UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 20212022

For the transition period from __________ to ___________

Commission File Number 333-326458

iCap Vault 1, LLC

(Exact name of registrant as specified in its charter)

(425)278-9030

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] ☒ No [  ]☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] ☒ No [  ]☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] ☐ No [X] ☒

There is no public market for the registrant’s outstanding membership interests. As of May 13, 2021,2022, there were 1,000 membership interests issued and outstanding.

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report includes “forward-looking statements” within the meaning of the federal securities laws that involve risks and uncertainties. Forward-looking statements include statements we make concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this quarterly report, the words “estimates,” “expects,” “anticipates,” “projects,” “forecasts,” “plans,” “intends,” “believes,” “foresees,” “seeks,” “likely,” “may,” “might,” “will,” “should,” “goal,” “target” or “intends” and variations of these words or similar expressions (or the negative versions of any such words) are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this quarterly report.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks and uncertainties are discussed in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended December 31, 2020,2021, filed with the Securities and Exchange Commission on March 31, 2020,24, 2022, as the same may be updated from time to time.

All forward-looking statements attributable to us in this quarterly report apply only as of the date of this quarterly report and are expressly qualified in their entirety by the cautionary statements included in this quarterly report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events, except as required by law.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

iCap Vault 1, LLC

Condensed Consolidated Balance Sheets

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

iCap Vault 1, LLC

Condensed Consolidated Statements of Operations (Unaudited)

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

iCap Vault 1, LLC

Condensed Consolidated Statements of Member’s Deficit (Unaudited)

Three Months Ended March 31, 2022 and 2021

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

iCap Vault 1, LLC

Consolidated Statements of Cash Flows (Unaudited)

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

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 20212022

Note 1. Nature of Business and Summary of Significant Accounting Policies

Organization and Nature of Business:

iCap Vault 1, LLC (the “Company”), a Delaware limited liability company, was formed on July 30, 2018 pursuant to and in accordance with the Delaware Limited Liability Company Act for the purpose of acquiring real estate investments in the United States and providing a rate of return to its investors. The Company was organized for the principal purposes of (a) sourcing, acquiring, financing and managing a portfolio of investments and (b) engaging in all activities incidental or ancillary thereto as the Manager, iCap Vault Management, LLC (the “Manager”), deems necessary or advisable. The Company’s Limited Liability Company Agreementamended and restated operating agreement is dated September 18, 2020 (the “Operating Agreement”) and provides for one class of membership units that have the same rights, powers and duties.membership. The Company had 1,000 units issued and outstanding as of March 31, 2021,2022, all of which were issued at the time of formation. All units are held by one member. The Operating Agreement continues until the Company is dissolved.

The Company has two wholly owned subsidiaries, Vault Holding, LLC (“Holding”) and Vault Holding 1, LLC (“Holding 1”). Holding was formed September 27, 2018. Holding 1 was formed2018 and April 28, 2020.2020, respectively. Each entity was formed with the intention of owning one or more standalone subsidiaries (each a “Portfolio SPE”), which itself will hold real property investments and real estate-based financial instruments. The Company intends to generate revenues in the following ways from its properties: from net rental income on our propertiesBoth Holding and from price appreciation of the properties upon their disposition. For the financial instruments secured by real estate that the Company invests in, the Company intends to generate revenues from the interest income received on such financial instruments. Additionally, the entitiesHolding 1 provide guarantiesguarantees to secured noteholders of the Company. Holding provides such a guarantyguarantee to holders of private placement secured demand notes. Holding 1 shall provideprovides a guarantyguarantee to holders of publicly available variable denomination floating rate demand notes the Company intends to offeroffers through a public offering.registration. As of the date of issuance of these unaudited condensed consolidated financial statements, Holding made two loansowns all investment properties and purchased three townhomes (see Notes 2 and 7).

affiliated notes receivable, whereas Holding 1 has not commenced operations and has no assets and liabilities.

The Company executed the Operating Agreement asgenerates revenue from rentals of August 1, 2018, which was amendedreal property investments and restatedinterest on September 18, 2020. Each member’s liability is limited to their respective member’s equity plus any debtinvestments in financial instruments based in real estate. Management intends for which a personal guarantee has been given. The Operating Agreement continues until the Company to generate additional revenue from price appreciation of real properties upon their disposition.

The Company’s investments and its operations in the near term will be funded primarily by $1 billion of investor demand notes. The first offering is dissolved.a private placement to accredited investors of up to $500 million under an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Rule 506(c) and Regulation S (“Private Placement Notes”). The second is a registered a public offering of up to $500 million of Variable Denomination Floating Rate Demand Notes (“Public Demand Notes”), under an effective registration statement (File No. 333-236458). Collectively these are referred to as the (“Demand Notes”) hereto, unless otherwise distinguished.

On September 18, 2020, the Company, Holding 1 and American Stock Transfer & Trust Company, LLC, as trustee, entered into an Indenture,indenture, which complies with the requirements of the Trust Indenture Act of 1939, as amended, under which the publicly registered demand notes will bePublic Demand Notes are offered.

On November 24, 2020, the Securities and Exchange Commission (“SEC”) declared the Company’s Registration Statement on Form S-11/A (the “Registration Statement”), filed with the SEC on November 2, 2020, effective and the Company is authorized to sell $500,000,000$500,000,000 of Variable Denomination Floating Rate Demand Notes (“Public Demand Notes”)Notes on a continuous basis, in a direct public offering. On April 29, 2021,2022, the Company filed with the SEC Post-Effective Amendment No. 12 to the Registration Statement. The SEC declared Post-Effective Amendment No. 12 effective on May 5, 2021.6, 2022. No additional securities were registered pursuant to Post-Effective Amendment No. 1. The Public Demand Notes will have the following terms and features:2.

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 20212022

There have been no Public Demand Notes issued as of March 31, 2021.

Note 2. Basis of Presentation:Presentation

Quarterly Reporting:

The accompanying unaudited condensed consolidated financial statements (“financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and have been consistently applied. They do not include allCertain information and footnotesfootnote disclosures normally included in financial statements presented in accordance with GAAP, but which are not required by GAAP for complete financial statements.interim reporting purposes, have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position as of March 31, 2022 and the results of operations and cash flows for a fair presentationthe interim periods ended March 31, 2022 and 2021, have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 20202021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2021.24, 2022. Operating results for the three months ended March 31, 20212022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.2022.

Use of Estimates:

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

Principles of Consolidation:

The unaudited condensed consolidated financial statements represent the consolidation of the Company and its wholly owned subsidiaries, Holding and Holding 1. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents:

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company’s cash and cash equivalents are held at major commercial banks which hold balances that at times may exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses in such accounts with these financial institutions. There were no cash equivalents as of March 31, 2021 and December 31, 2020.

The Company sets aside reserves of between 5-10% of the outstanding principal balances in available cash reserves to address demand payments of its private placement secured demand notes pursuant to the private placement memorandum (see Note 3).

Notes Receivable and Interest Income:

Notes receivable are accounted for in the Company’s unaudited condensed consolidated balance sheets at the outstanding principal balance, plus accrued interest. Interest income is accrued at the contractual rate of interest over the term of the note. The accrual of interest is discontinued when management believes, after considering collection efforts and other factors, the amount ultimately to be collected will be insufficient to cover the additional interest payments. The Company designates notes as non-performing at such time as (i) the note has a maturity default; or (ii) in the opinion of management, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the note.

The Company reviews notes receivable for impairment and provides an allowance for credit losses if all or a portion of the note is determined to be uncollectible. Notes are charged off to the allowance for credit losses when the contractual amount is no longer realizable.

Capitalized Software:

The Company recognized internal use software development costs in accordance with ASC 350-40, Intangibles – Goodwill and Other – Internal Use Software. Costs of materials, consulting, payroll, and payroll related costs incurred in developing internal use computer software are capitalized when incurred. The cost of certain upgrades and enhancements to internal use software that result in additional functionality are also capitalized. Costs incurred during the preliminary project and post implementation stages are charged to expense as incurred. Once a development project is substantially complete and the software is ready for its intended use, software costs are amortized on a straight-line basis over a three year estimated useful life.

Impairment of Definite-Lived Intangible Assets:

Definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. When it becomes apparent that indicators such as a significant decrease in the market value of an intangible asset group or if material differences between operating results and the Company’s forecasted expectations occur, then an impairment analysis is performed.

If indicators arise, an initial determination of recoverability is performed based on an estimate of the undiscounted future cash flows resulting from the use of the asset and its eventual disposition compared with the carrying value. If the carrying value of the asset group exceeds the undiscounted cash flows, a measurement of an impairment loss for intangible assets is performed. The impairment charge is the excess of the carrying value of the asset group over the fair value, as determined utilizing appropriate valuation techniques.

Due to the Company’s recurring losses, management conducted an impairment analysis and concluded there was $0 and $157,143 in impairment expense related to its capitalized software for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively.

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

Income Taxes:

As a limited liability company, the Company’s taxable income or loss is allocated to the member. Therefore, no provision or liability for income taxes has been included in the unaudited condensed consolidated financial statements.

Holding and Holding 1 are subsidiaries, and as single member LLCs are considered disregarded entities for income tax purposes.

The Company’s policy, if it had any uncertain tax positions, would be to recognize accrued interest and penalties related to uncertain tax positions as interest expense and other expense, respectively.

Management evaluated the Company’s tax positions and concluded the Company had no uncertain tax positions that would require disclosure. Since its formation, the Company is subject to income tax examinations by the U.S. federal, state or local tax authorities.

Organizational and Offering Costs:

Costs incurred in the private placement offering and the organization of the Limited Liability Company (collectively “Offering Costs”) are expensed as incurred.

Notes Payable and Related Costs:

The Company has been conducting a private placement of up to $500,000,000 of secured notes (“private placement secured demand notes”) to fund its investment and operational activities. Notes payable are recorded at the principal amount of the notes sold, plus reinvested interest.

The Company has not issued any Public Demand Notes as of March 31, 2021.

Interest is expensed in the period incurred.

Fair Value of Financial Instruments:

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to unaudited condensed consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of related party receivables and payables, affiliated note receivable, deposits received in advance, private placement secured demand notes, and accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. None of these instruments are held for trading purposes.

Liquidity and Going Concern:

The Company has not issued any Public Demand Notes as of the date that these unaudited condensed consolidated financial statements are available to be issuedand Private Placement Notes through March 31, 2022 and does not have sufficient cash or a sourcesources of revenue sufficient to cover its operationoperating costs and debt obligations. As of March 31, 2021,service. In addition, the Company and its subsidiaries have not made any investments into cash flowing assets and have generated recurring losses from operations and negative operating cash flows since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern withinfor one year afterfollowing the date these unaudited condensed consolidated financial statements are available to be issued. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These unaudited condensed consolidated financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.concern for one year following the date these unaudited condensed consolidated financial statements are available to be issued. The Company will beis dependent upon the raising of additional capitalfinancing through issuance of debt in order to implement its business plan. There can be no assurance that the Company will be successful in this situation in order to continue as a going concern. The Company is funding its initial operations from (1) payments of expenses by its related entities, which are included in related party payables on the unaudited condensed consolidated balance sheets, (2) equity contributions, and(3) issuance of private placement demand notes.Public Demand Notes and Private Placement Notes and (4) leveraging existing investment properties.

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

The Company’s operations may be affected by the ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020 was declared a pandemic by the World Health Organization.that has continued since 2020. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Company’s ability to make investments through its subsidiaries, negative impact to revenue related to real estate holdings, negative impact on its workforce, unavailability of professional services and other resources, disruption to credit markets necessary for success of the Company’s business model, and the decline in value of assets held by the Company’s subsidiaries.

iCap Vault 1, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

Recent Accounting Pronouncements

The supplyFinancial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of housing inventoryCredit Losses on Financial Instruments. This ASU updates Topic 326 by removing the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The guidance in ASU 2016-13 is effective for “public business entities,” for reporting periods beginning after December 15, 2022. Early adoption of the guidance is permitted for reporting periods beginning after December 15, 2018. Management is currently evaluating the impact that the pending adoption of this guidance will have on its consolidated financial statements.

Reclassification

Certain prior period balances in the Greater Seattle area may become further restricted through a shutdownunaudited condensed consolidated statements of construction activity. Additionally, a moratorium on real estate transactions may be imposedcash flows have been reclassified to conform with the current period presentation. The Company reflected non-cash issuances and corresponding redemptions of Private Placement Notes of $163,000 used in reaction to the pandemic. These housing market impacts may limit the Company’s ability to acquire or disposefinancing activities, which reduced proceeds and repayments of real estate assets.Private Placement Notes.

General employment in the region may continue to suffer as the pandemic continues. Some local governments have proposed rent or eviction moratoria, or similar programs of rent abatement, in response to the sudden upturn in unemployment. Any of these factors could cause a future decline in the market rate for residential rentals negatively impacting the Company’s income and cash flow from its real estate holdings.

Employees of affiliated companies could be medically or mentally affected by the pandemic and may be required to continue to work remotely, particularly given potential for complete or partial school closures. This situation could cause a reduction in productivity or the inability to complete critical tasks for the Company.

As of the date of this filing, the Company has not experienced significant impact related to the COVID-19 pandemic.

Note 2. 3. Related-Party Transactions

AsOperations:

Amounts due from affiliated entities of $0 and $1,440 at March 31, 20212022 and December 31, 2020, the Company holds2021, respectively, are included in related party receivables of $1,441 and $170,591, respectively.on the accompanying unaudited condensed consolidated balance sheets. These receivables are related to payments of operating expenses made on behalf of affiliated entities. These receivablesentities, are non-interest bearing and are due on demand. Amounts due to affiliated entities of $62,181 and $84,461 at March 31, 2022 and December 31, 2021, respectively, are included in related party payables on the Company’s demand of payment.accompanying unaudited condensed consolidated balance sheets. These payables are non-interest bearing and due on demand.

In consideration for the Manager’s services in managing the investments of the Company, theThe Company pays to the Manager an annuala management fee equal to one percent1% of the outstanding aggregate principal balances of the private placement secured demand notes. Private Placement Notes and 1.3% of outstanding Public Demand Notes.The management fee is paid in arrears on the last day of each calendar quarterCompany incurred $55,705 and is calculated on the average daily outstanding principal balances of the private placement secured demand notes during the applicable quarter. There were $8,911 and $2,375$8,911 in management fees incurredfrom the Manager during the three months ended March 31, 2022 and 2021, respectively.

Private Placement Notes:

Private Placement Notes payable to employees, officers and 2020, respectively. These feesan affiliated entity at March 31, 2022 and December 31, 2021 are includedpresented in the following table:

Schedule of Private Placement Notes Payable

iCap Vault 1, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

In addition, other non-key management fee expense-related party on the unaudited condensed consolidated statementsemployees of operations. When the Company issuesaffiliated entities held $114,282 and $83,201 of Private Placement Notes and $10,114 and $10,060 of Public Demand Notes the management fee paid by the Company shall increase to 1.3% of outstanding Public Demand Notes. Management fees on the private placement secured demand notes will remain at 1%.

Certain expenses of the Company were paid directly by affiliated entities, iCap Equity, LLC and iCap PNW Management LLC. Direct expenses paid by the affiliated entities totaled $277 and $8,991 for the three months ended March 31, 20212022 and 2020,December 31, 2021, respectively. These expenses are includednotes and the notes presented in general and administrative expenses on the unaudited condensed consolidated statements of operations.

Amounts due to affiliated entities, inclusive of direct expenses paid by affiliated entities and management fees accrued,table above are included in the related party payables of $16,832 and $7,644 on the unaudited condensed consolidated balance sheets at March 31, 2021 and December 31, 2020, respectively. These payables are non-interest bearing and due on the affiliated companies’ demand of payment. At March 31, 2021 there exists a concentration of payables to related parties of approximately 12% of the Company’s payables and accrued expenses compared to approximately 16% at December 31, 2020.

As of March 31, 2021, a private placement secured demand note of $1,056 payable to the CEO, is included in related party private placement secured demand notes on the unaudited condensed consolidated balance sheets. As of December 31, 2020, this note totaled $1,051. As of March 31, 2021, a private placement secured demand note of $879 is payable to the Director of Capital Markets, which is included in related party private placement securedand public demand notes on the accompanying unaudited condensed consolidated balance sheets.

As of December 31, 2020, this note totaled $875. AsMay 13, 2022, the total amount of March 31, 2021, a private placement secured demand note of $4,506,788 payable tooutstanding Private Placement Notes held by the Chief Executive Officer, iCap International Investments, LLC, a joint venture entity in which the CEO is the majority owner, is included in related party private placement secured demand notes on the unaudited condensed consolidated balance sheets. Asemployees of December 31, 2020, there were no notes owned by iCap International Investments, LLC.

iCap Vault 1, LLCaffiliated entities, was $1,080, $1,763,137 and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

Additionally,$1,143 respectively. In addition, other non-key management employees of affiliated entities held $24,210$76,536 of Private Placement Notes and $19,342$10,139 of private placement secured demand notes, which are included in the private placement secured demand notes on the unaudited condensed consolidated balance sheetsPublic Demand Notes as of May 13, 2022.

Affiliated Notes Receivable:

The Company holds $10,780,909 and $10,393,206 of affiliated notes receivable, inclusive of accrued interest on March 31, 20212022 and December 31, 2020,2021, respectively.

Effective October 13, 2020, These notes receivable include loans from Holding made a loan to Colpitts Sunset, LLC,individuals who are minority co-owners of an affiliated entity in the amount of $864,032, in exchange for a promissory noteand affiliated entities with investment properties secured by a deed of trust on property owned by Colpitts Sunset, LLC and bearing interest of 10% per annum. Effective January 14, 2021, Holding amended and restated its promissory note from Colpitts Sunset, LLC extending the maturity date to June 30, 2021 and increasing the total available principal balance on the note to a maximum of $1,500,000 of the note. On January 14, 2021, an additional advance of $350,000 was made under the agreement.real estate. The full amount of the notenotes plus accrued interest earned and accrued of $47,294 and $7,200 is included in therecorded as affiliated notenotes receivable on the accompanying unaudited condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively. Subsequent to March 31, 2021, Holding amended and restated its promissory note from Colpitts Sunset, LLC extending the maturity date to April 1, 2023 and increasing the total available principal balance on the note to a maximum of $3,500,000 (see Note 1). As of May 12, 2021, $3,448,618 of principal and $76,087 of accrued interest is outstanding.sheets.

Subsequent to March 31, 2021, iCap International Investments, LLC made additional investments of $5,259,602, and redeemed investments of $1,200,000, and as of May 12, 2021, the total amount of outstanding private placement secured demandAffiliated notes held by iCap International Investments, LLC was $8,586,917. There were no other investment or redemption activities related to the private placement secured demand notes held by iCap International Investments, LLC, the CEO, or the Director of Capital Markets. During such subsequent period, non-key management employees purchased an additional $600,000 private placement secured demand notes and redeemed $100,000 private placement secured demand notes.

Note 3. Capitalized Software in Development

The Company is in the process of developing software intended to facilitate the processing of demand notes and give noteholders the ability to monitor their notes and link personal accounts. As of February 1, 2021, management believes developmentreceivable consists of the internal use software is substantially complete and additional costs related to services that do not significantly increase functionality will be expensed as incurred.following:

Schedule of Affiliated Notes Receivable

Through December 31, 2020, costsNote 4. Investment Properties

Investment properties consist of $157,143 were capitalized. Due to the Company’s recurring losses, management conducted an impairment analysis and concluded there was $0 and $157,143 in impairmentfollowing:

Schedule of Investment Property

Depreciation expense related to its capitalized software for the three months ended March 31, 2022 and 2021, was $26,441 and $0, respectively.

At March 31, 2022, the Company has the following investment properties:

iCap Vault 1, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

Note 5. Acquisitions

On March 11, 2022, VH Senior Care LLC (“Senior Care”) entered into a Residential Purchase and Sale Agreement (the “Lynnwood Purchase Agreement”) by and between Senior Care and unaffiliated Sellers (the “Lynnwood Sellers”). Senior Care is a wholly owned subsidiary of Holding. Pursuant to the terms of the Lynnwood Purchase Agreement, Senior Care agreed to purchase from the Lynnwood Sellers certain real property located at 1226 160^th St. SW, Lynnwood, WA 98087 (the “Lynnwood Property”). Senior Care acquired the property for a purchase price of $1,779,431 on March 25, 2022. The aggregate purchase price was allocated between the estimated fair values of the underlying assets of $1,330,547 of buildings and $448,884 of land at the date of acquisition.

On March 14, 2022, Senior Care entered into a Residential Purchase and Sale Agreement (the “Burien Purchase Agreement”) by and between Senior Care and unaffiliated Sellers (the “Burien Sellers”). Pursuant to the terms of the Burien Purchase Agreement, Senior Care agreed to purchase from the Burien Sellers certain real property located at 302 SW 146^th St., Burien, WA 98166. Senior Care acquired the property for a purchase price of $1,003,768 on March 25, 2022. The aggregate purchase price was allocated between the estimated fair values of the underlying assets of $693,107 of buildings and $310,661 of land at the date of acquisition.

The Company entered into lease agreements for both properties that begin April 1^st, 2022 through March 31, 2027 subject to extension or earlier termination set forth in the lease agreements (see Note 8).

On April 23, 2021 and May 7, 2021, the yearCompany acquired, in related transactions, investment properties from an affiliated entity for a purchase price of $3,420,000 and a carrying value of $3,052,266.

The following unaudited pro-forma information presents the combined results of operations for the three months ended DecemberMarch 31, 2020, respectively.2022 and 2021 as if the above acquisitions had been completed on January 1, 2021. The November 15, 2021 acquisition of five townhouses was under construction until near the acquisition date and had no operations therefore, no proforma financial information is available or included in the table below. The proforma financial information is as follows:

Schedule of Proforma Revenue and Net (loss) Income

Revenues of $93,570 and operating expenses of $71,592 are included in the accompanying unaudited condensed consolidated statement of operations for the three months ended March 31, 2022 as a result of the acquisition of investment properties acquired in 2022 and 2021.

Note 4. 6. Notes Payable

On January 31, 2022, the Company entered into two loan agreements of $2,985,000 and $3,000,000, collateralized by two investment properties. The $2,985,000 loan is guaranteed by the CEO of the Company and the $3,000,000 loan is guaranteed by the CEO and affiliated entities. Each loan bears interest at $7.5% per annum and matures on March 1, 2023. Aggregate monthly interest only payments of $37,406 began March 10, 2022 and continue through February 10, 2023. The loans either individually or collectively, may be repaid before the maturity date with no prepayment penalty. The loans provide for non-financial covenants and include cross default and collateral provisions for the borrowers. The Company incurred financing fees related to the issuance of these loans of 42,827, which are amortized over the term of the notes. The notes payable are presented net of unamortized deferred financing costs of $36,238. For the three months ended March 31, 2022, the Company recorded interest expense of $74,812 of related to these notes payable. Additionally, the Company recorded amortization of deferred financing fees of $6,589 to interest expense.

iCap Vault 1, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

Note 7. Demand Notes

Private Placement Secured Demand Notes

The Company has been conducting a private placement ofis offering up to $500,000,000$500,000,000 of secured demand notes (“private placement secured demand notes”) to fund its investmentPrivate Placement Notes dated October 1, 2018. Private Placement Notes are being offered through August 31, 2022 and operational activities. The outstanding private placement secured demand notes are subordinated to the Company’s and its subsidiaries’ future secured bank debt and credit facilities and structurally subordinated to indebtedness or other liabilities of special purpose entity subsidiaries.

Until the time of the registered offering, the private placement secured demand notes will bePortfolio SPEs. The Private Placement Notes are secured by a pledge of Holding’s equity interests in the Portfolio SPEs. Holding entered into a guaranty agreement with the Company for the benefit of the noteholders, which shall automatically terminate on the 30-day anniversary of the effectiveness of the registered offering. Effective March 1, 2021, as described below, this offering was amended to allow the continuation of the guaranty and security agreementSPEs for as long as the private placement securedPrivate Placement Notes remain outstanding.

The Private Placement Notes, inclusive of accrued but unpaid interest, can be redeemed, in whole or in part, at any time through a demand notes remain outstanding.for repayment but in no instance will an individual note extend beyond 15 years following its issuance date. The Company plans to establish additional accounts with lending sources pursuant to which funds will be advanced as the Company secures additional real estate assets. Private Placement Notes will be subordinate to any security interest in favor of lenders of credit facilities.

Effective March 1, 2021, theThe Company released Supplement No. 2 to its private placement memorandum amending the Company’s private placement memorandum dated Octoberon March 1, 2018. The amendment2021 which modified the interest rates on private placement secured demand notesPrivate Placement Notes and introduced an interest premium program that matches the rewards program associated with the Public Demand Notes (see Note 1).

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

Notes. Prior to March 1, 2021, the private placement secured demand notes accruePrivate Placement Notes accrued interest at the rate of 2.00% per annum, based on a 365-day year, compounded daily; provided, however, that if an investor agreesagreed to forego the right to make a demand for payment during the first year after issuance, the interest rate for that year will be 3.00%, and then willwould revert to the standard 2.00% for following periods. The Company was able to increase and subsequently decrease the interest rate may be increased, and subsequently decreased, in the Company’sat its discretion, provided it doesthe rate would not drop below 2.00% or 3.00% for the first year as applicable.

applicable. In addition, Supplement No. 2 amended the offering to allow Holding’s guarantee to continue for as long as the Private Placement Notes remain outstanding. Originally, the guarantee was to terminate 30 days after an effective registered offering. The private placement secured demandamendment also allows the original security agreement and guaranty agreement to remain in place, removed the noteholder’s ability to exchange their notes are sold through a private placement that was extended through August 31, 2022.

The private placement secured demandfor registered notes, inclusive of accrued but unpaid interest, can be redeemed, in whole or in part, at any time through a demand repayment. Should an entire private placement secured demand note not be redeemed through demand payments, any remaining balances have a maturity date 15 years following the issuance date ofand amended the private placement secured demand note.

memorandum to not terminate upon the effectiveness of the registered offering. The Company will establish two sources of liquidityreleased Supplement No. 3 to address demand payments: first,its private placement memorandum on October 27, 2021, which updated the Company will set aside reserves of between 5-10%status of the outstanding principal balances in available cash reserves (see Note 1); second,offering, provided descriptions of investments made since Supplement No. 2, added discussions of operating results and transactions, provided administrative additions and restated all the Company plans to establish accounts with lending sources pursuant to which funds will be advanced to the Company. These lending sources have not been established at present and are not expected to be established until the Company secures real estate assets.risk factors.

The Company is restricted from making distributions to its members when the value of the real estate held at the Company’s subsidiaries is less than 70% of the value of the outstanding private placement secured demand notes.Private Placement Notes. Tax distributions and other distributions that may be legally required are exempted from this condition.

AsThe outstanding Private Placement Notes, inclusive of accrued but unpaid interest, totaled $18,310,559 and $20,261,724 on March 31, 20212022 and December 31, 2020, the outstanding private placement secured demand notes payable totaled $8,495,269 and $2,242,613,2021, respectively. Approximately 27%65% and 70%33%, respectively, of these private placement secured demand notesPrivate Placement Notes are held by foreign investorsinvestors.

The Company issued additional Private Placement Notes of $6,167,845 and redeemed $3,746,983 after the consolidated balance sheet date through May 13, 2022. An aggregate of $387,847,908 of Private Placement Notes are available to be issued as of May 13, 2022.

iCap Vault 1, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

Public Demand Notes

The Company is offering up to $500,000,000 of Public Demand Notes on a continuous basis pursuant to a registration filed with the SEC, which is effective November 24, 2020, as amended May 5, 2021. The Public Demand Notes accrue interest at a rate per annum equal to the Average Savings Account Rate as published by the FDIC plus 2% (“Floating Rate”). In addition, noteholders are eligible to accrue one or more interest rate premiums (“Interest Rate Premiums”). Both the Floating Rate and Interest Rate Premiums accrue monthly without compounding unless the noteholder opts to reinvest interest into additional Public Demand Notes, in which case, interest will accrue and compound daily. The Public Demand Notes are secured by a guarantee from Holding 1 for the benefit of the noteholders and the membership interest in Holding 1, which will hold interests in real estate and real estate-based financial instruments. There are no restrictions on the guarantee. Currently, Holding 1 is limited in its ability to satisfy the guarantee itself as it has not commenced operations and has no assets. Public Demand Notes will be subordinate to any security interest in favor of lenders of credit facilities.

The Floating Rate resets quarterly on January 1, April 1, July 1, and October 1 of each year based on the Average Savings Account Rate posted by the FDIC on December 15, March 15, June 15, and September 15, respectively, of the prior month. “Average Savings Account Rate” means the “national rate” for savings account products, which is the average of rates paid by all insured depository institutions and credit unions for which data is available, with rates weighted by each institution’s share of domestic deposits, as calculated by the FDIC.

Interest Rate Premiums are available for noteholders whose Public Demand Note features meet certain criteria. The features and criteria are as follows below:

Minimum principal amounts of $10,000, $25,000, $50,000 or $100,000 of Public Demand Notes, earn additional per annum interest of 0.10%, 0.25%, 0.50% and 1.00%, respectively.

Noteholders that waive the right to demand repayment of the Public Demand Notes for 12, 18 or 24 months will earn additional per annum interest during those months of 1.00%, 1.50%, and 2.00%, respectively.

Noteholders that are clients of Registered Investment Advisors (“RIA”) with whom the Company has a selling agreement and have made a direct investment through the RIA, will earn additional per annum interest of 1.00% for as long as the selling agreement is effective. For purposes of determining the term of this premium, reinvested interest shall not be considered a direct investment by a noteholder.

The Public Demand Notes are subject to repayment upon the earlier of demand by the noteholder or redemption by the Company. Public Demand Notes have no stated maturity.

The outstanding Public Demand Notes, inclusive of accrued but unpaid interest, totaled $2,746,419 and $7,657,018 at March 31, 20212022 and December 31, 2020,2021, respectively. Approximately 93% and 94%, respectively, of the Public Demand Notes are held by foreign investors.

Note 5. Member’s DeficitThe Company issued additional Public Demand Notes of $1,763,877 and redeemed $2,130,045 after the consolidated balance sheet date through May 13, 2022. An aggregate of $481,064,182 of Public Demand Notes are available to be issued as of May 13, 2022.

On September 30, 2020, For the three months ended March 31, 2022 and 2021, the Company recorded $159,668 and $22,221, respectively, of aggregate interest expense on these Demand Notes.

iCap Vault 1, LLC made

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

Note 8. Rental Income

On March 21, 2022, the Company entered separate operating lease agreements for two of its investment properties acquired on March 25, 2022 with an additional capital contributionoperator of $1,535,000 intotwo senior care facilities beginning April 1, 2022 and continuing through March 31, 2027, subject to extension or earlier termination. The leases provide for aggregate monthly rental income of $19,717 for the Company.first year and annual increases 3% on each anniversary date, thereafter. Each lease provides the lessee three 5-year extension options. The contribution consistedleases provide for tenant allowances of $1,150,000$75,000 and $150,000 for the Lynnwood Property and Burien Property, respectively to be reimbursed to lessee subject to terms of the lease agreements.

The following is a summary of our expected future minimum base rental income from our operating leases as of March 31, 2022:

Schedule of Future Minimum Base Rental Income

Income from leases is included in cashrental income on the accompanying unaudited condensed consolidated statements of operations.

Additionally, the Company leases individual units in its other investment properties under various operating leases. These leases generate an aggregate monthly rental income of approximately $33,000 and non-cash settlementeach have a term of related party debtone year or less. These leases expire on various dates through February 2023. The operations of $385,000. iCap Enterprises, Inc., the sole member of these properties, including leasing activities, are managed by an unrelated third party.

iCap Vault 1, LLC assumed debt of

Notes to Unaudited Condensed Consolidated Financial Statements

For the Company due to iCap Investments, LLC, an affiliate of the Company and iCap Vault, LLC, in the amount of $385,000. This assumption of debt constituted a part of the $1,535,000 capital contribution to iCap Vault, LLC from iCap Enterprises, Inc.; concomitantly, iCap Vault, LLC made a $1,535,000 capital contribution to the Company. No additional membership interests were issued by the Company to iCap Vault, LLC in connection with this additional capital contribution.Three Months Ended March 31, 2022

Note 6. 9. Commitments and Contingencies

Pursuant to the Securities Act of 1933 and applicable state blue sky law, in June 2020, theThe Company entered into a Broker Dealer Agreement with aan independent broker-dealer effective June 30, 2020, as amended on September 18, 2020 pursuantand again on August 9, 2021. Pursuant to whichthis agreement, the broker-dealer agreed to be the Company’s broker-dealer of record in thirteen states including Texas, Florida, Arizona, Virginia, Utah, Maryland, Oklahoma, Nebraska, Delaware, West Virginia, Montana, North Carolina and Arkansas as well as up to eight additional states to be determined from time to time during the term of the registered offering. As compensation for these broker dealer services, the broker-dealer will beis paid an aggregatea monthly fee of $4,100 per month$8,500 for the thirteen states plus an additional $300$300 per month for each additional state during the term of the registered offering. The broker-dealer services offered in this agreement continue to the earlier of, the date of which the registration statement ceases to be effective, the date of which the registration has been fully subscribed, or the agreement has been unilaterally terminated by either party with a 30-day notice.

On July 23, 2020,The Company is party to selling agreements with various distributors of the Company enteredPrivate Placement Notes and Public Demand Notes for both international and domestic investors. The terms of these agreements allow the distributors to effect sales of the Private Placement Notes and the Public Demand Notes to US and non-US persons on a selling agreementbest-efforts basis. Offers and sales of the Public Demand Notes may be made to qualified investors, upon the terms and subject to the conditions set forth in the Prospectus dated May 5, 2021, as amended. Offers and sales of the Private Placement Notes may only be made in accordance with Somerset Securities, Inc. (“Somerset”) forthe terms of the offering, as set forth in the private placement secured demand notes. Inmemorandum, and in compliance with all U.S. laws and regulations including, but not limited to, Regulation S under the event Somerset successfully sells andSecurities Act of 1933, as amended. The terms of agreements with foreign distributors allow for the Company agreessales of the Private Placement Notes only to issue private placement secured demand notes, Somerset will benon-U.S. persons. Each distributor is compensated 1%1% per annum on the average outstanding balance of those private placement secured demand notes. Therenotes sold by such distributor. These agreements can be cancelled at any time.

The Company entered into property management agreements to manage, lease and operate the investment properties. The property management agreements for investment properties were entered into on May 11, 2021 and August 21, 2021, respectively. The agreements will remain in effect for twelve months and will automatically extend thereafter on a monthly basis. The management fee is no other commitmentthe greater of $100 per month per unit or 7% of monthly gross income. The Company is also responsible for paying leasing and sale commissions if they occur.

Note 10. Subsequent Event

On April 25, 2022, the Company entered into listing agreements to Somerset contemplated inmarket and sell the selling agreement.VH Willows investment properties.

iCap Vault 1, LLC and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2021

Note 7. Subsequent Events

Additional Private Placement Secured Demand Notes Sold and Redeemed

As of May 12, 2021, the Company has sold additional private placement secured demand notes of $8,207,015 and redeemed private placement secured demand notes worth $3,334,016.

Affiliated Note Receivable

Effective April 23, 2021, Holding made a $2,000,000 loan to individuals who are minority co-owners of an affiliated entity, provided by the Company as an investment in Holding, in exchange for a promissory note bearing 8% interest and secured by a deed of trust on property owned by the borrower. On April 23, 2021, $1,000,000 of the note was distributed and $150,000 of the principal proceeds distributed was retained by the Company as an interest reserve. The remaining portion of the loan is payable at the Company’s discretion, upon written request of the borrower delivered to the Company on or before October 22, 2021. As of May 12, 2021, the total amount of the note outstanding net of the interest reserve is $854,222.

Affiliated Real Estate Purchases

The Company invested $3,430,766 into Holding, which subsequently invested $3,430,766 into VH Willows Townhomes, LLC, a wholly owned subsidiary of Holding. VH Willows Townhomes, LLC purchased six townhomes totaling $3,420,000 from iCap Investments, LLC, an affiliated entity. The purchase was made in two equal installments, one on April 23, 2021 for $1,710,000 and another on May 7, 2021 for $1,710,000.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of iCap Vault 1, LLC and its subsidiaries, including, but not limited to, Vault Holding, LLC and Vault Holding 1, LLC (collectively, the “Company” or “iCap Vault”), should be read in conjunction with the consolidated financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors section of our annual report on Form 10-K for the fiscal year ended December 31, 2020,2021, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021,24, 2022, as the same may be updated from time to time. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

iCap Vault 1, LLC, the issuer of the Public Demand Notes (as hereinafter defined), was formed as a Delaware limited liability company on July 30, 2018. Vault Holding, LLC (“Holding”), a wholly owned subsidiary of iCap Vault 1, LLC, was formed as a Delaware limited liability company on September 27, 2018. and Vault Holding 1, LLC (“Holding 1”), a wholly owned subsidiary of iCap Vault 1, LLC and the guarantor of the Public Demand Notes, was were formed as a Delaware limited liability companycompanies on July 30, 2018, September 27, 2018 and April 28, 2020. The Company has commenced only limited operations, primarily focused on organizational matters in connection with the Registered Offering (as hereinafter defined).2020, respectively. Each of Holding and Holding 1 was formed with the intention of owning one or more standalone subsidiaries which itself will hold income-producing real estate and financial instruments related to real estate in selected metropolitan statistical areas in the U.S. (each, a “Portfolio Investment”) with the objective of generating a rate of return from the Portfolio Investments that is greater than the costs necessary to purchase, finance and service them.property investments whether directly or through special purpose entities. Additionally, each of Holding and Holding 1 provides guaranties to secured demand noteholders of the Company. Holding provides such a guaranty to holders of the private placement secured demand notes.notes, while Holding 1 shallwill provide a guaranty to holders of the Public Demand Notespublic notes the Company intends to offeroffers through the Registered Offering. To date, Holding has made two loans, one loan in the amount of $3,209,105, provided by the Company as an investment in Holding, to Colpitts Sunset LLC (“Colpitts”), an affiliated entity, in exchange for a promissory note bearing 10% interest and secured by a deed of trust on property owned by Colpitts, and another loan in the amount of $2,000,000 to individuals who are minority co-owners of an affiliated entity, provided by the Company as an investment in Holding, in exchange for a promissory note bearing 8% interest and secured by a deed of trust on property owned by the borrower. On April 23, 2021, $1,000,000 of the note was disbursed and the remaining portion is payable at the Company’s discretion, upon written request of the borrower delivered to the Company on or before October 22, 2021.

The Company invested $3,430,766 into Holding, which subsequently invested $3,430,766 into VH Willows Townhomes, LLC, a wholly owned subsidiary of Holding. VH Willows Townhomes, LLC purchased six townhomes totaling $3,420,000 from iCap Investments, LLC, an affiliated entity. The purchase was made in two equal installments, one on April 23, 2021 for $1,710,000 and another on May 7, 2021 for $1,710,000.

registered offering. Holding 1 has not commenced operations and has no assets andor liabilities. Holding 1 does not currently own any Portfolio Investments.

iCap Vault Management, LLC (“Manager”) is the manager (“Manager”) of the Company, was formed as a Delaware limited liability company on July 31, 2018, and has since been only engaged in limited operations. Company.

We intend to generate revenues in the following ways fromon our properties:investments from net rental income on our properties and from price appreciation of the properties upon their disposition. For theour investment in financial instruments secured bybased in real estate, that we invest in, we intend to generate revenues from the interest income received on such financial instruments. Until we generate revenue sufficient to use for investments, to cover operations and to service debt, we will rely on the proceeds from a $500 million private placement of demand note (“Private Placement Notes” described below) and a $500 million registered public offering of demand notes (“Public Demand Notes” described below). Collectively these are referred to as the Demand Notes hereto, unless otherwise distinguished.

Our business plan contemplates continually acquiring income-producing real estate properties and financial instruments related to real properties in selected metropolitan statistical areas in the U.S. (each, a “Portfolio Investment”) that generate a rate of return that is greater than the costs necessary to purchase, finance and service the investment. Although our Portfolio Investments will be anchored to U.S. real estate, we are not a real estate investment trust and do not intend to be treated as such.

At March 31, 2022, the Company has the following Portfolio Investments:

We have no plans to change our business activities or to combine with another business, and we are not aware of any events or circumstances that might cause our plans to change. Neither management of the Company,Manager, nor the sole member of the Company, have any plans or arrangements to enter into a change of control, business combination or similar transaction or to change management.

Portfolio Investments may be held directly by the Company or held in a standalone wholly owned limited liability company (each, a “Portfolio SPE”) and one or more Portfolio SPEs may be held by a holding company that is wholly owned by the Company, rather than by the Company directly. The rental and interest income earned allows us to provide a rate of return to investors who acquire the Public Demand Notes. The Public Demand Notes will be secured by the membership interests in Holding 1. The Company’s business plan targets primarily income-producing properties and seeks to acquire the properties debt-free, and the Company expects to generate income from the financial instruments that it may hold. The Portfolio Investments will serve as collateral for one or more credit facilities entered into by the Company or an affiliate of us.

The locations of the properties are determined by selecting metropolitan statistical areas upon consultation with market professionals, such as real estate analytics companies, title and escrow companies, real estate brokerages, land-use specialists, licensed surveyors and civil engineers, and in-depth internal review of economic data. The Company may adjust its investment criteria to accommodate changing market conditions but will generally seek Portfolio Investments in attractive locations with strong rental income and a likelihood of long-term appreciation of value.

For the three months ended March 31, 20212022 and 2020,2021, we generated interest income from a related party promissory notenotes of $253,715 and $40,093, respectively, rental income of $93,570 and $0, respectively, and reported a net loss of $330,446 and $293,225, respectively. For the three months ended March 31, 2022 and $235,110, respectively, and2021, we had cash flow used in operating activities of $209,614$224,997 and $174,394,$209,614, respectively. As of March 31, 2021,2022, we had member’s deficit of $435,817. $2,457,143.

The capital to be raised in the Registered Offeringfrom both our private placement (defined below) and registered offering (defined below) has been budgeted to cover the costs associated with beginningcontinuing to operate our company, marketing expense, and acquisition related costs. We intend to use the majority of the proceeds from the Registered Offeringregistered offering for the acquisition of Portfolio Investments. However, closing and other acquisition related costs such as title insurance, professional fees and taxes will likely require cash. We do not have the ability to quantify any of the expenses as they will all depend on size of deal, price, and place versus procuring new financing, due diligence performed (such as appraisal, environmental, property condition reports), legal and accounting, etc. There is no way to predict or otherwise detail the expenses.

Recent Financings

Private Placements during 2018 – Notes

During the period from July 30, 2018 (inception) through December 31, 2018, we issued $370,869 aggregate principal amount of 2% Secured Demand Notes (“2018 Private Placement Notes”)We are currently conducting a private placement to accredited investors in a private placementof up to $500,000,000 secured demand notes under Rule 506(c) of Regulation Dan exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

Private Placements during 2019 – Notes

During pursuant to Rule 506(c) and Regulation S promulgated under the year ended December 31, 2019, we issued $13,638,437 aggregate principal amount of 2% Secured Demand NotesSecurities Act (“2019 Private Placement Notes”) to accredited investors in a private placement under Rule 506(c). Private Placement Notes issued during the three months ended March 31, 2022 and 2021 totaled $24,230,409 and $7,818,508, respectively. As of Regulation DMay 13, 2022, $387,847,908 of this offering is available for issuance and the amount of the Securities Act.aggregate outstanding principal and accrued interest is $20,802,911.

Private Placements during 2020 – Notes

DuringOn February 5, 2021, Chris Christensen, the year ended December 31, 2020, we issued $8,789,282 aggregateChief Executive Officer of the Company, formed iCap International Investments, LLC, a Washington limited liability company. Mr. Christensen holds a 51% ownership interest in the entity, and he is also the manager. As of May 13, 2022, the total amount of outstanding principal amount and accrued interest of 2% Secured Demand Notes (“2020 Private Placement Notes”) to accredited investors in a private placement under Rule 506(c) of Regulation D of the Securities Act.Notes held by iCap International Investments, LLC was $1,763,137.

Registered Public Offering

We have registered a public offering (“Registered Offering”) of up to $500,000,000 aggregate principal amount of our Variable Denomination Floating Rate Demand Notes, marketed and sold as “Demand Notes” (the “Public Demand Notes”), under an effective Registration Statement (File No. 333-236458) (“Registration Statement”), to fund our investment and operational activities. However, we have not engaged in the offer and sale of Public Demand Notes underissued during the Registration Statement asthree months ended March 31, 2022 and 2021 totaled $6,108,847 and $0, respectively. As of yet as we are establishing our distribution strategyMay 13, 2022, $481,064,182 of this offering is available for issuance and seeking a no objection letter from FINRA, which has not yet been granted. We expect to use the net proceeds fromamount of the Registered Offering to pay for our operating costs, including on-going legalaggregate outstanding principal and accounting fees, finance costs associated with acquiring primarily multifamily propertiesaccrued interest is $2,385,341.

Notes Payable

On January 31, 2022, the Company entered into two loan agreements of $2,985,000 and single-family residences,$3,000,000, collateralized by two investment properties. The $2,985,000 loan is guaranteed by the CEO of the Company and costs associated with broker price opinions, title reportsthe $3,000,000 loan is guaranteed by the CEO and recording fees.affiliated entities. Each loan bears interest at $7.5% per annum and matures on March 1, 2023.

Recent Developments

COVID-19

The Company’s operations may be affected byCOVID-19 pandemic has caused significant economic dislocation in the ongoingUnited States, resulting in an unprecedented slow-down in economic activity. The economic effects, including disruptions to the global supply chain, of the COVID-19 outbreak have had a destabilizing effect on financial markets, key market indices, and overall economic activity. The spread of the coronavirus disease 2019 (COVID-19)has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which in March 2020, was declared a pandemic byare highly uncertain, including when the World Health Organization. The ultimate disruption which maycoronavirus can be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operationsfully controlled and cash flows.abated. Possible areas that may be affected include, but are not limited to, disruption to the Company’s ability to make investments through its subsidiaries, negative impact to revenue related to real estate holdings, negative impact on its workforce, unavailability of professional services and other resources, disruption to credit markets necessary for success of the Company’s business model, and the decline in value of assets held by the Company’s subsidiaries.

The supply of housing inventory in certain geographical areas may become further restricted through a shutdown of construction activity. Additionally, a moratorium on real estate transactions may be imposed in reaction to the pandemic. These housingHousing market impacts may limit the Company’s ability to acquire or dispose of real estate assets.

General employment in the region may continue to suffer as the pandemic continues. Some local governments have proposed rent or eviction moratoria, or similar programs of rent abatement, in response to the sudden upturn in unemployment. Any of these factors could cause a future decline in the market rate for residential rentals negatively impacting the Company’s income and cash flow from its real estate holdings.

Employees of affiliated companies could be medically or mentally affected by the pandemic and may be required to continue to work remotely, particularly given potential for complete or partial school closures. This situation could cause of reduction in productivity or the inability to complete critical tasks for the Company.

AsWe lack the comparative historical financial information about the Company since our operations did not commence until after the start of the COVID-19 pandemic. Accordingly, although management believes that COVID-19, along with other macro-economic factors, were contributing factors to our business and results of operations to date, management is unable to measure the actual impact of COVID-19 on our business as of the date of this filing, the Company has not experienced significant impact related to the COVID-19 pandemic.quarterly report on Form 10-Q.

Private Placements during 2021 - Notes

We are currently conducting a private placement of up to $500,000,000 to fund our investment and operational activities in a transaction that is exempt from the registration requirements of the Securities Act pursuant to Regulation 506(c) and Regulation S of Secured Demand Notes pursuant to which we have issued $16,025,523 during the period from January 1, 2021 through May 12, 2021 (“Current Private Placement Notes”; together with 2018 Private Placement Notes, 2019 Private Placement Notes and 2020 Private Placement Notes, collectively referred to as “Private Placement Notes”).

As of May 12, 2021, we have repaid the noteholders of the Private Placement Notes as a return of capital $4,922,139 of the principal and accrued interest of Private Placement Notes. As of May 12, 2021, we estimate the value of the aggregate outstanding principal amount and accrued interest estimated to be approximately $13,404,000.

On February 5, 2021, Chris Christensen, the Chief Executive Officer of the Company, formed iCap International Investments, LLC, a Washington limited liability company. Mr. Christensen holds a 51% ownership interest in the entity and he is also the manager. iCap International Investments, LLC signed a subscription agreement on February 8, 2021 and invested $10.00 in the Private Placement Notes. iCap International Investments, LLC subsequently made additional investments of $9,761,268, and redeemed investments of $1,200,000, and as of May 12, 2021, the total amount of outstanding Private Placement Notes held by iCap International Investments, LLC was $8,586,917.

Amended Private Placement Memorandum

Effective March 1, 2021, the Company released Supplement No. 2 to its private placement memorandum amending the Company’s private placement memorandum dated October 1, 2018. The amendment modified the interest rates on private placement secured demand notes and introduced an interest premium program that matches the rewards program associated with the Public Demand Notes (see Note 1 to the unaudited condensed consolidated financial statements). The amendment also allows the original security agreement and guaranty agreement to remain in place, removed the noteholder’s ability to exchange their notes for registered notes and amended the private placement memorandum to not terminate upon effectiveness of the registered offering.

Capital Contribution

In September 2020, iCap Vault, LLC received from its sole member, iCap Enterprises, Inc., a $1,535,000 capital contribution in the form of $1,150,000 in cash and an assumption by iCap Enterprises, Inc. of iCap Vault 1, LLC’s indebtedness to an affiliate (iCap Investments, LLC) of $385,000. Concurrently, iCap Vault, LLC, the sole member of iCap Vault 1, LLC, made a $1,535,000 capital contribution to iCap Vault 1, LLC.

Affiliated Note Receivable

Effective October 13, 2020, Holding made a loan to Colpitts, an affiliated entity, in the amount of $864,032, in exchange for a promissory note secured by a deed of trust on property owned by Colpitts and bearing interest of 10% per annum. Effective January 14, 2021, Holding amended and restated its promissory note from Colpitts extending the maturity date to June 30, 2021 and increasing the total available principal balance on the note to a maximum of $1,500,000 of the note. On January 14, 2021, an additional advance of $350,000 was made under the note. Effective April 15, 2021, Holding22, 2022, the Company amended and restated its promissory note from Colpitts extending the maturity date to April 1, 2023 and increasing the total available principal balance on the note to a maximum of $3,500,000. iCap Vault 1, LLC provided Holding, a directly wholly owned subsidiary of iCap Vault 1, LLC and sister company to Holding 1, the funds through an investment in Holding. Holding advanced an additional $1,995,073 and $239,513 towards the maximum principal balance available on the note on April 15, 2021 and May 11, 2021, respectively. As of May 12, 2021, $3,448,618 in principal and approximately $76,087 of interest is outstanding.

Effective$2,000,000 loan agreement dated April 23, 2021 Holding made a $2,000,000 loan towith individuals who are minority co-owners of an affiliated entity that provided by the Company asfor an investment in Holding, in exchange for a promissory note bearing 8% interest and secured by a deed of trust on property owned by the borrower. On April 23, 2021, $1,000,000extension of the note was disbursedmaturity date to July 23, 2022. The loan continues to bear interest at 8% and the remaining portionretains an interest reserve of $50,000.

Acquisitions

Lynnwood Property

On March 11, 2022, VH Senior Care LLC (“Senior Care”) entered into a Residential Purchase and Sale Agreement (the “Lynnwood Purchase Agreement”) by and between Senior Care and unaffiliated Sellers (the “Lynnwood Sellers”). Senior Care is payable at the Company’s discretion, upon written request of the borrower delivered to the Company on or before October 22, 2021.

Affiliated Real Estate Purchases

The Company invested $3,430,766 into Holding, which subsequently invested $3,430,766 into VH Willows Townhomes, LLC, a wholly owned subsidiary of Holding. VH Willows Townhomes, LLC purchased six townhomes totaling $3,420,000Pursuant to the terms of the Lynnwood Purchase Agreement, Senior Care agreed to purchase from iCap Investments, LLC,the Lynnwood Sellers certain real property located at 1226 160^th St. SW, Lynnwood, WA 98087 (the “Lynnwood Property”). Senior Care acquired the property for a purchase price of $1,779,431 on March 25, 2022.

On March 21, 2022, Senior Care entered into a Lease Agreement (the “Lynnwood Lease”) with AFH Senior Care C Corp. (“AFH”). Pursuant to the terms of the Lynnwood Lease, AFH agreed to lease the Lynnwood Property from Senior Care, beginning April 1, 2022 and continuing through March 31, 2027, subject to extension or earlier termination as set forth in the Lynnwood Lease. The monthly rent is $11,717 for the first 12 months. Thereafter, effective as of each anniversary of the commencement date of the Lynnwood Lease, the base rent will increase to an affiliated entity.amount equal to 103% of the base rent in effect immediately prior to the adjustment.

Burien Property

On March 14, 2022, Senior Care entered into a Residential Purchase and Sale Agreement (the “Burien Purchase Agreement”) by and between Senior Care and unaffiliated Sellers (the “Burien Sellers”). Pursuant to the terms of the Burien Purchase Agreement, Senior Care agreed to purchase from the Burien Sellers certain real property located at 302 SW 146^th St., Burien, WA 98166. Senior Care acquired the property for a purchase price of $1,003,768, on March 25, 2022.

On March 21, 2022, Senior Care entered into a Lease Agreement (the “Burien Lease”) with AFH. Pursuant to the terms of the Burien Lease, AFH agreed to lease the Burien Property from Senior Care, beginning April 1, 2022 and continuing through March 31, 2027, subject to extension or earlier termination as set forth in the Burien Lease. The purchases were mademonthly rent is $8,000 for the first 12 months. Thereafter, effective as of each anniversary of the commencement date of the Burien Lease, the base rent will increase to an amount equal to 103% of the base rent in two equal installments, one on April 23, 2021 for $1,710,000 and another on May 7, 2021 for $1,710,000.effect immediately prior to the adjustment.

Plan of Operations

We believe we will need at least $500,000 to provide$1,500,000 of working capital and $500,000 for professional fees forduring the next 12 months.months for management fees, professional fees and other operating expenses. In addition, we will need funding for our continued investment in revenue generating real estate properties. We will utilizerely primarily on funds raised from both the initial $1,000,000 raisedregistered offering and from our private placement to fund these uses in 2022. To a lesser extent, we will rely on income from our existing investment properties and financial instruments.

As of March 31, 2022, we have aggregate cash balances of $4,759,763, including restricted cash of $1,831,056 available for operations and investment from both the Registered Offering for such required amounts for working capital ($500,000)public and professional fees ($500,000) forprivate offerings. Our strategy contemplates the next 12 months.ability to invest in financial instruments collateralized by or involved in real estate operations; however, we intend to focus primarily on investing in revenue generating properties. We are currently in competitive bidding scenarios to obtain additional investment properties and plan to continue acquiring revenue generating properties during 2022.

We hope to reach the following milestones in the next 12 months:

Acquisitions will depend highly on our funds, the availability of those funds, availability of assets that meet our investment criteria and the size of the assets to be acquired. There can be no assurance that we will be able to successfully complete such acquisition.acquisitions.

RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended March 31, 20212022 Compared to the Three Months Ended March 31, 20202021

Revenue

Interest income for the three months ended March 31, 2022, and 2021 was $253,715 and December 31, 2020 was $40,142 and $0,$40,093, respectively, of which $40,093 and $0, respectively, wasis from a related party promissory note.notes. The increase in interest income was primarily the result of interest earned on affiliatedthe notes receivable.issued during 2021. The notes receivable balances as of March 31, 2022 and 2021 were $10,780,909 and $1,261,326. Rental income for the three months ended March 31, 2022, and 2021 was $93,570 and $0, respectively. The increase in rental income was due to the acquisition of investment properties during 2021.

Operating Expenses

OperatingGeneral and administrative expenses for the three months ended March 31, 20212022 were $311,097,$381,086 as compared to $229,956$302,186 for the three months ended March 31, 2020.2021. The increase in expenses is primarily due to increased operating costs related to the investment properties acquired during 2021, professional services and management fees associated with the Registered Offering.

Other Expense

Interest expense increased to $22,221increase in of the Private Placement Notes and Public Demand Notes since the first quarter of 2021 offset by the decrease in computer related expenses. Management fees – related party was $55,705 for the three months ended March 31, 2021,2022 as compared to $5,154$8,911 for the three months ended March 31, 2020.2021. The increase is directly attributable to the increase in demand note balances for the three months ended March 31 2022 as compared to the three months ended March 31, 2021.

Other Expenses, net

Interest expense, net, for the three months ended March 31, 2022 and 2021 was $240,940 and $22,221, respectively, in which $15,970 and $0, respectively, was incurred on related party Private Placement Notes. The increase in interest expensesexpense is primarily attributable to the two loan agreements aggregating $5,985,000 entered into in January 2022 collateralized by two investment properties. Interest and amortization of deferred financing fee for these loans for the three months ended March 31, 2022 and 2021 was driven by an$81,401 and $0, respectively. The other significant increase in interest expense is attributable to the increase in average outstanding Private Placement Notes.Notes and Public Demand Notes balances during the quarter ended March 31, 2022 as compared to March 31, 2021.

Net Loss

Net Loss

NetThe change to the net loss for the three months ended March 31, 2022 and 2021 was $293,225,is provided for in the explanations shown above.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have generated minimal revenues and expect to rely on capital raised in the issuances of the Demand Notes to cover the costs associated with establishing and expanding Company operations, marketing expense, and acquisition related costs. We intend to use the majority of the proceeds from the Demand Notes for the acquisition of Portfolio Investments. However, closing and other acquisition related costs such as comparedtitle insurance, professional fees and taxes will likely require cash. We do not have the ability to a net lossquantify any of $235,110the expenses as they will all depend on size of deal, price, and place versus procuring new financing, due diligence performed (such as appraisal, environmental, property condition reports), legal and accounting, etc.

Currently, our primary source of liquidity is $1.0 billion from our registered and private offerings discussed herein (collectively the “offerings”). As of May 13, 2022, we have approximately of $868.9 million available for offerings of new subscriptions that will fund operations and new portfolio investments in income producing real estate properties and financial instruments. In addition, the Company may leverage its portfolio investments to provide additional liquidity. During the three months ended March 31, 2020. The increase in net loss was primarily2022, the Company borrowed $5,985,000 against its investment properties pursuant to notes payable that are due to the increase in operating expenses and interest expense.February 2023.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth a summary of our net cash flows for the periods indicated:three months ended March 31:

The Company had cash used in operating activities of $224,997 for the three months ended March 31, 2022, as compared to cash used in operating activities of $209,614 for the three months ended March 31, 2021, as compared2021. The overall increase in the use of cash is primarily attributable to the variances for the period attributable to the net loss of $330,446 versus $293,225 and change in accrued interest earned on affiliated notes receivable of $213,622 offset by the change in accrued interest on Private Placement Notes and Public Demand Notes of $137,398 and depreciation expense variance of $26,441.

The Company had used cash in operatinginvesting activities of $174,394$2,915,747 for the three months ended March 31, 2020. The increase in2022, as compared to cash used in operatinginvesting activities is primarily the result of increases in net losses.

During$180,850 for the three months ended March 31, 2021,2021. The net change is primarily attributable to the Company received $7,818,508acquisition of investment properties in March 2022 of $2,783,199 and the change in issuances of affiliated notes receivable related party notes of $216,012 offset by change in proceeds from the issuancerepayment of private placement secured demand notes and repaid $1,588,123related party receivables of principal on notes payable. During$167,710.

The Company had used cash in financing activities of $1,079,259 for the three months ended March 31, 2020,2022 as compared to the Company received $1,214,848cash provided for in financing activities of proceeds$6,503,385 for the three months ended March 31, 2021. This change of $7,582,644 was attributable to the fluctuation resulting from the issuanceexcess of private placement secured demand notes and repaid $1,721,486 of principal on notes payable.

Liquidity and Going Concern

In September 2020, iCap Vault, LLC received from its sole member, iCap Enterprises, a $1,535,000 capital contributionredemptions in the form of $1,150,000 in cash and an assumption by iCap Enterprises of iCap Vault 1, LLC’s indebtednesscurrent period compared to an affiliate (iCap Investments, LLC)excess of $385,000. Concurrently, iCap Vault, LLC, the sole memberissuances in prior period of iCap Vault 1, LLC, made a $1,535,000 capital contribution to iCap Vault 1, LLC, the issuer of the demand notes in the Registered Offering. In addition, iCap Vault, LLC intends to make additional capital contributions in the future to iCap Vault 1, LLC as needed to sustain positive net worth in the Company. iCap Vault 1, LLC expects its operating expenses related to its Registered Offering to decrease significantly in the near future. To date, the majority of iCap Vault 1, LLC’s expenses have been in connection with its Registered Offering, including, without limitation, legal, accounting, auditing, printing, blue-sky compliance and other expenses. As of the date of this Quarterly Report on Form 10-Q, iCap Vault 1, LLC has paid all required SEC, FINRA and blue-sky filing fees, and has therefore already expended the majority of the funds required to commence its Registered Offering. On-going operating expenses will be primarily focused on asset acquisition, asset monetization, and asset disposition.

We are currently conducting a private placement of up to $500,000,000 to fund our investment and operational activities in a transaction that is exempt from the registration requirements of the Securities Act pursuant to Regulation 506(c) and Regulation S of the Current Private Placement Notes pursuantand Public Demand Notes of $13,251,817, reductions of deposits received $273,000 offset with net loan proceeds of $5,942,173 in January 2022.

Going Concern

As a result of recurring losses, limited cash and insufficient revenue to which we have issued $7,818,508 during the period from January 1, 2021 through March 31, 2021. As of March 31, 2021, we have repaid the noteholders of the Private Placement Notes ascover our operating costs and debt service, management believes there is a return of capital $22,221,792 of the principal and accrued interest of Private Placement Notes. As of March 31, 2021, we estimate the value of the aggregate outstanding principal amount and accrued interest estimated to be $8,495,269.

In its audit report dated March 31, 2021, our independent registered public accounting firm raised substantial doubt regarding our ability to continue as a going concern. IfMoreover, if the Company is not successful in raising sufficient capital, or if it does not have access to sufficient credit from outside parties or related parties, it may have to delay or reduce expenses, or curtail operations, due to the fact thatsince its current cash and capital resources are not sufficient to meet its needs for the 12 months following the date of this filing. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern.

Assets

At March 31, 20212022 and December 31, 2020,2021, we had total assets of $8,488,457$24,941,321 and $2,154,789,$25,979,143, respectively. Assets consist primarily of the cash accounts held by the Company, inclusive of $849,527$1,831,056 and $224,261$2,026,172 of restricted cash on March 31, 20212022 and December 31, 2020,2021, respectively, and investment properties of $9,332,547 and $6,575,789 as of March 31, 2022 and December 31, 2021, respectively. In addition, the Company holds a promissory notenotes with an affiliated entity,entities, inclusive of interest receivable, totaling $1,261,326$10,780,909 and $871,232$10,393,206 as of March 31, 20212022 and December 31, 2020,2021, respectively.

Liabilities

At March 31, 20212022 and December 31, 2020,2021, we had total liabilities of $8,924,274$27,398,464 and $2,297,381,$28,105,840, respectively. The increase was primarily due to a net increase inCompany obtained two loans on investment properties and amounts outstanding on the notes payable were $5,948,762 and $0 as of March 31, 2022 and December 31, 2021. Outstanding Private Placement Notes of $6,252,656.

Off-Balance Sheet Arrangements

Asand Public Demand Notes were $21,056,978 and $27,918,742 as of March 31, 2022 and December 31, 2021, werespectively.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of May 13, 2022 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

CRITICAL ACCOUNTING POLICIES

Management believes the estimates and judgments most critical to the preparation of our unaudited condensed consolidated financial statements and to the understanding of our reported financial results include those made in connection with impairment of our tangible and intangible assets including notes receivable, investment properties and impairment of definite-livedfinite-lived intangible assets as well as evaluatingand our evaluation of whether the Company’s ability toCompany can continue as a going concern. Management evaluates our policies and assumptions on an ongoing basis.

Accounting for Acquisitions

The Company allocates the purchase price of investment properties to the underlying assets (and liabilities, if applicable) based upon the estimated fair values at the date of acquisition. Investment properties generally consist of land and buildings. Management estimates the fair values at the date of acquisition using either internal valuations or third-party appraisals. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions.

Impairment

Management routinely reviews notes receivable for impairment and provides an allowance for credit losses if all or a portion of a note is determined to be uncollectible. Notes are charged off to the allowance for credit losses when the contractual amount is no longer realizable.

Management evaluates investment properties for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from that investment property is less than the carrying values under its historical net cost basis. When estimating expected future cash flows, management considers factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other pertinent factors. Upon determination that there is a permanent impairment, the carrying values of the applicable investment properties are reduced to their relative fair values. For investment properties to be disposed of, an impairment loss is recognized when the fair values, less the estimated cost to sell, is less than the carrying amount of the investment property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded

For a description of our significant accounting policies relatedgoing concern analysis, refer to these accounts in the preparation of our unaudited condensed consolidated financial statements, see “Note 1—Nature of BusinessLiquidity and Summary of Significant Accounting Policies” of our unaudited condensed consolidated financial statements includedCapital Resources section in this Report.Management Discussion & Analysis.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and principal financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of March 31, 2021,2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2021,2022, our disclosure controls and procedures were not effective.

The Company does not have an effective control environment because we do not yet have formalized internal control policies and procedures as it relates to financial reporting. In addition, the Company does not yet have sufficient resources to provide appropriate segregation of duties related to the preparation and review of information used in financial reporting, as well as review controls over the financial statement reporting process.

Since becoming a publicly-tradedpublic reporting company on November 24, 2020, we have initiated and are continuing to recruit and hire additional accounting and financial personnel, establish policies and procedures for timely and accurate financial reporting, upgrade our internal accounting systems, and make various other efforts to remediate these weaknesses in our internal control. Management understands and appreciates the need to rapidly establish an effective system of internal controls over financial reporting.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in ordinary routine litigation typical for companies engaged in our line of business. As of the date of this quarterly report on Form 10-Q, we are not involved in any pending legal proceedings that we believe would be likely, individually or in the aggregate, to have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors as disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2021, as filed with the SEC on March 31, 2021.24, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As previously disclosed, since our formation on July 30, 2018, we have only issued 1,000 membership interests to iCap Vault, LLC (“iCap Vault”), our sole member, in exchange for services rendered by iCap Vault to us with a value of $0.01 per unit. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act because the transaction did not involve a public offering. On September 30, 2020, iCap Vault made an additional capital contribution of $1,535,000 into iCap Vault 1 (consisting of $1,150,000 in cash and an assumption by iCap Enterprises, the sole member of iCap Vault, of iCap Vault 1’s indebtedness to an affiliate (iCap Investments, LLC) of $385,000). No additional membership interests were issued by us to iCap Vault in connection with this additional capital contribution.None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) None.

(b) There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since we last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K promulgated under the Exchange Act.

ITEM 6. EXHIBITS

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.