CrowdCheck Law LLP
700 12th St NW, Ste 700
Washington, DC 20005-4052
December 9, 2021
Division of Corporation Finance
Office of Real Estate and Construction
United States Securities and Exchange Commission
Washington, D.C. 20549
Re: RAD Diversified REIT, Inc.
Post Qualification Amendment on Form 1-A
Filed November 29, 2021
File No. 024-11020
Ladies and Gentlemen:
We acknowledge receipt of the comments in your letter dated December 6, 2021 regarding the Offering Statement of RAD Diversified REIT, Inc (the “Company”). We appreciate the opportunity to respond to your comments.
Post Qualification Amendment on Form 1-A
General
| 1. | We reissue prior comment 1. We note the statements on your website at https://raddiversified.com that RAD Diversified made a 36.7% annualized return in 2020 and has cleared 35.48% in the past 12 months. Please reconcile your net asset value calculations on page 57 with the disclosure provided in your amended Form 1-A, including your financial statements for the applicable periods. In addition, we note the reference in the FAQs of the website to a 5% guarantee. Please explain the basis for this statement and reconcile with the Form 1-A, which clearly discloses there are no guarantees of future performance. |
The Company has updated the FAQ section of its website and deleted the reference to a 5% guarantee.
Our NAV per share is calculated by a collaboration of our internal accountants and our managers at the end of each fiscal quarter. As noted in our website at www.raddiversified.com, “The NAV will be the sum of the total fair value of each of the properties listed in the quarterly internal fair value assessment report, minus the leverage attached to each of those properties, plus the addition of any other assets, plus all liabilities we hold, divided by the number of our common shares outstanding.” It should also be noted that the “total fair value of each of the properties listed” is defined as the current fair market value of each property. Any difference between the sum of the original purchase price, acquisition fees and capital expenditures and the current fair market value is referred to as “Unrealized Gains/(Losses)” or “Unrealized Capital Gains/(Losses).” Unrealized Gains/(Losses) are included in our NAV Calculations. Unrealized Gains are not included in our balance sheet included in our financial statements prepared in accordance with GAAP.
The Company has attached as Exhibit 1 a comparison of our balance sheets included in its GAAP financial statements for the relevant periods side-by-side with the balance sheets it uses for calculating NAV, which includes unrealized capital gains. The Company has also included its calculations of NAV in each instance, which is Total Equity divided by the number of shares outstanding at the balance sheet date. The Company calculated Total Equity in each instance by deducting total liabilities from total assets, including unrealized capital gains.
Thank you again for the opportunity to respond to your questions to the Offering Statement of RAD Diversified REIT, Inc. If you have additional questions or comments, please contact me at fanni@crowdchecklaw.com.
| Sincerely, | |
| /s/ Fanni Koszeg | |
| Counsel |
cc:
Brandon Dutch Mendenhall
President and Chief Executive Officer
RAD Diversified REIT, Inc.
211 N. Lois Avenue
Tampa, FL 33609
EXHIBIT 1 – BALANCE SHEETS FOR PERIODS ENDING DECEMBER 31, 2020, JUNE 30, 2021
AND SEPTEMBER 31, 2021
RAD Diversified REIT, INC.
RECONCILED BALANCE SHEETS
AS OF DECEMBER 31, 2020
| AUDITED BALANCE SHEET AS OF 12/31/2020 INCLUDED IN THE FINANCIAL STATEMENTS | UNAUDITED BALANCE SHEET AS OF 12/31/2020 USED FOR NAV CALCULATION | |||||||
| ASSETS: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 16,182 | $ | 16,182 | ||||
| Accounts Receivable | $ | 85,255 | $ | 85,255 | ||||
| Deposits with vendors | $ | 701,008 | $ | 701,008 | ||||
| Other current assets | $ | - | $ | - | ||||
| Impound accounts | $ | 463 | $ | 463 | ||||
| Notes Receivable | $ | 2,302,734 | $ | 2,302,734 | ||||
| JV Receivables | $ | 444,777 | $ | 444,777 | ||||
| Loans to Shareholder | $ | - | $ | - | ||||
| Reveivable from Affiliates | $ | 643,824 | $ | 643,824 | ||||
| Prepaid Expenses | $ | 1,788 | $ | 1,788 | ||||
| Total Current Assets | $ | 4,196,031 | $ | 4,196,031 | ||||
| Fixed Assets | ||||||||
| Fixed Assets (Net of $51,378 Accumulated Depreciation) | $ | 3,212,606 | $ | 3,212,606 | ||||
| UNREALIZED CAPITAL GAINS | $ | 2,503,525 | ||||||
| TOTAL FIXED ASSETS | $ | 3,212,606 | $ | 5,716,131 | ||||
| Other Assets | $ | 24,813 | $ | 24,813 | ||||
| TOTAL ASSETS | $ | 7,433,448 | $ | 9,936,975 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 1,020,577 | $ | 1,020,577 | ||||
| Credit Cards | $ | 32 | $ | 32 | ||||
| Other Current Liabilites | $ | 1,073,991 | $ | 1,073,991 | ||||
| Total Current Liabilities | $ | 2,094,600 | $ | 2,094,600 | ||||
| Long Term Liabilities | $ | 4,100 | $ | 4,100 | ||||
| Total Liabilities | $ | 2,098,700 | $ | 2,098,700 | ||||
| COMMON STOCK, $.001 PAR VALUE; 544,844 SHARES OUTSTANDING AS OF 12/31/2020 | $ | 550 | $ | 550 | ||||
| ADDITIONAL PAID IN CAPITAL | $ | 6,021,911 | $ | 6,021,911 | ||||
| ACCUMULATED DEFICIT | $ | (687,712 | ) | $ | (687,712 | ) | ||
| UNREALIZED CAPITAL GAINS INCOME | $ | 2,503,526 | ||||||
| FINAL NET INCOME | $ | (687,712 | ) | $ | 1,815,814 | |||
| TOTAL EQUITY | $ | 5,334,748 | $ | 7,838,275 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 7,433,448 | $ | 9,936,975 | ||||
| NET ASSET VALUE PER SHARE CALCULATIONS | ||||
| TOTAL EQUITY (AKA "NET ASSET VALUE") | $ | 7,838,275 | ||
| (DIVIDED BY) TOTAL NUMBER OF SHARES OUTSTANDING AS OF 12/31/2020 | 550,659 | |||
| NAV PER SHARE | $ | 14.23 |
RAD Diversified REIT, INC.
RECONCILED BALANCE SHEETS
AS OF JUNE 30, 2021
| UNAUDITED BALANCE SHEET AS OF 6/30/2021 - EXCLUDES UNREALIZED GAINS/(LOSSES) | UNAUDITED BALANCE SHEET AS OF 6/30/2021 - INCLUDES UNREALIZED GAINS/(LOSSES) FOR NAV CALCULATION | |||||||
| ASSETS: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 299,169 | $ | 299,169 | ||||
| Accounts Receivable | $ | 691,066 | $ | 691,066 | ||||
| Deposits with vendors | $ | 3,310,558 | $ | 3,310,558 | ||||
| Other current assets | $ | 33,200 | $ | 33,200 | ||||
| Impound accounts | $ | 463 | $ | 463 | ||||
| Notes Receivable | $ | 2,080,378 | $ | 2,080,378 | ||||
| JV Receivables | $ | 426,923 | $ | 426,923 | ||||
| Loans to Shareholder | $ | 4,000 | $ | 4,000 | ||||
| Reveivable from Affiliates | $ | 2,468,677 | $ | 2,468,677 | ||||
| Prepaid Expenses | $ | 1,788 | $ | 1,788 | ||||
| Total Current Assets | $ | 9,316,222 | $ | 9,316,222 | ||||
| Fixed Assets | ||||||||
| Fixed Assets (Net of $51,378 Accumulated Depreciation) | $ | 2,980,022 | $ | 2,980,022 | ||||
| UNREALIZED CAPITAL GAINS | $ | 5,591,700 | ||||||
| TOTAL FIXED ASSETS | $ | 2,980,022 | $ | 8,571,722 | ||||
| Other Assets | $ | 409,813 | $ | 409,813 | ||||
| TOTAL ASSETS | $ | 12,706,057 | $ | 18,297,757 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 1,709,137 | $ | 1,709,137 | ||||
| Credit Cards | $ | - | $ | - | ||||
| Other Current Liabilites | $ | 618,748 | $ | 618,748 | ||||
| Total Current Liabilities | $ | 2,327,874 | $ | 2,327,874 | ||||
| Long Term Liabilities | $ | 822,222 | $ | 822,222 | ||||
| Total Liabilities | $ | 3,150,097 | $ | 3,150,097 | ||||
| COMMON STOCK, $.001 PAR VALUE; 924,483 AND 544,844 SHARES OUTSTANDING AS OF 6/30/2021 AND 12/31/2020 RESPECTIVELY | $ | 924 | $ | 924 | ||||
| ADDITIONAL PAID IN CAPITAL | $ | 11,385,379 | $ | 11,385,379 | ||||
| ACCUMULATED DEFICIT | $ | (1,831,344 | ) | $ | (1,831,344 | ) | ||
| UNREALIZED CAPITAL GAINS INCOME | $ | 5,591,700 | ||||||
| FINAL NET INCOME | $ | (1,831,344 | ) | $ | 3,760,356 | |||
| TOTAL EQUITY | $ | 9,555,960 | $ | 15,147,660 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 12,706,057 | $ | 18,297,757 | ||||
| NET ASSET VALUE PER SHARE CALCULATIONS | ||||
| TOTAL EQUITY (AKA "NET ASSET VALUE") | $ | 15,147,660 | ||
| (DIVIDED BY) TOTAL NUMBER OF SHARES OUTSTANDING AS OF 12/31/2020 | 924,483 | |||
| NAV PER SHARE | $ | 16.39 |
RAD Diversified REIT, INC.
RECONCILED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021
| UNAUDITED BALANCE SHEET AS OF 9/30/2021 - EXCLUDES UNREALIZED GAINS/(LOSSES) | UNAUDITED BALANCE SHEET AS OF 9/30/2021 - INCLUDES UNREALIZED GAINS/(LOSSES) FOR NAV CALCULATION | |||||||
| ASSETS: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,633,223 | $ | 1,633,223 | ||||
| Accounts Receivable | $ | 1,391,229 | $ | 1,391,229 | ||||
| Deposits with vendors | $ | 2,371,605 | $ | 2,371,605 | ||||
| Other current assets | $ | 33,200 | $ | 33,200 | ||||
| Impound accounts | $ | 463 | $ | 463 | ||||
| Notes Receivable | $ | 978,899 | $ | 978,899 | ||||
| JV Receivables | $ | 316,923 | $ | 316,923 | ||||
| Loans to Shareholder | $ | 4,000 | $ | 4,000 | ||||
| Reveivable from Affiliates | $ | 2,639,095 | $ | 2,639,095 | ||||
| Prepaid Expenses | $ | 1,788 | $ | 1,788 | ||||
| Total Current Assets | $ | 9,370,425 | $ | 9,370,425 | ||||
| Fixed Assets | ||||||||
| Fixed Assets (Net of $51,378 Accumulated Depreciation) | $ | 14,686,912 | $ | 14,686,912 | ||||
| UNREALIZED CAPITAL GAINS | $ | 8,729,429 | ||||||
| TOTAL FIXED ASSETS | $ | 14,686,912 | $ | 23,416,341 | ||||
| Other Assets | $ | 409,813 | $ | 409,813 | ||||
| TOTAL ASSETS | $ | 24,467,150 | $ | 33,196,579 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 2,589,723 | $ | 2,589,723 | ||||
| Credit Cards | $ | 32 | $ | 32 | ||||
| Other Current Liabilites | $ | 629,487 | $ | 629,487 | ||||
| Total Current Liabilities | $ | 3,219,242 | $ | 3,219,242 | ||||
| Long Term Liabilities | $ | 2,702,222 | $ | 2,702,222 | ||||
| Total Liabilities | $ | 5,921,464 | $ | 5,921,464 | ||||
| COMMON STOCK, $.001 PAR VALUE; 924,483 AND 544,844 SHARES OUTSTANDING AS OF 6/30/2021 AND 12/31/2020 RESPECTIVELY | $ | 1,473 | $ | 1,473 | ||||
| ADDITIONAL PAID IN CAPITAL | $ | 20,097,798 | $ | 20,097,798 | ||||
| ACCUMULATED DEFICIT | $ | (1,553,585 | ) | $ | (1,553,585 | ) | ||
| UNREALIZED CAPITAL GAINS INCOME | $ | 8,729,429 | ||||||
| FINAL NET INCOME | $ | (1,553,585 | ) | $ | 7,175,844 | |||
| TOTAL EQUITY | $ | 18,545,686 | $ | 27,275,115 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 24,467,150 | $ | 33,196,579 | ||||
| NET ASSET VALUE PER SHARE CALCULATIONS | ||||
| TOTAL EQUITY (AKA "NET ASSET VALUE") | $ | 27,275,115 | ||
| (DIVIDED BY) TOTAL NUMBER OF SHARES OUTSTANDING AS OF 12/31/2020 | 1,472,817 | |||
| NAV PER SHARE | $ | 18.52 |