# EDGAR Filing Document

**Accession Number:** 0001920508
**File Stem:** 0001213900-25-093509
**Filing Date:** 2025-9
**Character Count:** 167171
**Document Hash:** 3c923150307185b1075eb035205bd623
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-093509.hdr.sgml**: 20250930

**ACCESSION NUMBER**: 0001213900-25-093509

**CONFORMED SUBMISSION TYPE**: 1-SA

**PUBLIC DOCUMENT COUNT**: 5

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250930

**DATE AS OF CHANGE**: 20250930

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CWS Investments Inc
- **CENTRAL INDEX KEY:** 0001920508
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 880822121
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-SA
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 24R-00684
- **FILM NUMBER:** 251358562

**BUSINESS ADDRESS:**
- **STREET 1:** 5004 COLUMBIA RD
- **CITY:** ANNANDALE
- **STATE:** VA
- **ZIP:** 22003
- **BUSINESS PHONE:** 2023042784

**MAIL ADDRESS:**
- **STREET 1:** 5242 PORT ROYAL RD
- **STREET 2:** SUITE 1785
- **CITY:** SPRINGFIELD
- **STATE:** VA
- **ZIP:** 22151

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549** 

**FORM 1-SA**

**☒ SEMIANNUAL REPORT PURSUANT TO REGULATION A**

**or**

**☐ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A**

For the ﬁscal semiannual period ended June 30, 2025

CWS Investments Inc

(Exact name of issuer as speciﬁed in its charter)

<u>Virginia</u> <u>88-0822121</u> <br> State or other jurisdiction <br> of incorporation or organization (I.R.S. Employer <br> Identification Number)

5242 Port Royal Road, #1785, North Springfield, Virginia 22151

(Full mailing address of principal executive ofﬁces)

866-226-5736

(Issuer's telephone number, including area code)

**Item 1. Management's Discussion and Analysis of Financial Condition and Results of Operations**

 

*The financial statements and discussion and analysis of our financial condition, results of operations, and financial statements contained here within should be read in conjunction with our Offering Circular dated August 19, 2024 found [here](http://www.sec.gov/Archives/edgar/data/1920508/000121390024070800/ea0210825-1apos_cwsinvest.htm). This discussion and analysis may contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. The accompanying balance sheets, statements of operations, shareholders' equity and cash flows as of June 30, 2025 and for the six months ended June 30, 2025 and June 30, 2024 are unaudited and have not been reviewed by an external auditor.* 

**Overview**

The Company is a Virginia based corporation formed on February 22, 2022, that originates, acquires and manages real estate backed loans, as well as other real estate related assets, to include single family homes and smaller, multi-family residential properties (under 100 units). The Company purchases performing and non-performing promissory notes, lines of credit, and land installment contracts secured by real property (the "Notes") throughout the United States with loan to value characteristics typically less than 100%. Meaning, the Company intends on purchasing Notes that are fully secured with additional equity coverage. We define loan to value ("LTV") as a percentage of the sum of the unpaid balance plus all senior debt, divided by the estimated value of the collateral. While the Company primarily invests in first mortgages, the Company may opportunistically invest in second mortgages and lease options if they meet the aforementioned characteristics. The Company also invests in acquiring middle and upper class single family homes and smaller multi-family residential properties, and will also originate business purpose mortgage loans secured by the same. While the Company will typically make the aforementioned investments on a cash basis, it reserves the right to employ the use of credit facilities to enhance its buying power. In no event will the Company acquire debt from a credit facility in excess of 70% of loan to value to purchase assets.

The Company engages in originating business purpose mortgage loans throughout the United States. To support the origination and sale of Business purpose mortgage loans, the Company operates as a correspondent lender and utilizes a warehouse line of credit specifically for these purposes. The Company currently maintains a $10 million warehouse facility, which is exclusively dedicated to originating Business purpose mortgage loans. These loans are originated under the Company's underwriting guidelines, funded through the warehouse line, and temporarily held in a special purpose vehicle ("SPV"). The Warehouse Lender generally funds up to 85% of the loan amount. These loans are expected to be sold to third-party investors or institutional buyers within 30 days of origination. In certain cases, the Company may choose to retain select loans on its balance sheet based on strategic or market considerations. The Company has not utilized its warehouse line of credit as of June 30, 2025.

The Company's portfolio consists of:

*Residential Mortgage Loans ("RML"):* These are loans backed by residential real estate and made to borrowers for personal, family, vacation, or household use. We purchase both performing and non-performing Residential Mortgage Loans on the secondary market to maintain diversity of the portfolio. The Company's primary focus is on non-performing loans due to the difference between the discounted purchase price and the unpaid principal balance ("UPB"), accrued interest, and advances being greater.

 

*Business Purpose Mortgage Loans ("BPL"):* In addition to acquiring RML's, the Company engages in originating and purchasing business purpose mortgage loans. These are loans secured by real estate and made to an individual or entity for a non-consumer purpose such as purchasing an investment property that will be used as a rental property. A borrower can be the natural person, or the business entity obligated to repay the loan. BPL are typically short term in nature and are intended to "bridge" the gap until the borrower secures permanent financing or sells the property. We consider our BPL to include the following categories: Real Estate Construction, Real Estate Commercial, and Real Estate Residential.

*Real Estate Properties:* The Company also owns single-family homes and smaller multi-family residential properties purchased on a cash basis.

*Other Real Estate Properties ("OREO"):* The Company owns property acquired in full or partial settlement of loan obligations generally through foreclosure or deed in lieu of foreclosure.

**Results of Operations**

In the opinion of Management, all adjustments necessary in order to make the interim financial statements not misleading have been included.

The following Results of Operations are based on the unaudited financial statements for the six months ended June 30, 2025 ("SME June 30, 2025"), the unaudited financial statements for the six months ended June 30, 2024 ("SME June 30, 2024"), and the audited financial statements as of December 31, 2024.

For the SME June 30, 2025, the Company had Net Income of $920,708, total revenues of $1,703,808, and other income of $1,082,434. The Net Income was primarily driven by interest income on loans of $1,377,972, gains on transfer from loan to REO of $790,748, and a decrease in personnel costs of $141,541.

For the SME June 30, 2024, the Company had a Net Operating Loss ("NOL") of $66,454, total revenues of $1,172,834, and other income of $170,284. The NOL was primarily driven by personnel expenses, including salaries and benefits, of $844,087.

 

*Revenues*

We currently generate the majority of our revenue from interest on loans and loan origination fees ("Lender Fees"). The amount of revenue from interest from loans increased for the SME June 30, 2025 as compared to the SME June 30, 2024 due to an increase in the unpaid principal balance ("UPB") of accrual loans in our portfolio. The amount of revenue from interest on loans of $1,377,972 for the SME June 30, 2025 was recognized on 35 loans. Interest revenue of $896,262 for the SME June 30, 2024 was recognized on 48 loans.

Interest on Loans in the Statements of Operations in the financial statements is comprised of interest earned from the following situations:

● Prepayments of nonaccrual ("non-performing") loans

● Prepayments of accrual ("performing") loans

● Contractual interest payments due on performing loans

The following table summarizes the revenue included in Interest on Loans in the Statements of Operations due to prepayments of non-performing and performing loans:

---

| | | | |
|:---|:---|:---|:---|
|  | **SME June 30, 2025** | **SME June 30, 2025** | **SME June 30, 2025** |
|  | **Non-performing** | **Performing** | **Total** |
| Interest on Loans | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22997 | $1780 | $24777 |
| *Number of loans* | *1* | *1* | *2* |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **SME June 30, 2024** | **SME June 30, 2024** | **SME June 30, 2024** |
|  | **Non-performing** | **Performing** | **Total** |
| Interest on Loans | $28268 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0 | $28268 |
| *Number of loans* | *1* | *0* | 1 |

---

The decrease in Lender Fees revenue for the SME June 30, 2025 as compared to the SME June 30, 2024 is due a decrease in the amount of Lender Fees charged to borrowers and being credited to income due to the Company purchasing more loans than originating.

Late Fees are recognized as revenue when they are contractually due on performing loans. The increase in Late Fees for the SME June 30, 2025 as compared to the SME June 30, 2024 is due to the late fees occurring on business purpose mortgage loans with a higher unpaid principal balance. Late Fees on business purpose mortgage loans are generally calculated as a percentage of the UPB.

Advances are payments made by the Lender which are an obligation of the borrower. An example of Advances are payments made for property taxes, homeowners' insurance or past due utility bills or municipal liens and fines. When the Company purchases a loan, there are sometimes Advances owed on the loan, in addition to the loan balance and unpaid interest of the loan. When we purchase a loan with Advances, this means the prior lender made an advance on the borrower's behalf and the prior lender did not receive payment from the borrower for said Advances. If we purchase a loan with Advances, we are entitled to receive all future payments from the borrower for the unpaid balance of Advances. Payments we receive for the unpaid balance of Advances are recognized as revenue upon receipt and included in Late Fees and Other on the Statements of Operations.

When we make Advances on the borrower's behalf, the amount is recorded as a receivable and is shown in Other Receivables, net on the Balance Sheets in the financial statements. When we receive a payment from the borrower for Advances paid by us (not the prior lender), the payment is recorded as a reduction to the receivable.

 

Rental Income is generated from our rental properties. Rental income for the SME June 30, 2025 as compared to the SME June 30, 2024 is similar due to the occupancy and rent rates remaining consistent during both periods.

**Other Revenue** 

The Company utilizes its business credit card for marketing, advertising, and other general and administrative expenses. The business credit card provides limited liquidity and cash back rewards on purchases. The increase in Other Revenue for the SME June 30, 2025 as compared to the SME June 30, 2024 is primarily attributable to dividend income of $33,277 earned from a money market account established during 2025. The Company will temporarily place funds in such accounts following capital inflows, while conducting due diligence related to prospective asset acquisitions or loan originations. These placements are intended to preserve liquidity and generate short-term income during the interim evaluation period.

*Other Income*

We report gains on the transfer and sale of our loans and real estate in Other Income in the Statements of Operations in the financial statements. The Gain on Sale of Real Estate Property for the SME June 30, 2025 of $137,531 was from the sale of one foreclosure property. The Gain on Sale of Real Estate Property for the SME June 30, 2024 of $10,160 was from the sale of two foreclosure properties. The Gain on Transfer from Loan to REO for the SME June 30, 2025 of $790,748 was from the transfer from loan to REO of 10 foreclosure properties.

The Gain on Sale of Mortgage Loans is primarily due to the company liquidating loans as per the business plan, which includes selling non-performing loans off to the secondary market upon the borrowers commencing with making payments and the loan considered reperforming. The Gain on Sale of Mortgage Loans for the SME June 30, 2025 is from the sale of 11 residential mortgage loans. The Gain on Sale of Mortgage Loans for the SME June 30, 2024 is from the sale of 22 residential mortgage loans.

**Operating Expenses**

 

*Loan Expenses*

The Company incurred expenses directly related to its Loans of $200,670 and $64,351 for the SME June 30, 2025 and the SME June 30, 2024, respectively, and is included in Operating Expenses: Loan Expenses in the Statements of Operations in the Financial Statements. The following table is a breakdown of our Loan Expenses:

---

| | | |
|:---|:---|:---|
|  | **SME <br> June 30, <br> 2025** | **SME <br> June 30, <br> 2024** |
| Due Diligence | $33850 | $2172 |
| Legal | 55294 | 33090 |
| Loan Servicing Fees | 13567 | 15376 |
| Miscellaneous | 97959 | 13713 |
| **Total Loan Expenses** | $**200670** | $**64351** |

---

The Company performs due diligence on the loans prior to purchase. Due diligence expenses may include costs for title search and review, property inspections, attorney reviews and engaging third parties to review any available information about the loans, the creditworthiness of the borrower, and evaluating the value and condition of the underlying collateral on the loan. The increase in due diligence costs for the SME June 30, 2025 as compared to the SME June 30, 2025 is primarily attributable to a higher volume of loans reviewed. As more loan opportunities were evaluated, related expenses such as third-party reports, valuations, and underwriting analyses increased accordingly. We expect operating expenses to continue to increase in the future as we increase the number of loans within the portfolio.

Legal expenses directly related to our loans generally relate to legal action pertaining to our non-performing loans. The increase in legal expenses for the SME June 30, 2025 as compared to the SME June 30, 2025 is primarily the result of an increase in the number of loans proceeding through bankruptcy and foreclosure, including several contested cases. These matters require additional legal filings, representation, and case management, which contributed to the overall rise in costs.

We utilize a loan servicing company for our loans and pay a monthly servicing fee along with other miscellaneous servicing expenses to the loan servicing company. The decrease in Loan Servicing Fees for the SME June 30, 2025 as compared to the SME June 30, 2024 was due to the decrease in the number of loans being boarded and deboarded in our portfolio.

**Real Estate Property Expenses**

Real Estate Property Expenses include expenses related to the Company's multi-family rental properties, residential properties, and its OREO. Expenses include insurance, property management fees, property taxes, repairs and maintenance, utilities, and other miscellaneous expenses. Real Estate Property Expenses of $84,080 and $89,439 as shown in Real Estate Property Expenses in the Statements of Operations as of June 30 2025 and June 30, 2024, respectively, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** | **As of June 30,** |
|  | **2025** | **2024** |
| Insurance | $6675 | $3556 |
| Property Management Fees | 3060 | 5105 |
| Property Taxes | 4108 | 1787 |
| Repairs and Maintenance | 43255 | 13902 |
| Utilities | 5602 | 10034 |
| Selling Expenses | 14150 | 28440 |
| Other Miscellaneous Expenses | 7230 | 26615 |
| **Total Real Estate Property Expenses** | $**84080** | $**89439** |

---

Repairs and Maintenance Expenses increased for the SME as of June 30, 2025, compared to the same period in 2024, primarily due to non-capitalizable expenditures incurred on our OREO properties. These repairs were necessary to prepare the properties for sale or rental.

**General and Administrative ("G&A") Expenses**

The decrease in G&A Expenses for the SME June 30, 2025 as compared to the SME June 30, 2024 is primarily due to a reduction in software expenses and attendance fees and travel related to investor and broker dealer conferences. We regularly review our general and administrative expenses by assessing actual as compared to budgeted costs each month. As part of a cost-saving initiative, the Company reduced its dues and subscriptions, resulting in a cost savings of $23,895 for the SME as of June 30, 2025, compared to the same period in 2024.

We incur bank fees when receiving contributions from investors and paying monthly dividends to investors. Bank fees increased by $4,173 for the SME June 30, 2025 as compared to the SME June 30, 2024 due to the increasing number of investors. We expect bank fees to continue to increase in the future as we acquire more investors and therefore increase the number of bank transactions.

**Liquidity and Capital Resources**

We obtain the capital to fund our investment activities and operating expenses from the issuance of Preferred Shares and Bonds.

The Company raises capital through the issuance of Series A Preferred Shares with an initial stated value of $10 per share. From Inception (February 22, 2022) through June 30, 2025, the Company has raised $39,715,960 (net of redemptions) of capital through the issuance of Class A Series A Preferred Shares through its Regulation A Offering. During the same period, the Company issued 158,562 Shares of Class A Series A Preferred Bonus Shares (net of forfeitures via early redemption).

On February 2, 2023, the Company filed a notice with the SEC pursuant to Rule 506(c) of Regulation D, indicating its intent to offer the following classes of its Series A Preferred Stock: Class B, Class C, and Class D (collectively, "Class BCD"). As of June 30, 2025, the Company has raised $6,262,500 through the issuance of Series A Preferred Shares through the Reg D 506c offering. During 2023, the Company signed an Engagement Agreement to have MIT Associates LLC "MIT" as the exclusive financial advisor and lead placement agent in connection with Reg D 506c solicitation equity offering of Series A Preferred Shares.

The following table represents a rollforward of the number of Shares, by class, subject to redemption from Inception (February 22, 2022 through June 30, 2025):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Series A Preferred Shares Subject to Redemption** | **Series A Preferred Shares Subject to Redemption** | **Series A Preferred Shares Subject to Redemption** | **Series A Preferred Shares Subject to Redemption** | **Series A Preferred Shares Subject to Redemption** |
|  | **Class A** | **Class B** | **Class C** | **Class D** | **Total** |
| **Balance at inception February 22, 2022** | **-** | **-** | **-** | **-** | **-** |
| Shares Issued | 660163 |  |  |  | 660163 |
| Bonus Shares Issued | 34979 | - | - | - | 34979 |
| **Balance at December 31, 2022** | **695142** | **-** | **-** | **-** | **695142** |
| Shares Issued | 1283723 | 78800 | 50000 |  | 1412523 |
| Bonus Shares Issued | 58451 |  |  |  | 58451 |
| Shares Redeemed | (22550) |  |  |  | (22550) |
| Bonus Shares forfeited | (978) | - | - | - | (978) |
| **Balance at December 31, 2023** | **2013788** | **78800** | **50000** | **-** | **2142588** |
| Shares Issued | 945940 | 170800 | 55000 | 80000 | 1251740 |
| Bonus Shares Issued | 43886 |  |  |  | 43886 |
| Gross Up Shares |  | 4875 |  |  | 4875 |
| Shares Redeemed | (8850) |  |  |  | (8850) |
| Bonus Shares forfeited | (350) | - | - | - | (350) |
| **Balance at December 31, 2024** | **2994414** | **254475** | **105000** | **80000** | **3433889** |
| Shares Issued | 513970 | 116650 | 50000 | 25000 | 705620 |
| Bonus Shares Issued | 24274 |  |  |  | 24274 |
| Gross Up Shares |  | 3367 | 1250 |  | 4617 |
| Shares Redeemed | (27050) |  |  |  | (27050) |
| Bonus Shares forfeited | (1700) | - | - | - | (1700) |
| **Balance at June 30, 2025 (unaudited)** | **3503908** | **374492** | **156250** | **105000** | **4139650** |

---

On January 15, 2025, the Company filed an additional notice with the SEC under Rule 506(c) for the offering of Series B Bonds, specifically Class D4, Class D5, and Class E5 Bonds. As of June 30, 2025, the Company has received $5,605,000 through the issuance of Class D5 Series B Bonds.

The Company submitted a Post Offering Statement for qualification dated August 19, 2024 to extend the Offering and offer up to $75,000,000 of our Class A Series A Preferred Shares.

The Company currently maintains a warehouse line of credit, which is considered a debt obligation. As of June 30, 2025 the Company has not used this line of credit. This facility will be secured by a subset of the Company's loans and is used as a short-term financing mechanism to originate loans and provide liquidity. The Company typically repays the line upon sale of the loans, thereby recycling capital efficiently. Management's goal is to expand access to credit facilities, including securing a line of credit up to $20,000,000 in 2026. Any future line of credit would be secured by a subset of our loans.

The Company had cash on hand of $4,995,850 as of June 30, 2025.

We require capital to fund our investment activities and operating expenses. Our sources of capital may include net proceeds from our future Offerings, cash flow from operations, net proceeds from asset repayments and sales and borrowings under credit facilities.

We anticipate that cash on hand, along with future operational cash flows and proceeds from potential future offerings, will provide sufficient liquidity to meet our future funding commitments and operational costs. Should the Company decide to invest in residential real estate properties, it may consider financing options that allow leveraging the purchase on favorable terms while still generating a return. As of June 30, 2025, the Company has yet to secure any financing on its real estate owned properties.

If we are unable to raise additional funds, we may face long-term liquidity and capital resource challenges. This would result in fewer investments, leading to less diversification in the type, number, and size of our investments.

Additionally, we could experience greater fluctuations based on the performance of the specific assets we acquire. Moreover, our inability to secure substantial funds would increase our fixed operating expenses as a percentage of gross income and limit our ability to make distributions. We expect to continue paying interest on Bonds and dividends on Series A Preferred Shares and Bonus Shares on a monthly basis in the near term from operating income, offering proceeds and other sources.

**Trend Information**

For the first six months of 2025, the mortgage industry demonstrated a divergence between traditional economic indicators and actual loan performance. Historically, rising unemployment has been closely linked with higher mortgage defaults. While unemployment has indeed ticked upward this year, defaults on owner-occupied residential mortgage loans have remained stable. Borrowers in this category continue to benefit from high equity levels and the tighter underwriting standards adopted in the post-2008 era, suggesting that the broader homeowner market remains relatively resilient.

In contrast, a different trend has emerged in loans originated for investment purposes. The volume of non-owner-occupied loans entering default has increased significantly. Many of these borrowers operate with thinner margins, rely on rental income or short-term property appreciation, and are more exposed to cash flow disruptions. This has resulted in a noticeable rise in defaults among investor-held loans, even as owner-occupied performance remains steady.

Trading activity reflects this divide. The number of owner-occupied loans available for purchase on the secondary market remains limited, largely constrained by bid/ask pricing spreads between sellers and buyers. However, offerings of investor-backed mortgage loans have grown, both from distressed sellers and from lenders looking to reduce exposure.

Adding to this picture, certain regional markets have begun to experience home price declines. While the overall housing market remains supported by long-term supply constraints, specific areas have shown downward adjustments, creating additional risk pressure on leveraged investors.

Together, these dynamics suggest a bifurcated market: owner-occupied residential loans appear stable, supported by stronger borrower balance sheets, while investor-backed loans are exhibiting rising levels of distress and fueling increased activity in secondary trading.

The Company is closely monitoring this trend and its potential impacts on its loan portfolio. As of June 30, 2025, there has been no significant effect on the Company's performance. However, any deterioration in economic conditions could negatively impact cash flow and potentially affect our ability to make monthly distributions to investors.

**Item 2. Other Information**

Nothing to report as of June 30, 2025.

**Item 3. Financial Statements**

**CWS Investments Inc.**

**Balance Sheets**

**As of June 30, 2025 and December 31, 2024**

---

| | | |
|:---|:---|:---|
|  | **As of <br> June 30,<br> 2025** | **As of <br> December 31,<br> 2024** |
|  | **(unaudited)** | **(audited)** |
| **ASSETS** | | |
| Residential Mortgage Loans, held-for-sale, net | $1281914 | $1034747 |
| Residential and Business Purpose Mortgage Loans, held-for-investment, net | 26226475 | 17088695 |
| Real Estate Property, held-for-sale, net | 1484561 | 377938 |
| Other Real Estate Property, held-for-sale, net | 1990754 | 1728961 |
| Internal-use Software Intangible Asset, net | 63436 | 63436 |
| Cash and Cash Equivalents | 4995850 | 2005540 |
| Accounts Receivable | 2675 | 232447 |
| Interest Receivable | 1300 | 6164 |
| Other Receivables, net | 403431 | 2424072 |
| Prepaid Expenses | 10623 | 21969 |
| Due from Related Parties | 3926 | 17 |
| Cash Surrender Value of Company-owned Life Insurance | 30097 | 19477 |
| Furniture and Equipment, net | 5390 | 5390 |
| **Total Assets** | **36500432** | **25008853** |
| **LIABILITIES, REDEEMABLE SERIES A PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT** |  |  |
| Accounts Payable | 185345 | 60398 |
| Credit Card Obligations | 49407 | 10887 |
| Accrued Liabilities | 18353 | 103845 |
| Taxes Payable |  | 51895 |
| Liability for Credit Losses on Unfunded Loan Commitments | 4072 | 4072 |
| Bond Liabilities, net | 5542847 | - |
| **Total Liabilities** | **5800024** | **231097** |
| **Commitments and Contingencies** |  |  |
| Series A Preferred Stock, 4,139,650 and 3,433,889, Shares Issued and Outstanding at June 30, 2025 and December 31, 2024, respectively, at Redemption Value | 39715960 | 32930260 |
| **Stockholders' Deficit** |  |  |
| Common Stock 1,000,000 Shares Authorized, 1,000,000 Shares Issued and Outstanding; Zero Par Value Per Share |  |  |
| Additional Paid-in Capital |  |  |
| Accumulated Deficit | (9015552) | (8152504) |
| **Total Stockholders' Deficit** | **(9015552)** | **(8152504)** |
| **TOTAL LIABILITIES, REDEEMABLE SERIES A PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT** | **36500432** | **25008853** |

---

See accompanying unaudited notes to the financial statements

**CWS Investments Inc.**

**Statements of Operations**

**For the Six Months Ended June 30, 2025 and June 30, 2024**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
|  | **(unaudited)** | **(unaudited)** |
| **REVENUES** |  |  |
| Interest on Loans | 1377972 | 896262 |
| Late Fees and Other | 9830 | 2135 |
| Lender Fees | 182708 | 205457 |
| Rental Revenue | 65093 | 64495 |
| Other Revenue | 68205 | 4485 |
| **Total Revenues** | **1703808** | **1172834** |
| **OPERATING EXPENSES** |  |  |
| Personnel Expenses | 702546 | 860766 |
| Loan Expenses | 200670 | 64351 |
| Real Estate Property Expenses | 84080 | 89439 |
| General and Administrative | 279795 | 389088 |
| Bond Interest and Issuance Costs | 149014 |  |
| Provision for Credit Losses | 439724 | 5928 |
| **Total Operating Expenses** | **1855829** | **1409572** |
| **OTHER INCOME** |  |  |
| Gain on Sale of Mortgage Loans | 154155 | 160124 |
| Gain on Transfer from Loan to REO | 790748 |  |
| Gain on Sale of Real Estate Property | 137531 | 10160 |
| **Total Other Income** | **1082434** | **170284** |
| **INCOME (LOSS) BEFORE TAXES** | **930413** | **(66454)** |
| Income Tax Expense | 9705 | - |
| **NET INCOME (LOSS)** | **920708** | **(66454)** |
| Series A Preferred Stock Dividends | **(1572838)** | **(982564)** |
| **NET LOSS AVAILABLE TO COMMON STOCKHOLDER** | **(652130)** | **(1049018)** |

---

See accompanying unaudited notes to the financial statements.

**CWS Investments Inc.**

**Statements of Cash Flows**

**For the Six Months Ended June 30, 2025 and June 30, 2024**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
|  | **(unaudited)** | **(unaudited)** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| Net Income (Loss) | $920708 | $(66454) |
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used) in Operating Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Cash Surrender Value of Company-owned Life Insurance Policies | (10620) | (13535) |
| &nbsp;&nbsp;&nbsp;Amortization of Internal-use Software |  | 21000 |
| &nbsp;&nbsp;&nbsp;Accretion of Loan Costs | 3686 | 18362 |
| &nbsp;&nbsp;&nbsp;Accretion of Loans HFI discount | (786797) |  |
| &nbsp;&nbsp;&nbsp;Furniture and Equipment: Accumulated Depreciation |  | 967 |
| &nbsp;&nbsp;&nbsp;Real Estate Property: Accumulated Depreciation |  | 6077 |
| &nbsp;&nbsp;&nbsp;Provision for Losses on Real Estate | 393100 |  |
| &nbsp;&nbsp;&nbsp;Provision for losses on Recoverable Loan Advances | (948) | (14220) |
| &nbsp;&nbsp;&nbsp;Provision for Losses on Loans | 47572 | 47392 |
| &nbsp;&nbsp;&nbsp;Gain on Sale of Real Estate Property | (137530) | (10160) |
| &nbsp;&nbsp;&nbsp;Gain on Loan Transfer to REO | (790748) |  |
| &nbsp;&nbsp;&nbsp;Gain on Sale of Mortgage Loans | (154155) | (160124) |
| &nbsp;&nbsp;&nbsp;Purchases of Loans, HFS | (515000) |  |
| &nbsp;&nbsp;&nbsp;Principal Payments: Loans, HFS | 113509 | 397524 |
| &nbsp;&nbsp;&nbsp;Sale Proceeds: Loans, HFS | 307871 | 553689 |
| Changes in Operating Assets and Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts Receivable | 229772 |  |
| &nbsp;&nbsp;&nbsp;Interest Receivable | 19228 | (9934) |
| &nbsp;&nbsp;&nbsp;Other Receivables | 1991237 | (35065) |
| &nbsp;&nbsp;&nbsp;Prepaid Expenses | 11346 | (29384) |
| &nbsp;&nbsp;&nbsp;Due From Related Parties | (3909) | 554 |
| &nbsp;&nbsp;&nbsp;Credit Card Obligations | 38520 | (43435) |
| &nbsp;&nbsp;&nbsp;Accrued Liabilities | (85492) | (58280) |
| &nbsp;&nbsp;&nbsp;Accounts Payable | 124947 | (482) |
| &nbsp;&nbsp;&nbsp;Taxes Payable | (51895) | - |
| **Net Cash Provided by Operating Activities** | **1664402** | **604492** |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| Purchase and Funding of Loans, HFI net of discount | (12539655) | (7487786) |
| Broker Fees and Loan Costs Loans HFI | (157125) | (3250) |
| Principal Payments on Loans HFI | 2968825 | 2534000 |
| Lender Fees for Loans HFI | 25342 |  |
| Purchases of Furniture and Equipment |  | (3236) |
| Cash for Deed to Real Estate Property - REO |  | (1000) |
| Purchases of Real Estate Property | (1031979) |  |
| Proceeds from Sale of Real Estate Property | 1790174 | 191060 |
| Improvements of Real Estate Property | (274464) | (6793) |
| **Net Cash (Used in) Investing Activities** | **(9218883)** | **(4777005)** |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| Issuance of Series A Preferred Shares | 7056200 | 5156730 |
| Redemption of Series A Preferred Shares, net of penalties | (264750) | (25150) |
| Offering Costs | (216668) | (195821) |
| Distributions to Preferred Stockholders | (1572838) | (982564) |
| Issuance of Bonds, net | 5542847 | - |
| **Net Cash Provided by Financing Activities** | **10544791** | **3953195** |
| Net Increase in Cash and Cash Equivalents | 2990310 | (219318) |
| Beginning of Year or Period | 2005540 | 1064555 |
| **End of Year or Period** | **4995850** | **845237** |

---

See accompanying unaudited notes to the financial statements

**CWS Investments Inc.**

**Statement of Changes in Stockholders' Deficit**

**For the Six Months Ended June 30, 2025 and June 30, 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Preferred <br> Stock** | **Common <br> Stock** | **Additional <br> Paid-in <br> Capital** | **Accumulated <br> Deficit** | **Total Stockholders' <br> Deficit** |
| **Balance at January 1, 2025** | $**-** | $**-** | $**-** | $**(8152504)** | $**(8152504)** |
| Issuance of Series A Preferred Shares | 7056200 |  |  |  | 7056200 |
| Reclassification of Preferred Stock at Redemption Value | (7056200) |  |  |  | (7056200) |
| Redemption of Series A Preferred Shares | (270500) |  |  |  | (270500) |
| Reclassification of Redeemed Preferred Stock at Redemption Value | 270500 |  |  |  | 270500 |
| Penalties on Early Redemption of Series A Preferred Shares |  |  |  | 5750 | 5750 |
| Offering Costs |  |  |  | (216668) | (216668) |
| Distributions to Preferred Stockholders |  |  |  | (1572838) | (1572838) |
| Net Income | - | - | - | 920708 | 920708 |
| **Balance at June 30, 2025 (unaudited)** | $**-** | $**-** | $**-** | $**(9015552)** | $**(9015552)** |
| **Balance at January 1, 2024** | $**-** | $**-** | $**-** | $**(6011699)** | $**(6011699)** |
| Issuance of Series A Preferred Shares | 5156730 |  |  |  | 5156730 |
| Reclassification of Preferred Stock at Redemption Value | (5156730) |  |  |  | (5156730) |
| Redemption of Series A Preferred Shares | (28500) |  |  |  | (28500) |
| Reclassification of Redeemed Preferred Stock at Redemption Value | 28500 |  |  |  | 28500 |
| Penalties on Early Redemption of Series A Preferred Shares |  |  |  | 3350 | 3350 |
| Offering Costs |  |  |  | (195821) | (195821) |
| Distributions to Preferred Stockholders |  |  |  | (982564) | (982564) |
| Net Loss | - | - | - | (66454) | (66454) |
| **Balance at June 30, 2024 (unaudited)** | $**-** | $**-** | $**-** | $**(7253188)** | $**(7253188)** |

---

See accompanying unaudited notes to the financial statements

**CWS Investments Inc.**

**Notes to the Financial Statements (unaudited)**

**1. ORGANIZATION AND BUSINESS**

**Nature of Operations**

The Company is a Virginia based corporation formed on February 22, 2022, that originates, acquires and manages real estate backed loans, as well as other real estate related assets, to include single family homes and smaller, multi-family residential properties (under 100 units). The Company purchases performing and non-performing promissory notes, lines of credit, and land installment contracts secured by real property (the "Notes") throughout the United States with loan to value characteristics typically less than 100%. Meaning, the Company intends on purchasing Notes that are fully secured with additional equity coverage. We define loan to value ("LTV") as a percentage of the sum of the unpaid balance plus all senior debt, divided by the estimated value of the collateral. While the Company primarily invests in first mortgages, the Company may opportunistically invest in second mortgages and lease options if they meet the aforementioned characteristics. The Company also invests in acquiring middle and upper class single family homes and smaller multi-family residential properties, and will also originate business purpose mortgage loans secured by the same. While the Company will typically make the aforementioned investments on a cash basis, it reserves the right to employ the use of credit facilities to enhance its buying power. In no event will the Company acquire debt from a credit facility in excess of 70% of loan to value to purchase assets.

The Company engages in originating business purpose mortgage loans throughout the United States. To support the origination and sale of Business purpose mortgage loans, the Company operates as a correspondent lender and utilizes a warehouse line of credit specifically for these purposes. The Company currently maintains a $10 million warehouse facility, which is exclusively dedicated to originating Business purpose mortgage loans. These loans are originated under the Company's underwriting guidelines, funded through the warehouse line, and temporarily held in a special purpose vehicle ("SPV"). The Warehouse Lender generally funds up to 85% of the loan amount. These loans are expected to be sold to third-party investors or institutional buyers within 30 days of origination. In certain cases, the Company may choose to retain select loans on its balance sheet based on strategic or market considerations. The Company has not utilized its warehouse line of credit as of June 30, 2025.

**Offering of Securities**

The Company is offering a maximum amount of $75,000,000 of a single class ("Class A") of Redeemable Series A Preferred Stock ("Preferred Stock" or "Shares") at an offering price of $10 per share (the "Offering"). The minimum permitted purchase is $5,000 for Class A Shares. The Offering is being conducted pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings. The Offering will terminate on the earlier of 12 months from the date the offering circular was qualified by the Securities and Exchange Commission ("SEC") (which date may be extended for an additional two years in the Company's sole discretion) or the date when all Shares have been sold. The Offering Circular was qualified by the SEC on July 13, 2022, and the Company filed a Post Offering Statement on June 30, 2023 to extend the offering past the July 13, 2023 termination date. The Company filed an additional Post Offering Statement on August 19, 2024.

**Regulation D, Rule 506(c) Offering Disclosure**

On February 2, 2023, the Company filed a notice with the SEC pursuant to Rule 506(c) of Regulation D, indicating its intent to offer the following classes of its Series A Preferred Stock: Class B, Class C, and Class D (collectively, "Class BCD"). These securities are being offered exclusively to accredited investors under the Rule 506(c) exemption, which permits general solicitation provided that the issuer takes reasonable steps to verify accredited investor status.

The offering provides accredited investors the opportunity to purchase Class BCD Shares in aggregate amounts ranging from a minimum of $100,000 to a maximum of $75,000,000. Minimum investment thresholds vary by class:

● **Class B Shares**: Minimum investment of $100,000

● **Class C Shares**: Minimum investment of $250,000

● **Class D Shares**: Minimum investment of $1,000,000

On January 15, 2025, the Company filed an additional notice with the SEC under Rule 506(c) for the offering of Series B Bonds, specifically Class D4, Class D5, and Class E5 Bonds. The minimum investment amounts for these Bonds are as follows:

● **Class D4 Bonds**: $100,000

● **Class D5 Bonds**: $100,000

● **Class E5 Bonds**: $500,000

Certain Class D5 Bonds include contractual rights to phantom equity interests. These rights entitle the bondholder to receive cash distributions that are economically equivalent to a pro rata share of the Excess Distributable Cash otherwise payable to holders of the Company's common stock. These phantom equity interests do not confer any ownership or voting rights and are structured as non-equity contractual obligations.

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation** 

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The Company adopted the calendar year as its basis of reporting.

**Segment Reporting**

ASC Topic 280, Segment Reporting, requires public entities to report financial and descriptive information about their reportable operating segments. The Company adopted ASU 2023-07 "*Segment Reporting (Topic 280) – Improvement to Reportable Segment Disclosures"* on January 1, 2024.

The Company's chief operating decision maker ("CODM") is the Company's Chief Executive Officer and President ("CEO"). The CEO is responsible for allocating the Company's resources and for assessing its operating performance.

The Company has identified one reportable segment: investing in primarily mortgage related single-family and multi-family residential assets within the U.S. Factors used to identify the reportable segment include the basis of the Company being organized to invest in mortgage-backed loans and other real estate assets. We derive our revenues from interest income on loans, origination and other lender fees on loans, and gains on residential mortgage loans purchased in the secondary market at a discount and subsequently sold.

The accounting policies of the operating segment are the same as those described in the Summary of Significant Accounting Policies. No differences exist between the measurements used for internal management reporting purposes and those used in the Company's consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles. The CODM reviews financial information for the overall investment portfolio of assets and assesses the operating results and performance of the Company as a whole without differentiating between loan classification or status. The allocation of company-wide resources, specifically head count, is determined by the CODM based on net income calculated on the same basis as the net income reported in the Company's Statements of Operations. The CODM is regularly provided with expense information at a level consistent with that disclosed in the Company's Statements of Operations. The CODM uses net income to monitor budgeted versus actual results in assessing the performance of the segment. The measure of segment assets is reported on the Balance Sheets as Total Assets.

The Company did not have any intra-entity sales or transfers.

**Use of Estimates**

The preparation of the Company's financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition; valuation of accounts receivable, other receivables, loans held for investment, real estate property held for investment; evaluating impairment on loans and real estate properties held for sale; the allowance for credit losses; fair values of financial instruments; realization of deferred tax assets; income taxes; and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable.

**Risks and Uncertainties**

*Industry Risk*

The real estate market is inherently speculative and unpredictable. The Company's assets are secured by real estate holdings. In the event of a market downturn, the Company may face challenges in paying dividends or redeeming outstanding shares at the stated redemption price. Over the past two decades, the real estate industry has experienced significant fluctuations, including the notable downturn from 2007 to 2009. Such events can impact the Company's ability to generate revenue and subsequently distribute dividends and proceeds.

*Risks Relating to Real Estate Loans*

The ultimate performance and value of the Company's investments will depend upon, in large part, the underlying borrower on the mortgage's ability to perform and the Company's ability to operate any given property so that it produces sufficient cash flows necessary to generate profits. Revenues and cash flows may be adversely affected by: changes in national or local economic conditions; changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics, including, but not limited to, changes in the supply of and demand for competing properties within a particular local property market; competition from other properties offering the same or similar services; changes in interest rates and the credit markets which may affect the ability to finance, and the value of, investments; the on-going need for capital improvements, particularly in older building structures; changes in real estate tax rates and other operating expenses; changes in governmental rules and fiscal policies, civil unrest, acts of God, including earthquakes, hurricanes, and other natural disasters, acts of war, or terrorism, which may decrease the availability of or increase the cost of insurance or result in uninsured losses; changes in governmental rules and fiscal policies which may result in adverse tax consequences, unforeseen increases in operating expenses generally or increases in the cost of borrowing; decreases in consumer confidence; government taking investments by eminent domain; various uninsured or uninsurable risks; the bankruptcy or liquidation of Borrowers or tenants; adverse changes in zoning laws; the impact of present or future environmental legislation and compliance with environmental laws. If property securing loans becomes real estate owned as a result of foreclosure, the Company bears the risk of not being able to sell the property to recover the investment, and the Company is exposed to all the risks associated with the ownership of real property.

**Redeemable Shares**

All Series A Preferred Shares contain a redemption feature which allows for the redemption of such Shares. Class A Preferred Stock is subject to a four year holding period ("Class A Lock-up Period"), and Class B, C, and D Preferred Stock is subject to a three year holding period ("Class B, C, D Lock-up Period"). In accordance with ASC 480, conditionally redeemable Series A Preferred Shares (including Class A and Class B, C, and D Preferred Stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) are classified as temporary equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity's equity instruments, are excluded from the provisions of ASC 480. The Company recognizes changes in redemption value immediately as they occur. However, while Series A Preferred Shares that are redeemed prior to the applicable Lock-up Period are subject to a penalty or discount to the redemption value, such Series A Preferred Shares have been presented at the original sales price of $10 per share. Further, Class A Bonus Shares received by qualifying investors have no redemption value until after the Class A Lock-up Period.

**Loan Classification**

*Loans Held for Sale ("Loans HFS")*

Loans are classified as held-for-sale when management has positively determined that the loans will be sold in the foreseeable future and the Company has the intent and ability to do so. The Company's held-for-sale loans typically consist of residential mortgage loans. The classification may be made on or after the loan's origination or purchase date. Once a decision has been made to sell loans not previously classified as held-for-sale, such loans are transferred into the held-for-sale classification and carried at the lower of cost or estimated fair value on an individual loan basis. The fair value of Loans HFS is based on prevailing market prices as reported in Whole Loan Pricing Reports from reputable whole loan trading companies specializing in sales and analytics such as RAMS Mortgage Capital ("RAMS") and MIAC Analytics. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

*Loans Held for Investment ("Loans HFI")*

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost, net of the allowance for current expected credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, accrued interest, deferred loan fees and costs, and impairment losses. Interest on Loans HFI is recognized by using the effective-interest method on the principal amounts outstanding. Loan origination fees, net of certain direct origination costs, are deferred and recognized in lender fee income.

**Loan Impairment**

Loans considered held-for-sale are evaluated for impairment by Management at each reporting date. A valuation allowance is recorded to the extent that the fair value of the loan is less than the carrying value of the loan. No valuation allowance for loans held-for-sale was recorded as of June 30, 2025 and December 31, 2024.

**Charge-offs**

The Company records charge-offs for loans held-for-investment when Management determines that all, or a portion, of the unpaid principal balance is uncollectible, which generally occurs when all reasonable means of recovering the loan balance have been exhausted. Such determination is based on factors such as the occurrence of significant changes in the borrower's financial position such that the borrower can no longer pay the obligation, or that the proceeds from collateral will not be sufficient to cover the loan amount. When Management deems all or a portion of a loan to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. Subsequent recoveries, if any, are credited to the ACL when received. Costs incurred to recover charged-off loans are recorded as an expense and included in the Statements of Operations.

**Loan Origination Fees and Costs**

Loan origination fees and costs associated with Loans HFS are deferred and included as part of the loan balance until the loan is sold. For Loans HFI, direct loan origination costs and origination fees are offset, and the net amount is deferred and amortized over the life of the related loan using the interest method described in ASC 835, Interest. The Company does not amortize deferred net fees or costs during periods in which interest income on the loan is not being accrued because of concerns about the collection of principal and interest from the borrower. Net deferred fees from the origination of loans in the amount of $182,708 and $205,457 were amortized into income for the six months ended June 30, 2025 and June 30, 2024, respectively.

**Purchased Credit Deteriorated Assets ("PCD")**

Purchased credit deteriorated refers to a financial asset that has experienced a significant deterioration in credit quality since its origination, and has been purchased, not originated by the current holder. PCD assets are accounted for using a "gross-up" method, where the expected credit losses are added to the purchase price to determine the initial amortized cost.

The Company assesses what is more-than-insignificant credit deterioration since origination and considers the purchased assets with the following characteristics to be consistent with the factors that affect collectability in ASC 326-20-55-4. The Company records the allowance for credit losses in accordance with ASC 326-20-30-13 for the following assets:

&nbsp;&nbsp;&nbsp;&nbsp;a. Financial assets that are delinquent, including maturity
default, as of the acquisition date

&nbsp;&nbsp;&nbsp;&nbsp;b. Financial assets that have been downgraded since origination

&nbsp;&nbsp;&nbsp;&nbsp;c. Financial assets that have been placed on nonaccrual status

&nbsp;&nbsp;&nbsp;&nbsp;d. Financial assets for which, after origination, credit spreads
have widened beyond the threshold specified in its policy.

PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment and can be found in the section titled *Allowance for Current Expected Credit Losses ("ACL")*. In accordance with ASC 326-20, when an entity uses a non-discounted cash flow method, the initial allowance for credit losses for PCD assets should be based on the asset's unpaid principal balance and not its amortized costs basis. The initial allowance is then added to the asset's "initial amortized cost basis" (e.g. purchase price). This is required by the guidance in ASC 326-20-30-14 and was needed to avoid a potentially circular calculation in which the allowance is based on the collectability of the amortized cost bases of an asset, but it also impacts the amortized cost basis through the PCD gross up. When subsequently measuring the ACL, ASC 326-20-35-1 states that the method used to determine the allowance should generally be applied consistently over time. As such, the ACL on a PCD asset is based on the unpaid principal balance and not the amortized cost basis of the asset when using a non-discounted cash flow approach.

The Company measures expected credit losses of PCD assets on a collective, or pool, basis when the financial asset has similar characteristics. Where assets cannot be classified with other assets due to dissimilar risk characteristics, the Company assesses these assets on an individual basis. The sum of the loan's purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision for credit losses expense.

In accordance with ASC 310-10-35-53C, the recognition of income on PCD assets is dependent on having a reasonable expectation about the amount to be collected over the life of the asset. When we can no longer reasonably estimate the amount expected to be collected, we place the PCD asset on nonaccrual status. The ability to place a financial asset on nonaccrual status is not used to circumvent the recognition of a credit loss. When a PCD asset is placed on nonaccrual status, the accrual of interest on loans and the accretion of any noncredit discount or premium is discontinued. Any payments received by the Company while a PCD loan is in nonaccrual status are applied against principal.

**Allowance for Current Expected Credit Losses ("ACL")**

The Company adopted the current expected credit loss ("CECL Standard") on January 1, 2023. The CECL Standard replaced the incurred loss model under existing guidance with an expected loss model for instruments measured at amortized cost, including loan receivables and off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). With the adoption of CECL, the definition of impaired loans was removed from accounting guidance.

The ACL is a valuation account that is deducted from the amortized cost basis of Loans HFI to present the net amount expected to be collected. The Company estimates the ACL based on the non-PCD loan's amortized cost basis and PCD loan's unpaid principal balance ("UPB"). Expected credit losses are reflected in the ACL through a charge to provision for credit loss expense. When the Company deems all or a portion of a loan to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, a loan will typically be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACL when received.

The Company's methodologies for estimating the ACL take into account available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed.

The Company measures expected credit losses of financial assets on a collective, or pool, basis, when the financial assets share similar risk characteristics. Where assets cannot be classified with other assets due to dissimilar risk characteristics, the Company assesses these assets on an individual basis. The Company uses a loss-rate method to estimate expected credit losses. The Company applies an expected loss ratio based on internal and peer historical losses adjusted as appropriate for qualitative factors. The qualitative factors Management considers include company-specific, market, industry or business-specific data, the value of collateral, the short-term duration of remaining contractual terms, a consistent historical track record of real estate pricing, market changes in underlying loan composition of specific portfolios, trends related to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions. Due to the Company's limited history, we utilized the SCALE method developed by the Federal Reserve System for estimating current expected credit losses for institutions with assets of less than $1B to determine an appropriate lifetime loss rate for our loan portfolio. The SCALE tool, also developed by the Federal Reserve System, uses publicly available data from Schedule RI-C of the Call Report to derive the initial proxy expected lifetime loss rates. The data reported in Schedule RI-C requires institutions with $1 billion or more in total assets to report disaggregated information by portfolio segment on the amortized cost basis of held-for-investment loans and leases and the related balance in the allowance for credit losses at the end of each quarter in accordance with ASU 2016-13.

Management's process for evaluating the ACL is:

&nbsp;&nbsp;&nbsp;&nbsp;1. Assign
each loan to a portfolio segment based on standard Mortgage Call Report segments. The segments are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. *Real Estate Construction* - includes loans which were given to borrowers for rehabilitation/construction of property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. *Real Estate Commercial* - includes loans given to borrowers for commercial assets including retail, office or multifamily (5 or more units).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. *Real Estate Residential* - includes loans on single family (1-4 unit) properties that were not undergoing any rehabilitation or construction.

&nbsp;&nbsp;&nbsp;&nbsp;2. Input
the aggregated amortized cost, including accrued interest, for loans in each segment.

&nbsp;&nbsp;&nbsp;&nbsp;3. Calculated
the Life of Loan Loss Rate by using the sum of a) the expected loss rate from the Federal Financial Institutions Examination Council
("FFIECC") schedule RI-C on a national level for each portfolio segment and b) adjustment for qualitative factors, if any.
Based on Management's assessment of qualitative factors, no qualitative adjustment was deemed necessary.

&nbsp;&nbsp;&nbsp;&nbsp;4. Calculated
the ACL for each segment of loans assessed on a pooled basis before any adjustment for historical loss experience by multiplying a) the
aggregated amortized cost for each segment and b) the Life of Loan Loss Rate.

&nbsp;&nbsp;&nbsp;&nbsp;5. Calculated
the adjustment for historical loss experience based on a combination of the Company's experience and the historical institution
and peer net charge-off rates using the net loss to average total Loans and Leases ("LNLS") to the Peer (national) net loss
to average total LNLS found in the Uniform Bank Performance Report.

&nbsp;&nbsp;&nbsp;&nbsp;6. Entered
the expected losses on loans assessed on an individual basis.

&nbsp;&nbsp;&nbsp;&nbsp;7. The ACL was calculated as $407,317 and $359,745 as of June
30, 2025 and December 31, 2024, respectively. The Company assigns the ACL to each pooled loan proportionally, based on its amortized
cost relative to the total amortized cost.

There were no changes in the factors that influenced management's estimate of expected credit losses, including changes to policies, methodology, or rationale, from the prior period. Consequently, there are no quantitative effects of changes in the ACL calculation. Management believes the ACL is adequate to cover estimated losses on loans as of June 30, 2025 and December 31, 2024.

The Company's estimate of the ACL reflects losses expected over the remaining contractual life of the loans. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled loan modification.

**Off-Balance-Sheet Credit Exposures**

ASC 326-20-50-22 defines off-balance-sheet credit exposures as the credit exposures on off-balance-sheet loan commitments, standby letters of credit, financial guarantees not accounted for as insurance, and other similar instruments, except for instruments within the scope of Topic 815.

The Company estimates its liability for off-balance sheet credit exposures for unfunded loan commitments using the loss-rate method. The loss-rate method Management used is the SCALE method discussed in the section titled *Allowance for Current Expected Credit Losses ("ACL").* Additionally, Management considered the same qualitative factors in its calculation of the liability for credit losses related to unfunded loan commitments as discussed in the section titled *Allowance for Current Expected Credit Losses ("ACL").*

In the normal course of operations, the Company engages in financial transactions that, in accordance with generally accepted accounting principles, are not recorded in the financial statements. Specifically, the Company disburses loan proceeds for its real estate construction loans based on predetermined milestones related to the progress of the construction project. Requests for funding are submitted to the Company by the borrower on the A1A G702 Application and Certificate for Payment form ("Draw Schedule"). The Company periodically hires an inspector to go to the construction site to review the progress on the project and verify the percentage of completion of each component of the Draw Schedule. The Company's unfunded loan balance related to two construction loans is $197,850 as of June 30, 2025.

**Cash Surrender Value of Company-owned Insurance ("COLI") Policies** 

The Company owns life insurance policies on officers and certain key persons. The life insurance policies are used to indemnify the Company against the loss of talent, expertise, and knowledge of key employees. Current tax regulations provide for tax-free treatment of life insurance (death benefit) proceeds. Therefore, changes in the cash surrender values of COLI policies, as they progress towards the ultimate death benefits, are recorded without tax consequences. The life insurance policies have an aggregate cash surrender value ("CSV") of $30,097 and $19,477 as of June 30, 2025 and December 31, 2024, respectively. The CSV is reported as an asset on the Balance Sheets, net of outstanding loans of $0. The Company is responsible for paying the premiums on the policies.

**Cash and Cash Equivalents**

Cash Equivalents consists of money market funds as of June 30, 2025.

The Company's cash balances in bank deposit accounts, at times, may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

**Interest Receivable**

Interest Receivable represents the amount of interest recognized, but not collected, on loans in accrual status and is included in Interest Receivable in the Balance Sheets. The following table presents Interest Receivable by loan type:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,<br> 2025** | **December 31,<br> 2024** |
| Residential mortgage loans | $1300 | $2314 |
| Business purpose mortgage loans | 0 | 3850 |
| **Balance at end of year** | $**1300** | $**6164** |

---

The Company analyzes interest receivable balances on a timely basis, or at least monthly, to determine collectability. If an interest receivable amount is deemed uncollectible, the Company writes off the uncollectible amount through a reversal of interest income.

**Other Real Estate Property, held for sale ("OREO")**

OREO is property acquired in full or partial settlement of loan obligations generally through foreclosure. At acquisition, the Company records OREO at the property's fair value less costs to sell. Concurrently, the carrying value of the loan receivable is reduced to zero. A gain on loan transfer to OREO is recorded in the Statements of Operations when the property's fair value less estimated costs to sell is greater than the loan's carrying value. A loss on loan transfer to OREO is recorded in the Statements of Operations when the property's fair value less estimated costs to sell is less than the loan's carrying value.

The OREO fair value estimates are derived from information available in the real estate markets including similar property and often require the experience and judgment of third parties such as real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge for loan gain or loss and any subsequent valuation reserves. After OREO acquisition, costs incurred relating to the development and improvement of the property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. OREO is analyzed periodically for changes in fair values and any subsequent write down is charged as an expense on the statements of income. Any recovery in the fair value subsequent to such a write down is recorded, not to exceed the OREO fair value recorded at acquisition.

The Company owned twelve OREO properties as of June 30, 2025 and three OREO properties as of December 31, 2024.

**Other Receivable, net**

The Company incurs and pays loan expenses considered to be recoverable from borrowers ("Advances"). Advances include but are not limited to; forced placed insurance, property taxes, legal, and utility bills. Proper documentation is provided to the loan servicer and subsequently, the recoverable expense is added to the loan balance. The recoverable expense may be collected directly from the borrower, may reduce proceeds in the event of foreclosure, or may reduce or increase the gain or loss upon sale of the loan. The amount of Advances outstanding at June 30, 2025 is $280,718, net of an allowance for credit losses of $41,122. The amount of Advances outstanding at December 31, 2024 is $1,979,445, net of an allowance for credit losses of $42,070. Advances are included in Other Receivables, net in the Balance Sheets.

**Bond Liabilities, net** 

The Company incurs debt issuance costs related to its Series B Bonds. The Company capitalizes and amortizes the costs through the maturity of each class of Series B Bonds as applicable. As of June 30, 2025, the Company has issued 560,500 Series B Class D5 Bonds and incurred $62,153 of debt issuance costs. Bonds Liabilities, net as of June 30, 2025 and December 31, 2024 are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,<br> 2025** | **December 31,<br> 2024** |
| Series B Class D5 Bonds | $5605000 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| Debt issuance costs | (62153) | - |
| **Bond Liabilities, net** | $**5542847** | $**-** |

---

The Company pays monthly interest payments to the Series B Bondholders. The Company paid its first interest payment in February 2025. The Company recorded $144,878 and $0 as Bond Interest Expense for the SME June 30, 2025 and the SME June 30, 2024, respectively.

**Income Taxes**

The Company uses the asset and liability method of ASC 740 to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.

The recognition of certain net deferred tax assets of our reporting entities are dependent upon, but not limited to, the future profitability of the reporting entity, when the underlying temporary differences will reverse, and tax planning strategies. Further, Management's judgment regarding the use of estimates and projections is required in assessing the Company's ability to realize the deferred tax assets relating to Net Loss carryforwards.

ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. It requires a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, in an income tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Management has considered all positions expected to be taken on the 2024 and 2023 tax returns, and concluded that tax positions taken will more likely than not be sustained at the full amount upon examination. Accordingly, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2024. If any income tax exposure was identified, the Company would recognize an estimated liability for income tax items that meet the criteria for accrual. The Company has not been assessed interest or penalties by any major tax jurisdictions. If any interest and penalties related to income tax assessments arose, the Company would record them as income tax expense.

**Revenue Recognition**

For loans in accrual status, interest income includes interest at stated rates based on the contractual payment terms of the loan. If a loan is prepaid, the Company immediately recognizes the amount of interest calculated in the payoff statement as an increase to interest income.

For loans in nonaccrual status, interest income recognition is suspended until, in the opinion of management, a full recovery of the contractual principal and interest is expected. When a loan is in nonaccrual status, all payments received are applied to principal. If a loan in nonaccrual status is prepaid, the Company immediately recognizes the increase or decrease in the proceeds received versus the carrying value of the loan as interest income.

Rental revenue is recognized according to the guidance in ASU 2016-02, *Leases* (Topic 842) on a straight-line basis over the term of the lease.

**Gain on Transfer of Loan to OREO**

Gains and losses on transfers of loan to OREO are based on the difference between the fair market value of the real estate acquired through foreclosure and the carrying value of the loan at the date of transfer.

**Gain on Sale of OREO**

Gains and losses on sales of OREO are calculated by comparing the carrying value of the property acquired through foreclosure with the proceeds received from the sale. If the sale proceeds exceed the book value, a gain is recognized. Conversely, if the sale proceeds are less than the book value, a loss is recognized.

**Gain on Sale of Mortgage Loans**

Gains and losses on sales of mortgage Loans HFS are based on the difference between the selling price and the carrying value of the loan sold.

**Gain on Sale of Real Estate Property**

Gains and losses on sales of real estate property held-for-sale are based on the difference between the sales price, less sales commissions and other costs, and the carrying value of the real estate sold.

**Real Estate Property, held-for-investment, net**

*Real Estate Purchase Price Allocations*

 

Upon the acquisition of real estate properties which do not constitute the definition of a business, the Company recognizes the assets acquired, the liabilities assumed, and any noncontrolling interest as of the acquisition date, measured at their relative fair values. Acquisition-related costs are capitalized in the period incurred and are recorded to the components of the real estate assets acquired. In determining fair values for multifamily apartment acquisitions, the Company assesses the acquisition-date fair values of all tangible assets, identifiable intangible assets and assumed liabilities using methods like those used by independent appraisers (e.g., discounted cash flow analysis) and which utilize appropriate discount and/or capitalization rates and available market information. In determining fair values for single-family residential home acquisitions, the Company utilizes information obtained from county tax assessment records and available market information to assist in the determination of the fair value of land and buildings. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant.

Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of the respective leases.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets and assumed liabilities, which could impact the amount of the Company's net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based upon the assumptions made in calculating these estimates.

*Impairment of Real Estate Property* 

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company's real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, the Company assesses the recoverability of the assets by estimating whether the Company will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets.

*Lessor* 

The Company classifies its leases at inception as operating, direct financing or sales-type leases. A lease is classified as a sales-type lease if at least one of the following criteria is met: (1) the lease transfers ownership of the underlying asset to the lessee, (2) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) the lease term is for a major part of the remaining economic life of the underlying asset, (4) the present value of the sum of the lease payments equals or exceeds substantially all of the fair value of the underlying assets, or (5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. Furthermore, when none of the above criteria is met, a lease is classified as a direct financing lease if both of the following criteria are met: (1) the present value of the of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds the fair value of the underlying asset and (2) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. A lease is classified as an operating lease if it does not qualify as a sales-type or direct financing lease. Currently, the Company classifies all of its lessor arrangements as operating leases.

**Real Estate Property, held-for-sale, net**

Once real estate property is classified as held-for sale, it is reported at the lower of its carrying value or fair value less cost to sell beginning in the period the held for sale criteria is met. The carrying value of property held-for-sale is adjusted each reporting period for subsequent changes in fair value less cost to sell. A loss is recognized for any subsequent write-down to fair value less cost to sell. A gain is recognized for any subsequent increase in fair value less cost to sell, not to exceed the cumulative loss previously recognized. Depreciation and amortization is not recorded once an asset is classified as held-for-sale. The Company has nine real estate properties, HFS as of June 30, 2025 and two as of December 31, 2024.

**3. RESIDENTIAL MORTGAGE LOANS, HELD FOR SALE, NET ("RML HFS")**

Mortgage loans are evaluated based on three key characteristics:

Property – The condition of the property is assessed through exterior inspections. Additionally, the Underwriting Team, consisting of the CEO and other members of the asset management team, evaluates the title to ensure its accuracy. When acquiring a first-position mortgage loan, the Underwriting Team conducts a title report to confirm that the lien is indeed in the first position and that the seller is the legitimate holder of the loan. The Underwriting Team also verifies the status of taxes and other liens that could take precedence over the mortgage lien.

Borrower – The Underwriting Team's evaluation includes a review of the mortgage servicing notes, payment history, and a background check on the borrower. Key criteria such as the number of bankruptcy filings and the borrower's willingness to work with previous lien holders are analyzed to gauge the likelihood of reaching a resolution with the borrower.

Predicament – In the case of a non-performing loan, the underwriting team investigates the circumstances that led to the borrower's current situation, whether it was due to extenuating circumstances such as a death, divorce, disability, or a temporary loss of income.

These factors are integrated into an in-house financial model to determine potential outcomes and risks associated with the loan, ultimately guiding the Underwriting Team in establishing an appropriate acquisition price.

The following table summarizes the balance of Residential Mortgage Loans, held for sale, net in the accompanying Balance Sheets as of June 30, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Performing** | **Non-<br> Performing** | **Total** |
| Unpaid Principal Balance ("UPB") | $896773 | $1240791 | $2137564 |
| &nbsp;&nbsp;&nbsp;Less: Purchase Discount | (296070) | (310540) | (606610) |
| &nbsp;&nbsp;&nbsp;Less: Nonaccrual payments applied to principal |  | (264097) | (264097) |
| &nbsp;&nbsp;&nbsp;Closing Costs | 7832 | 7225 | 15057 |
| **RML HFS, net Balance at June 30, 2025** | $**608535** | $**673379** | $**1281914** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Performing** | **Non-<br> Performing** | **Total** |
| Unpaid Principal Balance ("UPB") | $1035996 | $1044715 | $2080711 |
| &nbsp;&nbsp;&nbsp;Less: Purchase Discount | (354357) | (508628) | (862985) |
| &nbsp;&nbsp;&nbsp;Less: Nonaccrual payments applied to principal |  | (200876) | (200876) |
| &nbsp;&nbsp;&nbsp;Closing Costs | 8707 | 9190 | 17897 |
| **RML HFS, net Balance at December 31, 2024** | $**690346** | $**344401** | $**1034747** |

---

*Loan Classification – RML HFS*

RML HFS are classified as performing (accrual) status when management expects to receive all contractually specified principal and interest payments. Conversely, loans are classified as non-performing (nonaccrual) status when management does not anticipate receiving all contractually specified principal and interest payments. The Company actively works with borrowers of non-performing loans to convert these loans to performing status, and then subsequently liquidating them at a higher margin. In cases where borrowers are unable to make payments, the Company has several options, including loan modification, deed-in-lieu of foreclosure, or property foreclosure. The Company strategically invests in non-performing mortgage loans with the intention of converting them to performing status, modifying the loan terms, or foreclosing on the property, and subsequently selling the loan or property after a short holding period.

The Company's business model involves acquiring, then selling or foreclosing on loans after a short holding period and, therefore, classifies its residential mortgage loans as held-for-sale. The Company accounts for its residential mortgage loans under ASC 948 Financial Services – Mortgage Banking, recording loans at the lower of cost or market upon acquisition and subsequently at each reporting date.

*Loan Servicing – RML HFS* 

The Company contracts with a loan servicing company to service the Company's mortgage loans. The loan servicing companies are entitled to a monthly servicing fee for each loan as well as other fees that are standard in the loan servicing business. The Company incurred $13,567 and $15,376 of loan servicing fees in for the six months ended June 30, 2025 and June 30, 2024, respectively, and is included in Loan Expenses in the Statements of Operations.

*Loan Modifications to Debtors Experiencing Financial Difficulty*

From time to time, Management negotiates and enters into loan modifications with borrowers whose loans are delinquent (non-performing). Modifications may include lowering monthly payments, deferring some principal balances to maturity, modifying the maturity date, and/or reclassifying loan charges. The Company recognizes the effects of any loan modifications in the financial statements immediately.

**4. RESIDENTIAL AND BUSINESS PURPOSE MORTGAGE LOANS, HELD FOR INVESTMENT, NET ("BPL HFI") and ACL**

The Company originates short term business purpose mortgage loans secured by real estate. Business Purpose Mortgage Loans are provided to a borrower to "bridge" the gap until the borrower secures permanent financing or sells the property. These loans are typically issued to borrowers to perform renovations to the property or acquire a property. Business Purpose Mortgage Loans originated by the Company are typically interest only with the full principal balance due at maturity and are typically twelve months in contractual duration. Business Purpose Mortgage Loans may contain options for borrowers who are current on their loan payments to extend the maturity date of the loan in exchange for an extension fee. Extensions are typically granted for up to six months in duration.

Residential and Business Purpose Mortgage Loans, held for investment, net in the accompanying Balance Sheets are shown at their amortized cost basis and are summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Accrual** | **Nonaccrual** | **Total** |
| Unpaid Principal Balance ("UPB") | $18120982 | $12981634 | $31102616 |
| &nbsp;&nbsp;&nbsp;Less: ACL | (113632) | (293685) | (407317) |
| &nbsp;&nbsp;&nbsp;Less: Discount | (217674) | (3320285) | (3537959) |
| &nbsp;&nbsp;&nbsp;Less: Nonaccrual payments applied to principal |  | (31295) | (31295) |
| &nbsp;&nbsp;&nbsp;Net Deferred Fees and Costs | (413354) | (543865) | (957219) |
| &nbsp;&nbsp;&nbsp;Unfunded Loan Commitment | (197850) |  | (197850) |
| &nbsp;&nbsp;&nbsp;Accrued Interest | 255499 | - | 255499 |
| **Loans HFI, net Balance at June 30, 2025** | $**17433971** | $**8792504** | $**26226475** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Accrual** | **Nonaccrual** | **Total** |
| Unpaid Principal Balance ("UPB") | $11557727 | $6237122 | $17794849 |
| &nbsp;&nbsp;&nbsp;Less: ACL | (125348) | (234397) | (359745) |
| &nbsp;&nbsp;&nbsp;Less: Discount | (63254) | (249154) | (312408) |
| &nbsp;&nbsp;&nbsp;Less: Nonaccrual payments applied to principal |  | (67893) | (67893) |
| &nbsp;&nbsp;&nbsp;Net Deferred Fees and Costs | (75538) | 8837 | (66701) |
| &nbsp;&nbsp;&nbsp;Accrued Interest | 100593 | - | 100593 |
| **Loans HFI, net Balance at December 31, 2024** | $**11394180** | $**5694515** | $**17088695** |

---

*Credit Quality Indicators – BPL HFI*

The Company monitors the credit quality of BPL HFI through the use of an internal letter grading system.

*Loans originated by the Company* - The Underwriting Team assesses each loan and the proposed terms of the loan to finalize the pricing terms (interest rate, maturity, repayment schedule, etc.) that the Company will accept. The Underwriting Team uses an internal grading system to assign one of five letter grades, from A to E, to each loan. The letter grade generally reflects the overall risk of the loan. Loans with a letter grade of A or B generally pose minimal risk to the Company and generally exhibit the following characteristics: a combined loan to value that includes senior and subordinated positions of less than 60%, loan amount is less than 50% of the borrower's net worth, a credit score of greater than 650, secured collateral position, and the borrower having more than 5 years of experience with renovating properties if the loan is a construction loan.

*Loans acquired by the Company* – Loans are assigned a letter grade by the Underwriting team. Loans are classified as PCD if, at the acquisition date, it has experienced a more-than-insignificant deterioration in credit quality since its origination.

**5. RELATED PARTIES**

The Company has historically engaged in and may continue to engage in certain business transactions with related parties, including but not limited to, purchases and dispositions of residential mortgage loans, real estate property, general and administrative expenses, and mortgage loan servicing. Related parties refer to non-consolidated companies that are controlled by one of the Company's common stockholders who is also an officer of the Company.

The Company had receivables due from related parties in relation to general and administrative expenses paid on behalf of related parties in the amount of $3,926 and $17 as of June 30, 2025 and December 31, 2024, respectively and is included in Due from Related Parties in the Balance Sheets.

*Legal proceedings*

The nature of the Company's business gives rise to litigation in the ordinary course of operations. Management, after consultation with the Company's legal counsel, is aware of one legal proceeding currently pending which, if determined adversely, is not expected to have a material effect on the Company's shareholders' equity or results of operations. Other than routine litigation incidental to the Company's business, no additional legal proceedings are pending. Furthermore, to the best of management's knowledge, no governmental authorities have initiated or are contemplating any material legal actions against the Company.

**6. SUBSEQUENT EVENTS**

The Company has evaluated subsequent events through June 30, 2025 and determined that except for the following, there have not been any events that have occurred that would require adjustments to or disclosures in the financial statements.

The Company's existing Regulation A+ offering has not yet expired but will reach the maximum time period permitted under SEC regulations. In anticipation of this, on July 11, 2025, the Company submitted a new Regulation A+ offering to the SEC for qualification. As of September 25, 2025, the new offering has not yet been qualified by the SEC.

**ITEM 4: INDEX TO EXHIBITS**

---

| | |
|:---|:---|
|  | **Exhibit** |
| [Certificate of Incorporation, CWS, Investments Inc., dated February 22, 2022](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex2-1_cwsinvest.htm) | 2.1 |
| [Bylaws, with amendments, of CWS Investments, Inc., dated May 16, 2023](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex2-2_cwsinvest.htm) | 2.2 |
| [Articles of Amendment, CWS Investments Inc., dated January 20, 2023](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex2-3_cwsinvest.htm) | 2.3 |
| [Form of Subscription Agreement](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex4-1_cwsinvest.htm) | 4.1 |
| [Form of CWS Investments Inc Bond](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex4-2_cwsinvest.htm) | 4.2 |
| [Loan Servicing Agreement, Madison Management Loan Servicing, LLC, dated October 26, 2022](https://www.sec.gov/Archives/edgar/data/1920508/000121390025063093/ea024829801ex6-1_cwsinvest.htm) | 6.1 |
| [Escrow Agreement with North Capital Investment Technology, Inc., Dated June 8, 2022](ea025933301ex8-1_cwsinvest.htm) | 8.1 |
| [Power of Attorney (included on signature page)](#signa) | 10.1 |

---

**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| CWS Investments, Inc. | CWS Investments, Inc. |
| By: | */s/ Christopher Seveney* |
|  | Christopher Seveney |
|  | President, CEO and CFO |

---

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated:

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Christopher Seveney* | President, CEO, CFO and | September 30, 2025 |
| Christopher Seveney | Chairman of the Board of Directors |  |
| */s/ Lauren Wells* | Co-Founder, Chief Strategy Officer, Board Secretary | September 30, 2025 |
| Lauren Wells |  |  |
| *Jeffrey Laroche* | Member at Large | September 30, 2025 |
| Jeffrey Laroche |  |  |
| *Alan Belniak* | Member at Large | September 30, 2025 |
| Alan Belniak |  |  |

---

## Ex1Sa-8

**Exhibit 8.1**

**ESCROW AGREEMENT**

This Escrow Agreement (this "**Agreement**"), effective as of the effective date set forth on the signature page hereto ("**Effective Date**"), is entered into by the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the issuer set forth on the signature page hereto ()"**Issuer** "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the broker-dealer for Issuer's offering set forth on the signature page hereto ()"**Manager** "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) North Capital Private Securities Corporation, a Delaware corporation, as escrow agent ()"**NCPS** ").

For purposes of this Agreement: (a) the above parties other than and excluding NCPS are referred to herein as "**Issuer Party**"; (b) references to "**Issuer Party**" in this Agreement shall include references to each Issuer Party individually, together and collectively, jointly and severally; and (c) Issuer Party, collectively with NCPS, are referred to herein as the "**Parties**" and each, a "**Party**".

The following Exhibits are incorporated by reference into this Agreement:

<u>Exhibit A</u> – Contingent Offering (if applicable)

<u>Exhibit B</u> – Fees and Expenses

**<u>Recitals</u>**

A. NCPS is a broker-dealer registered with the U.S. Securities and Exchange Commission ()"**SEC** ")
and a member of the Financial Industry Regulatory Authority, Inc. ()"**FINRA**") and the Securities Investor Protection
Corporation ()"**SIPC** ").

B. Issuer Party is engaging NCPS to serve as escrow agent in connection with Issuer's sale of debt,
equity or hybrid securities ()"**Securities**") in an offering exempt from registration under the U.S. Securities Act of
1933, as amended ()"**Securities Act** "), pursuant to Rule 506(b) of Regulation D, 506(c) of Regulation D, Regulation A
or Regulation Crowdfunding, as indicated on the signature page hereto ()"**Offering** ").

C. In accordance with the private placement memorandum, offering memorandum or Form 1-A applicable to the
Offering provided by Issuer Party for dissemination to investors in connection with the Offering ()"**Offering Document** "),
subscribers to the Securities ()"**Subscribers**") will be required to submit full payment for their respective investments
at the time they enter into subscription agreements.

D. In accordance with the Offering Document, all payments by Subscribers subscribing for Securities shall
be sent directly to NCPS as escrow agent, and NCPS by this Agreement agrees to accept, hold and disburse such funds deposited with it
with respect thereto ()"**Escrow Funds**") in accordance with the terms of this Agreement and in compliance with Rule 15c2-4
of the U.S. Securities Exchange Act of 1934, as amended ()"**Exchange Act** "), and related SEC guidance and FINRA rules.

E. If the Offering is being made by Issuer on an "all-or-none" basis or on any other basis that
contemplates payments to be made to Issuer only upon the occurrence of some further event or contingency as set forth in <u>Exhibit A</u>,
as applicable, NCPS will promptly deposit any and all Escrow Funds NCPS receives into a separate bank escrow account as set forth in <u>Section 1(d)</u> below, for the persons or entities with a beneficial interest therein, until the appropriate event or contingency has occurred,
at which time the Escrow Funds will be promptly transmitted to Issuer, else returned to the persons or entities entitled thereto pursuant
to <u>Section 4</u> below.

F. NCPS will be a participant in the Offering for the limited purpose of providing the escrow agent services
described in this Agreement, and in the case of an Offering pursuant to Regulation Crowdfunding, NCPS will be the "qualified third
party", as defined in Rule 303(e)(2) of the Securities Act. NCPS accepts no other role and assumes no other responsibilities related
to the Offering, such as managing broker-dealer, placement agent, selling group member or referring broker-dealer, unless and until the
roles and responsibilities are expressly delineated in a separately executed placement, managing broker, selling or referral agreement,
as the case may be, if any.

In consideration of the mutual representations, warranties and covenants contained in this Agreement, the Parties, intending to incorporate the foregoing Recitals into this Agreement and to be legally bound, agree as follows:

**<u>Agreement</u>**

1. **Definitions.** Capitalized terms used in this Agreement and not otherwise defined above or elsewhere in this Agreement shall have the meanings as set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**ACH**" means Automated Clearing House.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**Business Day**" means a calendar day other
than Saturday, Sunday or any public holiday when banks are closed for business in Delaware, Pennsylvania or Utah.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Cash Investment**" means an amount in US
Dollars equal to (i) the number of Securities to be purchased by a Subscriber, multiplied by (ii) the offering price per Security as
set forth in the Offering Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Cash Investment Instrument**" means, in full payment of the Cash Investment for the
Securities to be purchased by a Subscriber, a check, money order or similar instrument made payable by Subscriber to the order of or endorsed
to the order of:

NCPS/ <u>CWS Investments Inc </u> /   - Escrow Account <br> (Offering Name\*) (Subscriber Name\*\*)

or wire transfer or ACH transmitted by Subscriber to the following account ("**Escrow Account**"):

---

| | |
|:---|:---|
|  | Institution: TriState Capital Bank |
| ![](ex8-1_002.jpg) | ABA: 043019003<br> Account Name: North Capital Private Securities Corporation<br> Account Number: 0220003339 |

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| | |
|:---|:---|
| For Further Credit To: | CWS Investments Inc |
|  | (Offering Name\*) |
|  | (Subscriber Name\*\*) |

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\* Offering Name as set forth on the signature page hereto.

\*\* Subscriber Name as completed by Subscriber.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**Expiration Date**" means 12 months from
the Effective Date, unless mutually extended by the Parties in writing (which may be via email).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**Instruction Letter**" means joint written
instructions in a form acceptable to NCPS and executed by Issuer Party directing NCPS to the disburse the Escrow Funds to Issuer pursuant
to <u>Section 4(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Minimum Offering**" has the meaning as set
forth on the signature page hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Minimum Offering Notice**" means, if applicable
to an Offering, a written notification in a form acceptable to NCPS and signed by Issuer Party representing to NCPS that: (i)
subscriptions for at least the Minimum Offering have been received by Issuer; (ii) to the best of Issuer Party's knowledge
after due inquiry and review of Issuer Party's records, Cash Investment Instruments in full payment for that number of
Securities equal to or greater than the Minimum Offering have been received, deposited with and collected by NCPS; (iii) such
subscriptions have not been withdrawn, rejected or otherwise terminated; and (iv) Subscribers have no statutory or regulatory rights
of rescission without cause or all such rights have expired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "**NACHA**" means National Automated Clearing
House Association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "**Subscription Accounting**" means an accounting
of all subscriptions for Securities received and accepted by Issuer Party as of the date of such accounting, indicating for each subscription
Subscriber's name and address, the number and total purchase price of subscribed Securities, the date of receipt by Issuer of the
Cash Investment Instrument and notations of any nonpayment of the Cash Investment Instrument submitted with such subscription, any withdrawal
of such subscription by Subscriber, any rejection of such subscription by Issuer Party or other termination, for whatever reason, of
such subscription.

2. **Appointment of Escrow Agent.** Issuer Party hereby appoints NCPS to serve as escrow agent, and NCPS hereby accepts such appointment, in accordance with the terms of this Agreement. Issuer Party shall take all necessary steps to assure that all funds necessary to consummate the Transaction are deposited into the Escrow Account. Issuer Party shall not receive interest on the Escrow Funds and the Escrow Account shall be a non-interest bearing account as to Issuer Party.

3. **Deposits into Escrow Account.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer Party shall direct Subscribers to, and Subscribers shall, directly deliver to NCPS all Cash Investment Instruments for deposit in the Escrow Account. Each such direction shall be accompanied by a Subscription Accounting.

ALL FUNDS DEPOSITED INTO THE ESCROW ACCOUNT PURSUANT TO THIS <u>SECTION 3</u> SHALL REMAIN THE PROPERTY OF EACH SUBSCRIBER ACCORDING TO SUCH SUBSCRIBER'S INTEREST AND SHALL NOT BE SUBJECT TO ANY LIEN OR CHARGE BY NCPS OR BY JUDGMENT OR CREDITORS' CLAIMS AGAINST ISSUER PARTY UNTIL RELEASED OR ELIGIBLE TO BE RELEASED TO ISSUER IN ACCORDANCE WITH <u>SECTION 4(a)</u>. ISSUER PARTY SHALL NOT RECEIVE CASH INVESTMENT INSTRUMENTS DIRECTLY FROM SUBSCRIBERS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Issuer Party understands and agrees that all Cash Investment Instruments received by NCPS pursuant to this Agreement are subject to collection requirements of presentment, clearing and final payment, and that the funds represented thereby cannot be drawn upon or disbursed until such time as final payment has been made and is no longer subject to dishonor. NCPS shall process each Cash Investment Instrument for collection promptly upon receipt, and the proceeds thereof shall be held as part of the Escrow Funds until disbursed in accordance with <u>Section 4</u>. If, upon presentment for payment, any Cash Investment Instrument is dishonored, NCPS's sole obligation shall be to notify Issuer Party of such dishonor and, if applicable, to return such Cash Investment Instrument to Subscriber. Notwithstanding, if for any reason any Cash Investment Instrument is uncollectible after payment or disbursement of the funds represented thereby has been made by NCPS, Issuer Party shall immediately reimburse NCPS upon receipt from NCPS of written notice thereof, including, without limitation, any fees or expenses with respect thereto, which NCPS may collect from Issuer Party pursuant to <u>Section 10</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon receipt of any Cash Investment Instrument that represents payment of an amount less than or greater than the Cash Investment, NCPS's sole obligation shall be to notify Issuer Party, depending upon the source of the of the Cash Investment Instrument, of such fact and to pay to Subscriber by the same method the amount of the Cash Investment received by NCPS from such Subscriber or return to Subscriber such Subscriber's Cash Investment Instrument upon receipt from Subscriber of any required payment instructions; provided that amounts in excess of $25,000 will be returned via wire transfer upon confirmation by NCPS of Subscriber's account information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) NCPS shall not be obligated to accept, or present for payment, any Cash Investment Instrument that is not properly made payable or endorsed as set forth in <u>Section 1(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Issuer Party shall, or cause Subscriber to, provide NCPS with information sufficient to effect such return to Subscriber as outlined in this <u>Section 3</u>, including, without limitation, updated payment information in the event a return to Subscriber for any reason cannot be made by the same method as received by NCPS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) In the event any Party other than NCPS receives a Cash Investment Instrument, such Party agrees to promptly, and in no event later than one Business Day after receipt, deliver such Cash Investment Instrument to NCPS for deposit into the Escrow Account.

4. **Disbursement of Escrow Funds.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Section 3(b)</u> and <u>Section 10</u>, NCPS shall disburse in accordance with the Instruction Letter the liquidated value of the Escrow Funds from the Escrow Account to Issuer by wire transfer no later than one Business Day following receipt of the following documents:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Minimum Offering Notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subscription Accounting substantiating the fulfillment of
the Minimum Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Instruction Letter; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) such other certificates, notices or other documents as NCPS
may reasonably require;

provided that NCPS shall not be obligated to disburse the liquidated value of the Escrow Funds to Issuer if NCPS has reason to believe that (A) Cash Investment Instruments in full payment for that number of Securities equal to or greater than the Minimum Offering have not been received, deposited with and collected by NCPS, or (B) any of the information or the certifications, representations, warranties or opinions set forth in the Minimum Offering Notice, Subscription Accounting, Instruction Letter or other certificates, notices or other documents are incorrect or incomplete. After the initial disbursement of Escrow Funds to Issuer pursuant to this <u>Section 4(a)</u>, NCPS shall disburse any additional funds received with respect to the Securities to Issuer by wire transfer no later than one Business Day after NCPS receives from or on behalf of Issuer (1) Issuer's request for closing via NCPS's online portal and (2) Issuer's written verification that the subscriptions therefor are in good order.

 

*Any ACH transaction must comply with all applicable laws, rules, regulations, codes and orders of applicable governmental, regulatory, judicial and law enforcement authorities and self-regulatory authorities (collectively, "**Law**"), including, without limitation, NACHA's operating rules that apply to the ACH network as in effect from time to time. NCPS is not responsible for errors in the completion, accuracy or timeliness of any transfer properly initiated by NCPS in accordance with joint written instructions occasioned by the acts or omissions of any third party financial institution or a party to the transaction, or the insufficiency or lack of availability of funds on deposit in any account.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No later than three Business Days after receipt from Subscriber of any required payment instructions and receipt by NCPS of written notice: (i) from Issuer Party that Issuer Party intends to reject a Subscriber's subscription; (ii) from Issuer Party that there will be no closing of the sale of Securities to Subscribers; (iii) from any federal or state regulatory authority that any application by Issuer to conduct a banking business has been denied; or (iv) from the SEC or any other federal or state regulatory authority that a stop or similar order has been issued with respect to the Offering Document and has remained in effect for at least 20 days, NCPS shall pay to each Subscriber by the same method the amount of the Cash Investment received by NCPS from such Subscriber or return to Subscriber such Subscriber's Cash Investment Instrument; provided that amounts in excess of $25,000 will be returned via wire transfer upon confirmation by NCPS of Subscriber's account information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything to the contrary contained herein, if NCPS shall not have received an Instruction Letter on or before the Expiration Date or the Termination Date (as defined below), subject to <u>Section 5</u>, NCPS shall, within three Business Days after such Expiration Date or Termination Date and receipt from Subscriber of any required payment instructions, and without any further instruction or direction from Issuer Party, pay to each Subscriber by the same method the amount of the Cash Investment received by NCPS from such Subscriber or return to Subscriber such Subscriber's Cash Investment Instrument; provided that amounts in excess of $25,000 will be returned via wire transfer upon confirmation by NCPS of Subscriber's account information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Issuer Party shall, or cause Subscriber to, provide NCPS with information sufficient to effect such payment or return to Subscriber as outlined in this <u>Section 4</u>, including, without limitation, updated payment information in the event a payment or return to Subscriber for any reason cannot be made by the same method as received by NCPS.

5. **Suspension of Performance or Disbursement Into Court.** If, at any time, (a) there shall exist any dispute between Issuer Party, NCPS, any Subscriber or any other person with respect to the holding or disposition of all or any portion of the Escrow Funds or any other obligations of NCPS hereunder, or (b) NCPS is unable to determine, to NCPS's reasonable satisfaction, the proper disposition of all or any portion of the Escrow Funds or NCPS's proper actions with respect to its obligations hereunder, or (c) Issuer Party has not within 30 days of NCPS's notice of resignation pursuant to <u>Section 7</u> appointed a successor NCPS to act hereunder, then NCPS may, in its reasonable discretion, take either or both of the following actions: (i) suspend the performance of any of its obligations (including, without limitation, any disbursement obligations) under this Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of NCPS or until a successor escrow agent shall have been appointed (as the case may be); or (ii) petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction in any venue convenient to NCPS, for instructions with respect to such dispute or uncertainty, and to the extent required or permitted by Law, pay into such court all funds held by it in the Escrow Funds for holding and disposition in accordance with the instructions of such court. NCPS shall have no liability to Issuer Party, any Subscriber or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of the Escrow Funds or any delay in or with respect to any other action required or requested of NCPS.

6. **No Commingling, Investment of Funds or Interest to Issuer Party**. NCPS shall not:(a) commingle Escrow Funds received by it in escrow with funds of others that are not Escrow Funds, including funds received by NCPS in escrow in connection with any other offering of debt, equity or hybrid securities; or (b) invest such Escrow Funds. The Escrow Funds will be held in the Escrow Account, which shall not accrue interest in favor of Issuer Party or any Subscriber.

7. **Resignation of NCPS. NCPS** may resign and be discharged from the performance of its duties hereunder at any time by giving 10 days prior written notice to Issuer Party specifying a date when such resignation shall take effect. Upon any such notice of resignation, Issuer Party shall appoint a successor escrow agent hereunder prior to the effective date of such resignation. The retiring escrow agent shall transmit all records pertaining to the Escrow Funds and shall pay all Escrow Funds to the successor escrow agent, after making copies of such records as the retiring escrow agent deems advisable. After any retiring escrow agent's resignation, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was escrow agent under this Agreement. Any corporation or association into which NCPS may be merged or converted or with which it may be consolidated shall be the escrow agent under this Agreement without further act.

8. **Role of NCPS as Escrow Agent.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) NCPS's sole responsibility as a participant in the Offering under this Agreement shall be for the safekeeping and disbursement of the Escrow Funds as escrow agent, in accordance with the terms hereto. NCPS shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. NCPS may rely upon any notice, instruction, request or other instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which NCPS shall believe to be genuine and to have been signed or presented by the person or parties purporting to sign the same. NCPS shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines by final unappealed or non-appealable order pursuant to <u>Section 20(a)</u> that NCPS's fraud or gross negligence was the primary cause of any Losses (as defined below) to Issuer Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) NCPS shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds, any account in which Escrow Funds are deposited, this Agreement or the Offering Document, or to appear in, prosecute or defend any such legal action or proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) NCPS shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Agreement, including, without limitation, the Offering Document. Without limiting the generality of the foregoing, NCPS shall not be responsible for or required to enforce any of the terms or conditions of any subscription agreement with any Subscriber or any other agreement between Issuer Party or any Subscriber. NCPS shall not be responsible or liable in any manner for the performance by Issuer or any Subscriber of their respective obligations under any subscription agreement nor shall NCPS be responsible or liable in any manner for the failure of Issuer Party or any third party (including any Subscriber) to honor any of the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) NCPS is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Escrow Funds, without determination by NCPS of such court's jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, NCPS is authorized, in its reasonable discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if NCPS complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated. Notwithstanding the foregoing, to the extent legally permissible, NCPS shall provide Issuer Party with prompt notice of any such court order or similar demand and the opportunity to interpose an objection or obtain a protective order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) NCPS may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the opinion or instruction of such counsel. Issuer Party shall promptly pay, upon demand, the fees and expenses of any such counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) By this Agreement, Subscribers are not customers of NCPS and NCPS shall have no obligation to determine a Subscriber's suitability to participate in the Offering, whether the Offering complies with Law, verify a Subscriber's identity or perform anti-money laundering, know your customer or other due diligence, such responsibilities being obligations of Issuer Party or Issuer Party's agents. Any further participation by NCPS in the Offering (if any) other than to provide the escrow services as set forth in this Agreement shall be governed by separate agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) NCPS makes no representation, warranty or covenant as to the compliance of any transaction related to the escrow with any Law. NCPS shall not be responsible for the application or use of any funds released from the Escrow Account pursuant to this Agreement.

9. **Indemnification of NCPS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer Party (including Issuer Party's affiliates, collectively, the "**Indemnifying Party**") agrees (and agrees to cause the other Indemnifying Parties) jointly and severally and at their own cost and expense to indemnify, defend and hold harmless NCPS and its affiliates and their respective directors, officers, employees, agents, representatives, advisors and consultants, and their respective successors and assigns (each, an "**NCPS Parties**"), to the fullest extent permitted by Law, from and against (and no NCPS Party shall be liable for) any Losses, joint or several, in connection with all actions (including equity owner actions), claims, disputes, inquiries, indemnification, proceedings, investigations and other legal process regardless of the source (collectively, "**Actions**") arising out of or relating to the offering of securities, this Agreement, the provision of NCPS's services hereunder or the engagement of NCPS hereunder (including, without limitation, any breach or alleged breach of this Agreement or any representation, warranty or covenant herein, any breach or alleged breach of Law or any rejection of a Cash Investment, or the suspension of performance or disbursement into court pursuant to <u>Section 5</u>), and will reimburse NCPS Parties for all expenses (including attorneys' fees) as they are incurred by NCPS Parties in connection with investigating, preparing, defending or appearing as a third party witness in connection with any such Action whether or not related to a pending or threatened Action in which NCPS is a party. Notwithstanding, Issuer Party will not be responsible for any Losses that are finally judicially determined by unappealed or non- appealable order pursuant to <u>Section 20(a)</u> to have resulted primarily from NCPS's fraud or gross negligence, and NCPS agrees to immediately refund any payments made to an NCPS Party upon such determination. "**Losses**" means any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs or expenses of whatever kind, including, without limitation, reasonable attorneys' fees, the costs of enforcing any right hereunder, the costs of pursuing any insurance providers, the costs of collection and the costs of defending against or appearing as a witness, whether direct, indirect, consequential or otherwise. Indemnifying Parties shall pay to NCPS Parties all amounts due under this <u>Section 9</u> promptly after written demand therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that Escrow Agent performs any service not specifically provided hereinabove, or that there is any assignment or attachment of any interest in the subject matter of this escrow or any modification thereof, or that any controversy arises hereunder, or that Escrow Agent is made a party to, or intervenes in, any dispute pertaining to this escrow or the subject matter hereof, Escrow Agent shall be reasonably compensated therefor and reimbursed for all costs and expenses occasioned thereby; and Issuer Party hereto agree jointly and severally to pay the same and to jointly and severally and at their own cost and expense release, indemnify, defend and hold harmless the NCPS Parties pursuant to subsection (a) above, it being understood and agreed that Escrow Agent may interplead the subject matter of this escrow into any court of competent jurisdiction, and the act of such interpleader shall immediately relieve Escrow Agent of any duties, liabilities or responsibilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For the sole purpose of enforcing and otherwise giving effect to the provisions of this <u>Section 9</u>, Issuer Party hereby consents to personal jurisdiction and service and venue in any court in which any claim that is subject to this Agreement is brought against any NCPS Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If an Action is commenced or threatened and is ultimately settled, Issuer Party shall use its best efforts to cause NCPS, by name, and the other NCPS Parties, by description, to be included in any release or settlement agreement, whether or not NCPS and the other NCPS Parties are named as defendants in such Action.

10. **Compensation to NCPS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer Party shall pay or cause to be paid to NCPS for its services as escrow agent as outlined in <u>Exhibit B</u>, which may be updated from time to time by NCPS by providing written notice to Issuer Party. Issuer Party's obligation to pay such fees to NCPS and reimburse NCPS for such expenses is not conditioned upon a successful closing. Upon Issuer Party's request, NCPS will provide Issuer Party with copies of all relevant invoices, receipts or other evidence of such expenses. The obligations of Issuer Party under this <u>Section 10</u> shall survive any termination of this Agreement and the resignation or removal of NCPS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All of the compensation and reimbursement obligations shall be payable by Issuer Party upon demand by NCPS and will be charged automatically by NCPS to the credit card or other payment method indicated on the signature page to this Agreement or as otherwise agreed by the Parties. Issuer Party consents to NCPS retaining and using Issuer Party's payment information for future invoices and as provided in this Agreement. Issuer Party agrees and acknowledges that NCPS and its third party vendors may retain and use Issuer Party's payment information to facilitate the payments provided for in this Agreement. Issuer Party agrees to provide NCPS written notice (which may be via email) of any update or changes to Issuer Party's payment information. Absent current payment information, Issuer Party shall make, or cause to be made, all payments to NCPS within 10 days of receiving an invoice therefor. All payments made to NCPS shall be in US dollars in immediately available funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If Issuer Party fails to make any payment when due then, in addition to all other remedies that may be available: (a) NCPS may charge interest on the past due amount at the rate of 1.5% per month, calculated daily and compounded monthly, or if lower, the highest rate permitted under Law, which Issuer Party shall pay; such interest may accrue after as well as before any judgment relating to collection of the amount due; and (b) Issuer Party shall reimburse, or cause to be reimbursed, NCPS for all costs incurred by NCPS in collecting any late payments or interest, including attorneys' fees, court costs and collection agency fees; provided that cumulative late payments are subject to the overall limits as may be required by Law as set forth in <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) NCPS is authorized to and may disburse from time to time, to itself or to any NCPS Party from the Escrow Funds (but only to the extent of Issuer Party's rights thereto), the amount of any compensation and reimbursement of out-of-pocket expenses due and payable hereunder (including any amount to which NCPS or any NCPS Party is entitled to seek indemnification pursuant to <u>Section 9</u> hereof). NCPS shall notify Issuer Party of any disbursement from the Escrow Funds to itself or to any NCPS Party in respect of any compensation or reimbursement hereunder and shall furnish to Issuer copies of all related invoices and other statements. Notwithstanding, no disbursement shall be made pursuant to this subsection until the Minimum Offering has been met and otherwise in compliance with Law, including, without limitation, Rule 15c2-4 of the Exchange Act and related SEC guidance and FINRA rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Issuer Party hereby grants to NCPS and the NCPS Parties a security interest in and lien upon the Escrow Funds (to the extent of Issuer Party's rights thereto) to secure all obligations hereunder, and NCPS and the NCPS Parties shall have the right to offset the amount of any compensation or reimbursement due any of them hereunder (including any claim for indemnification pursuant to <u>Section 9</u> hereof) against the Escrow Funds (to the extent of Issuer's rights thereto.) If for any reason the Escrow Funds available to NCPS and the NCPS Parties pursuant to such security interest or right of offset are insufficient to cover such compensation and reimbursement, Issuer Party shall promptly pay such amounts to NCPS and the NCPS Parties upon receipt of an itemized invoice. Notwithstanding, no security interest or offset shall be granted pursuant to this subsection until the Minimum Offering has been met and otherwise in compliance with Law, including, without limitation, Rule 15c2-4 of the Exchange Act and related SEC guidance and FINRA rules.

11. **Representations and Warranties.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer Party jointly and severally represents, warrants and covenants to NCPS as of the Effective Date and at all times during the Term, including, without limitation, at the time of any deposit to or disbursement from the Escrow Funds:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Issuer Party is an entity duly organized, validly existing and in good standing under the laws of the state where it was formed. Issuer Party has all requisite power and authority to own those properties and conduct those businesses presently owned or conducted by it. Issuer Party is duly qualified to do business and is in good standing in all jurisdictions in which its ownership of property or the character of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on Issuer Party or Issuer Party's business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Issuer Party has full power and authority to enter into and perform this Agreement. This Agreement has been duly executed by Issuer Party and constitutes the legal, valid, binding, and enforceable obligation of Issuer Party, enforceable against Issuer Party in accordance with its terms. The execution, delivery and performance of this Agreement does not and will not: (A) conflict with or violate any of the terms of any organizational or governance document, stakeholder agreement, any court order or administrative ruling or decree to which it is a party or any of its property is subject, any agreement, contract, indenture, or other binding arrangement to which it is a party or any of its property is subject or any Law; or (B) conflict with, or result in a breach or termination of any of the terms of, or result in the acceleration of any indebtedness or obligations under, any agreement, obligation or instrument by which Issuer Party is bound or to which any property of Issuer Party is subject, or constitute a default thereunder. The execution, delivery and performance of this Agreement is consistent with and accurately described in the Offering Document as set forth in <u>Section 4(b)</u> and <u>Section 4(c)</u> and has been properly described therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Issuer Party acknowledges that the status of NCPS is that of agent only for the limited purposes set forth herein to provide escrow services, and in the case of an Offering pursuant to Regulation Crowdfunding, NCPS will be the "qualified third party", as defined in Rule 303(e)(2) of the Securities Act, and hereby represents and covenants that no representation or implication shall be made that NCPS has investigated the desirability or advisability of investment in the Securities or has approved, endorsed or passed upon the merits of the investment therein and that the name of NCPS has not and shall not be used in any manner in connection with the offer or sale of the Securities other than to state that NCPS has agreed to serve as escrow agent for the limited purposes set forth herein. Issuer Party shall comply with all Law in connection with the offering of the Securities. By this Agreement, NCPS accepts no other role and assumes no other responsibilities related to the Offering, including, without limitation, managing broker- dealer, placement agent, selling group member or referring broker-dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Issuer Party has the obligation to, and shall, determine a Subscriber's suitability to participate in the Offering, make sure the Offering complies with Law and the Offering Document, verify a Subscriber's identity and perform anti-money laundering, know your customer and any other due diligence in connection with the transactions contemplated by the Offering. The Offering and any offer or sale in the Offering complies with or is exempt from all applicable registrations or qualification requirements, including, without limitation those of the SEC or state securities regulatory authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) No person or entity other than the Parties and the prospective Subscribers have, or shall have, any lien, claim or security interest in the Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds or any part thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Any deposit with NCPS by NCPS and/or Issuer Party of Cash Investment Instruments pursuant to <u>Section 3</u> shall be deemed a representation and warranty by Issuer Party that such Cash Investment Instrument represents a bona fide sale to such Subscriber of the amount of Securities set forth therein in accordance with the terms of the Offering Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) To the extent Issuer Party will be sharing personal or financial information of a third party with NCPS in connection with this Agreement, Issuer Party shall maintain and obtain the agreement of each such third party, which shall permit the sharing of such third party's information with NCPS and its affiliates and service providers for NCPS and its affiliates and service providers to use, disclose and retain it in connection with this Agreement and the provision of the services hereunder and as required by Law. NCPS shall be a third party beneficiary to such agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Issuer Party's representations, warranties and covenants are continuing and deemed to be reaffirmed each time Issuer Party provides NCPS with any instructions in connection with the Escrow Account. Issuer Party shall immediately notify NCPS if any representation, warranty or covenant ceases to be true, correct, accurate and complete.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Issuer Party shall provide NCPS with immediate notice of any Action (as defined below), threatened Action or facts or circumstances that could lead to any Action involving Issuer Party, its agents or the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) NCPS represents, warrants and covenants to Issuer Party as of the Effective Date and at all times during the Term, including, without limitation, at the time of any deposit to or disbursement from the Escrow Funds:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) NCPS is an entity duly organized, validly existing and in good standing under the laws of the State of Delaware. NCPS is a broker-dealer registered with the SEC and a member of FINRA and SIPC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) NCPS has full power and authority to enter into and perform this Agreement. This Agreement has been duly executed by NCPS and constitutes the legal, valid, binding, and enforceable obligation of NCPS, enforceable against NCPS in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) NCPS's representations, warranties and covenants are continuing and deemed to be reaffirmed each time Issuer Party provides NCPS with any instructions in connection with the Escrow Account. NCPS shall promptly notify Issuer Party if any representation, warranty or covenant ceases to be true, correct, accurate and complete.

12. **Disclaimer of Advice.** Issuer Party is NCPS's sole customer pursuant to this Agreement. By this Agreement, NCPS is not undertaking to provide any recommendations or advice to any party, including any Subscriber who may be a retail investor, in connection with any offering of securities, NCPS's engagement hereunder or its provision of the services contemplated by this Agreement (including, without limitation, business, investment, solicitation, legal, accounting, regulatory or tax advice). Issuer Party understands that it will be solely responsible for ensuring that any offering and any sale of securities complies with all Law. Issuer Party acknowledges and agrees that it will rely on its own judgment in using NCPS's services.

13. **Survival.** Notwithstanding the expiration or termination of this Agreement or the resignation or removal of NCPS as escrow agent, the Parties shall continue to be bound by the provisions of this Agreement that reasonably require some action or forbearance (or are required to implement such action or forbearance) after such expiration or termination, including, but not limited to, those related to fees and expenses, indemnities, limitations of and exclusions to NCPS's liability, warranties, choice of law, jurisdiction and dispute resolution and such provisions shall remain operative and in full force and effect and shall survive any disbursement of Escrow Funds and the expiration or termination of this Agreement. Except as the context otherwise requires, all representations, warranties and covenants of Issuer Party contained in this Agreement shall be deemed to be representations, warranties and covenants during the Term, and such representations, warranties and covenants shall remain operative and in full force and effect and shall survive the sale of, and payment for, the securities and the expiration or termination of this Agreement to the extent required for the enforcement thereof.

14. **Assignment.** Except as provided in <u>Section 17</u>, no Party shall assign or otherwise transfer any of its rights, or delegate or otherwise transfer any of its obligations or performance, under this Agreement, in each case whether voluntarily, involuntarily, by operation of law or contract or otherwise, without each other Party's prior written consent; provided NCPS may assign or otherwise transfer its rights, or delegate or otherwise transfer its obligations or performance, under this Agreement pursuant to <u>Section 7</u> or to an affiliated escrow agent without any other Party's consent. Any purported assignment, delegation or transfer in violation of this <u>Section 14</u> is void. Subject to this <u>Section 14</u>, this Agreement is binding upon and inures to the benefit of the Parties and their respective successors and permitted assigns irrespective of any change with regard to the name of or the personnel of any Party.

15. **Entirety.** This Agreement incorporates by reference NCPS's and its affiliates' data privacy policies and website terms of use, as posted on NCPS's and its affiliates' website from time to time, with which Issuer Party shall, and shall cause issuers to, comply. This Agreement (including all exhibits, all schedules and NCPS's and its affiliates' data privacy policies and website terms of use) constitutes the sole and entire agreement between the Parties with respect to the acceptance, collection, holding, investment and disbursement of the Escrow Funds and sets forth in their entirety the obligations and duties of NCPS with respect to the Escrow Funds and supersedes and merges all prior and contemporaneous proposals, understandings, agreements, representations and warranties, both written and oral, between the Parties relating to such subject matter.

16. **Amendment; Waiver.** Except as set forth in <u>Section 7</u>, <u>Section 14</u> and <u>Section 22</u>, no amendment to or modification of this Agreement will be effective unless it is in writing and signed by an authorized representative of each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

17. **Term and Termination.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The term of this Agreement commences as of the Effective Date and, unless terminated earlier pursuant to any of this Agreement's express provisions, will continue in effect until the first to occur of the final closing of the Offering and/or the disbursement of all amounts in the Escrow Funds or deposit of all amounts in the Escrow Funds into court pursuant to <u>Section 5</u> or <u>Section 8</u> hereof ("**Term**"), at which time this Agreement shall terminate and NCPS shall have no further obligation or liability whatsoever with respect to this Agreement or the Escrow Funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding, NCPS may terminate this Agreement for cause immediately without notice to Issuer Party upon: (a) fraud, malfeasance or willful misconduct by Issuer Party or any of their affiliates; (b) conduct by Issuer Party or any of their affiliates that may jeopardize NCPS's current business, prospective business or professional reputation; (c) any material breach by Issuer Party of this Agreement if such breach is not cured within 10 days of receipt of written notice thereof (to the extent it can be cured), including, but not limited to, any failure to pay any amount under this Agreement when due; or (d) if Issuer Party ceases regular operations or files any petition or commences any case or proceeding under any provision or chapter of the Federal Bankruptcy Act, the Federal Bankruptcy Code, or any other federal or state law relating to insolvency, bankruptcy or reorganization; the adjudication that Issuer Party is insolvent or bankrupt or the entry of an order for relief under the Federal Bankruptcy Code with respect to Issuer; an assignment for the benefit of creditors; the convening by Issuer Party of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Issuer Party generally to pay its debts on a timely basis. Any Party may terminate this Agreement for any other or no reason with 90 days' prior written notice to each other Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) No termination or expiration of this Agreement shall affect the ongoing obligations of Issuer Party to make payments to NCPS in accordance with the terms hereunder and such obligations shall survive. Amounts that would have become payable had this Agreement remained in effect until expiration of the Term will become immediately due and payable upon termination, and Issuer Party shall pay or shall cause to be paid such amounts, together with all previously-accrued but not yet paid fees, on receipt of NCPS's invoice therefor or as otherwise set forth in <u>Exhibit B</u>, <u>Section 9</u> or <u>Section 10</u>. In addition, Issuer Party shall remove any and all references to NCPS from any Offering Document, cease use of NCPS intellectual property and no longer refer to NCPS in connection with the offering.

18. **Dealings.** NCPS and any stockholder, director, officer or employee of NCPS may buy, sell and deal in any of the securities of Issuer Party and become pecuniary interested in any transaction in which Issuer Party may be interested, and contract and lend money to Issuer and otherwise act as fully and freely as though it were not escrow agent under this Agreement. Nothing herein shall preclude NCPS from acting in any other capacity for Issuer Party or any other entity.

19. **Compliance with Law; Further Assurances.** The Parties expressly agree that, to the extent that the existing law relating to this Agreement changes, and such change affects this Agreement, they will reform the affected portion of this Agreement to comply with the change. Each Party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes of this Agreement.

20. **Choice of Law, Jurisdiction and Dispute Resolution.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement shall be governed by and construed under the laws of the State of Delaware, without giving effect to its choice of law, conflict of laws or "borrowing", statutes, rules, principles and precedent. The Parties irrevocably consent to the exclusive jurisdiction of the state and federal courts located in the State of Utah, County of Salt Lake.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Party acknowledges and agrees that a breach or threatened breach by a Party of any of its obligations under this Agreement may cause any other Party irreparable harm for which monetary damages may not be an adequate remedy and agrees that, in the event of such breach or threatened breach, any other Party will be entitled to seek equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from any court, without any requirement to post a bond or other security, or to prove actual damages or that monetary damages are not an adequate remedy. Such remedies and any other remedies set forth in this Agreement are not exclusive and are cumulative in addition to all other remedies that may be available at law, in equity or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) TO THE FULLEST EXTENT PERMITTED BY LAW, THE COLLECTIVE AGGREGATE LIABILITY OF THE NCPS PARTIES UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER, TO ISSUER PARTY, ANY OTHER PARTY OR THIRD PARTY, UNDER ANY LEGAL OR EQUITABLE THEORY, WHETHER ARISING OUT OF TORT (INCLUDING NEGLIGENCE), BREACH OF CONTRACT, STRICT LIABILITY, INDEMNIFICATION, BREACH OF STATUTORY DUTY, BREACH OF WARRANTY, RESTITUTION OR OTHERWISE, WHETHER BROUGHT DIRECTLY OR AS A THIRD PARTY CLAIM, SHALL BE LIMITED TO THE LESSER OF (A) $1,000 OR (B) THE AMOUNT OF FEES PAID BY ISSUER PARTY TO AND RECEIVED BY NCPS DURING THE SIX MONTHS PRECEDING THE DATE OF THE EVENT GIVING RISE TO THE ACCRUAL OF THE ACTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. To the full extent permitted by law, no legal proceeding shall be joined with any other or decided on a class-action basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to <u>Section 20(c)</u>, in any Action, by which one Party either seeks to enforce this Agreement or seeks a declaration of any rights or obligations under this Agreement, the non-prevailing Party will pay the prevailing Party's costs and expenses, including, but not limited to, reasonable attorneys' fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) None of the NCPS Parties shall be liable to any Issuer Party or to anyone else for any special, exemplary, indirect, incidental, consequential or punitive damages of any kind or for any costs of procurement of substitution of services or any lost profits, lost business, trading losses, loss of use of data or interruption of business or services arising out of this Agreement, including, without limitation, any breach of this Agreement or any services performed, regardless of the basis of liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) At NCPS's or its affiliate's determination, a breach under this Agreement by Issuer Party will constitute a default by Issuer Party or its affiliates under any other agreements any of them have then in effect with NCPS or its affiliates and vice versa.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) All rights and remedies of NCPS in this Agreement will be in addition to all other rights and remedies available at law or in equity and shall survive any expiration or termination of this Agreement.

21. **Notices; Consent to Electronic Communications.** All notices, requests, consents, claims, demands, waivers and other communications under this Agreement ("**notices**") have binding legal effect only if in writing and addressed to a Party as set forth on the signature page hereto (or to such other address that such Party may designate from time to time in accordance with this <u>Section 21</u>). Notices sent in accordance with this <u>Section 21</u> will be deemed effectively given: (a) when received, if delivered by hand, with signed confirmation of receipt; (b) when received, if sent by a nationally recognized overnight courier, signature required; or (c) on the third day after the date mailed by certified or registered mail, return receipt requested, postage prepaid. In addition, Issuer Party consents to the receipt of notices electronically via email.

22. **Severability.** If any provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or invalidate or render unenforceable such provision in any other jurisdiction. Upon such determination that any provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

23. **Relationship of the Parties.** Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and no Party shall have authority to contract for or bind any other Party in any manner whatsoever.

24. **No Third Party Beneficiaries.** Except as otherwise set forth in <u>Section 9</u>, this Agreement is for the sole benefit of the Parties and, subject to <u>Section 14</u>, their respective successors and assigns. Nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. NCPS Parties shall be third party beneficiaries as set forth in <u>Section 9</u>.

25. **Interpretation; Headings and References.** The Parties intend this Agreement to be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. Further, the headings used in this Agreement and the references throughout to the policies and documents constituting this Agreement are for convenience only and are not intended to be used as an aid to interpretation. All such references are subject to the full text of such policies and documents. Any decision by NCPS with respect to the interpretation or application of this Agreement shall be final and binding on Issuer Party.

26. **Gender; Number.** Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. If one or more persons or entities constitute "**Issuer Party**", as defined in the introductory paragraph, references to "**Issuer Party**" in this Agreement shall include references to each Issuer Party individually, together and collectively, jointly and severally.

27. **Intellectual Property; Confidential Information.** All trademarks, service marks, patents, copyrights, trade secrets, confidential information, and other proprietary rights of each Party shall remain the exclusive property of such Party, whether or not specifically recognized or perfected under Law. Issuer Party shall not use, disclose or retain confidential information (including personally identifiable information or other account information) of NCPS Parties or any third parties that Issuer Party or its affiliates or their employees, directors, officers, consultants, independent contractors, advisors and auditors may receive or otherwise have access to in connection with the transactions contemplated by this Agreement copies of and disclose and use any data or information collected from or on behalf of any Issuer Party or otherwise up to and throughout this Agreement as may be required in connection with legal, financial or regulatory filings, audits, discussions or examinations or as otherwise required by Law.

28. **Counterparts.** This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement. Upon execution and delivery of a counterpart to this Agreement by the Parties, each Party shall be bound by this Agreement. A signed copy of this Agreement by facsimile, email or other means of electronic transmission or signature is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

29. **Anti-Money Laundering.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer Party acknowledges that NCPS is subject to U.S. federal Law, including the CIP requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which NCPS must obtain, verify and record information that allows NCPS to identify customers of NCPS. Accordingly, NCPS will ask Issuer Party to provide, and Issuer Party shall provide, certain information, including, but not limited to, name, physical address, tax identification number and other information that will help NCPS to identify and verify Issuer Party's identity, such as organizational documents, certificates of good standing, financial statements, licenses to do business or other pertinent identifying information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Parties agree to comply with all applicable anti-money laundering Law and government guidance, including the reporting, recordkeeping and compliance requirements of the Bank Secrecy Act, as amended by the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2002, Title III of the USA PATRIOT Act, its implementing regulations, and related SEC, state regulatory organizations and FINRA rules. Each Party shall comply with all other anti-money laundering Law outside of the U.S. applicable to such Party or such Party's activities under this Agreement. Upon NCPS's request, Issuer Party shall provide customary certifications as to Issuer Party's CIP, anti-money laundering program and OFAC Sanctions Compliance Program on which NCPS is entitled to rely.

30. **Privacy.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Party agrees any non-public personal information (as defined in Regulation S-P of the SEC) disclosed to it in connection with this Agreement is being disclosed for the specific purpose of permitting such Party to perform such Party's obligations and the services set forth in this Agreement. Each Party agrees that, with respect to such information, it will comply with Regulation S-P of the SEC, the Gramm-Leach-Bliley Act (15 U.S.C § 6081 et seq.) and all other applicable U.S. privacy Law and it will not disclose any non-public personal information received in connection with this Agreement to any other party (except to the other Party), except to the extent required to carry out this Agreement or as otherwise permitted or required by Law. Each Party shall comply with all other privacy Law outside of the U.S. applicable to such Party or such Party's activities in connection with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Party shall: (a) as applicable to such Party, comply with all applicable requirements of the CCPA (as defined below), when collecting, using, retaining or disclosing personal information; (b) limit personal information collection, use, retention and disclosure to activities reasonably necessary and proportionate to the performance of this Agreement or other compatible operational purpose; (c) only collect, use, retain or disclose personal information collected in connection with this Agreement; (d) not collect, use, retain, disclose, sell or otherwise make personal information available for such Party's own commercial purposes or in a way that does not comply with the CCPA, as applicable to such Party; (e) promptly comply with the other Party's request or instruction requiring such Party to provide, amend, transfer or delete the personal information, or to stop, mitigate, or remedy any unauthorized processing; (f) reasonably cooperate and assist the other Party in meeting any compliance obligations and responding to related inquiries, including responding to verifiable consumer requests, taking into account the nature of such Party's processing and the information available to such Party; and (g) notify the other Party immediately if it receives any complaint, notice or communication that directly or indirectly relates to either Party's compliance. For purposes of this Agreement, "**CCPA**" means the California Consumer Privacy Act of 2018, as amended (Cal. Civ. Code §§ 1798.100 to 1798.199), and any related regulations or guidance provided by the California Attorney General.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31. **Citations.** Any reference to Law are current citations. Any changes in the citations (whether or not there are any changes in the text of such Law) shall be automatically incorporated into this Agreement.

**[Signatures appear on following page(s).]**

In witness whereof, the Parties have duly executed this Agreement effective as of the Effective Date.

---

| | | |
|:---|:---|:---|
| **Effective Date:** | 6/8/2022 |  |
| **Offering Name:** | CWS Investments Inc |  |
| **Minimum Offering:** | &nbsp;&nbsp;&nbsp;&nbsp;$0.00 | (including offline investments and in kind contributions and similar creditable amounts) |
| **Total Offering Amount:** | &nbsp;&nbsp;&nbsp;&nbsp;$75000000.00 |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Offering Exemption:** | ●Rule 506(b) of Regulation D | ● Rule 506(c) of Regulation D | ☒ | ● Regulation A |
|  | ● Regulation Crowdfunding |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| **ISSUER:** |  | **NCPS:** | **NCPS:** |
| Entity Name: | CWS Investments Inc | North Capital Private Securities Corporation | North Capital Private Securities Corporation |
| Jurisdiction: | Virginia | Jurisdiction: | Delaware |
| By: | /s/ Chris Seveney | By: | /s/ Linsey Harkness |
|  | (Signature) |  | (Signature) |
| Name: | Chris Seveney | Name: | Linsey Harkness |
| Title: | CEO | Title: | Managing Director |
| Date: | 6/8/2022 | Date: | 6/6/2022 |
| Email: |  | Email: |  |
| With a copy to: |  | With a copy to: |  |
| Address: |  | Address: |  |

---

---

| | |
|:---|:---|
| **MANAGER:** |  |
| Entity Name: | Dalmore Group, LLC |
| Jurisdiction: | New York |

---

---

| | |
|:---|:---|
| By: | /s/ Etan Butler |
|  | (Signature) |
| Name: | Etan Butler |
| Title: | Chairman |
| Date: | 6/6/2022 |
| Email: |  |
| Address: |  |

---

**Issuer Party Payment Information:**

☒ ● Use payment information currently on file with NCPS; or

Complete the payment information below:

---

| | |
|:---|:---|
| <u>Credit Card</u> | <u>ACH/Wire Information</u> |
| Name on Card: | Bank Name: |
| Credit Card Number: | Account Holder Name: |
| Expiration Date (MM/YY): | Routing Number: |
| Billing Address: | Account Number: |
|  | Account Type (Checking/Savings): |
|  | <u>Billing Contact Person</u> |
|  | Name: |
|  | Email: |
|  | Telephone Number: |

---

**<u>EXHIBIT A</u>**

**CONTINGENT OFFERING**

If the Offering is a contingent offering as this term is referenced under Rule 15c2-4 of the Exchange Act ("**Rule**"), the distribution is being made with the express understanding that Escrow Funds are not to be released to Issuer until some further event or contingency occurs, as described in this <u>Exhibit A</u>, in accordance with the Rule.

Investor funds will be promptly deposited in a separate bank escrow account, with NCPS serving as agent for the persons who have the beneficial interests therein, until the appropriate event or contingency has occurred.

Upon certification that all contingencies have been met, the Escrow Funds will be promptly distributed to Issuer. If the contingencies fail to be satisfied as required by the Offering, the Escrow Funds will be returned to the persons or entities entitled thereto.

The following contingencies apply to the Offering (please check all that apply):

☐ None.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;☒ Issuer KYC, AML, and Bad Actor Check screening are complete for
Issuer and all Control Persons of Issuer.

☐ Certain listed events will have occurred prior to closing (please specify):

☐ Other contingencies (please describe):

![](ex8-1_003.jpg)

**<u>EXHIBIT B</u>**

**FEES AND EXPENSES**

---

| | |
|:---|:---|
| Escrow Administration Fee: | $500 set-up and administration for 12 months (or partial period); $250 for each additional 12 months (or partial period) |
| Issuer Routable Account Number: | $150 per month |
| Out-of-Pocket Expenses: | Billed at cost |
| Check Disbursements: | $10.00 per check (incoming/outgoing) |
| Transactional Costs: | $100.00 for each additional escrow break |
|  | $100.00 for each escrow amendment |
|  | $50.00 for reprocessing a closing |
| Wire Disbursements: | $25.00 per domestic wire (incoming/outgoing) |
|  | $45.00 per international wire (incoming/outgoing) |

---

Issuer Party shall pay NCPS the Escrow Administration Fee upon execution of this Agreement. In the event the escrow is not funded, the Fee and all related expenses, including attorneys' fees, remain due and payable, and once paid, will not be refunded. Annual fees cover a full year in advance, or any part thereof, and thus are not pro-rated in the year of termination.

Escrow Parties shall pay such fees immediately upon Escrow Agent's demand, or at Escrow Agent's option, Escrow Agent may deduct such fees from any disbursement of Escrow Funds from the Escrow Account as provided in <u>Section 10(d)</u>.

The fees quoted in this schedule apply to services ordinarily rendered in the administration of an Escrow Account and are subject to reasonable adjustment based on final review of documents, or when NCPS is called upon to undertake unusual duties or responsibilities, or as changes in law, procedures, or the cost of doing business demand. Services in addition to and not contemplated in this Agreement, including, but not limited to, document amendments and revisions, non-standard cash and/or investment transactions, calculations, notices and reports and legal fees, will be billed as extraordinary expenses and capped at $15,000.

Extraordinary fees are payable to NCPS for duties or responsibilities not expected to be incurred at the outset of the transaction, not routine or customary, and not incurred in the ordinary course of business. Payment of extraordinary fees is appropriate where particular inquiries, events or developments are unexpected, even if the possibility of such things could have been identified at the inception of the transaction.

Unless otherwise indicated, the above fees relate to the establishment of one escrow account. Additional sub-accounts governed by the same Escrow Agreement may incur an additional charge. Transaction costs include charges for wire transfers, checks, internal transfers and securities transactions.

NCPS may increase the amounts set forth in this <u>Exhibit B</u> by providing written notice to Issuer Party such increase to be effective as of such notice, and the fees will be deemed amended accordingly without further notice or consent; provided that Issuer Party may terminate this Agreement pursuant to <u>Section 17</u>.

Escrow Agent may submit any payment information provided to it by an Issuer Party in connection with this Agreement against any fees due from such Issuer Party. Each Issuer Party consents to Escrow Agent retaining and using such payment information for future invoices and as provided in this Agreement. All payments shall be in US dollars in immediately available funds.

\* *The fees payable under this Agreement, plus the other relevant fees, attributable to any public offering (including any interest thereon), shall be capped at an aggregate amount not to exceed as permitted by applicable FINRA rules.*

ALL FEES AND EXPENSES PAID TO NCPS ARE NON-REFUNDABLE.