UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 1-SA
☒ SEMIANNUAL REPORT PURSUANT TO REGULATION A
or
☐ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A
For the fiscal semiannual period ended June 30, 2022
PFG Fund V, LLC
(Exact name of issuer as specified in its charter)
Colorado
(State of other jurisdiction of incorporation or organization)
Pine Financial Group, Inc.
6990 W. 38th Ave, Suite 208, Wheat Ridge, Colorado 80033
303-835-4445
(Address, including zip code, and telephone number, including area code of issuer’s principal executive office)
85-2725801
(I.R.S. Employer Identification Number)
Debt
(Title of each class of securities issued pursuant to Regulation A)
Forward-Looking Statement
This Semi-Annual Report of PFG Fund V, LLC, a Colorado limited liability company, contains certain forward- looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “outlook,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could have a material adverse effect on our forward looking statements and upon our business, results of operations, financial condition, funds derived from operations, cash flows, liquidity and prospects include, but are not limited to, the factors referenced in the PFG Fund V, LLC Offering Circular filed pursuant to Regulation A, or the Offering Circular, under the caption “RISK FACTORS” and which are incorporated herein by reference to the Offering Circular.
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When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this report. The matters summarized below and elsewhere in this report could cause our actual results and performance to differ materially from those set forth or anticipated in forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise.
Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Unless the context otherwise requires or indicates, references in this Semi-Annual Report on Form 1-SA to “us,” “we,” “our” or “our Company” refer to PFG Fund V, LLC, a Colorado limited liability company.
PFG Fund V, LLC, a Colorado limited liability company, was formed on August 26, 2020. The Company is organized to conduct the following business: to make, purchase, originate, acquire, or sell loans secured by interests in real property located throughout the United States, with a primary focus in Colorado and Minnesota. The Company may also manage, remodel, develop, lease, renovate, repair, and/or sell real properties acquired through the Company’s lending activities, including, but not limited to, properties acquired through foreclosure and real estate owned (“REO”). The Company actively participates in the servicing and operational oversight of our assets through our manager, Pine Financial Group, Inc., rather than subrogate those responsibilities to a third party.
The Company filed an offering statement on Form 1-A, or the Offering Statement, with the United States Securities and Exchange Commission, or the SEC, on January 15, 2021, which offering statement was qualified by the SEC on June 3, 2021. Pursuant to the Offering Statement, we offered, on a “best-efforts” basis up to $75,000,000 in principal amount of unsecured, non-convertible, fixed-rate promissory notes (the “Notes”) of PFG Fund V. The Company has set a minimum investment requirement of $25,000 but may accept subscriptions for less or greater amount at the discretion of our Manager. Proceeds from the sale of the Notes was used to make and originate loans secured by interests in real property located throughout the United States, with a primary focus in Colorado and Minnesota.
As of June 30, 2022, the Company had issued 208 promissory notes. The notes have terms of 60 months and bear an interest of 8.00% per annum, interest payable only monthly. The notes have varying maturity dates, with the principal and accrued and unpaid interest due in full on demand after the maturity date. As of June 30, 2022, outstanding promissory notes and interest payable totaled $29,868,937, and $190,774, respectively. The promissory notes mature in 2026. The cash generated by these Note sales is utilized to originate loans secured by interests in real property.
As of June 30, 2022, the Company has a lines of credit with a two financial institutions from which the Company may receive advances up to a combined maximum of $9,000,000.00 based on the Company’s underlying collateral. As of June 30, 2022, the interest rate was 5% on the line of credit agreement, which expires on November 12, 2024. The agreement contains certain financial covenants concerning minimum interest coverage ratio and minimum net worth requirements, which need to met combined with a related party. All of which were met as of June 30, 2022.
As of June 30, 2022, the Company held Mortgage loans receivable consisting of notes to individuals, limited liability companies and corporations secured by deeds of trust, bearing interest at various rates ranging from 10.00% to 15.00% per annum. These notes have original maturity dates ranging from October 2021 to December 2023. As of June 30, 2022, mortgage loans receivable, and interest receivable totaled $41,059,646, and $205,592, respectively. Unfunded commitments were $5,940,382 as of June 30, 2022.
All of the mortgage loans receivable are collateral for the line of credit. Of the total mortgage loan receivable of $41,059,646 as of June 30, 2022, $39,227,517 will mature in the next 12 months. As of June 30, 2022, there were no loan modifications nor default loans.
We are managed by our Manager, Pine Financial Group, Inc, a Colorado Corporation. We do not have any employees. We rely on the employees of our Manager, for the day-to-day operation of our business. As of the end if the reporting period of June 30, 2022, the following recent developments regarding the real estate markets in which we participate might have an impact on our business operation: Increased inflation, labor shortages, increased time to sell, and global supply chain weakness. There have been no recent developments regarding the composition of our lending competition, material agreements entered into by the Company, or any other material change which impacted our business operations.
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Liquidity and Capital Resources
The Company is seeking to raise up to $75 million of capital by selling Notes to Investors. We deploy most of the capital to make, purchase, originate, acquire, or sell loans secured by interests in real property located throughout the United States, with a primary focus in Colorado and Minnesota. The Company may also manage, remodel, develop, lease, renovate, repair, and/or sell real properties acquired through the Company’s lending activities, including, but not limited to, properties acquired through foreclosure and real estate owned (“REO”).
There is no public market for units of the Company, and none is expected to develop in the foreseeable future. No public market currently exists for our Notes. The Company has set a minimum investment requirement of $25,000.00 but may accept subscriptions for less or greater amount at the discretion of our Manager. Therefore, purchasers of our Notes may be unable to sell their securities because there may not be a public market for our securities. Any purchaser of our securities should be in a financial position to bear the risks of losing their entire investment.
As of June 30, 2022, the Company has a lines of credit with a two financial institutions from which the Company may receive advances up to a combined maximum of $8,975,000 based on the Company’s underlying collateral. As of June 30, 2022, the interest rate was 5% on the line of credit agreement, which expires on November 12, 2024. The agreement contains certain financial covenants concerning minimum interest coverage ratio and minimum net worth requirements, which need to met combined with a related party. All of which were met as of June 30, 2022. The Company is currently exploring additional lines of credit with two financial institutions.
We anticipate that adequate cash will be generated from operations to fund our operating and administrative expenses, and all continuing debt service obligations, including the debt service obligations of the Notes. However, our ability to finance our operations is subject to some uncertainties such as the performance of the mortgagor related to each of our assets and the economic and business environments of the various markets in which our underlying collateral properties are located.
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Trend Information
Recent economic trends and developments may have adverse impacts on the Company and its operations including, without limitation, historically high inflation, rising interest rates, increased costs of materials and construction, inflated property values and rapidly fluctuating real-estate markets, low supply of housing stock, tight labor markets and rising wages.
As a result of the global outbreak of a new strains of coronavirus, COVID-19 and its variants, economic uncertainties have arisen that continue to have an adverse impact on economic and market conditions. The global impact of the outbreak has evolved, and the after-effect of the outbreak presents material uncertainty and risk with respect to our future financial results and capital raising efforts. We are unable to quantify the impact COVID-19 may have on us at this time. However, the extent of the impact of COVID-19 outbreak on operations of the Company will depend on future developments, including the duration and spread of the outbreak, related advisories and restrictions, government actions, the impact on financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s operations can be affected. Depending on the severity and length of the outbreak, the novel coronavirus may continue to present uncertainty and risk with respect to the Company, its performance, and its financial results in the future.
With the exception of the foregoing, there currently are no other events or uncertainties that we are aware of that will materially or adversely impact the lending operations of the Company nor are we aware of any events or uncertainties that would cause any of the reported financial information to not be indicative of future operating results.
Despite the current economic and market trends, we expect PFG Fund V, LLC to continue to grow its debt obligation as we sell more Notes, and increase its assets based on loans originated as outlined in the Offering.
Item 2. Other Information
None.
Item 3. Financial Statements
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Accountants’ Compilation Report
PFG Fund V, LLC
Financial Statements - Unaudited
June 30, 2022
F-1
| PFG Fund V, LLC |
| Financial Statements - Unaudited |
| 6 Month Period Ended June 30, 2022 |
| Table of Contents |
| Page | |
| Balance Sheet | F-3 |
| Statements of Income | F-4 |
| Statements of Changes in Members’ Equity | F-5 |
| Statements of Cash Flows | F-6 |
| Notes to Financial Statements | F-7 F-13 |
F-2
PFG FUND V, LLC
June 30, 2022 and December 31, 2021
| 6/30/2022 | 12/31/2021 | |||||||
| ASSETS | ||||||||
| Assets: | ||||||||
| Cash | $ | 320,131 | $ | 905,258 | ||||
| Fund in Escrow | — | 2,420,000 | ||||||
| Interest Receivable | 205,592 | 155,114 | ||||||
| Mortgage Loans Receivable | 41,059,646 | 21,386,592 | ||||||
| Related Party Receivable | — | 150,000 | ||||||
| Total Assets | $ | 41,585,369 | $ | 25,016,964 | ||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Interest Payable | $ | 190,774 | $ | 152,588 | ||||
| Lines of Credit | 8,975,000 | 2,000,000 | ||||||
| Investors Promissory Notes | 29,868,937 | 22,813,690 | ||||||
| Note Payable | 2,000,000 | — | ||||||
| Total Liabilities | 41,034,711 | 24,966,278 | ||||||
| Members’ Equity | 550,658 | 50,686 | ||||||
| Total Liabilities and Members’ Equity | $ | 41,585,369 | $ | 25,016,964 | ||||
See Notes to Financial Statements
F-3
PFG FUND V, LLC
STATEMENTS OF INCOME - UNAUDITED
Six Month Period from January 1 to June 30, 2022 and 2021
| 6 Month Period Ended | ||||||||
| 6/30/2022 | 6/30/2021 | |||||||
| Revenue: | ||||||||
| Interest Income | $ | 1,504,334 | $ | 2,910 | ||||
| Late Fee Income | 700 | — | ||||||
| Total Revenue | 1,505,034 | 2,910 | ||||||
| Expense: | ||||||||
| Bank Service Charges | 22,600 | — | ||||||
| Interest Expense | 947,859 | 1,129 | ||||||
| Legal and Professional Fees | 39,094 | — | ||||||
| Recording Fee | 509 | — | ||||||
| Total Expenses | 1,010,062 | 1,129 | ||||||
| Net Income | $ | 494,972 | $ | 1,781 | ||||
See Notes to Financial Statements
F-4
| PFG FUND V, LLC |
| STATEMENTS OF CHANGES IN MEMBER’S EQUITY - UNAUDITED |
| Six Month Period from January 1 to June 30, 2022 and 2021 |
| Member’s Equity | Total | |||||||||||
| Unit | Amount | Member’s Equity | ||||||||||
| Balance at January 1, 2021 | 1 | $ | 5,000 | $ | 5,000 | |||||||
| Issuance of Units | — | — | — | |||||||||
| Net Income | — | — | 1,781 | |||||||||
| Balance at June 30, 2021 | 1 | $ | 5,000 | $ | 6,781 | |||||||
| Issuance of Units | — | — | — | |||||||||
| Net Income | — | — | 43,905 | |||||||||
| Balance at December 31, 2021 | 1 | $ | 5,000 | $ | 50,686 | |||||||
| Issuance of Units | 1 | 5,000 | 5,000 | |||||||||
| Net Income | — | — | 494,972 | |||||||||
| Balance at June 30, 2022 | 2 | $ | 10,000 | $ | 550,658 | |||||||
See Notes to Financial Statements
F-5
| PFG FUND V, LLC |
| STATEMENTS OF CASH FLOWS - UNAUDITED |
| Six Month Period from January 1 to June 30, 2022 and 2021 |
| 6 Month Period Ended | ||||||||
| 6/30/2022 | 6/30/2021 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net Income | $ | 494,972 | $ | 1,781 | ||||
| Changes in operating Assets and Liabilitites | ||||||||
| Fund in Escrow | 2,420,000 | — | ||||||
| Interest Receivable | (50,478 | ) | (2,910 | ) | ||||
| Interest Payable | 38186 | — | ||||||
| Mortgage Loans Receivable | (19,673,054 | ) | (898,000 | ) | ||||
| AdvanceReceivable - Pine | 150,000 | — | ||||||
| Net Cash Used in Operating Activities | (16,620,374 | ) | (899,129 | ) | ||||
| Cash Flows From Investing Activities: | — | — | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from Lines of Credit | 6,975,000 | — | ||||||
| Proceeds from Investor Promissory Notes | 7,055,247 | 1,456,181 | ||||||
| Proceeds from Note Payable | 2,000,000 | — | ||||||
| Issuance of Voting Member Units | 5,000 | — | ||||||
| Net Cash Provided by Financing Activities | 16,035,247 | 1,456,181 | ||||||
| Net Increase in Cash | (585,127 | ) | 557,052 | |||||
| Cash - Beginning of Period | 905,258 | 5,000 | ||||||
| Cash - End of Period | $ | 320,131 | $ | 562,052 | ||||
| Supplemental Cash flow information: | ||||||||
| Cash Paid For: | ||||||||
| Interest Expense | $ | 757,085 | $ | 1,129 | ||||
| Taxes | $ | — | $ | — | ||||
See Notes to Financial Statements
F-6
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
PFG FUND V, LLC. (the “Company”) was incorporated on August 26, 2020, in Colorado. The Company’s fiscal year end is December 31. The Company specializes in lending to real estate investors and provides debt financing to borrowers primarily in Colorado and Minnesota.
The Company is managed by Pine Financial Group, Inc. (the “Manager”), a Colorado Corporation. The Manager is in complete control of the Company business. The Company will operate for up to 5 years and may use multiple exit strategies, including: organic company wind down, sale of notes, refinance notes and hold, sale to a public real estate investment trust, and bulk sale to an institution.
Investor Promissory Notes
The Company offers up to $75,000,000 in principal amount of unsecured, non-convertible, fixed-rate promissory notes through a Tier II offering pursuant to Regulation A under the Securities Act, also known as “Reg A+” and it intends to offer the notes directly to investors and not through registered broker-dealers who are paid commission. The Company has set a minimum investment requirement of $25,000 but may accept subscriptions for less at the discretion of the Manager. The maximum amount to be raised in the offering is $75,000,000.
As of June 30, 2022, $29,868,837 in notes were issued and outstanding, respectively.
The Notes are non-negotiable and will be issued in the minimum amount of $25,000 but may be higher or lower upon the Manager’s discretion. The Notes are offered with a minimum term of 60 months from the dates of issue, with a fixed interest rate of 8%. After 1 month from the dates of issuance of the Note, an Investor may request redemption of its Note with 90 days’ notice without penalty subject to availability of cash on hand. The Company has the right, at its option, to call any of the Notes for redemption before maturity in whole or in part, at any time or from time to time. If a Note is redeemed before maturity, the holder will be paid an amount equal to the face value of the Note plus any accrued interest through the date of redemption.
Distributions
The Company provides quarterly statements of account to the note holders and distributes or reinvests amounts equal to accrued and unpaid interest once per month on the first business day of each month.
F-7
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)
Manager Compensation
The Manager has contributed $5,000 to purchase Membership Interests of the Company. The Manager is entitled to all Company profits. Profits equal all Company revenue minus all Company expenses to include note holder interest. The Manager has sole voting rights. The Manager is also entitled to various compensation, including, (1) servicing fee, which is equal to an annualized rate of 1% of the principal amount of the loan, (2) origination and administration fee, which is $685 per loan plus 2-4% of the loan principal amount, and (3) reasonable inspection fee. The Manager waived all fees for the 6 months period ended June 30, 2022. No fees to the Manager were incurred or accrued.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared on the accrual basis of accounting in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and reflect all significant receivables, payables and other liabilities.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates as future confirming events occur.
Mortgage Loans Receivable
Mortgage loans receivable are recorded at their outstanding unpaid principal balance with interest thereon being accrued as earned. The loans will have varying terms at the discretion of the Manager, and generally have a term between 7 to 18 months. Loan agreements provide for monthly payments of principal and interest, or interest only with a “balloon payment” at the end of the term.
The Company will not recognize interest income on loans once they are determined to be impaired until the delinquent interest is collected in cash. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, generally 90 days or more past due. Management also determines whether or not the terms of the mortgage loan should be modified. Impairment is measured on a loan level basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the underlying collateral.
F-8
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Allowance for Loan Losses
The allowance for loan losses is established when losses are estimated to have occurred through a provision for loan loss that is charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to income. The allowance for loan loss is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the types and dollar amount of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
Revenue Recognition
Mortgage interest income on performing loans is recognized as revenue when earned according to the contractual terms of the loan.
Fees income, including late fees, is recognized as revenue when earned upon collection.
Financial Instruments
The Company follows Financial Accounting Standards Board, Accounting Standards Codification (“ASC”) ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the assets or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based om the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three board levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active market); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
F-9
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments (Continued)
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities
Valuation Process and Techniques
The Company has various processes and controls in place to ensure that fair value is reasonably estimated. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
During the 6 months period ended June 30, 2022, there were no changes to the valuation techniques that had, or are expected to have, a material impact on Company’s financial position or results of operations.
The following methods and assumptions were used to estimate the fair value of the following asset group:
Mortgage loans receivable that are performing are reported at their amortized cost. For non-performing loans in which a specific allowance is established, the Company reports the loan at the net realizable value of the underlying collateral based on an observable market price or a current appraised value. These loans are classified as Level 2. If an appraised value is not available or if there is no observable market price, the Company reports the loan as Level 3. At June 30, 2022, there are no loans classified as Level 2 or 3.
At June 30, 2022, there were no non-recurring assets or liabilities recorded at fair value.
Income Taxes
The Company is a disregarded entity under the Internal Revenue Code and a similar section of the state code. The member of the limited liability company is taxed on its proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal income taxes have been included in these financial statements. The Company has evaluated its current tax positions and has concluded that as of June 30, 2022, no significant uncertain tax positions exist for which a reserve would be necessary.
The Company’s income tax returns are subject to review and examination by federal, state, and local governmental authorities. As of June 30, 2022, there were 2 years open to examination by the Internal Revenue Service or state and local governmental authorities.
To the extent penalties and interest are incurred through the examinations, they are included in the other operating expenses section of the accompanying statements of income.
F-10
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
Accounting Standards Issued but Not Yet Effective
Credit Losses - In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326), and was clarified by FASB ASU 2019-04, Codification Improvements, and FASB ASUs 2019-05 and 2019-11, Targeted Transition Relief and Clarification. Prior to these pronouncements, generally accepted accounting principles required use of the incurred loss method for recognizing credit losses in the reserve. The incurred loss method recognizes a credit loss when it is probable that a loss has been incurred. The new guidance replaces the incurred loss method with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The pronouncements also allow for the irrevocable election of the fair value measurement for certain financial assets. FASB ASUs 2018-19 and 2019-10, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, have deferred the adoptions of these standards until interim and annual periods beginning after December 15, 2022. Management is currently evaluating the guidance and the impact it will have on the Fund’s financial statements.
NOTE 3 - CASH CONCENTRATION
The Company maintains funds in financial institutions that are members of the Federal Deposit Insurance Corporation. As such, funds are insured based on Federal Reserve limits. The Company has not experienced any losses in the past, and Company management believes it is not exposed to any significant credit risk on the current account balance. At times, cash balances might exceed insured amounts.
NOTE 4 - MORTGAGE LOANS RECEIVABLE
Mortgage loans receivable consist of notes to individuals, limited liability companies and corporations secured by deeds of trust, bearing interest at various rates ranging from 10.00% to 15.00% per annum. These notes have original maturity dates ranging from October 2021 to December 2023. As of June 30, 2022, mortgage loans receivable and interest receivable totaled $41,059,646, and $205,592, respectively.
Unfunded commitments were $5,940,382 as of June 30, 2022. These unfunded commitments will be funded by a combination of additional investor promissory notes, repayment of principal on current loans and draws on the Company’s line of credit.
There were no delinquent loans as of June 30, 2022. Management therefore determined that an allowance for loan losses was not necessary.
All mortgage loans receivable are collateral for the line of credit and the investor promissory notes. $39,227,517 will mature within the next 12 months. As of June 30, 2022, there were no loan modifications nor default loans.
F-11
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 5 - LINE OF CREDIT
As of June 30, 2022, the Company has line of credit with 2 financial institutions and can receive advances under the agreement up to a combined maximum of $8,975,000 based on the Company’s underlying collateral. As of June 30, 2022, the interest rate was 5% on the line of credit agreement, which expires on November 12, 2024. The agreement contains certain financial covenants concerning maximum debt to equity, minimum net worth and liquidity requirements, all of which were met at June 30, 2022.
NOTE 6 - INVESTOR PROMISSORY NOTES
As of June 30, 2022, the Company has 208 investor promissory notes. The notes have terms of 60 months and bear an interest of 8.00% per annum, interest payable only monthly. The notes have varying maturity dates, with the principal and accrued and unpaid interest due in full on demand after the maturity date. The notes are secured by a pro-rated first lien interest on the Company’s assets. As of June 30, 2022, outstanding promissory notes and interest payable totaled $29,868,937, and $190,774, respectively. Promissory notes mature in five years after execution.
NOTE 7 - NOTE PAYABLE
As of June 30, 2022, the Company obtained a note from 1 financial institution. The note bears interest at prime rate plus 1.75% but not less than 5.25% per annual and matures on March 31, 2023 or earlier when the Commercial Note, as defined in the loan agreement, becomes 60 days past due. The note is payable monthly for interest only starting June 4, 2022. All principal and accrued and unpaid interest are due at the maturity date. As of June 30, 2022, the outstanding principal was $2,000,000.
NOTE 8 - FAIR VALUE MEASUREMENTS
Due to their short-term nature, the carrying values of mortgage loan receivable, interest receivable, related party receivable, promissory notes, interest payable, and lines of credit approximate their fair values at June 30, 2022.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company receives certain operating and administrative services from the Manager, some of which may not be reimbursed to the Manager. The Company’s financial position and results of operations would likely be different without this relationship with the Manager.
F-12
PFG Fund V, LLC
Notes to Financial Statements - Unaudited
Six Month Period Ended June 30, 2022
NOTE 10 - RISKS AND UNCERTAINTIES
Default Risk
In the normal course of business, the Company is exposed to default risk related to its mortgage loans held for investment. In the event a borrower defaults on a Company loan, the Company has the ability to foreclose on the mortgage collateral and subsequently sell the real estate to recover its investment. However, there is no guarantee that the original investment will be recovered.
NOTE 11 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through October 3, 2022, the financial statements are prepared and ready, and there were no subsequent events to report.
| F-13 |
| PFG Fund V, LLC, | ||
| a Colorado limited liability company | ||
| Date: | September 30, 2022 | |
| By: | Pine Financial Group, Inc. | |
| a Colorado corporation | ||
| Its: | Sole Member | |
| By: | /s/ Kevin Amolsch | |
| Name: | Kevin Amolsch | |
| Its: | President | |
Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.
| Date: September 30, 2022 | ||
| By: | /s/ Kevin Amolsch | |
| Name: | Kevin Amolsch | |
| Its: | President of the Sole Member of the Manager | |
| 5 |
