summary information included in the “Prior Performance Summary” section of the Offering Circular.

Investors should not construe inclusion of the following tables as implying, in any manner, that we will have results comparable to those reflected in such tables. Distributions made by the Company, federal income tax deductions or other factors could be substantially different. Investors should note that by acquiring the Company’s Membership Interests, they will not be acquiring any interest in any prior program.

Description of the Tables

The information contained in Tables I and II in this Index are as of March 31, 2019. The rest of the information contained in Tables III through V in this Index are as of December 31, 2018. The following tables are included herein:

Table I — Experience in Raising and Investing Funds

Table II — Compensation to Sponsor

Table III — Operating Results of Prior Programs

Table VI — Table of Acquisition

TABLE I

EXPERIENCE IN RAISING AND INVESTING FUNDS

(UNAUDITED)

Table I presents information showing the experience of the Sponsor in raising and investing funds for the prior as of March 31, 2019.

TABLE II

COMPENSATION TO SPONSOR

(UNAUDITED)

Table II presents information showing the compensation paid to the Sponsor by the SIHYF and SIHYF II as of March 31, 2019.

TABLE III

OPERATING RESULTS OF PRIOR PROGRAMS

(AUDITED)

Table III sets forth the operating results of the SIHYF Funds for the years ending in December 31, 2018, 2017, and 2016. SIHYF is currently undergoing liquidation event. Statement of Net Assets in Liquidation of Prior Programs ending in December 31, 2018, is stated below.

STATEMENT OF NET ASSETS IN LIQUIDATION OF PRIOR PROGRAMS

(AUDITED)

TABLE VI

ACQUISITION OF ASSETS

(UNAUDITED)

Table VI sets forth summary information on the properties held by the prior SIHYF Funds as of March 31, 2019.